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Thursday, November 16, 2006
Profit taking trims early gains
The northbound trend remained intact for the sixth consecutive session, with the market witnessing volatile moves and swinging 129 points in intra-day trades. The Sensex failed to hold on to its early gains and closed off its highs amid profit taking towards the close. Riding on the back of yesterday's buoyant close and optimism in several international markets, the Sensex resumed 32 points higher at 13501 and advanced sharply on sustained buying support to move above 13550 and touch a new intra-day high of 13588. After remaining above 13500 during the first half of the trading session, the Sensex witnessed profit taking and slipped below 13500 to touch the day's low of 13459, 10 points below its last close. However, the index ended the session with steady gains of 37 points at 13506, while the Nifty gained one point to close at 3877.
Among the gainers, ACC surged 6.65% at Rs1,087, HDFC Bank soared 6.26% at Rs1,145, SBI jumped 3.56% at Rs1,220, Satyam rose 2.53% at Rs438, HDFC advanced 1.63% at Rs1,556, Gujarat Ambuja added 1.20% at Rs139 and Wipro gained 1.17% at Rs553. NTPC, ICICI Bank, Grasim, L&T and RIL ended the day in positive territory. However, Ranbaxy dropped 1.51% at Rs397, Infosys fell 1.31% at Rs2,194, ONGC lost 1.19% at Rs870, Maruti shed 1.18% at Rs894, Reliance Communication slipped 1.18% at Rs397, Tata Motors was down 1.17% at Rs814, Hindalco dropped 1.10% at Rs176 and Hero Honda closed weaker by 1.05% at Rs706. TCS, Tata Steel, Bajaj Auto, Dr Reddy's, REL, ITC, BHEL, Bharti Airtel, HLL and Cipla ended the day in negative territory.
The market breadth was negative, with the losers outpacing the gainers in the ratio of 1:0.65. Of the 2,610 stocks traded on the BSE, 1,003 stocks advanced, 1,536 stocks declined and 71 stocks ended unchanged. Baring the Bankex, the PSU index and the CG index the remaining sectoral indices ended with marginal losses. The BSE Bankex gained 2.16% at 7212. The BSE PSU index and the BSE CG index were up with marginal gains.
Banking stocks were in the limelight once again. Most of the Bankex stocks ended with steady gains, with HDFC Bank being the major gainer with gains of 6.26% at Rs1,145. Federal Bank advanced 4.19% at Rs223, Indian Overseas Bank added 3.67% at Rs120, UTI Bank surged 3.61% at Rs484, SBI gained 3.56% at Rs1,220 and Bank of India was up 3.36% at Rs192. Union Bank of India, Oriental Bank of Commerce, Andhra Bank and Punjab National Bank gained 1-2% each. ICICI Bank and Canara Bank also ended the day in positive territory. However Karnataka Bank dropped 1.55% at Rs114 while Kotak Mahindra Bank was down 0.84% at Rs399. Allahabad Bank, Bank of Baroda, Vijaya Bank and Centurion Bank of Punjab ended the day in negative territory.
Over 5.16 crore Gujarat Ambuja Cements shares changed hands on the BSE followed by IDFC (1.10 crore shares), Silverline Technologies (67.25 lakh shares), IFCI (48.44 lakh shares) and Nandan Exim (40.18 lakh shares).
Value-wise Gujarat Ambuja Cements registered a turnover of Rs708.24 crore on the BSE followed by Tech Mahindra (Rs306.14 crore), Mahindra Gesco (Rs299.29 crore), Hindustan Zinc (Rs192.05 crore) and ACC (Rs175.83 crore).
Firm global indices signal positive outlook
Following gains of around 400 points during the last five trading session the market bias may remain positive on strong fund buying into the local market and surging international indices. The market crossed the new all time high of 13506 in yesterday's trades and is likely to take further lead as buying interest continues in large-caps and several other sectoral counters. A strong overnight US markets and sharp rise in several Asian indices in current trades may augur well for the markets. Among the key local indices, the Nifty could test higher levels around 3885-3850 range and has supports at 3840 and 3821. The Sensex has a likely support at 13330 and may face resistance at 13500.
