Emerging Markets- India Focus
India Tech Daily - Indecision
The market may gain further ground, tracking firm global markets, and on good rollover of the contracts for April to the May 2007 series. FII inflow remains robust. April derivative contracts expire today. At end Tuesday (24 April), the rollover in the Nifty was about 40% and in stock futures it was about 43%.
The market received a boost early this week, when in its monetary policy announced Tuesday, the Reserve Bank of India (RBI) kept all policy rates unchanged. The RBI forecast that annual wholesale price inflation, which was running just above 6% in early April 2007, will be close to 5% at end-March 2008. RBI's forecast of GDP growth at 8.5% in the fiscal year ending March 2008, is lower than the 9.2% expected for 2006/07.
Corporate results announced so far, were strong. Grasim reported robust Q4 results after trading hours on Wednesday (25 April). The key Q4 result today is of index heavyweight Reliance Industries (RIL). The other major result is that of pharma major Cipla.
The outcome of the ongoing seven-phased Uttar Pradesh assembly elections, is a key political event to watch out for. The assembly poll gets over in early-May 2007. The UP vote is seen as a barometer of national political trends.
FIIs resumed buying on Tuesday (24 April) after turning sellers on Monday (23 April). They were net buyers to the tune of Rs 501.50 crore on Tuesday. FIIs have pumped money heavily in Indian stocks this month. Their inflow picked up after IT major Infosys on 13 April 2007, issued a strong guidance for FY 2008, puttting to rest concerns of a US economic slowdown on the IT sector. FII inflow for April 2007 (till 24 April) reached Rs 5552.70 crore. FIIs had pulled out a net Rs 1082 crore in March 2007.
Asia stocks rose on Thursday after strong profits from US firms eased fears on the outlook for corporate earnings, but the dollar sat near a record low to the euro on nagging worries of a slowdown in the US economy. South Korean stocks hit the latest in a string of record highs. It was up 0.8%. Key benchmark indices in Hong Kong, Japan, China, Singapore and Taiwan were up between 0.4 - 1.4%.
Figures for US durable goods orders came out stronger than forecast on Wednesday, but failed to fully dispel doubts about the strength of US growth that had been raised by weaker-than-expected housing data a day earlier.
The Dow Jones industrial average surged to a record high above 13,000 on Wednesday, driven by stronger-than-expected earnings, while the dollar slumped to a record low against a basket of major currencies after a tepid US housing report. The Dow Jones industrial average climbed 135.95 points, or 1.05%, to end at a record 13,089.89. Earlier in the day, it hit a lifetime intraday high of 13,107.45. The Standard & Poor's 500 Index shot up 15.01 points, or 1.01%, to finish at 1,495.42. The Nasdaq Composite Index jumped 23.35 points, or 0.92%, to close at 2,547.89.
London Brent crude, currently seen as more representative of global oil prices than US crude, inched 3 cents higher to $68.60, after spiking a day earlier when weekly data showed the 11th successive draw in US gasoline stocks.
NIFTY (4167) SUP 4143 RES 4196
BUY CAIRN (136.55)
SL 132 T 144, 146
BUY ITC (161.80)
SL 157 T 169, 171
BUY HEXAWARE (178.20)
SL 174 T 186, 189
SELL GAIL (283)
@ 286 SL 290 T 274, 271
SELL TATAELXSI (314.15)
@ 317 SL 321 T 307, 303
Reliance results and rollover reasons
“Waiting is a trap. There will always be reasons to wait. The truth is, there are only two things in life, reasons and results, and reasons simply don't count.”
The bulls have had things going their way and like we mentioned there appears no pause for the moment. After an impressive recovery on Wednesday we have another action packed day in store. The biggies of corporate India will declare their results while the F&O expiry will provide the choppiness. The mood has significantly improved after the weakness last month and the highly volatile few days earlier in the month. With over 8% gains, the bulls could slow down but not for the initial half at least. Strong global cues, a fine Asian market and the spillover effect of Wednesday's recovery could keep the indices healthy.
Reliance Industries is most definitely the stock to keep an eye on as it declares its earnings. India Infoline estimates RIL to record an increase of 11.6% in net sales in Q4FY07 compared to last year. In Institutional activities, FIIs were net buyers in cash segment to the tune of Rs5.02bn while in the F&O segment they were net buyers of Rs5.9bn.
Blue Star is reportedly planning to buy Bangalore-based electrical contractor Naseer Electricals for over Rs1bn.
Ceat Tyres is set to outsource tyres from China and Vietnam for sales in India. Ceat has tied up with two companies in China to outsource truck and bus radials, according to a report.
he board of directors of Sun TV Network Ltd is seeking permission from the shareholders for a stock-split.
