Nifty settles at lifetime high

Even as volatility prevented the 30-share BSE Sensex from swiftly reachin a new high, the broader index S&P CNX Nifty wriggled past its previous high of 4,269.35 points struck on Monday, 21 May 2007, to reach a fresh all-time high of 4,281.60 on strong buying demand for frontline pivotals.

The all-time high level for the benchmark Sensex is 270 points away from 14,723.88 hit on 9 February 2007.

Even as the Sensex is trailing, the Nifty managed to scale new peaks due to its composition. While 30 shares form the base of the Sensex, the Nifty is made of 50 stocks. Apart from the 30 scrips, which are common in both, the other 20 stocks in Nifty have registered brisk gains in the last three months.

Broad-based buying by FIIs continued fuelling the rally and domestic institutions too were not too far behind. Last week, the markets absorbed Rs 1,518-crore net investments from FIIs and Rs 1,006 crore from domestic institutional investors. Though the valuations look a bit stretched owing to robust liquidity in the market, the ongoing momentum is expected to continue in line with the firm global markets.

Meawhile, the market that stayed in losses for most part of the day, recovered in late afternoon session of trade as buying resumed at lower levels. The Sensex rose 35.12 points, or 0.24%, to 14,453.72

The S&P CNX Nifty gained 17.20 points, or 0.40%, to 4,278.10, also an all-time closing high.

Zee Entertainment Enterprises (ZEE) (up 4.48% to Rs 312.25), HDFC (up 4.34% to Rs 1792.80), Reliance Communications (up 3.08% to Rs 523.30), VSNL (up 2.87% to Rs 473.25), and Tata Power (up 2.33% to Rs 611.55) were the top five gainers from the Nifty pack.

Index heavyweight Reliance Industries (RIL) saw a trend reversal from the morning session and recovered from its low of Rs 1738.50 to settle 0.66% higher at Rs 1773.25 on 10.88 lakh shares. RIL also struck an all-time high of Rs 1780 in intra-day trade. It had reached this all-time high of Rs 1780 on 21 May 2007 as well.

RIL has been hitting record highs in the past three sessions and has advanced over 34% to Rs 1761.55 since its close of Rs 1313.50 on 2 April 2007. It has been major drivers of the recent rally.

The RIL stock entered a sharp uptrend after it said on Tuesday, 15 May 2007, it had made two gas discoveries in separate blocks off the east and west coasts of the country. The commerciality of the above discoveries is currently under evaluation.

It had opened at 14,457.26, and struck a high of 14,483.59, as buying continued. But it was not able to sustain at the higher level and succumbed to selling pressure. This selling continued till it touched a low of 14,348.26

Led by index heavyweight RIL, other shares from the Reliance pack were not left out either. Reliance Capital surged 4.89% to Rs 1017 after striking an all time high of Rs 1046.40 today. It clocked high volumes of 44.10 lakh shares on BSE, and was the top traded counter on BSE with a total turnover of Rs 446.52 crore.

Reliance Natural Resources (up 5.90% to Rs 33.25), Reliance Communications (up 2.75% to Rs 520.20), and IPCL (up 1.38% to Rs 352.50) advanced.

Most of the BSE sectoral indices settled on a flat note. Banking and IT indices finished lower, while FMCG, capital goods and pharma shares saw buying.

The market breadth, which indicates the overall health of the market, was weak on BSE, with 1,464 shares declining as compared to 1,115 that advanced, while 85 remained unchanged. This is in contrast to the positive market breadth at 10:30 IST, when 837 shares advanced as compared to 759 that declined.

The BSE Small-Cap index closed at 7,286.77, down 0.1%, while the BSE Mid-Cap index rose 0.25% to 6,144.88.

The total turnover on BSE amounted to Rs 5270.18 crore, while the NSE F&O turnover was Rs 33,440.2 crore.

The total market wide turnover has been advancing in the past three trading sessions. It crossed Rs 50,000 crore to net Rs 50,069.21 crore today, which is higher than total marketwide turnover of Rs 46,560.99 crore on 21 May 2007, and Rs 44,316.68 crore on 18 May 2007.

Among the Sensex pack, 16 advanced while 15 declined.

For the fourth straight day, Bajaj Auto was on a losing streak, declining 2.77% to Rs 2186.10, as its demerger scheme, announced during trading hours on 17 May 2007, triggered a flurry of rating downgrades by brokerage houses. It was the top loser.

Disappointment about the post-demerger structure and lack of clarity about future business plans were cited as the main reasons for the downgrades.

