Sharekhan Riveting Metals dated May 09, 2007
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Wednesday, May 09, 2007
Market Close: Turnaround ! After a weak Play but...
Weak trend continued as we witnessed yesterday. Start for Indices was in green but weakness in global weighted on the market as the Bourses slipped in red. Asian markets traded mixed but recovered to close in positive territory while Europe trading mixed. Sensex had a volatile session with no clear direction as investors played cautiously ahead the final results of the UP elections and the Fed meeting in the evening. Profit booking was on the cards for most of the sessions but the market saw some patchy attempts by the bulls to push the indices into the positive.
Sensex remained in the red for the most of the day. Sudden Momentum sprung up in the final hour of trade as it witness strong buying at lower levels in the index heavyweights to close marginally up in the positive territory. The rally was started in the Bank sector as there was news in the market that RBI might cut CRR which saw SBI to zoom. Other banking stocks also gained after witness a profit bookedin the day to close in green during final hours of trading. Selective stocks in the Software, FMCG and Energy sectors bared the brunt of profit booking. Selling pressure continued for small cap and mid cap stocks.
Sensex ended up by 16 points at 13781.51. It was helped up by gains in SBI (1122.9,+4 percent), Hero Honda (701.3,+3 percent), Rel Energy (519.4,+3 percent), TISCO (562.2,+2 percent) and Bajaj Auto (2564.45,+1 percent). Restricting the gains were TCS (1236.65,-2 percent), HLL (191.05,-2 percent), Cipla (207.85,-2 percent), ONGC (909.35,-1 percent) and ACC (875.7,-1 percent).
Fortis Healthcare which listed today settled at Rs 100 a discount over IPO price of Rs 108 per share. The stock debuted at Rs 105 and surged to a high of Rs 109 and made low for the day at Rs 98. Almost 1.38 crore shares changed hands in BSE. Fortis Healthcare had priced its 4.59 crore equity shares for the IPO in the price band of Rs 92 to Rs 110 per share. The issue was subscribed 2.78 times. The qualified institutional buyers (QIB) portion was subscribed 2.72 times, non-institutional portion 1.74 times and the retail portion 3.26 times. This is a Ranbaxy promoted group company. Bulk of the IPO proceeds would be used to part-fund a hospital to be built in New Delhi and to pay a loan made for an acquisition.
Some of the financial bids for the government?s residual 10.27% shareholding in the country?s largest car maker, Maruti Udyog came in today while the others would follow later on. The floor price had been fixed at Rs 760 a share. As many as 296,79,709 shares of Rs 5 each would be sold through the competitive bidding route to domestic public sector financial institutions, public sector banks and mutual funds. The highest bid for Maruti came in at Rs.850 per share from the Corporation Bank while bid from LIC stood at Rs. 800 per share for the same. The bids have just opened and this news has the stock running. However it?s better to avoid long positions as the Government informs that 36 banks, institutions have bid for Maruti stake, highest bid coming in at Rs.850 per share. It does not benefit the small investor. In fact its overall negative for markets as that much of money which could have otherwise come into the market is likely to be sucked out. The stock ended marginally up after a good rally in the early sessions.
With news becoming hotter and hotter that Canara Bank might acquire Dena Bank, Canara Bank has reportedly appointed Ernst & Young to explore the possibility of acquiring Dena Bank. The chairmen of the two banks are reportedly to meet shortly after which the matter would be taken up by the respective boards. Canara Bank is strong in the south with a network of 2,542 branches, while Mumbai based Dena Bank has a large presence in Maharashtra, Gujarat and Chhattisgarh with almost 1,050 branches. The government holds a 73% stake in Canara Bank and 52% in Dena Bank. Dena bank ended the day up by 6.5% while Canara Bank ended 2% higher.
Technically Speaking: Markets traded in a volatile manner but a good bounce back in the last session saw it end in the positive territory. Sensex touched an intraday high of 13806 levels and low of 13612 levels. Volumes were good as the market churned almost Rs. 4081cr. Overall breadth was in favor of Declines, where the Declines were 1396 against Advances of 1161.
