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Monday, January 15, 2007

Profound faith in RIL behind rally


The market kept its upward momentum intact, advancing on the third consecutive day, with the BSE Sensex and NSE Nifty index finishing at their all-time highs. The benchmark index has advanced 767.49 points in these three days, from a close of 13,362.16 on 10 January 2007.

Much of today's rally materialised after index heavyweight Reliance industries (RIL), advanced to an all-time high of Rs 1372.30.

The 30-shares BSE Sensex advanced 73.11 points, at 14,129.65. It had opened strong, extending gains from Friday, and surged to strike an all-time high of 14,202.12, as buying continued. The benchmark index had also dipped to a low of 14,103.12, earlier.

The S&P CNX Nifty rose 25.95 points to 4,078.40. It also struck an all- time high of 4,099.65 during intra-day trade.

The market-breadth was strong on BSE, as buying happened across small-cap and mid-cap counters. On BSE, there were close to 2 gainers for every loser. For 1,749 shares advancing, 913 declined and 45 remained unchanged.

The total turnover on BSE amounted to Rs 4677 crore.

Among the 30-Sensex pack, 18 advanced while the rest declined.

Tata Steel was the top gainer, up 4.36% to Rs 487.80, following reports that the steel major may soon put in a new bid for Corus. As the 30 January 2006 deadline, set by the UK Takeover Panel nears, the market expects an announcement anytime. Tata Steel will need to beat the 515 pence-per-share bid made by its Brazilian rival, Companhia Siderurgica Nacional (CSN), on 11 December 2006. The Indian major revised its bid to 500 pence per share from 455 pence, which CSN pipped within hours. A newspaper citing sources in investment banking circles said Tata Steel’s bid may go up as high as 550 pence, “but not necessarily in one go’’.

HDFC Bank gained 2.70% to Rs 1092, on a volume of 2.90 lakh shares. Two block deals of 62,904 shares at Rs 1086.10 per share and 82,287 shares at Rs 1091.60 per share, were struck in the counter on BSE in early trade. The stock also struck a high of Rs 1096.

Index heavyweight Reliance Industries (RIL) advanced 1.93% to Rs 1366 on a volume of 12.13 lakh shares. The market is rife with rumours that the company will announce a stock-split along with its quarterly results on Thursday.

India's top private oil refiner, Reliance Industries, is expected to report on Thursday, a 26% rise in quarterly earnings due to strong margins from petrochemicals. Analysts estimated Reliance's petrochemical margins in October-December to increase by more than 35% from a year earlier, helped by higher product prices and a drop in raw material costs. Analysts forecast 39.5% rise in net sales to Rs 25300.40 crore.

L&T (up 2.69% to Rs 1507.20), Ranbaxy Laboratories (up 2.26% to Rs 430.50) and REL (up 1.61% to Rs 533.25) were the other gainers.

Tata Motors rose 0.66% to Rs 947. Media reports that the company may bid for Daewoo Automobile, Romania.

ITC gained 0.38% to Rs 172, on a volume of 17.41 lakh shares. It had recovered from a low of Rs 169.05. A block deal of 10.31 lakh shares was executed in the counter at Rs 171.40 per share, by 10:09 IST.

Maruti Udyog was the top loser, down 1.72% to Rs 904.90, on a volume of 2.48 lakh shares.

ICICI Bank (down 1.56% to Rs 955), Bhel (down 1.59% to Rs 2221) and Hero Honda (down 1.37% to Rs 732.95) were the other losers.

Reliance Communications (RCL) was down 0.81% to Rs 430.25. It plans to list its wholly-owned Flag Telecom unit on the London Stock Exchange to raise $500-$550 million, according to newspapers. Reliance Communications will dilute up to 24% stake in the undersea cable unit, a newspaper said citing unnamed sources. Another newspaper said, the company will begin procedures related to an initial public offering in February. RCL recently revealed it will invest $1.5 billion in increasing Flag Telecom's network capacity.

ONGC slipped 0.93% to Rs 916.25. The company will offer stakes in its deepwater blocks off the east coast to Brazil's Petrobras, Italy's ENI, Norway's Norsk Hydro and Malaysia's Petronas, Chairman RS Sharma said Friday. He also said that the state-run explorer earned $42 - $45 a barrel for crude sold to state-run refiners in the December 2006 quarter. ONGC will report December 2006 quarter earnings on 30 January 2007.

CMC jumped 28.66% to Rs 898, after the company reported a 69% jump in net profit for December 2006 quarter. CMC’s consolidated net profit jumped 69% in December 2006 quarter, to Rs 20.40 crore (Rs 12.07 crore). Consolidated sales jumped 44% to Rs 298.63 crore (Rs 207.25 crore). For April-September 2006, CMC’s net profit rose 26% to Rs 48.50 crore (Rs 38.59 crore). During the same period, consolidated revenue rose 30% to Rs 790.69 crore (Rs 609.24 crore).

State run steel major Sail surged 10.10% to Rs 99.80, extending Friday’s rally triggered by the steel minister’s statement of massive expansion proposed at the company. Steel minister Ram Vilas Paswan said on Friday that the Steel Authority of India (Sail) will invest Rs 100,000 crore to raise capacity from 14.6 million tonnes per annum to 40 mtpa by 2020. Sail had earlier announced scaling up capacity to 23.8 mtpa by 2010.

Cairn India jumped 5.11% to Rs 141.80, amid reports of reaching an agreement with ONGC to build a $340-million pipeline to transport crude oil from Rajasthan to Gujarat. ONGC and Cairn will share the cost of the pipeline project in 70:30 ratio. The new arrangement will also mark Cairn India’s involvement in the mid-stream segment of the petroleum business in the country. As per reports, Cairn and ONGC will first build a 340-km line to Indian Oil Corp’s (IOC) Viramgam pipeline terminal in Gujarat. The construction will take 12-18 months.

