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Tuesday, August 12, 2008

Eye on IIP, ear on SEBI!


Don't miss all the beautiful colors of the rainbow looking for that pot of gold.”

We talked about triggers and aiming for the target at the right time. Well, the bulls did just that with the Sensex and the Nifty climbing another 2% each. A happy coincidence was when Mr. Abhinav Bindra did India proud by hitting the bull's eye (or was it opening the bull’s eye) at the Beijing Olympics in the 10-metre rifle shootout. His is the first ever individual gold medal in the Olympics for India. Hopefully, his feat will inspire many more Indians to attain sporting glory in the years to come.

Coming back to the markets, many games continue and investors may take heart that they are winning in some gains. The undertone has certainly changed for the better over the past few days thanks to the steep drop in oil prices, which are off quite a bit from the all-time high of $147 per barrel. This is the single biggest factor that has perked up global equity markets. The positive trend may persist for some time if crude oil remains subdued, or falls further. Then you will hear theories about how a drop in oil price means demand is slowing; followed by how the indices tend to fall when demand drops etc. For now enjoy the positives, which include the correction in industrial commodities and revival in monsoon.

Speaking of macro-economic factors, the Government will release the industrial production numbers for the month of June. According to most estimates, the data is expected to be better than expected. In May the IIP growth touched a six-year low of 3.8%. For June, expectations are of a 5-6% growth rate as against 8.9% in the same month last year. A good monsoon may help shore up demand for manufactured goods, though rising interest rates are a cause for worry.

Given the mixed set of global cues, we expect a cautious to a slightly positive opening. The trend may turn sideways ahead of the IIP data. The bulls are likely to extend their shopping spree if the numbers are indeed encouraging. On the flip side, a negative surprise may spook the sentiment. Although the trend will largely remain positive, we do not rule out some cooling after the recent spurt. Beware of the small-caps and mid-caps as these scrips tend to be highly volatile and less reliable.

FIIs were net buyers of Rs2.8bn (provisional) in the cash segment on Monday and the local funds pumped in Rs5.05bn. In the F&O segment, the foreign funds were net buyers of Rs8.16bn. On Friday, FIIs were net buyers of Rs791mn in the cash segment. Mutual funds were net sellers of Rs1.31bn.

SEBI Board is to meet on Wednesday, and among the items on agenda include a review of the policy on P-Notes. However, media reports suggest that any relaxation in the P-Note norms for the FIIs is unlikely.

Asian stocks are largely down this morning. The Nikkei in Tokyo was down 0.7% while the Hang Seng in Hong Kong was up 0.2%. Markets are also down in South Korea, Singapore, Shanghai and Taiwan.

The MSCI Asia Pacific Index lost 0.3% to 128.25 as of 10:43 a.m. in Tokyo, extending this year's decline to 19%.

Regional commodities producers declined, as gold tumbled to the lowest level since December and crude oil traded near a 14-week low. Copper too has touched a six-month low.

Newcrest Mining, Australia's largest gold producer, fell in Sydney and Sumitomo Metal Mining dropped in Japan. South Korea's Posco led steelmakers lower amid signs the Chinese market is weakening. Japanese steel producers received fewer orders.

Singapore Telecommunications Ltd., Southeast Asia's largest phone company, slumped the most in three months after first-quarter profit missed analyst estimates.

US stocks erased some of their gains to end modestly higher on Monday, as oil prices fell below $114 per barrel amid a renewed strength in the dollar.

After an opening drop and then a triple-digit rise, the Dow Jones Industrial Average rose 48 points, or 0.4%, to 11,782.35, its highest level since June 25. The S&P 500 index advanced 9 points, or 0.7%, to 1,305.32 after jumping 2.9% last week. The Nasdaq Composite Index gained 26 points, or 1.1%, to 2,439.95.

Market breadth was positive. Almost five stocks rose for every two that dropped on the New York Stock Exchange.

Small caps gained too, with the Russell 2000 index up 2.3%.

US stocks slipped early as oil prices rallied on worries about supply disruptions in energy-rich Central Asia, amid the military conflict between Russia and Georgia. But crude resumed last week's slide after Iran called for renewed nuclear talks and China reported a decline in crude imports.

