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Wednesday, November 29, 2006
Sensex ends with marginal gains
n a listless trading session, the market displayed a range-bound trend with alternate bouts of buying and selling. After opening 47 points above its previous close the Sensex moved up to touch an intra-day high of 13712. The market remained steady in noon trades. However the sentiment turned bearish towards the end of the session and the index dipped to the day's low of 13586. The Sensex recouped its losses on selective buying interest and ended the trading session at 13617, up 15 points. The Nifty advanced six points to close at 3928. The market breadth was positive on the BSE. Of the 2,623 stocks traded, 1,662 stocks advanced, 888 stocks declined and the remaining stocks ended unchanged.
The sectoral indices were mixed. The BSE Auto index, the BSE CD index, the BSE CG index, the BSE HC index and the BSE Metal index ended in positive territory. On the other hand the BSE Bankex, the BSE IT index, the BSE PSU index, the BSE Oil & Gas index and the BSE Teck index exhibited weakness. The BSE FMCG index was up 1.47% at 2015.
Among the gainers ACC surged 4.22% at Rs1,146, Grasim gained 2.75% at Rs2,790, ITC jumped 2.45% at Rs184, Gujarat Ambuja added 2.06% at Rs146, Dr Reddy’s advanced 1.64% at Rs735, Bajaj Auto was up 1.32% at Rs2,673 and TCS advanced 1.29% at Rs1,164. Reliance Communication, Maruti and Reliance Energy reported steady gains. However, Cipla dropped 2.53% at Rs249, ONGC shed 1.26% at Rs857 and Bharti Airtel dipped 1.20% at Rs621. BHEL, NTPC, and ICICI Bank closed with marginal losses.
Nova Petro at Rs16.80 and Nandan Exim at Rs11.65 hit the lower circuit on the BSE. On the other hand Adani Enterprises at Rs216.95 hit the upper circuit.
Over 1.14 crore Lanco Infratech shares changed hands on the BSE followed by SAIL (25.35 lakh shares), Gujarat Ambuja (21.90 lakh shares) and Reliance Communication (19.74 lakh shares).
Sensex registers small gain
Sensex ended with small gain of 14.78 points to settle at 13,616.73 in volatile trade. After surging over 100 points at the onset of trading tracking firm Asian markets, it gradually pared gains later and it even slipped into the red at one point of time at the fag end of the trading session. It recovered from the red and moved into the green again at close.
Sensex hit a low of 13,586.04 and high of 13,711.76.
Liquidation of positions in the November 2006 derivatives contracts ahead of expiry of November contracts on Thursday weighed on the bourses. Five Sensex heavyweights Infosys, ICICI Bank, ONGC, Bharti Airtel and Reliance Industries (RIL) slipped into the red. Cement shares rose on firm cement prices. Auto scrips edged higher after the government cut retail fuel prices.
The broad market depicted bullish trend as gainers outpaced losers by a ratio of 1.77:1 on BSE. Select side counters surged.
BSE clocked a turnover of Rs 4388 crore compared to Tuesday’s Rs 4161 crore.
Cement shares extended their recent upmove on firm cement prices. ACC gained 3.6% to Rs 1140, Gujarat Ambuja Cements rose 2.3% to Rs 146.55 and Grasim gained 2% to Rs 2770.
Cigarette major ITC advanced 2.5% to Rs 184.40. 9.3 lakh shares changed hands in the counter on BSE.
Auto shares rose after the government today announced a cut of Rs 2 per litre in price of petrol and rupee one per litre in diesel. Bajaj Auto rose 1.1% to Rs 2670, Tata Motors gained 0.8% to Rs 817 and car major Maruti Udyog added 0.6% to Rs 920.
Refinery shares slipped on worries that cut in retail fuel prices would put further pressure on their marketing margins. HPCL shed 3.5% to Rs 291.50 and BPCL lost 1.7% to Rs 354.
Indian Oil Corporation dropped 4.7% to Rs 459.90 and Bongaigaon Refinery shed 5.5% to Rs 50.65. Indian Oil Corporation (IOC) today recommended a swap ratio of four IOC shares for every 37 shares held in Bongaigaon Refinery, for merger of Bongaigaon Refinery in IOC.
Oil exploration major ONCG dropped 0.8% to Rs 859.80.
Bharti Airtel dropped 1.3% to Rs 620 on profit taking. Communist Party of India said on Tuesday it was against the entry of Wal-Mart Stores Inc. in India, a day after Bharti Enterprises – a Bharti Airtel group company announced a tie-up with the world's biggest retailer on Tuesday.
ICICI Bank shed 0.8% to Rs 855 and Reliance Industries dropped 0.1% to Rs 1249.
Software major Infosys shed 0.7% to Rs 2151 in volatile trade. On Tuesday, Infosys ADR rose nearly 1%.
Infosys, ICICI Bank, ONGC, Bharti Airtel and Reliance Industries have a combined weightage of over 40% in Sensex.
