RBI hikes CRR, Repo rate

In what may be described as an attempt to put a check on the spiraling inflation, which zoomed to a record 11.05%, the highest in 13 years last week, the Reserve Bank of India hiked the key rates on Tuesday evening. While the Repo Rate was raised by 50 basis points to 8.5%, the highest since 2000, the Cash Reserve Ratio too saw a 50 basis point increase to 8.75%. Repo Rate is the rate at which RBI lends money to other banks.

The apex bank has said that the CRR hike will be implemented in two stages-the first of 25 basis points will be effective from July 5 and the remaining half from July 19.

Announcement of hiking the rates comes close on the heels of RBI Governor Y V Reddy discussing with Prime Minister Manmohan Singh and Finance Minister P Chidambaram the prevailing inflation scenario.

The RBI’s attempt to suck liquidity from the market by increasing the cash reserve will have a direct impact on the interest rates on home and retail loans, which are expected to rise. While the apex bank described it as a painful measure “forcefully” taken due to rise in oil prices, it also expressed hope that the measure would rein the galloping inflation.

In a precursor to raising the CRR from 8.25 per cent to 8.75 per cent in two installments beginning July 5 and the Repo Rate from 8.0 per cent to 8.5 per cent with immediate effect, Reddy had said on Monday that the apex bank would do every thing to ease the inflationary pressures.

Expressing concern over rising inflation, RBI said, "Besides oil prices there are some underlying inflationary pressures impacting inflation in India."

BSE Bulk Deals To Watch - June 24 2008

Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
24/6/2008 532975 AISHWARYA TE ANGEL INFIN PRIVATE LIMITED B 226183 42.71
24/6/2008 532975 AISHWARYA TE ANGEL INFIN PRIVATE LIMITED S 216183 42.69
24/6/2008 532981 ANU LABS RUPESH DALAL B 69385 398.47
24/6/2008 532981 ANU LABS MANISH SARVAIYA B 83730 401.91
24/6/2008 532981 ANU LABS GOLDSTAR FINVEST PVT LTD S 65000 386.09
24/6/2008 532981 ANU LABS RUPESH DALAL S 69385 398.37
24/6/2008 532981 ANU LABS MANISH SARVAIYA S 83730 400.10
24/6/2008 590081 BRAHMANAND WILFUL FINANCE AND INVESTMENT B 200000 61.75
24/6/2008 590081 BRAHMANAND SCOPE VYAPAR PRIVATE LIMITED S 201035 61.75
24/6/2008 531932 C G IMPEX PRAFULLABEN AMRUTBHAI SONI B 75108 13.19
24/6/2008 531137 GEMSTONE INV ANKIT R. SANCHANIYA S 43100 22.75
24/6/2008 531137 GEMSTONE INV HEMANT M SHETH S 43000 22.50
24/6/2008 517354 HAVELLSINDIA CAPITAL GROUP AC SMALL CAP WORLD FND INC S 1000000 370.00
24/6/2008 500219 JAIN IRRI SY MORGAN STANLEY MAURITIUS COMPANY LTD B 1635000 468.50
24/6/2008 500219 JAIN IRRI SY MORGAN STANLEY AND COMPANY INTERNATIONAL PLC S 1635000 468.50
24/6/2008 531687 KARUTURI GLO CLSA MAURITIUS LIMITED B 2375000 21.20
24/6/2008 512559 KOHINORFOODS PR VYAPAAR PRIVATE LIMITED B 172626 98.30
24/6/2008 512559 KOHINORFOODS PRAGYA MERCANTILE PVT LTD S 172626 98.25
24/6/2008 532494 MICRO TECHN PR VYAPAAR PRIVATE LIMITED B 53000 224.69
24/6/2008 532494 MICRO TECHN PRAGYA MERCANTILE PVT LTD S 53000 224.66
24/6/2008 532986 NIRAJ CEMENT PRAKASH MOHANLAL JAIN B 608373 180.50
24/6/2008 532986 NIRAJ CEMENT AYODHYAPATI INVESTMENT PVT LTD B 361553 190.60
24/6/2008 532986 NIRAJ CEMENT PRABHUDAS LILLADHER PVT. LTD. B 197486 180.34
24/6/2008 532986 NIRAJ CEMENT N D NISSAR B 222196 178.90
24/6/2008 532986 NIRAJ CEMENT DHARMRAJBHAI BHABHLUBHAI WALA B 83349 178.97
24/6/2008 532986 NIRAJ CEMENT VEERAJ BHABHLUBHAI WALA B 65100 180.05
24/6/2008 532986 NIRAJ CEMENT BHAVARLAL BABULAL JAIN B 381176 188.95
24/6/2008 532986 NIRAJ CEMENT PRAKASH MOHANLAL JAIN S 608373 180.70
24/6/2008 532986 NIRAJ CEMENT AYODHYAPATI INVESTMENT PVT LTD S 361553 190.90
24/6/2008 532986 NIRAJ CEMENT PRABHUDAS LILLADHER PVT. LTD. S 197486 180.63
24/6/2008 532986 NIRAJ CEMENT N D NISSAR S 222196 179.08
24/6/2008 532986 NIRAJ CEMENT N.C.JAIN S 53092 179.02
24/6/2008 532986 NIRAJ CEMENT DHARMRAJBHAI BHABHLUBHAI WALA S 83349 189.93
24/6/2008 532986 NIRAJ CEMENT VEERAJ BHABHLUBHAI WALA S 80100 189.71
24/6/2008 532986 NIRAJ CEMENT BHAVARLAL BABULAL JAIN S 381176 185.61
24/6/2008 531746 PRAJAY ENG S SWISS FINANCE CORPORATION MAURITIUS LTD B 250000 109.37
24/6/2008 531746 PRAJAY ENG S GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD S 168565 109.06
24/6/2008 532988 RANE ENGVL EUREKA STOCK AND SHARE BROKING SERVICES LTD. B 63219 142.43
24/6/2008 532988 RANE ENGVL MANSUKH STOCK BROKERS LTD B 53516 136.25
24/6/2008 532988 RANE ENGVL B K SHAH CO B 79456 143.06
24/6/2008 532988 RANE ENGVL BHANDARI RAKHI KALPESH B 62648 140.66
24/6/2008 532988 RANE ENGVL EUREKA STOCK AND SHARE BROKING SERVICES LTD. S 63219 142.94
24/6/2008 532988 RANE ENGVL MANSUKH STOCK BROKERS LTD S 53516 137.10
24/6/2008 532988 RANE ENGVL B K SHAH CO S 79456 142.97
24/6/2008 532988 RANE ENGVL BHANDARI RAKHI KALPESH S 62648 143.62
24/6/2008 532884 REFEX REFRIG TUSHAR RAMESHBHAI PATEL B 445551 210.83
24/6/2008 532884 REFEX REFRIG HIMMAT PARSHOTTAMBHAI JATANIA S 445551 213.86
24/6/2008 523838 SIMPLX INFRA GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD B 300000 470.00
24/6/2008 523838 SIMPLX INFRA HSBC INVESTMENTS HK LTD AC HGIF INDIA EQUITY FUND B 700000 470.00
24/6/2008 523628 WEAROLOGY LT MAVI INVESTMENTS FUND LTD B 100000 96.99

