Friday, December 22, 2006
BUY Reliance Capital (591)
SL 579 T 610, 615
BUY BRFL (232.95)
SL 219 T 252, 257
BUY Divi’s Labs (2800)
SL 2751 T 2878, 2885
BUY IPCL (286)
SL 278 T 299, 303
BUY Parsvnath Developers (437.7)
SL 423 T 460, 465
Opto Circuits (India) Limited
Opto Circuits (India) Ltd (OCIL), an established player in a niche segment of medical electronic devices and medical monitoring products is expected to witness revenue CAGR of 63% to Rs3.7bn over FY06-08. While the core business is expected to record 30% plus revenue CAGR to Rs2bn over FY06-08 driven by continuous demand for its products, EuroCor (OCIL’s 100% subsidiary) is on track to expand its geographical coverage of stents to 36 countries by end 2006 and contribute at least 30% to profitability by FY08. However, net margins for EuroCor may be subdued in the short term on account of heavy advertising and promotional expenditure. OCIL’s products have started gaining preference with cardiologists who have attended various seminars, conferences and live workshops conducted by the company. Appointment of Dr. O’Neill on board is likely to expedite the process for USFDA approval, but it is still 18-24 months away.
OCIL’s proposed acquisition of a European company is likely to be a good strategic fit for the company. OCIL is likely to acquire this company which is into design and manufacturing of a wide range of balloon catheter assemblies and related products for coronary, renal and other applications for a consideration of Rs0.72bn. The target company is likely to generate revenue of Rs0.8-1bn for 2007. While we await further details about the acquisition, which is likely to be closed over the next 4-6 weeks, the acquisition enables EuroCor to achieve backward integration, which would cut costs. These savings can then be passed on to the customer, which would increase penetration. In addition, OCIL is also looking at conducting certain low-end manufacturing operations for EuroCor in India, which will not only cut costs but boost net margins as OCIL is under 100% EOU till 2009-10.
We are confident that the company is on track to witness earnings CAGR of 61.1% to Rs1bn over FY06-08 excluding the potential from the proposed acquisition. At Rs305, the stock is trading at 28.8x FY07E EPS of Rs10.4 and 18.4x FY08E EPS of Rs16.3. We maintain BUY with a target price of Rs326. Closure of the proposed acquisition and disclosure of financial details by the management may lend further upsides to the stock.
CMP: Rs465.40 Not Rated
Unitech is India’s largest listed real estate company with a market cap of Rs284bn. The company has a land bank of 10,332 acres (400mn sq ft) spread across north, south and east India. The company is one of the leader in developing residential complexes and commercial/IT parks in India. Unitech has also ventured into SEZ development and is expected to develop a large SEZ of 20,000 acres in Kundli (Haryana) and another 38,000 acres development in Kolkota. Apart from the real estate development, the company is involved in executing industrial projects on a turnkey basis both in India and overseas. It also has a tie up with Carlson Hospitality to manage Radisson hotels and with Marriot International to manage 3 hotels.
As a management philosophy, Unitech does not believe in trying to get a foothold in established areas. The management is clear that it prefers to enter into a city into the city suburbs, and develop integrated townships, thereby developing the area. This is seen in Unitech’s policy in Gurgaon, where the company along with few other large players have capitalized on the early mover advantage in creating integrated townships.
The company is clear that it would rather prefer to accumulate land though open market purchases and agricultural land, than bid for high cost properties at public tender process. While this process is cumbersome, it benefits the company through lower land prices.
In line with industry trend, majority of Unitech’s completed projects have been in the residential segment. Incrementally, 77% of the total planned development space is expected to come from residential segment. This also helps the company’s cash flows as residential segment is a very low working capital intensive business.
Indo Tech Transformers Ltd
CMP: Rs249 BUY
Indo Tech Transformers Ltd is in the process of more than doubling its existing capacity from 2,450MVA to 7,450MVA, including both planned and unplanned expansions. It is venturing into higher rating power transformers segment by setting up a new unit at Kancheepuram. This facility will have the capability to manufacture 400kv class transformers. It is also setting up a new dry type transformer unit in collaboration with Dupont. In order to expand its reach the company is appointing marketing executives pan India, which will help it have pan India focus. We expect the company to benefit from the ongoing investments in the power generation and transmission and distribution space by public and private sector. This should translate into stronger demand for transformers which will help the company’s bottomline grow at 39.1% CAGR over FY06-08E. The stock is currently trading at 16.7x and 12.3x FY07E and FY08E earnings of Rs14.9 and Rs20.1 respectively. We maintain a BUY on the stock with a long term perspective.
Cement Update –
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.
Marico - another acquisition in Egypt
Marico Ltd. has acquired a hair creams and hair gels brand – HairCode from Egypt’s Pyramids Group for an undisclosed consideration. The Pyramids group has agreed for a non-compete agreement in certain segments with Marico. Marico has funded this acquisition through a short-term debt. The brand enjoys 23% market share of the pre and post wash hair care market in Egypt. In September 2006, Marico had acquired a hair care brand called Fiancee, owned by the Ready Group of Egypt. With both these acquisitions, Marico has now achieved a dominant market share of 50% in the Rs1.7bn pre and post wash hair care market in Egypt.
The management expects, Fiancee and HairCode brands to contribute Rs950mn plus to its consolidated turnover during FY08.
Marico has raised Rs1.5bn through a QIP issue of 2.9mn fresh equity shares at Rs522 per share. Post this placement, the issued capital of the company has increased by 5% Rs609mn from Rs580mn. Marico has used the money to retire some of the short-term debt on the company’s books and has brought down the debt: equity ratio from 1:1 as on September 30, 2006 to about 0.4:1. The current debt on the books is at Rs1.8bn.
ONGC, RIL, Essar announce new finds
After a protracted drought, Oil and Natural Gas Corp. Ltd. (ONGC) seems to have struck gold. The public sector oil & gas explorer reportedly found a huge gas reserve in the Krishna-Godavari basin, with a potential reserve of 21 trillion cubic feet (tcf). Separately, ONGC found gas in the Mahanadi basin, off the Orissa coast, and oil in Assam. Reliance Industries Ltd. (RIL) reportedly discovered oil in the D6 block, off the country's east coast, the company's Canadian partner Niko Resources said. "The MA-2 well has encountered the thickest hydrocarbon column discovered to date in D6," Niko said. Essar Oil too reportedly made an oil discovery in its onshore Mehsana block in Gujarat. Oil and associated gas has been found in Prospect B in the Block CB1/3.
Bush clears Indo-US nuke deal
The much-hyped Indo-US civilian nuclear deal has finally become a law. President George W. Bush signed on the dotted line, allowing India to buy American nuclear technology for the first time in three decades. However, the bill must still be approved by the Nuclear Suppliers Group (NSG), the International Atomic Energy Agency (IAEA), and for the second time by the US congress. It was approved overwhelmingly by the Congress on Dec. 9. The act will allow the two countries to share civilian nuclear technology and bring India's civilian nuclear programme under the safeguards of IAEA. But, critics of the agreement believe that the pact undermines American efforts to curb the spread of nuclear weapons and will fuel an arms race between India, Pakistan and perhaps even China.
SEBI bans Gammon India for a year
The Securities and Exchange Board of India (SEBI) banned Gammon India Ltd. and its chief promoter Abhijit Rajan from accessing the capital markets for one year for alleged misuse of company funds for its 2001 Rights Issue and failure to make certain mandatory disclosures. The capital market watchdog also barred Gammon India from selling the shares of its subsidiary, Gammon Infrastructure Projects Ltd. (GIPL) for a period of three years. Nikhita Estate Developers and Devyani Estate & Properties, companies owned by Rajan, have also been banned from the capital markets for a year. SEBI charged Gammon India promoters of diverting funds from the rights issue to increase their stake in the company. However, subsequent to the order, the fate of the GIPL IPO, which Gammon India wanted to list next year, is not yet clear. Gammon India said the company would challenge the order in the Securities Appellate Tribunal (SAT). SEBI also barred Reliance Silicones from accessing the capital market for a year, as it allegedly acted as fronts for siphoning of funds for increasing the promoters' stake in Gammon India.