Biocon's Shaw looks at acquisitions
Biocon Ltd is going to focus on acquisitions abroad purely for strategic reasons in either intellectual property assets or for marketing and distribution. Speaking to ET.com, Kiran Mazumdar-Shaw, CMD of Biocon, specified that for her company, the M&As will essentially be based on a strategic reason. She pointed out that Indian companies had different reasons for acquiring a global company, but said very few companies today are doing it simply for expanding the footprint.
Shaw agreed that M&A is the new hallmark of Indian multinationals and the one sector that is positioned to grow globally is the pharma sector.
Overseas acquisitions by Indian pharma companies in the 2005-2007 period has been to the tune of $2000 million. Shaw said: “For instance, this year, Biocon acquired a company in the US for reasons other than expanding the footprint. It was an IP company and we had to negotiate a lot, but it was important to pay the right price for the buy-out.
Biocon has acquired all intellectual property assets of its bankrupt US research partner Nobex Corporation early this year. The IP acquisition, unprecedented among Indian companies, has cost Biocon $5 million, including the final bid amount of $4.1 million, royalties and creditor settlements in what could be called a not hotly contested bid.
She said, "This was truly a strategic acquisition which provided us with an immensely valuable IP platform. It also gave us full ownership of our ongoing oral insulin and oral BNP programmes.” She added, “We propose to leverage these proprietary assets through a combination of licensing and co-development partnerships."
Shaw also said that pharma is really big on the M&A scene, but agreed that Dr Reddy’s and Ranbaxy are really driving the trend. However, she said, “Biocon is emerging as a key player in the generic market.”
Commenting on the acquisitions by the Indian corporations, she agreed that M&As are the new hallmark of Indian multinationals. The one sector that is positioned to grow further globally using this approach is the pharma sector.
She said Biocon started as a manufacturer and exporter of enzymes. The company gradually shifted focus to a life-science driven generic company with fermentation technology. Biocon is again going through a transition phase from being a generic company to a discovery led life science company. Statins sales to the US and Europe would be a major growth driver in the short term.
US growth will improve next year: Bernanke
The world`s largest economy is still on track to expand at a moderate pace over the next year without slowing too much, says chairman of the Federal Reserve
The US economy, which has seen some moderation in its growth over the past couple of quarters, is likely to pick up pace next year, Federal Reserve Chairman Ben S. Bernanke said on Tuesday.
In a speech delivered at the National Italian American Foundation in New York, Bernanke said that the world's largest economy is still on track to expand at a moderate pace over the next year without slowing too much.
"Economic growth will be modestly below trend in the near term, and over the coming year will return to a rate that is roughly in line with the growth rate of the economy's underlying productive capacity," he said in his first speech on the US economy in four months.
Bernanke said some slowing of growth was welcome at this stage of the expansion if the economy is to be sustained without a buildup in inflationary pressures.
Excluding the ailing housing and auto sectors, "economic activity has, on balance, been expanding at a solid pace," he said.
But, the Fed chief acknowledged that inflation still continues to be the major risk to the US economy. Bernanke said inflation is likely to continue to moderate gradually over the next year.
The Fed chairman said that although readings on the core inflation rate have improved modestly since the spring, core inflation nevertheless remains uncomfortably high. "Given the current level of inflation, a failure of inflation to moderate as expected would be especially troublesome," Bernanke said.
Bernanke said that whether further policy action against inflation will be required depends on the incoming data, and in particular how these data affect the FOMC's medium-term forecasts. The Fed chairman said he is watching rising labor costs carefully for signs that employers are passing them on to customers.
The Fed chairman said that the effects of the housing market correction will persist into next year, but said that the rate of decline in home construction should slow as the inventory of unsold new homes is gradually worked down.
Small-cap, mid-cap stocks to the fore
Sensex pared gain in afternoon trade. But a host of small-cap and mid-cap shares held firm.
Select side counters surged. Side counters Vapi Paper (up 20% to Rs 15.06), Micro Tech (up 20% to Rs 261.75), Machino Plastics (up 20% to Rs 65.15), Fortis Financial (up 20% to Rs 74.20), Pioneer Embroideries (up 20% to Rs 109.10), Torrent Power (up 20% to Rs 84.80), Gujarat NRE Securities (up 18% to Rs 31.75), Alphageo (up 10% to Rs 168), Surya Pharma (up 10% to Rs 82), Godfrey Phillips (up 10% to Rs 1254.60), EIH Associated Hotels (up 10% to Rs 160.55), Ind-Swift Labs (up 9% to Rs 61.35), and Balkrishna Industries (up 8% to Rs 517) surged.
A number of small-cap and mid-cap stocks were up by between 3% to 7% for the day.
The market breadth remained strong. 1793 shares rose on BSE as compared to 672 shares that declined. 64 shares were unchanged. Gainers outpaced losers by a ratio of 2.6:1.
At 13:26 IST, Sensex was up 35 points at 13,637. Sesnex came off from 13,656 to 13,673 range it had hovered at in early afternoon trade.
Sensex had surged over 100 points in opening trade. It had pared gains later. It turned range bound in mid-morning, early afternoon trade.
Sensex’s low was 13,617.12 and high 13,711.76 so far.