NSE Bulk Deals to Watch - June 24 2008

Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
24-JUN-2008,KNL,Karuturi Networks Limited,CLSA (MAURITIUS) LIMITED,BUY,2625000,21.35,-
24-JUN-2008,MONNETISPA,Monnet Ispat Ltd,RELIANCE CAPITAL MUTUAL FUND A/C RELIANCE NATURAL RESOURCES,BUY,742000,540.00,-
24-JUN-2008,PANTALOONR,Pantaloon Retail (India),FIDELITY FUNDS - EMERGING MARKETS FUND,BUY,1055904,458.60,-
24-JUN-2008,PRAENG,Prajay Engineers Syndicat,SWISS FINANCE CORPORATION (MAURITIUS) LTD SUB A/C. OF UBS,BUY,250000,109.09,-
24-JUN-2008,RANEENGINE,Rane Engine Valve Limited,ASTUTE COMMODITIES & DERIVATIVES Pvt Ltd,BUY,35963,138.91,-
24-JUN-2008,RANEENGINE,Rane Engine Valve Limited,B K SHAH CO KETAN BHAILAL SHAH,BUY,88526,144.04,-
24-JUN-2008,RANEENGINE,Rane Engine Valve Limited,CHOKHANI SECURITIES LTD,BUY,37683,141.50,-
24-JUN-2008,RANEENGINE,Rane Engine Valve Limited,MANSUKH SECURITIES & FINANCE LTD,BUY,45123,140.59,-
24-JUN-2008,RANEENGINE,Rane Engine Valve Limited,PRASHANT JAYANTILAL PATEL,BUY,28557,142.63,-
24-JUN-2008,RANEENGINE,Rane Engine Valve Limited,TRANSGLOBAL SECURITIES LTD.,BUY,55251,141.02,-
24-JUN-2008,RBL,Rane Brake Lining Limited,TRANSGLOBAL SECURITIES LTD.,BUY,54642,71.11,-
24-JUN-2008,VALECHAENG,Valecha Engineering Limit,INDIA MAN FUND (MAURITIUS) LTD. DEUTSCHE BANK,BUY,65000,153.90,-
24-JUN-2008,MONNETISPA,Monnet Ispat Ltd,CITICORP INTL FINANCE CORPORATION,SELL,742664,540.00,-
24-JUN-2008,PANTALOONR,Pantaloon Retail (India),FIDELITY FUNDS - EMERGING MARKETS FUND,SELL,1055904,458.60,-
24-JUN-2008,PRAENG,Prajay Engineers Syndicat,GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD,SELL,273063,109.26,-
24-JUN-2008,RANEENGINE,Rane Engine Valve Limited,ASTUTE COMMODITIES & DERIVATIVES Pvt Ltd,SELL,35963,139.55,-
24-JUN-2008,RANEENGINE,Rane Engine Valve Limited,B K SHAH CO KETAN BHAILAL SHAH,SELL,88520,145.24,-
24-JUN-2008,RANEENGINE,Rane Engine Valve Limited,CHOKHANI SECURITIES LTD,SELL,37683,142.45,-
24-JUN-2008,RANEENGINE,Rane Engine Valve Limited,MANSUKH SECURITIES & FINANCE LTD,SELL,45123,139.87,-
24-JUN-2008,RANEENGINE,Rane Engine Valve Limited,PATHPIONEER MANG.SER.PVT.LTD,SELL,30405,146.12,-
24-JUN-2008,RANEENGINE,Rane Engine Valve Limited,PRASHANT JAYANTILAL PATEL,SELL,28557,143.75,-
24-JUN-2008,RANEENGINE,Rane Engine Valve Limited,TRANSGLOBAL SECURITIES LTD.,SELL,55251,140.98,-
24-JUN-2008,RBL,Rane Brake Lining Limited,TRANSGLOBAL SECURITIES LTD.,SELL,54642,71.04,-

Free fall continues

Nervousness gripped the market for the fifth consecutive session as selling pressure since early trades saw the index remain weak all through the trading session. Although the Sensex resumed 20 points above its previous close at 14,313 and moved up to touch an early high of 14,433, the market soon snapped gains owing to the emergence of selling pressure. As correction continued unabated, the index tumbled below the mark to touch the intra-day low of 13,991 by end of the trade. While the market languished in negative territory through the noon trades, the Sensex signed off the session with losses of 187 points at 14,107. The Nifty also ended in the red at 4,191, down 75 points.

The market breadth was weak. Of the 2,707 stocks traded on the BSE, 1,922 stocks declined, 722 stocks advanced and 63 stocks ended unchanged. All the sectoral indices ended at lower levels. The BSE Metal index fell 3.52%, the BSE PSU index dipped 2.80%, the BSE FMCG index shed 2.54% and the BSE IT index was down 2.17%.

Among the draggers, Hindustan Unilever dropped 5.32% at Rs208, Tata Steel shed 4.60% at Rs690, NTPC tumbled 3.92% at Rs153.50, ONGC declined 3.61% at Rs840 and Larsen & Toubro was down 3.58% at Rs2,290.10. Ambuja Cement at Rs80.15, HDFC Bank at Rs1,046, Grasim Industries at Rs2,060, Infosys at Rs1,765.10 were down around 3% each.

Select index heavyweights managed to register decent gains. HDFC rose 2.32% at Rs2,266.20, Ranbaxy Laboratories gained 2.31% at Rs525.30, Reliance Industries scaled up 2.18% at Rs2,066.20, BHEL added 2.17% at Rs1,391, Jaiprakash Associates jumped by 1.24% at Rs155.25 and SBI advanced 0.57% at Rs1,211.95.

Metal stocks came under sharp hammering. Nalco slumped 8.56% at Rs370.60, Welspun Gujarat lost 8.06% at Rs308.10, Ispat Industries declined 5.80% at Rs24.35 and Sterlite Industries was down 5.24% at Rs699.15. Shree Precoated, Tata Steel, Jindal Steel, Gujarat NRE, Hindalco and Sesa Goa Exports dipped 2-4% each.

Over 1.39 crore Reliance Natural Resources shares changed hands on the BSE followed by IFCI (1.32 crore shares), Reliance Petroleum (1.03 crore shares), Chambal Fertilisers (0.99 crore shares) and Ispat Industries (0.84 crore shares).

Post Session Commentary - June 24 2008

Indian market fell sharply to close in red as intense selling pressure was seen across board. Though the market showed some buying interest from the investors at the initial session but later tumbled to give up all its gains as the global cues are supportive. Also the rising inflation concerns supported by the crude oil and the the possibility of it resulting in some monetary tightening measures from the Reserve Bank of India, all contributed to the negative sentiments in the market The market lost the momentum after the mid session to close on the back foot due to lack of support from the investors. All indices closed in red and metal stock was major victim, which ended with a cut of more than 3.5 %. The market breadth was negative as 1,925 stocks closed in red and 718 stocks closed in green while 64 stocks remained unchanged.

The BSE Sensex closed lower by 186.74 points at 14,106.58 and NSE Nifty ended down by 75.3 points at 4,191.10. The BSE Mid Caps and Small Cap closed negative with fall of 102.49 points and 129.88 points 5,712.74 and 7,006.42 respectively. The BSE Mid Cap and BSE Small Cap ended with a cut of more than 1.5% each. The BSE Sensex touched intraday high 14,432.90 and intraday low of 13,991.31.

Losers from the BSE are HUL (5.32%), Tata Steel (4.60%), NTPC Ltd (3.92%), ONGC (3.61%), L&T Ltd (3.58%), Ambuja Cement (3.52%), HDFC Bank Ltd (3.31%), Infosys Tech (2.95%) and Grasim industries (2.79%).

The Metal index closed lower by 487.51 points at 13,368.82. Lossers are NALCO (8.56%), Welspan Guj Sr (8.06%), Ispat industries (5.80%), Sterlite In (5.24%), Sh Precoated (5.19%), Tata Steel (4.60%), and Jindal Steel (3.26%).

The Capital Goods index dropped by 157.41 points to close at 10,639.60. Major losers are Seimens Ltd. (5.58%), Bharat Elect (4.70%), Areva (4.54%), L&T Ltd (3.58%), Aiaengineer (3.49%) and Havells India. (2.93%).

The Banking index closed down by 130.92 points at 6,499.66. Lossers are Allahabad Bank (5.20%), Kotak Bank (4.39%), Federal Bank (3.31%), HDFC Bank Ltd (3.31%), Andhra Bank (2.98%), Axis Bank (2.88%) and OBC (2.29%).

