Sharekhan Commodities Buzz dated May 21, 2007
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Monday, May 21, 2007
Sharekhan Commodities, High Noon
Sharekhan Commodities Buzz dated May 21, 2007
Kotak - Tata Motors, Sun Pharma, Dr Reddy's Labs, Lanco Infratech, Federal Bank, GSPL, Reliance Industries, HDFC Bank, Cairn India, Strategy
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Investsmart - Morning Call
Market Grape Wine :
In House :
Nifty at a support of 4170 & 4135 levels with resistance at 4245 and 4278 levels .
Nifty above 4250 closing , then target 4365 levels in near future .
Buy : IVRCL above 338.5 target 350 s/l 333
Buy: Sterlite above 556.50 with a target of 570 and a SL of 551
F&O : Buy BATA above 182 with a target of 193 and a SL of 178
Sell Gujalkali below 148 with a target of 133 and a SL of 145
Out House :
Markets at a support of 14114 & 14014 levels with resistance at 14414 & 14532 levels .
Buy : RIL & RelCap
Buy : SBIN & IciciBank
Buy : IDBI & Nagarjuna bullet
Buy : ABB & BEML
Buy : Skumar & GujNreCoke
Buy : IbullReal
Buy : Glenmark & Praj
Dark Horse : IBUlls , Praj , SKumar , GuNreCoke , EduComp , Patni , Beml & Lupin
Bullet for the day : RelCap & SBIN with strict stop loss
Indiainfoline - Intraday Stock Ideas
NIFTY (4214) SUP 4202 RES 4240
BUY CAIRN (144.55)
SL 140 T 152, 155
BUY INOXLEISUR (136.25)
SL 132 T 144, 146
BUY IVRCLINFRA (335.15)
SL 330 T 345, 348
SELL UTIBANK (536.75)
@ 539 SL 545 T 530, 527
SELL GUJAMBCEM (119.25)
@ 121 SL 124 T 113, 111
STRATEGY INPUTS FOR THE DAY
Firm opening likely
He who would leap high must take a long run.
A new all-time high for the Nifty is just 30 points away. Going by last week's broad-based rally, that should be a cake walk. If not today, the Nifty should touch a new milestone sometime later this week. What investors must keep in mind is that this is just a short-term statistical event and therefore should focus on the long term. One concern is that FII inflows have slowed considerably from last year and from last month. The other worry is valuations as the major indices are near historic peaks. Also, the rupee continues its rally unabated. Though everything looks all right at the moment the much-dreaded correction could be lurking somewhere down the line. So, investors should use every big rally to book partial profits.
If global markets remains firm, we may see the Nifty surpassing its previous all-time high with ease this week. However, it remains to be seen whether the bulls can hold on to these gains. They may start feeling dizzy at the top with no great positive triggers in the sight. Bulls will look to their regional peers and Wall Street to provide some direction. Mid-cap and Small cap stocks will continue to be in action as investors could shift their attention from large caps after the recent rally. With global markets in healthy state, the market will open higher but there may be some volatility and hardship before the indices hit new landmarks.
FIIs were net buyers of Rs566.4mn (provisional) in the cash segment on Friday while the domestic investors bought stocks worth Rs580.5mn. In the F&O segment, FIIs were net sellers to the tune of Rs6.82bn. FIIs were net buyers of Rs10.6bn ($251.7mn) on Thursday. Mutual Funds pumped in Rs6.07bn on the same day.
Sun Pharma will see plenty of action after the company announced that it was acquiring Taro Pharma in a $ 454mn deal. But, remember some of the big-ticket acquisitions announced recently have not found favours with the bulls. So, there may well be a knee jerk negative reaction from the streets. Patni will be in focus amid reports that some promoters are planning to sell their stake in the IT firm. Fortis may also hog the limelight given the controversial exit of Dr. Trehan from Escorts Heart Institute.
Keep an eye on Parsvnath Developers today as the company will declare its results today. The market grapevine also has it that a leading FII is likely to pick up shares of the company. Construction major Patel Engineering may also gain on reports of rising institutional interest in the stock on the back of the company's announcement of a foray into the real estate sector and healthy business outlook. Bajaj Auto may remain in the spotlight following its seemingly disappointing demerger. A few analysts on the street are of the view that despite the concerns on the insurance business, the stock looks good for a long-term investment.