Bajaj Auto shares slumped 16% in the past two trading sessions after the surprise revelation that Allianz — Bajaj’s partner in its two insurance ventures — has a ‘call option’ to buy up to 74% at a nominal price. This was the biggest disappointment in the demerger plan.

Most analysts expected Bajaj Auto to remain the majority partner, while allowing Allianz to raise its stake up to 49%. They see a high possibility of the government raising foreign investment limit in insurance sector to 74% and Allianz exercising the option to hike the stake.

The insurance business of Bajaj Auto was valued at around Rs 800 per share. But going by the new structure, the value has been trimmed to Rs 300 per share. So the fall was more of a realignment to its fair value of Rs 2,250.

Gujarat Ambuja Cements (down 2.10% to Rs 116.45), SBI (down 1.91% to Rs 1321), and ICICI Bank (down 1.38% to Rs 926.90) were the other losers.

IT pivotals, which have been underperforming the market of late, were left behind as the rupee struck a fresh nine-year high. Appreciating further against the US currency, the rupee again neared the crucial 40.50 level in late morning deals. The appreciation was seen following fresh dollar selling amid absence of buyers.

The interbank foreign exchange (forex) market today, 22 May 2007, witnessed fairly active trade in the initial stages of trading. The domestic unit resumed firm at 40.60/62 a dollar over last close of 40.67/68 a dollar. It later traded at 40.5850/5950 a dollar in late morning deals on some dollar selling. The rupee strengthened in the absence of any dollar demand from oil corporates.

A rise in the rupee directly impacts revenue and profit of IT firms, which derive a lion’s share of revenue from exports to the US.

The BSE IT Index closed at 4,849.51 down 0.4%. Infosys (down 1.26% to Rs 1936), HCL Technologies (down 1.42% to Rs 342.25), and Tata Consultancy Services (down 0.56% to Rs 1230) contributed to its decline.

However, Satyam Computer Services was up marginally by 0.06% to Rs 448.55 after it signed a multiyear, multi-disciplinary service agreement with Hawker Beechcraft Corporation (HBC) on Monday, 21 May 2007.

The contract calls for the company to provide high-end design, computer-aided engineering (CAE), analysis, product lifecycle management, and other services for the world's reading business, special mission, and trainer aircraft manufacturer.

The arrangement will enable HBC to fulfill orders more quickly and within appropriated budgets, while maintaining exacting quality standards. However, the deal size was not disclosed.

HDFC was the top gainer, up 4.76% to Rs 1800 on 2.31 lakh shares.

HDFC Bank (up 1.54% to Rs 1120), ACC (up 1.55% to Rs 885) and Hero Honda (up 0.85% to Rs 686.25) advanced.

The BSE Capital Goods Index advanced 0.56% at 9,934.06, and was the top gainer among sectoral indices on BSE. Thermax (up 7.46%), Punj Lloyd (up 1.33%), and Siemens India (up 1.39%) ended higher.

PSU engineering major Bhel rose 1.30% to Rs 2,670, on 1.35 lakh shares. The stock is rallying ahead of its record date of 1 June 2007 for the proposed 1:1 bonus issue. The company has earmarked about Rs 3,200 crore for investment in the Eleventh Five-Year Plan period to increase manufacturing capacity from the current 6,000 Mega Watt (MW) to 15,000 MW per annum.

ABB rose 1.23% to Rs 4341 after it bagged an order worth Rs 289 crore from Delhi Metro Rail Corporation (DMRC). As part of this project, the company will supply the turnkey electrification package for Phase II of the Metro line spanning ten corridors across parts of New Delhi and surrounding areas of Gurgaon and NOIDA.

Auto major Maruti Udyog rose 0.80% to Rs 827. On 10 May 2007, the government had sold its residual stake of 10.27% in the company to a group of financial institutions, banks and mutual funds for Rs. 2,368 crore, which works out to Rs. 797 a share.

The purchase consideration varies among bidders. For instance, LIC, which successfully bid for 130 lakh shares, by far the largest number, is paying Rs 800 for a share. On the other side, Corporation Bank is shelling out Rs 850 a share for its acquisition of 5.88 lakh shares. Two mutual funds, Reliance MF and HDFC MF, have also acquired chunks of Maruti shares.

The BSE FMCG Index gained 0.5% at 1,920.35. ITC (up %), HLL (up 0.36%), Tata Tea (up 4.36%), Britannia (up 2.69%), advanced.

United Spirits jumped 6.33% to Rs 1248 after 58,168 shares of the company changed hands at Rs 1,199 shares in a block deal on NSE. The counter clocked total volumes of 11.82 lakh shares on BSE.