The IT index went down by 91.91 points to close at 4,141.51 as Infosys Tech (2.95%), Tech Mahindra (2.21%), Moser Bayer (2.20%), Mphasis Ltd (2.14%) and Wipro Ltd (1.95%) closed in negative territory.

The Reality Index closed lower by 89.48 points at 5,098.44. Lossers are Pheonix Mill (7.79%) along with Ansal Infra (5.41%), Mahindra Life (4.45%), Housing Development (4.22%), Omaxe Ltd (2.95%) and Purvankara (2.84%).

The Auto index closed down by 80.64 points at 3,842.77. As Exide Industries (4.81%), Hero Honda Motors (4.34%), Cummins India (2.56%), Bosch Ltde (2.50%), TVS Motors Ltd (2.50%) and Appollo Tyre (2.14%) closed in negative territory.

Downward Ride Continues In Asian Markets

Hang Seng, Nikkei Follows Market Trend While Shanghai Stand Aside With Gains

Asian markets were broadly lower, with indexes in Hong Kong and Australia declining for a fourth straight session on weakness in banking stocks. Trading volumes were thin in most markets as investors stayed on the sidelines ahead of the U.S. Federal Reserve's decision on interest rates scheduled to release tomorrow.

In Hong Kong, the Hang Seng Index fell 1.1% to 22,456.02 and the Hang Seng China Enterprises Index gave up 1.8% to 12,018.51. In Sydney, the S&P/ASX 200 index recorded a marginal gain of 0.1% gaining to 5,290 as lot of poor performing stock are being closed out as the financial year in Australia come to an end on 30 June 2008.

Chinese shares in Shanghai wavered between positive and negative zones, as bargain-buying in airline and insurance stocks after a string of recent losses was countered by losses in Baoshan Iron & Steel Co., after the steel maker agreed to an 85% price increase on iron ore supplies from Rio Tinto. At the end of day the Shanghai Composite gained 1.5% to 2,803.02, bouncing off from the day's low at 2,728.83. The Shenzhen Composite rose up by 2.8% reaching 801.50 levels.

In Tokyo, shares continued slipping on high crude-oil prices and weakened yen. At the closing bell the Nikkei 225 Average was marginally down by 0.1% closing at 13,849.56, while the broader Topix index gained 0.1% to 1,349.19.

Elsewhere, South Korea's Kospi shed 0.3% to 1,710.84, New Zealand's NZX 50 index rose 0.3% to 3,298.02, Singapore's Straits Times Index lost 0.4% to 2,968.46 and Taiwan's weighted index dropped 1.8% to 7,738.12.

Malaysia's KLSE Composite gained by 0.4% to 1,200.28 while the Thailand's SET was marginally down by 0.5% at 546.33.

In the afternoon trading India's Sensitive Index, or Sensex, was down by 1.2% to 14,125.49 and the broader S&P/CNX Nifty fell by 1.5% to 4,200.55.

In Asian currency trading, the U.S. dollar bought 108.07 yen, compared with 107.85 yen late Monday in New York.

Shares of energy producers advanced, as August-crude oil futures rose as much as six cents to $136.80 a barrel in electronic trading, after adding $1.38 to $136.74 a barrel on the New York Mercantile Exchange.

On Wall Street, the Nasdaq Composite fell 20.35 points to 2,385.74 and the Dow Jones Industrial Average slipped 0.33 points to 11,842.36, while the S&P 500 index rose 0.07 points to 1,318.

European shares dragged lower from early highs, pulled down by a second day of notable losses for the auto sector accompanied by negative economic news. In the opening trade the national indexes were trading weaker, with the U.K. FTSE 100 index was marginally up 0.1% at 5,672.80 while the German DAX 30 index down 0.4% at 6,564.40 and the French CAC-40 index down 0.4% at 4,493.98.

On the economic front the day began with a series of negative economic news. The GfK market research institute said its consumer climate index for Germany is forecast to be at 3.9 points in July compared with 4.7 points in June. The GfK also revised down the June figure from the 4.9 points it had forecast last month. GfK said the German consumer climate deteriorated in June, due to continuously rising energy prices and an impending further massive increase in gas prices.

GfK cut its full-year 2008 forecast for German consumer spending growth for the second time this year, to 0.5 % from 1.0 %. In March, it cut its forecast to 1.0 % from 1.5 %.

At 9.22 GMT U.K. FTSE 100 index was back in red falling by 0.8% to 5,620. The German DAX 30 index plunge further by 0.9% at 6,530.77 while the French CAC-40 index down 1.3% at 4,451.92.

Looking ahead the day is scheduled to release some of the key indicators for US. It will start with S&P Shiller home price index that will be followed by consumer confidence data for June. However the focus of the eve will be on Housing price index and Richmond Fed manufacturing index. In the late evening we have Merchandise trade balance data for Japan.

Bears rule the roost

Bears are in total command of the proceedings on the stock exchanges. Bulls are in hibernation. Equities extended losses for the fifth straight day today with the barometer index BSE Sensex falling below the psychologically important 14,000 mark for the first time in 10 months since late August 2007. However, it settled above that level. Heavy selling pressure in index pivotals during the second half of the trading sessions spooked the market. Metal, IT and FMCG shares were the worst hit in today’s trade.

Choppy swings were witnessed in late trade with the Sensex even bouncing in the green for a while led by solid rally in index heavyweight Reliance Industries (RIL). However, as RIL quickly pared gains, the Sensex plunged in late trade. The market breadth was weak. All sectoral indices in BSE suffered losses. Asian and European markets were trading lower.

Fears of further increase in interest rates to tame inflation continued to weigh on the market sentiment. Reserve Bank of India (RBI) governor signaled on Monday, 23 June 2008, that the central bank will tighten monetary policy further to tackle inflation that surged past 11% in early June 2008 to a 13-year high.

As per provisional data, foreign funds today, 24 June 2008, bought shares worth a net Rs 90.06 crore. Domestic funds bought shares worth a net Rs 475.94 crore.

The 30-share BSE Sensex was down 186.74 points or 1.31% at 14,106.58. Sensex lost 302.01 points at day’s low of 13,991.31 hit at the fag end of the trading session. It was the Sensex's lowest level in 10 months since 22 August 2007.

At the day’s high of 14,432.90, the Sensex gained 139.58 points in early trade.

The broader based S&P CNX Nifty slumped 75.30 points or 1.76% at 4,191.10. Nifty hit a low of 4,156.10, its lowest level in 10 months since 24 August 2007.

Nifty June 2008 futures were at 4159.70, a sharp discount of 31.40 points as compared to spot closing.

Bears have been calling the shots on the bourses for a while now. The Sensex has lost 1590.32 points or 10.13% in five trading sessions, from its close of 15,696.90 on 17 June 2008, due to political uncertainty, and on fears of further rise in interest rates by the Reserve Bank of India to combat inflation

The barometer index has shaved 6180.41 points or 30.46% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2008. It is down 7100.19 points or 33.48% from its all-time high of 21,206.77 struck on 10 January 2008.

In a crucial global event, the US Federal Reserve is expected to hold key rate for short-term lending at its current 2%, at its two-day policy meeting that begins today, 24 June 2008. Investors will scrutinise the statement accompanying the decision for clues on the future course of monetary policy.

Meanwhile, a crucial UPA-Left meeting on the controversial civilian nuclear deal with the United States is scheduled tomorrow, 25 June 2008. The left allies, whose parliamentary support is crucial to the Congress-led United Progress Alliance (UPA) government at the Centre, have said they would withdrew support if the government went ahead with the deal.

