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Tuesday, February 26, 2008

Bulls hope to stay on track!


Life barrels on like a runaway train where the passengers change,
they don't change anything, you get off someone else can get on.

The markets resemble a runaway train since Monday. Some getting in, some getting off. After all it is better to get off comfortably at your destination rather than being thrown out for ticketless travel (read leveraged play). With the railway budget set to be a populist one, the bulls will hope that they manage to chug ahead. Expectations are that the railway minister many announce reduction in certain passenger fares and freight rates.

The global cues will lend support at start. The outlook for today is a good opening led by some follow on buying. Depending on the budget announcements, certain sectors and stocks will have a field day. Profit booking at higher levels could always set in as the near term outlook remains a worry. Get in and get out as per your risk profile. Monday’s start brought in hopes of a long awaited pre-budget rally. How long that lasts, remains to be seen.

A mix of surging costs and a steel shortage could bring steel stocks in limelight unless the railway minister decides to spoil sentiment. Globally, further hikes are expected in steel.

Watch out for action in tea counters too.

The FIIs turned to net buyers of Rs1.78bn in Index Future and by Rs4.75bn in index options. In Single Stock Futures they were net buyers at Rs53.4mn. In the Cash segment, FIIs were net buyers by Rs7.83bn and DIIs were net sellers of Rs3.16bn.

US stocks gained after S&P reiterated its top rating for Ambac Financial. Dow Jones added 1.5%. Standard & Poor's 500 (SPX) index was up 1.4%. Nasdaq added 1%.

Asian stocks rose to their three week highs following cues from Wall Street. Nikkei climbed 0.5 percent to 13,983.51.

Citigroup slipped 1.5% after Goldman Sachs cut its earnings outlook. Goldman also cut its forecasts on a number of other big banks. Fannie Mae and Freddie Mac fell after Goldman Sachs downgraded the companies to "sell" saying it expects them to announce big writedowns.

US light crude oil for April delivery rose 44 cents to settle at $99.23 a barrel on the New York Mercantile Exchange

ONGC has announced four new oil and gas discoveries, three onland and one offshore.

HDFC Bank, Centurion Bank of Punjab approved a swap ratio of 1:29 for merger and may look at an overseas buy.
.
HDFC Bank is likely to issue preference shares to promoter HDFC to enable the mortgage company to retain its shareholding above 20% post-merger.

Swedish truck and bus maker Scania has firmed up plans to manufacture trucks in India alone as L&T has reportedly backed out.

PNB has cut its PLR by 50 basis points to 12.5%.

Ashok Leyland is planning to double investment in Uttaranchal from Rs10bn to Rs20bn as a part of its expansion plan, according to a report.

Hindustan Electro Graphites expects to achieve a capacity of 58,000 tons by FY09 and ~64,000 tons by FY10.

Bhushan Steel
has entered into two JV with Australian firm Bowen Energy for exploration of coal mines.

Gitanjali Group plans to hive off its five businesses and eventually list them on the bourses.

Essar Shipping has approved raising of US$1bn through issue of securities

Jubilant Organosys has bagged new contracts worth US$92mn for its proprietary products and exclusive synthesis segment for 2008.

Crompton Greaves has announced a tie-up with Dutch firm Lemnis Lighting for launching LED lighting products.

Bulls look to chug ahead

Finally, bulls managed to end a session on a strong note. Initially after falling sharply in the early trades markets bounced back and gradually gained momentum through out the trading session. The Sensex recovered over 500 points and the Nifty index recouped over 140 points from their respective days low. The rally could be attributed to strong buying interest in the Reliance pack of stocks. Also the IT, Power and the Realty stocks were in demand. Finally, the 30-share Sensex closed at 17,650 adding 301 points. The NSE Nifty closed at 5,200 gaining 89 points.

Overall about 1,074 stocks advanced, 1,594 stocks declined while 72 stocks remained unchanged. Among the BSE 30 index 26 stocks advanced while only 4 stocks declined.

Among the 30-scrips of Sensex, RIL, ICICI Bank, Infosys and L&T were among the major gainers. However, HDFC Bank, Baja Auto and Hindustan Unilever were among the major losers in the index.

IRB Infrastructure Developers Ltd, developers of various infrastructure projects in the road sector through several Special Purpose Vehicles got listed at Rs192 against issue price of Rs185. After initially slipping heavily below its issue price, the scrip constantly gained ground thought out the session.

Finally, the stock ended at Rs189 recording gains of 2% after hitting an intra-day high of Rs200 and a low of Rs168 and recorded volumes of over 2,00,00,000 shares on NSE. IRB Infrastructure, raised about Rs9.44bn through its IPO last month. IRB Infrastructure offered 51mn equity shares through the IPO, constituting 15.36%of its fully diluted post issue paid-up capital. The issue got subscribed by over four times. The issue price at the lower end of price band of Rs185-220.