US stocks extended their longest stretch of weekly gains since 2004. Economic data showing moderating inflation, a rebound in industrial production and an increase in consumer confidence aided the market's advance besides the slew of M&A announcements.
The Dow Jones Industrial Average climbed 1.7% last week to a record 13,556.53. The S&P 500 gained 1.1% to 1522.75, bringing the index within 5 points of its all-time high of 1527.46 on March 24, 2000. Both benchmarks rose for a seventh straight week, the longest streak since January 2004. The Nasdaq Composite Index slipped 0.2% to 2558.45, dragged down by Applied Materials and Sepracor.
European stocks climbed on Friday with key benchmarks hitting fresh multi-year highs as oil producers extended their rally from the previous session. The UK's FTSE 100 added 0.9% at 6,640.90, its highest level since September 2000. The French CAC 40 rose 1.2% at 6,101.14 and the German DAX 30 gained 1.4% to a seven-year high of 7,607.54. The pan-European Dow Jones Stoxx 600 index advanced 0.9% at 393.95.
In the emerging markets, the Ibovespa in Brazil gained 0.9% to 52,077 while the IPC index in Mexico rose 0.65% to 30,676 and the RTS index in Russia climbed 0.9% to 1859.
The latest data from the Emerging Portfolio Funds Research (EPFR) shows that investors continued to show their aversion for risky assets during the third week of May by trimming their exposure to emerging market equity funds. China and Greater China Country Funds witnessed the maximum exodus.
Asian stocks rose for the first time in five days on Monday after US consumer confidence unexpectedly improved. The Morgan Stanley Capital International Asia-Pacific Index added 0.5% to 148.06 at 11:02 a.m. in Tokyo, ending a four-day, 1.6% losing streak.
The Nikkei in Tokyo rose by 97 points to 17,497 while the Hang Seng in Hong Kong advanced by 84 points to 20,989. The Kospi in Seoul added 6 points to 1618 and the Straits Times in Singapore was up by 12 points at 3524.
Benchmarks gained elsewhere in markets open for trading, except for China and Malaysia. China's CSI 300 Index dropped as much as 3.5% after the central bank raised interest rates and ordered lenders to set aside more money as reserves.
Markets ended on a flat note on the last trading session of the week however the bulls had a fantastic week as both the NSE Nifty ended near its all time high and benchmark Sensex closing above the 14300mark. After opening on a weak note the markets further weakened as Inflation for the week ended 5th May was higher than expected at 5.44% against expectation of 5.30%. The frontline stocks like Bajaj Auto, ACC, Tata Motors and Tisco ended in negative terrain. However, ICICI Bank, ITC, and ABB aided the markets from losing ground. Finally, the 30-share Sensex closed flat at 14303. NSE-50 Nifty closed flat at 4214.
Tata Motors dropped by 1.7% to Rs741. The company announced its Q4 result with net profit at Rs5.76bn (up 25%) and net sales at Rs82.67bn (up 20%). The scrip touched intra- high of Rs757 and a low of Rs740 and recorded volumes of over 14,00,000 shares on NSE.
Patni Computer was in the limelight the scrip gained over 9% during the week to finally close at Rs512.8. Reports stated that IBM and Blackstone Capital Partners LP showed interest to acquire stake in the company. The company on May 16, 2007 also announced the formation of its Consulting Services practice within its Manufacturing Business Unit. The new Consulting Services practice would offer manufacturers a full spectrum of solutions designed to improve business performance.
Deccan Aviation slipped by over 3% to Rs140 amid market grapevine of an impending stake sale. Rumors have it that the ADAG is a strong contender for picking up a substantial stake in the low-cost carrier. The scrip touched intra-day high of Rs147 and a low of Rs136 and recorded volumes of over 63,00,000 shares on NSE.
Rana Sugars edged higher 0.4% to Rs19 after the company announced that it has increased prices by Rs75 per 100 kg. The scrip touched intra-day high of Rs20 and a low of Rs19 and recorded volumes of over 23,00,000 shares on NSE.
Fedearl Bank gained by 3.3% to Rs278 after the company announced its full year profit at Rs2.93bn and revenue at Rs21.04bn. The scrip touched intra- high of Rs283 and a low of Rs220 and recorded volumes of over 4,00,000 shares on NSE.
