Dead Presidents! - India Equity Research

Wednesday, September 12, 2007

Mangalam Timber

Gold surge does not deter Indians

Indian retail gold buyers are stepping up their jewellery orders for the festival season, despite prices of the precious metal hovering at near 16-month highs.

Jewellers said spot gold prices of around $714 an ounce were not going to deter purchasers, with the festival of Ganesh Chaturthi starting on September 15.

"Customers have already placed a good amount of orders before the start of Ganesh Chaturthi," said Rajiv Popley, director of Popley & Sons in Mumbai, referring to upcoming birthday celebrations of the elephant-headed god of wisdom and prosperity.

He said most customers were paying half up front and were likely to complete the transactions on the day of the festival itself.

"The figure of $700 is not a deterrent for Indian buyers. I don't think it will dampen the season in any manner," Popley said.

He added prices in the local market were below 9,500 rupees ($235) per 10 grams, which was below last year's level of 10,000 rupees at the same time.

"We are still far away from that level," he said.

India's peak festival season commences with Rakhi, which celebrates the bond between a brother and sister, held at the end of August, and culminates with the festival of lights, Diwali, in November
It is traditionally considered auspicious to buy gold during these festivals.

Narendra Singh Rathore, Ahmedabad-based proprietor of Raju Bhai Kiran Jewellers, said he expected the buying trend to be good so long as the gold prices stabilised at close to $700.

"If it goes beyond $700, then it will impact the demand. It is important that it should stabilise," he said.

But a Chennai-based bullion analyst said the bullish trend in prices could stoke demand, rather than cool it.

"When the prices are going northwards, everybody will jump into the gold market," said N. Prasad. "On the contrary, there is hesitation in buying during bearish phases."

Demand for gold in India grew nearly 71 percent during the first half of the year to 387 tonnes from 227 tonnes during the same period of 2006, according to the World Gold Council.

Prasad said he saw Indian gold prices rising by 300-400 rupees during the festival season with the U.S. Federal Reserve expected to cut interest rates next week and a rise in oil prices above $78 a barrel.

But added the rise in gold prices would be in part cushioned by a strengthening rupee against the dollar.

The Indian rupee is quoting at nearly 40.5 rupees to a dollar, compared with above 45 rupees at the same time last year.

Via Reuters

Sensex drops 37pts, RIL ends above Rs 2,000

The Sensex opened with a positive gap of 66 points at 15,609, and touched a high of 15,661 in early deals. Profit-taking at higher levels limited the rally, and the index exhibited lacklustre movement for most of the trading session today.

Selling in late trades saw the index slip to a low of 15,487 - down 174 points from the day's high. The Sensex finally ended with a loss of 37 points at 15,505.

The market breadth was positive - out of 2,753 stocks traded, 1,537 advanced, 1,163 declined and 53 were unchanged today.

INDEX MOVERS...

Reliance Energy soared over 3% to Rs 888. Bajaj Auto rallied 2.5% to Rs 2,392.

Reliance moved up over 1% to Rs 2,013. HDFC was up nearly 1% at Rs 2,166.

...AND THE SHAKERS

NTPC declined nearly 3% at Rs 190. ITC dropped 2% to Rs 180, and ICICI Bank slipped 1.8% to Rs 885.

Cipla declined 1.5% to Rs 175. Hindalco, Satyam, Ambuja Cements and Larsen & Toubro were down around 1% each at Rs 155, Rs 429, Rs 142 and Rs 2,564, respectively.

VALUE & VOLUME TOPPERS

Reliance Capital topped the value chart with a turnover of Rs 209.50 crore followed by Everonn Systems (Rs 154 crore), Reliance (Rs 151.40 crore), Larsen & Toubro (Rs 142 crore) and Reliance Energy (Rs 133 crore).

Tata Teleservices led the volume chart with trades of around two crore shares followed by Nagarjuna Fertilisers (1.85 crore), Ispat Industries (1.50 crore), IFCI (1.46 crore) and Vishal Exports (1.26 crore).

