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Thursday, December 21, 2006

Edelweiss - Hindalco

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Thanks Ashis

KR Choksey - JMC

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Thanks Ashis

Sharekhan Eagle Eye (equities) & Derivatives Info Kit for December 22, 2006

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Emkay - SREI Infrastructure Finance

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Sensex ends on a buoyant note

After being battered in the last two trading sessions, the market witnessed a smart bounce back amid considerable volatility. The Sensex opened with a negative gap of 26 points and continued to slip in early trades. However a sharp bout of buying interest saw it bounce and touch a high of 13441. The Sensex finally wound up the session with gains of 45 points at 13385 while the Nifty advanced 18 points to close at 3834. The breadth of the market was positive. Of the 2,604 stocks traded on the BSE, 1,424 stocks advanced, 1,119 stocks declined and 61 stocks ended unchanged.

The BSE Auto index was the major gainer among the sectoral indices and was up 1.85%. The BSE CD index and the BSE Metal index were up nearly 1% each. However the BSE Bankex, the BSE CG index, the BSE IT index and the BSE PSU index ended on a weak note.

Among the prominent index gainers Tata Motors surged 3.48% at Rs865, Reliance Communication soared 3.16% at Rs462, Reliance Energy jumped 1.99% at Rs524, Bajaj Auto added 1.98% at Rs2,559, Satyam Computers was up 1.61% at Rs466, HDFC added 1.43% at Rs1,594, Cipla gained 1.31% at Rs247 and Reliance Industries was up 1.02% at Rs1,261. On the other hand Gujarat Ambuja Cements shed 1.04% at Rs133. Tata Steel, HDFC Bank, L&T and Ranbaxy were down with marginal losses.

Among the auto and auto ancillary stocks Amtek Auto and Mahindra & Mahindra gained 4% each. Escorts, Asahi India, Punjab Tractor, Bharat Forge and Sundaram Fasteners were up 1% each.

Mahindra & Mahindra at Rs866.95, Garware Offshore at Rs280.90, Simplex Trading at Rs88.60, Texmaco at Rs1,149.05, Millars at Rs124 and IST at Rs342.20 touched new all-time highs on the BSE.

Over 73.38 lakh Sobha Developers shares changed hands on the BSE followed by Reliance Communication (26.50 lakh shares), Reliance Petro (22.70 lakh shares) and Polaris (18.87 lakh shares).

Value-wise Sobha Developers clocked a turnover of Rs187 crore followed by Reliance Communication (103 crore) Reliance Industries (Rs93 crore), SBI (Rs73 crore) and Century Textiles (Rs61 crore).

Sensex gains 45 points in volatile trade

The market witnessed high volatility for the second day in a row today as the Sensex moved between positive and negative zone.

The 30-share BSE Sensex settled with gain of 44.65 points, at 13,384.86. It had opened lower, and slipped to an intra-day low of 13,182.35 shortly after the commencement of trading. It kept on recovering as the day progressed and struck an intra-day high of 13,441.36. It moved 259.01 points in this range.

The S&P CNX Nifty rose 17.95 points (0.47%) to 3833.50

The market breadth was strong on BSE, as buying resumed for small-cap and mid-cap stocks. Against 1,430 shares that advanced on BSE, 1126 declined. 70 remained unchanged.

The total turnover on BSE amounted to Rs 4050 crore as compared to Wednesday’s turnover of Rs 4417 crore.

Among the Sensex pack, 19 advanced while the rest declined.

Reliance Communication was the top gainer, up 3.54% to Rs 463.40, on a volume of 22.67 lakh shares. It moved in a broad range of Rs 439 – 466.

Reliance Energy (up 2.52% to Rs 527), Tata Motors (up 3.13% to Rs 862.10) and Bajaj Auto (up 2.22% to Rs 2565) edged higher.

Index heavyweight Reliance Industries (RIL) gained 1.06% to Rs 1,261.80 on a volume of 7.38 lakh shares. Recently, RIL and its partner Niko Resources, discovered oil in the hydrocarbon rich Krishna-Godavari basin. The two have discovered a column of gas condensate of 170 m and 24 m of oil-bearing hydrocarbons. RIL has 90% stake in the block and Niko 10%. It moved in a range of Rs 1243.15 – 1270.

