Sterlite Industries

Sterlite Industries

Crude marks another all time high

Crude prices close above $80 for the first time ever

Crude oil future prices rose today and reached an all time new high. Crude prices closed above $80/barrel after Hurricane Humberto shut three refineries in Texas. Prices also bore the brunt of yesterday’s report by energy Department which showed that crude supplies dropped more than 7 million barrels and motor gasoline inventories fell a sixth week in a row.

For the day ending Thursday, 13 September, 2007, crude-oil futures for light sweet crude for October delivery closed at $80.09/barrel (higher by $0.18/barrel or 0.3%) on the New York Mercantile Exchange.

Futures touched $80.20, the highest intraday price since trading began in 1983. Prices are up 25% from a year ago.

Brent crude oil for October settlement slipped 28 cents (0.4%) to close at $77.40 a barrel on the London-based ICE Futures Europe exchange.

As per yesterday’s weekly inventory report, U.S. crude supplies dropped a third week, down 7.1 million barrels to 322.6 million, for the week ended 7 Sept. Supplies have now dropped 14.5 million barrels from the mid-August level, though they're still up about 1.4% from a year ago.

Motor gasoline supplies fell a sixth straight week, down 700,000 barrels at 190.4 million in the latest week. Distillate stocks were up 1.8 million barrels at 134 million barrels. The decline in gasoline supplies came as U.S. refinery utilization fell to 90.5% of capacity from 92.1% a week ago.

Natural gas at drops but gasoline price perks up

Natural gas in New York fell after a government report showed U.S. stockpiles rose above expectations. Stockpiles rose 64 billion cubic feet (against an expected 61 billion cubic feet) to 3.069 trillion cubic feet in the week ended 7 Sept. Gas for October delivery fell 40.9 cents (6.4%) to settle at $6.029 per million British thermal units.

The International Energy Agency made a modest downward revision to oil demand forecasts yesterday saying it doesn't know how the turmoil from the U.S. subprime-mortgage market will affect demand. The agency sees 2007 oil demand at 85.9 million barrels a day and 2008 demand at 88 million barrels.

Against this backdrop, refinery concerns provided a boost to gasoline prices, with October reformulated gasoline up 3.04 cents to close at $2.0464 a gallon. October heating oil closed nearly unchanged at $2.219 a gallon, retreating from a record intraday level of $2.2347 in electronic trading.

Attacks on oil facilities in Nigeria have curtailed shipments and tight supplies from OPEC have bolstered crude prices this year. As per the U.S. Energy Information Administration, tight global energy supplies are expected to keep energy prices high through 2008.

Earlier this week, OPEC planned to boost daily oil production by 500,000 barrels. OPEC's production target is 27.2 million barrels a day, beginning 1 Nov. OPEC, has decided to raise their daily output by 500,000 barrels per day, starting 1 November.

Pipes Sector

Pipes Sector

Vesuvius India

Vesuvius India

Hindustan Construction

Hindustan Construction

Model Portfolio - Sep 2007

Model Portfolio - Sep 2007

Q2FY08 Media Preview

Q2FY08 Media Preview

Sensex ignores IIP numbers

Brushing aside numbers suggesting that the economy could be slowing down, bulls came out in full force on Thursday. Setting aside a two-day losing streak, indices registered handsome gains on the back of bottom fishing in construction, auto and software shares.

“Market brushed aside a dip in IIP figures as it realised that the numbers were on a higher base and fundamentals were still intact,” says Niche Brokerage head of research Priyadarshi Srivastava.

He does not sense any negative mood in the market, but warns that the action will be range-bound. Dealers say the market is awaiting the outcome of the US Fed’s meeting in the coming week and there are strong expectations that it would go for a cut in its benchmark interest rates.

“Players have been waiting for the next positive trigger. We, however, believe that a 25 basis point cut by the Fed has already being discounted by the market,” Mr Srivastava said. While BSE 30-share Sensex gained 109.08 points, or 0.70%, to end at 15,614, the S&P CNX Nifty rose 32 points, or 0.71%, at 4,529. Intra-day, the Sensex hit a high of 15,650.

The Nifty September 2007 futures settled at 4,527, a marginal discount of 1.95 points compared to the spot closing. This discount has narrowed over the past trading session while the open interest has gone up, indicating bullish undertones.