Tulsi Extrusions Limited manufacturer of various types of PVC pipes and fabricated fittings got listed at Rs100 on the bourses against issue price of Rs85. The scrip constantly gained ground thought out the trading session finally closed at Rs140 translating into a premium of 65%. The scrip has touched an intra-day high of Rs144 and a low of Rs99 and has recorded volumes of over 3,00,00,000 shares on NSE.

The company came out with public issue of 57,00,000 equity shares of Rs10 each during February 1 and February 5, 2008. The price band for the issue was set between Rs80 and Rs85. The issue was subscribed 2.08 times. QIBs portion subscribed 1.54 times, HNIs 3.11 times and Retail category 2.46 times.

Pfizer India ended flat at Rs633. The company announced its Q4 result with net profit at Rs220.36mn (up 29.5%) and revenue at Rs2bn (up 9.2%). The company also announced that it would pay dividend of Rs27.5 per share. The scrip touched an intra-day high of Rs653 and a low of Rs630 and recorded volumes of over 32,000 shares on NSE.

Gati ended lower by 1.3% to Rs121. The company announced that it entered into agreement with General Logistics. The scrip hit an intra-day high of Rs126 and a low of Rs119 and recorded volumes of over 28,000 shares on NSE.

M&M was marginally down by 0.3% to Rs627. According to reports the company was planning to launch a premium SUV codenamed ‘W201’ by 2009 and the Ingenio MUV by end August of this year. The scrip touched an intra-day high of Rs634 and a low of Rs605 and recorded volumes of over 3,00,000 shares on NSE.

RPower surged by over 8% to Rs450 the scrip for the first time crossed the IPO price of Rs450 led by unabated buying. The scrip touched an intra-day high of Rs455 and a low of Rs421 and recorded volumes of over 3,00,00,000 shares on NSE.

Ram Informatics gained 1.2% to Rs16 after the company said that it received orders from Registration & Stamps. The scrip touched an intra-day high of Rs16 and a low of Rs15 and has recorded volumes of over 43,000 shares on BSE.


Cues from the international markets look to be a bit supportive for the time being and with the railway budget to be announced on Tuesday, bulls would look to carry forward the momentum. However, having said that, even a bad day in the US market is enough to turn the sentiments negative. It also shows that one cannot take any rally for granted, as all the gains of a day can easily be wiped out in a minutes. Stock specific action would continue.

News Snippets:

- Godrej Industries has set up a joint venture with Malaysian firm IJM Plantations to develop palm estates and palm oil mills in India. (BS)

- Godawari Power and Ispat planning to foray into commercial power generation with projects in Chhattisgarh or Jharkhand with capacities ranging between 300 to 1,000 mw with coal and coal rejects as fuel. (BS)

- Opto Circuits India has signed an agreement to acquire Wisconsin-based Criticare Systems Inc, a maker of medical equipments, for US$68mn. (BS)

- Zylog Systems Ltd is foraying into Voice over Internet Protocol (VoIP) with a tie-up with an American company. (BL)

- The Future Group is all set to make a foray into rural retailing by riding on the Aadhaar outlets belonging to Godrej Agrovet.

- Dish TV has cancelled the Rs2.5bn preferential allotment of equity shares and warrants to Indivision India Partners. (BL)

- Tata expects to double revenues from China—primarily from TCS and Tata Steel—to US$600mn this year. (FE)

- HSBC, StanChart have evinced interest in picking up a stake in YES Bank. (FE)

- ONGC has reconfigured its proposed mega petrochemical plant at Dahej in Gujarat, bringing down the cost by Rs11bn to Rs124.4bn.

- The Government has directed IOC, BPCL and HPCL to stop LPG supply to PNG users. (ET)

- Crompton Greaves has entered into two agreements with the Netherland-based Lemnis Lightings and Italy-based Fael Luce to boost its presence in lightning space. (ET)

- The Empowered Committee of Secretaries has cleared Cairn India's proposal to lay a US$800mn pipeline for transporting crude oil from its Rajasthan oil fields and recover the cost through sale of crude. (ET)

- BPCL is expected to export less fuel oil for FY08 to cover for its increased domestic market share. (ET)

- Gati Ltd plans to invest US$100mn over the next 18 months to expand operations in the domestic and overseas markets. (ET)

- Unitech to invest Rs90bn in two real estate projects in Hyderabad. (ET)

- GMR Infrastructure plans to foray into the corporate jet market with a capital expenditure plan of Rs7bn. (ET)

- Tulip IT Services has earmarked US$40mn for overseas acquisitions. (ET)

- - IRB Infra has won a bid for six-laning part of the Surat-Dahisar highway. (DNA)

- Real estate company, Omaxe plans to set up a township at Raipur in Chhattisgarh with a project value of Rs12bn. (ET)

- MMTC Ltd to import 1.5mn tons of non-coking coal. (Mint)

- AV Birla Group company, Grasim Bhiwani Textiles plans to ramp up fabric business. (ET)

- - ICICI Venture and Jaypee Infratech terminated US$800mn deal for buying ~10-15% stake in Jaypee Infratech. (ET)

- China-based Sinosteel will set up its first integrated steel plant in Jharkhand and a cold forged rolls unit at Haldia in West Bengal. (BS)