Easun Reyrolle, Bharat Bijlee
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Wednesday, June 27, 2007
Spice IPO gets over subscribed 37 times
The initial public offer of mobile service provider Spice Communications has got subscribed over 37 times on its last day on Wednesday.
The IPO received bids for 425.38 crore shares against 11.3 crore shares on offer, latest data available on the stock exchanges show.
The QIB portion had received subscriptions of more than 5 times the reserved shares with major demand coming from foreign institutional investors till yesterday.
Spice Communications expects to raise up to Rs 520 crore through its maiden public offering at a price band of Rs 41- 46 per share.
The company is expected to use a major portion of the issue proceeds to get national and international long distance licences. The company, in which Telekom Malaysia holds 49 per cent stake, has received a non-exclusive letter of intent for providing STD and ISD services.
A part of the proceeds would also be used for repayment of debt and payment to vendors for network equipment.
Chidambaram - Easing inflation may cap interest rates
Finance Minister P.Chidambaram said on 27 June that central bank policy tightening and currency strength had helped to moderate inflation and more rate rises may not be needed if the trend continues.
“So far central bank actions have moderated inflation. The rupee rise has also helped moderate inflation to some extent,” Chidambaram told reporters on the sidelines of a conference in London.
“If inflation is contained at current levels and shows a decline, there is no reason why interest rates should go up.”
Last week, data showed India’s wholesale inflation fell to its lowest level in 14 months at 4.28% in the 12 months to 9 June. The signs of slowing price growth came finally after five interest rate rises in the past year to 7.75%.
The central bank has also largely kept out of the rupee’s way as the currency has surged to nine-year highs versus the dollar, rising about 9% so far this year.
India’s economy, the third largest in Asia, grew 9.4% in the fiscal year ending March, its highest rate in 18 years and second only to China among major economies.
Chidambaram said the intention for this year was to keep inflation at 4.0 to 4.5%. He earlier told the conference that inflation remained a concern for the economy but policies aimed to tackle this issue should not dampen growth.
“We have to strike a balance between growth and inflation. The politically tolerant level of inflation in India is 4-4.5% and we are aiming to keep it at that level,” he said, noting that factors such as oil prices would be key.
“But we will be alert and take fiscal as well as monetary steps (to curb inflation)”.
Chidambaram said it was hoped gross domestic product growth would be “close to 9%” in the current fiscal year, with an annual growth rate of 10% growth achievable by 2010.
He acknowledged that rupee appreciation was a headache for Indian exporters, but he said the rise was due to huge capital inflows into the country and no immediate steps were planned to curb the currency’s strength.
“We don’t believe in imposing capital controls on inflows. We will keep an eye on the rupee but our policy is a well regulated market determining the exchange rate,” he said. “The rupee will find its level, if it hurts any sector unduly, we will help that sector in other ways.”
Chidambaram forecast that foreign direct investment would exceed the $16.1 billion received in the 2006/2007 fiscal year.
One of the sectors that has experienced booming price growth has been real estate and most major Indian cities have seen property prices double in the past two years.
Foreign property funds have been flocking into India ever since rules on inward investment in the construction sector were relaxed.
Many analysts believe a property price correction of 10-40% is due in the short term. The last time a property bubble burst in India, prices fell as much afive interest rate r ises in the past year to 7.75%.
PwC - India to emerge 3rd largest credit market
he country could emerge as the third-largest domestic credit market in the world after United States and China by 2040, and, in the long run, could grow faster than China, said a PricewaterhouseCoopers (PwC) report on the banking sector by 2050.
While, India’s domestic credit is projected to grow from relatively low levels of $0.4 trillion in 2004 to $23 trillion in 2050, China’s credit market is set to expand from $2.8 trillion to $45 trillion over the same period, according to the report.
The total domestic credit in China could overtake the United Kingdom and Germany by 2010, Japan by 2025 and the US before 2050.
However, India is likely to be the fastest growing among the emerging economies (E7) of China, India, Brazil, Russia, Indonesia, Mexico and Turkey in the long-run.
“The model suggests that while China will continue to grow somewhat faster than India over the next 5-10 years but, after that, China's growth will be held back by its rapidly ageing population (due in large part to its one child policy) and diminishing returns to its investment-led strategy. In contrast, India and other emerging economies have much younger populations with faster-growing labour forces,” Jairaj Purandare, executive director, PwC, said
Short-term Trading Calls
Buy Birla Corp with stop loss of Rs 240 for a target of Rs 266/330
Buy Prism Cement with stop loss of Rs 35.50 for a target of Rs 43
Buy Ador Welding with stop loss of Rs 235 for a short-term target of Rs 276.