Maruti Udyog rose 0.43% to Rs 927 after reports that the Cabinet Committee on Economic Affairs (CCEA) approved the sale of the government's residual 10.2% stake. Japanese car giant Suzuki has a majority 54.2% stake in the company. The government's stake in Maruti is valued at Rs 2,800 crore at the current market price.

Gujarat Ambuja Cements was the top loser, down 1.25% to Rs 132.55, on a volume of 3.50 lakh shares.

PSU oil exploration major ONGC lost 0.91% to Rs 851. Reports say it has struck gas in Mahanandi, which may contain 3 - 4 trillion cubic feet natural gas.

Banking stocks witnessed selling pressure. ICICI Bank (down 0.72% to Rs 853), State Bank of India (down 0.52% to Rs 1210), and HDFC Bank (down 0.75% to Rs 1010) edged lower.

Tech Mahindra was the most active counter on BSE with total turnover of Rs 358.36 crore followed by Indiabulls Financial Services (Rs 335.05 crore) and United Spirits (Rs 290.54 crore).

A huge block deal of 30.28 lakh shares was struck on United Spirits counter at Rs 880 per share by 11:37 IST. The counter was up 1.30% to Rs 885.20 on total volume of 32.98 lakh shares.

The Nikkei average rose 0.22% on Thursday, edging higher above 17,000 as exporters rose on a softer yen and steel stocks such as Sumitomo Metal Industries Ltd. gained on hopes for a further industry shake-up. The Nikkei was up 36.79 points at 17,047.83.

Hang Seng index was down 0.09% at 19,222.84. European markets were trading on a mixed note.

US stocks edged lower on Wednesday in light trading as a disappointing outlook from FedEx Corp pulled down transport stocks and off set the positive influence of the latest round of proposed takeovers. The Dow Jones industrial average dipped 7.45 points, or 0.06%, to end at 12,463.87, while the Standard & Poor's 500 Index edged down 2.02 points, or 0.14%, to finish at 1,423.53. The Nasdaq Composite Index fell 1.94 points, or 0.08%, to close at 2,427.61.

As per provisional data, FIIs were net sellers to the tune of Rs 354 crore on Wednesday (20 December). They were net buyers to the tune of Rs 270 crore in index-based futures and Rs 152 crore in individual stock futures on that day.

Crude oil climbed to a three-month high in New York after a government report showed that US inventories dropped more than expected and imports fell, signaling that OPEC is acting on its pledge to trim output. Crude oil for February delivery rose 26 cents, or 0.4%, to $63.72 a barrel on the New York Mercantile Exchange, the highest close for the contract nearest expiration since 18 September

Kotak - Lupin

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Sharekhan Highnoon dated December 21, 2006

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Karvy - ACC

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Batlivala & Karani - Great Offshore Ltd

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Market to remain volatile

Rollover/squaring up of positions in derivatives segment has triggered high volatility on the bourses recently. Volatility was immense on Wednesday. The total turnover on NSE’s derivatives segment surged to Rs 46081 crore on that day, the highest turnover this month.

According to dealers, an early rollover/squaring up is happening in derivatives contracts this time as foreign fund managers will be on Christmas and New Year holiday. December 2006 derivatives contracts expire next Thursday (28 December).

As per provisional data, FIIs were net sellers to the tune of Rs 354 crore on Wednesday, 20 December. They were net buyers to the tune of Rs 270 crore in index based futures and Rs 152 crore in individual stock futures on that day.

Strong economic data and reports showing robust advance tax payment by leading corporates may provide support to the market at lower level. Cement companies and oil firms have paid substantially higher advance tax in the third installment of 15 December 2006. State Bank of India, Tata Steel, Reliance Industries (RIL), Hindalco, L&T, and Cipla have paid substantially higher advance tax in the third installment.

FDI inflow in India touched $6.1 billion in first 7 months April-October 2006 period compared to an inflow of $2.6 billion in the same period last year. India’s exports during the 8 months April-November 2006 rose 39% to $79.59 billion.