All the sectoral indices on BSE were in the red today. The BSE Metal index (down 3.52% to 13,368.82), BSE Power (down 1.64% to 2,398.09), BSE Realty index (down 1.72% at 5,098.44), BSE FMCG index (down 2.54% to 2,146.63), BSE Auto (down 2.06% at 3,842.77), BSE TecK index (down 2.08% to 3,161.59), BSE Consumer Durables index (down 1.46% to 3,719.09), BSE IT index (down 2.17% to 4,141.51), BSE Bankex (down 1.97% at 6,499.66), BSE Capital Goods index (down 1.46% at 10,639.60), BSE PSU index (down 2.80% to 6,040.08), underperformed the Sensex.

The BSE Oil & Gas index (down 0.28% to 9,146.43), and BSE Health Care index (down 1.29% at 4,165.61), outperformed the Sensex.

The market breadth was weak. On BSE, 1930 shares declined as compared to 713 that advanced. 67 remained unchanged.

The BSE Mid-Cap index slipped 1.76% to 5,712.74 and the BSE Small-Cap index fell 1.82% to 7,006.42. Both these indices underperformed the Sensex.

The total turnover on BSE amounted to Rs 5355 crore as against Rs 5,035.83 crore yesterday, 23 June 2008. Turnover on NSE’s futures & options segment amounted to Rs 70250.13 crore as compared to Rs 66917.33 crore yesterday, 23 June 2008.

Reports that Indian coroprates have paid higher advance tax in the first installment of June 2008 over the corresponding period of the previous year has failed to lift the sentiments on the bourses. As per reports, corporate advance tax payment rose 27% to Rs 21,000 crore in the first installment of 15 June 2008. Advance taxes are paid in four installments, in June, September, December and March. Usually, the first installment is 15% of the total tax estimated to be paid for the whole fiscal.

Among the 30-member Sensex pack, 24 declined while the rest gained in today's trade. India's largest private sector engineering company in terms of order book Larsen & Tourbo declined 4.23% to Rs 2294.95

Metal shares declined sharply. India’s largest private sector steel maker Tata Steel plunged 7.08% to Rs 692.80 on 12.52 lakh shares. It was the top loser from Sensex pack.

Sterlite Industries (down 5.39% to Rs 698.10), Hindalco Industries (down 3.65% to Rs 143), National Aluminium Company (down 11.20% to Rs 359.95), Jindal Steel & Power (down 4.95% to Rs 1810.05), and Sesa Goa (down 4.3% to Rs 3230) were the other major losers from the metal sector.

Hindustan Unilever (down 6.38% to Rs 212.10), Dabur India (down 4.40% to Rs 88.10), ITC (down 2.74% to Rs 190.05), Marico (down 5.58% to Rs 58.40), and Nestle India (down 0.70% to Rs 1648), edged lower from the FMCG sector.

Among the real estate stocks, Ansal Infrastructure (down 5.41% to Rs 83), DLF (down 1.43% to Rs 439.85), Unitech (down 0.47% to Rs 170.65), Sobha Developers (down 1.66% to Rs 323.85), and Parsvnath Developers (down 1.84% to Rs 141.15), declined.

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries (RIL) saw high volatility in the day. The stock settled 0.80% higher to Rs 2038.30 on 16.45 lakh shares. The stock swung wildly in a range of Rs 2012 and Rs 2133.70 during the day. As per recent reports, RIL plans to open its first North American plant in North Carolina by investing $215 million.

India’s largest power generation company in terms of sales, NTPC lost 4.84% to Rs 154.20. As per reports, NTPC had paid 6.9% lower advance tax at Rs 188 crore in the first installment of this financial year over the corresponding period in the previous year.

India’s largest state-run oil exploration company Oil & Natural Gas Corporation (ONGC) fell 4.75% to Rs 845.15. ONGC has decided to exit projects to set up a refinery and a special economic zone Andhra Pradesh, the company said on Monday, 23 June 2008. ONGC will unveil its Q4 and year ended March 2008 results on Wednesday, 25 June 2008.

Banking stocks slipped on selling pressure. ICICI Bank (down 2.95% to Rs 700.10), HDFC Bank (down 4.62% to Rs 1046) and State Bank of India (down 0.17% to Rs 1203), edged higher.

Software stocks slipped in the red after firm start. Satyam Computer Services (down 2.09% to Rs 450.50, off day’s high of Rs 465.75), Infosys Technologies (down 4.08% to Rs 1772.05, off day’s high of Rs 1859.90), and TCS (down 1.26% to Rs 847, off day’s high of Rs 864.80) declined.

Wipro, the country’s third largest software services exporter was down 2% to Rs 470. Wipro has reportedly raised close to Rs 1,400 crore (35 billion Yen) through external commercial borrowings (ECBs). The company has been pursuing an aggressive acquisition strategy over the last few years and it concluded two major acquisitions in the year ended March 2008 including Unza and Infocrossing for a cumulative value of close to $900 million. As of 31 March 2008, Wipro had cash and bank balance Rs 3,927 crore.

Reliance Communications (RCom), the country’s second largest telecom services provider in terms of market capitalisation slumped 2.85% to Rs 474. RCom’s proposed merger deal with South Africa based global operator, MTN is reportedly expected to close by first week of July 2008 with RCom likely to acquire 40% stake in the merged entity.

India’s leading pharma company in terms of sales, Ranbaxy Laboratories gained 2.44% to Rs 526 on 14.58 lakh shares. It was the top gainer from Sensex pack.

Bharat Heavy Electricals (Bhel), the country’s largest state-run engineering company in terms of order book, gained 2.10% to Rs 1390. As per reports, Bhel has paid 42.8% higher advance tax at Rs 300 crore in the first installment of this financial year over the corresponding period in the previous year.

India’s dedicated housing finance company Housing Development Finance Corporation advanced 2.05% to Rs 2260. The stock moved in a range of Rs 2182 and Rs 2300 in the day.

Reliance Capital was the top traded counter on BSE with turnover of Rs 454.33 crore followed by Reliance Industries (Rs 341.56 crore), Tata Steel (Rs 239.07 crore), Reliance Communication (Rs 184.91 crore), and Anu’s Labs (Rs 177.87 crore), in that order.

Reliance Natural Resources topped the volumes charts on BSE clocking volumes of 1.39 crore shares followed by IFC (1.32 crore shares), Reliance Petroleum (1.03 crore shares), Chambal Fertislisers & Chemicals (99.16 lakh shares) and Ispat Industries (84.14 lakh shares), in that order.

Among side counters, Simplex Projects (down 13.88% to Rs 184.30), ANG Auto (down 13.81% to Rs 68), Niraj cement & Structurals (down 12.03% to Rs 165.20), Spice Communications (down 11.48% to Rs 53.20), Educomp Solutions (down 11.20% tp Rs 2938), slumped

Indian Hotels Company declined 4.36% to Rs 88.90 on reporting 0.3% rise in net profit to Rs 134.88 crore on 10.4% rise in sales to Rs 557.63 crore in Q4 March 2008 over Q4 March 2007. The company announced result after trading hours on Monday, 23 June 2008.

Jetking Infotrain soared 12.73% to Rs 310 after the company said its board will meet on 30 June 2008 to consider issue of bonus shares. The company made this announcement during trading hours today, 24 June 2007.

Orchid Chemicals & Pharmaceuticals fell 4.81% to Rs 225.50 after the company said it had secured Canadian regulatory approval to sell a combination antibiotic injection in that country. The company made this announcement during trading hours today, 24 June 2007.

Tech Mahindra slipped 2.21% to Rs 745 despite signing a contract with Telecom New Zealand for program management and systems integration for the latter's retail business.

Tata Power Company declined 6.93% to Rs 1110 despite reporting 24.8% rise in net profit to Rs 869.90 crore in the year ended March 2008 over the year ended March 2007 The company announced the results after trading hours on Monday, 23 June 2007.

GAIL India tumbled 5.42% to Rs 357.90, off sharply from day’s high of Rs 394, after its board recommended issue of bonus shares in the ratio of one equity share for every two shares held. The company made this announcement before trading hours today, 24 June 2007.

