Investors wonder what RBI will do
Some people make things happen, some watch while things happen, and some wonder 'What happened?'
Though there are many factors to consider, one individual called Dr. Y.V. Reddy will probably decide whether the bulls will be able to score a hat-trick in terms of weekly gains or not. The RBI Governor has managed to spring many surprises since he took over from Dr. Bimal Jalan in September 2003. Will he pull another rabbit out of the bag tomorrow is a million-dollar question. Some have also criticised him saying he has been a bit behind the curve and is trying to make amends for past lapses. India Inc. is certainly not happy with the central bank's recent measures, nor are the consumers. After having taken so many tightening steps over the past few months it may be time for him to take a pause. But, will Dr. Reddy be able to meet market expectations only time will tell.
This perhaps will remain an overriding theme in the market today. Among the other issues to be weary of include inflation, monsoon, earnings outlook for FY08, global commodity prices (especially that of crude), state of economies in the US and China, and the currency fluctuations. Having said that, the bulls can take heart from the fact that FII inflows this month have been quite strong this month. Global markets are in a healthy state though there will be intermittent bouts of selloff every now and then that one needs to watch out for.
We see a positive opening today on the back of strong cues coming from the US and Asian markets. But, there could be some cooling as the key indices have gained more than 8% in the last two weeks. We will also have the F&O expiry on Thursday. So, expect more volatility. Even if the RBI holds rates steady, the stance will remain hawkish considering that inflation still remains above its comfort levels.
FIIs were net buyers to the tune of Rs6.23bn (provisional) in the cash segment on Friday. At the same time, domestic institutional investors pumped in Rs1.3bn. In the F&O segment, FIIs were net buyers at Rs14.01bn. FIIs were net sellers of Rs734mn on Thursday. Mutual Funds too offloaded stocks worth Rs258mn.
OK Play India, a maker of moulded plastic products, has staged a turned around. It has received a rehabilitation package from the BIFR and is entering the telecom sector as well. It is on a growth path. But, there's only one issue. The counter is extremely dry in terms of traded volume.
Kalindee Rail Nirman is likely to gain amid reports that is may bag fresh orders from the Indian Railways. Shree Renuka Sugars could be a stock one can look at from a medium to long-term perspective on strong fundamentals and government's incentives on exports. HCL Tech and Tata Steel are good value picks.
Maruti is expected to be in the limelight. It has slashed prices by Rs 3,000 to Rs 5,000 following a reduction in the concessional central state tax (CST) offered by the Haryana government. It is also likely to launch a new mid-sized car to replace the Baleno next month. M&M might see some action as it is reportedly eyeing the control of Swaraj Mazda along with private equity firm Actis.
On Wall Street, the Dow Jones Industrial Average closed at a new record on Friday, spurred by a string of strong earnings reports that also propelled the broader stock market.
The Dow rallied 153.35 points or 1.2% to 12,961.98, a new closing high. Shortly before the close, the Dow hit a new intraday high of 12,966.29. The Dow finished the week up about 2.8%.
The S&P 500 advanced 13.62 points nearly 1% to 1,484.35 and hit a fresh six and a half year high. For the week, the broader index gained 2.2%. The Nasdaq Composite index climbed by about 0.8% and hit a fresh six-year peak. For the week, the Nasdaq rose about 1.4%.
US light crude oil for May delivery rose $1.88 to settle at $63.38 a barrel on the New York Mercantile Exchange. The front-month contract was quoting 23 cents lower at $63.88 a barrel in extended trading in Asia.
COMEX gold for June delivery rose $7.50 to settle at $695.80 an ounce. Treasury prices were little changed, with yields on the ten-year note hovering around 4.67%, roughly in line with Thursday levels. In currency trading, the dollar recovered a bit after hitting a two-year low versus the euro and inched higher versus the yen.
European shares gained ground on Friday. The pan-European Dow Jones Stoxx 600 index increased 1.2% to 388.95, a level not seen since November 2000. The UK's FTSE 100 closed up 0.7% at 6,486.80, the German DAX Xetra 30 advanced 1.4% to 7,342.54, and the French CAC-40 rose 1.9% to 5,938.90, a level not seen since February 2001.
