Market takes cautious stance ahead of Fed meet

The market which opened on optimistic note tracking strong US and Asian markets, pared gains as the day progressed, on profit booking. Volatility also emerged since mid-afternoon trade. Asian markets were trading mixed, after the initial firmness. Most European markets were trading firm.

The BSE 30-share Sensex rose 29.74 points or 0.20% at 14,932.77. The benchmark index opened with a 135-point upward gap at 15,038.03 and rose further to hit a high of 15,142.04. It hit a low of 14,901.83 at 15:27 IST, at the fag end of the trading session.

The S&P CNX Nifty was up 16.85 points or 0.39% at 4,356.35. The Nifty August 2007 futures settled at 4309, a sharp 47.35 point discount as compared to spot closing.

Profit taking emerged at higher level in late trading as investors turned cautious ahead of the crucial Federal Open Market Committee, or FOMC meeting later in the day today, 7 August 2007. Fed is widely expected to keep interest rates on hold at 5.25% at a policy meeting late on Tuesday, 7 August 2007, but investors are eager to see central bank statements on economic growth and the US credit market turmoil. US stocks had got a boost on Monday, 6 August 2007, from speculation that the US Federal Reserve may take steps to reassure investors that troubles in the subprime mortgage market won't slow economic growth.

The market breadth was strong on BSE with over 1.5 gainers for every loser: 1,660 shares advanced as compared to 1,026 that declined, while 61 remained unchanged.

The BSE Mid-Cap index rose 0.34% to 6,574.90 while the BSE Small-Cap index gained 0.92% to 7,914.37.

The total turnover on BSE amounted to Rs 4626 crore as against Rs 4328 crore on Monday, 6 August 2007

The NSE F&O turnover was Rs 32668.01 crore as compared to Rs 37564.99 crore on Monday, 6 August 2007

Among the 30-member Sensex pack, 17 settled higher while the rest of them slipped.

Reliance Energy (REL), the country’s second largest power generation and distribution company in revenue, advanced 3.02% to Rs 765 on 9.89 lakh shares. It was the top gainer from the Sensex pack. The Supreme Court on Wednesday, 1 August 2007 admitted a petition from REL challenging its disqualification from the Rs 2,600-crore sea-link expressway project connecting Mumbai and Navi Mumbai.

India’s largest power generation company NTPC (formerly known as National Thermal Power Corporation) advanced 1.80% to Rs 166.50. As per reports that company is focusing all its attention in realising its goal of having 50,000 megawatt (MW) capacity by 2012. As on date, the installed capacity of NTPC is 27,904 MW.

Cement stocks advanced on fresh buying in the wake of infrastructure boom. Ambuja Cements (up 0.83% to Rs 127.40), ACC (up 0.35% to Rs 982.50), and Grasim (up 0.45% to Rs 2910) gained.

Recent reports suggest that Maharashtra has been witnessing an acute shortage of cement in the last two to three months resulting in prices shooting up to Rs 280-300 from Rs 240-250 in June 2007, an increase of Rs 40 to Rs 50 during this period. This shortage of cement has been attributed to heavy consumption by infrastructure projects.

Bharti Airtel, the country’s largest listed cellular services provider rose 1.86% to Rs 877.20 after its parent, Bharti Enterprises, and Wal-Mart signed a much delayed joint venture for wholesale operations.

India’s second largest listed cellular services provider Reliance Communications slipped 0.16% to Rs 530.70. As per reports, it is in advanced talks with American Tower Corp. to sell a strategic stake of up to 21% in its telecom towers unit.

Banking shares advanced on steady buying interest. Kotak Mahindra Bank (up 2.23% to Rs 781), Bank of India (up 1.59% to Rs 245.70), Bank of Baroda (up 2.23% to Rs 301.95), Canara Bank (up 3.97% to Rs 267.40) and Union Bank of India (up 2.21% to Rs 148.20) gained.

India’s largest commercial bank State Bank of India eased sharply from its high of Rs 1726 to settle 0.40% lower at Rs 1675.30. Reports that it may announce a stock-split and follow-on public offer simultaneously in the next few months, kept the stock in action. The bank aims to generate liquidity for its share whose value has gone up considerably. Post-split, face value is likely to be Rs 1 or Rs 2 per share.

ICICI Bank slipped 1.98% to Rs 870. The BSE Bankex was down 0.42% at 8,371.91

Tata Motors rose 1.12% to Rs 657.95 on high volumes of 13.41 lakh shares after 10 lakh shares traded were traded at Rs 660 per share on BSE at 11:28 IST in a block deal.

ITC, the country’s largest cigarette manufacturer slumped 3% to Rs 167.20 on high volumes of 17.68 lakh shares. It was the top loser from the Sensex pack.

The BSE FMCG Index lost 1.38% at 1,937.07, and was the top loser among the sectoral indices on BSE. Colgate (down 2.26% to Rs 399.35) and Britannia (down 1.15% to Rs 1600), ended in red.