European markets, which opened after Indian market, slipped into the red after firm opening. Key benchmark indices in United Kingdom, France and Germany were down by between 1.18% and 1.48%.

Crude oil prices continue to hold firm. Crude for August delivery was up 20 cents at $136.94 a barrel today, 24 June 2008 amid fears of Nigerian supply disruptions and tensions between Israel and Iran. It had hit a record high of $139.89 on 16 June 2008. Oil price has risen about 40% in this calendar year so far.

Asian markets, which opened before Indian market, were trading lower except China's Shanghai Composite which rose 1.50% at 2,801.72. Japan's Nikkei (down 0.06% at 13,849.56), Hong Kong's Hang Seng (down 1.14% at 22,456.02), Taiwan's Taiwan Weighted (down 1.76% at 7,738.12), Singapore's Straits Times (down 0.57% at 2,962.20) and South Korea's Seoul Composite (down 0.28% at 1,710.84) slipped.

US markets lost some ground yesterday, 23 June 2008, sending financial shares to their lowest level in five years, on a deteriorating outlook for bank earnings. The Dow Jones industrial average dropped 0.33 points, or less than 0.01%, to 11,842.36. The Standard & Poor's 500 index gained 0.07 points, or 0.01%, to 1,318.00, and the Nasdaq composite index lost 20.35 points, or 0.85%, to 2,385.74.

Back home, volatility is expected to remain high on the Indian bourses in the near term as derivatives contracts for June series are set to expire on Thursday, 26 June 2008. As per reports, the marketwide rollover of positions from June 2008 series to July 2008 series stood at 26.50% while that of Nifty was 31%, as on Friday, 20 June 2008.

Market seen opening lower

Local market is expected to open lower tracking lower Asian markets. Crude oil's relentless rise will continue to weigh on sentiment.

Volatility is expected to remain high in the near term as derivatives contracts for June series are set to expire on Thursday, 26 June 2008. As per reports, the marketwide rollover of positions from June 2008 series to July 2008 series stood at 26.50% while that of Nifty was 31%, as on Friday, 20 June 2008.

Meanwhile, as per reports, advance tax collections increased 27% to Rs 20,700 crore over the same period last year, as of 20 June 2008. Advance taxes are paid in four instalments, in June, September, December and March. Usually, the first instalment is 15% of the total tax estimated to be paid for the whole fiscal.

Asian markets were trading lower today, 24 June 2008. China's Shanghai Composite was down 0.03% at 2,760.71, Japan's Nikkei fell 0.05% or 6.43 points at 13,851.04, Hong Kong's Hang Seng lost 0.20% or 45.95 points at 22,669.01, Taiwan's Taiwan Weighted declined 0.87% or 68.67 points at 7,807.82, Singapore's Straits Times dropped 0.11% or 3.37 points at 2,975.78 and South Korea's Seoul Composite slipped 0.53% or 9.06 points at 1,706.53

US markets lost some ground yesterday, 23 June 2008, sending financial shares to their lowest level in five years, on a deteriorating outlook for bank earnings. The Dow Jones industrial average dropped 0.33 points, or less than 0.01%, to 11,842.36. The Standard & Poor's 500 index gained 0.07 points, or 0.01%, to 1,318.00, and the Nasdaq composite index lost 20.35 points, or 0.85%, to 2,385.74.

Back home, Indian stocks suffered losses for the fourth straight session yesterday, 23 June 20008, to settle at 10-month low on sustained selling pressure throughout the day due to concerns of further policy tightening by the Reserve Bank of India with inflation reaching 13-year high and political uncertainty.

The 30-share BSE Sensex lost 277.97 points or 1.91% at 14,293.32 and the broader based S&P CNX Nifty was down 81.15 points or 1.87% to 4266.40, on that day.

The barometer index has now shaved 5,993.67 points or 29.54% in the calendar year 2008 so far from its close of 20286.99 on 31 December 2008. It is down 6,913.45 points or 32.60% from its all time high of 21206.77 struck on 10 January 2008.

As per provisional data, foreign funds sold shares worth a net Rs 665.56 crore and domestic mutual funds bought shares worth a net Rs 91.75 crore yesterday, 23 June 2008.

Foreign institutional investors (FIIs) were net sellers of Rs 166.24 crore in the futures & options segment yesterday, 21 June 2008. They were net buyers of index futures to the tune of Rs 876.86 crore and sold index options worth Rs 864.33 crore. They were net sellers of stock futures to the tune of Rs 165.96 crore and sold stock options worth Rs 12.81 crore.

Crude for August delivery was up 20 cents at $136.94 a barrel today, 24 June 2008 amid fears of Nigerian supply disruptions and tensions between Israel and Iran. It had hit a record high of $139.89 on 16 June 2008.

Morning Notes - June 24 2008

Morning Notes - June 24 2008

Pre Session Commentary - June 24 2008

The Indian Market is expected to have negative opening on the back of weak global cues as Asian markets are trading lower and US market ended mixed. On Monday, the Indian market closed in red backed by selling across the ground. It opened on downbeat note and covered with black clouds throughout the trading session due to weak global markets along with high oil prices, rising inflation concern and the possibility of it resulting in some monetary tightening measures from the Reserve Bank of India, all contributed to the negative sentiments in the market. Nuke Deal was also the concern for the market. From the sectoral front, metal, capital goods, oil & gas, bank and reality stocks were the major victims of the negative sentiment, while IT stocks were on limelight as maintained to close on positive zone. The BSE Sensex closed lower by 277.97 points at 14,293.82 and NSE Nifty ended down by 81.15 points at 4,266.40. The BSE Mid Cap and BSE Small Cap ended with a deep cut of more than 3% each. We expect bearish market during the trading session.

US markets closed mixed on Monday. Stocks in New York opened on the upbeat note, but the early advance was short-lived, as investors ran away from the financials and Oil prices rose above $136 a barrel on Monday after major energy producers ruled out further output. Bank of America reduced the income estimates for brokerages and Goldman Sachs advised selling bank shares as credit losses stay behind into 2009. American International Group, the largest insurer, dropped to its lowest since 1997, also added to the negative attitude.

The S&P 500 closed marginally higher by 0.07 points at 1,318.00, while NASDAQ ended down by 20.35 points to close at 2,385.74 and Dow Jones Industrial Average (DJIA) dropped by 0.33 points to close at 11,842.36.

Indian ADRs ended mixed. In technology sector, Patni Computers ended up by (1.99%) along with Satyam by (1.79%), Infosys by (1.56%) and Wipro by (0.16%). In banking sector, HDFC bank and ICICI bank decreased by (1.64%) and (1.25%) respectively. In telecommunication sector, Tata Communication and MTNL reduced by (3.64%) and (3.01%). Sterlite industries declined (3.72%).

Today the major stock markets in Asia are trading in negative. Taiwan Weighted is trading lower by 68.67 points at 7,807.82 along with Hang Seng index trading down by 45.95 points at 22,669.01 and Japan’s Nikkei trading at 13,851.04 advanced by 6.43 points.

The FIIs on Monday stood as net seller in equity and debt. The gross equity purchased was Rs2,501.50 Crore and the gross debt purchased was Rs0.00 Crore while the gross equity sold stood at Rs3,454.00 Crore and gross debt sold stood at Rs56.00 Crore. Therefore, the net investment of equity reported was (Rs952.50) Crore and net debt was Rs56.00 Crore.

Today, Nifty has support at 4,170 and resistance at 4,332 and BSE Sensex has support at 13,920 and resistance at 14,492.

Trading Calls - June 24 2008

Nifty (4266) Sup 4210 Res 4350

Buy Sasken Comm (142)
SL 139 Target 150, 152

Buy HDFC (2213)
SL 2195 Target 2255, 2265

Buy NDTV (419)
SL 414 Target 429, 434

Sell Maruti (688)
SL 694 Target 678, 674

Sell IVRCL Infra (328)
SL 333 Target 318, 315

Morning Call - June 24 2008

Market Grape Wine :

In House :

Nifty at a support of 4212 and 4156 with resistance at 4325 and 4390 levels.