Industrial growth slumps to 7.1 pc in July

Industrial production came down to 7.1 per cent in July 2007, compared to 12.4 per cent in the same period last fiscal due to poor performance of the manufacturing sector.

For April-July period, the output went up by 9.6 per cent against 10.6 per cent.

As per the quick estimates released by the government on Wednesday, manufacturing output grew by only 7.2 per cent (as against 14.3 per cent in July 2006) while electricity and mining and quarrying sector registered a growth of 7.5 and 4.9 per cent.

In the first four months of the fiscal, these sectors witnessed a growth of 10.3 per cent, 8.1 per cent and 3.1 per cent respectively.

Sensex settles a tad above 15,500

The market saw trend reversal from initial strength to end in the red. The market moved between positive and negative zone throughout the day. It first slipped in negative zone in mid-afternoon trade as data showing slower growth in industrial production raised worries about economic slowdown from a robust growth in the year ended March 2007. Turnover was high today.

The market had opened firm tracking rally in US stocks on Tuesday, 11 September 2007, bolstered by confidence the Federal Reserve will cut interest rates next week.

The BSE 30-share Sensex declined 37.41 points or 0.24% at 15,505.36. It opened higher at 15,608.50 and advanced further to hit a high of 15,661.44. It also slipped to a low of 15,486.81.

The Sensex had slipped 55.96 points at the day’s low of 15,486.81. It had gained 118.67 points at the day’s high of 15,661.44. Sensex oscillated 174.63 points in the day.

The barometer index is 363.49 points away from its all time high of 15,868.85 hit on 24 July 2007.

The S&P CNX Nifty was down 0.80 points or 0.02% at 4,496.15. The Nifty September 2007 futures settled at 4485.10, a discount of 11.05 points as compared to spot cloisng

India's industrial output rose 7.1% in July 2007 from a year earlier, sharply lower than downwardly revised annual growth of 9% in June 2007 due to slower manufacturing output, data showed on Wednesday. Manufacturing production rose 7.2% in July 2007 from a year earlier, compared with provisional annual growth of 10.6% in June 2007.

The market breadth was strong on BSE, with 1610 shares advancing as compared to 1157 that declined, while 55 remained unchanged.

The BSE Mid-Cap index was up 0.20% to 6,889.55, while the BSE Small-Cap index gained 0.51% to 8,572.35. Both these indices outperformed the Sensex. The BSE Small-Cap index struck a lifetime high of 8,634.68 earlier during the day.

The total turnover on BSE surged to Rs 5362 crore as compared to Rs 4839.55 crore on Tuesday, 11 September 2007. The NSE’s F&O turnover was Rs 40563.67 crore as compared to Rs compared to Rs 41739.52 crore on Tuesday, 11 September 2007.

Sectoral indices on BSE displayed mixed trend. The BSE Oil and Gas Index (up 0.73% at 8,321.15), BSE Auto Index (up 0.18% at 4,875.78), BSE Consumer Durables index (up 0.81% to 4,594.71), BSE Realty index (up 1.47% to 7,642.34) and BSE Metal Index (up 1.24% at 11,918.28) outperformed the Sensex.

However, the BSE PSU index (down 0.61% to 7,323.60), BSE FMCG Index (down 0.77% at 2,081.93), BSE Capital Goods Index (down 0.37% at 13,664.18), BSE Bankex (down 0.73% at 7,979.77), BSE TecK index (down 0.39% to 3,540.44), BSE Health Care Index (down 0.52% at 3,684.56), and BSE IT Index (down 0.59% at 4,443.98) were underperformers.

From 30-member Sensex pack, 23 declined while the rest of them gained.

India’s second largest power generation & distribution firm in terms of revenue Reliance Energy (REL) hit all time high of Rs 901.60 on BSE. It settled with a spurt of 3.59% to Rs 891 on high volumes of 15.02 lakh shares. As per reports, Supreme Court has allowed the company to bid for the Rs 2600 crore Mumbai sea link project. It was the top gainer from the Sensex pack.