The turnaround in oil prices helped stocks rebound. Oil prices then erased half of their losses late in the session, and the stock market followed suit. The stock advance also seemed to lose momentum after the Fed released a study that showed 75% of US banks have tightened lending standards on home mortgages and other loans.

The advance will be tested later this week, when the retail sales and consumer inflation reports are released. Tuesday brings readings on the June trade balance in the morning and the July Treasury budget in the afternoon. Swiss bank UBS reports its results on Tuesday.

US light crude oil for September delivery lost 75 cents to settle at $114.45 a barrel on the New York Mercantile Exchange. Retail gas prices dropped overnight, extending a downward trend for a 25th day, according to a survey of gas station credit-card activity.

In currency trading, the greenback rose versus the euro and slipped versus the yen, recovering from bigger morning losses. COMEX gold for October delivery fell $36.40 to settle at $824.30 an ounce. In the bond market, Treasury prices slumped, raising the yield on the benchmark 10-year note to 4% from 3.93%.

European shares climbed on Monday. The pan-European Dow Jones Stoxx 600 index rose 1.3% to 292.95. Germany's DAX 30 closed up 0.7% at 6,609.63, while the French CAC-40 advanced 0.8% to 4,527.80 and the UK's FTSE 100 gained 1% to 5,541.80.

In the emerging markets, the Bovespa in Brazil was down 3.3% at 54,720 while the IPC index in Mexico fell 0.7% at 26,943. The RTS index in Russia rose 1.2% to 1742 amid continued military hostilities with Georgia. The ISE National 30 in Turkey was up 2.4% at 51,472.

Indian markets started off the week in style with the NSE Nifty closing above the 4,600 and the BSE benchmark Sensex shutting shop above the15,500 level. Strong global cues coupled with a sharp fall in crude oil prices lifted the key indices to open with a positive gap.

Bears were unable to show up on the bourses as bulls dominated throughout the trading session again led by gains in the rate sensitive stocks like the banking, Realty and Auto stocks. Even the Mid-Cap and the Small-Cap stocks were und demand. Finally, the benchmark Sensex surged 336 points to close at 15,503 and Nifty was up 90 points to close at 4,620.

Shares of Spicejet surged by over 5% to Rs30.2 after the company announced a US$100mn cash infusion.

The shareholders RHSL, Istithmar, Ajay Singh and Goldman Sachs, as a bondholder of the Company have entered into definitive agreements with WL Ross & Co. LLC to inculcate approximately US$100mn in the company for its business requirements.

Furthermore, Goldman Sachs has agreed to subscribe to equity warrants of the company under the preferential issue guidelines of SEBI. The scrip touched an intra-day high of Rs31.4 and a low of Rs29 and recorded volumes of over 32,00,000 shares on BSE.

Shares of HEG Ltd rallied by over 10% to Rs264 after the board of directors of the company announced that they would meet on August 19, 2008 to consider buyback of equity share of the company. The scrip touched an intra-day high of Rs276 and a low of Rs239 and recorded volumes of over 2,00,000 shares on BSE.

SAAG RR Infra was locked at 5% upper circuit to Rs54.65 after the company announced that it received an order from ONGC for the hiring of operation and maintenance services for ONGC rigs "Sagar Shakti", "Sagar Jyoti" and "Sagar Kiran". The scrip touched an intra-day high of Rs54.65 and a low of Rs54.50 and recorded volumes of over 26,000 shares on BSE.

NTPC gained by 1% to Rs185 after the company along with PFC agreed to set up an exchange to trade power in Asia's third-largest economy. NHPC Ltd. and TCS will also form venture that will operate the exchange. The scrip touched an intra-day high of Rs187 and a low of Rs182 and recorded volumes of over 21,00,000 shares on BSE.

Debutant, Vishal Information Technologies Ltd. an IT-enabled service solution providing company got listed at Rs150 against the issue price of Rs150. The scrip finally ended at Rs194 translating into a premium of 29%. The scrip touched an intra-day high of Rs198 and a low of Rs125.