There was also good buying in second-line shares as indicated by strong gains in the mid-cap and small-cap indices. “Reliance companies, both the groups, have been doing extremely well in the past few sessions, sending both frontline and mid-cap indices higher,” says a broker with a domestic brokerage. For instance, India’s largest private sector company by market capitalisation and oil refiner Reliance Industries (RIL) ended the day much above the 2,000 levels at Rs 2,025 on strong volumes.

The stock edged higher after the empowered group of ministers (EGoM) approved RIL’s pricing formula for its gas from the Krishna-Godavari (KG) basin, much in line with what the company sought. Reliance Communications, the county’s second-largest listed cellular services provider in terms of revenue, gained 1.86% to Rs 552.15.

As per reports, FLAG Telecom Group (FLAG) reportedly bagged a contract from European Organisation for Nuclear Research to provide gigabit connectivity. Other Reliance shares also registered gains. Another group of stocks that were in action were the real estate and construction stocks.

These advanced on fresh buying led by Unitech which surged 7.72% to Rs 285.55 on news that it would replace IPCL in 50 share S&P CNX Nifty soon. Other real estate shares like DLF, Parsvnath Developers, Orbit Corporation and Omaxe all advanced between 1 and 4%.

Core sector growth slows to 6.3% in July

A substantial slowdown in coal, steel and petroleum refining production led to a decline in overall growth in the six core infrastructure sectors to 6.3% in July 2007, as against 10.9% in the same month last year. For the four month period till July this financial year, core sector growth rate declined to 6.1%, as against 8.7% in the same period in 2006-07.

Crude petroleum production registered a decline in growth at 0.9% in July, down from 4.1%, while petroleum refinery production dipped to 4.6% from 12.6% in July 2006. Coal production growth declined to 1.1%, a significant fall from the 9.1% growth witnessed in July last. Electricity generation registered a growth of 7.5% in the month under review, compared to 8.9% in July 2006. Cement production grew 9%, as against 14% same month last year, while finished (carbon) steel production grew 7.9% versus 15%.

The infrastructure sectors accounts for 26.7% of the Index of Industrial Production (IIP). The data came a day after IIP data showed that overall industrial growth slowed sharply this July, providing further evidence of a moderation in economic activity on account of a tight monetary policy and a perceptible slowdown in consumer spending.

The IIP rose 7.1% in July, as against 13.2% in July 2006. This has been the slowest growth in the index in the last nine months. It had slumped to 4.4% last October.

Recently, Finance Minister P. Chidambaram had written to Prime Minister Manmohan Singh apprising him of the slowdown in key infrastructure sectors and said that bottlenecks to production in these areas must be removed.

"Our assessment is that there has been a slow down in key infrastructure sectors. While there is no evidence of a slow down in investment, bottlenecks to enhanced production need to be addressed and removed."

Power Grid Subscription Details

Qualified Institutional Buyers (QIBs) - 115.9031 times

Non Institutional Investors - 40.3413 times

Retail Individual Investors (RIIs) - 6.7678 times

Employee Reservation - 2.6571 times

OVERALL - 64.82 times

Power Grid IPO subscribed nearly 65 times

The initial public offer of state-run Power Grid Corporation of India (PGCIL) received bids for nearly 65 times of the issue size, generating demand for a record-smashing Rs 1,95,000 crore worth of shares.

The country's biggest transmission utility's IPO received bids for 3,719.76 crore equity shares against the 57.39 crore shares on offer, as per the latest data available on the bourses. This is 64.81 times of the issue size.

The company is expecting to raise up to Rs 3,000 crore through its issue, for which the price band has been fixed between Rs 44 and Rs 52 a share.

The proceeds would be used to part finance 15 projects that entail a total investment of Rs 12,280 crore. PGCIL owns and operates 61,875 circuit kms of transmission lines.

The proposed 15 projects would enhance its transmission system by 13,022 circuit km.

The company has inter-regional electricity transfer capacity of around 14,000 MW and plans to scale it up to 37,000 MW.

PGCIL is the third central power utility to tap the capital market for raising funds after NTPC Ltd in 2004 and Power Finance Corporation early this year.

As in the case of NTPC and PFC, the government will piggyback on PGCIL IPO to divest five per cent of its stake. While NTPC had raised around Rs 5,400 crore, PFC had mopped up nearly Rs 1,000 crore.