Govt eases restriction on sugar exports
Sugar mill owners across the country can finally afford to smile with the Government partially lifting a ban on sugar export. The Union Cabinet allowed companies that had imported raw sugar under the advance license scheme to re-export up to one million tons of refined sugar. Only mills that imported raw sugar duty-free last year to meet a shortage have been permitted to export. Sugar mills bought 3mn tons of raw sugar in the last two years under the advance license scheme that allows companies to import raw sugar duty-free provided they re-export an equivalent amount at a later date. Sakthi Sugars, Shree Renuka Sugars, Simbhaoli Sugar Mills and EID Parry hold advance license for exports. Separately, the Government raised the benchmark price of sugarcane to help farmers. Sugar mills will pay Rs81.18 for 100 kilograms of cane in the year starting in October 2007, compared with Rs80.25 in the current year, Finance Minister P. Chidambaram said. Sugar mills pay a statutory minimum price fixed by the Government to the farmers. The guaranteed prices are meant to shield farmers, a powerful voting block, from losses.
Govt unveils gas pipeline policy; clears Maruti sale
The Government announced the natural gas pipeline policy and framework for setting up of city gas distribution network. "No gas pipeline or local gas distribution network will be laid, built, operated or expanded without the authorisation of the sector regulator," Petroleum Minister Murli Deora said. The policy stipulates that pipelines will have at least 33% more capacity than what is required by the operator. The extra capacity will be available for use on common carrier basis by any third party. The entity authorised to lay, build, operate or expand a city gas distribution network will get five-year period of exclusivity, but will have to fulfill marketing service obligations.
The Government cleared the proposal for selling its residual stake of 10.27% in Maruti Udyog Ltd. The decision as taken at the meeting of the Cabinet Committee on Economic Affairs (CCEA). The stake may be offloaded to domestic Financial Institutions (FIs) and Banks, according to reports. The Government equity in the country's top carmaker may fetch around Rs28-30bn depending on the timing of the stake sale.
The Government deferred the decision to hike the FDI limit in telecom to 74% from 49% by three months. "It came up for discussion," Finance Minister P. Chidambaram said after a Cabinet meeting. "Broadly, it has been approved. We still have to redraft the revised guidelines and the matter will come up for formal approval," he said. Operators, having up to 74% FDI, were earlier required to abide by the guidelines by January 2, 2007. A revision of the telecom rules, originally laid down on Nov. 3, 2005, may allow expatriates to head a local telephone company and disallow the local partner's right to veto the overseas company's nominee for CEO or other key positions.
Economy on a roll
India’s merchandise exports jumped 34% to US$9.8bn in November. If the current trend continues, the country will top the annual target of US$125bn. The government has set a target of US$150bn in exports by 2008-09. Imports in the month surged by 42.9% to US$15.88bn. As a result, the trade gap for the month stood at US$6.2bn versus Rs3.87bn in the same month last year. Exports during April-Nov 2006 rose 39% to US$79.59bn. Imports rose 43% to US$115bn during April-Nov 2006. The trade deficit for the period widened to US$36.04bn from US$27.64bn a year ago.
Foreign Direct Investment (FDI) into India quadrupled in October to US$1.7bn from US$0.412bn in the same month last year, raising expectations that annual inflows will reach a new record by March 2007. During April-October 2006, FDI inflows touched US$6.1bn compared to US$2.6bn in the first eight months of the previous fiscal year, showing a growth of 134%, Commerce Minister Kamal Nath said.
The Government’s advance tax collections grew by 38.5% in April-December 18, 2006. Total direct tax collections grew 42.5% against the Budget growth target of 27.5%. Corporate advance tax collections were Rs593.93bn during April-December 18, 2006, up 38.5% over last year’s collection of Rs428.81bn. In fact, the corporate advance tax collections in December 2006 (up to 18th) grew by 46.4%. The net direct tax collections till December 18 were Rs1.33 trillion, up 42.5% over last year. The budgetary estimate for direct taxes is Rs2.1 trillion for FY07.
Tata Power, Lanco win bids for Mundra, Sasan UMPPs
Tata Power Company Ltd. and Lanco Infratech Ltd. won the bids for the first two Ultra Mega Power Projects (UMPP) worth 4,000 MW each. Tata Power emerged the lowest bidder for the Mundra project in Gujarat while Lanco got the Sasan plant in Madhya Pradesh. With a tariff of Rs 2.26 per unit, Tata Power outbid Reliance Energy, Larsen & Toubro, Essar Power, Sterlite Industries and Adani Exports for the imported coal-based plant. Meanwhile, Lanco outbid its nearest rivals Reliance Energy and Tata Power as well as seven other suitors. The Lanco-Globoleq combine quoted a bid of Rs1.196 per unit for the coal-fired project. The Government wants to build at least four UMPP of 4,000 MW each to meet the rising demand in Asia's fourth largest economy. The plants will begin production by 2012 and full output will start by 2013.
Stalemate over Corus deal may end soon
The deadlock over the acquisition of Corus Group Plc could end soon, with the British takeover regulator giving six weeks to India's Tata Steel Ltd. and Brazil's CSN for submitting revised offers. The UK Takeover Panel said that Corus would be put to an auction if the offers are still outstanding before January 30. Should a competitive situation continue to exist shortly before Jan. 30, the panel may require any revised offers to be published in accordance with an auction procedure, it said. Corus said in a separate statement that a planned Extraordinary General Meeting (EGM) of its shareholders has been adjourned. According to analysts, the ruling by the UK Takeover Panel will result in a clear winner by Jan. 30.
Mega deals for IT majors
Tech Mahindra announced the signing of a five year deal to provide BT with strategic sourcing services. This contract is expected to create new revenue for Tech Mahindra in excess of US$1bn over this period. Tech Mahindra will support BT's planned growth of managed services to business customers around the globe and continue to provide ongoing services related to BT's internal systems, processes and re-usable platforms. HCL Technologies Ltd. said that it has won a US$200mn, multi-service, five-year contract from Skandia UK, a leading independent provider of long-term savings solutions. As part of the agreement, 250 Skandia employees will be transferred to HCL Technologies to ensure a smooth transition. The contract will be executed by one of the company's leading offshore insurance industry delivery centres based in Chennai. Satyam Computer Services Ltd. said that Nipuna Services Ltd., its BPO subsidiary, has signed a US$25mn edutainment deal. Nipuna is partnering 4K Animation Ltd., UK for the execution and delivery of these projects. Nipuna will work with the 4K Animation team for 15 months on two European animation projects.
JVs galore for India Inc
Tata Motors Ltd. entered into an Joint Venture (JV) agreement with Thailand's Thonburi Automotive Assembly Plant Co. to manufacture, assemble and market pickup trucks. Tata Motors will hold a 70% equity stake in the JV while Thonburi will own the remaining 30%. Tata Motors will get vehicles manufactured in Thonburi's manufacturing facility. It will go on stream in a year's time.
Welspun-Gujarat Stahl Rohren Ltd. entered into a definitive agreement to form a Joint Venture (JV) with US$1.4bn Lone Star Technologies, Inc. (USA). The JV will manufacture Spiral Welded Tubular Products for the oil & gas industry in North America. The new facility will be located in South West USA.
Dishman Pharmaceuticals & Chemicals Ltd. announced the second Joint Venture in Saudi Arabia to manufacture hospital disinfectant formulations, anti-cancer drug formulations and dry powder inhaler (DPI). The company signed an agreement with Takamul Investments Holding Co. (Takamul), a group company of Capital Advisory Group.
Primary market buzz
Cairn India set Rs160 as the issue price for its IPO after a lukewarm response to the mega issue. The Indian unit of London-listed Cairn Energy Plc would raise US$1.9bn at the lower end of the price band of Rs160-190 per share. Cairn India is now valued at US$6.32bn, instead of US$7.5bn if it was priced at Rs190. The IPO was subscribed by just 1.14 times, owing to concerns over high valuation and uncertainties over the transportation of the crude. Tanla Solutions Ltd., a provider of integrated telecom solutions and products for the wireless market, fixed the issue price at Rs265 per share of Rs2 each. This is the higher end of the price band of Rs230 to Rs265 per share. Shares will be listed on the BSE and NSE before January 10. The IPO of Pyramid Saimira Theatre Ltd., the Chennai-based digital theatre chain operator, has been subscribed more than 16 times. The IPO of Shree Ashtavinayak Cine Vision Ltd. has been subscribed 6 times.
Deals keep rolling in
As part of its efforts to boost the auto parts business, Mahindra & Mahindra Ltd. (M&M) announced that it would acquire a 90.47% stake in Schoeneweiss & Co. GmbH. The Mumbai-based company has acquired Schoeneweiss through its subsidiaries. A leading company in the forgings sector in Germany, Schoeneweiss is one of the top five axle beam manufacturers in the world and specializes in suspension, power train and engine parts. Reliance Life Sciences announced that it will acquire a majority stake in UK-based biopharmaceuticals company GeneMedix Plc. Reliance Life Sciences would also invest £32.1mn over the next five years in order to take the company's bio-similars for launch in the EU and the US. GHCL Ltd. said its step down US subsidiary, Dan River Inc. has acquired assets of HW Baker Lenin Co. for US$6.75mn. HW Baker Lenin has a turnover of US$70mn. It is a leading supplier of textile products covering Sheets, Terry Lenin, Blanket, Pillow and Pillow Cases, to leading hotels and motels.