Bharat Forge gained by 3.5% to Rs275 after the company announced the commissioning of India's largest commercial open forging press at its Mundhwa facility in Pune.

The new facility which is a large 4000T open die press will produce ingots ranging up to 70 tons and will primarily cater to the Wind Energy, Oil & Gas, Steel, Power, Gear, Cement Ship building, Pressure Vessel, Petrochemical & Sugar Industry. Shafts for the Wind Energy & Power Generation sector, Well Heads & X-mas Tree parts for the Oil & Gas Industry and Pinion Shafts, Gear blanks etc. for the Capital Goods sector are some of the parts that will be manufactured at this new facility.

The scrip touched an intra-day high of Rs280 and a low of Rs266 and recorded volumes of over 1,00,000 shares on BSE.

Bank of Baroda surged by over 3.5% to Rs296 after the company announced that it decided to increase its Benchmark Prime Lending Rate by 75 bps from existing 13.25% p.a. to 14% p.a. with effect from August 11, 2008. The scrip touched an intra-day high of Rs298 and a low of Rs291 and recorded volumes of over 2,00,000 shares on BSE.

Shares of Hindustan Zinc slipped by 2.5% to Rs577 after the company announced that it reduced Zinc prices by Rs1,700/ton and cut Lead prices by Rs900/ton effective from August 09, 2008. The scrip touched an intra-day high of Rs600 and a low of Rs573 and recorded volumes of over 28,000 shares on BSE.

Godawari Power & Ispat advanced by 2.5% to Rs223 after the company announced that it signed a MoU with the government of Chhattisgarh for setting-up of manufacturing facilities under its expansion programme in the state of Chhattisgarh with proposed investment of Rs15.70bn. The scrip touched an intra-day high of Rs228 and a low of Rs217 and recorded volumes of over 1,00,000 shares on BSE.

SBI has raised its benchmark PLR 100bps to 13.75%. (BS)
The oil ministry has asked the Cabinet for a three year drilling holiday for firms like ONGC and Reliance Industries. (ET)
Tata Steel plans to double its borrowing capacity to part finance its future projects. (ET)
DoT has asked Idea Cellular to surrender one of the two-telecom licences it holds for the circles of Punjab and Karnataka. (ET)
Reliance Industries, Reliance Telecom, RCOM, Reliance Infratel, P&G, Gillette and NTPC have moved the Supreme Court against entry tax imposed by the Madhya Pradesh Government. (ET)
Ross and Goldman to invest US$100mn in SpiceJet. (BS)
Idea may take Rs3.5bn hit on Spice equity buy. (BL)
Oil India public offer likely in October. (BL)
The government to list four or five more of state-owned companies, which include Satluj Jal Vidyut Nigam Ltd, Manganese Ore India Ltd and Cochin Shipyard, by March next year. (BS)
Nalco proposes to set up an alumina refinery in Andhra Pradesh and an aluminium smelter and a captive power plant in Orissa, besides two smelter complexes abroad. (FE)
Nalco proposes to set up a 0.31mn tons smelter project in Iran with an investment of Rs40bn. (FE)
The West Bengal state government plans to exempt Tata Motor’s Nano from payment of road tax. (BS)
SAIL is interested in developing the Jharia coal mines in Jharkhand. (FE)
Dr Reddy’s Labs and Teva have settled a patent case involving the active pharmaceutical ingredient in GlaxoSmithKline’s heart drug Coreg. (FE)
KEC International to set up 400 telecom towers in rural areas. (BL)
Parsvnath Developers to open 10 retail stores this year and develop 21 commercial projects as part of its plan to foray into retail. (BS)
Godawari Power and Ispat will invest Rs15.7bn for setting up manufacturing facilities in Chhattisgarh. (ET)
Texmaco plans to transfer its heavy engineering division to a newly formed subsidiary in order to raise resources. (BS)
Austral Coke & Projects has acquired 95% stake in coking coal mines in Mozambique for US$500mn. (BS)
Gujarat NRE Coke will invest around Rs7bn in its plant in Andhra Pradesh over a period of three years. (BS)
Gujarat NRE Minerals Ltd, the Australian outfit of Gujarat NRE Coke, will raise US$50-100mn through a mixture of debt and equity to part finance its ongoing US$500mn. (BL)
HUL to raise prices of tea. (BS)
ICSA plans buyouts in US and SE Asia. (BS)
RCF plans to invest Rs5bn for debottlenecking its urea plant in Maharashtra. (ET)
Geometric Software is looking towards oil and gas and fashion industries to derisk its revenues. (ET)
Panacea Biotec is learnt to have bagged a US$35mn drug supply order from UNICEF to supply pentavalent vaccines. (ET)
D-link India has developed first ‘Made in India’ videophone, which requires only 128Kbps speed. (ET)
Aditya Birla Telecom’s plan to infuse foreign equity has run into trouble with the Foreign Investment Promotion Board. (ET)
Sagar Cements Ltd has allotted 1mn equity shares, totaling 6.67% of stake in the company, to Parficim SAS, a subsidiary of France-based Vicat SA. (BL)
Mundra Garments plans to set up premium lifestyle stores for men with an investment of Rs2.75bn from internal accruals. (ET)

