Can bulls leave the world aside?
The world is a tragedy to those who feel, but a comedy to those who think.
Leave your feelings and thoughts aside as the market movement today may have no logical reasoning. The bulls have been on a roll this week notwithstanding the lack of catalysts and absence of buying from the FIIs. But, today could be somewhat different. There might be some softening at the start as US stocks slipped overnight and Asian markets are also in the red this morning. Crude oil prices climbed past the $65 per barrel mark yesterday and are still hovering around the same level. There has also been a sell-off in the metals market on the London Metal Exchange.
Federal Reserve Chairman Ben S. Bernanke has warned that the housing market in the US will continue to bleed and the central bank sees significant risks in the leveraged-buyout boom. Against this background, we may just close the week on a negative note. Having said that, one should not be surprised if the domestic market manages to brush aside global concerns and charts its own course.
Select stocks will be in focus. Bajaj Auto may cede some more ground on worries about the call options given to Allianz for increasing its stake in the two insurance joint ventures. A few foreign brokerages have already downgraded the stock. Others may follow suit. But, those with an eye on the long-term and a strong heart may consider entering the stock at lower levels. Tata Steel is likely to rise after posting strong results. Tata Motors will hog the limelight as it is set to announce its results today. Dr. Reddy's will also declare its results today.
Among the other big names unveiling their results today include the likes of Marico, Jaiprakash Associates, Federal Bank and Sun Pharma.
Deccan Aviation will remain in the spotlight amid market grapevine of an impending stake sale. Rumors have it that the ADAG is a strong contender for picking up a substantial stake in the low-cost carrier.
FIIs were net buyers of Rs5.18bn (provisional) in the cash segment yesterday while the domestic institutions pumped in Rs6.34bn. In the F&O segment, foreign funds poured in Rs13.4bn. On Wednesday, FIIs were net sellers of Rs1.39bn. Mutual Funds were net buyers of Rs3.36bn on the same day.
US stocks dropped for a third day this week, amid renewed concerns that a troubled housing market will hurt growth in the world's largest economy. Rising oil prices, mixed economic news and some investor fatigue also had a role to play in yesterday's decline.
The S&P 500 finished almost flat at 1512.75. The Dow Jones Industrial Average slipped 10.81 points, or 0.1%, to 13,476.72. The Nasdaq Composite Index fell by 8 points, or 0.3%, to 2539.38.
Fed chief Bernanke said that stricter lending rules may lead to foreclosures in the housing market. Bernanke said at a conference in Chicago that tighter lending standards will limit mortgage financing, further restraining home sales that fell to the lowest level in almost four years in March.
US light crude oil for June delivery rose $2.30 to settle at $64.85 a barrel on the New York Mercantile Exchange. The front-month contract was quoting 8 cents up at $64.94 a barrel in extended trading in Asia.
Gold futures closed lower for a two-day drop of nearly $16 an ounce and copper futures tumbled more than 3%, to stretch its losing streak to four successive trading sessions. COMEX gold for June delivery fell $4.30 to settle at $657.20 an ounce.
The dollar rallied to a three-month high against the yen and one-week high versus the euro. Treasury prices slipped, pushing the yield on the 10-year note to 4.75% from 4.71% late on Wednesday.
A measure of six metals traded on the LME, including copper and zinc, slumped 3.3%. Copper slid 4.7%, zinc dropped 4.7% and nickel fell 3.2%.
Asian stocks are mostly down this morning, with the Morgan Stanley Capital International Asia-Pacific Index set for its first loss in three weeks. BHP Billiton and Sumitomo Metal declined after metals prices slumped on the LME.
MSCI's Asia-Pacific Index fell 0.4% to 147.55 at 11:07 a.m. in Tokyo, taking its decline this week to 0.6%. Japan's Nikkei 225 Stock Average lost 0.2% to 17,466.71. Benchmarks rose only in New Zealand, Taiwan and the Philippines. Indonesia's stock market is close for a public holiday.
Brazilian shares closed lower on profit-taking while Mexican equities reached an all-time high for the second straight session. In Mexico City, the IPC index of the 35 most-traded issues rose 0.5%, or 137 points, to 30,478.37, after hitting an intraday high of 30,535.89. In Sao Paulo, the broader market as measured by the benchmark Bovespa index closed 106 points, or 0.2%, lower at 51,631.47.
Bulls may take breather
Markets yet again registered strong close for second consecutive trading session after closing flat on Tuesday. The frontline stocks once again lifted the NSE Nifty to close above the 4200 mark with Reliance industries, SBI, ICICI Bank, Infosys and Tata Steel leading the pack. The Oil & Gas stocks were the major gainers others like Bank and Technology followed suit. However, Auto index was the major loser as heavy weight Bajaj Auto declined over 6.5%.
Technology stocks witnessed some momentum after being on the side lines in previous trading sessions. Deccan Aviation flew higher by over 22% to Rs145 after reports stated that ADAG group was interested in picking stake in the company. Finally, the 30-share Sensex closed at 14299 gaining 172 points. NSE-50 Nifty ended at 4219 adding 48 points.
Tata Steel gained by 1.6% to Rs598 after the company announced its Q4 result with net profit at Rs11.03bn (up 40.8%) and sales at Rs56.09bn (up 21.6%). The scrip has touched intra-day high of Rs608 and a low of Rs590 and has recorded volumes of over 67,00,000 shares on NSE.
Bajaj Auto plunged by over 6% to Rs2503. The company approved the demerger scheme. The companies Q4 Group profit was at Rs3.77bn (up 5.6%) and standalone net sales at Rs23.14bn (up 6.8%). The scrip touched intra-day high of Rs2749 and a low of Rs2395 and recorded volumes of over 18,00,000 shares on NSE.