Major US indices registered significant gains on Wednesday, after reports from the Fed's recent policy-setting meeting stating that cutting inflation was the central bank's greatest concern. With the Dow Jones moving up to after reports another record close 12252, up 34 points which the Nasdaq moved up by 12 points to close at 2443. During the trading session, the Dow Jones hit a new intra day high at 12,291.73 while the Nasdaq climbed up to 2,45.56, its highest mark in almost six years.
Barring few, most of the Indian ADRs traded firm on the US bourses. MTNL led the pack with gains of nearly 5% while ICICI Bank and Rediff jumped over 2-3% each. Among the laggards Wipro and Tata Motors were down around 1% each.
Crude oil prices in the US market rose on Wednesday, with the Nymex Light Crude oil for December delivery rising 48 cents to close at $58.76 a barrel. However, in the commodity space, the Comex gold for December series dropped $1.50 to settle at $623.80 a troy ounce.
On Nov 14 2006, FIIs were net buyers of stocks to the tune of Rs1523.80 crore (purchases worth Rs3096.90 crore and sales of Rs1573.10 crore) while domestic mutual funds were net sellers of stocks to the tune of Rs39.50 crore (purchases worth Rs474.31 crore and sales of Rs513.81 crore).
Indian shares seen trading sideways
Indian shares are likely to trade sideways on Thursday as investors pause after a run to record highs, with leads from other Asian markets subdued ahead of key U.S. data.
But the downside for an index that has hit all-time highs on four successive days should be limited by strong foreign fund flows that have topped $7.7 billion this year.
That has helped the key index <.BSESN> gain 15 percent since the start of September and more than 43 percent so far this year, making it the best performer in Asia-Pacific.
"We are seeing investors turn more cautious at these levels, picking specific stocks and more mid-caps," said Ketan Shah at Prabhudas Lilladher brokerage.
"But there is enough liquidity in the market to keep up the momentum, barring big profit sales."
The 30-share BSE index closed 0.33 percent higher at 13,469.37 points on Wednesday, a record close, after it scaled a record high of 13,506.08 in intra-day trade.
STOCKS TO WATCH
* Hindustan Zinc Ltd.
* Zandu Pharmaceutical Works Ltd.
* Power generation and air conditioning equipment maker Thermax Ltd.
* State-run National Aluminium Co. Ltd.
* BSEL Infrastructure Realty Ltd.
FACTORS TO WATCH * Indian bonds seen pausing ahead of auctions [IN/] * Indian rupee may edge higher on yen strength [INR/] * FOREX-Yen jumps on report China c.bank buying currency [FRX/] * Oil rises on U.S. stock fall, OPEC cut talk [O/R] * GLOBAL MARKETS-Stocks subdued ahead of data, yen jumps
[MARKETS/AS] * STOCKS NEWS ASIA-Tokyo firms on dividend hopes, Australia slips
Profit taking may cap upside
The market is likely to remain firm but the upside may be capped by profit taking with the Sensex hitting a string of record highs over the past few days. Continued strong FII inflow may keep sentiment firm. The Asian markets were mostly in the green. As per news which has just hit the market, the Bank of Japan has kept interest rates unchanged at 0.25% as was widely expected by the market.
FII inflow for calendar 2006 has reached $7.8 billion (till 14 November) compared to a record inflow of $10.7 billion in 2005. Revision in earnings estimates by brokerages for companies following strong Q2 results has fuelled surge in FII inflow in the past few weeks. Another factor that has contributed to the surge in FII inflows is the fresh number of FIIs registering with Sebi every day. Since January this year, there has been an addition of over 150 FIIs, and the aggregate now stands at 978. A strong global liquidity, too, has aided the fund flow.
A section of the market attributes the solid surge on the Indian bourses to increasing recognition of India’s long-term growth prospects. From 4,644 on 23 June 2004, it has galloped 190% in less than two and a half years.
FIIs were net buyers to the tune of Rs 262 crore in index-based futures on Wednesday. They were net sellers to the tune of Rs 31 croer in individual stock futures on that day. As per provisional data, FIIs were net sellers to the tune of Rs 84 crore in the cash segment on that day.
