Short-term could be taxing for bulls
Nothing travels faster than the speed of light with the possible exception of bad news, which obeys its own special laws.
The bulls will hope to extend their winning streak today, though some softening in key indexes cannot be ruled out at higher levels. Foreign investors appear to be back with a bang. In the last few sessions they have stepped up their investments into Indian equities. As long as this continues, there is hope that the Sensex could flirt with the 15k milestone maybe before the budget.
The momentum may get disturbed by reports that the Finance Minister may hike the short-term capital gains tax from 10% currently to 15%. Also, Congress President Sonia Gandhi's request to the Prime Minister that the Government should go slow on opening up the retail sector could also weigh on the sentiment.
The pre-budget rally may already be underway, but one should not get carried away and build up huge positions. A sharp correction is possible just about anytime. Long-term investors, with enough money need not be told to buy on dips.
The third quarter earnings growth has been quite strong barring a few surprises like Satyam and SBI. The trend is likely to continue in the fourth quarter as well though cost pressures are beginning to tell on a few companies already. Rising inflation and hardening interest rates could spoil the party for India Inc. and consequently for the bulls going ahead. Another cause for worry is the higher crude oil prices.
FIIs were net buyers of Rs4.63bn (provisional) in the cash segment yesterday. In the F&O segment, they pumped in Rs7.1bn. On Friday, they poured in Rs6.64bn in the cash segment. Mutual Funds were net sellers to the tune of Rs776.3mn on the same day.
Steel stocks should open up after domestic producers hiked prices of Hot-Rolled Coils by an average of Rs500 per ton. Public sector banks could come under pressure after the Finance Minister's diktat that they should refrain from raising home loan rates.
Maruti is expected to be in the limelight as it inaugurates its Manesar plant today. Our recent recommendation Pyramid Saimira could advance further amid news that it is foraying into Malaysia with a 150-theatre plan.
Lanco, Tata Power and Reliance Energy will be in focus as the three are likely to bid for the global power assets of Globeleq. Hindalco is another stock to keep an eye for as it is reportedly eyeing Canadian aluminium major Novelis.
Pfizer could rise as it has reportedly sold its Chandigarh plant. Reliance Communications has raised $1bn from a mega FCCB issue. Punjab Tractors could hog some limelight as well amid reports that the Tata Group has joined M&M in the race for acquiring the tractor major.
Cement shares may also rise amid expectations of another increase in prices in Mumbai and Ahmedabad. Generic pharma makers like Dr. Reddy's and Ranbaxy are likely to gain amid reports that three US Senators have introduced a bill to prevent Big Pharma companies from launching authorised generics.
Shares of Textile and Footwear-making companies might attract some buying amid news that the Finance Minister may bring down the import duty on machinery used by the two industries to 5%.
Entertainment Network India might gain as it has won the contract from Delhi International Airport Pvt Ltd (DIAL) to design, set up, develop and maintain advertisements at the Indira Gandhi International Airport.
US stocks were mixed on Monday. The S&P 500 fell for the first time in five days and the Nasdaq had its first drop in a week as faster-than-forecast growth in service industries revived concern that an expanding economy will stoke inflation. The Dow Jones rose as Wal-Mart reported sales that topped its forecast.
The S&P 500 lost 1.40, or 0.1%, to 1446.99. The Nasdaq fell 5.28, or 0.2%, to 2470.60. The Dow added 8.25, or 0.1%, to 12,661.74.
US light crude oil for March delivery fell 31 cents to $58.71 a barrel on the New York Mercantile Exchange. The front-month contract was quoting 24 cents higher at $58.98 a barrel in extended trading in Asia.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 4.8% from 4.82% late on Friday. In currency trading, the dollar gained versus the euro and fell versus the yen. COMEX gold rose $4.60 to $656.10 an ounce.
European markets also finished mixed. London-based FTSE 100 inched up 0.1% , or 7 points, to 6,317.90. The German DAX Xetra 30 declined 0.1% to 6,876.98 and the French CAC-40 edged higher by 0.1% to 5,684.66. The pan-European Dow Jones Stoxx 600 index ended 0.1% higher at 379.42.
Key Asian markets are trading higher this morning. The Nikkei in Tokyo was up 70 points at 17,415 while the Hang Seng in Hong Kong gained 133 points at 20,589. The Morgan Stanley Capital International Asia Pacific Index gained 0.6% to 142.92 at 11:09 a.m. in Tokyo.
Australian stocks were set to close at a record as investors anticipated that the central bank will today refrain from raising interest rates. All markets open for trading advanced except South Korea, Singapore and China, whose Shanghai and Shenzhen 300 Index lost 2.7%.
Major Bulk Deals:
Sundaram Finance picks up Alok Industries but HSBC Financial sells it; Bear Stearns and JP Morgan have bought Bhagyanagar India; Fidelity has sold Bharat Forge; BNP Paribas has purchased Global Vectra while HDFC MF has sold it; Citigroup has bought Graphite India; T. Rowe Price has sold Network Fincap; HSBC financial has sold Shree Ashtavinayak; Morgan Stanley has picked up Sujana Metal while HSBC Financial has sold it; HSBC Financial has also sold Zee News.
Insider Trades:
Igarashi Motors India Limited: Goldman Sachs Investments (Mauritius) I Limited ("GSIMI") has purchased from open market 586180 equity shares on 31st January, 2007.
Bajaj Auto Finance Ltd: Dipak Poddar (Managing Director) has sold in open market 100000 equity shares of Bajaj Auto Finance Ltd on 29th January, 2007.
Market Volumes:
The turnover on NSE was down by 10% to Rs91.86bn. BSE Auto index was the major gainer and gained 2.05%. BSE Consumer Durable in (up 1.53%), BSE Small cap index (up 1.26%) and BSE Capital Good index (up 0.99%) were among the other major gainers. However, BSE Metal index lost 1.18%.
Volume Toppers:
IFCI, Himachal Futuristic, RNRL, TTML, IDBI, R Comm, Shree Ashtavinyak, XL Telecom, Indiabulls, IDFC, Aftek, Tata Steel, Hanung Toys, UCO, Praj industries and Bharat Forge
Upper Circuit Filters:
Ansal Infrastructure, GMR Industries, Nelco Ltd, Jyoti Structure, Heritage Foods, Shree Ram, Anant Raj Industries, Aurionpro Solutions, Flex Industries, Ganesh Housing, Gemini Communication, HOV Services and Taneja Aerospace.
Delivery Delight:
ABG Shipyard, APIL, Aptech, BEL, Bharat Forge, Bharati Shipyard, Hero Honda, IFCI, India Infoline, Indiabulls, IDBI, Maharashtra Seamless, M&M, Maruti, Praj Industries and Reliance Communications.
Brokers Recommendations:
Jindal Drilling & Industries - Buy from Emkay with target of Rs786
Crompton Greaves - Buy from Sharekhan with target of Rs230.
Long Term Investment:
RMCL
Major News Headlines:
Chidambaram says there is ample liquidity in the banking system
L&T starts concrete plant in Dubai
Govt may let foreign airlines buy stake in cargo airlines
Shringar Cinemas gets Entertainment Tax Exemption in Aurangabad
RMCL to consider fund raising option for expansion on Feb 6
Tata Motors ties up with MDI of France for developing environmentally-friendly engine technologies
BOC India signs agreement with Adhunik Metaliks
Infotech Enterprise sets up development center in Kakinada
TCS signs agreement with Mumbai International Airport
Manugraph India board declares interim dividend of 100%
BPCL gets 20% interest in Timor exploration area
Federal Bank Board to consider plan to sell shares on Feb 12