Asian markets were mixed on Thursday. Key benchmark indices in Japan, Singapore and Taiwan were up by between 0.04% to 0.2%. Key benchmark indices in Hong Kong and South Korea were down by between 0.07% to 0.18%.

US stocks edged lower on Wednesday in light trading as a disappointing outlook from FedEx Corp. pulled down transport stocks and offset the positive influence of the latest round of proposed takeovers. The Dow Jones industrial average dipped 7.45 points, or 0.06 percent, to end at 12,463.87, while the Standard & Poor's 500 Index edged down 2.02 points, or 0.14 percent, to finish at 1,423.53. The Nasdaq Composite Index fell 1.94 points, or 0.08 percent, to close at 2,427.61.

Oil slid 45 cents to $63.27 after jumping to a three-month high above $64 a barrel on Wednesday, spurred by a steep drop in US crude inventories

5 Intra-day Stock Ideas

NIFTY (3815) SUP 3766 RES 3836

SL 170 T 184, 187

SL 270 T 285, 288

SELL VSNL (391.20)
@ 394 SL 399 T 383, 380

@ 124 SL 127 T 116, 114

@ 159 SL 163 T 147, 145


Bulls n bears do Bhagam Bhaag

This world is a comedy for those who think and a tragedy for those who feel.

It's a riot out there in the markets. And, it's not funny if you are in it. The appearance and disappearance of bulls may appear funny if you are on the sidelines. The current swings cannot be taken by the faint hearted. It would suit most people to stay out and watch the show like a comedy instead of fully investing and risking a tragedy. The market now a days appears more like a cat on a hot tin roof, with wild intra-day swings being the order of the day. Uncertain times call for extra caution. The key indices are unlikely to witness any unidirectional moves till the first batch of latest quarterly results start rolling in next month.

Indications from the derivative segment are also not particularly encouraging, with short positions getting created in January Nifty futures and longs getting cut in December Nifty futures. FII inflows have also slowed. In fact, foreign funds have been net sellers in the past few days. Activity from the overseas investors is expected to slow till the budget is out. Most foreign funds start taking a call on the Indian market only after the government's most-anticipated economic policy document is unveiled in February. As a result, we see the market being rangebound and choppy in the next couple of months.

Having said that, the October-December quarter results could change the scenario. The advance tax numbers, (though not a true indication) of some the major companies could prop up sentiment and expectations. There is bound to be a few negative surprises, but on the whole India Inc's report card will exhibit continuing strength in the Indian economy.

For today, we expect a cautious opening given the mixed trend in global markets. But, things could improve later on. The latest data on the economy i.e. November exports figures, October FDI numbers and the tax revenues are all pointing towards a robust economy. This again proves that the surprising fall in October industrial production was just an aberration. Still, volatility will be high with the year coming to an end. And of course the F&O expiry next week will only add to the swing.

Shares of Great Offshore, the demerged entity of GE Shipping will get listed on the exchanges today. Analysts expect Great Offshore to debut between Rs600-700. Tech Mahindra will surely get a gap-up opening, as the company has secured a $1bn five-year contract for BT, the company's joint venture partner. Ranbaxy could be under pressure as it has lost a patent suit against Pfizer in Australia over the latter's blockbuster cholesterol-lowering drug, Lipitor. Welspun-Gujarat might gain as it has entered into a definitive agreement to form a JV with Lone Star Technologies Inc. of USA. Marico is likely to attract some attention amid reports that it has bought another hair care brand in Egypt.

FIIs were net sellers to the tune of Rs3.54bn (provisional) in the cash segment. In the F&O segment, they pumped in Rs4.31bn. On Tuesday, foreign funds pulled out a net of Rs6.73bn from the cash segment. Mutual Funds were net buyers of Rs106.9mn on the same day.

US stocks rose on Wednesday, pushing the S&P 500 Index toward a six-year high. Morgan Stanley helped boost financial stocks after UBS raised its earnings forecast. The advance was limited by a decline in transportation stocks after FedEx forecast third-quarter earnings that trailed analysts' estimates.

The 30-stock Dow was down 7.45 to 12,463.87. It scaled a new record trading high of 12,498.47 but pulled back late in the session. On Tuesday, the Dow closed at its best level ever. The S&P 500 fell by 2.02 to 1,423.53 and the tech-heavy Nasdaq dropped 1.94 to 2,427.61.