Market recovers on late buying
The market witnessed a correction in the opening trades, as weak Asian markets, and flat US and European indices dampened the sentiment. Although the Sensex resumed on a positive note at 13772, yet the market soon lost ground and slipped to touch the early low of 13638. The market managed to recover some lost ground but as the trading progressed the Sensex slipped significantly in the afternoon with selling in heavyweight, IT, oil and banking stocks dragging the index to the day's low of 13612. However, recovery in auto, banking and capital goods stocks towards the close lifted the Sensex to the positive territory to touch the intra-day high of 13806. The Sensex finally ended the session with gains of 16 points at 13782, while the Nifty added nine points and closed at 4086.
Among the sectoral indices, the Bankex led the upsurge with gains of 1.46% at 6851 followed by the BSE Auto index (up 0.54% at 5007) and the BSE CG index (up 0.46% at 9945). However, the BSE IT index, The BSE Oil & Gas index, the BSE FMCG index and the BSE Teck index closed in negative territory. Interestingly, the market breadth was negative. Of the 2,633 scrips traded on the BSE 1,407 stocks declined, 1,122 stocks advanced and 104 stocks ended unchanged.
Out of the 30 Sensex stocks, 17 managed to end in the green while 13 stocks ended with losses. Banking major SBI was the lead gainer and soared 3.83% at Rs1,123. Hero Honda advanced 3.20% at Rs701, Reliance Energy moved up by 2.72% at Rs519, Tata Steel jumped 1.64% at Rs562, Bajaj Auto shot up by 1.24% at Rs2,564, Ranbaxy added 1.14% at Rs393 and Bharti Airtel rose 1.13% at Rs825. ICICI Bank, L&T and Gujarat Ambuja Cement gained marginally. Among the laggards, TCS dropped 2.46% at Rs1,237, HLL shed 1.77% at Rs191, Cipla declined by 1.75% at Rs208 and ONGC lost 1.39% at Rs909.
Banking stocks were the star performers, Fwedral Bank 4.78% at Rs257, BOI surged 2.70% at Rs194, Bank of Baroda jumped 2.62% at Rs243, Oriental Bank scaled up 2.39% at Rs195, Canara Bank spurted 2.19% at Rs221, Punjab National Bank soared 2.14% at Rs508 and UTI Bank was up 1.87% at Rs517.
Over 1.77 crore of IFCI shares changed hands on the BSE followed by Fortis Healthcare (1.37 crore shares), Tata Teleservices (83.54 lakh shares), Nagarjuna Fertilizers (82.98 lakh shares) and GV Films (70.86 lakh shares).
Reliance Capital registered a turnover of Rs103 crore on the BSE followed by Reliance Industries (Rs101 crore), SBI (Rs93 crore), Infosys (Rs72 crore) and Tata Steel (Rs65 crore).
Market snaps three-day losing streak
The market was able to snap its three days of losing streak and posting a marginal gain as buying resumed. In the last three days, it had slipped 312.75 points, from 14,078.21 on 3 May to 13,765.46 on 8 May 2007.
The sharp recovery today was triggered by value buying at lower levels and strong global markets.
Japan's Nikkei average gained 0.52% on Wednesday, 9 May 2007, to its highest close since the global equity sell-off in February 2007, as Kawasaki Kisen Kaisha jumped following an upbeat earnings report, prompting investors to buy shares in other shipping firms. The Nikkei rose 91.28 points to 17,748.12, its highest close since 27 February 2007.
Hong Kong’s Hang Seng index was up 0.62% or 128.72 points to 20,835.07
US stocks closed flat on Tuesday as investors locked in profit after five straight sessions of gains in blue chips, a day before Fed's meeting on interest-rate policy. The Dow Jones industrial average dipped 3.90 points, or 0.03%, to end at 13,309.07, after falling as much as 75 points.
The Standard & Poor's 500 Index slipped 1.76 points, or 0.12%, to finish at 1,507.72. But the Nasdaq Composite Index edged up 0.80 point, or 0.03%, to close at 2,571.75.
The improved sentiment forced traders to cover their short positions. Bears dominated the first half of the session, but sporadic buying since the afternoon session saw the bulls emerging victorious. Banking, auto and metal stocks led the recovery.
