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Friday, December 08, 2006

Indiainfoline - STRATEGY INPUTS FOR THE DAY


Watch out...It's time to unwind a little

You can't turn back the clock. But you can wind it up again.

Timing the market is wishful thinking. But taking time off when the indices are at unstable heights may allow you to breathe freely. After propelling the Sensex past the 14,000 mark, the market has struggled to move ahead. We expect the market to open flat and see some red ticks owing to weak global cues. Last Friday was a cracking day for the bulls. Will they crack today? And even if the market corrects, keep an eye on your favorite counters and slowly start lapping them at lower levels. For the time being, ignore where the indices go, unless you are trading on the Nifty.

FIIs too appear to have started some selling. On the F&O side, the Nifty December futures closed at a discount yesterday. At the same time, the open interest has increased, indicating that some short positions are being created. Even global markets have not been kind this week amid concerns about the strength of the US economy and the weakness in the dollar.

This may just be the beginning of some cooling that quite a few analysts have been waiting for. Though the key indices have not corrected much, on an intra-day basis, there has definitely been some profit booking at higher levels. In addition, the broader market has remained subdued. May be the bulls are feeling jaded and fatigued after the five-month rally. Also, the year-end factor may come into play as we approach the Christmas. The trend after that would hinge on the strength of the quarterly results and expectations from the Union Budget. So, the time looks ripe for the much-talked about correction. Having said that any fall won't be too sharp, and will provide opportunity to those having some cash to buy fundamentally sound scrips.

FIIs were net sellers to the tune of Rs1.53bn (provisional) in the cash segment yesterday. In the F&O segment, they offloaded securities worth Rs2.81bn. However, on Tuesday and Wednesday they pumped in Rs6.77bn in the cash segment. Mutual Funds were net sellers of Rs1.77bn on Wednesday.

We mentioned about UTV yesterday. The company may again be in the spotlight as it has picked up two gaming companies, one in Mumbai and the other from UK. UTV closed yesterday at Rs277. i-flex is expected to advance as Oracle has announced a revised open offer of Rs2,100 per share. The stock ended yesterday at Rs1,751. Britannia could come under pressure amid reports that Danone is considering either exiting the equal joint venture with the Wadias or buying out the Indian partner's stake in the holding company, Associated Biscuits Holding. Britannia finished nearly 2% down yesterday at Rs1,130.

Bayer CropScience is reportedly considering selling its 84-acre freehold land at Kolshet, Thane. The German company has already got the land valued and is reportedly close to striking a deal with a large corporate house. Yesterday, the stock was locked at the 10% upper circuit at Rs269. SBI is another stock to keep an eye on, as its chairman OP Bhatt says that the public sector bank is considering a fresh public issue next fiscal. IOC has picked up 12.5% stake in Turkey's Samsun-Ceyhen crude oil pipeline project.

US stocks fell on Thursday in anticipation of Friday's jobs report. Toll Brothers and Ryland Group dropped the most in almost two months after Credit Suisse downgraded the US housing industry.

The S&P 500 finished down 5.61, or 0.4%, at 1407.29, extending its decline from a six-year high two days ago. The Dow Jones slipped 30.84, or 0.3%, to 12,278.41. Apple Computer had its biggest tumble in four months, weighing on the Nasdaq, which lost 18.17, or 0.7%, to 2427.69.

US light crude oil prices for January delivery added 30 cents to settle at $62.49 per barrel on the New York Mercantile Exchange. The front-month contract was 37 cents higher at $62.86 a barrel in extended trading in Asia this morning.

COMEX gold rose $1.10 to $637 an ounce. Treasury prices were little changed, with the yield on the benchmark 10-year note at 4.48%, roughly where it stood late on Wednesday. In currency trading, the dollar was little changed versus the euro and yen.

Among the Indian ADRs, Wipro was down 2%, Satyam gave up 1.6%, Tata Motors climbed 2.7%, Dr. Reddy's rose 1.1%, ICICI Bank advanced 1.7% and MTNL added 0.8%.

