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Monday, April 30, 2007
Morning Call - Apr 30
Market Grape Wine :
In House :
Nifty at a support of 4055 & 4025 levels with resistance at 4130 & 4166 levels .
Markets to remain range bound with negative bias.Reduce position at higher levels.
Intra Day: Buy Parsavnath above 336 with a TGT of 347 and a SL of 331
Buy HCL Tech above 332.50 with aTGT of 342 and a SL of 326
Sell ICICIBANK with SL
Buy IDFC above 101 with SL
Out House :
Markets at a support of 13858 & 13786 levels with resistance at 14141 & 14242 levels .
Buy : RIL
Buy : Rolta
Buy : IDEA
Buy : Praj & GlenMark
Buy : ICRA & Crisil
Buy : JSW & Tisco
Buy : SesaGoa & ABAN
Indiainfoline - Intraday Calls
NIFTY (4083) S 4039 R 4128
Buy IOC at Rs436 with SL of Rs432 and target of Rs444, 446
Buy BEL at Rs1687 with SL of Rs1675 and target of Rs1710, 1715
Buy BEML at Rs980 with SL of Rs972 and target of Rs1000, 1005
Sell REL at Rs509 with SL of Rs514 and target of Rs501, 498
Sell UTI Bank at Rs455 with SL of Rs460 and target of Rs447, 445
STRATEGY INPUTS FOR THE DAY
Bulls on a summer holiday!
Holidays are an expensive trial of strength. The only satisfaction comes from survival.
We're all going on a summer holiday. That's the song bulls seem to be forced to sing. The melody is surely missing following Friday's sudden and sharp selloff despite stable inflation and strong corporate earnings. It is yet another reminder that you should not get too carried away when the market is rising continuously. Lock in some gains regularly to avoid a big hit when things suddenly turn gloomy. Having said that, we do not want to scare the bulls though the month of May has not been too kind to them in two of the last three years. April was a very good month after a volatile first quarter thanks mainly to the renewed strength in FII inflows. What the foreign funds have in mind for May is anybody's guess. With the result season drawing to a close, and the monetary policy also out of the way there may not be many triggers to push the key indices higher. Inflation and the fluctuations in the currency markets coupled with global factors like crude oil prices, and the state of the US, Chinese and Japanese economies will continue to drive the sentiment. Fund flows to emerging markets, including India, will definitely play a major role.
This week at least we do not see much happening as we will have two trading holidays on Tuesday and Wednesday. As for today, we expect a weak opening on the back of the sharp drop in Asian markets and a rangebound trading for the rest of the day. The lower than expected US GDP data may also cast a shadow on the market as will higher oil prices. The yen is up this morning from a record low against the euro after China curbed lending to cool its economy, prompting traders to cut down on the so-called 'carry trades' funded by borrowing the Japanese currency. As is the trend on Monday, traded volume will be low thereby leading to higher intra-day gyrations. We advise investors to stay a little cautious due to the emergence of the fresh set of negative global issues. Reliance Communications and HLL results today may have a bearing on the index movements.
FIIs were net sellers to the tune of Rs3.78bn (provisional) in the cash segment on Friday while domestic institutions pumped in Rs1.76bn. In the F&O segment, they were net sellers of Rs7.03bn on the same day. On Thursday, FIIs were net buyers of Rs3.6bn taking their net investment for April to $1.37bn. For the year so far, foreign funds' net buying is close to $3bn. Mutual Funds brought in Rs178mn on Thursday.
Shares of airline companies could rise amid reports that they are likely to jack up fuel surcharge from Rs750 to Rs900. DS Kulkarni is the stock to watch out for. A financial daily says that the company is close to signing a deal with a foreign developer for investment in two of its projects. ICICI Bank will remain in the limelight following the declaration of its results over the weekend and announcement of the fresh equity issue worth up to $5bn. Some market watchers say the stock might fall amid worries about equity dilution.