Bajaj Auto, the country’s second largest bike manufacturer in terms of sales, rose 2.38% to Rs 2388. The company is reportedly targeting to sell 20,000 units of its recently lunched bike XCD in September 2007 and 50,000 in the month October 2007.

India’s top dedicated mortgage finance company in terms of sales HDFC rose 1.25% to Rs 2175, on sustained buying. It struck an all time high of Rs 2194.95. Analysts see significant value in HDFC’s insurance business, which could be unlocked in due course.

India’s top private sector entity by market capitalisation and oil refiner Reliance Industries advanced 1.30% to Rs 2012.20 on 7.52 lakh shares boosted by reports that government may approve Reliance Industries (RIL)'s pricing formula for the gas it plans to produce from July next year, with minor changes. The stock struck an all time high of Rs 2022.

The empowered Group of Ministers (eGoM) today left the decision on the gas price that RIL can charge its customers to External Affairs Minister Pranab Mukherjee. Mukherjee is likely to give his decision after his return from the South East Asian tour on 19 September 2007

NTPC, the nation’s largest power generation company by sales slumped 3.04% to Rs 189.80 on 15.36 lakh shares. It was the top loser from the Sensex pack.

Pharma counters slipped on profit booking. Dr Reddy’s Laboratories (down 0.95% to Rs 645), Ranbaxy Laboratories (down 0.49% to Rs 417.75), and Cipla (down 1.27% to Rs 175.45) were the losers from pharma sector.

Banking pivotals saw some unwinding. ICICI Bank (down 1.69% to Rs 886), and HDFC Bank (down 0.53% to Rs 1181.50) edged lower

Among side counters, Salora International (up 10% to Rs 187.90), IndusInd Bank (up 10.78% to Rs 63.20), Tanla Solutions (up 10% to Rs 530.90), and Gemini Communions (up 20% to Rs 264.15), surged

Gulf Oil Corporation (down 6.13% to Rs 1200), Simplex Castings (down 4.94% to Rs 80.75), and Phoenix Mills (down 4.57% to Rs 2130), slipped

Sugar shares surged on momentum buying as crude oil prices hovered near record high of over $78 a barrel. Dwarikesh Sugar (up 3.56% to Rs 56.75), Sakthi Sugar (up 3.86% to Rs 78), Triveni Engineering (up 2% to Rs 86.50), Balrampur Chini Mills (up 3.16% to Rs 65.25), Shree Renuka Sugars (up 3.13% to Rs 550.30), and Bajaj Hindustan (up 4.31% to Rs 141.15) advanced.

Peninsula Land rose 2.36% to Rs 533.10 after it struck a deal to sell 5,75,000 square feet of land at its Dawn Mills premises to Alok Infrastructure for Rs 1050 crore.

Western India Shipyard (WISL) jumped 5% to Rs 18 ahead of its board meeting to discuss ABG Shipyard’s involvement in reviving the company. Recent reports suggest that ABG Shipyard would take over WISL in a Rs 200-crore deal. ABG would get management control of the company and the 40% stake held by financial institutions led by ICICI Bank.

Kernex Microsystems India declined 2.10% to Rs 355. The company fixed 17 October 2007 as the record date for the purpose of issue of bonus issue in the ratio 1:10.

Steel Authority of India rose 1.81% to Rs 174.45 on reports of the company planning major expansion of Rs 40,000 crore. The company would achieve a capacity of 26 million tonnes by 2010 compared with its current capacity of 13.5 million tonnes.

Kinetic Engineering rose 0.72% to Rs 139. The stock surged to a high of Rs 157.90 on reports of Tata Motors selecting the company as a vendor for supply of gearboxes for its proposed Rs 1 lakh car.

Nagarjuna Fertilisers (up 6.64% to Rs 46.55) and Tata Teleservices (Maharashtra) (up 0.44% to Rs 34.60) advanced after NSE lifted ban on building fresh derivatives positions effective today, 12 September 2007.