US light crude oil for February delivery rose 26 cents to settle at $63.72 a barrel on the New York Mercantile Exchange after a weekly report on fuel inventories showed a dip in crude stocks. The front-month contract was trading 48 cents lower at $63.24 a barrel in extended trading in Asia.

Treasury prices held steady, leaving the yield on the benchmark 10-year note at the 4.59% level reached late on Tuesday. The dollar edged higher against the euro and the yen. COMEX gold futures lost $1.10 to $624.30 an ounce.

Among the Indian ADRs, Infy gave up 1.5%, Satyam lost 1.9%, Tata Motors dropped close to 2% and HDFC Bank was down 1.35%.

European shares gained ground. The French CAC-40 closed up 0.5% at 5,514.42. The German DAX Xetra 30 rose 0.5% to 6,586.91, while the UK-based FTSE 100 slipped 0.1% to 6,198.60. The pan-European Dow Jones Stoxx 600 index advanced 0.3% to 364.71.

Mexico and Brazil stocks closed slightly lower. In Mexico, the benchmark IPC index of 35 most-traded shares fell 227 points, or 0.9%, to 25,394.69. Brazil's benchmark Ibovespa stocks index closed 87 points, or 0.2%, at 43,502.36.

Asian markets are mixed this morning. The Nikkei 225 Stock Average in Tokyo was up 55 points at 17,066 while the Hang Seng in Hong Kong was down 12 points at 19,228. The Kospi in Seoul was flat at 1442.

The Morgan Stanley Capital International Asia-Pacific Index climbed 0.3% to 139.10 as of 11:12 a.m. in Tokyo, set for its highest since May 12. Indexes open elsewhere rose, except in Australia, Hong Kong and South Korea.

BHP Billiton and Rio Tinto Group led mining shares lower along with prices of metals including copper. A measure of six metals traded on the London Metal Exchange (LME), including copper and zinc, dropped 1.7% yesterday.

Major Bulk Deals:
Kotak Mahindra Bank has sold Navin Fluorine International.

Insider Trades:
Surana Telecom Ltd: Shri Narender Surana, Managing Director has purchased from open market 37838 equity shares of Surana Telecom Ltd from 25th November to 15 December, 2006.

The Great Eastern Shipping Co. Limited: Bharat K. Sheth, Deputy Chairman & Managing Director has purchased from open market 120947 equity shares of The Great Eastern Shipping Co. Limited on 13th December, 2006.

Market Volumes:
The turnover on NSE was up by 10% to Rs100.1bn. BSE Bank index was the major loser and lost 1.01%. BSE Capital Good index (down 0.76%), BSE Auto index (down 0.50%) and BSE Technology index (down 0.25%) were among the other major losers. However, Consumer Durable index gained 1.15%.

Volume Toppers:
IFCI, R Com, ITC, Polaris, Ashok Leyland, SAIL, India Cements, Reliance Industries, Tata Steel, HLL, Gujarat Ambuja, TTML, Parsvnath, Tech Mahindra, Hindalco, Satyam, ONGC, Mphasis BFL and Unitech.

Delivery Delight:
ABG Shipyard, AIA Engineering, BPCL, Bharati Shipyard, Cipla, Colgate, Educomp Solutions, GAIL, Gitanjali Gems, GTL, HPCL, HDFC, Indiabulls, IPCL, Mahindra & Mahindra, Maruti, ONGC, Strides Arcolab and Tisco.

Brokers Recommendations:
Subex Azure – Buy from Man Financial

Long Term Investment:
Bharti Airtel

Major News Headlines:
HPCL to pay Rs6 per share interim dividend
HCL Tech gets $200mn deal from Skandia UK
MRF recommends final dividend of 140%
Gitanjali Gems buys Samuels Jewelers for Rs4.5bn
Union Bank to declare interim dividend on Dec 28
Peninsula Land sells 2.6mn shares at Rs600 a share
Indiabulls acquires 100% in Noble Realtors
ITC to spend Rs11bn to build paper mill in AP
Four Soft agrees to acquire Transaxiom of Denmark
KEC secures orders worth Rs1.51bn from UAE, Ghana
Torrent Power to light up Bhiwandi circle

From Research Desk - Cement Update

Cement Update – December 2006

Average cement prices in the country have gone up by Rs2 in the beginning of December 2006 as the situation improved in Southern States post monsoon. Cement prices in other regions are stable and ruling at November 2006 levels. Cement prices in Southern States were depressed in the first half of November due to monsoon. Construction activities picked up smartly due to the real estate boom in Southern States.