Cash : Buy ZEE above 223.75 TGT 232 with S/L 219.

Cash : Buy BPCL above 268.50 TGT 277 with S/L 263.

Future : Buy WIPRO above 476 TGT 488 with S/L 470.

Future : buy LIC HOUSING above 272 TGT 285 with S/L 265

Out House:

Markets at a support of 14114 & 14214 resistance at 14474 & 14591 levels .

Buy : LT & Gail at dips

Buy : Sunpharma & Glenamark at dips

Buy : Infy & satyam

Buy : ONGC

Buy : ITC

Dark Horse : Wipro , HLL , LT , INFY & ITC

Forget cherries, pick some bigger fruits

He that climbs the tall tree has won right to the fruit.

Any fall in the market often prompts one to do cherry picking. But given the continuous fall for almost half a year, investors have the luxury of choosing and picking low hanging fruits without worrying about climbing high. Delicious valuations did we hear! Use lower levels to add the large caps only even though the mid-cap and smaller stocks may have fallen more.

After a partial rebound from lower levels yesterday, we expect some bounce today. Barring European markets, which tumbled on bad set of economic data, most global markets ended flat to slightly negative. We see a cautious to perhaps a slightly higher opening in our market. Though a short-squeeze we predicted yesterday didn't fully materialise, the F&O segment did see some short covering. The Nifty June futures closed with a slight premium as against a discount of a few points. The open interest too declined substantially.

These factors point to short covering by the bears. More can be expected over the next couple days ahead of Thursday's settlement day. We will also have the outcome of the Fed meeting, where the US central bank is likely to keep rates steady while stressing on containing inflation.

On the political front, there hasn't been any significant new development, though some reports suggest that the UPA and Left may agree to some comprise formula to avoid early polls. A truce between the Congress and the red brigade could come as a welcome breather.

On the whole, the bulls may well have a good day in office after a four-day drubbing during which the Sensex has lost some 1,400 points. Much will hinge on global markets and F&O trends.

FIIs were net sellers of Rs6.66bn (provisional) in the cash segment on Monday while the local institutions poured in Rs917.5mn. In the F&O segment, foreign funds were net sellers of Rs1.66bn.

On Friday, FIIs were net sellers of Rs9.53bn in the cash segment. With this, they have pulled out almost $5.9bn from the Indian market this year.

Results Today: Amara Raja, Apollo Hospitals, Classic Diamond, Cyber Media, IndusInd Bank, Jet Airways, Patel Engineering, PSL, Ramsarup Industries, Sadbhav Engineering, Tata Chemicals and TV Today.

Shares of Rane Engine Valve Ltd. will get re-listed today.

US stock indices closed mixed on Monday. The Nasdaq slid while the broader market was mixed as investors grappled with the ongoing troubles for the financial and automaker sectors and high oil prices.

After the close, express delivery firm UPA cut its second-quarter earnings forecast, due to slower economic growth and higher fuel costs. Shares slumped more than 4% in after-hours trading.

The Dow Jones Industrial Average finished flat at 11,842.36, with 17 of its 30 components trading lower. The S&P 500 closed at 1,318, with the financial sector suffering the most, off nearly 3%, followed by consumer discretionary, down 2%.

The technology-laden Nasdaq Composite fell 20.35 points to 2,385.74.

A stronger dollar and two major deals helped stocks rise in the early going. But the undertone soon turned negative as concerns about bank and automakers resurfaced, giving investors a reason to stay cautious.

Market breadth was negative. On the New York Stock Exchange, losers beat winners two to one on volume of 1.08bn shares. On the Nasdaq, losers beat winners by over two to one on volume of 1.93bn shares.

The financial sector was hurt by reports of job cuts at investment banking divisions of Citigroup and Goldman Sachs, besides fresh downgrades of the financial and consumer discretionary sectors.

Banc of America Securities lowered second-quarter estimates for both Merrill Lynch and UBS, saying that mortgage-related exposures are likely to weigh on the bottomlines of both investment firms.

Oil prices were volatile as investors weighed a possible disruption in Nigerian supply with news that Saudi Arabia will boost daily output to 9.7 million barrels from the current 9 million barrels. August crude closed at $136.74 a barrel in New York, up $1.38, or 1%, for the session.

The national average price for a gallon of regular unleaded gas fell to $4.072 from $4.073 the previous day, according to AAA.

Meanwhile, on Capitol Hill, four energy analysts told Congress the price of gasoline could fall to about $2 a gallon within 30 days of passage of a law to limit speculation in energy-futures markets.

The Federal Open Markets Committee (FOMC) will gather today for a two-day meeting. Federal Reserve Chairman Ben Bernanke and is colleagues are widely expected to hold rates at 2%, amid mounting inflation pressures.

Tuesday also brings the June reading on consumer confidence from the Conference Board. The index is expected to have dipped to 56.0 from 57.2 in May.

Citi is about halfway through previously announced job cuts in its investment banking unit, according to reports, with the bulk of those cuts expected this week. The No.1 US bank had said earlier this year that it will cut 10% of the 65,000 employees in its investment banking unit. That news pressured other financial stocks.

The auto sector too remained under pressure. GM shares lost 6.4%, after nearing a 33-year low, on nagging worries about the industry's financial health. Separately, GM said it will offer 0% financing for 72 months on certain cars and trucks, as a means of unloading select 2008 vehicles. The company also announced prices increases on some 2009 models.

In related development S&P said it will probably cut GM, Ford and Chrysler's debt ratings and the debt ratings of the companies' finance units. Also, Moody's said Ford and Chrysler are in danger of being downgraded - a warning it already gave about GM earlier this year.

Republic Services, a disposal company, said it will buy rival Allied Waste Industries in a $6.1bn stock deal. Farm-products company Bunge is buying Corn Products for $4.8bn in stock and the assumption of debt.

In currency trading, the dollar gained versus the euro and the yen. In the bond market, Treasury prices rose modestly, lowering the yield on the benchmark 10-year note to 4.16% from 4.17% late on Friday. COMEX gold for August delivery fell $16.50 to settle at $887.20 an ounce.

European shares finished lower, as the outlook for a sluggish eurozone economy dragged on shares of construction firms and banks. The pan-European Dow Jones Stoxx 600 index fell 1.7% to 295.08, breaking below the 300 level for the second time in two days. UK's FTSE 100 closed down 1.5% at 5,620.80, while Germany's DAX 30 fell 2.1% to 6,578.44 and the French CAC-40 dropped 1.8% to 4,509.27.

In the emerging markets, the Bovespa in Brazil was nearly flat at 64,640 while the IPC index in Mexico fell 0.2% to 29,464. The RTS index in Russia slumped 1.8% to 2342 and the ISE National-30 index in Turkey dropped 0.6% to 45,739.

Looking for bounce

Markets continued their southward journey starting off the weak with a negative bias. Selling pressure, fueled by global weakness saw the Indian bourses take a nosedive in the morning trades, dragging the Nifty below the 4,300 level. However, in the mid-afternoon trades bulls managed to partially erase early losses, with the benchmark index recovering over 300 points and the Nifty managing to recoup over 90 points. But, the momentum was short lived as bears were back with a sudden bout of selling in the index heavyweights like Reliance Industries, Infosys and Tata Steel.

Among the 50-Nifty, 38 stocks ended in negative terrain and only 11 stocks ended in green. Finally, the BSE benchmark Sensex lost 277 points to close at 14,293 and the Nifty index lost 81 points to close at 4,225.

Reliance Industries, the index heavyweight fell to its lowest since September 12. The stock dropped below the Rs2,000 mark in the morning trades, losing over 3.5% to close at Rs2022. There were reports stating that, the company’s USA arm would invest US$215mn and create 200 new jobs at a newly acquired polyester plant in the US.