Market Close: weak and volatile as expected ahead of FNO expiry
Market saw selling pressure throughout the day. Sensex traded volatile swinging in both directions but was mostly in the red zone. Not much support was seen from global markets as all Asian and European markets were in negative zone except China which remained in the positive territory. Investors were cautious ahead of expiry of June 2007 derivatives contracts and the market may be volatile also tomorrow. Some buying was seen in the IT on the back of some Rupee weakness which traded at Rs 41 against the Dollar. Auto, Metal and PSU sectors were out of favor and attracted selling pressure. Mid and Small caps gained marginally as investors preferred to play safe while went on for profit booking in the heavyweights.
Sensex ended down by 70 points at 14431.06. Weighing on the Sensex were losses in NTPC (150.2,-2 percent), RCVL (514.95,-2 percent), Rel Energy (578.2,-2 percent), ACC (829.8,-2 percent) and Tata Motors (671.9,-2 percent). Losses were restricted by gains in Satyam (468.05,+3 percent), TCS (1133,+1 percent), Hero Honda (675.75,+1 percent), Infosys (1936.2,+1 percent) and Dr Reddys (653.65,+1 percent).
Tata Power jumped as it announced the acquisition of 30% equity stakes in major Indonesian thermal coal producers, PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia as well as related trading companies owned by PT Bumi Resources Tbk. Tata Power in order to complete the acquisition has taken a loan facility from a group of banks led by Barclays Bank for $ 950-million. As part of the purchase, Tata Power has signed an offtake agreement with KPC which entitles it to purchase about 10.1 million tonnes of coal per annum for an initial period upto 2021 which is extendable thereafter. This purchase supports the company's upcoming power projects on the West Coast of India comprising 7,000 mega watt (MW) which is to be developed over the next 5 years. These projects will require approximately 21 million tonnes of imported coal and these acquisitions would serve well.
Austin Engineering the manufacturer of specialty bearings reported good results. Ebidta margins up 400 bps despite higher exports (50% o f revenues). The rupee was strong and that would have hit into the margins as well. At the current market price of Rs 101, stock trades 6 times of FY 2006-07 earnings. Future seems to be good but the only risk in the business is slow down globally and an appreciating Rupee. We remain positive on this company The stock ended up by almost 2%. We had a research note here.. Do read.
KazStroyService PLC has made an open offer to the shareholders of Petron Engineering Construction Ltd to acquire 1,507,680 fully paid up equity shares of Rs 10 each or 20% of the share capital at Rs 180 per share. The offer opens on August 14 and closes on September 3 with the specified date being June 25. The shares ended the day marginally down.
Technical Speaking: Markets traded in a volatile manner as the F&O expires tomorrow. Sensex touched an intraday high of 14520 levels and low of 14407 levels. Volumes were good as the market churned almost Rs. 4685cr. Overall breadth was in favor of Declines, where the Declines were 1355 against of Advances 1266. Sensex held on to our support level of 14420 and closed slightly higher. We maintain that the level of 14400--14420 will play a crucial role in tomorrow's expiry, below which we might move, upto 14315 and 14170 levels.
Profit booking takes its toll
Weak global cues and choppy trading ahead of the expiry of the June F&O series ensured that the market remained in the red today. Despite weak Asian markets the Sensex opened on a positive note but soon slipped into the red on selling pressure in heavyweights and metal stocks. The Sensex fell sharply as investors sold for profits and touched the early low of 14433. However, buying at lower levels by the afternoon saw the Sensex pare most of its losses, but the benchmark index again tumbled on unabated selling in public sector, metal and auto stocks, touching the day's low of 14407. The Sensex finally closed the session at 14431, down 70 points. The Nifty ended the session down 21 points at 4264.
The breadth of the market was weak, with the losers outnumbering the gainers in a ratio of 1.06:1. Of the 2,647 stocks traded on the BSE, 1,338 stocks declined, 1,245 stocks advanced and 64 stocks ended unchanged. Most of the sectoral indices ended weak. The BSE PSU index slipped by 1.04% followed by the BSE Auto index (down 0.87%), the BSE Metal index (down 0.79%) and the BSE Bankex (down 0.64%).
