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Thursday, May 15, 2008

A little long way!


If you add a little to a little and do this often, soon the little will become great.

With little action left in the markets, it makes sense to do just a little these days. The bulls managed to ward off the challenge from the bears on Wednesday, with the key indices ending sharply higher. Buying in IT and metals helped lift the Nifty past the 5,000 mark. Select consumer discretionary and auto shares too advanced while PSU and banking stocks ended lower. However, one should not read too much into Wednesday's pullback, as both traded volume as well as turnover fell sharply from the previous day.

For the day, we expect a better opening as most global markets are up. Intra-day gyrations are a given these days. Remain careful and selective while dabbling in fresh purchases. Pick up small quantities at lower levels to rebuild a long term portfolio.

The market breadth was only marginally positive, indicating that the bulls are still lacking in confidence. The small-cap and mid-cap indices were also subdued, meaning that strength in select large caps propped up the main indices. The market remains in a consolidation phase, and will continue to see alternate bouts of buying and selling. No clear trend is visible at this juncture, as negatives still outweigh the positives (if there are any).

Delivery volumes have taken a sharp dip, which underscores the current uncertainty and anxiety among the bulls on future direction of the market. FII inflows have slowed down considerably this year, which is proving to be a major stumbling block for the bulls. Inflation remains a formidable challenge as does the slowdown in the overall economy. India Inc's facing several headwinds on the cost front. As a result, the market is likely to remain sideways and rangebound in the near term.

Key Results Today: Chambal Fertilizers, Chennai Petroleum, Morepen Labs, Nelco, OCL India, PNB, Tamil Nadu Petroproducts, Torrent Power, Voltas, Zuari Industries and Zylog Systems.

Mercator Lines has reported strong results for Q4 and full year. The company has posted almost a 3-fold jump in net profit for FY08 at Rs3.7bn, supported by growing fleet, buoyant shipping demand and firm freight rates in dry carriers segment.

Cement stocks could be under pressure after companies pledged to cut prices, joining steelmakers in the government's efforts to curb inflation.

BASF SE, the promoter of BASF India has announced a voluntary Open Offer to purchase up to 6,289,591 shares (constituting 22.3% of the issued share capital of BASF India) at Rs274 per share for a total consideration of Rs1.72bn (assuming full acceptances are received in the Offer).

Maxwell Industries' Board will meet today to discuss the inter-se-transfer of shares among the promoters of the company. According to a financial daily, the Reddy family - a co promoter - is likely to sell its entire holding of 32% to other promoter, the Pathare family.

FIIs were net buyers of Rs851.2mn (provisional) in the cash segment yesterday while local institutions poured in Rs3.1bn. In the F&O segment, foreign funds were net sellers of Rs2.55bn. On Tuesday, FIIs were net buyers of Rs1.86bn while Mutual Funds were net sellers of Rs3.05bn.

Asian stocks rose the most in two weeks, led by technology companies, after Sony and NEC Electronics forecast higher-than-expected profit.

The MSCI Asia Pacific Index gained 1% at 151.52 as of 10:51 a.m. in Tokyo, poised for its largest advance since May 2. Almost four stocks rose for each that declined today.

Japan's Nikkei 225 Stock Average was up 1% at 14,258.45. All other Asian benchmark indexes rose, apart from New Zealand and the Philippines.

Sony shares surged the most in more than two years in Tokyo after the consumer electronics giant's Q1 results surpassed market expectations. NEC posted its steepest advance in 10 months.

Coca-Cola Amatil, Australia's biggest soft-drinks maker, jumped after saying net income will rise this year. Nippon Steel climbed the most in two months after a newspaper said Toyota agreed to pay more for the alloy.

US stocks ended higher on Wednesday, buoyed by a milder-than-expected consumer price inflation data and falling oil prices. But a late-session sell-off in technology shares checked further gains.

Financial and consumer discretionary stocks gained following the benign CPI report, while a smaller-than-expected loss posted by mortgage lender Freddie Mac helped ease credit-market jitters.

Off a triple-digit rise, the Dow Jones Industrial Average finished at 12,898.38, up 66.20 points, or 0.5% from the last close. All but five of its 30 components closed the day in positive turf, with HP and Verizon leading the blue-chip advance. Caterpillar and McDonald's lost the most ground, each down more than 1%.

The S&P 500 gained 6.52 points, or 0.4%, to end at 1,408.66. The technology-laden Nasdaq Composite climbed 1.58 points, less than 0.1%, to 2,496.7. Nine of ten industry groups in the S&P 500 rose as the Labor Department's April inflation report gave the Federal Reserve more leeway to stimulate the economy.