London stocks closed higher. The FTSE 100 closed up 0.7% at 6,131.50. The markets were little moved by the decision of the Bank of England to keep rates on hold. European stocks closed higher. The German DAX Xetra 30 rose 0.7% to 6,413.03 and the French CAC-40 added 0.5% to 5,379.21. The pan-European Dow Jones Stoxx 600 gained 0.6% at 356.03.

In the emerging markets, the Bovespa in Brazil was down 0.4% at 42,909 while the RTS index in Russia rose 0.65% to 1848.

Asian stocks were down Friday morning amid concern that a weaker dollar will reduce profits of companies that rely on US sales. Samsung Electronics led the decline after the won this week rose to a nine-year high.

Mizuho Financial and Seven & I Holdings, Asia's largest retailer by market value, dropped in Japan after the world's second-largest economy grew at less than half the pace the government had forecast in the last quarter.

The Morgan Stanley Capital International Asia-Pacific Index dropped 0.4% to 137.59 as of 11:25 a.m. in Tokyo. The measure, which closed yesterday at its highest since May 12, is set for a 0.7% gain this week.

South Korea's Kospi index dropped 1.4%. Japan's Nikkei 225 Stock Average was little changed. The Hang Seng in Hong Kong was down 55 points at 18,787.

Major Bulk Deals:
HSBC Financial has sold Allianz Securities, SBI MF has sold Global Vectra Helicorp, Fidelity has bought Mcnally Bharat, ABN AMRO Bank has sold Monnet Isapt, Reliance Capital has picked up Nahar Spinning while Prudential ICICI MF has sold it, Bear Stearns has sold WS Industries.

Insider Trades:
ITC Ltd: Anup Singh (Wholetime Director) has sold in open market 3000 equity shares of ITC Ltd on 1st December, 2006.

Aptech Limited: Pramod Khera, Managing Director has sold in open market 10000 equity shares of Aptech Limited on 4th December, 2006.
Nava Bharat Ventures Limited: Shri P. Punnaiah, Director has sold in open market 8000 equity shares of Nava Bharat Ventures Limited on 5th December, 2006.

Mphasis Limited: Jaithirth Rao, Chairman has sold in open market 170581 equity shares of Mphasis Limited on 4th December, 2006.

Market Volumes:
The turnover on NSE was down by 14% to Rs74.80bn. BSE Capital Good index was the major gainer and gained 1.14%. BSE Bank index (up 0.79%), BSE Oil & Gas index (up 0.78%), BSE Metal index (up 0.63%) and BSE Auto index (up 0.35%) were among the other major gainers.

Volume Toppers:
Ashok Leyland, IDBI, SAIL, IDBI, Reliance Industries, IVRCL Infrastructure, Hindalco, Satyam Computer, Indiabulls, Action Construction, Gujarat Ambuja, Unitech, JP Associates, Hindustan Motors, NTPC, Zee Telefilms and HLL.

Delivery Delight:
ABB, APIL, Ballarpur Industries, BEL, BHEL, D S Kulkarni, Dr Reddys, Everest Kanto Cylinder, Hindalco Industries, ICICI Bank, India Infoline, Indiabulls, Jaiprakash Associates, Mangalam Cement, Punj Lloyd, Siemens, SBI and Yes Bank.

Upper Circuit Filters:
Ambalal Sarabhai, GTC Industries, Peninsula Land, Adani Enterprises, NEPC India, Subhash Projects and Hindoostan Spinning.

Brokers Recommendations:
IPCL – Outperformer from ENAM
Grasim – Outperform from Macquarie Research
Patel Engineering – Buy from Man Financial

Long Term Investment:
Siemens

Major News Headlines:

IOC buys 12.5% stake in Trans-Anatolian pipeline company
Aurobindo Pharma to mull plan to merge 2 units with itself on 15th December
Maruti denies reports its developing a new mini car
Bayer Diagnostics fixes 22nd Dec as Record Date for payment of Interim Dividend
IDBI seeks regulatory permission to open new branches
ORG Informatics raises $10mn from GDR sale
IOC Board to meet on Dec 22 to consider interim dividend
Satyam to launch software engineering campus in Malaysia
Gokaldas Exports to set up new production facility in Hyderabad
Mazda wins Rs17.5mn order from Jindal Poly Films
Gail to consider interim dividend on 20th December