Mitsui & Co., Japan's second-biggest trading firm, is reportedly planning an exit from its Indian iron ore business. Mitsui plans to sell its 51% stake in Sesa Goa Ltd., Indian iron ore exporter, says a New Delhi-based national daily. The Marico Group announced that it had acquired the HairCode brand from Cairo-based Pyramids Group. HairCode is a leading brand in the Egyptian hair care market and its range includes hair creams and hair gels. The two parties expect to grow the brand’s turnover from its current base to over Egyptian Pounds 50mn in the next financial year. Gitanjali Gems announced that it had acquired Samuels Jewelers, Inc., the 10th largest jewellery chain in the United States. The company has acquired 97% stake in the US specialty retailer, which operates 97 stores across 18 states with current revenues of Rs4.5bn.
Ranbaxy gets mixed ruling on Lipitor
Ranbaxy Laboratories Ltd. announced that a court in Australia has awarded a mixed ruling in a case involving Pfizer's blockbuster cholesterol lowering drug Atorvastatin, sold under the brand name Lipitor. Justice Neil Young of the Federal Court of Australia ruled that one of Pfizer’s patents is invalid for false suggestion and misrepresentation in obtaining the Australian patent 628198. However, Young also said that Ranbaxy's Atorvastatin product infringes another Pfizer patent. Separately, Ranbaxy received an approval from the US Food and Drug Administration (USFDA) to manufacture and market Simvastatin Tablets USP, 5 mg, 10mg, 20mg and 40mg in the US. Cadila Healthcare Ltd. and Aurobindo Pharma Ltd. also secured an approval each from the USFDA for selling Simvastatin Tablets in strengths of 5 mg, 10 mg, 20 mg, 40 mg and 80 mg. Cadila launched the Simvastatin Tablets in the US market on the very first day of receiving the approval.
Moser Baer forays into home video market
Moser Baer India announced its maiden foray into the entertainment industry through the Indian home video market. The company will release video content on DVD and Video CD formats using its proprietary and patented technology. The new division is in final negotiations to acquire copyrights/exclusive license of more than 7,000 titles in all major Indian languages. Moser Baer will offer high quality titles at very attractive price points between Rs28 - Rs34 for VCD/DVD.
Arcelor Mittal signs MoU for Orissa project
Arcelor Mittal signed a Memorandum of Understanding (MoU) with the Government of Orissa for setting up a steel making operation in the Keonijhar District. The project is expected to entail an investment of about Rs400bn (about US$9bn). The intention is to build an integrated steel plant with a total annual capacity of 12mn tons. The project would be developed in two phases of 6mn tons each. The first phase would be completed within 48 months from the date of the submission of the DPR and the second phase within a further 54 months after the completion of Phase 1. JSW Steel Ltd. is reportedly considering building a 3mn tons a year hot strip mill in Karnataka to convert slabs into high-value steel products for automobiles and consumer durables industries. India's fourth- biggest steelmaker plans to spend Rs20bn (US$450mn) on the plant.
BOJ leaves rates unchanged
As expected, the Bank of Japan (BOJ) kept its benchmark interest rates unchanged as it awaits more data on the strength of the world's second-largest economy. However, majority of the economists expect the Japanese central bank to hike rates at its January 18 policy meeting. Central bank Governor Toshihiko Fukui and his policy board kept the key overnight lending rate at 0.25%, the central bank said in a statement released in Tokyo. The decision, which was unanimous, was in line with expectations.
Gazprom wrests control of Sakhalin-2
Gazprom agreed to buy half of Sakhalin-2 oil and gas project from Royal Dutch Shell and partners for US$7.45bn, handing President Vladimir Putin another victory in his drive to control Russia's energy industry. Shell, Mitsui Co. and Mitsubishi Corp. will each sell half of their stakes in the project to Moscow-based Gazprom. Hague-based Shell and its partners have invested US$12bn in the venture, which will be the first to produce liquefied natural gas in Russia. "We as the main shareholder of the project will do everything to launch it as soon as possible," Gazprom Chief Executive Alexei Miller told reporters after meeting President Vladimir Putin. Shell will continue to contribute to management and act as technical adviser on Sakhalin-2, which will honour its existing contracts to sell liquefied natural gas to Japan, South Korea and the United States according to the agreed schedule, with the first shipment due in the summer of 2008.
Toyota set to overtake GM next year
Toyota expects demand for its fuel-efficient cars in the US, Asia and Europe to increase vehicle sales by 6% in 2007. If the forecast turns out to be right, the Japanese giant could well upstage General Motors from the position of the world's largest carmaker after 81 years. Toyota passed Ford as the world's second-largest carmaker in 2003. Toyota and its affiliates will probably sell 9.34mn vehicles next year, up from 8.8mn in 2006, the company said in a statement. Production next year will rise 4% to 9.42mn vehicles. Toyota shares, which have gained 27% this year, rose 1.6% to a record 7,800 yen at the end of trading in Tokyo, giving the company a market value more than 14 times the size of General Motors.
Goldman gives out record bonus to CEO
Goldman Sachs gave its CEO, Lloyd Blankfein US $53.4mn bonus, eclipsing a record set by Morgan Stanley, who paid CEO John Mack US $40mn in stock and options on Dec. 14. The bonanza for Blankfein included a cash bonus of US $27.3mn, with the rest paid in stock and options. He took the helm of the investment bank in June after President Bush nominated Henry Paulson to be Treasury secretary. Mack, who is 62, rejoined Morgan Stanley 18 months ago to turn around the company after the ouster of Philip Purcell. Mack's short-lived record bested one set in 2005 by Goldman's Paulson, who was given US $38.3mn. Blankfein's bonus reflects the street's very profitable results this year. Other than Blankfein, 11 other senior Goldman executives as a group were granted slightly more than US$150mn in shares and stock options. Goldman said last week it had set aside a total of US $16.5bn this year for salaries, bonuses and benefits. On average, this would translate to US $622,000 per employee. The bonuses come after Goldman reported last week that it had earned the highest yearly profit in the history of Wall Street. Net profit rose 70% to US $9.4bn on revenue of US $37.67bn. Goldman and other firms have benefited from a surging market for takeovers and a strong stock market.
NYSE, Euronext shareholders approve merger
The New York Stock Exchange (NYSE) said that its shareholders overwhelmingly approved a planned US $14.3bn acquisition of Paris-based Euronext, in a deal that would create the first trans-Atlantic financial market. The cash-and-stock deal was endorsed by about 99.7% of shareholders who voted. More than 75% of eligible shareholders voted, NYSE said. The vote came one day after the European exchange operator's shareholders comfortably approved the deal. The shareholder votes set the stage for NYSE Euronext to receive final regulatory approval early next year to become the world's largest stock market. The deal comes amid a slew of M&A activity among global stock markets. Nasdaq Stock Market has launched a hostile bid to acquire the rest of the London Stock Exchange in a deal that values that exchange at US$5.3bn. It owns 28.75% of the London exchange. The NYSE and Euronext, which operates the Paris, Amsterdam, Brussels and Lisbon stock exchanges, expect to complete their deal in the first quarter of 2007.
Delta spurns US Airways' offer
Delta Air Lines rejected the hostile offer from US Airways, saying that it wanted to emerge from the bankruptcy as a stand-alone entity. But, US Airways' said he was more determined than ever to push ahead with his company's hostile bid to buy Delta. The latest remarks from both the airlines intensifies the war of words that started when US Airways disclosed its US$8.4bn offer to buy Delta on Nov. 15. Parker said Delta's projection that it will be worth as much as US$12bn when it emerges from bankruptcy as a stand-alone airline is way out of whack. He said his company's analysis of Delta's stand-alone plan values the airline at US$5.5bn to US$6.9bn. He also said that, while US Airways generally agrees with Delta's profit projections for 2007, his company believes Delta's projections beyond that are too rosy. Parker also said that his company strongly believes that its offer to buy Atlanta-based Delta will pass regulatory scrutiny.