Macy's helped spark a rise among retailers, with the department-store operator maintaining its full-year profit forecast, while reporting a first-quarter loss. Freddie Mac, the second-largest US mortgage-finance company, rallied the most in six weeks after reporting a smaller loss than analysts estimated.

Market breadth was positive. Seven stocks advanced for every five that fell on the New York Stock Exchange.

The CPI rose 0.2% in April, versus forecasts for a rise of 0.3%. Stripping out food and auto sales, CPI rose 0.1%, versus expectations for a rise of 0.2%. Food prices played a big role in the rise in prices, posting the biggest jump in 18 years.

US light crude oil for June delivery fell $1.58 to settle at $124.22 in New York, despite a weaker-than-expected weekly inventories report. On Tuesday, crude hit a record trading high of $126.98 a barrel during the session.

The national average price for a gallon of regular unleaded gas rose to a record $3.758 from $3.732 the previous day, according to AAA. It was the seventh record in a row.

COMEX gold for August delivery fell $2.90 to $871 an ounce. The dollar firmed up a bit versus the euro and the yen. Treasury prices rose, lowering the yield to 3.90% from 3.92% late on Tuesday.

Thursday brings the weekly jobless claims report, readings on manufacturing in the New York and Philadelphia areas, and earnings from JC Penney.

M&A speculation, earnings and a better-than-expected reading on core US inflation lifted stocks in Europe. The pan-European Dow Jones Stoxx 600 index turned higher in a volatile session, to finish up 0.5% at 327.20.

The French CAC-40 climbed 1.1% to 5,055.24, while the UK's FTSE 100 closed up 0.1% at 6.216.00 and the German DAX 30 rose 0.3% to 7,083.24.

In the emerging markets, the Bovespa in Brazil was down 0.7% at 70,026 while the IPC index in Mexico climbed 1.45% to 31,336. The RTS index in Russia surged 2.8% to 2406 while the ISE National 30 index in Turkey jumped 1.9% to 52,392.

Bulls may be tested again

Markets started off the day with a negative bias mirroring overnight losses in the US markets. However, as the day progressed key indices gradually gained momentum on back of positive cues from the Asian markets. The momentum was further carried as the IT and Metal stocks attracted buying which saw the Nifty index close above the crucial 5k mark. Finally, the BSE benchmark Sensex ended 225 points higher to close at 16,948 and the Nifty index gained 53 points to close at 5,011.

Overall about 1,417 stocks advanced; 1,245 stocks declined while 88 stocks remained unchanged. Among the 50-Nifty 37 stocks ended in green and 13 stocks ended in red.

Strides Arcolab surged by over 3.5% to Rs182 after the company announced receipt of ANDA approval for Flumazenil Injection USP. 0.1 mg / ml multiple dose vial. The product is licensed to Akorn-Strides, LLC, which is a joint venture that was funned in 2004 by Akorn, Inc and Strides Arcolab Ltd. The scrip touched an intra-day high of Rs195 and a low of Rs175 and recorded volumes of over 95,000 shares on NSE.

Sun Pharma Advanced gained by over 2% to Rs95 after the company announced its Q4 net profit at Rs144.7mn (up 190.5%) and the revenue was at Rs245.1mn. The scrip touched an intra-day high of Rs100 and a low of Rs93 and recorded volumes of over 14,00,000 shares on NSE.

LITL rallied by over 10% to Rs513 after the company announced that it secured Rs80bn International terminal project in Kerala. The scrip touched an intra-day high of Rs526 and a low of Rs446 and recorded volumes of over 17,00,000 shares on NSE.

JSW Steel surged by over 4% to Rs996 after the company announced that it posted 14% growth in crude steel production in April' 2008 including production of Salem works for corresponding period on comparable basis. JSW Steel also registered a 12% growth in Rolled flat product (HR Coils & Plates) & 33% growth in Rolled long products segments. The scrip touched an intra-day high of Rs1044 and a low of Rs950 and recorded volumes of over 5,00,000 shares on NSE.

The IT stocks were in momentum as the Indian rupee further depreciated to Rs42.45 per dollar. IT bellwether Infosys gained by over 4.5% to Rs1826, Satyam gained by a percent to Rs501, Wipro advanced by 2% to Rs503 and i-Flex added over 4.5% to Rs1386.

Apollo Tyres ended flat to Rs42, there were reports stating that Apollo Tyres partly owned by Michelin & Cie. would spend Rs10bn this year to raise capacity. The scrip touched an intra-day high of Rs43 and a low of Rs42 and recorded volumes of over 1,00,000 shares on NSE.

SCI rallied by over 6% to Rs258 after the board of directors of the company said it will consider bonus issue proposal. The board of directors of the company would meet on May 20, 2008 to consider the proposal. The scrip touched an intra-day high of Rs264 and a low of Rs249 and recorded volumes of over 3,00,000 shares on NSE.