FII: + Rs 282 Cr; MF + Rs 73 Cr

FII Gross purchases Rs 2392 Cr, Gross sales Rs 2111 Cr, Net Buyers Rs 282 Cr.
MF Gross Purchases Rs 721 Cr, Gross Sales Rs 647 Cr, Net Buyers Rs 73 Cr.

The positive flows despite ranged markets gives some comfort. All eyes are on the Fed decision regarding interest rates. The Mid cap counter continues to attract retail investors. Wait and watch approach is advocated at the moment.

Market Close: Upbeat ranged action !

It was a ranged session for Indian markets. Even in absence of global cues, Indian indices started the day on a fair note. The damp Industrial production figures failed to dampen the ethusiasm.. as the markets digested the slower 7% growth blaming it on the low base. Investors' mood remained positive throughout the day. The buying momentum kept the indices to trade ranged in green. However some profit booking set in during mid day but buying emerged and markets managed to close with modest gains. Asian markets ended in green, European markets were trading in red at the time of writing this. Value buying was seen in index heavy weights like Maruti, SBI, HDFC Bank and ACC. Most of the indices closed in green except FMCG. It was Auto, Banking and Cement stocks which witnessed value buying. The Govt postponed the meeting for the subsidy for Fertilizer companies as result of this the stocks came off. This has been a sector which has been rallying quite strongly oflate. Mid and Small caps were closed inline with the front line indices.

Sensex closed up by 109 points at 15614. It was helped up by gains in Maruti (892.1,+4 percent), SBI (1675.85,+3 percent), HDFC Bk (1212.6,+3 percent), ACC (1128.8,+2 percent) and Grasim (3264.45,+2 percent). Restricting the gains are HLL (215,-1 percent), Hindalco (153.95,-1 percent), Dr Reddys (641.55,-1 percent), TISCO (706.6,-1 percent) and Rel Energy (889.55,-1 percent).

SBI's intention to raise money brought in the buyers. Higher equity clearly means that the 20% FII stake will be vacated and fresh buying would get possible. Thats an odd reason for strength for SBI.

We reran a note on Navneet Publication. The company seems headed the Educomp way. It has managed to develop content which it has already sold to 20 schools in Gujarat. The e-content for Maharashtra is slated to be online by November. This e-initiative should change the face of the company from being a laid back one to one that is leveraging its position in the Education space using all available media. Do read the note We had a Wow call on this and the stock is now at Rs 78 . The stock has delivered more than 30% with in a short span of time.

Suzlon Energy Ltd the world's fourth largest wind turbine maker plans to invest about Rs 5600 cr to triple its production capacity by 2009. The expansion would raise Suzlon's turbine production capacity in India to 5,700 megawatt (MW) by March 2009 from 2,700 MW now. It recently acquired subsidiary Germany's REpower Systems would have increased its capacity to 1,200 MW from an existing 700 MW. The total investment in this three year plan is about Rs 5600 cr and most of this investment would be financed by debt. The company also plans to raise its capacity to produce wind gearboxes, made by its unlisted Belgian subsidiary Hansen Transmissions to 9,300 MW by 2009. The company's order book stands at around Rs 14000 cr up from Rs 13200 cr in July with most orders for exports. It also informed that in June it might seek a listing in London or Frankfurt in the next 12-24 months. The expansion plans are aggressive and certainly impressive.. But the valuations certainly leave a lot to be desired. The acquisition of RE power was not an attractive one financially and that we believe could impact earnings The stock closed up by 3.27%.

We had a note on Bharat Fertiliser. This is after many months of waiting for the company to announce its real estate projects. The value of the property itself is couple of times the market cap. But what is more and what are the risk factors is something which will be known only on reading the note.

Technically Speaking: It was a ranged session for the whole day before closing. Sensex touched an intraday high of 15650 and low of 15548. Overall breadth was in favor of Advances, where the Advances stood at 1647, while Declines at 1123. The turnover was good at Rs 5257 cr. Sensex is facing resistance at 15700 but we believe it is just a matter of time before we cross it and move towards our target of 16100. On the lower side supports at 15490 and 15350.