Among the major losers, Tata Motors slipped 2.40% at Rs668, NTPC tumbled by 2.09% at Rs150, Reliance Communication declined by 2.05% at Rs515, Reliance Energy plunged by 1.97% at Rs578, ACC dropped 1.93% at Rs829, Bharti Airtel crumbled by 1.81% at Rs835, ONGC slumped 1.57% at Rs921 and Ranbaxy fell by 1.41% at Rs343. However, Satyam Computer gained 2.55% at Rs468 and Hero Honda moved up by 1.07% at Rs677 while TCS, Grasim, Infosys, Dr Reddy's Lab, HLL, Gujarat Ambuja, Wipro and Bajaj Auto ended with modest gains.
PSU stocks took a beating on the bourses. Bank of Baroda slipped by 2.92% at Rs259, Union Bank crashed by 2.36% at Rs128, SAIL shed 2.28% at Rs131, Mangalore Refineries lost 2.17% at Rs41 and Bharat Petroleum dropped 2.14% at Rs331.
Over 1.80 crore IFCI shares changed hands on the BSE followed by IKF Technologies (82.45 lakh shares), Reliance Petroleum (79.42 lakh shares), GV Films (62.22 lakh shares) and Nelcast (60.95 lakh shares).
Value-wise GMR Infrastructure clocked a turnover of Rs297 crore on the BSE followed by Indiainfoline (Rs138 crore), Nelcast (Rs131 crore), Suzlon Energy (Rs124 crore) and Entertainment Network (Rs116 crore).
Auto, metal stocks lead 70-point Sensex fall
The market drifted lower today as selling pressure continued throughout the day. Market may remain volatile tomorrow, 28 June 2007, ahead of the expiry of June 2007 derivatives contracts. All the Asian and European markets, with the exception of China, slipped today, 27 June 2007.
Buying was seen in consumer durables and IT stocks, while auto and metal stocks witnessed selling.
The BSE 30-share Sensex lost 70.02 points or 0.48% at 14,431.06. It had opened slightly higher at 14,520.19, but immediately started declining. It kept on striking fresh lows as the day progressed, with the last being 14,407.12 at 15:21 IST, which was a fall of 93.87 points for the day. It oscillated in a range of about 113 points for the day.
The S&P CNX Nifty declined 21.75 points or 0.51% at 4,263.95. The Nifty June 2007 futures were at 4254, a discount of 9.05 points to spot closing.
The total turnover on BSE amounted to Rs 4,685 crore as compared to Rs 4,706 crore on Wednesday, 26 June 2007. The NSE F&O turnover rose to Rs 56,258.84 crore as against Rs 52,571.16 crore on Wednesday, 26 June 2007.
The market breadth, which held positive till late afternoon trade, turned negative later as selling emerged in small and mid-cap stocks. On BSE with 1,355 shares declined as compared to 1,266 that advanced. 71 remained unchanged.
The BSE Mid-Cap Index struck all time high of 6,448.78, before settling 6.91 points or 0.11% higher at 6,424.81. The BSE Small-Cap index was up 0.12% to 7,613.84.
Among the Sensex pack, 19 declined while the rest advanced
IT stocks saw steady buying throughout the day. The BSE IT Index gained 0.9% to 4,843.47. Satyam Computers spurted 2.76% to Rs 469, on 4.48 lakh shares. It was the top gainer from the Sensex pack. Other stocks from the IT pack -- Wipro (up 0.10% to Rs 509.15), TCS (up 0.80% to Rs 1131.40) and Infosys Technologies (up 0.65% to Rs 1935) -- also gained.
Tata Consultancy Services (TCS) on Tuesday, 26 June 2007, said it had entered into an agreement with Scuderia Ferrari to provide the complete software to the Italian automaker’s Formula one (F1) cars. The two companies had in 2004 entered into an agreement to provide IT and engineering services and assist the development of F1 racing cars and Ferrari sports cars.
The rupee opened at its lowest in more than two weeks on Wednesday, 27 June 2007, as overseas investors' appetite for risk weakened and on strong dollar demand from oil companies for import payments. In early trade, the rupee was at 41.027/035 per dollar.