We expect cement prices to rise in Southern States in January again as they are slightly low compared to pre monsoon levels and the demand is strong. With the onset of peak construction period we expect cement prices to go up in the coming months in other regions also. The dispatch growth is better by 100 basis points compared to the April-November period in FY06.


The economy is growing strongly and the October 2006 IIP slowdown is considered to be just a blip due to festivals. Demand for cement is picking up and with the onset of peak construction period, this is expected to grow at a faster pace in future. We feel the initial estimates of 10% growth for FY07 may get surpassed as construction activities pick up. The demand from Housing, Retail and SEZ is expected to keep the growth at higher levels.

The supply growth is not matching with the demand growth at present. With the supply growth lagging behind we see possibilities of further upside in price in the coming months, but we the yoy growth may come down going forward.

The margin for cement companies operating in Tamil Nadu is expected to rise slightly as the state is implementing VAT from January 2007. The sales tax incidence will come down from 14% to 12.5% post VAT.

Our top pick continues to be Kesoram Industries (KIL), which is expected to start its additional capacity in December 2006. We expect tyre margins for the company to improve as the average rubber prices are trading at lower levels compared to last quarter. KIL is ramping up its tyre capacity also. There is possibility for upward revision in our estimates for KIL if rubber and tyre prices continue at the present levels. The tyre industry is expected to do well for the next few years and we find the valuations of KIL not justifying the growth opportunities in the tyre industry. We retain our HOLD rating for ACC and BUY rating on Shree Cement and downgrade Ultratech Cement to HOLD from BUY as we feel the share price of the company reflect possible upside in cement prices and gains from fuel price reductions.

How Market Fared

Bulls appear lost on D-Street

Volatile trading session ended in red, the key indices fell for second straight day as bears won the intra-day battle. The markets witnessed huge gyrations throughout the day with benchmark Sensex swinging over 300 points in intra-day hitting a low of 13232.56 and high of 13568.09. The low sentiments of the investors turned positive as the Finance Minister Pridiyathorn Devakula said that the controls would not apply on equities aiding the benchmark Sensex to open on a firm note, however the key indices lost ground as selling pressure in the Auto, Banking and select Technology stocks dragged the index to end in negative territory. Finally, the BSE benchmark Sensex lost 41 points to close at 13340. NSE Nifty slipped 16 points to close at 3815.

ITC gained 1.2% to Rs170 after the company planned 54 new fresh food stores. The scrip touched an intra-day high of Rs177 and a low of Rs169 and recorded volumes of over 91,00,000 shares on NSE.

HCL Tech edged lower 0.5% to Rs599. The Company got selected by Skandia UK for $200mn deal. The scrip touched an intra-day high of Rs619 and a low of Rs579 and recorded volumes of over 16,00,000 shares on NSE.

Pharma stocks were in good health. Cipla advanced 1.4% to Rs244, Glaxo gained 1.6% to Ras1150, Sun Pharma was up 1.15% to Rs952 and Ranbaxy edged higher 0.5% to Rs390.

Power stocks ended in darkness. Tata power declined 2.6% to Rs556. The company announced that they would raise money locally, overseas for Mundra project, Suzlon Energy dropped 3.1% to Rs1239 and Reliance Energy slipped 1.7% to Rs513.

Capital Good stocks were also on the receiving end. Siemens lost 1.2% to Rs1117, L&T edged lower 0.5% to Rs1409, BHEL was down 0.5% to Rs2280 and Punj Lloyd slipped 1.5% to Rs968.

Consumer Durable stocks stood firm in volatile trading session. Gitanjali Gems surged over 3.8% to Rs222 after the company bought Samuels Jewelers of US, Videocon Industries advanced over 2.8% to Rs440 and Titan added 0.7% to Rs743.

