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Thursday, October 18, 2007

FIIs net sellers of Rs 1,130cr in cash market

Foreign institutional investors (FIIs) were net sellers of Rs 1,130.59 crore (provisional) today, according to data released by BSE.

While FIIs made gross purchases of Rs 7,066 crore, gross sales totalled Rs 8,196.59 crore.

Domestic institutional investors (DIIs) were net buyers of Rs 96.02 crore today. While DIIs made gross purchases of Rs 1,886.24 crore, gross sales totalled Rs 1,790.22 crore.

FIIs were net sellers of Rs 1,776.60 crore on Wednesday, October 17, according to data released by Sebi today. While FIIs made gross purchases of Rs 6,076.50 crore, gross sales totalled Rs 7,853.10 crore.

Jubilant Organosys - BUY, HDIL - BUY

Jubilant Organosys - BUY, HDIL - BUY

Reliance Energy, GAIL, Gateway Distripaks, Polaris Software, Consumer Products

Reliance Energy, GAIL, Gateway Distripaks, Polaris Software, Consumer Products

Grey Market - Rathi Bars, Varun Industries, Mudra Port, Saamya Biotech

Reliance Power - 48

Mudra Port & Sez 280 to 285

Supreme Infra 108 75 to 80

Saamya Biotech (I) Ltd. 10 14 to 15

MAYTAS Infra 370 160 to 165

Circuit Systems (India) Ltd. 35 6 to 7

Rathi Bars 35 8 to 9

Allied Computers 12 3.5 to 4

Varun Ind. 60 16 to 18

Market Close: Profit booking or Correction..?

After yesterday?s rollercoaster ride, the markets once again witnessed same volatile ride today. SEBI?s regulation to limit derivative instruments like P-Notes continued to haunt the indices. The markets today recorded its second biggest fall of over 700 points after the initial rally of 500 points in the morning. However, the whole market mood turned after mid session as it pared all the gains as it slipped into the negative terrain with intense selling pressure witnessed across the board. Indices saw some panic selling which saw a free fall in the red zone with rumors floating in the market that margin calls may be triggered and that the NSE would increase margin requirements. But NSE declined it saying there was nothing like this. Rumours of political uncertainty also surfaced saying that the PM would resign which only compounded the fall.

We also feel that the FII?s preferred to reduce their positions in the form of P notes because of no tax benefits after converting to hedge funds which saw some heavy selling. We can only assume that the FII?s have been the seller on the basis of the provisional data which stated it as a seller to tune of Rs 1776 cr. All sectors ended in deep red, some selective stocks in IT and Consumer Durables were able to close in green. Power and Banking stocks were hit badly. Even the mid and small caps ended with losses. Asian markets ended the mixed while Europe was in red.

Sensex ended the day down by 717 points at 17998. The major losers were ACC (-12.53%), REL (-12.13%), SBI (-10%) and Bharti Airtel (-9%) while the major gainers were Wipro (+1.87%), TCS (+1.27%), Dr Reddy (+1.12%) and Satyam (+1%).

ACC, the cement major reported unimpressive results for Q2 FY07. The top line grew by 23% to Rs 1678 cr and the bottom line grew by 30% to Rs 292 cr. The Ebidta margins remained unchanged at 27%. ACC dispatch were 4.68 mn tones, higher by 10% on yoy basis. The average realization per ton stood at Rs 3587 higher by 13% on yoy basis. Net Profit includes the other income of Rs 28 cr. This includes the sale proceeds of its subsidiary ACC Nihon Casting Ltd. Even the top line growth is not impressive because even in the monsoon season the sales were not down. At the current market price of Rs 1052 the stock trades at 15 times of trailing earnings. On EV/Ton basis the valuations are placed at US $ 221 per ton. This seems to be expensive. Look for down side for trading opportunities. For details do read our updated quarterly analysis on this.

SKF India Ltd (SKF) has reported good results for the third quarter September 2007. The top line grew by 14% to Rs 387 cr from Rs 339 cr. The bottom line grew by 92% to Rs 43 cr from Rs 22 cr on yoy basis. The Ebidta profit grew by 76% to Rs 68 cr from Rs 39 cr on yoy basis. The Ebidta margins enhanced by 600 bps to 17%. The cost of raw material decreased by 7% to 59% of net sales, that?s the main reason for increase in Ebidta margins. Valuation seems to be attractive at current market price of Rs 390, the stock trades at 14 times of trailing earnings. However company was able to maintain the growth despite slow down in Auto sector as the growth was mainly seen in the industrial bearing segment. We are positive on the business. The overall demand outlook for the future remains good; the company expects pressure on margins on account of intense competition and price of steel which is the key raw material. We expect the growth momentum to continue for future. SKF parent CEO informed that the company expects the shortage of raw material and components had worsened its third quarter earnings. This give may give more outsourcing opportunity to Indian unit.

