Subdued opening likely
Open your mouth and purse cautiously, and your stock of wealth and reputation shall, at least in repute, be great.
Profit booking and weakness in IT shares dragged the main indices down from intra-day peaks yesterday. The sudden and sharp pullback in the afternoon session just goes to show the vulnerability of the market at all-time highs. The Sensex has gained some 2,000 points from the lows hit in March. As a result, valuations, especially that of the large cap stocks, appear to be much higher than historical average. The benchmark BSE index still needs around 325-330 points to make a new historic high. It may take a while to reach there as the market will be choppy ahead of Thursday's derivative settlement. Investors and traders should remain cautious at this juncture. Big-time fresh buying should be avoided though select stock picking after proper home work can be done.
Today, we don't have much in the way of global cues as the markets in the US, UK and Europe were shut for holidays. Asian markets are mixed this morning with the Nikkei in Tokyo advancing and the Hang Seng in Hong Kong losing a little bit of ground. Oil prices are hovering above the $64 per barrel mark. We expect the market to open on a cautious note. It will remain rangebound and volatile with lots of stock specific action to go with it. Small-Cap and Mid-Cap shares may continue to attract attention with the frontline counters looking a bit tired. Though there is no big threat to the ongoing secular bull run, returns may not be as high as in the past. The market will continue to witness alternate bouts of buying and selling with a slightly positive bias.
Reliance Industries may come under some pressure amid reports of inspection at its proposed multi-product SEZ at Jamnagar by Directorate of Revenue Intelligence. Hero Honda may be in action as it has launched two new variants of the Splendour. Sobha Developers has forayed into the booming retail segment with the launch of Sobha Lifestyle. With the rupee breaching the 40.50 mark yesterday, IT shares will continue to feel the heat. Cellular mobile service providers like Reliance Communications, Idea and Bharti Airtel may attract some buying amid reports of value unlocking from the infrastructure business.
Adani Enterprises is likely to crash after SEBI banned its promoters for two years due to the alleged price manipulation. Sugar stocks will remain weak as a host of brokerages have come out with negative calls on the sector. ICI India may rise as its Board will consider a higher buyback price of Rs575 per share instead of Rs350 a share earlier. Rico Auto Industries and Zhejiang Jinfei Co. Ltd. of China have signed an agreement for establishing a JV in India to manufacture aluminium alloy wheels for two wheelers. Easun Reyrolle's Board will meet on May 30 to consider results and a stock split.
Markets managed to end in positive terrain as selling pressure set in towards the end of the session. IT stocks were the major laggards led by heavy weights like Infosys, Wipro and Satyam Computer. The Mid-Cap and small cap stocks were in momentum as both the index gained nearly by 1% each. Finally, the 30-share Sensex ended higher by 49 points to close at 14387. NSE-50 Nifty gained 8 points to close at 4256.
Unitech rallied by over 9% to Rs595 after the company declared that hey would give bonus shares in the ratio of 1:1. The scrip touched intra-day of Rs604 and a low of Rs545 and recorded volumes of over 79,00,000 shares on NSE.
Bharti Shipyard gained by over by 3% to Rs437 after the company received order worth Rs4.18bn. The scrip touched intra-day of Rs450 and a low of Rs423 and recorded volumes of over 62,000 shares on NSE.
Ranbaxy edged higher by 0.4% to Rs382 after the company declared that they have purchased 13 Bristol-Myers Squibb Brands. The scrip touched intra-day of Rs390 and a low of Rs381 and recorded volumes of over 8,00,000 shares on NSE.
IOC gained by 1.4% to Rs481 after the company announced its result with net profit at Rs75bn (up 52%) and sales at Rs1994bn (up 20.5%). The scrip touched intra-day of Rs494 and a low of Rs476 and recorded volumes of over 2,00,000 shares on NSE.
Jain Irrigation surged by over 3% to Rs465 after the company announced that they would buy 50% stake in Israel's Naandan for $21.5mn. The scrip has touched intra- of Rs475 and a low of Rs451 and has recorded volumes of over 48,000 shares on NSE.