Modern Dairies jumped 5% at Rs 158.40 ahead of its record date for issuing bonus shares. Modern Dairies has fixed 1 October 2007 as record date for issuing bonus shares, in the ratio of 1:1 (1 bonus share for every 1 equity share held). The stock had jumped 5% to Rs 150.90 yesterday, 11 September 2007

Nitco Tiles rose 2.73% to Rs 245. The stock rose for the second straight day on reports that firm has forayed into import and distribution of cement and is importing 1 million tonnes (MT) of cement from Pakistan. The stock had gained 4.05% to Rs 238.90 yesterday, 11 September 2007

3i Infotech rose 0.92% to Rs 143 after it acquired a strategic stake of 26% in Taxsmile.com India, with a commitment to acquire a majority stake over a period. Taxsmile is a company engaged in Internet-based tax filing and tax advisory space for individuals.

The trend on the bourses today was similar to yesterday, 11 September 2007, when the market had opened higher but settled with losses on late selling due to political worries ahead of a key meeting of the government with left parties.

The government held initial talks with its communist allies yesterday, 11 September 2007 over a controversial India-US nuclear deal. External Affairs Minister Pranab Mukherjee said after the 45-minute meeting that the UPA government and its Left allies set ground rules for further talks and the committee would meet again on 19 September 2007.

Most of the European markets were trading lower today, 12 September 2007. Key benchmark indices in United Kingdom (down 0.55% to 6,246.30) and Germany (down 0.37% to 7,430.46) slipped. However France’s CAC 40 rose 0.04% to 5,481.34

Asian markets settled mixed today, 12 September 2007. Hang Seng (up 1.49% at 24,310.44), Taiwan Weighted (up 0.17% at 9,018.12) and Singapore's Straits Times (up 0.33% at 3,506.09) gained.

However, South Korea's Seoul Composite (down 1.83% at 1,813.52) and Japan's Nikkei (down 0.50% at 15,797.60), slipped

The Dow Jones Industrial Average (DJIA) rose 180.54 points, or 1.38%, to 13,308.39 on Tuesday, 11 September 2007. The Standard & Poor's 500 index rose 19.79 points, or 1.36%, to 1,471.49, while the Nasdaq Composite index rose 38.36 points, or 1.50%, to 2,597.47.

Crude oil prices held near a record high over $78 a barrel on Wednesday, 12 September 2007, after OPEC's token output increase failed to soothe consumers' worries about falling inventories. US light crude for October delivery rose 8 cents to $78.31 a barrel, after a record close yesterday, 11 September 2007 of $78.23, and within striking limit of 1 August 2007’s record high of $78.77.

Meanwhile, in a move that could boost FII investments in India, the Securities and Exchange Board of India (Sebi), on Tuesday 11 September 2007, permitted acceptance of foreign sovereign securities with ‘AAA’ rating by clearing members as collateral from FIIs for exchange traded derivative transactions. Currently, collateral deposited by FIIs with the clearing members for derivative transactions is in the form of cash. RBI has already given permission for the new facility.

Market slips on weak IIP numbers

The market resumed on a positive note and rose over 118 points to touch the day's high at 15,661 in mid-morning trades. Reliance Industries and Larsen & Toubro led the rally, but caution and lack of news capped the gains as the market neared record highs. However, the Sensex fell into negative territory soon after the release of weaker-than-expected industrial production data. The industrial output in July rose to 7.1% from a year earlier, well below the forecast of 9.6%. The market remained subdued thereafter with alternate bouts of buying and selling in index pivotal stocks. Selling intensified towards the close and the market touched the day's low at 15,487. The Sensex finally closed the session at 15,505, down 37 points. The Nifty ended the session at 4,497 with a little change.