Technically Speaking: Markets started the day with a gap up and saw an early rally of 500 points. Later it had free fall as the market ended in red. Sensex touched intraday high of 19,199 and low of 17,771. Overall breadth was in favor of Declines, where the Advances stood at 935, while Declines at 1806. Markets have been seeing preety good volumes since past few sessions. But today it broke all the records as the market churned Rs 11,570 cr. Sensex has closed below a good support of 18,500. Markets might try to pullback above this level tomorrow, incase of a failure to sustain the up move, lower targets of 16800 will be opened.

Sensex nosedives on panic selling

The market crashed by over 1,428 points from the day's high amid panic selling, pulling the front-line stocks to their day's low. Banking stocks were the worst hit followed by metal and oil & gas stocks. After slipping by over 300 points in yesterday's trades, the Sensex resumed 111 points higher at 18,827 and rallied sharply to touch another record high of 19199, up 483 points from yesterday's close, on sustained buying in front-line stocks. But, the panic selling towards the close dragged the index to its day's low of 17771. The index ended the session with a loss of 717 points or 3.83% at 17998. The Nifty tumbled 3.75% or 208 points to close at 5351.

The market breadth was negative, with the losers outnumbering the gainers in the ratio of 1.65:1. Of the 2,822 stocks traded on the BSE, 1,730 stocks declined, 1,043 stocks advanced and 49 stocks ended unchanged. All the sectoral indices were battered. Among the major losers the BSE Bankex Index lost 5.96%, the BSE Realty Index shed 4.56%, the BSE Metal Index dropped 4.39%, the BSE PSU Index fell 4.26% and the BSE CG Index slipped by 4.07%.

Excluding select IT and pharma stocks most of the Sensex stocks ended in the red. Among the major losers, ACC plummeted by 13.86% at Rs1,036, Reliance Energy tanked by 9.71% at Rs1,591, SBI dropped 8.26% at Rs1,677, Bharti Airtel slumped 7.67% at Rs1,019, ICICI Bank crumbled by 6.99% at Rs1,039 and NTPC shed 5.57% at Rs209. However, TCS, Wipro, Cipla, Satyam Computer, Dr Reddy's Lab, HLL and Ranbaxy managed to close in the green with gains of over 0.50-2%.

Banking stocks came under selling pressure and lost heavily. SBI tumbled by 8.26% at Rs1,677, Union Bank shed 7.45% at Rs154, ICICI Bank lost 6.99% at Rs1,039 and BOI declined by 6.88% at Rs278. Yes Bank, Punjab National Bank, Bank Of Baroda and HDFC Bank crumbled by 5-6% each.

Over 4.78 crore Reliance Natural Resources shares changed hands on the BSE followed by Power Grid Corporation (3.59 crore shares), Tata Teleservices (3 crore shares), Reliance Petroleum (2.33 crore shares) and IFCI (1.13 crore shares).

Reliance Industries was the most actively traded counter on the BSE and registered a turnover of Rs714 crore followed by Reliance Energy (Rs627 crore), ICICI Bank (Rs626 crore), Power Grid Corporation (Rs514 crore) and Reliance Natural Resources (Rs482 crore).

Sensex tanks 717 points in choppy trade; turnover surges

Heavy selling towards the latter part of the trading session pulled the market sharply lower in what was a choppy trading session. The market earlier had witnessed choppy trade in mid-afternoon trade, swinging between positive and negative zone, on rumours that NSE had raised some futures & options margins. But television reports in mid-afternoon indicated that there is no change in margin structure on NSE.

Banking, metal, realty and power stocks witnessed heavy selling. IT stocks held the fortress in market meltdown. The market breadth turned weak. Reliance Industries and Reliance Energy declined sharply. ACC plunged after announcement of Q3 results. European markets were trading weak. Asian markets were in green.

Earlier, shrugging off concerns arising from Securities & Exchange Board of India's proposal to clamp down FII inflow through participatory notes (PN), the market had surged to all-time high in early afternoon trade. Reliance Industries (RIL) declined after hitting all-time high ahead of its results today.

The BSE 30-share Sensex ended down 717.43 points, or 3.83%, to 17,998.39 points. It opened with an upward gap of 111.64. It hit all-time high of 19,198.66 in early afternoon trade. At day’s high Sensex had risen 482.84 points for the day. It hit a low of 17,771.16 in late trade. At day’s low of 17,771.16, Sensex had lost 944.46 points. Sensex swung 1,427.5 points in today’s trade.

The broader based S&P CNX Nifty was down 208.3 points, or 3.75%, to 5,351. It hit all-time high of 5,736.80 in early afternoon trade. It hit a low of 5,269.65 in late trade.

