Search Now

Recommendations

Tuesday, April 03, 2007

STRATEGY INPUTS FOR THE DAY


First a jerk, then a perk!

An investor would do better to just shop for cheaper expenses. Then you can buy your own perks.

As expected, it was a Manic Monday yet again with the first day of the new financial year wiping out Rs1430bn value in the stocks listed on the BSE alone. We mentioned last weekend that the crucifixion of bulls may take place well before Good Friday. An immediate resurrection cannot be expected by what bulls can hope for is a technical pull back. Given there are no major negative global cues, the markets could hope to see some pick up.

The Nifty futures saw a build-up of short positions in open interest (OI). This led to Nifty April series ending at a discount of 32 points to spot Nifty. Short positions were built up in Maruti, Tata Motors, M&M, HDFC, ICICI Bank, ONGC and HLL. Some stability on these counters could see a pullback.

Hexaware could see some action as the company inaugurates its new center at Gurgaon later today. M&M could also see some action as Mahindra Renault unveils its new car- the Logan. Sugar stocks gave sweet returns in a weak market. But avoid going overboard on these counters as profit booking could set in anytime. Bharti Enterprises and the world’s largest retailer, Wal-Mart Stores, will sign a legal agreement for their joint retail venture this month. Bharti Airtel’s DTH venture is expected to roll out by the end of this calendar year, chairman and managing director, Sunil Mittal said.

The Reserve Bank of India on Monday unveiled draft guidelines for mortgage guarantee firms, stipulating minimum net owned funds of Rs100 crore at the time of commencement of business, to be augmented to Rs 300 crore within three years from the date of commencement of business.

HDFC, HDFC Bank, UTI Bank, Srei Finance have hiked rates on Monday. HDFC has increased its retail prime lending rate (RPLR) on which its adjustable rate home loans (ARHL) are benchmarked, by 0.50% with effect from April 1, 2007. For all new home loan customers the ARHL loans will now be priced at 11.25% per annum, while the fixed rates will be at 13.25% per annum. HDFC bank has also hiked its rates across the segments rates by 1%.

Asian stocks gained as investors picked up counters which fell yesterday on concern a US manufacturing report would drive down equities. The Dow Jones added 0.2% and the Standard & Poor's 500 Index gained 0.3%. The Nasdaq too was just a tad higher.

U.S. light crude oil for May delivery rose 7 cents to end at $65.94 a barrel on the New York Mercantile Exchange.

The Lanco Group Chairman, Mr L. Madhusudhan Rao, has denied any misrepresentation in the Lanco-Globeleq combine's bid document submissions for the Sasan Ultra Mega power project. Lanco Infratech Ltd has won three construction projects in Karnataka and Tamil Nadu, valued at Rs 102 crore.

Ranbaxy Laboratories and GlaxoSmithKline have decided to develop a drug in the respiratory segment, as the first of their joint drug discovery collaboration.

BEML, Coal India Ltd and two leading tyre companies is setting off the indigenisation of some of the critical and heavier-range OTR tyres.

A report says Indian steel makers are hiking the export prices of steel. While JSW Steel Ltd has increased the export price of steel by Rs 1,500-Rs 2,500 per tonnes for various grades, other steel makers are likely to follow suit

HOW MARKET FARED

Lower level buying likely!

It was Mayhem right from the start as hike in CRR rate and reverse Repo rate by the Reserve Bank of India on Friday acted as a huge negative trigger for the markets. Further interest rate hike by lending majors like ICICI Bank and HDFC dampened the sentiments of the investors on Dalal Street. All the sectoral indices finished in red as all round selling pressure in scrip’s across the bourses dragged the benchmark Sensex to close below the 13500mark.

The Auto were the worst hit sector as the index fell over 6%, others like Banking, Capital Good index fell over 5% each. The small cap and the Mid-Cap stocks also participated in the down fall. However, Sugar stocks held firm in a falling market. Finally, the 30-share benchmark Sensex plunged 616 points to close at 12455. NSE Nifty slumped 187 points to close at 3633.

Moser Baer fell by 2.2% to Rs292. The company’s arm acquired 40% in Slovenian Company and Warburg Pincus units raised stake in the company. The scrip touched an intra-day high of Rs309 and a low of Rs290 and recorded volumes of over 3,00,000 shares on NSE.

Lanco Infratech dropped 6.6% to Rs148. The Company announced that they have won the bid for three construction projects worth Rs.1.02bn in Karnataka and Tamil Nadu. The scrip touched an intra-day high of Rs158 and a low of Rs146 and recorded volumes of over 3,00,000 shares on NSE.

Hindustan Zinc gained by 1% to Rs570. The company lowered prices of lead by 2.3% to match global rates. The company cut prices by Rs2,200 to Rs94,400 a ton. The scrip touched an intra-day high of Rs584 and a low of Rs545 and recorded volumes of over 1,00,000 shares on NSE.

Ranbaxy declined by 3% to Rs341. The company announced that they would conduct Pre-clinical Trails on respiratory drug and could get $100mn payment for drug Development. The scrip touched an intra-day high of Rs363 and a low of Rs336 and recorded volumes of over 22,00,000 shares on NSE.

Auto was the worst hit sector the index was down by over 6%. Heavy weights led the down fall Maruti declined over 8.5% to Rs749. The company recorded its March sales at 71772 units (up 13.5%). Tata Motors dropped by over 9% to Rs633, M&M fell over 8.5% to Rs713 despite impressive monthly sales figures. The company registered March sales at 20263 units which rose by 25% and Bajaj Auto lost by over 6.5% to Rs2265.

Banking stocks plunged after the nation's central bank unexpectedly raised a key interest rate on March 30 to curb money supply. The shares of banks fell on concern higher rates will curb loan growth and locking away cash will force banks to pay higher interest on deposits, squeezing their spreads. The index heavy weight SBI dropped by over 6.5% to Rs930, ICICI Bank declined by 5.6% to Rs805 and HDFC Banks lost 5.6% to Rs900.

Sugar stocks traded firm in a falling market. Sakhti Sugar was up by 1.8% to Rs102, Dhampur Sugar gained by 2.3% to Rs76, Bajaj Hindusthan added 1.4% to Rs197 and Renuka Sugar advanced by 0.7% to Rs470.

Real Estate stocks were battered out after the central bank unexpectedly raised a key interest rate on March 30. Unitech was locked at 5% lower circuit to Rs368.10, Parsvnath declined by over 7% to Rs241 and Ansal Preperties also was frozen at 5% lower circuit to Rs501.

Capital Good stocks also witnessed heavy selling pressure. L&T dropped by 5.8% to Rs1524, BHEL was down 4.7% to Rs2154, ABB slipped by 4.3% to Rs3399 and Siemens declined by over 5% to Rs1035.

In a broad based sell off, the benchmark Sensex lost 600 points and Nifty over 180 points. For the coming day, we may continue to see further some more downside in the market. However, bulls might get some relief as value buying may be seen in the market at lower levels. The action on the bourses is likely to be more stock-specific and sector specific in a few cases like IT and Pharma. Others interest rate sensitive sectors like Banking, Auto and Real Estate could continue to trade lower. Global market movement can provide some direction at least in the early trades. One needs to see if the market can snap back from Monday’s fall.