Asian stocks rose this morning after earnings reports from US companies boosted confidence in the global economy and helped drive the Dow Jones Industrial Average to a record. Toyota and Samsung Electronics advanced. The Nikkei in Tokyo was up 164 points to 17,617 while the Hang Seng advanced 131 points to 20,698 and the Kospi in Seoul added 20 points to 1553.
Bulls set sights on 14k
Bulls made a come back as better than expected quarterly results from IT major like Satyam Computer and Wipro lifted the key indices to surge higher. Strong Asian markets also compelled the key indices to rise at open. Inflation figures played a spoil sport as Inflation for the week ended April 7 is at 6.09% against expectation of 5.80% dragging the markets a bit. However, frontline stocks like Tata Steel, Bharti Airtel, Reliance Industries and ONGC held the markets and strengthened the markets to close on a strong note.
BSE Metal index led from front others like Technology, Oil & Gas and Capital Good indexes followed suit. Even the Mid-Cap and the small cap indexes ended higher. Finally, the 30-share benchmark Sensex surged 277 points to close at 13897. NSE Nifty was up 85 points to close at 4083.
Satyam Computer spurred by over 6% to Rs476 after the company announced its Q4 result with net Profit (up 17%) to Rs3.94bn and Revenues (up 7%) at Rs17.79bn. The scrip touched an intra-day high of Rs478 and a low of Rs460 and recorded volumes of over 72,00,000 shares on NSE.
Wipro pared its gains on back of profit booking, the scrip was down 0.8% to Rs571. The company announced its Q4 result with net profit of Rs8.56bn, (up 11.9%) and revenues (up 8.9%) over the previous quarter at Rs43.33bn. The scrip touched an intra-day high of Rs604 and a low of Rs561 and recorded volumes of over 32,00,000 shares on NSE.
India Cement pared its gains the scrip closed 0.2% lower to Rs170. The company announced its Q4 result with net profit at Rs1.39bn (up 479%) and sales at Rs6.73bn (up 34.8%). The scrip touched an intra-day high of Rs176 and a low of Rs169 and recorded volumes of over 27,00,000 shares on NSE.
Gujarat Ambuja gained by 1.7% to Rs113 after the company announced its Q1 result with net profit at 5.9bn (up 42.8%) and net sales at Rs14.34bn (up 33.5%). The scrip touched an intra-day high of Rs116 and a low of Rs114 and recorded volumes of over 45,00,000 shares on NSE.
M&M gained by 1.4% to Rs743 after the company approved raising upto 300mn overseas. The scrip has touched an intra-day high of Rs752 and a low of Rs735 and has recorded volumes of over 5,00,000 shares on NSE.
Metal index was the leading from front the index rose over 3%. Tata Steel spurred by over 5.5% to Rs533, Nalco was up by 3% to Rs243, SAIL surged by over 6.5% to Rs134 and Sterlite Industries added 1.6% to Rs523.
Mid-Cap Technology stocks were among the major gainers. Rolta surged by 5% to Rs370, Ploaris was up by 4% to Rs202 and Mphasis BFL gained by 4.7% to Rs319. Satyam Computer, Infosys and Wipro were major gainers among the heavy weights.
Sugar stocks were back in action after government announced that they would give incentives for Sugar exporters until April 2008. Bajaj Hindusthan, Renuka Sugar, Balrampur Chini and Sakhti Sugar were among the major gainers.
Auto stocks slightly pared its gains after trading strong for major part of the session. Tata Motors advanced by 1.4% to Rs722, M&M gained by 1.4% to Rs743, Maruti was marginally up by 0.2% to Rs776 and Bajaj Auto was flat at Rs2442.
Capital Good stocks also ended with smart gains. BHEL was up 1.3% to Rs2536, L&T gained 2% to Rs1694, Punj Lloyd edged higher 0.2% to Rs185 and Siemens added 1.8% to Rs1068.
Market Volumes:
The turnover on NSE was up by 8% to Rs88.58bn. BSE Metal index was the major gainer and gained 3.51%. BSE Oil & Gas index (up 2.74%), BSE Technology index (up 2.18%) and BSE PSU index (up 1.77%) were among the other major gainers.