The scrip touched an intra-day high of Rs2083 and a low of Rs1984 and recorded volumes of over 16,00,000 shares on BSE.

Maharashtra Seamless was down by a 2% to Rs294. The company announced that they secured order worth RsUS$45mn. The scrip touched an intra-day high of Rs297 and a low of Rs282 and recorded volumes of over 6,000 shares on BSE.

DLF slipped 2.5 percent to close at Rs446. According to reports, the company will be getting around 5,000 acres near Greater Noida at less than market rate under the Taj Expressway Industrial Development Authority’s (TEA) scheme.

TEA will transfer the land to realty developers at acquisition cost from the farmers, which is likely to be much cheaper than the market rate developers have been paying privately. The scrip touched an intra-day high of Rs463 and a low of Rs438 and recorded volumes of over 11,00,000 shares on BSE.

Sterlite Technologies dropped by 5% to Rs198. The company announced two major contract wins with Indian telecoms giant BSNL. The contracts, which are for fiber optic cable and copper telecoms cable, respectively, are worth a total of Rs1.07bn to Sterlite Technologies. The scrip touched an intra-day high of Rs210 and a low of Rs197 and recorded volumes of over 64,000 shares on BSE.

Sayaji Hotels plunged by over 9% to Rs61.30. The company announced that it opened its seventh restaurant on June 21, 2008 at J P Nagar, Bangalore. The company is inaugurating the new restaurant at 67, Sarkki Industrial Layout, J P Nagar, Phase 3, Bangalore, with 168 covers of sitting capacity.

The seventh restaurant is being opened by the wholly owned subsidiary company Barbeque-Nation Hospitality Ltd and currently operating six restaurants at Jaipur, New Delhi, Lucknow, Chandigarh, Chennai and Ahmedabad. The scrip touched an intra-day high of Rs67 and a low of Rs61 and recorded volumes of over 17,000 shares on BSE.

Petronet LNG ended 3.2% to lower to close at Rs59. The company is taking participating interests in gas assets in Australia. The company is in talks with European and American firms with acreages in Australia. It is looking at gas fields with likely in-place reserves of 8-15 trillion cubic ft (TCF), according to the report.

PLL is also looking at coal bed methane (CBM) projects in Australia. The company plans to source around 7.5-10 million tonnes per annum of LNG. The scrip touched an intra-day high of Rs61 and a low of Rs59 and recorded volumes of over 4,00,000 shares on BSE.

Corporate News

GMR will replace ONGC in Rs310bn Kakinada refinery and petrochemical project in Andhra Pradesh. (BS)
Tata Power plans to invest Rs250bn to boost its capacity by six-fold to 12,800mw by 2013. (BS)
GIC and Temasek may be allowed to pick up 10% stake each in ICICI Bank. (FE)
GAIL will issue one bonus share for every two equity shares held by its shareholders. (BS)
Wipro has raised Rs14bn through external borrowings. (BS)
Tech Mahindra has bagged a US$24mn engagement to assist Telecom New Zealand overhaul its retail business. (BL)
SBI is likely to raise its PLR and is awaiting fresh monetary action from the RBI to finalise the extent of increase. (BS)
Reliance Industries USA has acquired a polyester manufacturing facility in North Carolina for about US$12.2mn from Unifi Kinston and plans to invest US$215mn in that company. (ET)
Tata Motors has decided to absorb a significant portion of the cost increase of its Nano vendors. (ET)
Reliance Globalcom, the global arm of RCOM is entering into an alliance with a VOIP exchange in the US. (DNA)
M&M’s used-car business, First Choice is likely to sell 10% stake to Phi Advisors for ~Rs800mn. (ET)
Nalco will resume full production from June 25 after a strike cut the supply of coal to its Orissa power station. (BS)
Binani Cement has lined up capex plans of Rs16bn to take its global capacity to 13mmtpa by 2011-12. (BS)
Binani Cement is close to acquiring an African cement company for ~US$100mn. (ET)
Kingfisher Airlines and Deccan have slashed over 10% of their total daily flights. (BL)
Saint-Gobain Glass India plans to invest Rs10bn on a 0.3mn ton a year greenfield float glass making plant in Bhiwadi in Rajasthan. (BL)
ONGC Tripura Power Co, a unit of ONGC has awarded a Rs22.07bn order to a consortium of BHEL and GE for its 720 MW plant in Tripura. (ET)
Unichem has received a certification from the European Directorate for the Quality of Medicines and Healthcare for its active pharmaceutical ingredients plant in Roha, Maharashtra. (BL)
Unichem Laboratories has got approval from the US Food and Drug Administration for its formulations plant in the northern state of Uttar Pradesh. (ET)
JK Tyre has acquired 100% shares of Tornel, the Mexican Tyre company, along with its subsidiaries, for Rs2.7bn. (ET)
JK Tyre & Industries will raise prices of tyres by August. (ET)
Lupin has entered into a promotion agreement with Ascend Therapeutics Inc to promote its Suprax 400mg tablets in the US. (DNA)
The Parikhs, co-promoters of Zandu Pharmaceuticals have sent a letter to SEBI to thwart Emami Group’s attempt to take over the company. (ET)
Reliance Brands have entered into a 50:50 JV with Italy’s luxury sportswear brand Paul & Shark. (ET)
Alok Industries will invest Rs400mn in expanding its retail venture in FY09. (BL)
Religare Enterprises plans invest over Rs1bn for setting up 200 retail stores in the personal finance space under the Finmart brand over the next one year. (ET)
Pyramid Saimira Group, Chairman and MD P. S. Saminathan is considering an open offer to consolidate his stake in the company. (Mint)
Vodafone Essar has secured Rs70bn loan from lenders led by State Bank of India. (DNA)
SpiceJet plans to cut 20 flights from July 1. (BL)

Economic News

Around Rs80bn worth of real estate projects covering over 40mn square feet are facing delays. (BS)
DoT has asked TRAI to review termination charges. (BS)
Advance tax collection for the June 15 installment is expected to have gone up 30% on a yoy basis. (BL)
The June 30 bid submission date for the seventh round of NELP will not be deferred. (BL)
Indian corporate houses have raised a record more than Rs1trn by issuing corporate bonds during FY08. (Mint)
The DoT committee, formed to recommend ways to allocate and price 2G spectrum for mobile services, is likely to hold its first meeting in the first week of July. (ET)
The Competition Commission of India has asked SEBI to make compliance with competition law mandatory for listing on stock exchanges. (ET)
Government has held discussions with Nigeria to acquire more oil and gas fields. (FE)
RBI has decided that, for the limited purpose of valuation, all special securities issue by GoI, directly to the beneficiary entities, which do not carry SLR status may be valued at a spread of 25bps above the corresponding yield on GoI securities. (FE)

KSK Energy Ventures IPO Analysis

KSK Energy Ventures (KEVL) develops and operates power generation projects through various special purpose vehicles (SPVs). It is a step-down subsidiary of KSK Power Venture Plc, listed on the London Stock Exchange. Through its wholly owned subsidiary KSK Energy of Mauritius, KSK Power Venture Plc will hold a 55.24% stake in post-issue equity capital (pre-issue 61.39%)of KEVL. S. Kishore and K.A. Sastry are the promoters of the company.

Currently , KEVL operates three power projects with an aggregate capacity of around 144 MW. It has two projects with an aggregate power generation capacity of 675 MW under construction. The aggregate generation capacity of projects in the pipeline is 8,318 MW.