US stocks rose for the fourth straight week, sending the Dow Jones Industrial Average above 13,000 for the first time, powered by better than expected earnings and a surge in M&A deals.
On Friday, the Dow closed at a record high for the third day in a row and the Nasdaq hit its highest point in six years, despite a weaker-than-expected GDP reading.
The Dow Jones was up 15.44 at 13,120.94. For the week, the Dow gained 1.2%. The tech-heavy Nasdaq Composite rose 2.75 to 2,557.21. For the week, the Nasdaq was up 1.2%. The broader S&P 500 finished flat at 1,494.07. For the week, the S&P 500 gained nearly 0.7%.
US light crude oil for June delivery rose $1.40 to settle at $66.46 a barrel on the New York Mercantile Exchange. The front-month contract was 14 cents down at $66.32 a barrel in extended hours of trading in Asia.
COMEX gold for June delivery rose $1.50 to end at $679.50 an ounce. Treasury prices were mostly flat with the yield on the 10-year note at 4.69%, little changed from late on Thursday. In currency trading, the dollar slipped to an all-time low against the euro before paring some of its losses and also fell modestly versus the yen.
European shares weakened from six-year highs on Friday as the euro hit an all-time record against the dollar after weak US GDP data. The pan-European Dow Jones Stoxx 600 index declined 0.6% to 386.10. The UK's FTSE 100 shed 0.8% at 6,418.70, the German DAX Xetra 30 lost 0.1% to 7,378.12 and the French CAC-40 slipped 0.2% to 5,930.77.
Asian stocks fell to a one-week low amid concern about economic growth in the US and China. The Morgan Stanley Capital International Asia-Pacific excluding Japan Index lost 0.2% to 429.17 as of 10:03 a.m. in Hong Kong, the lowest since April 19. The index is up 5% this month, set for its biggest monthly advance since November. Taiwan's Taiex index slid 1%, while Hong Kong's Hang Seng Index declined 0.4%. Indexes fell elsewhere, except in Australia, New Zealand and China. Japan's market is closed today for a public holiday.
In the emerging markets, the Bovespa in Brazil was up 0.3% at 49,229 while the IPC index in Mexico gained 0.1% at 29,372.93 and the RTS index in Russia climbed 1% to 1935.51.
HOW MARKET FARED
Bulls take a breather
After holding firm through the week, the bulls decided to lock in some gains ahead of a truncated trading week. Reliance Industries and Bharti Airtel led the fall following mixed results while Cipla shares slumped after it reported a 34% drop in Q4 net profit. A weak Asian markets also contributed to the fall.
As a result, the benchmark BSE Sensex slid 320 points or 2.25% to end at 13,908.58 after being as high as 14,219.25 and as low as 13,884.53. The NSE Nifty finished 2.3% lower at 4083.50 after touching a high of 4182 and a low of 4074.30.
The BSE Small-Cap index and the Mid-Cap index were relatively better off, losing 1.1% and 0.9%, respectively.
The BSE Healthcare index bore the brunt of the selloff, plunging by nearly 4%, thanks largely to a 14.3% decline in Cipla. Other big losers in the pharma pack were Glenmark (4.5%), Sun Pharma (3.25%), GSK Pharma (3.2%) and Matrix Labs (3%).
Oil & Gas (3%), Banking and Metals (2.3% each) were the other big losers among the sectors. FMCG and Consumer Durable indices lost 1.1% each as well. The BSE IT index closed flat while Auto and Capital Goods shed 0.7% apiece.
Within the Sensex, the biggest losers were Cipla, Bharti Airtel (4.15%), SBI (4.1%), Tata Steel (4%), Reliance (3.7%), ONGC (3.2%), ICICI Bank (3.15%) and Grasim (3.1%). Satyam was the only major gainer, rising by 1.5%. Wipro and NTPC also ended marginally in the green.