Of the 30 shares of the Sensex, 7 had moved up, while the remaining were trading down. The market breadth was weak on BSE in: 1,027 scrips advanced, 1,707 declined, while 326 remained unchanged.

BSE clocked a turnover of Rs 11,570 crore today compared to Wednesday (17 October 2007)'s Rs 10,308.13 crore.

Nifty October 2007 futures were at 5,309.90, a discount of 41.1 points or 0.76% over the spot price of 5,351.

NSE's futures & options (F&O) segment clocked a turnover of Rs 1,10,563.83 crore today, 18 October 2007, compared to Wednesday's Rs 98,395.58 crore

BSE Mid Cap index declined 2.3% to 7,426.24 and BSE Small Cap index declined 1.33% to 9,078.75. Both these indices outperformed Sensex.

BSE Capital Goods index (down 4.07% to 16,140.49),BSE Bankex (down 5.96% to 9,034.68), BSE Metal index (down 4.39% to 15,029.82), BSE PSU index (down 4.26% to 8,410.73), BSE Realty index (down 4.56% to 9,382.94) underperformed Sensex.

BSE Auto index (down 1.51% to 5,393.48), BSE IT (flat at 4,676.27)BSE Health Care index (down 0.12% to 3,775.79) outperformed Sensex.

Sebi’s proposals to clamp down participatory notes to restrict foreign inflows, announced after trading hours on Tuesday, 16 October 2007, created havoc on the bourses yesterday, 17 October 2007. Trading was halted on that day just within minutes of opening, as market wide circuit filters were triggered by a steep fall. Later, the market had staged a sharp pull back from day’s lows, since afternoon trade after Sebi chairman M Damodaran, clarified to television media that participatory notes (PN) are not being banned and there will be no bar on FII inflows. He also clarified that Sebi is not proposing a ban on offshore derivatives.

After trading hours on Tuesday, 16 October 2007, Securities & Exchange Board of India issued draft proposals wherein the market regulator proposed restriction on use of the popular participatory notes (PNs) route of FII inflow and it also recommended unwinding of some PNs within 18 months. PNs are financial instruments used by foreign investors that are not registered with Sebi, to invest in Indian shares. FIIs and their sub-accounts buy Indian securities and then issue PNs to foreign investors with these securities as the underlying.

Sebi’s recommendations are clearly negative in the extreme short term as far as direction of FII inflow in India are concerned, brokerage Motilal Oswal Securities said in a note to clients. Investors having delivery can hold to their positions, it said. Traders should have strict stop loss particularly so if they are trading on the long side, the brokerage said in the note.

The Sebi proposals on participatory notes may cast a shadow on investor sentiment to an extent, according to Franklin Templeton Investment (FTI), one of the largest financial services groups in the world. More clarity on market impact will emerge after issuance of final guidelines by the market regulator, it reckons. Any sharp FII outflows will impact the markets in the near term, according to FTI.

The financial services group which has also one of the leading mutual funds in India, however, feels that inflow to India from long-term global investors will not be impacted due to these measures given that India’s economic and corporate fundamentals remain robust.

India’s largest private company in terms of market capitalization and oil refiner Reliance Industries (RIL) was down 4.25% to Rs 2,575.90. It had hit an all-time high of Rs 2,805 earlier during the day. The stock pared gains in mid-afternoon trade. Reliance Industries (RIL) unveils its Q2 September 2007 results today.

RIL is expected to report results taking into consideration merger of IPCL in it that was effected recently. Analysts expect a modest growth in RIL’s net profit in Q2 September 2007 over Q2 September 2006 on the back of higher refining margins.

Banking majors declined sharply. BSE's banking sector index Bankex was the major loser from sectoral indices on BSE. ICICI Bank (down 6.99% to Rs 1,038.80), HDFC Bank (down 5.51% to Rs 1,379.20) and State Bank of India (down 8.26% to Rs 1,677.45) edged lower.

Heavy selling was seen in metal counters. Tata Steel (down 3.79% to Rs 836.15), Sterlite industries (down 1.57% to Rs 890.35), Steel Authority of India (down 6.45% to Rs 23.30) and Hindalco Industries (down 5.56% to Rs 186.95) edged lower.

Realty stocks also declined. DLF (down 5.85% to Rs 843.55), Indiabulls Real Estate (down 7.86% to Rs 532.20) and Unitech (down 3.19% to Rs 330.40) edged lower.

Power stocks fell sharply. NTPC (down 5.57% to Rs 208.50), Power Grid Corporation of India (down 2.3% to Rs 133.60), Reliance Energy (down 9.71% to Rs 1,591.35) and Tata Power Company (down 8.27% to Rs 1,078.75) edged lower.

