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Friday, March 30, 2007
Market may edge higher as mutual funds may provide support
The market may remain firm today as mutual funds are likely to support prices to prop up their year-end net asset values (NAVs). Today is last trading session of the financial year FY 2007 (year ending 31 March 2007).
The key data due today is the weekly inflation date which will be released at about 12:00 IST. Wholesale price inflation is forecast at 6.50 percent for the 12 months to March 17, little changed from an annual rise of 6.46 percent a week earlier. Annual inflation hit a peak of 6.73 percent in early February, its highest rate in more than 2 years.
Stock exchanges have clubbed settlement of trading done today with that of Monday (2 April)’s trading as banks remain closed on Monday for financial year closing.
The market-wide rollover of March futures to April was at 70-72%, as against 78-80% during the previous expiry. Rollover in Nifty March futures to April was at 65%, as against 74% in the previous expiry, according to estimates. A large portion of the rollover to April was short positions due to the existing weak investor sentiment.
Asian markets were mostly in the red on Friday (30 March 2007). Key benchmark indices in Hong Kong, China, Singapore, South Korea and Taiwan were down by between 0.03% to 0.15%. Japan’s Nikkei was up 0.07%.
US blue chips edged higher on Thursday after data showed the economy in the United States grew at a faster clip than previously thought in the final quarter of 2006. The Dow Jones Industrial Average rose 48.39 points, or 0.39 percent, to 12,348.75, rebounding after a three-day losing streak. The broader Standard & Poor's 500 index gained 5.30 points, or 0.37 percent, to 1,422.53. The Nasdaq Composite Index edged up 0.78 point, or 0.03 percent, to 2,417.88.
Oil rose nearly 1 percent, building on a 3 percent surge on Thursday, as a stand-off over the capture of British sailors and marines by Iran escalated and US naval exercises in the Gulf continued to ratchet up tension between Tehran and the West. Iran, the world's No. 4 oil exporter, had suspended an offer to release the only woman among the 15 British personnel it is holding. Their capture last week occurred just before the United Nations imposed new sanctions over Iran's nuclear programme. US oil rose 64 cents to $66.67 a barrel.
FIIs were net buyers to the tune of Rs 520 crore on Wednesday 28 March 2007, the day when Sensex had lost 240 points due to weak global markets. As per provisional data, FIIs were net sellers to the tune of Rs 172 crore on Thursday 29 March, the day when Sensex had risen 95 points tracking Asian recovery.
Intra-day Stock Ideas
NIFTY (3798) RES 3825 SUP 3778
BUY ORIENTBANK (185.6)
SL 181 T 193, 195
BUY TVTODAY (121.2)
SL 117 T 127, 129
SL 103 T 112, 114
SELL MANGLMCEM (137.90)
@ 140 SL 143 T 130, 128
SELL CUMMINSIND (256.15)
@ 258 SL 262 T 248, 246
Market Watch & Insider Trades
Insider Trades:
Gujarat Ambuja Cement Ltd: Shri P B Kulkarni, Director has sold in open market 70000 equity shares of Gujarat Ambuja Cement Ltd on 21st March and 22nd March, 2007.
Amara Raja Batteries Ltd: Franklin Templeton Mutual Fund (through its various schemes) has purchased from open market 51165 equity shares of Amara Raja Batteries Ltd on 26th March, 2007.
Market Volumes:
The turnover on NSE was up by 19.5% to Rs100bn. BSE FMCG index was the major gainer and gained 2.08%. BSE Consumer Durable index (up 1.45%), BSE Capital Good index (up 1.22%), BSE Pharma index (up 1.00%) and BSE Technology index (up 0.79%) were among the other major gainers.
Volume Toppers:
IFCI, Idea, ITC, IB Real estate, Sakhti Sugar, Gujarat Ambuja, TTML, IDFC, HLL, HCL Tech, Tata Motors, Bajaj Hindusthan, Arvind Mills, India Cement, Satyam Computer, NTPC and Infosys
Upper Circuit:
BPL, GMR Industries, Harrison Malyalam, Shah Alloys, KLG Systel, Goldstone Technology, BSEL Infrastructure, McLeod Russel, KEW Industries, Nirlon, Vypar Industries, IOL Broadband and BF Utilities.
Delivery Delight:
Amtek Auto, ACC, Bharti Airtel, CESC, Divis Laboratories, Gujarat Ambuja Cements, HCL Technologies, Hero Honda, India Cements, India Infoline, IPCL, IDFC, ITC, Jet Airways, Maruti, McDowell & Co, NDTV, Orchid Chemicals, Praj Industries, PNB, Reliance Capital, Reliance Industries, Sun Pharma and Tata Power.
