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Wednesday, January 24, 2007

Market Close: Ranged action but not willing to give up!


Indian Indices traded in a range bound manner with majors like Tisco, L&T, ONGC supported the rally as market closed up. Global cues were positive with Asian Indices ending in green territory and Europe in green too. Metal stocks like SAIL, Tisco, Hindalco all rallied for the day talks that China had scrapped subsidy on steel exports. There is the bidding for Corus which is on and that lent its feel to the markets. Cement saw yet another day of profit taking. Mid caps and Small contributed their part in the rally with good results. Maruti launched a Diesel Variant of Swift today which brought in some interest here. Oil majors ONGC too traded as Crude prices jumped to trade around $55 A barrel. Not a good sign for Oil Marketing companies which investors reacted with their feet and stocks were down 2% plus each.

Sensex ended up 69 points at 14110.46 helped up by gains in TISCO (481.45,+4 percent), L & T (1576.8,+3 percent), ONGC (913.25,+3 percent), HDFC Bk (1056.8,+2 percent) and Hindalco (168.85,+2 percent). Restricting the gains were HLL (214.25,-4 percent), Tata Motors (916.2,-4 percent), Cipla (248.7,-2 percent), RCVL (434.95,-1 percent) and ACC (1026.35,-1 percent).

Bank of Baroda results were above the street expectations. The company's Q3 net profit was up at Rs 329 crore in the third quarter versus Rs 202 crore in the corresponding quarter of the previous year. Net interest income was up 17.8% at Rs 961 crore from Rs 815 crore. The total income has grown QoQ by almost 33% and the other income had also gone up 21%. Total business has gone up by 37%. The net profit was up by 62.8%, while the net interest income was up by 18.1%. The net interest margin had improved from 3.18% to 3.21%. Bank also has ambitious plans for overseas expansions. Overseas business contributes 18% towards total business and 35% to net profit. Bank has presence in 21 countries with 60 branches and has licenses for 10 more overseas branches. Stockjumped to end higher by 5.16%.

L&T the engineering major reported that the company's engineering and construction division has bagged three orders from the Delhi Metro Rail Corporation for the second phase of the Delhi Metro project (L&T was also involved in the first phase, which has been successfully completed). The projects are valued at Rs 360 Cr (US$ 79 m). The second phase of this project is targeted for completion by 2010, in time for the Commonwealth Games to be held in New Delhi. While two of the three contracts are directly in L&T's fold, the remaining one contract will be implemented as a joint venture with some international and domestic contractors. L&T executed Rs 700 cr (US$ 156 m) worth of contracts in the first phase of the Delhi Metro project. L&T rallied to support indices to close high.

The Cement stocks took it on the chin. The overall impact is unlikely as bad as the stocks make it out to be. A cut in import duty will not lead to any big imports. Its too difficult to import cement.. It needs large storage facilities and a strong distribution network. However given that the Government is so keen to keep prices low, the announcement of price hikes could have the Government banning exports as well and thats the worry. Ambuja was the big loser. The Government has put a freeze to trading on a couple of commodities.. i.e . Urad and Tur futures trade has been banned. Such irrationality needs to be priced into commodities and thats reason for some caution.

FNO closing is an event which will get over.. Its the results which keep flowing in thick and fast. Most of the numbers are good but there are a few negative surprises as well. There are others where performance did not meet raised expectations and the stocks came off despite good comparative numbers. Its all about expectations. Markets will now bring in expectations from the budget. With the economy doing what it is, expecting a further phillip from the budget would be asking for too much. However no one can stop expectations. The pink papers put them out daily.

Technically Speaking: Sensex Traded ranged ahead of FNO expiry. Declines were ahead of Advances. Market turnover stood good at Rs 4,447 cr. Market traded in the range of 14156 and 14043. Sensex Resistance lies at 14170-14220 levels and support at 14058-13994 levels.