Congestion at Australia's Newcastle port has spiked up bulk freight rates leading to Indian shipping companies moving up on the bourses. Global freight rates in the dry bulk segment further firmed up.
Asian stocks rose the most in a week as higher oil and metals prices lifted commodity producers and companies such as Honda Motor Co. reported improved profits. Japan's Nikkei 225 Stock Average rose 1.3 percent to 17,462.33, while the broader Topix index added 0.9 percent.
The Dow Jones hit an all-time high of 13,107, before closing at a record 13,090, up 136 points. Nasdaq added 23 points to close at 2548. Among the Indian ADRs HDFC Bank rose nearly 3% to $74.92 while ICICI Bank added 2.6% to close at $46.52. VSNL, Infosys, Satyam, Wipro and Dr.Reddy's gained between 1-2% each to $21.47, $53.59, $25.38, $16.49 and $17.40, respectively.
However, Patni Computers fell 3.7% to $25.50 after it declared its numbers. MTNL slipped 1% to $7.14. In the Indian market, the buzz is that MTNL may see added interest as one of the investors sees the stock rising significantly from these levels, according to a report.
Tata Tea rose almost 15% on reports that cola major Coca-Cola is planning to acquire US company Energy Brands International, commonly known as Glaceau, in which Tata Tea holds 30 per cent. However, we feel Tatas are unlikely to sell out their stake. So expect some cooling on this counter soon.
The rupee breached the 41 per dollar barrier for the first time since 1998. This could temporarily hurt the sentiment in export-related counters, especially IT.
Yet another attempt by the West Bengal government to resolve the ongoing imbroglio at Hindustan Motors (HM) Ltd Uttarpara plant failed.
HOW MARKET FARED
All eyes on RIL, F&O expiry
The bulls reigned supreme over Dalal Street as they made an impressive comeback on led by gains in Pharma and Real Estate stocks from days low. ICICI Bank, ONGC, M&M and Grasim were the prominent gainers today. Earlier, in the day, indices took a deep breath following a remarkable 208 points rally yesterday triggered by RBI’s decision to keep interest rates unchanged. Weak Asian markets also contributed towards a lower opening. However, short –covering ahead of F&O expiry on Thursday aided the bulls in late afternoon trades. Buying was seen in Banking, Auto, Oil & Gas and FMCG stocks were among the major gainers today. Finally, the BSE 30-share Sensex closed at 14218, up by 81 points and NSE Nifty was up by 26 points at 4167.
Healthy FII inflows, short-covering and the encouraging Monetary & Credit Policy kept the bulls in good spirits. However, Tech stocks were at the receiving following appreciation of Rupee against the Dollar.
Ranbaxy advanced by over 5% to Rs369.4 following media reports that the company has received US approval to sell Pravastatin Copy. The scrip touched an intra-day high of Rs372 and a low of Rs348 and recorded volumes of over 25,00,000 shares on NSE.
GTL added over 3% to Rs186, the company has recommended to buy back shares at Rs300 each and to spend Rs2.75bn to buy back the shares. The company recorded its Q4 results with profit at Rs283.9mn (up 282%) and revenue at Rs3.96bn (up 110%).
Fresh buying was seen in Cement stocks. ACC was up by 2% to Rs833, Mangalam Cement was up by 1% to Rs148 and Grasim was up by over 2% to Rs2438 ahead of its quarterly results to be announced later today.
Tech stocks closed lower after Rupee climbed for a fourth day on speculation that RBI will allow the currency to strengthen to curb inflation. Income from US constitutes around 60% for the tech companies. Rupee touched a high of 40.87 against the Dollar. Frontline stock Infosys slipped by 2% to Rs2019 and Satyam Computer was down by over 1.5% to Rs466. HCL Tech and Patni Computers were among the other major losers.
Real Estate stocks advanced further led by gains in Sobha and Parsvnath after RBI slashed the risk weight for housing loans of up to Rs2mn. Parsvnath Developers gained by 5% to Rs338, Sobha was up by 7% to Rs918 and Bombay Dyeing added 1.4% to Rs570.
Metal stocks witnessed profit booking. Tata Steel dropped by 1.5% to Rs571 and Hindustan Zinc dropped by over 4% to Rs654.
After an impressive recovery on Wednesday another action packed day with lots of news, especially results is on the cards. The mood seems to have improved after the highly volatile few days earlier in the month. Though the market may remain choppy with expiry of derivatives contracts for the month of April. The bulls may also be tiring a bit after over 8% gains in last two weeks. Reliance Industries is most definitely the stock to keep an eye on as it declares its earnings. As it is the index heavyweight, any movement in it is likely to have a bearing on the key indices today. India Infoline estimates RIL to record an increase of 11.6% in net sales in Q4FY07 compared to last year.