Housing finance major HDFC rose 0.80% to Rs 1,900, as buying emerged in the scrip at the fag end of the day. The stock recovered from intraday low of Rs 1850. As per recent reports, the housing finance major has cut floating rates for new home loans by 25 basis points as part of the monsoon offer
Auto stocks saw mixed trend. Tata Motors slumped 2.40% to Rs 668 on 1.53 lakh shares, and it was the top loser from the Sensex pack. Maruti Udyog lost 0.42% to Rs 754. Two wheeler makers Hero Honda Motors (up 1.07% to Rs 677) and Bajaj Auto (up 0.30% to Rs 2134), gained. The BSE Auto Index lost 0.87% to 4,746.24.
Index heavyweight Reliance Industries (RIL) lost 0.38% to Rs 1,697, on 4.21 lakh shares. It moved in a range of Rs 1692 to Rs 1710.25. As per reports, the Prime Minister's Office (PMO) has referred the issue of pricing natural gas found off the east coast to a committee of secretaries. The move comes in the wake of differences the petroleum ministry has with the power and fertiliser ministries over the methodology adopted for arriving at the gas price.
Reliance Communications (down 2.39% to Rs 513.20), Reliance Energy (down 2.02% to Rs 577.90) and NTPC (down 2.22% to Rs 150), were the other losers.
Aluminium and copper major Hindalco Industries lost 1.30% to Rs 168.90, on 31.81 lakh shares. Fall in global metal prices on Tuesday, 26 June 2007, weighed on the counter.
Pharma major Ranbaxy Laboratories lost 1.05% to Rs 343.50. Goldshield become the latest in a string of companies to pay millions of pounds in out-of-court settlements to the National Health System (NHS) for alleged drug price-fixing. Goldshield's settlement follows April's announcement from the UK's Serious Fraud Office that it intended to charge nine people and five companies with conspiracy to defraud the NHS over certain drug prices and supply. Ranbaxy is one of the five companies allegedly involved in a cartel that took place between 1996 and 2000.
GMR Infrastructure rose 1.02% to Rs 699, after striking a high of Rs 744.95, which is the lifetime high for the scrip. The stock surged in anticipation of good Q4 March 2007. The company will unveil results on 30 June 2007. The stock was the top traded counter on BSE with total turnover of Rs 296.59 crore
The BSE Consumer Durables (CD) index spurted for the second straight day, and struck an all-time high of 4,256.31 today, 27 June 2007. It settled 1.27% higher to 4,216.57, and was the top gainer among the sectoral indices on BSE. On Tuesday, 26 June 2007, the BSE CD index had surged 2.71% to 4,163.86. Titan Industries (up 3.81% to Rs 1,328), Lloyd Electric (up 3.35% to Rs 160.20), and Rajesh Exports (up 0.45% to Rs 527.50) were the major gainers from the BSE CD index.
Titan Industries, Rajesh Exports, Gitanjali Gems and Lloyd Electric have weightages of 34.01%, 8.14%, 5.03% and 4.03% respectively in BSE Consumer Durable index. The Consumer Durable index rose 7.28% in the past one month to 26 June 2007.
Nelcast settled at Rs 206.25 on BSE, a discount of 5.80% over the IPO price of Rs 219 per share. The scrip opened at Rs 252.05. It touched a high of Rs 284.70 and a low of Rs 203.10 during the day. The counter saw high volumes of 60.95 lakh shares.
The BSE Metal Index declined 0.80% to 10,685.59. Hindustan Zinc (down 2.40% to Rs 704), Sail (down 2.21% to Rs 130.60), Jindal Stainless (down 2.20% to Rs 142.10), and Tata Steel (down 1.93% to Rs 591.50) were among the losers.
Steel Authority of India (Sail) entered into a memorandum of understanding with Manganese Ore India for setting up of a joint venture to produce ferro-manganese and silico-manganese. Sail made this announcement after market hours on Tuesday, 26 June 2007.
Steel maker JSW Steel was down 0.68% to Rs 603.15 after the United Nations awarded more than 5.4 million carbon credits to two of its projects for reducing greenhouse gas emissions between 2001 and 2006.
Wind turbine maker Suzlon Energy jumped 4.58% to Rs 1,502 on reports that it along with Vestas India has signed agreements with the Kerala government for 15 mega watt (MW) wind power project.
Patni Computer Systems gained 1.40% to Rs 506 on announcing a partnership for collaborative research activities in the medical device domain.
IFCI spurted 4.20% to Rs 52 after the central bank once again allowed foreign investors to purchase shares in the company.