Bajaj Auto (down 1.96% to Rs 2262) and Bhel (down 0.80% to Rs 1670) were the other losers from Sensex pack.

IT pivotals were in demand today. Tata Consultancy Services (TCS), the country’s largest IT services exporter, rose 0.42% to Rs 1107. It has reportedly inked a multi-year deal with Geneva-based International Organisation for Migration (IOM). Under the deal, TCS will build and implement an integrated financial management solution to meet the resource management challenges of IOM.

Wipro, the country’s third largest software exporter, eased from high of Rs 479.80 to end flat at Rs 457.80, after it announced after market hours on Monday, 6 August 2007, the acquisition of US-based, Nasdaq-listed outsourcing firm Infocrossing for approximately $600 million (around Rs 2430 crore) in an all-cash deal.

Infosys (up 1.24% to Rs 1890), and Satyam Computers (up 0.31% o Rs 463), logged gains

India’s largest private sector entity Reliance Industries (RIL) gained 1.05% to Rs 1800.80 on 6.38 lakh shares. Prime Minister Manmohan Singh on Monday, 6 August 2007, constituted an Empowered Group of Ministers to go into the issue of pricing of natural gas to be produced by RIL from its eastern offshore Krishna Godavari basin block.

Led by RIL and state run oil refining and marketing companies, the BSE Oil and Gas Index advanced 1.10% to 7,804.55. It was the top gainer among the sectoral indices on BSE

State-run oil marketing firms edged higher after crude oil prices declined sharply on Monday, 6 August 2007. Indian Oil Corporation (up 1.75% to Rs 407), HPCL (up 2.42% to Rs 256) and BPCL (up 1.67% to Rs 316) gained.

India’s largest private sector steel maker Tata Steel slipped 1.38% to Rs 641 after pricing an issue of foreign currency convertible alternative reference securities at Rs 876.6225 per share, a 35% premium over yesterday's 6 August 2007, closing price on NSE. Tata Steel's overseas issue was oversubscribed by more than two times and has a greenshoe option of $150 million, which has not been exercised, Tata Steel said late on Monday, 6 August 2007.

Top aluminium maker Hindalco Industries declined 0.76% to Rs 156.25 after its unit Novelis Inc. said it had signed a multi-year supply deal worth $1 billion with drinks cans maker Rexam Plc.

Top gainers from small-cap and mid-cap space were Jagatjit Industries (up 11% to Rs 99), Avanti Feeds (up 19.94% to Rs 57.45), Grabal Alok Impex (up 11.74% to Rs 136.10), Selan Exploration (up 10.27% to Rs 121.85), GM Breweries (up 10% to Rs 96.40), TV Today (up 5.80% to Rs 165.30), Emami (up 5.30% to Rs 257.10), TTK Prestige (up 9.63% to Rs 148), Pratibha Industries (up 9.36% to Rs 235.55), and REI Agro (up 7.24% to Rs 214.60).

Top losers from small-cap and mid-cap space were KSL & Industries (down 8.75% to Rs 169), UB Holdings (down 7.17% to Rs 802.95), Tudor India (down 5.25% to Rs 50.50), and ABG Shipyard (down 6% to Rs 574).

Real-estate stocks hogged limelight on renewed buying on hopes interest rates may remain steady. BSE Realty index was up 0.44% to 7,409.44. DLF (up 1.30% to Rs 588), Housing Development and Infrastructure (HDIL) (up 4.14% to Rs 520.40) and Mahindra Gesco Developers (up 0.70% to Rs 546) edged higher.

Orbit Corporation slipped from high of Rs 413.90 to settle 0.65% lower to Rs 390.50. The inital momentum was on back of reports yesterday, 6 August 2007, that Reliance Retail, an unlisted arm of Reliance Industries, and JSW Steel were in race to buy its land and building in Mumbai for about Rs 800 crore. It had surged 8.26% yesterday.

Kale Consultants jumped 3.66% to Rs 95 on reports it had acquired UK-based Zero Octa, a specialist provider of revenue management, integrity and audit software for airlines. Zero Octa, with revenue of $6 million in 2006, employs about 600 people and has a large part of its operations located in India. The acquisition was made for about 1.5 times Zero Octa’s sales and the consideration will be paid as earn-outs spread over 30 months.

Punj Lloyd, a global engineering, procurement and construction (EPC) services provider in energy and infrastructure domains, jumped 3.60% to Rs 287.70 after it bagged a Rs 590-crore contract for building a sulphur block at Bina Refinery of Bharat Oman Refineries, on Monday, 6 August 2007. The project is scheduled to be completed within 25 months. With this, the order backlog as on June 2007 for the group stands at Rs 16,480 crore.