TCS rose 2.17% to Rs 1,118.85 after India's top software services exporter secured a $1.2 billion 10-year contract from information and media firm Nielsen Co. to provide IT services for the latter's global operations.

Other IT stocks Wipro (up 2.17% to Rs 496.45) and Satyam Computer Services (up 1.16% to Rs 462.55) edged higher. Infosys (down 0.08% to Rs 1,888.40) edged lower.

Ranbanxy Laboratories rose 0.4% to Rs 421.85. The company today reported 72.8% rise in net profit at Rs 168.16 crore on 4.78% decline in sales to Rs 1038.12 crore in Q3 September 2007 over Q3 september 2006. The results hit the market in afternoon trade. Cipla (up 1.76% to Rs 182.50) and Dr. Reddy’s Laboratories (up 1.05% to Rs 612.55) edged higher.

ACC declined 13.86% to Rs 1,036 after it reported 30.14% rise in net profit to Rs 292.42 crore on 22.22% rise in sales to Rs 1678.78 crore. The results hit the market in afternoon trade. It was the major loser from Sensex pack.

Bharti Airtel declined 7.67% to Rs 1,019.40.

Reliance Communications declined 3.51% to Rs 711.45 after the company said it added 1.5 million subscribers in September 2007. It hit an all-time high of Rs 794 earlier today.

Hero Honda Motors declined 1.5% to Rs 724.60. Hero Honda unveils Q2 September 2007 results today.

Capital goods stocks pared gains. Larsen & Toubro declined 4.37% to Rs 3,149.70 after it won Rs 462 crore orders for projects in Andhra Pradesh. Bharat Heavy Electricals was down 4.42% to Rs 2,182.25. The stock came off session's high of Rs 2,375.

Reliance Natural Resource (RNRL) was the volume topper on BSE, notching total volumes of 4.78 crore shares. The stock lost 5.73% to Rs 91.35. Power Grid Corporation of India declined 4.94% to Rs 130 on volumes of 3.59 crore shares on BSE. Tata Teleservices (Maharashtra) slumped 4% to Rs 39.55 on 3 crore shares, and stood third in terms of volumes. Reliance Petroleum ranked fourth clocking volumes of 2.33 crore shares on BSE. The stock lost 3.95% to Rs 174. IFCI plunged 7% to Rs 75.90 on volume of 1.13 crore shares.

Reliance Industries with a turnover of Rs 714.87 crore was turnover topper on BSE. Reliance Energy clocked second highest turnover of Rs 627.59 crore. ICICI Bank clocked the third highest turnover of Rs 626.45 crore. Power Grid Corporation of India clocked fourth highest turnover of Rs 514.11 crore. Reliance Natural Resources fifth highest turnover of Rs 482.85 crore.

Side counters, Krone Communications (up 20% to Rs 154.85), Ashco Industries (up 20% to Rs 48), MPIL Corporation (up 20% to Rs 114.45), Borax Morarji (up 20% to Rs 64.30) edged higher.

Sanguine India (down 17.01% to Rs 38.55), Mangalam Cement (down 15.53% to Rs 195) edged lower.

ABB rose 1% to Rs 1502.15, after it secured orders worth Rs 512 crore from JSW and its associated companies, to provide turnkey power and automation solutions for steel and power plant projects.

GAIL India declined 4.06% to Rs 400.45. GAIL's net profit rose 27.70% to Rs 572.54 crore on 22.2% growth in net sales to Rs 4,528.90 crore in Q2 September 2007 over Q2 September 2006.

Great Offshore declined 3.52% to Rs 780.85, after the Reserve Bank of India allowed foreign institutional investors to buy upto 49% of the company’s paid-up capital.

Supreme Infrastructure India ended at Rs 175.25 on BSE, a premium of 62.26% over IPO price of Rs 108.

Polaris Software Lab rose 0.31% to Rs 115.05, on reporting 3.90% fall in net profit to Rs 12.56 crore in Q2 September 2007 over Q1 June 2007.

European markets declined after opening on a positive note. France’s CAC 40 (down 0.63% to 5,782.32) and UK’s FTSE 100 (down 0.73% to 6,628.10) edged lower. Germany’s DAX (up 0.17% to 7,999.39) edged higher.

A majority of Asian markets ended higher today, 18 October 2007. Hong Kong's Hang Seng (up 0.57% at 29,465.05), Japan's Nikkei (up 0.89% at 17,106.39), Taiwan's Taiwan Weighted (up 0.78% at 9,637.07), South Korea's Seoul Composite (up 1.07% at 2,005.09) edged higher. However, Singapore's Straits Times fell 0.78% at 3,809.69.

Crude oil were almost unchanged on Thursday, 18 October 2007 as one OPEC minister raised the prospect of another output hike and U.S. data showed rising inventories and weak demand. US crude slipped 12 cents to $87.28 a barrel.