The market breadth was positive, with the gainers outpacing the losers. Of the 2,753 stocks that traded on the BSE, 1,538 stocks advanced, 1,163 stocks declined and 52 stocks ended unchanged. Most of the sectoral indices ended in the red. The BSE FMCG index dropped 0.77% at 2,082 followed by the BSE Bankex index (down 0.73% at 7,980) and the BSE PSU index (down 0.61% at 7,324). However, the BSE Realty index gained 1.47% at 7,642, the BSE Metal index (up 1.24% at 11,918) and the BSE CD index (up 0.81% at 4,595).

Among the Sensex stocks, Reliance Energy was the leading gainer and its stock price soared 3.24% at Rs888. Among other stocks, Bajaj Auto advanced 2.58% at Rs2,393, Reliance Industries jumped 1.34% at Rs2,013, while HDFC, Tata Steel, M&M, SBI and HLL closed with marginal gains. Among the laggards, NTPC slipped 2.76% at Rs190, ITC shed 2.07% at Rs180, ICICI Bank declined by 1.83% at Rs885, Cipla fell by 1.46% at Rs175 and Hindalco lost 1.21% at Rs155.

Over 2.03 crore Tata Teleservices shares changed hands on the BSE followed by Nagarjuna Fertilisers (1.85 crore shares), Ispat Industries (1.48 crore shares), IFCI (1.46 crore shares) and Vishal Exports (1.25 crore shares).

Reliance Capital registered a turnover of Rs209 crore on the BSE followed by Everonn Systems (Rs154 crore), Reliance Industries (Rs151 crore), L&T (Rs142 crore) and Reliance Energy (Rs133 crore).

Sensex sheds 39 points; RIL settles above Rs 2000

Koutons Retail India IPO

Morning Call

Market Grape Wine :

In House :

Nifty at a supp of 4485 and 4453 with resistance at 4527 and 4550 levels.

Intraday : Buy : Rolta above 517 with target 535 S/L 509.

Buy: Bata above 172 with target 180 S/L 169.

Intraday: F & O : Buy Tata Steel above 716.50 with target 735 S/L 709.

F & O : Buy ABirlanuvo above 1435with target 1475 S/L 1420

Delivery Buy : IFCI above 80 target 88~95

Tatasteel target 750

Out House :

Markets at a support of 15454 & 15353 levels with resistance at 15695 & 15786 levels .

Buy : REL

Buy : RIL

Buy : Tisco

Buy : Hanun & Sintex delivery bullet

Buy : IBulls & IbullsReal

Buy : JpHydro , TTML , Nagarfert & IFCI

Buy : NTPC

Buy : IFCI bullet

Dark Horse : RIL , REL, NTPC , SBIN , Hanun , Aptech , Tisco , Titan & ONGC

Daily Futures - Sep 12 2007

Grey Market - Dhanus, Power Grid, Kouton, Kaveri

Power Grid Corporation 44 to 52 14.5 to 15

Dhanus Tech. 280 to 295 90 to 95

Allied Computer 12 0

Koutons Retail 370 to 415 95 to 98

Kaveri Seeds 150 to 170 12 to 14

Indowind Energy 55 to 65 Discount

Magnum Venture 30 2 to 3

Consolidated Construction 460 to 510 NA

Pre Market Watch

Indian market is likely to have a positive opening due to favoring global cues. On Tuesday, the Indian markets ended on a negative note, as BSE Sensex closed lower by 54.06 points at 15,542.77 while Nifty slipped by 10.8 points to close at 4,497.05. We expect the market to trade higher during the trading session.

On Tuesday, the US market closed in green. The Dow Jones Industrial Average grew by 180.54 points to close at 13,308.39. The Nasdaq Composite Index grew by 38.36 points to close at 2,597.47. The S&P 500 index increased by 19.79 points to close at 1,471.49.

Indian ADRs ended in mixed. In technology sector, Satyam computers grew by (0.71%) along with Wipro by (0.36%) while Patni computers and Infosys slipped by (3.02%) and (0.32%) respectively. In banking sector, HDFC bank and ICICI bank advanced by (0.68%) and (0.32%) respectively. VSNL and MTNL grew by (3.37%) and (0.43%) respectively.