TTML marginally edged higher by 0.4% to Rs27 on 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. The scrip touched intra-day high of Rs28 and a low of Rs27 and recorded volumes of over 1,00,00,000 shares on NSE.
VSNL gained 1.6% to Rs457 amid reports that the Government may consider the issue of residual stake sale in today's cabinet meeting. The scrip touched intra-day high of Rs468 and a low of Rs450 and recorded volumes of over 5,0,000 shares on NSE.
Patni Computer rallied by over 7% to Rs514 after the company announced the formation of its Consulting Services practice within its Manufacturing Business Unit. The scrip touched intra-day high of Rs536 and a low of Rs482 and recorded volumes of over 18,00,000 shares on NSE.
Banking stocks continue its uptrend. Frontline stocks like 3.2% to Rs1324, ICICI Bank is up by 2.3% to Rs939, HDFC Bank has advanced by 1.5% to Rs1049. Corp bank, OBC and Canara Bank are the major gainers among the Mid-Cap stocks.
Petroleum marketing companies were in action. There were reports earlier regarding hike in petrol and diesel prices. However, cabinet later on denied the reports. HPCL rose over 3.6% to Rs306; BPCL advanced by over 3% to Rs380 and IOC added 5% to Rs514.
Insider Trades:
Balrampur Chini Mills Ltd: 1) Morgan Stanley & Co. International Plc A/C Morgan Stanley Dean Witter Mauritius Co. Ltd. 2) Morgan Stanley & Co. International Plc A/C Morgan Stanley Investment Mauritius Ltd has purchased from open market 1700000 equity shares of Balrampur Chini Mills Ltd on 14th May, 2007.
Sectoral Movement:
BSE Oil & Gas index was the major gainer and gained 2.41%. BSE Bank index (up 1.69%), BSE PSU index (up 1.42%), BSE Technology index (up 1.16%) and BSE FMCG index (up 1.09%) were among the major gainers. However, Auto index lost 0.82%.
Volume Toppers:
IFCI, Bhagwati Banquets, Nagarjuna Fertilizer, TTML, RPL, Unitech, Idea, SAIL, Arvind Mills, Tata Steel, PFC, R Com, Ashok Leyland, ITC, Deccan Aviation, Satyam Computer, Balrampur Chini and UCO Bank
Upper Circuit:
Atlanta, Radha Madhav, GMR Industries, Mefcom Agro, Tripex Overseas, Vypar Industries, Anant Raj Industries, Swan Mills and Ruby Mills.
Delivery Delight:
Federal Bank, Grasim Industries, HDFC Bank, IPCL, Infosys, Reliance Capital, Tata Chemicals, Tata Tea and Bombay Dyeing.
Abnormal Delivery:
Sundram Fasteners, BEL, Rolta India, LIC Housing Finance, Steel Authority of India Ltd, ONGC, HDFC and Raymond.
Stock Futures with largest increases in OI:
Sterlite Optical, Patel Engineering, Deccan Aviation, Rolta, BRFL, Financial Technologies and Patni
Stock Futures with Decreases in OI:
Sobha Developers, United Spirits, J&K Bank, OBC, JP Associates, Ansal Property and Kotak Bank.
Results Today:
Deepak Fertilizers, Dr Reddy’s Lab, Federal Bank, GTC Industries, JP Associates, KEI Industries, SRF Polymers, Tata Motors and VSNL.
Results Corner:
Bajaj Auto Q4 net (down 9%) to Rs3.08bn and net sales at Rs23.13bn (up 6.7%).
Tata Steel Q4 profit at Rs11.03bn (up 40.8%) and sales at Rs56.09bn (up 21.6%).
Brokers Recommendations:
Ahmednagar Forgings – Buy from Emkay with target of Rs335.
Patel Engineering – Buy from Motilal Oswal with target of Rs504.
Long Term investment:
Great Offshore.
Major News Headlines:
Chidambaram says 'scam' unlikely in India's IPO market
Usha Martin recommends 5:1 stock split and Rs3.75 per share dividend
Orient Paper to mull ratio and price of Rights Issue on 24th May
Sugar Exim to give mills incentive to boost exports
HDFC Bank to raise an additional share capital US$1bn or Rs42bn
Hindusthan Zinc cuts zinc prices by 3.5%.
Great Offshore Ltd. was formed by de-merging the offshore division of The Great eastern shipping company. The Company is into offshore logistics, offshore drilling, Marine construction and port & terminal services. The company’s fleet strength stands at 40 offshore vessels which include 2 exploratory rigs, 26 offshore support vessels, 11 harbor tugs and one construction barge.
Rising crude prices, increasing trend in exploration & production is bound to give Great Offshore benefit as they are well diversified and well maintained fleet. The Company’s assets are on 3-5 years contract that indicates long term profitability. It is been learnt that the company is entering into new asset contract on a higher rate of at least 20-25%, this is because of high demand in exploration and production. The Company is into a huge expansion foray with seven vessel additions in FY07 and targeted another two more by FY10, One jack up rig and one MSV, both from Bharati Shipyard. It is estimated that this new asset will increase the revenue of the company by 50% by FY10.
The Company plans to focus on marine construction projects, management back on this huge opportunity and is expecting revenue of Rs. 200cr in FY08. It is estimated that Great Offshore has 74% of the revenue is been contracted for the next 2 years. Currently the Great Offshore stock trades at a P/E of 7.6x FY09E EPS of Rs 93.6.