Market ends firm, gains 109 points

The market was back on track after displaying subdued trend for last couple of sessions. The market remained firm for almost the entire trading session, above the 15,600 level. The Sensex began the day 43 points above its previous close at 15,548 and moved up to touch an intra-day high of 15,650 on substantial buying support in heavyweight, auto and banking stocks. The index also received major support from Maruti Udyog, SBI and ACC, which gained around 2-3% today. The Sensex finally wrapped up the session with a gain of 109 points at 15,614, while the Nifty closed with a gain of 32 points at 4,529.

The breadth of the market was positive. Of the 2,748 stocks traded on the BSE, 1,574 stocks advanced, 1,110 stocks declined and 64 stocks ended unchanged. Among the sectoral indices, the BSE Realty index moved up by 2.69% followed by the BSE Auto index (up 1.30%), the BSE Bankex index (up 1.28%) and the BSE PSU index (up 1%). However, the BSE FMCG index closed in negative territory.

Among the heavyweights, Maruti Udyog gained 3.72% at Rs891, SBI soared 3.18% at Rs1,676, ACC surged 2.45% at Rs1,129, HDFC Bank moved up by 2.42% at Rs1,210, Grasim scaled up 1.88% at Rs3,264, Ambuja Cement was up 1.80% at Rs144 and HDFC advanced by 1.61% at Rs2,209. Reliance Communication gained 1.56% at Rs551, Tata Motors advanced by 1.35% at Rs695 and TCS moved up by 1.34% at Rs1,030. However, HLL, Hindalco, Dr Reddy's Lab, Tata Steel, ITC, Reliance Energy, Bharti Airtel, Cipla and ICICI Bank closed with moderate losses.

Over 2.13 crore Vishal Exports shares changed hands on the BSE followed by IFCI (1.59 crore shares), Reliance Natural Resources (1.06 crore shares), IKF Technologies (1.01 crore shares) and Ispat Industries (87.34 lakh shares).

Value wise, Reliance Capital registered a turnover of Rs177 crore on the BSE followed by IFCI (Rs124 crore), Reliance Industries (Rs124 crore), MIC Electronics (Rs115 crore) and Welspun Gujarat (Rs107 crore).

Post Market Commentary

The markets closed on positive note as BSE Sensex closed higher by 109.08 points at 15,614.44 and the Nifty closed higher by 32.1 points at 4,528.95. The BSE mid cap and Small cap closed higher by 57.15 points and 65.91 points at 6,946.70 and 8,638.26 respectively. The market breadth was strong with 1,576 stocks advanced and 1115 stocks declined.

BSE bankex index surged by 102.17 points to close at 8,081.94 as Kotak bank (3.31%), SBI (3.18%), HDFCbank (2.87%), Union bank (2.08%), Axis bank (1.96%), PNB (1.82%) closed higher.

BSE oil & gas index grew by 57.62 points to close at 8,378.77 as GAIL (1.15%), ONGC (0.94%), Reliance industries (0.67%), BPCL (0.50%) and RPL (0.38%) closed higher.

BSE Auto Index grew by 63.56 points to close at 4,939.34 as Maruti Udyog (3.82%), TVS (3.23%), Hero Honda (1.67%), Tata Motors (1.35%), M&M (1.33%) and Bajaj auto (1%) closed in green.

BSE Capital goods index grew by 59.70 points to close at 13,723.88 as Suzlon energy (3.61%), Praj industries (3.06%), BEML (1.92%), Alfa laval (1.36%) and Alstom (1.26%) and L&T (0.14%) closed higher.

BSE IT index increased by 38.59 points to close at 4,482.57 as Mphasis (2.96%), Tech Mahindra (2.17%), TCS (1.34%), Satyam (1.25%), Wipro (1.07%) and Infosys (0.77%) closed in red.

BSE Health Care Index closed higher by 9.32 points at 3,693.88 as Lupin ltd (2.73%), Nicholas piramal (1.43%), Glennmark (0.55%), Sun pharma (0.24%) and Wokhardt (0.18%) closed in positive.

BSE Metal index increased marginally by 6.35 points to close at 11,924.63 as Jindal steel (7.55%), Welspun Gujarat (6.84%), sterlite industries (0.46%) closed in green while SAIL (0.95%), Hindalco (0.81%), Tata Steel (0.66%) and Nalco (0.50%) closed in red.

BSE FMCG index dropped by 11.14 points to close at 2,070.79 as United breweries (3.48%), Colgate Palmolive (1.26%), HUL (0.97%) and ITC (0.53%) closed in red.