The 30-shares BSE Sensex settled 16.05 points higher at 13,781.51, after surging to 13,806.37. Earlier, the Sensex had opened weak at 13,709.95 as profit booking continued for the fourth straight session, pulling the benchmark index below the 13,700 mark to a low of 13,612.04.
The NSE Nifty gained 2.30 points to 4,079.30
The market breadth, which indicates the overall health of the market, recovered from the initial weakness arising from selling in small-cap and mid-cap stocks. On BSE, 1,396 shares declined as compared to 1161 that advanced. Prices of 102 stocks remained unchanged.
The BSE Mid-Cap Index ended at 5,792.15, gaining 12.33 points, or 0.21%, while the BSE Small-Cap Index lost 20.65 points, or 0.30%, to 6,918.60.
The total turnover on BSE amounted to Rs 4081.17 crore while the F&O turnover on NSE stood at Rs 31001.77 crore. Total market wide turnover amounted to Rs 43464.21crore, which is higher than Rs 40,927.59 crore on Tuesday.
The Sensex has been moving in a trading range of 13,700 and 14,300 points since the past few weeks and a breakout on closing basis, either way, is likely to provide future direction.
Traders are seen to be refraining from building fresh positions ahead of the crucial US Federal Reserve’s meeting today evening (IST). Fresh short positions in the futures and option (F&O) segment are said to have been built up on Tuesday, 8 May 2007, as the basis (the spread between futures and spot market) turned negative.
Among the 30-member Sensex pack, 21 advanced while the rest declined.
Meanwhile, the government has not taken any decision to allow foreign direct investment (FDI) in the retail sector, Finance Minister P Chidambaram told the Rajya Sabha today.
FDI was only permitted for cash-and-carry, wholesale and single brand retail.
FDI inflow of $13.5 billion in 2006-07 was the highest-ever.If retained earning and swap deals were to be included, FDI would be $19 billion.
India’s largest commercial bank State Bank of India (SBI) advanced 3.85% to Rs 1123 on 8.44 lakh shares, and was the top gainer. The stock surged after market rumors that CRR may be slashed shortly. ICICI Bank (up 1.25% to Rs 852) and HDFC Bank (up 0.71% to Rs 997) were the other gainers from the banking space.
Led by SBI, the BSE Bankex advanced 1.46% at 6,851.35, and was the top gainer among the sectoral indices on BSE. Federal Bank (up 5.31%), Bank of Baroda (up 2.93%), Canara Bank (up 1.98%), and PNB (up 1.81%), advanced.
Bike maker Hero Honda followed with a gain of 3.46% to Rs 703. The BSE Auto Index closed at 5,007.06 up 0.54%.
REL (up 2.81% to Rs 520), Tata Steel (up 2.11% to Rs 564.80), and Bajaj Auto (up 1.65% to Rs 2575), were the other gainers.
Ranbaxy Laboratories gained 1.35% to Rs 393.95. The pharma major is planning to invest around Rs 60 crore to upgrade the recently acquired Be-Tabs Pharma units in South Africa. With the revamp of the Be-Tabs facilities, the company expects to lead the way for generics manufacturing in South Africa, says a company statement. The acquisition substantially strengthens the basket of products that Ranbaxy brings to the market, specially in the acute and over the counter product streams.
Index heavyweight Reliance Industries (RIL) rose 0.27% to Rs 1598 on 6.38 lakh shares. It staged a smart recovery from a low of Rs 1577.25
IT major TCS was the top loser, down 2.04% to Rs 1242, on renewed selling. TCS, a leading global IT services, business solutions and outsourcing firm, announced its tie-up with Microsoft Corporation to deliver RFID (radio frequency identification) solutions to global companies. It launched an initiative to develop RFID solutions built on Microsoft BizTalk
Other shares from the IT pack were not spared either. Infosys (down 0.89% to Rs 1985) and Satyam Computers (down 1.12% to Rs 451.35) also declined. The BSE IT Index declined 0.92% at 4,887.62, and was the top maximum loser among the sectoral indices on BSE.
Cipla (down 1.77% to Rs 207.80), HLL (down 1.34% to Rs 191.90), and ONGC (down 1.21% to Rs 911), declined
Fears of backlash from the US pulled ONGC down by 1.31% to Rs 911, despite subsidiary ONGC Videsh, leading a consortium of Indian companies, striking large oil and gas reserves in a block in Iran.