ONGC was flat at Rs908 after the company announced its plans to hike the receiving and production capacity of its Hazira gas processing complex to 48mn cubic metres per day of sour gas from the present level of 41mn cubic metres per day as per report. The scrip touched intra- high of Rs919 and a low of Rs892 and recorded volumes of 6,00,000 over shares on NSE.
Metal stocks lost their shine as metal prices on LME are weak. A measure of six metals traded on the LME, including copper and zinc, slumped 3.3%. Copper slid 4.7%, zinc dropped 4.7% and nickel fell 3.2%. Index heavy weight Tata Steel dropped by 1.5% to Rs591, Sterlite Industries dropped by 2.5% to Rs546 and Hindustan Zinc down by 1.1% to Rs667.
Select frontline Cement stocks witnessed come profit booking during the session. Gujarat Ambuja declined by over 3% to Rs119, Grasim was down by 0.85 to Rs2512 and ACC fell by 1.4% to Rs876. However, Mangalam Cement ros over 2.5% to Rs145 and Kesoram Industries was up by 0.9% to Rs435.
Mid-Cap Technology stocks were in the limelight led by Moser Baer which rose by over 535% to Rs456, Rolta surged over 4.5% to Rs464, NIIT Technology was up by 2.7% to Rs888 and HCL Tech added 2% to Rs353.
Auto stocks were in the reverse gear led by Bajaj Auto as the scrip was down by over 9.5% to Rs2264, Tata Motors was down by 1.5% to Rs740 and TVS Motors slipped by 1.5% to Rs60.
Insider Trades:
Network 18 Fincap Limited: Reliance Capital Limited had purchased from open market 2555003 equity shares of Network 18 Fincap Limited on 16th May, 2007.
Gujarat Ambuja Cement Ltd: Shri. B L Taparia, Director has sold in open market 20000 equity shares of Gujarat Ambuja Cement Ltd on 8th May and 11th May, 2007.
Sector Movement:
BSE Auto index was the major loser and lost 1.86%. BSE Metal index (down 1.18%), BSE PSU index (down 0.72%) were among the other major losers. However, Consumer Durable index gained by 1.13%.
Volume Toppers:
Nagarjuna Fertilizers, IFCI, TTML, Bhagwati Banquets, DCB, Gujarat NRE, Hotel Leela, RPL, Deccan Aviation, SAIL, Unitech, Cairn, India Cement, ITC, Idea, Bajaj Auto and United Spirits
Upper Circuit:
Hindustan Oil Exploration, Piramyd Retail, GTC Industries, Saregama Industries and Mefcom Agro.
Delivery Delight:
Balrampur Chini, Federal Bank, ICICI Bank, India Cements, India Cements, IPCL, Kesoram Industries, Moser Baer and Rolta India.
Abnormal Delivery:
ACC, Tata Chemicals, Alfa-Laval, HPCL, Tamil Nadu Newsprint & Papers, NALCO, HDFC Bank and Hero Honda.
Stock Futures with largest rise in OI:
United Phosphorous, United Spirits, Financial Technologies, Federal Bank, Unitech, Bajaj Auto and Pantaloon Retail.
Stock Futures with largest decline in OI:
Corp Bank, Dabur India, M&M, JP Associates, Tata Chemicals, Nagarjuna Construction and HPCL
Results Today:
SAIL, Adani, Everest Kanto, Jindal Steel, Orbit Corp, Parsvnath, IG Petro and City Union Bank.
Results Corner:
Dr Reddy's Labs Q4 net income at Rs3.25bn against loss of Rs237mn and net sales at Rs15.57bn (up121%).
Tata Motors Q4 net profit at Rs5.76bn (up 25%) and net sales at Rs82.67bn (up 20%).
JP Associates Q4 profit (up 56%) to Rs1.31bn, revenue was unchanged at Rs9.16bn and to pay dividend of R1.6 a share
Brokers Recommendations:
ENIL - Buy From Kotak with target of Rs441
HDFC Bank - Buy from Emkay Research with target of Rs1210.
Long Term investment:
Infosys
Major News Headlines:
Inflation for week ended 5th May at 5.44% against expectation of 5.3%
REL to build mega power project at Hisar
IBM, Blackstone may acquire stake in Patni: reports
Karuturi Networks buys ESTEL Communications
Ranbaxy gets USFDA nod for Fexofenadine tablets
Kamat Hotels to consider stock split on 30th May
Rana Sugars increases prices by Rs75 per 100 kg
L&T gets order worth Rs4.12bn
GAIL, HPCL signs accord for gas projects in Rajasthan.