Outside the Sensex, the prominent losers included Mahindra Gesco, Unitech, GHCL, Hindustan Construction, India Cements, Sterlite, Century Textiles, FT, Suzlon, Dabur and Reliance Capital.
MICO was a big gainer. The stock surged by 11.6% after its German parent Robert Bosch GmbH made an open offer to buy a 20% stake in the company at Rs4,000 per share or Rs25.64bn. Patni (6.2%), Crompton Greaves (3.3%) and Kotak Bank (3.2%) were the other notable gainers.
Deccan Aviation tumbled 5% after the low-cost carrier posted a loss in its third quarter. Loss for the three months ended March 31 reached Rs2.13bn, the company said in a statement without giving year-ago numbers. Total sales rose 66% to Rs4.57bn, while net sales were Rs4.38bn.
Market Volumes:
The turnover on NSE was down by 30% to Rs82.22bn. BSE Oil & Gas index was the major loser and lost 3.04%. BSE Auto index (down 0.69%), BSE Bank index (down 2.34%) and BSE PSU index (down 1.22%) were among the other major losers.
Volume Toppers:
IFCI, TTML, Cipla, Nagarjuna Fertilizers, IDFC, Orbit Corp, R Com, Idea, RPL, RNRL, SAIL, IREAL, IDBI, Tele Data Informatics, FSL, Bharti Airtel, Satyam Comp, RIL, Bank of India, HCC.
Lower Circuit:
Deccan Aviation, GHCL, GTC Inds, Tele Data and Unitech.
Results Today:
Alps Industries, APIL, Amtek India, Amtek Auto, Andhra Bank, BEL, Bharti Shipyard, CESC, GHCL, GBN, HLL, ICICI Bank, JSW Steel, Jain Irrigation, Mphasis BFL and Vijaya Bank.
Delivery Delight:
Arvind Mills, Asian Electronics, Bata India, Crompton Greaves, DCHL, Gammon India, HCL Infosystems and Infotech Enterprises.
Abnormal Delivery:
Raymond, Balrampur Chini, Cadila Healthcare, Wockhardt, Tata Tea, Hindalco and Grasim.
Stock Futures with Largest Increases in OI:
Cipla, Chennai Petro, J&K Bank, Crompton Greaves, Indian Bank, Bharti Airtel, Bongaigaon Refinery, ICICI Bank and Aban Offshore.
Stock Futures with Largest Decreases in OI:
BILT, ACC, IOC, Corp Bank, Zee, Divi’s Labs, India Cements, STAR, Cummins and Tata Steel.
Results Corner:
Ranbaxy Q1 group profit at Rs1.28bn (up 80%), net sales at Rs15.54bn (up 23%)
GlaxoSmithKline Consumer Q1 profit at Rs423mn (up 23%), revenue at Rs3.4bn (up 20%)
Cipla Q4 net income (down 34%) at Rs1.26bn and total sales fell 57%
Brokers Recommendations:
RIL – Outperformer from Man Financial with target of Rs1707
Wipro – Buy from ABN Amro with target of Rs690
Long Term investment:
Crompton Greaves
Major News
Inflation rate unchanged at 6.09% in week ended April 14 against expectation of 6.10%
Essar Propack plans to spend additional $14mn to expand in the US
JSW Steel may build US Steel Mill
Bharti plans to start Direct-to-Home TV Broadcast this year
SBI says ' No Decision' on share sale
Petron Engineering gets Rs45.5mn order
Market may resume weak
The market may exhibit cautious trend after taking a strong dip on Friday. Also major Asian gauges like the Hang Seng index, the Kospi index, Straits Times and the Jakarta index have declined in current trades and may drag down the indices in early trades. Among the local indices, the Nifty has an intra-day support at 4073 and on a break below 4073 the next support is at 4060. On the upside there is a resistance at 4100. The Sensex has a likely support at 13800 and may face resistance at 14050.