Key benchmark indices in Japan, Hong Kong, Singapore and Taiwan were up by between 0.2% to 0.4% on Thursday.
US stocks rose on Wednesday as a proposed airline merger lifted airline shares and after positive broker comments sparked a surge in Google Inc.'s shares. But the three major US stock indexes ended sharply off the session's best levels after minutes from the Federal Reserve's recent policy-setting meeting sparked worries that the central bank could delay interest-rate cuts as it fights to keep a lid on inflation. The Dow Jones industrial average gained 33.70 points, or 0.28 percent, to end at a record 12,251.71. The Standard & Poor's 500 Index added 3.35 points, or 0.24 percent, to finish at 1,396.57. The Nasdaq Composite Index rose 12.09 points, or 0.50 percent, to close at 2,442.75. The key US data viz. US consumer prices data is due later in the day.
US crude was steady at $58.76 after climbing 48 cents on Wednesday, boosted by US data showing sharp fall in fuel inventories and after OPEC signalled it might need to cut crude output again in December.
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FII: + Rs1529 Cr MF's - Rs40Cr
FII Gross purchases Rs 3096.90 Cr Gross Sellers Rs 1573.80 Cr Net Buyer Rs 1523.80 Cr
MF Gross Purchases Rs 474.31 Cr Gross Sellers Rs 513.81 Cr Net Sellers Rs-39.50 Cr.
This FII number includes the Rs 900 cr + TCS deal but even after that the number in excess of Rs 400 cr is certainly enterprising.
Sharekhan Investor's Eye - Nov 15 2006
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Thermax Mind-blowing results Result highlights
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Leading private banks can breathe easy
The RBI has started granting branch licenses to banks caught in the IPO scam. ICICI Bank has received permission for 100 new branches and 500 ATMs to add to its current network of 625 odd branches and 2,325 ATMs across the country.
SECTOR UPDATE
Pharmaceuticals
US court rules in Ranbaxy’s favour
A US appeals court has upheld a district court ruling that gave Israel's Teva Pharmaceutical Industries and India's Ranbaxy Laboratories exclusive rights to sell generic forms of Merck & Co. Inc.'s blockbuster anti-cholesterol drug simvastatin (brand name: Zocor).
Banking
Improved performance across bank groups
Key points
- The impressive financial performance is likely to sustain as the banking sector is all poised for improved financial performance in FY2007 on the back of the robust credit demand, improving asset quality and stable costs.
- There has been a significant improvement in the asset quality across all bank groups as the NPAs at the gross and net levels showed a significant improvement due to lower incremental NPAs and historical write offs and provisioning.
- The sensitive sectors are under the scanner and the RBI has been repeatedly coming out with cautionary statements regarding the banks’ exposure to the sensitive sectors, especially real estate. The PSBs have more than doubled their exposure to real estate. However, the exposure still remains lower than the other bank groups at 14.2%.
- The credit growth for the last couple of years has been in excess of 30%. The flow of credit to the different sectors has remained unchanged except for the bank credit to the industrial sector (small, medium and large), which decreased by 200 basis points to 40% in March 2006 compared to 42% in March 2005.
- The new priority sector lending guidelines are negative for foreign banks. The off-balance sheet exposure of the foreign banks on an aggregate is significantly offline than the entire banking sector data mainly due to their presence in the derivatives market. The RBI wants to realign the operations of foreign banks and make direct lending a larger part of their total assets.
VIEWPOINT
United Phosphorus
United Phosphorus to buy Cerexagri
United Phosphorus Ltd (UPL) is to buy Cerexagri, the France-based crop science business unit with an annual revenue of 250 million euros. Cerexagri specialises in plant protection products, mainly fungicides. The deal size is estimated at around 111 million euros (Rs640.47 crore). Cerexagri has a strong distribution network in the USA and Europe, which accounts for 70% of the company’s revenues. This would be UPL’s fifth acquisition in the calendar year, making it the third largest generic agrochemical company in the world.
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