The major stock markets in Asia are trading higher. Japan''s Nikkei trading up by 56.69 points to trade at 15,934.36. Hang Seng grew by 229.67 points to trade at 24,181.91. Taiwan weighted advanced by 16.83 points to trade at 9,019.95. Singapore Strait times trading higher by 21.47 points at 3,516.04.

Today, Nifty has support at 4,470 and resistance at 4,565 and BSE Sensex has support at 15,460 and resistance at 15,750.

Daily Call - Sep 12 2007

Market to head higher

The market is expected to head higher tracking firm US markets overnight. Also most of the Asian markets were trading higher today, 12 September 2007.

However some nervousness may prevail as the government which held initial talks with its communist allies yesterday, 11 September 2007 over a controversial India-U.S. nuclear deal, threatened to split the ruling coalition. As per Foreign Minister Pranab Mukherjee, the meeting framed broad issues to be taken up for discussions and the committee would meet again on 19 September 2007.

Also the Index of Industrial Production (IIP) data for July 2007 is due today, 12 September 2007. IIP was up 9.8% in June 2007 compared with 9.7% in June 2006. It edged up 11% in April-June 2007 as against 10.5% in April-June 2006. The rise in IIP was due to continuing growth in manufacturing and electricity sectors.

Most of the Asian markets were higher today, 12 September 2007, in the wake of Wall Street's strong gains overnight. Hang Seng (up 0.96% at 24,181.91), Japan's Nikkei (up 0.36% at 15,934.36), Taiwan Weighted (up 0.19% at 9,019.95) and Singapore's Straits Times (up 0.61% at 3,516.04) gained. However, South Korea's Seoul Composite slipped 0.77% at 1,833.1

US markets advanced sharply yesterday, 11 September 2007 as investors grew more confident that the Federal Reserve will lower interest rates next week, even after its chairman gave no clues about the central bank’s intentions. The Dow Jones Industrial Average (DJIA) rose 180.54 points, or 1.38%, to 13,308.39. The Standard & Poor's 500 index rose 19.79 points, or 1.36%, to 1,471.49, while the Nasdaq Composite index rose 38.36 points, or 1.50%, to 2,597.47.

Crude oil prices held near a record high over $78 a barrel on Wednesday, 12 September 2007, after OPEC's token output increase failed to soothe consumers' worries about falling inventories. US light crude for October delivery rose 8 cents to $78.31 a barrel, after a record close yesterday, 11 September 2007 of $78.23, and within striking limit of 1 August 2007’s record high of $78.77.

As per provisional data, foreign institutional investors (FIIs) purchased shares worth a net Rs 256.59 crore, while domestic institutional investors (DIIs) were net sellers of shares worth Rs 444.75 crore on Tuesday, 11 September 2007.

The BSE 30-share Sensex shed 54.06 points or 0.35% at 15,542.77, on Tuesday, 11 September 2007. It is now 326.08 points away from its all time high of 15,868.85 hit on 24 July 2007.

The S&P CNX Nifty declined 10.80 points or 0.24% at 4,497.05, on Tuesday, 11 September 2007

Market may witness lackluster trades

The mood of the market is expected to remain positive on the back of gains in the US markets and positive Asian indices in current trades which also help the local indices advance further. However, presence of intra-day volatility due to lack of clarity may see the market remain edgy. Among the indices, the Nifty could test higher levels around 4550 and 4620 while on the downside the index has a strong support at 4450-4410 levels. The Sensex has a likely support at 14900 and may face resistance at 15850.

US indices gained marginally on Tuesday on expectations of rate cuts in Fed meeting next week. While the Dow Jones gained by 181 points at 13308, the Nasdaq added 38 points to close at 2597.

Crude oil prices in the global market extended their upward trend, with the Nymex light crude oil for October series moved up by 74 cents a barrel at $78.23. In the commodity space, the Comex gold for December delivery jumped by $8.90 to settle at $721.10 a troy ounce.