Early gains, enjoy the day
It is always sound business to take any obtainable net gain, at any cost and at any risk to the rest of the community.
The dullness during most part of Wednesday suddenly disappeared post lunch. With the global markets in a pink of health, the bulls may just be able to extend their gains, at least in the early hours of trading. What's heartening about Wednesday’s trade is that the market breadth and volume were both positive. Even the small-cap and mid-cap shares participated in the rally. Some cooling may wait for a day as the market is moving ahead without any triggers. And yes, don’t forget the historic falls of May 17 in ’04 and May 18 in ’06.
In fact, foreign funds have been bearish this month after pumping in well over a million dollars last month. They were said to be net sellers yesterday as per the NSE data and on Tuesday too they offloaded stocks worth Rs3.3bn. Mutual Funds too were net sellers on Tuesday at Rs736mn. Stock specific action and the usual intra-day volatility is a given as valuations are not cheap.
Watch out for Bajaj Auto as the company unveils its plans on the much-awaited demerger. The two-wheeler major is also set to announce its annual results. Tata Steel is also likely to be in the thick of things as it will also declare its results today. GE Shipping and Great Offshore might benefit from a newspaper report that the Seth brothers are headed for an amicable resolution. Tata Tele (Maharashtra) could gain from improved financial performance and reports that the Tata Group is expected to form a joint venture with Richard Branson's Virgin Mobile for the British company's India foray. Petroleum marketing companies may rise amid talk of a hike in petrol and diesel prices.
Shares of Bhagwati Banquets & Hotels Ltd. will get listed on the bourses today. Electrotherm India may gain as it has secured $25mn in funding from IFC. ICI India may rise following good set of numbers. Also, the company's Board will meet on May 26 to consider a proposal for buy-back of shares at a price not exceeding Rs575 per share. The stock rose 4.2% yesterday to end at Rs502. Balaji Telefilms could be in action after its results. There is a disinvestment rumour in Gujarat Alkalies. Reliance Capital seems to be in momentum. VSNL may attract some attention amid reports that the Government may consider the issue of residual stake sale in today's cabinet meeting.
FIIs were net sellers to the tune of Rs2.45bn (provisional) in the cash segment yesterday while domestic institutions pumped in Rs4.03bn. In the F&O segment, FIIs were net buyers at Rs1.84bn on the same day.
US stocks closed higher on Wednesday, with the Dow Jones Industrial Average closing at another record high. Investors cheered stronger-than-expected industrial production data and set aside worries about the troubled housing market.
The Dow climbed 103.69, or 0.8%, to 13,487.53. The S&P 500 added 12.95, or 0.9%, to 1514.14, its first advance in three days. The Nasdaq Composite Index rose 22.13, or 0.9%, to 2547.42.
The sentiment also received a boost from reports that billionaire investors Warren Buffett, Edward Lampert and Carl Icahn have boosted their holdings of drugmakers, banks and railroads.
Healthcare shares rose the most in four weeks after Buffett's Berkshire Hathaway almost doubled its investment in Johnson & Johnson. Citigroup had its biggest jump since 2003 after Lampert disclosed an $800mn stake in the largest US bank.
Icahn joined Buffett in acquiring railroad shares by building up a position in CSX, the third-largest US railroad.
After the close, Hewlett-Packard reported lower quarterly earnings and higher quarterly revenue. Shares rose 0.5% in extended-hours trading.
US light crude oil for June delivery fell 62 cents to settle at $62.55 a barrel in New York, remaining lower after the weekly inventories report showed a surprise rise in gasoline and crude oil stocks. The front-month contract was trading 14 cents higher at $62.59 a barrel in extended trading in Asia.
COMEX gold for June delivery fell $13 to settle at $661.50 an ounce. Treasury prices slipped a bit, pushing the yield on the 10-year note to 4.71%, up from 4.7% late on Tuesday. In currency trading, the dollar rallied against the euro and the yen.
European shares lost ground. The pan-European Dow Jones Stoxx 600 index slipped 0.2% to 389.47. The UK's FTSE 100 closed down 0.1% to 6,559.50, the German DAX Xetra 30 lost 0.3% to 7,481.25 and the French CAC-40 declined 0.2% to 6,017.91.
All the emerging markets ended sharply higher yesterday. The Ibovespa index in Brazil surged 2.4% to 51,737 while the IPC index in Mexico jumped 2.4% to 30,341 and the RTS index in Russia climbed 1.65% to 1856.
Asian stocks rose for the first time in three days on Thursday. The Morgan Stanley Capital International Asia-Pacific Index gained 0.5% to 148.95 at 10:42 a.m. in Tokyo. All of the region's benchmarks rose.
Japan's Nikkei added 92 points to 17,624.87 while the Hang Seng in Hong Kong rallied 118 points at 21,055. The Kospi in Seoul added 12 points to 1613 while the Straits Times in Singapore advanced 13 points to 3514.
Rally may continue
Markets registered strong opening and a robust closing. After opening on a firm note markets turned lackluster in the afternoon trades. However, buying interest in the heavy weights like BHEL, SBI, ICICI Bank, Reliance Industries and Reliance Communication lifted the benchmark index Sensex to hit a high of 14159.36 and NSE Nifty to close above the 4150 level. Finally, the 30-share benchmark Sensex surged 197 points to close at 14127. NSE Nifty was up 50 points to close at 4170.