Brokers Recommendations:
Dr Reddy’s Laboratories – Buy from Merrill Lynch
Aventis Pharma – Buy from Kotak.
Long Term investment:
TCS
Major News Headlines:
S&P affirms ratings on RIL at 'BBB'
Gitanjali Gems to foray into luxury retail market; to spend Rs1bn
i-flex wins order from First Bank Nigeria
Sterling Biotech Q4 net at Rs375.2mn (up 16%), sales at RS1.68bn (up 30%)
Aurobindo Pharma receives US FDA approval to sell Ceftriaxone
Ranbaxy to pay Rs6 per share as mid-year dividend
Man Industries gets Rs10bn order from USA
STRATEGY INPUTS FOR THE DAY
Marching ahead with less baggage!
It is the dull man who is always sure, and the sure man who is always dull.
As expected, short covering in the F&O segment on the settlement day led to a rally in the cash segment. A steep fall in the rupee against the dollar make bring some smiles to the IT counters. Volatile Asian markets and lack of conviction among the bulls could make the markets dull and choppy. The indices may manage to close in the green as fresh positions are taken.
Volume was up sharply yesterday due to the F&O expiry. The market breadth was positive. The last six reported figure by SEBI on FII inflows has been good. But, the NSE's provisional data for Thursday shows foreign funds being net sellers of Rs1.72bn in the cash segment on a day when the Sensex gained 95 points.
Another concern is the lower than usual rollover in the derivative segment and a high cost of carry. Having said that one should take these short-term indicators with a pinch of salt as they are not quite consistent and reliable. Given the fact that companies will soon come out with their latest quarterly numbers, we expect the market to remain lackluster with intra-day volatility. Watch out for the inflation data at noon as it might unnecessarily swing the mood.
US stocks managed to rebound on Thursday, with blue chips leading the pack at the end of a choppy session. A stronger-than-expected reading on fourth-quarter GDP growth offset a 3% spike in oil prices. The Dow Jones was up 48.39 at 12,348.75, and the broader S&P 500 gained 5.30 to 1,422.53. The Nasdaq Composite ended nearly unchanged, recovering after briefly dipping into negative territory for the year.
America's fourth-quarter GDP grew at a 2.5% annual rate, up from the previous estimate of 2.2% and a reading of 2% in the third quarter. Another encouraging report showed a surprise drop in the number of Americans filing new claims for unemployment last week.
US light crude oil for May delivery rose $1.95 to settle at $66.03 a barrel in New York. Prices have been on the rise recently amid worries about the conflict with Iran, the world's No. 4 exporter. The front-month contract was trading 61 cents higher at $66.64 a barrel in extended trading in Asia.
COMEX gold for April delivery fell $5.30 to settle at $667.60 an ounce. Treasury prices slipped, raising the yield on the 10-year note to about 4.64% from 4.61% on Wednesday. In currency trading, the dollar fell versus the euro and rose versus the yen.
European shares rose on Thursday. The pan-European Dow Jones Stoxx 600 index rose 1.1% to 374.29. The UK's FTSE 100 added 0.91% to 6,324.20, Germany's DAX Xetra 30 moved 1.15% higher to 6,895.27 and France's CAC-40 gained 1.42% to 5,131.53.
Stocks in Latin American finished higher, aided by a jump in international oil prices. Brazil's benchmark Ibovespa stocks index rose 871 points, or 2%, to 45,355.13. Mexican stocks rose on stronger than expected US fourth-quarter economic growth. The market's IPC index closed up 606 points, or 2.1%, at 28,704.24, breaking a three-session losing streak.
Asian markets are mixed this morning. The Nikkei in Tokyo was up 27 points at 17,291 while the Hang Seng in Hong Kong lost 93 points to 19,728. The Straits Times in Singapore declined 7 points to 3221 and the Kospi in Seoul was almost unchanged at 1449.
HOW MARKET FARED
Bulls roll over smoothly
The markets managed to make a come back after falling for three consecutive trading sessions as short covering towards the fag end lifted the key indices to close in green terrain. The FMCG index was the major gainer and gained 2.08%, others like Capital Good, Pharma and Technology followed suit. HLL, ITC and Suzlon were at the limelight. Finally, the 30-share benchmark Sensex advanced 95 points to close at 12979. NSE Nifty rose 37 points to close at 3798.
Ranbaxy gained by 1% to Rs341 after the company declared that they would pay Rs6 per share as mid-year dividend. The scrip has touched an intra-day high of Rs343 and a low of Rs336 and has recorded volumes of over 6,00,000 shares on NSE.