From Rs 837.60 on 15 May 2007, the United Spirits stock has risen a staggering 34% in the past four trading sessions, boosted by the company’s acquisition of Whyte & Mackay (W&M), announced during trading hours on 16 May 2007.

The acquisition of Whyte & Mackay (W&M) allows the new owners to promote the company's Whyte & Mackay Scotch and Jura single malt brands in India and China, the focus of operations of United Spirits and the world's two fastest-growing major markets for Scotch.

The company will borrow £325m against W&M's assets to help finance the purchase. W&M expects to have an operating profit of 50 million pounds this year and this is expected to take care of the interest costs for the acquisition.

Refinery stocks HPCL (down 2.25% to Rs 298), BPCL (down 0.61% to Rs 389), and Indian Oil Corporation (down 0.58% to Rs 500) slipped as crude oil prices soared today and crossed $66 per barrel. Reports of fresh violence at Nigeria, Israel and Lebanon coupled with US refineries increasing production to meet the coming gasoline summer demand perked up crude prices.

Crude-oil futures for light sweet crude for June delivery closed at $66.27 per barrel (higher by $1.33 per barrel or 2.05%) on the New York Mercantile Exchange. The expiration of the June crude futures contract tomorrow also likely helped exaggerate the move in oil.

Everest Kanto Cylinder (EKC) saw high volatility. It had plunged 9.55% to Rs 1,045, due to sell-off following poor set of results from the company. However it recovered sharply and was down only 0.255 to Rs 1142. EKC posted a 50% fall in net profit in the March 2007 quarter. Everest Kanto Cylinder’s board approved a stock split in face value of equity shares from the current Rs 10 per share to Rs 2 per share.

The company has also embarked on an expansion and modernisation scheme with a projected outlay of approximately US$ 60 million. Net profit fell 49.90% to Rs 5.12 crore in Q4 2007 as compared to Rs 10.2 crore in Q4 March 2006. Net sales were almost flat at Rs 80.08 crore (Rs 80.15 crore)

Budget airliner SpiceJet added 2.97% to Rs.46.95 on expectation of break even in the next quarter. The company posted loss of Rs.21.37 crore in Q3 February 2007 compared to profit of Rs.4.30 crore in Q3 February 2006. Sales surged 86.3% to Rs.246.04 crore in Q3 February 2007. SpiceJet anounced today, 22 May 2007, that it is likely to break even in the the April-June 2007 quarter and will become the first of the new entrants in the domestic civil aviation space to achieve this feat, two years after it started operations.

California Software Company was up 9.36% to Rs 69.10 after it signed an agreement to acquire 51% stake in Aspire Communications. The company has offices in Mysore, Bangalore, and San Jose. Aspire is expected to add about $ 3 million in revenue and $ 400,000 in net profit to the Calsoft Group on a consolidated basis in the ye ar ending March 2008.

Motherson Sumi Systems surged 20% to Rs 133.55 after the auto parts maker said its board would meet on 26 May to consider a bonus issue of shares.

Kalpataru Power Transmission advanced 4.83% to Rs 1345 after reporting robust Q4 March 2007 results. KPTL's net profit spurted 105.90% to Rs 64.45 crore in Q4 March 2007 as compared to Rs 31.30 crore in Q4 March 2006. Net sales jumped 44.50% to Rs 522.15 crore (Rs 361.38 crore).

Raj Television soared 10% to Rs 288.30 after 272,149 shares of the company changed hands at Rs 288.30 in a block deal on the BSE. Raj TV rose almost 6% to close at Rs 262.10 on Monday, 21 May 2007. after announcing the launch of new channel with DMK (Dravida Munnetra Kazhagam) logo

ABG Shipyard declined 1.80% to Rs 423 after scotching rumors of bagging a Rs 900-1000-crore order from a European company.

Asian and European markets were trading mixed. Hang Seng down 0.40% while the Nikkei 225 Index was up 0.70%.

The Standard & Poor's 500, the broadest measure of the US stock market and the one most closely followed by professionals on Wall Street, closed just shy of a record high Monday, 21 May 2007, as fresh takeover announcements lifted US stocks. It gained 2.35 points, or 0.2%, to end at 1,525.10 points. Earlier, the index temporarily topped its 24 March 2000 record close of 1,527.35, breaching 1,529.

The blue-chip Dow Jones Industrial Average fell 13.65 points, or 0.1%, to 13,542.88. The technology-heavy Nasdaq Composite Index jumped 20.34, or 0.8%, to 2,578.79.