Reliance Communication advanced by 3.2% to Rs490 after reports stated that the company has added 1.02mn new subscribers in April. The scrip touched intra-day high of Rs492 and a low of Rs476 and recorded volumes of over 30,00,000 shares on NSE.
Gujarat NRE surged by over 4.5% to Rs49 after the company agreed to pay A$49mn to buy Elouera coal mine in Australia from BHP Billiton. The scrip touched intra-day high of Rs49 and a low of Rs47 and recorded volumes of over 3,00,000 shares on NSE.
Tata Power gained by 1.2% to Rs587 after the company announced that it has signed Contract for Boiler Island Scope with Doosan for first 4000 MW Mundra Ultra Mega Power Project. The scrip touched intra-day high of Rs592 and a low of Rs574 and recorded volumes of over 1,00,000 shares on NSE.
Banking stocks continued to its upward trend. SBI surged 4.6% to Rs1284, ICICI Bank was up by 3.8% to Rs918 and HDFC Bank gained by 2.5% to Rs1035. OBC, Andhra bank and Canara Bank were major gainers among the Mid-Cap stocks.
The Real Estate stocks witnessed fresh buying interest. Parsvnath surged nearly by 6% to Rs328, Bombay Dyeing spurred by over 4.5% to Rs580, Sobha Developers was up by 5% to Rs909 and Akruti added 4.2% to Rs395.
The BSE small cap index advanced by 1.45% was among the major gainers. Bajaj Electrical locked at 20% upper circuit to Rs503.60, Aztek Software surged by over 8% to Rs94 and Blue Bird rallied by over 9% to Rs74.
PSU stocks are recording smart gains. BHEL was up by 2.6% to Rs2586, SAIL gained by 0.8% to Rs139 and Dena bank surged by over 7% to Rs43.
Sector Movement:
BSE Bank index was the major gainer and gained 3.09%. BSE PSU index (up 1.55%), BSE Oil & Gas index (up 1.52%), BSE Capital Good index (up 1.50%) and FMCG index (up 1.15%) were among the other major gainers. However, BSE IT index lost 0.54%.
Volume Toppers:
RNRL, Nagarjuna Fertilizers, TTML, IFCI, Petronet LNG, SAIL, Dena Bank, IDBI, Unitech, PFC, RPL, HFCL, Zee News, Raj TV, R Com, Idea and DCB.
Upper Circuit:
UTV Software, TV Today, Max India, Atlanta, U Fklex, GMR Industries, Mefcon Agfro, Nesco Ltd, Tripex Overseas, Tera Software, Dawn mills, Vypar industries, Flawless Diamond, ACE, Thomas Cook, Bajaj Electricals, KS Oils, PBA Infrastructure and Swan Mills
Delivery Delight:
Andhra Bank, Bajaj Auto, Ballarpur Industries, BEL, Bombay Dyeing, Century Textiles, Dr Reddys Laboratories, HCL Technologies, HDFC Bank, Nicholas Piramal, Reliance Capital, SBI, SAIL and UTI Bank.
Abnormal Delivery:
Escorts, Sterling Biotech, Polaris, Arvind Mills, IPCL, Lupin, BASF India, BPCL, VSNL, Mahindra & Mahindra Ltd and Balrampur Chini.
Stock Futures with largest increases in OI:
Birla Corp, BRFL, Peninsula Land, Mahindra Gesco, Kesoram Industries, Unitech, Ansal Property, S Kumar Nationwide, Shree Cement and Sterlite Optical.
Stock Futures with Decreases increases in OI:
United Spirits, Bank of India, Reliance Capital, TTML, Century Textiles, Bongaigaon Refinery, Bajaj Hind, Siemens, HTMT and Nagarjuna Fertilizers.
Results Today:
Bajaj Auto, Nicholas Piramal, OCL India, Oriental Hotels, STAR, Tata Steel, Unichem Labs, Usha Martin, Dabur Pharma and Wyeth.
Brokers Recommendation:
R Com – Outperform from Macquarie with target of Rs650.
Tata Steel.
Allsec Technologies Ltd. (Q4 FY07) Result Update
"Lowering estimates for FY08, but upgrade to Buy".
Allsec Technologies Ltd. delivered below expected numbers for the second quarter in a row. Revenues and net profit were up just 1.2% and 0.5% respectively on qoq basis. The Company continued to face manpower ramp-up issues similar to Q3 FY07 leading to a business execution shortfall. Over the last two quarters, stand-alone headcount has decreased by ~573 people ie ~21%.
Operating margin was maintained near the previous quarter level. For the full year on consolidated basis, revenue growth stood strong at 35.8% while profit growth was lower at 19.6% bogged down by margin contraction due to B2K losses.
Management expects growth resumption from Q1 FY08 with rectification of manpower recruitment issues. Company is targeting ~4,000 people in voice segment by the end of the year.
On the back of significant underperformance in FY07 (actual EPS at Rs16.2 v/s expected EPS of Rs17), we are revising downwards our FY08 EPS forecast by 12.7% to Rs22.6. However, we are upgrading our view on the stock from ‘Hold’ to ‘Buy’ as Allsec has underperformed its peers and the market in the last three months declining by 23.5%. We see negligible downside from current levels but rather a likely upside of 20-30% in the next 6-8 months. We expect strong sequential growth in Q1 and Q2 of FY08.