Key announcements like Alstom Projects, Amtek Auto, Andhra Bank, Bharat Electrical, Castrol, CESC, Gateway Distripark, Gemoet, GHCL, Gujarat Gas, HLL, JSW Steel, Moser Baer, Mphasis, Nestle, Proctor & Gamble, Reliance Communication, Sterlite Optical, Triveni Engineering, Vijaya Bank are expected to announce their figures.
US indices rose on Friday, with robust earnings pushing the blue-chip Dow Jones index to its third straight record close even as data showed the economy grew in the first quarter at its slowest pace in four years. The index gained 15 points to close at 13121 while the Nasdaq ended three points higher at 2557.
However, Indian ADRs were largely weak on the US bourses. Tata Motors and ICICI Bank dropped over 2% each while HDFC Bank, MTNL, VSNL, Dr Reddy's, Satyam, Wipro and Infosys were down around 1% each. Patni Computers and Rediff, however, ended with modest gains.
Crude oil prices in the global market moved up, with the Nymex light crude oil for June series rising by $1.40 at $66.46 a barrel. In the commodity segment, the Comex gold for June delivery surged $3.80 to settle at $681.80 an ounce.
Market may remain range-bound
The market may remain range-bound today, as traders are likely to refrain from taking up fresh positions ahead of the public holidays, on Tuesday (1 May) and Wednesday (2 May).
The Union Budget 2007-08 is due to be passed by the Parliament on Thursday (3 May), and markets will keep an eye for any rollback measures from Budget Day (28 February 2007). The markets will be watch whether Finance Minister P Chidambaram rolls back the export duty imposed on iron ore exports, which has hit exports to China, and any changes to bring employee stock options plans under the fringe benefit tax.
The key March 2007 quarter results today are FMCG giant Hindustan Lever and cellular services major Reliance Communications (RCL). RCL is seen reporting robust Q4 results on the back of surging new subscription additions.
The outcome of the ongoing seven-phased Uttar Pradesh assembly elections, is a key political event to watch out for. The assembly poll gets over in early-May 2007, and the vote is seen as a barometer of national political trends. Some opinion polls show the opposition Bharatiya Janata Party (BJP) could emerge second in the race, further adding to the woes of the ruling Congress, which is battling rising prices.
FIIs have pumped money heavily into Indian stocks, this month. Their buying picked up after IT major Infosys on 13 April 2007, issued a strong guidance for FY 2008, putting to rest concerns of a US economic slowdown on the IT sector. FII inflow for April 2007 (till 26 April) reached Rs 6874 crore. FIIs had pulled out a net Rs 1082 crore in March 2007.
But a bout of selling was witnessed from FIIs on Friday (27 April 2007). As per a provisional data, FIIs were net sellers to the tune of Rs 378 crore on Friday, the day when the Sensex had plunged 320 points.
Chinese stocks on Monday shrugged off a central bank announcement at the weekend that it will raise bank reserve ratios to help restrain loan growth. The Shanghai Composite Index was up 0.9%.
But other Asian markets were subdued, as exporters were hit by a weak US GDP growth data. A report on Friday showed the US economy grew by just 1.3% in the first quarter.
Strong earnings helped lift the Dow to another record close above 13,000 on Friday (27 April). It rose 15.44 points, or 0.12%, to end the day at a record 13,120.94, capping off its fourth straight week of gains. The Standard & Poor's 500 Index was down just 0.18 of a point, or 0.01%, to finish at 1,494.07. The Nasdaq Composite Index was up 2.75 points, or 0.11%, to close at 2,557.21.
Brent crude oil prices hovered above $68 a barrel on Monday, following sharp gains at the end of last week, with investors still on edge over a foiled plot to attack oil facilities in top-exporter, Saudi Arabia. Brent rallied over 1% on Friday after Saudi Arabia said it fended off an Al-Qaeda-linked plot to attack oil facilities, military-bases and public figures, arresting Islamist militants, including some trainee pilots preparing for suicide operations.
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