Banking stocks pared their early gains on back of profit booking. Index heavy weights ICICI Bank declined, HDFC bank and SBI were among the major losers

Weak international markets may weigh

After taking a small dip in yesterday's trades, the market may remain cautious amid weakness in several Asian indices and overnight marginal fall in the US markets. Mix trend in major Asian indices may drag down the market in early trades. On the technical front, the Nifty in the short term could test 3850 on the upside and has a support at 3760. The Sensex may face resistance at 13452 and could test lower levels at 13232.

All the Indian ADRs witessed a mixtrend on the US bourses on wednesday. Infosys, Satyam, Wipro, Tata Motors and HDFC Bank shed over 1% each. However, Rediff gained 2.22% and Dr Reddy, Patni Computers, and MTNL were in positive territory. ICICI Bank & VSNL remained unchanged.

US indices eased on wednesday, as the result the Dow Jones, which had closed at 12464 dropped by 7 points and the Nasdaq shed 2 points to close at 2428.

Crude oil prices moved up, with the Nymex light crude oil gaining by 26 cents to close at $63.72 a barrel. In the commodity space, the Comex gold tumbled $1.10 to settle at $624.30 an ounce.

Emkay Morning Notes - Garnet Construction

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Karvy - Tata Steel & JSW Steel

Tata Steel

JSW Steel

IDBI Capital - IPCA Labs

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Tech Mahindra eyes $1bn biz from BT

Tech Mahindra today announced the signing of a five-year deal to provide BT with strategic sourcing services.

According to a release issued by Tech Mahindra to the BSE today, the contract is expected to create new revenue for the company in excess of $1 billion over the contract period.

"The company will support BT’s planned growth of managed services to business customers around the globe, and continue to provide on-going services related to BT’s internal systems, processes and re-usable platforms," the release added.

Vineet Nayyar, vice chairman and managing director of Tech Mahindra, said: "We are proud to be BT’s preferred partner for its internal IT requirements, and this new opportunity will enable us to assist BT serve their external customers more effectively. We feel privileged that BT has selected us for this opportunity and takes our long standing relationship to a new level."

Sharekhan Investor's Eye dated December 20, 2006

Cluster: Apple Green
Recommendation: Buy
Price target: Rs670
Current market price: Rs582

USFDA nod for Trandolapril

Key points

  • Lupin has obtained a tentative approval from the US Food and Drug Authority (USFDA) for its abbreviated new drug application for Trandolapril tablets of strengths 1mg, 2mg and 4mg. Trandolapril is prescribed for the treatment of hypertension.
  • Abbot Laboratories Plc, USA is the innovator of Trandolapril, which is sold under the brand name Mavik®. The annual sales of the product in the USA stood at approximately $53 million for the twelve months ended July 2006, based on IMS data. The product patent expires in June 2007.
  • Lupin would launch the generic equivalent of the Mavik® tablets in US markets on receiving the final approval from the USFDA. The final permission is expected upon the expiry of the patent protection for the branded product in June 2007.
  • Anticipating a 25% market share for Lupin at a 30% price erosion, we expect the product to generate revenues worth Rs27.8 crore (for the eight months after the expiry of the patent in June 2007) in FY2008.
  • At the current market price of Rs582, Lupin is quoting at 14.9x its FY2008E earnings estimate, on a fully diluted basis. Keeping in mind the strong business fundamentals and growth potential of the company, we maintain our Buy recommendation on the stock with a price target of Rs670.


Great Offshore

Follow the leader
Great Offshore Ltd (GOL), the de-merged offshore business of the Great Eastern Shipping Company, is likely to get listed tomorrow. The de-merger has been a step towards unlocking the value of the offshore business that commands much higher multiples as compared with the shipping business. More so in the current scenario where the heightened exploration activity globally is resulting in firming up of the charter rates for offshore drilling and offshore support vessels, and the other allied services.

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Citigroup - Thailand - Out of Proportion

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Citigroup - Indian Sugar Sector

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Citigroup - ABG Shipyard

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Citigroup - Bharti Shipyard

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Sharekhan Eagle Eye (equities) & Derivatives Info Kit for December 21, 2006

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