IndusInd Bank jumped 6.06% to Rs 51.65. On Monday, 25 June 2007 the bank had got a $50 million line of credit from US-based Wachovia Bank N.A. to expand its international business. The bank has an approval from its board to raise up to Rs 400 crore through debt this fiscal year, which began on 1 April 2007.
Motor Industries Company (Mico) slumped 4.28% to Rs 4,485 after its parent Robert Bosch GmBH raised the open offer price by 15% to Rs 4,600 a share. The market had expected the open price to be raised to at least Rs 5,000 per share. The news hit the market before trading hours today, 27 June 2007. Robert Bosch, the world's largest auto parts maker, holds 60.55% in Mico. The parent firm said it was buying the additional stake in Mico to realise greater operational synergies through closer cooperation and sharing of technology.
Apollo Hospitals Enterprise slipped 1.35% to Rs 518.30 after its net profit advanced 17.74% to Rs 14.60 crore in Q4 March 2007 as against Rs 12.40 crore in Q4 March 2006. Revenue rose 21.56% to Rs 233.40 crore (Rs 192 crore). The company’s net profit surged 66.28% to Rs 100.10 crore in FY 2007 as against Rs 60.20 crore in the year ended March 2006. Revenue increased 25.88% to Rs 891.00 crore (Rs 707.80 crore). The results were announced after market hours on Tuesday, 25 June 2007.
FDC dropped 4.22% to Rs 32.90 after it posted a 43.31% decline in net profit in Q4 March 2007 to Rs 4.32 crore as against Rs 7.62 crore in Q4 March 2006. Sales rose 18.49% to Rs 81.21 crore (Rs 68.54 crore). Net profit slipped 7.35% to Rs 64.33 crore in the year ended March 2007 as against Rs 69.43 crore in the previous year ended March 2006. Sales were up 25.04% to Rs 423.76 crore FY 2007 as against Rs 338.91 crore in FY 2006. . The results were announced after market hours on Tuesday, 26 June 2007
Gail (India) was down 0.35% to Rs 308.80, after the state-owned gas utility inked a pact with China Gas Holdings to jointly pursue gas sector business opportunities in China, India and other countries. Gail on Tuesday, 26 June 2007 signed a pact with China Gas Holdings to jointly pursue businesses in CNG (compressed natural gas), city gas distribution and coal bed methane extraction, besides pipeline and LNG (liquefied natural gas) projects in China, India and other countries.
Nagarjuna Construction Company was unchanged at Rs 171 after it secured Rs 334-crore contract to construct Rajeev Gandhi University of Health Science's administrative block, medical college block, 500 bedded hospital, 250 bedded super speciality hospital and allied colleges, hostels, quarters, and buildings in Ramanagara, Bangalore. The project is to be completed within 18 months.
All the Asian markets were trading lower today, 27 June 2007 led by Japan, as shares of exporters such as Toyota Motor Corp. and Canon Inc. were hurt by yen's strengthening against the US dollar. Japan's Nikkei was down 1.20% at 17,849.28. Hang Seng (down 0.45% to 21,705.56), Taiwan's Taiwan Weighted (down 0.24% at 8,844.22), South Korea’s Seoul Composite (down 0.94% at 1,733.10), and Singapore's Straits Times (down 0.56% at 3,505.50), all edged lower.
However, Shanghai Composite was an exception. It rose 2.65% to 4,078.59
All the European markets were trading lower
Wall Street finished an extremely erratic session with a modest decline on Tuesday, 26 June 2007, as investors parsed unimpressive data on home sales and consumer confidence and awaited the Federal Reserve's meeting on interest rates.
The Dow Jones fell 14.39 points, or 0.11%, to 13,337.66. Broader stock indicators also fell. The Standard & Poor's 500 index slipped 4.85 points, or 0.32%, to 1,492.89, and the Nasdaq Composite index fell 2.92 points, or 0.11%, to 2,574.16.
Oil prices were steady in Asia, on 27 June 2007, as traders awaited the release of a US government inventory report expected to show increases in supplies of crude, gasoline and distillates. Light, sweet crude for August delivery lost 6 cents to $67.71 a barrel in Asian electronic trading on the New York Mercantile Exchange.
As is the case at the time of expiry of near-month contracts, the extent of rollover to July 2007 contracts from June 2007 contracts will dictate the trend on the domestic bourses in the near term. A higher rollover indicates that the market players expect bourses to remain firm in the month ahead and vice versa.
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