Small is beautiful, but dangerous
It is true great things come in small packages...but so do dynamites
Are the bulls suffering from some sort of a fatigue after the recent run up? At least that seemed to be the case yesterday. We are aware of the over bullishness in the small and mid-cap stocks. The key indices finished almost flat though some action was seen in the small- and mid-cap space with a few scrips hitting upper circuits. The consolidation may continue even today though the pre-budget rally is surely in tact.
We are bound to see a lot of churning as the benchmark indexes are trading near all-time highs. Small- and Mid-cap shares, which underperformed the market last year may attract more attention this year. But, one has to be careful in dealing with these scrips as they tend to be highly volatile. For today, we expect a cautious to higher opening and a choppy day. The positive bias will continue though as will the stock-centric action.
Global markets are throwing up mixed cues. Oil prices are above $59 per barrel. US shares closed nearly unchanged. In Asia, the Nikkei in Japan has taken a beating while the Hang Seng is up marginally.
One positive factor is that FIIs were net buyers of Rs8.94bn (provisional) in the cash segment yesterday, when the key indices actually closed almost flat. In the F&O segment, they were net sellers of Rs3.51bn.
The appetite for emerging market equities among overseas investors remains strong even as they remove money from the US market. In the week ending Feb. 1 Global Equity Funds tracked by Emerging Portfolio Fund Research (EPFR) experienced their strongest weekly inflows since the first quarter of 2006 as investors continued to pump money into global equities at the expense of US equities. Year to date, investors have poured in about $12bn to global and emerging market equity funds while removing about $4.2bn from US equity funds.
Akruti Nirmal Ltd. and Cambridge Technology will get listed on the bourses today.
Patni Computer and Rain Calcining will declare their results today.
Aurionpro Solutions' Board will meet today to consider the proposal of raising finance through a preferential issue. The stock was up 4% yesterday. The Board of Emco will hold a meeting today to discuss strategic investment in an Electrical Industry Company.
The IPO of Power Finance Corp (PFC) has received an overwhelming response, with the overall subscription being 77 times the issue size. The IPO of Indian Bank has been subscribed two times. The IPO of Euro Ceramics opens today. It will close on Feb. 13. The price band for the issue is Rs150 to Rs180.
NIIT Technologies could gain as the software firm will announce new initiatives in insurance verticals today. ICICI Bank will be in focus after India's largest private bank hiked home loan rates by 1%. Other rates like on auto loans, loans against shares and corporate loans will also go up.
Lloyd Electric & Engineering is expected to shine as the RBI has hiked the FII investment limit in the stock up to 74%.
Keep an eye on Punjab Tractors as the buzz heats up on the stake sale by existing shareholders, private equity firm Actis and the Burman family.
Another scrip to watch out for is Morepen Labs. The stock hit the 5% upper circuit yesterday after a business channel reported that the company is likely to make a placement at Rs35-40 per share. The stock ended at Rs23.1.
Balaji Telefilms has been rising of late. Market grapevine has it that Star TV is likely to hike its stake in the television content producer, from the current 25.99%.
US stocks ended little changed on Tuesday after a choppy session. The S&P 500 added 1.01, or 0.1%, to 1448, its fifth advance in six days. The Dow Jones Industrial Average rose 4.57 to 12,666.31. The Nasdaq Composite Index closed unchanged at 2471.49.
After the close, Cisco Systems reported higher quarterly sales and earnings that topped forecasts. Shares inched higher in extended-hours trading.
Treasury prices rose, sending the yield on the benchmark 10-year note to 4.76% from 4.80% late on Monday. Crude oil for March delivery rose 14 cents to settle at $58.88 a barrel on the New York Mercantile Exchange. The front-month contract was quoting 48 cents higher at $59.36 a barrel in extended trading in Asia.
In currency trading, the dollar slipped against the yen after briefly spiking higher on Treasury Secretary Henry Paulson's comments about the Japanese currency. He said there was nothing fundamentally wrong with the yen's weakness and that Japanese officials haven't been interfering to keep the yen near 20-year lows. The dollar also slid versus the euro. COMEX gold for March delivery rose $2.60 to settle at $658.70 an ounce.
Among the Indian ADRs, VSNL was down 3.6%, Satyam added 1.3%, ICICI Bank rose 1.3% and MTNL shed 1%.
European share indexes hit multi-year highs on Tuesday. The pan-European Dow Jones Stoxx 600 index rose 0.4% to 380.58. The UK's FTSE 100 closed up 0.5 % at 6,346.30. The Dutch AEX index touched its highest level in just under five-years at 509.35. It closed up 0.2% at 507.40. The German DAX Xetra 30 closed virtually flat at 6,875.70, holding just short of highs. The French CAC-40 slipped 0.1% at 5676.78, after touching its highest level since May 2001 earlier in the day at 5699.27.
In emerging markets, The Bovespa in Brazil added 0.1% to 45,351 while the IPC index in Mexico advanced 0.5% to 28,067 and the RTS index in Russia rose by nearly 1% to 1923.
Asian markets are mixed this morning. The Nikkei in Tokyo fell 139 points to 17,266 while the Hang Seng in Hong Kong rose 6 points to 20,661.
Major Bulk Deals:
BNP Paribas has sold Bombay Rayon; HSBC MF has bought Ceat; Templeton MF has picked up Federal Mogul while Bear Stearns has sold it; Jpmsl Ac Copthall has sold GVK Power; HDFC MF has purchased Manugraph while Citigroup has sold the scrip; Kotak Mahindra UK has bought Mirza International; Govt of Singapore has picked up Orchid Chemicals.
Insider Trades:
Rolta India Ltd: (i) Morgan Stanley & Co. International Limited a/c Morgan Stanley Dean Witter Mauritius Co. Ltd. (ii) Morgan Stanley & Co. International Limited A/C Morgan Stanley Investment Mauritius Ltd has purchased from open market 446284 equity shares of Rolta India Ltd on 1st February, 2007.
Geodesic Information Systems Limited: Kiran Kulkarni, Managing Director has sold in open market 20000 equity shares of Geodesic Information Systems Limited from 31st January to 2nd February.
Market Volumes:
The BSE Consumer Durable in was the major lower and lost 2.09%. BSE Metal index (down 0.66%), BSE Technology index (down 0.56%) and BSE FMCG index (down 0.35%) were among he major losers. However, BSE Mid-Cap index gained 0.44%.
Upper Circuit Filters:
Ansal Infrastructure, Prism Cement, Heritage Foods, Goldstone Technology, Dhanlak Bank, 3i Infotech, Anant Raj Industries, Dolphine Off shore, Ganesh Housing, Gemini Communication and HOV Services.
Brokers Recommendation:
Thermax - Hold from Emkay with target of Rs450.
Long Term Investment:
Madhav Marbles.
Major News Headlines:
ONGC, Petronas may jointly bid for oil blocks in India
Gammon India appeals SEBI ban
Marsons in talks to acquire Siros Electrical Engineering
ICSA India gets order worth Rs175.7mn
BHEL wins Rs39bn orders
L&T to raise debt to finance projects
Ranbaxy signs new R&D agreement with GSK
Ansal Properties to invest about Rs110bn in Punjab
VSNL gets $406mn claim from Flag
Radha Madhav to raise up to Rs1bn for funding expansion
Pyramid Saimira to set up a chain of multiplexes in Malaysia