ONGC continued to trade firm as crude oil prices still hovers above $64 a barrel on the New York Mercantile Exchange. Prices have been on the rise amid worries about the conflict with Iran, the No. 4 oil exporter. The scrip gained by 1% to Rs874 touching an intra-day high of Rs881 and a low of Rs858 and recorded volumes of over 18,00,000 shares on NSE.
Man Industries was the star of the day although profit booking dragged it lower, however the scrip rallied by over 8% to Rs199 after the company secured Rs10bn order for Pipes. The scrip touched an intra-day high of Rs220 and a low of Rs192 and recorded volumes of over 1,00,000 shares on NSE.
FMCG stocks ended with smart gains. FMCG major HLL advanced over 3.5% to Rs205, ITC surged 2.5% to Rs146, Marico spurred 4.7% to Rs61, and McDowell was up 1.6% to Rs821.
Sugar stocks run was bought to an end in mid afternoon after following reports that government has stopped fresh sugar export permits under open license. Balrampur Chini dropped 2.9% to Rs64, Renuka Sugar declined 6% to Rs428, Dhampur Sugar slipped 1% to Rs71 and Bajaj Hindusthan edged lower 0.7% to Rs181. However, Sakhti Sugar rallied by over 12% to Rs88.
Pharma stocks were in the pink of health. Dr Reddy’s Lab advanced by 2.1% to Rs706, Ranbaxy was up by 1.8% to Rs345, Cipla gained by 1% to Rs236 and Sun Pharma added 1.5% to Rs1014.
Telecom stocks were a mixed bag. VSNL advanced 1.7% to Rs402 and Bharti Airtel recovered all its intra-day losses, the scrip gained 0.8% to Rs763. However, MTNL declined 1.7% to Rs146 and Reliance Communication edged lower by 0.3% to Rs418.
Select Auto stocks were in the reverse gear. Bajaj Auto declined 1.9% to Rs2421, TVS Motors declined over 3% to Rs59 and Tata Motors was down 0.5% to Rs716. However, Hero Honda advanced 2.8% to Rs676 and Maruti added 2% to Rs812
Market may remain volatile
The market is likely to witness volatility as US & European market ended on positive side and major Asian gauges are trading in the mix and may fall further in early trades. Although the domestic indices moved up on Thursday, intra-day volatility remains the major concern. Among the local indices, the Nifty has a support at 3770 and intra-day it may target 3840. The Sensex has a likely support at 12800 and may face resistance at 13150.
In the US markets, blue chips ended higher on Thursday, as investors scooped up large-cap, defensive stocks, against a backdrop of mounting global tensions. The broader Dow Jones was up by 48 points at 12349 and the tech-heavy Nasdaq was gained marginally to close at 2418.
Among the Indian ADRs losers outnumbered gainers on the US bourses. However, Dr Reddy's gained by 3.52% and Rediff, ICICI Bank , Satyam gained around 1% each. Among the laggards Wipro, Infosys, Patni, VSNL and MTNL were down marginally.
Crude oil prices edged higher, with the Nymex light crude oil for May series rising by $1.95 to close at $66.03 a barrel. In the commodity segment, the Comex gold for June delivery tumbled $5.30 to settle at $667.60 a troy ounce.
Investsmart - Morning Call
Market Grape Wine :
In House :
Nifty at a support of 3780 & 3750 levels with resistance at 3830 & 3850
levels .
Markets to be range bound .
Sell : BajajAuto intra day below 2420 target of 2375 s/l of 2440
Buy : ParsVnath above 270.5 target 286 s/l of 264
Out House :
Sensex at a support of 12858 & 12786 with resistance at 13073 & 13131
levels .
Buy : RIL & RPL
Buy : Aban & SesaGoa
Buy : Praj
Buy : ONGC
Buy : GlenMark & IDEA finds active buyers at dips
Buy : IciciBank & TITAN
Buy : ACC at dips
Dark Horse : Aban ,IFCI ,Skumar , IDEA , Glenmark , ONGc , RIL & ACC
TGIF : Thank God Its Friday : Book profits at all higher levels
Investsmart - Apar Industries Visit Note
We met the management of Apar Industries Ltd. Our initial view on the
company is positive, given a sharp growth in its high return businesses --
conductor and transformer oil -- and attractive valuation at 9X its
annualised 9MFY07 EPS.
Apar is the second largest player in the aluminium power conductor business
(contributing 43% of its total revenue), with a market share of about 25%.
The company is the largest exporter of aluminium power conductors from
India. With a surge in orders from Power Grid Corporation (PGCIL), Apar is
rapidly expanding capacity to gear up for additional demand. This is
supported by a robust order book position of Rs5.4bn
Apar's transformer oil division is the largest player, with a market share
of 50%, in this business. The division is a cash cow for the company,
generating a RoCE of 59%, contributing about 50% of its total
profitability. The company's key strength in the industry is its large
market share in the OEM market.