Public sector diversified listed company Andrew Yule & Co jumped 5% to Rs 27.10 on reports that it has finally initiated the demerger processes for its various divisions.

ETC Networks was locked at the upper limit of 20% to Rs 70.85 on reports that its board approved the merger of Zee Interactive Systems with itself from 1 April 2007. The share-swap ratio has been fixed at two shares in ETC for each held in Zee Interactive.

Nitin Fire Protection Industries rose 1.70% to Rs 433.50 after Nitin Cylinders, a wholly owned subsidiary of the company, signed a memorandum of understanding (MOU) for the supply CNG gas cylinders to Iran. The value of the order is Rs 65 crore.

Prakash Industries spurted 5% to Rs 83 after its board approved issuing 12.1 million convertible warrants to Barclays Capital Mauritius at a conversion price of Rs 67.96 a share.

Binani Cement (BCL) rose 1.22% to Rs 70.50 on reports that it has submitted expression of interest (EoI) for a joint venture with National Aluminium Company (Nalco). Nalco is scouting for a joint venture partner to set up a cement plant that uses fly ash generated at its captive power plant.

Mumbai-based digital post-production and VFX specialist Prime Focus rose 1.86% to Rs 840 on reports that it is gearing up for another acquisition. The buzz is that it is targeting a facility in the United States of America.

Public sector Hindustan Copper (HCL) jumped 5% for the second straight day to Rs 109.10 on reports that it may be revived without any cash support from the government. A financial restructuring package worth Rs 637 crore is proposed by the ministry of mines that includes waiver of loan, interest, preference share capital, guarantee fee and reduction of capital. The combined measures are expected to substantially reduce HCL’s accumulated losses.

GMR Infrastructure slipped from high of Rs 876, and settled 0.35% higher at Rs 831. The company yesterday, 6 August 2007, announced that it had entered into a memorandum of understanding with Tamil Nadu Industrial Development Corporation for the development of a multi-product special economic zone in Krishnagiri District, Tamil Nadu

Era Constructions India surged 5% to Rs 552 on bagging a order in consortium with Karam Chand Thapar & Bros (C.S.) from National Highways Authority of India (NHAI) on build, operate and transfer (BOT) basis.

MphasiS, the global IT and business process outsourcing company, slipped 2% to Rs 282.70 after it posted 57.37% rise in consolidated net profit to Rs 51.30 on a 33.95% growth in sales to Rs 513.9 crore in Q1 June 2007 over Q1 June 2006.

Industrial Finance Corporation of India (IFCI) jumped 3.69% to Rs 66.10 after gaining 5% yesterday, 6 August 2007. Its board of directors in a meeting on Saturday, 4 August 2007 set a deadline of 14 September 2007 to receive expressions of interest (EOI) for offloading a 26% equity stake in the form of new shares to a strategic partner.

Jammu and Kashmir Bank jumped 2.54% to Rs 701 after Fitch Ratings assigned the bank's Rs 600-crore lower Tier 2 subordinated debt programme a national long-term 'AA(ind)' rating with stable outlook.

Meanwhile, India Index Services and Products (IISL) today launched a new sectoral index based on the infrastructure sector. The 25-stock CNX Infrastructure Index will include companies belonging to the telecom, power, port, air, roads, railways and shipping and other utility services providers. CNX Infrastructure Index constituents represented about 21.01% of the total market capitalisation as on 31 July 2007. The index is a market-capitalisation-weighted index with base date of 1 January 2004, indexed to a base value of 1000. The index values will be available on end of the day (EOD) basis.

Asian markets were mixed. Singapore's Straits Times (down 0.21% to 3,302.01), Hong Kong's Hang Seng (down 0.13% to 21,907.99), and Taiwan Weighted (down 0.89% to 8,862.31) slipped

South Korea's Seoul Composite (up 0.26% to 1,859.82), Shanghai Composite (up 0.50% to 4,651.23) and Nikkei 225 (up 0.04% to 16,921.77) gained

Wall Street surged higher in a volatile session yesterday, 6 August 2007. as investors tried to balance their concerns about the availability of credit with hopes that Tuesday's Federal Reserve meeting will be a calming influence after two weeks of frenetic trading on Wall Street.

The Dow jumped 286.87 points, or 2.18%, to 13,468.78. Broader stock indicators also rebounded. The S&P 500 index rose 34.61 points, or 2.42%, to 1,467.67. The Nasdaq Composite index was up 36.08 points, or 1.44%, to 2,547.33.

Crude oil prices continued to decline in Asia on Tuesday, 7 August 2007, on concerns about the US economy and as investors sold to lock in profit from last week's record-setting rally. Light, sweet crude oil for September delivery fell 23 cents to $71.83 a barrel in Asian electronic trading on the New York Mercantile Exchange. Oil prices had slumped more than 5% on Monday, 6 August 2007, the biggest slide since December 2004, to near $71 per barrel.