Another volatile week in the offing
Last Christmas, I gave you my heart
But the very next day, You gave it away
This year, to save me from tears
I'll give it to someone special
Once bitten and twice shy
I keep my distance but you still catch my eye
Its Christmas time! We have had enough of Bulls and Bears, the ongoing tussle between them have made markets more volatile. The Christmas will provide some time for the bulls to nurse their wounds. The sharp swings on the eve of the Christmas may have tempted investors to sing the famous Christmas song by WHAM! But, the bulls would certainly be hoping that the sunny days will be here again sooner rather than later.Next week will be crucial as December F&O series comes to an end. Some short positions have been created for the January series while longs for the current-month contracts have been cut. It remains to be seen as to what happens to these positions. Which way the cookie crumbles is anybody's guess. The market will remain volatile as the near term direction remains unclear. The Oct-Dec quarter results and the Budget could provide some much-needed tonic to the bulls, who seem to be suffering from some fatigue after the rally since late July. There could be some more churning and consolidation in the near term, as there are no immediate positive triggers. One should adopt a cautious approach at this point in time and wait for a clear trend. FII inflows have slowed down this month partially due to the Christmas holidays. They may resume their buying spree some time early next year when the latest batch of results start trickling in. A reform-centric budget could provide further boost to the market. Having said that, in the short term the uncertainty is likely to continue, which will keep the bulls on tenterhooks. So, some caution is required. Any negative surprise there could spook the rally. Positions may get lighter and the F&O expiry next week would keep the market choppy.
Bulls die another week
The market consolidated during the week amid high volatility as investors were not prepared to take a fresh after the recent carnage. However, the Indian market did well to recover from another big crash on Tuesday. Stock markets across Asia fell sharply after Thai regulators imposed severe capital controls to cap gains in its currency, the baht, against the dollar. Thai stocks plunged by 16%, prompting the central bank there to relax the rules partially. The rollback lifted the spirits of the bulls yet again, though lack of buying support, especially from FIIs meant that the key indices could not make much headway. The market witnessed sharp intra-day swings due to the lack of any major positive triggers. Inflows from overseas investors remained volatile.
Capital Goods, FMCG, Banking and Sugar stocks declined. However, new discoveries in the KG basin by ONGC and Reliance provided some cheer to the bulls, preventing the indices from a major fall. ONGC, Tata Steel, Maruti and Reliance were the major gainers. The benchmark BSE Sensex lost 1% or 143 points to close at 13471.74 and the NSE Nifty closed the week at 3871.15, down 17.5 points or 0.45% after touching a high of 3934 and a low of 3768.8.
Auto stocks were in top gear, reversing last week's losses. Value buying was seen in auto stocks, led by Maruti. The scrip added 2% to Rs925 after the Cabinet approved the sale of the Government's remaining stake in the country's leading carmaker. M&M also surged by over 7% to Rs870. The company, through its subsidiary agreed to acquire 90.47% stake in Schoeneweiss & Co. GmbH, Germany. Others like, Hero Honda paced ahead by 2.6% to Rs749, Bajaj Auto gained 0.7% to Rs2590 and Tata Motors was up 0.2% to Rs859. Tata Motors entered into a JV with Thailand's Thonburi Automotive Assembly Plant Co. to manufacture, assemble and market pickup trucks.
Capital Good stocks continued to slide lower led by BHEL. The scrip fell by over 7% to Rs2310, L&T dropped 1.3% to Rs1004, Punj Lloyd dipped 2.3% to Rs987 and Siemens was down 1% to Rs1120. Oil & Gas stocks outperformed the key indices. ONGC led from the front. The scrip surged 6.5% to close at Rs869 on reports that it had found new reserves of natural gas and oil. Reliance was up 1.4% to Rs1031. The company is also said to have struck oil in the KG basin. Among the other oil stocks IOC advanced 2.1% to Rs444.
Profit booking dragged the IT stocks down. Index heavy weight Infosys lost 2.7% to Rs2171, Satyam declined 3.1% to Rs462 and TCS edged lower by 0.5% to Rs1151. Among the Mid-Cap stocks i-flex slumped over 10% to Rs1803, Financial Technology slipped 8.5% to Rs1732 and HCL Tech was down 2.5% to Rs605 despite winning a US$200mn order.
Banking stocks were also on the receiving end. HDFC Bank slipped 4.8% to Rs1005, SBI dipped by 3.9% to Rs1214, ICICI Bank fell over 1.5% to Rs856. Among the Mid-Caps, Bank of Baroda lost 5.2% to Rs233, Punjab National Bank was down 2.3% to Rs495 and Bank of India fell 1.355 to Rs189.
Sugar stocks pared early gains towards the end of the week with Renuka Sugar, Bajaj Hindusthan and Oudh Sugar among the leading losers. Earlier in the week, sugar stocks regained some momentum amid reports that the Government had partially lifted a ban on exports. Sugar companies with advance licenses will be permitted to release sugar as a matter of export. Renuka Sugar lost over 12% to close at Rs418, Uttam Sugar fell 4.7% to close at Rs129 and Mawana Sugars declined by over 5% to close at Rs49.
Tech Mahindra was clear the star performer of the week. The scrip hit its maximum limit on Dec 21 and soared further to close at Rs1654, advancing by a whooping 46.7% during the week. The scrip received a huge boost after the company won an order valued in excess of US $1bn from its UK-based partner, BT Group.
Thai policy flip-flop rattles Asia
Thailand was the focus of attention across the world, as a seemingly exaggerated reaction from its central bank to a sharp rise in its currency, the baht, brought back unhappy memories of the 1997 Asian financial crisis. On Dec. 18, the Bank of Thailand slapped unleashed a series of steps aimed at curbing the runaway gains in baht against the dollar as it was hurting the country's exports. The central bank told banks to lock up 30% of new foreign-currency deposits for a year to curb speculation and imposed penalties on overseas investments held for less than a year. The central bank responded to exporters who said the baht's 12.5% gain this year was hurting demand from overseas by making their goods more expensive.
A day after, Thailand's SET Index sank 16% to its lowest since Oct. 29, 2004. This was the biggest decline in Thai stocks since Aug. 7, 1990. The Thai currency had its biggest two-day decline since April 2005. Other regional markets too crashed amidst fears of a repeat of the 1997 financial crisis when a similar crash in baht had sparked off a regional financial crisis. The baht too dropped the most in three years after the Bank of Thailand's announcement. The bloodbath across Asian markets forced the Thai central bank to reverse part of its measures aimed at protecting exporters.
Thailand's Finance Minister Pridiyathorn Devakula said controls would remain on foreign investments in bonds and commercial paper but would not apply to equities. It also diluted its currency restrictions by excluding purchases of land, condominiums and other such property by foreigners from the restrictions. The Bank of Thailand has no further plans to place curbs on investor funds, Governor Tarisa Watanagase said later. The partial rollback propped up the mood across regional markets, but Thailand's reputation with global investors suffered a big blow.
The exercise dented the credibility of Thailand's recently installed military government. The 'two steps forward one step back' approach of the Thai central bank also proved that in today's scenario, central bankers cannot afford to have a high-handed approach towards markets, as the latter have become too powerful. A more subtle handling is a much better option given the high degree of globalisation. The events in Thailand and its fallout on the regional markets will certainly discourage other governments from considering similar measures.
Vodafone shows interest in Hutch
It's official now. Vodafone Group Plc, the world's largest mobile-phone company, is considering a proposal to acquire a controlling stake in Hutchison Essar Ltd., India's fourth-largest mobile phone operator. "The process is at an early stage and may not lead to a transaction", Newbury, England-based Vodafone said in a Regulatory News Service statement. Vodafone said that such a transaction would be consistent with its stated strategy of seeking selective acquisition opportunities in developing markets. Earlier, media reports had suggested that The Board of Vodafone had given a green signal to CEO Arun Sarin to pursue a multi-billion dollar bid for Hutch Essar. The deal is likely to value Hutch at up to US$13.5bn (£7bn), the reports stated.
Meanwhile, Hutchison Telecommunications International Ltd. said it has been approached by various potentially interested parties regarding a possible sale of its equity interests in Hutchison Essar. The Hong Kong-based company said that no agreement in respect of such possible sale had been entered into. The company reiterated that there was no assurance that a sale may result from these approaches. Shares of Hutchison Telecommunications rose while that of Vodafone fell.
It will take some time for a final deal to fructify, as three different suitors have thrown in their hats in the ring for the Indian unit of Hong Kong billionaire Li Ka-shing's Hutchison Telecommunications. Besides Vodafone, the other contenders are Reliance Communications Ltd., part of the Reliance-Anil Dhirubhai Ambani Group (ADAG), and Maxis of Malaysia. Reports say that Reliance Communications has tied up with private equity majors Blackstone and Texas Pacific for the Hutch Essar bid. In a related development Hutch Essar held a Board meeting on Friday, but didn't discuss the offers. "We did have a board meeting, but it was a routine internal quarterly meeting," Hutchison Essar Managing Director Asim Ghosh told reporters in Mumbai.