ICICI Bank lost 0.1% to Rs 860.60. The stock had risen over 1% in early trade to Rs 873.25.
Gujarat Ambuja Cements lost 0.1% to Rs 143. The scrip had firmed up in morning trading when it had gained as much as 1.8% to 145.90.
Reliance Industries (up 0.6% to Rs 1258.50) though it held positive zone, the stock pared gain. The scrip had gained as much as 1.1% to a high of Rs 1265 in early trade.
L&T (up 0.3% to Rs 1388) too pared gain. The stock had risen as much as 1.2% to Rs 1400 in early trade.
ITC firmed up. The stock was up 2% to Rs 183.40.
Grasim rose 2.3% to Rs 2779 and it was the biggest gainer in 30 Sensex scrips.
Tata Steel rose nearly 1% to Rs 480.40 after Anglo-Dutch steelmaker Corus Group said on Wednesday its third-quarter earnings rose 63% on the back of higher steel prices. Corus last month agreed a 4.3 billion-pound takeover offer from Tata Steel. However, Brazil's Companhia Siderurgica Nacional has since proposed making a higher bid and it has been conducting due diligence with the help of senior Corus management. Corus this week delayed a shareholder meeting to vote on Tata's takeover offer until Dec. 20.
State Bank of India added 1.5% to Rs 1313. The stock hit a high of Rs 1324.70 which is a lifetime high for the scrip. A block deal took in State Bank of India in the FII segment that took place in early trade at Rs 1552, about 20% premium over Tuesday’s closing price
Select auto shares were in demand following reports that the government is likely to announce a cut of Rs 2 per litre in price of petrol and a cut of rupee one per litre in diesel. Bajaj Auto rose 1.8% to Rs 2687, and car major Maruti Udyog gained 1.3% to Rs 926.50.
On Global Stage - By Jay Dubashi
Globalisation has turned the world upside down. We expected foreign companies to make a beeline to India and snap up every Indian firm in sight at giveaway prices. After all, foreign companies had all the cash in the world while Indian companies were going cheap.
But that is not what happened. Fifteen years after liberalisation, it is the Indian companies that are buying foreign firms now. Every day, you read about Indian companies, which, until a few years ago, were unknown outside the country, swallowing up foreign companies, many considerably bigger than themselves, as easily as sharks swallow small fish.
What is surprising is that many, like Corus Steel, gave in without a fight and seem positively relieved that they become part of Indian business groups like the Tatas. Ratan Tata now heads Corus, the first Indian to do so. I have a feeling that after the deal goes through, the company will drop the name Corus and will be known as Tata Steel, which is what it actually is anyway.
This is only the beginning. Much bigger things are in store for the future. If Tata Steel, which until recently, made less than four million tonnes of steel a year, can buy a British steel giant that makes four times as much steel, what is to prevent firm like Infosys Technologies, making a bid for IBM in, say, 10 years time and getting away with it? Or, for that matter, ONGC buying up Shell or BP (British Petroleum), both of which are not doing too well!
In fact, I won't be surprised if Tata Motors, a highly successful company, decides to make a bid for Ford Motors or General Motors, which have been ailing for some time and may be only too glad to jump on the Tata or some other Indian bandwagon, as Corus Steel did last month or Arcelor did (on the Mittal wagon) a few month ago.
Globalisation was not expected to do all this. It was supposed to bring in badly-needed foreign investment and give a spurt to the Indian economy. It has certainly given a spurt to the economy and also brought in foreign investment, but Indian companies are investing more outside than foreign companies inside the country, and this has messed up all the calculations. Instead of the world globalising India, it is India that is globalising the world.
I wonder whether we realise what is happening. The government certainly doesn't nor the so-called economics experts who think they know all about globalisation. Globalisation is not a one-way process. When capital starts flowing, it does so in all directions, from the west to the east and from the north to the south. But it also flows from the east to the west and from the south to the north. For investment is like water and when you open up the sluices, it flows everywhere and floods all the canals.
The fact is that you cannot keep India or Indians down. Liberalisation has released their energies, which were bottled up all these years by politicians who know no better. They made all kinds of excuses --- as the communists are doing now --- to keep us down and they did succeed. But now that the gates are up and the waters are flooding the countryside, there is little that the politicians can do. Corus and Arcelor are only the beginning. The world is an oyster and it is ours for the taking.
Poweryourtrade.com Trading Calls
Buy Reliance Industries above Rs 1262, support at Rs 1257, minor resistance at Rs 1267 above that expect Rs 1280.(Intra-day Call)
Poweryourtrade.com Trading Calls
Buy Binani Ind around Rs 388 with stop loss of Rs 383.(Intra-day Call)
Buy Dabur Pharma around Rs 73.85 with stop loss of Rs 72.5.(Intra-day Call)
Buy Indo Tech transformers with stop loss of Rs 190 for target of Rs 260
Buy Ansal Infra with stop loss of Rs 970 for target of Rs 1170-1300
Buy IVRCL Infra below Rs 414 with stop loss of Rs 411; This is day-trading recommendations.
Short sell HCL Tech above Rs 617 with stop loss of Rs 623; This is day-trading recommendations.
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