The company's polymer business remains the only segment which is a drag on
its overall profitability and return ratios. Apar is trying to address this
issue by setting up swing manufacturing facilities for high demand
products.
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Anand Rathi - Daily Technical Note
Nifty and Sensex have exhibited a narrow bullish candlestick.
Technically, one may use the level of 3750 (Nifty) and 12800 (Sensex) as the stop loss level.
Nifty faces resistance at 3900 and Sensex at 13400.
BSE Smallcap and BSE Midcap exhibited bullish candlesticks.
CNX IT has gained ground.
In the Punter's zone we have a BUY in Bajaj Hindustan and Mind Tree & SELL in Shree Renuka Sugar.
In the Technical call section, we have a BUY in Hind Lever and ITC & SELL in IDEA.
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Infinity: Buy Havell's, target Rs 530
Infinity.com Financial Securities, in a reaserch report released on March 26, has revised its recommendation on Havell's India to Buy with a price target of Rs 530.
The report said: "HIL trades at a P/E of 13.7x FY08E consolidated EPS of Rs 32.9. The stock trades at an EV/Sales of 0.7x and EV/EBIDT of 9x FY08 estimates. While the appreciation in stock price adequately captures the immediate benefit of consolidation, valuations should improve as benefits of synergies set in over the next 18-24 months.
"A ramp up in international revenues should help HIL sustain high growth levels without undue strain on its balance sheet. We revise upwards our recommendation to ‘BUY’ with a price target of Rs 530 over a one-year investment perspective as large scale benefits start flowing."
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US Market ends higher after GDP estimates revised higher
US Market fights back in last minutes to end in green despite crude kissing $66/barrel
Though market opened in the morning in a positive note, riding on the back of better than expected economic data, the indices spent much of the day sea sawing between high and low as crude oil prices shot up beyond $66/bbl today. Dow was up by 80 points at one time, but lower by almost 40 points at another time. But in the final minutes of trading, market made a comeback and ended the day with all the three indices in green.
Stock futures had extended their gains after the Commerce Department said the economy grew at a 2.5% annual pace in the final three months of 2006, slightly faster than the previous estimate of 2.2%. Oil prices surged above $66 a barrel for the first time since September amid increasing tension with Iran and strife in Nigeria.
24 out of 30 stocks closed higher for the day. For the day (29 March, Thursday) the Dow Jones Industrial Average closed higher by 48.39 points at 12348.75, Nasdaq higher by 0.78 points at 2417.88 and S&P 500 higher by 5.3 points at 1422.53. Altria, Exxon Mobil and American Express were the main Dow winners while 3M, General Motors and United Technologies were the major Dow laggards.
Nine out of ten economic sectors ended higher for the day. The lone sector that stood as a loser was technology. Airlines and Telecom fell the most while Oil and Pharmaceuticals were the main winners.
Better than expected economic data starts day in good tone
The stock market started the day on a positive note with Dow up by 65 points when market opened in the morning. The bullish bias was solidified when the initial claims and final Q4 GDP reports checked in better than expected. Claims for the latest week fell by 10,000 to 308,000. Q4 GDP was revised up to 2.5% from 2.2% (though it is still down from the 3.5% that was first reported for Q4 GDP).
Materials was one of the top gainers today, aided by the outperformance of the steel group which has rallied on the news that U.S. Steel is going to acquire Lone Star Technologies for $2.1 billion
Crude surpasses $66 amid tensions between UK and Iran
In the broad market for equities, trading volumes showed 1.509 billion exchanging hands on the New York Stock Exchange and 1.943 billion on the Nasdaq stock market. Advancing issues outpaced gainers by 5 to 3 on the NYSE, while decliners and gainers were in roughly equal balance on the Nasdaq.
Today crude-oil futures for light sweet crude for May delivery closed at $66.03/barrel (higher by $ 1.95/barrel or 3.04%) on the New York Mercantile Exchange. Prices also stood at their highest level of the year. Prices shot up after continuing tensions between Iran and the U.K. continued to ignite concerns about supply disruptions in the Persian Gulf. Iran also suspended the release of the female British trooper that it had previously said would be released late Wednesday or early Thursday.
Among major bluechip stocks, Boeing gained 0.4% after Colombia's largest airline, Avianca SA, said it would buy 10 of Boeing's 787 Dreamliner aircraft. Intel gained 1.1% after saying it would make design changes to boost microchip performance, including adopting techniques from rival Advanced Micro Devices
For tomorrow, the February Personal Income and Spending report are expected before market opens. Also on the economic calendar are Chicago PMI followed by Construction Spending and a revision of Michigan Sentiment.
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