Fortis Healthcare, which listed today, settled at Rs 100, a discount over the IPO price of Rs 108 per share. The stock debuted at Rs 105, and surged to a high of Rs 109.10. Its low for the day was Rs 97.90. On BSE, 1.38 crore shares changed hands in the counter.
Fortis Healthcare had priced its 4.59-crore equity shares at Rs 108. The price band for the IPO was Rs 92 to Rs 110 per share. The issue, which had opened for subscription on 16 April 2007 and closed on 20 April 2007, was subscribed 2.78 times. The qualified institutional buyers (QIB) portion was subscribed 2.72 times, non-institutional portion 1.74 times and the retail portion 3.26 times
TRF jumped 10% to Rs 684.85 after it reported a 147% growth in net profit in Q4 March 2007 to Rs 10.03 crore in Q4 March 2007. Sales rose 78.49% to Rs 141.61 crore. Net profit jumped 185.29% to Rs 20.17 crore in the year ended March 2007. Sales surged 60.33% to Rs 347.20 crore.
Biscuits maker Britannia Industries surged 5.1% to Rs 1450.50, extending its recent rally. The government has exempted from excise biscuits whose retail price does not exceed Rs 100 per kilo gram from the earlier proposal of excise exemption for retail price up to Rs 50 per kg. These changes were announced on 3 May 2007, when the Finance Bill 2007-08 was passed in Lok Sabha.
SKF India rose 4.94% to Rs 383.45. The stock rose ahead of its analyst meet scheduled later in the day. Last month, SKF India reported a 63% growth in net profit to Rs 36.66 crore in Q4 March 2007. Net sales rose 22% to Rs 359.82 crore.
Gas transmission firm GAIL (India) dropped 4.37% to Rs 280.40 even as it reported a 66.33% growth in net profit to Rs 680.73 crore in Q4 March 2007 as against Rs 409.26 crore in Q4 March 2006. Sales rose 6.11% to Rs 3883.41 crore, from Rs 3659.81 crore. Net profit rose 3.32% to Rs 2386.67 crore in the year ended March 2007 as against Rs 2310.07 crore during the previous year ended March 2006. Sales declined 1.86% to Rs 16047.18 crore, from Rs 16351.29 crore.
Dena Bank surged 6.65% to Rs 36.90 on reports that Canara Bank is contemplating a takeover and has reportedly appointed Ernst & Young to explore the possibility of acquiring Dena Bank. The chairmen of the two banks are said to be meeting shortly after which the matter would be taken up by the respective boards. The government holds a 73% stake in Canara Bank and 52% in Dena Bank.
State-run Syndicate Bank gained 4.80% to Rs 79.75 after it reported a 911.6% surge in net profit to Rs 104.30 crore in Q4 MArch 2007, from Rs 10.31 crore in Q4 March 2006. Total income edged up to Rs 1930.40 crore, from Rs 1255.06 crore. Advances grew 42%, whereas deposits were up only 4.4%. The bank's net profit jumped 33.47% to Rs 716 crore in the year ending March 2007. Total income increased to Rs 6659 crore, up 44.36% from FY 2006. Its capital adequacy ratio (CAR) stood at 11.74%. The gross non-performing assets (NPA) declined to 2.95%, from 4% in FY 2006. The net NPA was also down to 0.76%, from 0.86%.
Mid-Day Multimedia declined 5.70% to Rs 44.65,extending its fall triggered by the loss in Q4 March 2007. A couple of days ago, the company had reported net loss of Rs 2.89 crore in Q4 March 2007 compared to a net loss of Rs 0.36 crore in Q4 March 2006. Net sales rose 12.80% to Rs 27.85 crore (Rs 24.69 crore). Net profit fell 86.40% to Rs 1.10 crore in FY 2007 (year ended March 2007) compared to a net profit of Rs 8.09 crore in the previous financial year. Net sales rose 1.10% to Rs 105.94 crore (Rs 104.34 crore).