Tata Power Co. Ltd: Life Insurance Corporation of India from market has purchased 2.01% equity shares of Tata Power.
Sb&T International Ltd: Citigroup Global Mkts (Mauritius) Pvt Ltd from market has sold 715000 equity shares of Sb&T International on 17th April 2007.
The turnover on NSE was up by 1.7% to Rs110.8bn. BSE FMCG index was the major gainer and gained 2.52%. BSE Auto index (up 1.22%), BSE Bank index (up 1.06%) and BSE Oil & Gas index (up 1.38%) were among the other major gainers. However, BSE IT index lost 1.30%.
IFCI, Nagarjuna Fertilizers, TTML, GTL, RNNRL, Indian Bank, SAIL, RPL, Idea, IBREAL, ITC, Tele Data Info, IVRCl Infra, Satyam Comp, IDFC, PFC, TCS and FSL.
Ansal Infra, BBTC, Tanla, Shree Precoated, Tele Data Info, Marksans, SHIVVANI OIL and Sona Koyo.
RIL,ABB, Adlabs, Akruti Nirman, Balrampur Chini,Cipla, Deccan Aviation, Escorts, FSL, Hind Zinc, Jupiter Bio, KPIT Cummins, Sakhti Sugar, STAR and Wockhardt.
ABB, Cipla, Corporation Bank, Hero Honda, HLL, HPCL, ICICI Bank, India Cements, IOC, M&M, Nagarjuna Fertilizers, ONGC, Ranbaxy, SCI, Tata Power and Tata Tea.
VSNL, Union Bank of India, Rolta India, Tata Elxsi, LIC Housing Finance Ltd, Bajaj Auto, Reliance Capital, CEAT, Escorts and Indian Hotels.
Stock Futures with Largest Increases in OI:
Voltas, Alok Industries, Can Bank, PNB, JP Hydro, Balrampur Chini, Hindalco, Maharashtra Seamless, JSW Steel and Bajaj Hind
Stock Futures with Largest Decreases in OI:
OBC, M&M, Orchid Chem, Indian Bank, Gateway Distripark, Sesa Goa, Tata Tea, i-Flex, Gujarat Alkalies and LITL
Grasim Q4 profit (up 80%) to Rs4.74bn, sales (up 36%) to Rs24.94bn and to pay Rs27.5 per share as final dividend
REL Q4 profit at Rs2.37bn (up 40%), revenue at Rs18.89bn (up 54%) and to pay Rs5.3 per share as dividend
Maharashtra Seamless Q4 profit at Rs530.7mn (up 26%) and sales (up 26%) to Rs3.67bn
Alfa Laval Q1 profit at Rs242.2mn (up 29%) and revenue at Rs1.61bn (up 11%)
GTL Q4 profit at Rs283.9mn (up 282%), revenue at Rs3.96bn (up 110%)
Godrej Consumer Q4 group profit at Rs393.9mn (up 28%), met sales at Rs2.42bn (up 26%)
NALCO profit at Rs5.91bn (down 2%) and sales (up 2%) to Rs15.66bn
Glenmark Q4 net income triples to Rs311bn and revenue almost doubles to Rs12.07bn
Reliance Capital – Buy from Merrill Lynch with target of Rs850
Wipro - Underperform from CLSA with target of Rs575.
Long Term investment:
Major News Headlines:
In House :
Today report of RIL , ABB & Cipla among major results .
IT to remain under pressure as Rupee still strong against the Dollar .
Buy : Grasim as good results both from cement and sponge iron units to see upside in medium term
Nifty at a support of 4120 & 4150 and resistance at 4200 & 4240 levels .
Buy : JSW steel
Buy : WockHardt looking positive
Buy : Glaxo & Lupin
Buy : Indiacement
Buy : Orchid chemical above 272 target 283 s/l of 267
Out House :
Markets at a support of 14104 & 13987 levels with resistance at 14325 & 14434 levels .
Buy : RIL & RElCap
Buy : I- Flex & Rolta
Buy : IDFC & IDEA
Buy : Praj & GlenMark
Buy : ICRA , GodfreyPhilip & Concor
Buy : JSW & Sail
Buy : SesaGoa & ABAN
Dark Horse : IFCI , Praj , Tisco ,TataTea, ABAN , JSW , Sobha & BanKIndia
Bullet for the Day : ONGC & Bharti with stop loss