For Vodafone, any offer for Hutch Essar will hinge on it wriggling out of a one-year non-competition clause with its existing partner Bharti Airtel Ltd. Vodafone bought a 10% stake in the Bharti Airtel last year, but could sell it to help fund a takeover of Hutch. Meanwhile, Reliance Communications has sounded out its bankers to arrange the finances for the bid. ABN Amro, Barclays, Deutsche Bank and Citigroup have been roped in by the ADAG firm to finance the company's ambitious purchase. The Ruia family, which controls the 33% stake of the Essar Group in Hutch Essar, have not decided whether to sell out. Media reports say that the Ruias could even decide to buy out its JV partner.
Tag of War continued between Bulls and bears which brought in tough fight this week. As market began with gains but the witnessed selling pressure and Thai Govt, dictat was given as excuse for the fall. Valuations were stretched...and it was used as opportunity to book profit by smart investors. But major impact was seen on FIIs. This week saw foreign fund flowing out of the system. But value buying was seen after two days of fall. Fundamentally Indian markets have always remained an attractive destination and they will continue to attractive in future too...but at certain point market seems to be overvalued and corrects. Anyways such rally should be used to get in some value stocks with sound fundamentals.
The Sensex ended down by 1% for the week. Gains supported by ONGC up 6.45%, Ranbaxy up 2.65%, Tata steel up 4.04%, Hero honda up 3.35%. While Bhel down 7.46%, NTPC down 6.36%, SBI down 4.35%, HDFC bank down 4.83%, Satyam down 3.42%, HLL down 4.98% led to the fall. Cement stocks were also laggard for the week.
US finally signed the much talked about nuclear bill. That's was the progress in itself. This will open the doors for Nuclear Power technology. There are some hurdles to the same as internally, there are some provisions which challenge sovereignty of thought on the Nuclear plans. There seems to be a provision which contains to the effect that the fuel will be cut off if India performs a Nuclear test even once. Power stock some interest. But the Leftists have raised the issue. This is an extract from a note.. "The Hyde U.S.-India Peaceful Atomic Energy Cooperation Act takes away that option by making it explicit that not only nuclear cooperation will be terminated if India conducts tests but the country will be required to return all equipment and materials that it may have received under the deal." How the Government deals with this needs to be seen however given the increased benefits of a deal such as this, we believe it should be passed.
There was turmoil in Asia this week after the Thai Government brought in capital controls on the Baht. Thailand put in place capital controls which made it mandatory for all foreigners bringing money into the country to place 30 per cent of it on deposit at the central bank, without interest. To take their money out again within a year overseas investors would have to pay a 10 per cent penalty. Investors reacted with their feet and Thai Market collapsed by 15%. This also brought back memories of 1997 Asian crises. The sell off prompted a change of rules back to square one, which came after crisis talks between the central bank, the government and the stock exchange. These controls have been removed for investment in equities. The rule remains in place for bonds and commercial paper. Thailand has a military Government after the recent coup. Certainly it does not understand economic policy. This bungle had the Thai Baht crashing but then market bounced back as the currency was down and also the markets with the brave Investors wanted to take advantage in the equities.
News which was missed out in the Thai melee was that the Japanese central bank has kept interest rates unchanged at 0.25%. The Bank of Japan said in its monthly report that the economy is still growing, though sluggish wage growth is holding back consumer spending. The economy is expected grow two per cent in the coming fiscal year but downgraded its estimate for growth in the current year. The country's GDP is expected to grow by only 1.9 per cent in the current year, down from a forecast of 2.1 per cent made earlier this year. Still both years would trail last fiscal year's 2.4 per cent increase.
The government said that it was confident in achieving its targets of fiscal and revenue deficit for the year. While the fiscal deficit target for 2006-07 stands at 3.8% of the GDP, the revenue deficit target has been set at 2.1% of the GDP. We believe that it is certainly going to be a tough task. The expenditure is front loaded and a lot of it has been incurred. Revenues from tax collections has been encouraging but there is a possibility of slippage largely on the back of higher expenditure given the oil and fertiliser subsidies. We however believe that in a growing economy, even higher deficits can be sustained. Capital formation helped by higher deficit is acceptable. However more on this later.
Reliance surged ahead of its bid for Hutch stake. The battle for Hutch seems to be getting more interesting. Vodafone which has a 10% stake in the holding company of Bharti has been indicated to have bid for over $12 bn and Reliance Communication apparently has bid for $ 15 bn. The market has so far reacted positively for Reliance Communications bid. But an aggressive bidding is always negative for the bidder and hence thats our pick for downtrades. A high valuation for Hutch implies even higher for Bharti and that is what makes it an upstock.
The capital goods sector stocks were under pressure. The Mega power projects were won by Tata Power and Lanco. Apparently these two bid at Rs 2.3 per unit and 1.2 per unit of Power. This will be possible only if the capital cost for the project is extremely low. There were worries that Lanco Bid was a flippant one but really its in line with Reliance Energy which bid around Rs.1.3 for the same and another bid which was slightly higher. Incidently NTPC also bid but was high at over Rs 2 per unit. Tata Power and Lanco intend to source the power equipment from Korean and Chinese suppliers. This hit Bhel and Siemens badly. Also hits NTPCs low cost power producer image. Valuations of these companies have been hitting the roof on the back of large order books. But if the mega power project orders go to some other players, its certainly a hit to valuations.
Technically 13600 is important level. If market sustains above this levels index could see new high while 13200 is major support. If this level is breached then index could see 12600. We would recommend to play extremely safe in such choppy markets.
Performance for the day: DTP continued to deliver well in choppy markets. However, today there calls with hit our the target and some missed. Long call on Maruti and Sadbhave hit stop loss. India Cement, Deepak Fertiliser and Adlabs booked good profits
The market settled in positive territory in the afternoon and witnessed a rally. However, there was considerable volatility in early trades. The Sensex began the trading session with a positive gap of 13 points and moved past 13480 in early trades before a bout of selling dragged it to the day's low of 13362. The sentiment turned extremely bullish in the afternoon driven by across-the-board buying support, which lifted the index to an intra-day high of 13494. The Sensex closed with gains of 87 points at 13472 while the Nifty was up 38 points at 3871.
The breadth of the market was firm. Of the 2,631 stocks traded on the BSE, 1,497 stocks advanced, 1,050 stocks declined and 84 stocks ended unchanged. The BSE Metal index led the sectoral indices table with gains of 1.48%. The BSE CG index, the BSE Oil & Gas index and the BSE CD index gained around 1% each. The other sectoral indices also ended in the green except the BSE FMCG index.
Leading the upsurge, Gujarat Ambuja Cements soared 3.09% at Rs137, Hero Honda surged 2.99% at Rs750, Wipro gained 2.67% at Rs573, Larsen & Toubro added 2.37% at Rs1,432, Tata Steel advanced 1.99% at Rs478, ACC gained 1.87% at Rs1,049 and Grasim Industries was up 1.74% at Rs2,710. ONGC, Reliance Communication, TCS, Bajaj Auto and BHEL gained over 1% each. However, Satyam Computers, ITC, Tata Motors, HDFC Bank, HLL and Maruti Udyog ended weak.
Among the other gainers Visual Soft surged 12.03% at Rs78, Sterling Biotech soared 8.04% at Rs198, Sobha Developers gained 8% at Rs1,008 and Mastek added 7.84% at Rs353. iGate Global, Rolta India, Sun TV, Finolex Industries, JSW Steel and Zee Telefilms gained 4-6% each.
The metal stocks were in action on account of the price hike announced by a few companies. Sesa Goa rallied 12.53% at Rs1,392. Jindal Stainless, Maharashtra Seamless, Jindal Saw and SAIL added 1-5 % each.
Sobha Developers was the most actively traded counter on the BSE with trades of over 24.21 lakh shares followed by Sterling Biotech (23.47 lakh shares), Reliance Communication (17.71 lakh shares) and SAIL (13.93 lakh shares).
The market is expected to keep trading in a range, coupled with high volatility on account of mixed cues ahead of the expiry of December 2006 derivative contracts. December 2006 derivative contracts expire next Thursday (28 December).
Volumes are likely to be low, as foreign fund managers will be on year-end holiday. Instead, operators and mutual funds will dictate activity on the bourses till the year-end, say dealers.
The near term trigger for domestic bourses is Q3 December 2006 results. Market men expect December 2006 quarter to be another strong quarter in terms of earnings growth. The Q3 results will start trickling in from about 12 January 2007. Strong advance tax payments support this view.