Usha Martin (Q4 FY07): Good quarter, Remain positive.
Usha Martin Ltd. consolidated Q4 FY07 results were on our expected lines with earnings remaining flat qoq at Rs393mn and revenues growing 3.8% qoq to Rs4.99bn. On stand-alone basis, revenue growth was strong at 14.4% qoq while earnings growth was marginal at 2.1% qoq. During the quarter OPM slipped sequentially by 222 bps on stand-alone basis and 100 bps on consolidated basis. Margin was mainly impacted by sharp Rupee appreciation, higher coke prices and higher contribution from Agra rolling mill. Full year consolidated numbers were also in line with our expectations. We remain positive on Usha Martin but have marginally tweaked our FY08 EPS estimate downward to Rs33.9 from Rs34.1.
Since our last recommendation at Rs210 in our Q3 FY07 Investment Update in February 2007, the stock has run-up by 16.7%. Despite this, we remain positive on the company for its re-rating potential. At CMP Rs245, company trades at 7.2x FY08E EPS and 5.1x FY08E EV/EBITDA. We believe these valuations does not reflect sufficient premium to commodity steel makers with company’s character of an alloy/special steel manufacturer producing high value added products like Wires and Wire Ropes in majority. Also as seen, company’s products are subjected to far less cyclical price fluctuations than that of commodity steel players. With operating margin on improvement path from backward integration (iron ore – started & coal - to start) and stress on value added products, we expect material upgrades to valuations.
Market to extend gains on firm Asian bourses
The market is likely to extend gains tracking firm global markets and on the back of latest data showing a surge in FII inflow on Thursday 17 May 2007.
The market had surged, last week, tracking firm global markets, and on reports that there will be early onset of monsoon. Rally in two bank shares State Bank of India, ICICI Bank and in index heavyweight Reliance Industries (RIL) aided the rally. The 30-share BSE Sensex 507.25 points or 3.67% to settle at 14303.41 in the week ended Friday 18 May 2007. The S&P CNX Nifty rose 137.85 points or 3.3% to 4214.50 in the week.
FIIs bought shares worth a massive Rs 1060.80 crore on Thursday 17 May 2007. The large inflow came after they had pulled out Rs 470 crore in two trading sessions from Tuesday 15 May 2007 to Wednesday 16 May 2007. But their inflow was muted Rs 56.64 crore on Friday 18 May 2007, as per provisional figures. Domestic institutions were net buyers to the tune of Rs 58 crore on Friday, 18 May 2007.
Meanwhile, in a major development the Indian government late on Friday 18 May 2007 tightened overseas borrowing rules, making it harder for less creditworthy and smaller local companies to raise funds, a measure seen aimed at curbing soaring capital flows and calm the hot real estate sector. The finance ministry said in a statement late on Friday that the ceiling has been lowered to 150 basis points over six-month Libor from the earlier 200 basis points for overseas borrowings by Indian companies for maturities between three and five years.
For maturities over five years the ceiling has been reduced to 250 basis points over six-month Libor from 350 basis points. It said the ceilings had been revised in view of the upgrading of the country's sovereign credit ratings
China's stocks held steady on Monday, 21 May 2007, helping Asian markets react calmly to China's surprise move to widen the yuan's trading band and raise interest rates, while the yen slid to a record-low against the euro. Sentiment was underpinned by Wall Street, where US blue chip shares hit a record high on Friday, 18 May 2007
China's shares initially slumped more than 3% at the open in their first reaction to the flurry of monetary announcements late on Friday 18 May 2007. However, they pared back the losses to stand broadly steady later in the day. MSCI's measure of Asia Pacific stocks excluding Japan rose 0.53% to near a record high set last Thursday 17 May 2007.
Wall Street was boosted on Friday 18 May 2007 by fresh takeover activity and after a gauge of consumer sentiment rose more than expected in May 2007, reassuring investors about the strength of the US economy. Dow Jones Industrial Average gained 79.81 points or 0.59% to a record closing high of 13,556.53. The Nasdaq Composite Index gained 19.07 points or 0.75% to 2,558.45.
Brent crude oil rose 28 cents to $69.70 a barrel on Monday, 21 May 2007, while US benchmark crude gained 20 cents to $65.14, boosted by concerns over supplies from major exporters Iran and Nigeria
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