Of the three operational power plants, two are dedicated coal-based captive power plants of 43 MW each in Chattisgarh and Andhra Pradesh. The Chattisgarh power plant is owned by Arasmeta Captive Power Company, with KEVL owning a 51% stake, and is dedicated to the captive power requirement of Lafarge Cements. The Andhra Pradesh plant is owned by Sitapuram Power, with KEVL’s stake at 49%, and is dedicated to the captive power needs of Zuari Cements. The third operational power plant,, Sai Regency Power Corporation, is a gas-based combined cycle group captive power plant in Tamil Nadu, with KEVL holding a 73.92% stake ,and meets the captive power requirement of companies such as Chemplast Sanmar, Lakshmi Mills, Orchid Pharma, and Elforge. The Arasmeta, Sai Regency and Sitapuram power projects were synchronized with the grid on May 2006, February 2007 and July 2007, respectively.

Of the projects under development, a lignite-based power project with an generation capacity of 135 MW in Rajasthan is scheduled to be operational by October 2008. Another 540-MW coal-based power project at Warora in Chattisgarh is likely to be operational by December 20’09. KEVL has secured debt financing and intends to commence construction for the three projects with an aggregate generation capacity of 1,973 MW. The company has plans for three more projects with an aggregate capacity of 6,345 MW.

In January 2008, KEVL divested its stake in the SPVs of the three operating power companies, under the restructuring plan between the promoter groups of the company and LB India Holdings Mauritius I, to the ‘Small is Beatutiful Fund’. Besides this divestment, the company picked up 100% of the shareholding in KSK Electricity Financing India, previously a 51:49 joint venture between the company and LB India. It has divested its stake fully in RVK Energy (20 MW), Kasargod Power (20 MW) and Coramandel Power. The stakes in these erstwhile subsidiaries along with investment in Athena Projects were transferred to promoter group company KSK Energy Company, in which parent Mauritius-based KSK Energy holds 100% stake.

KEVL is tapping the capital market with an IPO to facilitate equity infusion in Wardha Power Company to meet the equity component of the 1,800-MW Wardha Chattisgarh power project and to meet general corporate expenses.

Strengths

On completion of all planned projects, there will be a fairly diversified plant mix of geography and fuel supply. The plants will be spread over seven states, with eight coal-based plants, one lignite-based plant, one natural gas-based plant and three run-of-the-river hydroelectric plants.

Weaknesses

Power generation capacity, operational or under construction, amounts to just 819 MW of the proposed power generation capacity of 9,137 MW by 2013. Yet to appoint engineering, procurement and construction (EPC) contractors for the balance 8,318-MW power generation capacity. The supply constraints at the equipment as well as the execution contractors side expose it to high level of execution risk. With rising commodity prices, escalation in project cost can also be significantly higher.

Lacks experience in developing and operation of power plants of higher capacity as well as the magnitude proposed. Current operational projects and projects under construction are thermal power units and execution of hydel power projects, which are more complex with long gestation periods, needs to be seen.

Yet to sign a definite fuel supply agreement (FSA) for the 540-MW Wardha Warora Power Project in Maharashtra, expected to be operational by December 2009. Similarly, still in negotiating for fuel supply for the 43-MW Arsmeta expansion project. Yet to sign definite FSA for three 1,800-MW coal-based power projects (one at Chattisgarh and two in Orissa) even though an MOU has been signed.

Still to finalise the power purchase agreement and fuel supply for generation capacity of 8,500 MW.

Of the three operational power projects, the Sitapuram Power SPV continues to be in red with net loss of Rs 1.91 crore in the year ended March 2008 (FY 2008). A shareholder agreement with Zuari Cements relating to Sitapuram Power SPV contains an onerous provision giving option to ZCL to pick up the entire 49% stake in the SPV after the third anniversary ( 1 March 2011) of commercial operation of the Sitapuram power plant .

Proposes to add 8,993 MW of power generation capacity by 2013. The estimated infusion of equity into SPVs will be a staggering Rs 8000 crore on the assumption that all the proposed projects will be funded through a debt: equity mix of 70:30. Currently, only about Rs 883 crore is to be raised by the IPO. So there will be significant equity dilutions in future.

Certain SPVs will pay project development and support fees to group company KSK Energy Company .

The power purchase agreement for captive power plants provides for fixed rates and have limited passthrough.

An affiliate of Lehman Brothers will hold 28.41% of the equity capital after the IPO. Lehman has been in the news for the severe subprime problems it is facing.

Valuation

Due to the benefits of commissioning two new power projects, the restated consolidated net sales of KEVL were up 208% to Rs 239.13 crore in the fiscal ended March 2008 (FY 2008). Net profit rose 476% to Rs 108.65 crore. The figures for FY 2008 are not comparable with those of FY 2007 as the company has divested three of its operating power plants to a group company under the restructuring plan implemented n January 20’08. Further, the sales were boosted by project-development fees of Rs 23.36 crore and power-arrangement income of Rs 23 crore. On post-IPO equity of Rs 346.11 crore, the EPS for FY 2008 works out to Rs 3.3. The P/E is 72.7-77.3 at the price band of Rs 240-Rs 255.

KEVL will have the full benefit of the operation of Sitapuram plant in FY 2009. And with the 135-MW lignite power project getting commissioned by December 2008, the company will get significant revenue upside in FY 2010 as well.

With 144-MW (current) power generation capacity, KSK Energy Ventures will have a market capitalisation of Rs 8826 crore at the higher price band, while an equivalent payer like GIPCL has a market cap of Rs 1305 crore with higher 555-MW power generation capacity. Having learnt the lessons, stock markets are unlikely to give huge market capitalisation to companies like KEVL just based on their lofty plans.

Bullion end mixed

Precious metals register strong gains for the week

Bullion metals ended with losses today, Monday, 23 June, 2008 as the dollar rallied. Silver prices also fell 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. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies.

Comex Gold for August delivery fell $16.5 (1.5%) to close at $887.2 ounce on the New York Mercantile Exchange. It fell to a low of $879 during intra day trading. With this, gold gave up some of its last week’s gains. Last week, gold prices ended higher by $30.6 (3.5%). Last month, in May, it ended with a gain of higher by $22.5 (2.5%). On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped since then.

This year, gold prices have gained 6.5% till date against a 6% drop for the dollar against the euro. Before May, for April, prices closed lower by 6.3%. For first quarter prices gained 10.7%. In January, prices gained 11%, the highest monthly gain since April 2006. For February, it gained 6%. But in March, prices succumbed and fell by 5.5%.

On Monday, Comex silver futures for July delivery fell 60.7 cents (3.5%) to $16.79 an ounce. Last week, silver has gained 5%. Silver has gained 13.5% in 2008 till date.

Silver prices ended the month of May 2008 with a gain of 2.7%. For April, it closed lower by 5.5%. Silver had gained 16% in Q1. In January this year itself, prices climbed 14%. In February, it gained another 15%. For March, it ended lower by 13%. The metal had climbed 16% in FY 2007. The metal also has gained for seven straight years.

At the currency markets on Monday, the dollar index which measures the greenback against a basket of trading partners, was at 73.47, compared with 73.05 late Friday. The euro lost ground after closely tracked gauges of German economic sentiment and euro-zone activity weakened more than expected in June.

Since last September, Fed has axed interest rates seven times and brought it down to 2%. On the other hand, the ECB has kept rates unchanged at 4% since June, 2007.

In the crude market on Monday, crude-oil futures closed with a gain of more than $1 per barrel, with energy traders showing disappointment over Saudi Arabia's latest move to increase production as concerns over output in Nigeria continued to grow. Crude for August delivery closed at $136.74 a barrel on the New York Mercantile Exchange, up $1.38, or 1%. It traded as high as $137.85 during the Nymex session.

Gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. In 2006, silver had jumped 46% while gold gained 23%.

At the MCX, gold prices for August delivery closed lower by Rs 217 (1.7%) at Rs 12,309 per 10 grams. Prices rose to a high of Rs 12,623 per 10 grams and fell to a low of Rs 12,215 per 10 grams during the day’s trading.

At the MCX, silver prices for July delivery closed Rs 749 (3.1%) lower at Rs 23,744/Kg. Prices opened at Rs 24,530/kg and fell to a low of Rs 23,513/Kg during the day’s trading.