Ispat Industries rose 20% to Rs 15.42. The company had recently entered a memorandum of understanding (MoU) with the Chhattisgarh Government for setting up a coal-based 600 Mw power project in Janjgir, Champa district, for Rs 2,500 crore. Recently, the company also signed an agreement with the Maharashtra Government for expansion of capacity to manufacture steel at its integrated steel complex located at Dolvi.

Uttam Galva Steels jumped 12.32% to Rs 41.95, after the company raised galvanised steel prices by Rs 1,500 a tonne to Rs 50,000 per tonne on Monday. The hike in domestic zinc prices appear to have triggered the move by the company to raise zinc prices. Zinc is a key raw material in the manufacture of galvanized steel.

Geometric Software Solution surged 4.25% to Rs 141.25, after it unveiled a net profit growth of 254% for Q3 December 2006 to Rs 8.29 crore in Q3 December 2006, compared to Rs 2.34 crore in Q3 December 2005. Total income has increased from Rs 31.84 crore to Rs 52.98 crore.

Videsh Sanchar Nigam (VSNL) rose 6.74% to Rs 465, on reports that it is in talks to buy a telecom operator, Suntel, in Sri Lanka. Suntel is a joint venture backed by Sri Lanka's National Development Bank, Sweden's Overseas Telecom AB, Metrocorp, Hong Kong's Townsend and International Finance Corporation (IFC). VSNL Global, VSNL’s international arm, recently won licences to provide international long distance and Internet services in Sri Lanka, and wanted to enter the outbound voice traffic, data and enterprise businesses, a newspaper said, quoting company sources. The company, however, shot down the reports.

Tata Sponge Iron spurted 20% to Rs 124.80, after the company reported a 193% surge in net profit in December 2006 quarter. Tata Sponge Iron reported a 192.9% surge in net profit to Rs 7.06 crore in December 2006 quarter. Net sales rose 98.9% to Rs 82.13 crore (Rs 41.29 crore).

Sterlite Industries lost 0.80% to Rs 536.50, after its Q3 December 2006 consolidated net profit jumped to Rs 1293 crore, compared to Rs 395 crore in Q3 December 2005. Net sales increased to Rs 6814.3 crore (Rs 3511.4 crore).

Indian Oil Corporation declined 1% to Rs 478.15. There are reports that it has put plans for an Indonesian foray into the freezer. However, the company is likely to continue with its lubricant distribution business in Indonesia. Indian Oil was looking at launching its retail outlets in Indonesia by floating a fully-owned subsidiary. If the plans had materialised, it would have been Indian Oil's third retail venture overseas.

SREI Infrastructure Finance advanced 3.95% to Rs 55.35, after it announced it will shortly enter into a strategic partnership with the European Bank for Reconstruction and Development. The strategic partnership comprises an investment by the EBRD in the equity of SREI Russia, and extension of credit lines to support the company's business overseas.

Tayo Rolls surged 12.80% to Rs 154.70, after the company performed well in Q3 December 2006. Tayo Rolls posted a net profit of Rs 4.04 crore in Q3 December 2006, compared with the net profit of Rs 0.01 crore in Q3 December 2005. Net sales rose to Rs 45.25 crore from Rs 37.41 crore.

Rajesh Exports rose 5% to Rs 455.75, after it posted a net profit growth of 57.71% to Rs 28.12 crore in Q3 December 2006 compared to Rs 17.83 crore in Q3 December 2005. Net sales rose to Rs 1872.45 crore from Rs 1294.02 crore.

Rallis India slumped 3.87% to Rs 287, after it reported a net profit of Rs 8.70 crore in December 2006 quarter compared to a net profit of Rs 8.56 crore in December 2005 quarter. Net sales rose to Rs 172.19 crore (Rs 166.26 crore).

All the Asian and European markets were trading in the green.

The Nikkei 225 index rose 0.9% on Monday, with investors buying exporters such as electronic parts maker Kyocera Corp., following gains on Wall Street and a softer yen. Nikkei jumped 152.91 points, to 17,209.92.

Hong Kong’s Hang Seng index advanced 455.15 points (2.32%), to 20,068.56.

FIIs were net buyers to the tune of Rs 159 crore on Thursday (11 January), when the Sensex rallied 269 points. As per provisional data, FIIs were net buyers to the tune of Rs 397 crore on Friday (12 January), the day when the benchmark index spurted 426 points. FIIs were net buyers to the tune of Rs 919 crore and Rs 86 crore in index-based futures and individual stock futures, respectively, on 12 January 2006.

Mutual Funds were net sellers to the tune of Rs 250 crore in equity on 11 January 2006.

US stocks rose for a third day on Friday, driving the Dow to another record high as energy shares rebounded on oil prices. Data showing surprisingly robust December retail sales underscored optimism about economic growth also aided the upmove. US retail sales grew in December at the fastest pace since July. The Dow Jones industrial average rose 41.10 points, or 0.33%, to end at 12,556.08. The Standard & Poor's 500 Index advanced 6.91 points, or 0.49%, at 1,430.73. The Nasdaq Composite Index was up 17.97 points, or 0.72%, at 2,502.82.

Oil prices rose above $53 a barrel Monday amid reports that OPEC may hold an emergency meeting to reverse the 13% plunge in oil prices this year. Light, sweet crude for February delivery gained 31 cents to $53.30 a barrel in electronic trading on the New York Mercantile Exchange in Singapore.

Crude oil futures plummeted as low as $51.56 Friday, the lowest in 19 months, before closing at $52.99 a barrel, up $1.11, on news that producer cartel, OPEC, was considering an emergency meeting and new production cuts.