Tamil Nadu Newsprint & Papers gained 0.41% to Rs 85.45 after disclosing plans to set up a 400-tonne a day cement plant and an information technology park on surplus land. Kalindee Rail Nirman Engineers was up 1.10% to Rs 175 after it net profit surged to Rs 3.67 crore in Q4 March 2007 as compared to Rs 95 lakh in Q4 March 2006. Net sales rose to Rs 82.5 crore (Rs 40 crore).
Kirloskar Brothers edged up 2.81% to Rs 350 following its joint ventures with various firms bagging Rs 1338.90-crore contracts.
A crucial US Federal Reserve’s meeting today is scheduled in the evening (IST) today. It looks certain that Fed will hold interest rates steady when it meets and will likely restate worries on inflation, even while nodding to weak growth and an easing of price pressures.
The US central bank has held the benchmark overnight borrowing costs steady at 5.25% for six consecutive meetings stretching back to August 2006.
The Bank of England is seen lifting rates to 5.5% on Thursday, a move that would put British interest rates above those in the US for the first time since January 2006. The European Central bank (ECB) is expected to hold its rates steady at 3.75% on Thursday,10 May 2007, but signal a hike in June 2007.
FIIs remained in buying mode on the bourses on Monday, 7 May 2007. FIIs were net buyers of Rs 96.70 crore of equities on Monday, 7 May 2007. Domestic institutional investors were net sellers of Rs 124.54-crore equities on Tuesday, 8 May 2007.
Oil prices rebounded to above $65 a barrel on Wednesday, 9 May, as new attacks on Nigeria's oil industry deepened supply losses, interrupting a six-session losing streak that had driven prices to their lowest level since 26 March. London Brent crude was up 6 cents to $65.60 a barrel
Anand Rathi - Daily Strategist - May 9 2007
The NIFTY futures saw a rise in OI to the tune 1.02% with prices coming down and closing below 4100 levels near day's low indicating short positions were built up in the market as market not sustaining at higher levels .The discount in nifty futures widened and nifty futures closed at 21 points discount to spot nifty indicating aggressive short positions built up and profit booking emerging in the market at the current levels. The FII sold index futures to the tune of 77crs and sellers in index options to the tune of 15crs. The PCR has come down from 1.19 to 1.17 indicates some weakness may be seen in the market. The IV is around 25.40 levels indicating some volatile trading sessions ahead.
Among the Big guns, ONGC saw 1.50% rise in OI with prices coming down 1.23% indicating shorts built up their positions and long positions liquidated in the counter indicating weakness in the counter. Whereas RELIANCE saw 2.23% rise in OI with prices coming down from high indicating selling pressure emerging at higher levels and drop in prices was mainly driven by short selling coming in the counter and which may be expected to remain continue for few days.
In the TECH front, INOFSYSTCH& TCS, WIPRO & SATYAMCOMP saw rise in OI with prices coming down sharply indicating fresh short positions being built up in overall IT pack indicating some weakness may be seen in IT pack. TCS saw some buying emerging at lower levels indicating that the counter may outperform the overall IT pack in the short term.
In the BANKING counters, SBIN saw rise OI to the tune of 5.37% with prices coming down sharply and closing near day's low indicating fresh short positions being built up in the counter indicating weakness in the counter. ICICIBANK saw rise in OI with fall in prices indicating short positions being built up in this counter indicating weakness in the counter. HDFCBANK saw rise in OI with drop in prices indicating liquidation of long positions and built up of fresh short positions in the counter.
In the metal pack TATASTEEL saw drop in OI to the tune of 8.89% with price down to the tune of 0.30% indicating liquidation of long positions in the counter suggesting weakness may be seen in this counter. SAIL saw drop in OI with prices almost flat indicating liquidation of positions. HINDALCO saw rise in OI with fall in prices indicating weakness in the counter. STER saw liquidation of positions with prices positive indicating buying emerging at lower levels indicating some strength in the counter.
We feel that the volume and built up in OI suggests that market may show some short positions being built up and long positions liquidation as uncertainty prevail in the market .Market may show weakness if it closes below 4050 levels where we may see fresh short positions built up in the market and long liquidation in the market .One should trade with strict stop losses to be adhered too.
Anand Rathi - Daily Strategist Note - May 9 2007
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