Banking stocks were among the major gainers. HDFC Bank surged by over 5.5% to Rs1127, SBI was up 0.7% to Rs1308 and ICICI Bank added 1.1% to Rs922. bank of Baroda, Canara bank and Bank of India were the major gainers among the Mid-Cap stocks.
Oil exploration stocks were a mixed bag. Reliance Industries pared its gains on back of profit booking the scrip edged lower 0.4% to Rs1723 and ONGC edged higher 0.5% to Rs911. Oil Refinery stocks gained as HPCL advanced 0.32% to Rs280 and IOC added 1.4% to Rs481.
Pharma stocks were in good health. Glaxo surged by over 3.5% to Rs1270, Cipla was up by 1.7% to Rs208, Dr Reddy’s Lab gained 0.8% to Rs655 and Lupin added 1.5% to Rs700.
Technology stocks were on the receiving end as Indian Rupee is trading at a nine year high at Rs40.50 per dollar. Infosys declined by 1% to Rs1971, Wipro was down by 0.8% to Rs539 and Satyam Computer slipped by 0.5% to Rs469.
Insider Trades:
UFLEX Limited: Anshika Consultants Private Limited (part of the promoters' group) has purchased from open market 44026 equity shares of UFLEX Limited on 25th May, 2007.
The Great Eastern Shipping Co. Limited: Bharat k. Seth, Deputy Chairman & Managing Director has purchased from open market 25000 equity shares of The Great Eastern Shipping Co. Limited on 22nd May, 2007.
Educomp Solutions Limited: Reliance Growth Fund has sold from open market 91476 equity shares of Educomp Solutions Limited on 23rd May, 2007.
Volume Toppers:
RNRL, RPL, Nagarjuna Fertilizers, Idea, Dish TV, SAIL, Unitech, Dena bank, R Com, IVRCL Infrastructure, IDFC, ITC, Satyam Computer, Zee News, Welspun Gujarat, NTPC, Ahishek Mills and Reliance Capital
Upper Circuit:
United Breweries, KEW Industries, Tele Data, Raj Tele, Avaya Global, Unity Infrastructure, Eicher Motors, Karut Network, KEI Industries, Rasoi, Tripex Industries, Sujana Metal, Flawless Diamond, Nirma, ION Exchange and Infomedia
Delivery Delight:
Andhra Bank, Arvind Mills, ACC, Bank of Baroda, BEML, BHEL, Chambal Fertilisers, Cipla, Deepak Fertilizers, Kesoram Industries, National Aluminium, OBC, Ranbaxy Laboratories, SCI, Siemens and TVS Motors.
Abnormal Delivery:
VSNL, ABB, APIL, SCI, ITC, McDowell, Tata Tea, Union Bank of India, SAIL, ICICI Bank, Bombay Dyeing, SBI and Federal Bank.
Results Today:
ACE, Adhunik Metaliks, Bajaj Electricals, Britannia, HPCL, India Hume Pipe, L&T, Pricol, Sanghvi Movers, Savita Chemicals, Shasun Chemicals, Sunil Hitech, Tata Coffee, Thermax and Torrent Power.
Results Corner:
M&M Q4 net profit at Rs10.68bn (up 25%) and total income (net of excise) at Rs102.45bn (up 23%)
Dwarikesh Sugar Q2 loss of Rs2.86mn against profit of Rs85.74mn, net sales at Rs638mn (up 24%)
IOC full year profit is at Rs75bn (up 52%) and sales at Rs1994bn (up 20.5%)
Brokers Recommendations:
ITC - Underperform from CLSA with target of Rs150
Ramkrishna Forgings – Buy from Man Financial with target of Rs197.
Long Term investment:
Gayatri Projects
Major News Headlines:
Monsoon hits Kerala four days earlier than normal, says MET
M&M to combine all engineering services into one unit
IOC, Suntera, Oil India acquire stake in Nigerian field
GMR Infra to acquire 100% stake in GMR Aviation
Jain Irrigation to buy 50% stake in Israel's Naandan for $21.5mn
Ranbaxy buys 13 Bristol-Myers Squibb Brands
Northgate Technologies announces 1:1 bonus issue
Bharti Shipyard receives order worth Rs4.18bn
Crompton Greaves to buy Ireland’s Microsol holdings