Good morning bulls…welcome to danger zone
Get the facts, or the facts will get you. And when you get them, get them right, or they will get you wrong.
After a fairly choppy trading week and a searing weekend, the bulls have something to cheer about this morning. The Asian markets have rallied on the back of Friday's steep gains in US stocks. The F&O indicators are also positive, with the May Nifty futures turning into premium from a big discount. What's more 31 new scrips will be added in the derivative segment today. The rupee has also cooled off a bit after hitting a nine-year peak last Monday. So, expect some positive action in IT shares. What's also encouraging is that inflation too seems to be softening though we will have to wait and see how it behaves going forward.
The stage is set for a rebound today after last week's 1% drop in both the key indices. That's more or less the good news. The bad news, however, is that there are not many triggers to bank on, barring the monsoon of course. Nothing sensible in the thought, but the dates this week brings back memories of two major crashes in the last three years. Don't be surprised if a sharp fall comes your way, again for no valid reason.
Valuations appear to be expensive as ever. The series of monetary tightening steps is expected to bring about a slowdown in both GDP growth as well as corporate earnings. As a result, the market will depend on stock specific news and inflows from FIIs to ascertain its future direction. We continue to advocate some caution at higher levels though value buyers can pick fundamentally sound companies at every correction.
The Dow Jones had a triple-digit gain on Friday after a mild reading on inflation and a weak reading on retail sales raised hopes that the Fed could cut rates later in the year.
The Dow climbed 111.09 points or 0.8% to 13,326.22. It was up 0.5% on the week. The broader S&P 500 index advanced 14.38 points or nearly 1% to 1,505.85, but ended the week little changed. The Nasdaq Composite was up 28.48 points or 1.1% to 2,562.22, but slipped 0.4% on the week.
US light crude oil for June delivery rose 56 cents to settle at $62.37 a barrel on the New York Mercantile Exchange. The front-month contract was down 7 cents at $62.30 a barrel.
COMEX gold for June delivery rose $5.30 to settle at $672.30 an ounce. Treasury prices slumped, raising the yield on the 10-year note to 4.67% from 4.63% late on Thursday. In currency trading, the dollar slipped against the euro and rose against the yen.
European indexes advanced on Friday. The pan-European Dow Jones Stoxx 600 index gained 0.4% to 389.34. The German DAX Xetra 30 closed up 0.9% at 7,479.34. The French CAC-40 added 0.6% to 6,050.63, and the UK's FTSE 100 rose 0.6% to 6,565.70.
In the emerging markets, the Ibovespa index in Brazil gained 1.3% at 50,902 while the IPC index in Mexico jumped 1.4% to 30,058 and the RTS index in Russia slumped 2.5% to 1845.
Asian markets rose for the first time in three days this morning following a tepid reading on wholesale inflation. The Nikkei in Tokyo is up 187 points at 17,740 while the Hang Seng in Hong Kong shot up by 514 points to 20,982. The Kospi in Seoul is up 5 points at 1608 and the Straits Times in Singapore advanced 53 points to 3500.
As per the data posted on the NSE's web site, FIIs were net sellers to the tune of Rs5.14bn (provisional) in the cash segment on Friday. On the other hand, domestic institutions pumped in Rs4.4bn on the same day. In the F&O segment, foreign funds were net sellers at Rs5.07bn.
FIIs were net buyers of Rs1.91bn on Thursday, according to SEBI. Mutual Funds were net buyers of Rs2.27bn on the same day.
Bajaj Auto will remain in focus ahead of its Board meeting on May 17 for the company's demerger. UB is likely to gain amid reports that the company will buy Whyte & Mackay for $1.3bn. Trent may attract some attention as a financial daily reports that iconic lifestyle retail firm Ralph Lauren is likely to sign a deal with the Tatas for its India foray. Telecom shares could be hit after the resignation of telecom minister Dayanidhi Maran.
Shiv Vani Oil may rise amid market grapevine that it may receive a big order from ONGC. MphasiS BFL could advance amid reports that it will get more orders from parent EDS. Shyam Telecom is reportedly looking at acquisitions in Europe or Asia. RIL could be in action as reports suggest that the company is sitting on another huge gas reserve at its North East Coast (NEC) blocks. SBI is likely to gain after reporting better than expected results over the weekend.
Matrix Labs is expected to rally after its US parent Mylan bagged the deal to acquire the generic business of German drug maker Merck. Torrent Pharma and Aurobindo Pharma are expected to move up as well as they were also in the race for the big-ticket acquisition.
Bulls made a solid come back as last half an hour's trade lifted the key indices to close in positive terrain. Weak global cues dampened the sentiment at opening, dragging the markets lower. However, better than expected inflation figures which was at 5.66% in week ended April 28 against expectation of 5.75% and rise in India's March industrial production which rose 12.9% from year ago lifted the market from its day's low. Wild intra-day gyrations during the trading session pulled and pushed the markets in and out of positive terrain. Finally, the 30-share benchmark Sensex gained 24 points to close at 13796. NSE Nifty was up 10 points to close at 4076.