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. Q3 results will start trickling in from about 12 January 2007.
Technical analysts feel that the Nifty has a strong support, at 3,700, and the Sensex at 12,800-12,900.
Bajaj Hindustan and Plethico Pharmaceuticals will announce annual results in the forthcoming week.
The market continued its journey downward, posting losses for the third straight week.
The barometer index lost 142.78 points (1.05%) for the week ended Friday (22 December) at 13,471.74. The S&P CNX Nifty slipped 17.50 points (0.5%), to 3,871.15.
The 30-shares BSE Sensex gained 116.57 points, to 13,731.09, on 18 December, on strong buying in index pivotals, especially for index heavyweight Reliance Industries (RIL).
The BSE Sensex plunged 349.08-point on 19 December 2006, to 13,382.01, amid high volatility following a sell-off across Asian emerging markets, sparked by a 10% penalty imposed on foreign funds moving out Thailand within a year, by its central bank.
The Sensex lost 41.80 points to 13,340.21 on 20 December following a mixed trend in index pivotals.
The BSE Sensex settled with a gain of 44.65 points, at 13,384.86, as buying resumed. On 22 December 2006, the BSE index gained 86.88 points, to 13,471.74, as buying picked up in the fag end of the trading session.
PSU oil exploration major ONGC advanced 5.7% to Rs 869.There were reports of huge gas finds in the Bay of Bengal, initial estimates suggesting reserves of about 21 trillion cubic feet.
Reliance Industries (RIL) advanced 1.5% to Rs 1,272. It has paid an advance tax of Rs 444 crore for the third installment, taking its total remittance to Rs 1,102 crore, compared to Rs 848 crore paid in the same period last year, reports said. Also, there were reports that RIL is talking with the Russian government for permission to invest in a refinery and petrochemical industry there. Unconfirmed reports suggested that the company had acquired Orient Craft, a leading garment exporter.
Maruti Udyog rose 2.13% to Rs 922.10, after 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.
PSU engineering major Bhel lost 8% to Rs 2,310. The scrip declined as it failed to secure ceratin equipment orders for the upcoming ultra mega power projects. It also bagged a Rs 165-crore order from IOC for setting up a power plant at the oil major's Haldia refinery in West Bengal.
FMCG bigwig, ITC, slipped 2.90% to Rs 169.55, amid reports that it will expand fruit, vegetable retail as well as the wholesale business by opening 54 new outlets in select metros in the next three years. The company will target metropolitan cities for these wholesale-cum-retail stores. Currently, there are 6,500 e-Choupal kiosks in over 38,000 villages across nine states.
Telecom software firm, Tech Mahindra, jumped 46.36% to Rs 1,651. It had announced signing of a five-year deal to provide BT with strategic sourcing services. This contract is expected to generate in excess of $1 billion new revenue for Tech Mahindra. The company will support BT’s planned growth of managed services to business customers around the globe, while continuing ongoing services related to BT’s internal systems, processes and re-usable platforms.
L.T. Overseas settled at a slight discount, at Rs 55, compared to its IPO price of Rs 56 per share on 18 December 2006. The stock listed on BSE at 7.14% premium, at Rs 60, and hit an intra-day high of Rs 62.90. The intra-day low was Rs 51.
On 20 December 2006, Sobha Developers settled at premium at Rs 968.75 on BSE, compared to its IPO price of Rs 640 per share. The scrip debuted at Rs 1,111.25 on BSE and hit a high of Rs 1,179. Its low was Rs 918.10. Sobha Developers’ IPO was subscribed over 100 times.
Ruchira Papers finished at a discount, at Rs 20.95 on BSE, compared to the IPO price of Rs 23 per share on 20 December. The stock listed on BSE at 5.86% premium, at Rs 24.35 per share, which was also its intra-day high. The stock dipped to a low of Rs 20.65.
On 21 December, Great Offshore settled at Rs 727.05. Great Offshore came into existence following a restructuring of GE Shipping, whereby the shipping firms’ offshore services business was transferred to a separate company.
Jindal Drilling & Industries settled at Rs 580 on BSE, on 22 December. Jindal Drilling’s restructuring scheme involved the amalgamation of two group companies Newsco Newtech and Discovery Hydrocarbons with the company. It also involved demerger of Jindal Drilling’s Casinvest division into Haryana Engineering.
India's wholesale price index rose 5.32% in the 12 months to 9 December, which is higher than previous week's annual rise of 5.16% due to an increase in food prices. The annual inflation rate was 4.39% during the corresponding week of the previous year, data released on Friday showed.
Meanwhile, RBI on 15 December came out with new capital market exposure norms for banks, which will come into force from April 2007. In terms of the new guidelines, the exposure of a bank to the capital market cannot exceed 40% of its net worth as on 31 March of the previous year.
Market settled with decent gains, on the back of strong buying in index pivotals.
BSE Sensex gained 86.88 points at 13,471.74. The market gathered steam at the fag end of the trading session after it had remained range bound for a better part of the day. Sensex struck its intra-day high of 13493.88 in late trading. Its intra-day low was at 13,362.11.
The S&P CNX Nifty rose 37.65 points to 3871.15
The market breadth was strong on BSE, with around 1.5 gainers for every loser, as buying interest was seen for small-cap and mid-cap stocks. 1501 shares advanced, as compared to 1069 that declined. 92 stayed unchanged. The BSE Small-Cap index closed at 6721.39, up 56 points or 0.84% while the BSE Mid-Cap index gained 36 points or 0.64% to settle at 5,648.77
The total turnover on BSE amounted to Rs 4188.60 crore, as compared to Rs 4369 crore on Thursday.
Among the Sensex pack, 22 advanced while the rest declined.
Bike maker Hero Honda was the top gainer, up 3.74% to Rs 755.10 on 24370 shares. The stock moved in a broad range of Rs 728 – 759.
Gujarat Ambuja Cements (up 3.16% to Rs 137), L&T (up 2.92% to Rs 1440) and Grasim (up 2.06% to Rs 2718.10) were the other top gainers.
Frontline IT stocks witnessed renewed buying interest. Wipro (up 3.02% to Rs 575), Infosys (up 0.41% to Rs 2170) and TCS (up 1.22% to Rs 1150) advanced.
Tata Steel gained 1.88% to Rs 476.40 on 9.56 lakh shares. It had struck an intra-day high of Rs 479.95.
Car maker Maruti Udyog lost 0.42% to Rs 922.10 after hitting a high of Rs 939. The government on Thursday decided to sell in its remaining 10% stake in the car major in favour of banks and financial institutions.
Ranbaxy Laboratories declined 0.25% to Rs 385.05. The company received approval from the US Food and Drug Administration (FDA) to manufacture and market Simvastatin Tablets USP, 5 mg, 10 mg, 20 mg and 40 mg in the US.
Index heavyweight Reliance Industries (RIL) rose 0.85% to Rs 1272 on 3.97 lakh shares.
ICICI Bank rose marginally by 0.05% to Rs 855 after it borrowed $1 billion from overseas markets to fund credit growth. The yen-denominated syndicated loan is the largest by an Indian bank. The loan is split into three tranches of $350 million for 364 days, $450 million for two years and $200 million for three years.
Satyam Computer was the top loser, down 1.03% to Rs 461 on 6.83 lakh shares. The company said on Thursday its back office unit Nipuna Services has signed an animation order worth $25 million. Nipuna will partner 4K Animation of the United Kingdom to execute the project.
HDFC Bank dropped 0.44% to Rs 1006. The private sector bank has raised its prime lending rates (PLR) by 1.5% to 13% effective 20 December. But only a small portion of HDFC Bank’s loans are linked to PLR. The private sector bank has also raised deposit rates by 50 to 75 basis points across various maturities over the past month.
Tata Motors (down 0.81% to Rs 858), ITC (down 0.76% to Rs 169.45), and HLL (down 0.57% to Rs 218.70) were the other losers.
Tech Mahindra was the most active counter on BSE with turnover of Rs 485.50 crore) followed by Sobha Developers (Rs 236.62 crore) and Great Offshore (Rs 204.39 crore).
Jindal Drilling & Industries settled at Rs 580 on BSE on 1.85 lakh shares. The stock hit high of Rs 702 and low of Rs 505. The scrip was relisted on the bourses today. Jindal Drilling’s restructuring scheme involved amalgamation of two group companies Newsco Newtech and Discovery Hydrocarbons with the company. It also involved demerger of Jindal Drilling’s Casinvest division into Haryana Engineering. Following the restructuring scheme, Jindal’s equity capital was reduced substantially to Rs 4.50 crore from Rs 9 crore. The face value per share remains same at Rs 10. Trading in the shares of the company was stopped in September 2006 to give effect to the restructuring scheme. The scrip’s last trading was at Rs 319.60 on BSE on 11 September 2006.