Volume Toppers:
IFCI, Idea, TTML, SAIL, Dish TV, Satyam Computer, Tata Steel, IDFC, R Com, IB Real Estate, ITI, Parsvnath, Wipro, Orbit Corp, Hindalco, MTNL, Voltas and Indiabulls.
Upper Circuit:
Aurionpro Sol, Atlanta, Tanla, Shree Ashtavinyak, Saksoft, Indiainfoline, Sujana Metal, Shree Precoated, Ganesh Housing, Diamond Cable, HOV Services and Nirlon
Results Today:
Bajaj Hindusthan, Bata India, Bank of India, Rolta, Siemens, CEAT, Bihar Tubes, Diamond Cables, IOB, KEC Intl, Reliance Capital, GVK Power, ANG Auto, Cosmo Films, Indian Bank, Power Finance Corp, Macmillan India, South India Bank, Taj GVK Hotel, Uttam Galva and Unity Infra.
Delivery Delight:
ABB, Balaji Telefilms, Bata India, BHEL, Bharti Airtel, Dr Reddys Laboratories, HDFC, HCL Technologies, India Infoline, IPCL, IDFC, ITC, Jet Airways, NDTV, Praj Industries, Reliance Capital, Reliance Communications, Rolta India, Satyam Computer, SAIL and Tisco.
Abnormal Delivery:
Century Textiles, Kotak Mahindra Bank, Moser Baer, MTNL, Wockhardt, BEL and Bank of Baroda.
Stock Futures with Largest Increases in OI:
IDEA Cellular, NDTV, Zee Tele, Patni, Jindal Stainless, Tata Chemicals, Crompton Greaves, Indian Bank, IVRCL Infrastructure and Reliance Capital.
Stock Futures with Largest Decreases in OI:
Satyam Computer, Parsvnath, IOB, TCS, Praj Industries, Ashok Leyland, HPCL, HCL Tech and JP Associates.
Results Corner:
Gujarat Ambuja Cements Q1 profit at 5.9bn (up 42.8%), net sales at Rs14.34bn (up 33.5%)
Satyam Q4 Profit up 17% to Rs3.94bn and Revenues up 7% at Rs17.79bn
Wipro Q4 net profit of Rs8.56bn, (up 11.9%), Revenues are up 8.9% at Rs43.33bn
Renuka Sugars Q2 profit (down 50%) to Rs229mn and sales (up 29.5%) to Rs3.03bn.
Brokers Recommendations:
Satyam – Buy from ASK RJ with target of Rs582
Wipro – Buy from Citigroup with target of Rs730
Long Term investment:
Mphasis BFL
Major News Headlines
Chidambaram expects inflation to slow down on wheat supply
Govt to give incentives for sugar exporters until April 2008 under open General License
SBI to raise Rs100bn in FY08 to boost capital
Cadila gets initial US nod for Losartan Potassium tablets
M&M approves raising of up to US$300mn overseas
Balaji Telefilms to invest Rs600mn in Venture with STAR.
ACC Ltd. Q1CY07 Results
CMP: Rs790
Rating: SELL
Target: Rs769
Net Sales increases by 24.8% yoy to Rs16.7bn
Operating profit increases by 55.3% yoy to Rs5.1bn
OPM increases by 600 bps to 30.3%
Cement realization per ton increases by 26% to Rs3432
Net Profit increases by 51.9% to Rs3.4bn
We expect cement realization to remain flat over next one year with a negative bias, due to continuous activeness by the Government to bring down the prices. There are signs of housing growth tapering which may lead to demand growth slowdown and put additional pressure for slowdown in prices. We expect margin pressure from Q2CY07 on qoq basis for ACC as cost growth outpaces realization growth. ACC's CMP of Rs788 discounts our estimated EPS of Rs69.9 and Rs64.1 for CY07 and CY08 by 11.3x and 12.3x. We value ACC at 12x of CY08 EPS of Rs64.1 which gives a fair value of Rs769. Maintain SELL.