Corporate News

The Joint Venture between SREI Infrastructure Finance and BNP Paribas Lease Group - announced last year - has started operations in April under the name of SREI Infrastructure Development Finance Pvt Ltd.

A JV between Kirloskar Brothers, Maytas Infrastructure and MEIL has received a contract worth Rs9.34bn from the Irrigation & CAD Department of the Andhra Pradesh government. Kirloskar Brothers' portion of this order is Rs1.5bn.

Kinetic Motors has clarified that the news about M&M buying a majority stake in it is purely speculative. The company says it is exploring various alternatives to raise funds for its two wheeler business. However, no definitive agreement has been entered with any investor or M&M.

Trans Freight Containers has sold the entire 30,00,000 shares of Morteo Trans Freight Reefer Containers and therefore the latter is no longer a subsidiary of the company.

Tata group plans to up stakes in globally active subsidiaries by 3-4% this year. (BS)
Bharti and MTN in talks for 50:50 cash-share deal. (BS)
Lafarge buys L&T’s concrete business for Rs14.8bn. (BS)
Consortium led by Lanco Infratech wins Rs80bn Kerala port project. (Mint)
SBI and GE Money split credit card JV into two separate operations. (Mint)
Kotak Mahindra Bank to raise US$1.2bn. (Mint)
EDS arm, Mphasis may go private following HP deal. (Mint)
Punj Lloyd plans to offer onshore oil rigs to Libya’s National Oil Corporation. (Mint)
Supreme Court stays order against Tata-BEST power pact. (Mint)
Satyam loses appeal barring its moves to block the online mobile payment company Upaid’s fraud and forgery claims against it in Texas. (Mint)
Belgium based Cockerill Maintenance and Ingenierie makes open offer to acquire 20% in Flat Products. (BS)
Apollo Tyres will spend Rs10bn to add capacity. (BS)
Maharashtra government takes ICICI Lombard to court for not settling farmer related claims. (BS)
Lupin embarks on Rs3bn expansion plan. (BL)
ONGC promoted company enters into MoU with Torrent Energy for supply of bulk power at Dahej. (BL)
Cash crunch affects IOC’s investment plans; part retail expansion proposal on hold. (BL)
Shyam Telelink gets CDMA spectrum in Maharashtra. (BL)
BSNL decides to deploy HP’s disaster recovery solutions. (BL)
Vodafone Essar seeks FIPB approval for investment in tower company. (BL)
PNB not to cut deposit rates for now. (BL)
Syndicate Bank reprices its bulk deposits. (BL)
SC dismisses BSNL’s appeal seeking to recover revised charges from BPL Mobile, and Idea Cellular. (FE)
ONGC to boost production from Bassein. (FE)
Omaxe to invest US$20bn to build 1mn homes. (FE)
ONGC files review petition on disputes on being denied entitlement to tax holiday. (FE)
Wadias sue Rahejas for alleged breach of agreement pertaining 478 acres of land, to claim damages of Rs13.7bn. (FE)
GHCL eyes US furnishing firm Linens ’N Thing. (ET)
Mphasis to scale up operations in India, to raise India headcount by 8,000. (ET)
Mascon Global acquires US-based Ebusinessware Inc, for US$35mn. (ET)
HB Stockholdings revises open offer to acquire 20% of DCM Shriram from Rs120 to Rs130 per share. (ET)
PFC signs MoU with Exim Bank of US for a credit of US$800mn. (ET)
SBI set to launch its Mobile Banking Services by end of June. (ET)

Economic News

Shipping regulator exempts Indian vessels from age bar. (BS)
New players allocated spectrum in Kerala. (BS)
Pharma firms opt for in-licensing to increase sales. (BS)
1.565mn demat accounts stay frozen for lack of PAN details. (BL)
Supply to sugar mills may be hit as cane area shrinks. (BL)
Government to consider fresh pricing of gas from KG Basin. (FE)
The railway ministry enters into an agreement with SNFC International, France. (FE)
Indirect tax collection grew 11% in April 2008. (ET)
Excise Duty collection fell by 3.9% to Rs64.10bn in the first month of the fiscal year. (FE)
Custom duty collection grew 24.9% to Rs90.18bn in April 2008 against Rs72.21bn in same month last year. (ET)
Monsoon to reach Kerala on May 29, three days early. (FE)
The DoT may allow foreign telcos to bid during the upcoming 3G auction. (ET)
Railways to consider removing 30% port congestion surcharge on iron ore for local use. (ET)
India tapping Non-NSG’s (Nuclear suppliers group) members to explore possibilities of importing fuel for its nuclear plants. (ET)