Cement shares witnessed renewed buying in anticipation of firm cement prices. Gujarat Ambuja Cements was the top gainer, up 2.03% to Rs 135.50 on 4.05 lakh shares. Other cement shares ACC (up 1.59% to Rs 1046), Shree Cement (up 1.21% to Rs 1380), UltraTech Cement (up 2.48% to Rs 1038), Dalmia Cement (up 5.46% to Rs 415), and India Cement (up 4.59% to Rs 231.25) gained.
A host of mid-sized IT firms surged today in anticipation of robust set of December quarter results from them. The top gainers were Orient Info (up 20% to Rs 22.25), Zensar Tech (up 13% to Rs 237), VisualSoft Tech (up 11% to Rs 77.75), Aztec Software (up 8% to Rs 174.50), Infotech Enterprises (up 7% to Rs 328.50), 3i Infotech (up 6.6% to Rs 185), Helios & Matheson Information Technology (up 6% to Rs 138), Rolta India (up 6% to Rs 248.20), Mastek (up 6% to Rs 347), iGate Global Solutions (up 5.8% to Rs 329), R Systems International (up 5.6% to Rs 186), CMC (up 3.9% to Rs 644), Aftek Infosys (up 3.5% to Rs 51.40), Hexaware (up 3.3% to Rs 186), Polaris Software (up 3% to Rs 165), Kale Consultants (up 3% to Rs 120), and NIIT Tech (up 2.4% to Rs 281).
Among the side counters, iron ore exporter Sesa Goa jumped 12.58% to Rs 1392.30 on reports that Japan's Mitsui & Co plans to sell its 51% stake in company. Reports add that Sesa Goa's enterprise value is expected at about Rs 6000 crore. Steel makers such as Arcelor Mittal, Tata Steel, Jindal Steel & Power and Essar Steel, besides iron ore exporter MSPL are said to be in the fray to buy Japanese promoters stake.
Telecom software provider Tech Mahindra jumped 10.59% to Rs 1650.50 on high volume of 28.87 lakh shares, extending its recent solid surge after it won a mega $1 billion five-year outsourcing deal from BT to provide strategic sourcing services. This is the biggest ever outsourcing deal won by an Indian IT vendor. As per the deal, Tech Mahindra would support BT's planned growth of managed services to business customers around the globe and continue to provide ongoing services related to its internal systems, processes and re-usable platforms.
Gammon India plunged 10% to Rs 196.05 after Sebi on Thursday barred Gammon India and its chairman Abhijit Rajan from accessing the capital markets for one year, in investigations into use of company funds for a rights issue and failure to make certain disclosures.
Mount Shivalik jumped 8.10% to Rs 60.70 on reports that SABMiller, the world's second-largest brewer, is eyeing to buy at least 50% stake or a complete buyout of the Mount Shivalik Group, which owns Mount Shivalik Industries. The deal could carry an enterprise value of $67-$78 million.
Mahindra & Mahindra rose 2.31% to Rs 870 after the company said it agreed to buy 90.47% of German auto parts firm Schoneweiss & Co. GmbH for an undisclosed sum.
Fedders Lloyd Corporation advanced 7.10% to Rs 125.90 after the company said its board will meet on 2 January 2007 to raise FII investment ceiling in the company. As on 30 September 2006, FII holding in the company was 14.66%.
Software developer R Systems International rose 5.7% to Rs 186.25 after the company said it will buy 13.51% of Japan's Aisel. The proposed transaction also includes both parties collaborating exclusively for delivery of certain services to each other's customers. R Systems would serve Aisel for all its offshore software development needs and Aisel would serve R Systems with onsite project management and coordination needs.
Textiles and chemicals firm GHCL lost 2.41% to Rs 163.75 on high volumes of 47.55 lakh shares. Two block deals of 13.07 lakh shares were struck on the counter at an average price of Rs 162.25 per share in opening trade. GHCL said on Friday its U.S.-based step-down subsidiary DanRiver Inc. has acquired the assets of U.S. textile firm HW Baker for $6.75 million. H W Baker supplies sheets, pillows and pillow cases to hotels and has a turnover of $70 million.
Jewellery maker Rajesh Exports jumped 5% to Rs 338 after the company got an order worth Rs 276 crore from Sharjah-based Excel Goldsmiths.
Aurobindo Pharma gained 4% to Rs 689 after the company said on Friday it had received tentative approval from the US Food and Drug Administration for anti-AIDS drug efavirenz in capsule forms. Efavirenz is the generic version of Bristol-Myers Squibb’s brand drug Sustiva.
FIIs pressed substantial sales for the second day in a row on Wednesday (20 December). Their net outflow was Rs 365.10 crore on 20 December compared to an outflow of Rs 673.40 crore on 19 December. The outflow in two trading sessions between 19 December and 20 December aggregated Rs 1038.50 crore.
But the provisional data pertaining on Thursday (21 December)’s trade showed that FIIs were net buyers to the tune of Rs 254 crore on that day. They were net sellers to the tune of Rs 301 crore in index-based futures. They were net buyers to the tune of Rs 52 crore in individual stock futures.
Mutual funds stepped up buying on 20 December. They bought shares worth a net Rs 460 crore on that day.
Most of the Asian markets were trading with gains on Friday, while Europena market were trading subdued.
The Nikkei average gained 0.34% on Friday at 17,104.96, rising for the third straight session to the highest close since 9 May. Toyota Motor Corp. climbed after announcing that its group-wide auto output will rise to a record 9.42 million vehicles next year, a level likely to make it the world's top auto maker.
Hang Seng index was up 0.51% to 19,320.52
India's wholesale price index rose 5.32% in the 12 months to 9 December, which is higher than the previous week's annual rise of 5.16% due to an increase in food prices. The annual inflation rate was 4.39% during the corresponding week of the previous year, data released on Friday showed.
US stocks dropped on Thursday as concerns that economic growth could be slowing faster than expected dented optimism about corporate profits. Reports that showed a contraction in regional business activity and a downward revision in GDP data overshadowed a fresh flurry of corporate takeovers. The Dow Jones industrial average was down 42.62 points, or 0.34%, to end at 12,421.25. The Standard & Poor's 500 Index was down 5.22 points, or 0.37%, to finish at 1,418.31. The Nasdaq Composite Index was down 11.76 points, or 0.48%, to close at 2,415.85.Crude oil was little changed in New York after yesterday falling from a three-month high as mild weather in most of the U.S. signaled decreased demand for heating oil and a government report showed higher fuel inventories. Crude oil for February delivery was at $62.62 a barrel, down 4 cents, in after-hours electronic trading on the New York Mercantile Exchange in Singapore
Make your own way
The world makes way for the man who knows. where he is going.
Will the market go up, down or sideways? The easy answer is it will go down, up and sideways depending on where you are. All this happens not over a quarter or year but in a single trading session. At the end of it all you have a more or less muted ending. Just when the Thursday closing gained some confidence, we have the global cues which give the bears a chance to remain in the reckoning. The choppiness is likely to continue. Positions may get lighter and the F&O expiry next week would keep the market directionless. A lot of portfolio shuffling may be attempted as 26 more securities get added to the F&O segment from the start of the January series. With an extended weekend ahead, the bulls will hope for some jingle on the way.
FIIs were net buyers of Rs2.53bn (Provisional) in the cash segment yesterday. In the F&O segment, they offloaded scrips worth Rs2.35bn. On Wednesday, foreign funds withdrew Rs3.65bn from the cash segment. Mutual Funds were net buyers on the same day at Rs4.6bn.
In global news, US stocks fell following concerns of a slowing economy after a report showed an unexpected drop in manufacturing in the Mid-Atlantic region. A warning on inflation, from Richmond Federal Reserve Bank President Jeffrey Lacker also weighed on the sentiment.
The Dow Jones was down 42.62 points at 12,421.25. The broader S&P 500 index was down 5.23 points and the Nasdaq Composite was down 11.76 points at 2,415.85.
Stocks were flat early in the session but turned lower around midday after the Philadelphia Federal Reserve Bank's monthly survey posted a big decline in December.
The US Commerce Department said GDP grew at a slower pace in the third quarter than previously estimated. The third-quarter GDP expanded at a 2% annual rate, less than the 2.2% estimated last month. Economists had forecast a 2.2% gain.