Page Industries and Redington were among the star performers however, ACC and M&M disappointed. The BSE FMCG and Pharma index dragged as Technology and Auto index were major gainers. Sugar stocks were the show stoppers of the day as they attracted buying interest towards the fag end of the session.
Moser Baer gained 2.5% to Rs381 after the company announced that the home video major, has acquired copyrights and exclusive licenses for 7000 films in all major Indian languages, placing it far ahead of its rivals. The scrip touched intra- day high of Rs385 and a low of Rs362 and recorded volumes of over 10,00,000 shares on NSE.
Tata Power edged lower 0.5% to Rs571. The company announced its plans to bid for a $400 million defense contract. The scrip touched intra- day high of Rs576 and a low of Rs551 and recorded volumes of over 2,00,000 shares on NSE.
Pratibha Industries ended o a flat note at Rs222. The Company announced that they would pay final Dividend of Rs2 a share. The scrip touched intra- day high of Rs226 and a low of Rs214 and recorded volumes of over 4,00,000 shares on NSE.
Metal stocks lost their shine on back of profit booking. Tata Steel dropped 1.8% to Rs569, Hindalco was down 1.4% to Rs144, Sterlite Industries slipped 1% to Rs549 and Hindustan Zinc shed 0.8% to Rs712.
Cement stocks were badly battered out as profit booking dragged them lower. ACC declined 2.8% to Rs850, Grasim was down 2.5% to Rs2425, Gujarat Ambuja dropped 1% to Rs119 and Mangalam Cement slipped 0.8% to Rs141.
Technology stocks gained momentum and witnessed buying interest after the rupee hovered around the Rs41 per dollar mark. Index heavy weight Infosys gained 1.4% to Rs2000, Moser Baer advanced 2.4% to Rs381, Mphasis BFL was up 2.1% to Rs319 and HCL Tech added 1.7% to Rs330
Sugar stocks were back in action as they witnessed fresh buying. Renuka Sugar rallied by over 10% to Rs526, Bajaj Hindusthan jumped by over 7% to Rs169 and Sakhti Sugar was also up 10% to Rs94.
Insider Trades:
ICICI Bank Ltd: KS Badri Narayanan, Deputy General Manager has sold in open market 2575 equity shares of ICICI Bank Ltd on 3rd, 4th and 7th May, 2007.
BSE IT index was the major gainer and gained 0.81%. BSE PSU index (up 0.62%), BSE Bank index (up 0.60%), BSE Auto index (up 0.51%) and Oil & Gas index (up 0.45) were among the other major gainers. However, BSE FMCG index lost 1.13%.
Volume Toppers:
IFCI, RNRL, IDBI, TTML, DCB, PFC, Page Industries, Reliance Industries, ITC, Balrampur Chini, Petronet LNG, IDEA, Indiabulls, Dena Bank, HLL and Redington India
Upper Circuit:
Aptech, Teledata, Shree Ashtavinyak, Ansal Infrastructure, Educomp Solutions, PSTL, Deep Industries, ACE, Shree Precoated and BF Utilities.
Delivery Delight:
Arvind Mills, Bajaj Auto, Balrampur Chini, Bank of Baroda, HCL Technologies, ICICI Bank, Kotak Mahindra Bank, Ranbaxy and Voltas.
Abnormal Delivery:
Ashok Leyland, VSNL, Wockhardt, Tata Elxsi, SAIL, SCI, Apollo Tyres, HCL Tech and Crompton Greaves.
Results Today:
Allsec Technologies, Indian Bank, Sobha Developers, Suzlon, Voltas, Ess Dee Aluminium, Mukand, NEPC Textiles, Shree Cement, Whirlpool India, LIC Housing Finance, Hindustan Oil Exploration, EMCO, and Welspun Gujarat.
Results Corner:
SBI Q4 profit at Rs14.93bn (up 75%), total revenue at Rs72.14bn (up 21.9%) and to pay Rs14 a share as dividend.
Hero Honda net income (down 27%) to Rs1.95bn and net sales at Rs26.39bn (up 17%).
Brokers Recommendation:
HLL – Buy from CLSA with target of Rs240.
Long Term investment:
Bharti Airtel.
Major News Headlines:
March Industrial Production rises 12.9% from year ago
Inflation in week ended April 28 at 5.66% vs expectation of 5.75%
EKC to mull stock split and plans to raise funds on 21st May
NTPC signs JV agreement with Singareni Collieries
Pratibha Industries to pay final dividend of Rs2 a share
Tata Power unit to bid for $400mn Indian Defence deal
Merrill Lynch raises stake in IVRCL Infra to 5.2%.