Crude oil futures fell $1.06, or 1.7%, to close at $62.66 a barrel in New York trade. Gold futures were under pressure for a second day in a row. The February contract finished down $3.20 at $621.10 an ounce. The dollar was stuck in a tight-range in thin pre-holiday trade. The greenback rose 0.1% against the euro but fell 0.03% against the yen.
Among the Indian ADRs, VSNL was up close to 2%. There are reports that the Tata Group firm is eyeing a US-based company in manages data services. Infy gained 1.6%, Tata Motors rose 1.5%, HDFC Bank slid 2.4%, ICICI Bank shed 1.7% and MTNL climbed 1.9%.
European shares declined in sparse trading. The UK-based FTSE 100 closed down 0.2% to 6,183.70. The French CAC-40 fell 0.1% to 5,510.39 and the German DAX Xetra 30 declined 0.2% to 6,573.96. The pan-European Dow Jones Stoxx 600 eased 0.2% to 364.01.
Asia stocks were mixed this morning. Japan's Nikkei 225 Index was down 0.1% at 17,023.29. The Hang Seng in Hong Kong was up 36 points at 19,259. Markets in the region fell in South Korea, New Zealand, China and Indonesia while they gained elsewhere.
Asian mining shares dropped, led by BHP Billiton and Sumitomo Metal Mining, amid reports that demand for commodities may be weakening, pushing copper prices to an eight-month low. A measure of six metals traded on the London Metal Exchange (LME), including copper and zinc, slid 1.9%. Copper prices fell 3.1%.
In the emerging market space, the Bovespa in Brazil was down 0.3% at 43,385 while the IPC index in Mexico advanced by 0.6% to 25,546 and the RTS index in Russia lost 0.1% to 1864.
Major Bulk Deals:
Blackstone Asia has bought Bombay Rayon Fashions; Merrill Lynch has picked up Classic Diamond; Bear Stearns has sold Polyplex and Royal Orchid Hotels; Reliance Capital has purchased Ramakrishna Forgings; Deutsche Securities has bought Sharyans Resources; Fidelity has picked up Texmaco; CLSA has purchased United Spirits.
The turnover on NSE was down by 20.7% to Rs79.37bn. BSE Auto index was the major gainer and gained 1.85%. BSE Consumer Durable index (up 1.59%), BSE Metal index (up 0.75%), BSE Pharma index (up 0.71%) and BSE Oil & Gas index (up 0.37%) were among the other major gainers. However, BSE Bank index lost 0.40%.
TTML, Indiabulls, IFCI, SAIL, Tech Mahindra, India Cements, Sobha Developers, Ashok Leyland, ITC, NTPC, HLL, Hindalco, Moser Baer, Reliance Industries, Unitech, Tata Steel, IVRCL Infrastructure and Satyam Computer.
3i Infotech, Bharti Airtel, Bombay Dyeing, BRFL, Cambridge Solutions, Glenmark Pharmaceuticals, GVK Power & Infrastructure, Hindalco Industries, India Infoline, Maharashtra Seamless, Mahindra & Mahindra Financial, M&M, Mahindra Gesco, Maruti, McDowell & Co, Nicholas Piramal, Titan Industries, Union Bank of India and UTI Bank.
Upper Circuit Filters:
Anant Raj industries, Educomp, Industries, NIIT Ltd, India Infoline, Champagne Indage, Crest Animation, DS Kulkarni, Gemini Communication, Navin Fluorine and Provogue.
KPIT Cummins – Buy from Citigroup
Long Term Investment:
Major News Headlines:
Ranbaxy, Cadila, win approval to market Simvastatin tablets in USA
Satyam’s BPO unit secures $25mn animation order
JSW Steel plans to spend Rs20bn to produce high grade steel
IDBI, LIC sign MoU for financing core projects
Moser Baer forays into Home Video segment
Gail India Board approves interim dividend of 55%
Ansal Properties to develop Rs200bn project near Delhi
Govt approves selling residual stake in Maruti
Blackstone, Anil Ambani ask banks to lend $15bn for Hutch
BHEL gets contract worth Rs1.65bn
Union Bank, BoI & Dai-ichi Life join hands for Life Insurance JV
Marico - another acquisition in Egypt
Marico Ltd. has acquired a hair creams and hair gels brand – HairCode from Egypt’s Pyramids Group for an undisclosed consideration. The Pyramids group has agreed for a non-compete agreement in certain segments with Marico. Marico has funded this acquisition through a short-term debt. The brand enjoys ~23% market share of the pre and post wash hair care market in Egypt. In September 2006, Marico had acquired a hair care brand called Fiancee, owned by the Ready Group of Egypt. With both these acquisitions, Marico has now achieved a dominant market share of ~50% in the Rs1.7bn pre and post wash hair care market in Egypt.
The management expects, Fiancee and HairCode brands to contribute ~Rs950mn plus to its consolidated turnover during FY08.
Good Friday before Christmas?
The markets ended with modest gains led by Auto, Technology, Telecom and FMCG stocks. The bulls managed to make a comeback in the final hour of the trading session as index heavy weights like M&M, Reliance Energy, Satyam Computer, Bharti Airtel and Reliance Industries supported the key indices to register a modest win over the bears. Weak openings in the morning led by selling pressure at the open dragged the benchmark BSE Sensex below the 13200 mark, however after being sluggish for most part of the day the bulls came out winners towards the end. Finally, the BSE benchmark Sensex added 44 points to close at 13384. NSE Nifty was up 17 points to close at 3833.
BHEL edged lower 0.2% to Rs2277 after the company secured contract worth Rs1.65bn. The scrip touched an intra-day high of Rs2315 and a low of Rs2252 and recorded volumes of over 4,00,000 shares on NSE.
Maruti edged higher by 0.4% to Rs926 after India approved selling Residual stake in the company. The scrip touched an intra-day high of Rs965 and a low of Rs906 and recorded volumes of over 9,00,000 shares on NSE.
Indiabulls spurred by over 9% to Rs590 after the company acquired 100% equity share capital of Noble Realtors Ltd. The scrip touched an intra-day high of Rs634 and a low of Rs533 and recorded volumes of over 1,00,00,000 shares on NSE.
Moser Baer climbed 11% to Rs300 after the company announced that it has ventured into Entertainment space and has entered Home Video. The scrip touched an intra-day high of Rs306 and a low of Rs265 and recorded volumes of over 24,00,000 shares on NSE.
Auto stocks were in the limelight today. M&M, Tata Motors, Bajaj Auto, Hero Honda and Maruti were among the major gainers.
Metal stocks were back in action on back of fresh buying. Tisco gained 0.7% to Rs467, National Aluminum advanced 1.3% to Rs214, Hindustan Zinc rose 0.4% to Rs834, and Sterlite Industries added 0.9% to Rs521.
Telecom stocks were ringing with smart gains on back of fresh buying. Reliance Communication surged 3.1% to Rs461 after Blackstone and Ambani ask banks to lend $15bn for Hutchison, Bharti Airtel gained 1.1% to Rs611, VSNL advanced 2% to Rs399 and MTNL added 2% to Rs132.
Pharma stocks were in good health. Glenmark Pharma spurred by over 8.5% to Rs619, Cipla advanced 1.2% to Rs247, Sun Pharma gained 0.6% to Rs943 and Lupin was up 2% to Rs594.
Fresh buying in the Technology stocks brought them back in action. Mid-Cap stocks like NIIT Ltd, Moser Baer and Mphasis BFL led from the front. However, among the Frontline stocks Wipro gained 0.5% to Rs558 and Satyam Computer advanced 1.4% to Rs465 were the major gainers.
The market may witness downfall, with concerns over foreign funds pulling out money from the domestic market coupled with weak asian indices and overnight fall in US indices continue to haunt the investor sentiment. While the Nifty could test 3800 on the downside and 3850 on the upside, the Sensex is likely to face a resistance at 13520 and has support at 13300 levels.
US indices sheds for the second straight session on Thursday, While the Dow Jones tumbled 43 points to 12421, the Nasdaq shed 12 points to close at 2416.
Indian ADRs largely ended on a mixed note on the US bourses. VSNL, Infosys, Tata Motors and MTNL gained nearly 1-2% each. However, HDFC Bank tumbled over 2.41%, Rediff dropped 1.79%, ICICI Bank moved down 1.67%, Infosys lost 1.59% while Satyam, DR Reddy closed with marginal losses. Patni Computers ended unchanged.
Crude oil prices moved down, with the Nymex US light crude oil for february delivery drop by $1.06 cents to close at $62.66 a barrel. In the commodity segment, the Comex gold declined $2.70 to settle at $621.60 an ounce.