Economy Front page

SBI has raised its benchmark PLR 100bps to 13.75%. (BS)
The oil ministry has asked the Cabinet for a three year drilling holiday for firms like ONGC and Reliance Industries. (ET)
Tata Steel plans to double its borrowing capacity to part finance its future projects. (ET)
DoT has asked Idea Cellular to surrender one of the two-telecom licences it holds for the circles of Punjab and Karnataka. (ET)
Reliance Industries, Reliance Telecom, RCOM, Reliance Infratel, P&G, Gillette and NTPC have moved the Supreme Court against entry tax imposed by the Madhya Pradesh Government. (ET)
Ross and Goldman to invest US$100mn in SpiceJet. (BS)
Idea may take Rs3.5bn hit on Spice equity buy. (BL)
Oil India public offer likely in October. (BL)
The government to list four or five more of state-owned companies, which include Satluj Jal Vidyut Nigam Ltd, Manganese Ore India Ltd and Cochin Shipyard, by March next year. (BS)
Nalco proposes to set up an alumina refinery in Andhra Pradesh and an aluminium smelter and a captive power plant in Orissa, besides two smelter complexes abroad. (FE)
Nalco proposes to set up a 0.31mn tons smelter project in Iran with an investment of Rs40bn. (FE)
The West Bengal state government plans to exempt Tata Motor’s Nano from payment of road tax. (BS)
SAIL is interested in developing the Jharia coal mines in Jharkhand. (FE)
Dr Reddy’s Labs and Teva have settled a patent case involving the active pharmaceutical ingredient in GlaxoSmithKline’s heart drug Coreg. (FE)
KEC International to set up 400 telecom towers in rural areas. (BL)
Parsvnath Developers to open 10 retail stores this year and develop 21 commercial projects as part of its plan to foray into retail. (BS)
Godawari Power and Ispat will invest Rs15.7bn for setting up manufacturing facilities in Chhattisgarh. (ET)
Texmaco plans to transfer its heavy engineering division to a newly formed subsidiary in order to raise resources. (BS)
Austral Coke & Projects has acquired 95% stake in coking coal mines in Mozambique for US$500mn. (BS)
Gujarat NRE Coke will invest around Rs7bn in its plant in Andhra Pradesh over a period of three years. (BS)
Gujarat NRE Minerals Ltd, the Australian outfit of Gujarat NRE Coke, will raise US$50-100mn through a mixture of debt and equity to part finance its ongoing US$500mn. (BL)
HUL to raise prices of tea. (BS)
ICSA plans buyouts in US and SE Asia. (BS)
RCF plans to invest Rs5bn for debottlenecking its urea plant in Maharashtra. (ET)
Geometric Software is looking towards oil and gas and fashion industries to derisk its revenues. (ET)
Panacea Biotec is learnt to have bagged a US$35mn drug supply order from UNICEF to supply pentavalent vaccines. (ET)
D-link India has developed first ‘Made in India’ videophone, which requires only 128Kbps speed. (ET)
Aditya Birla Telecom’s plan to infuse foreign equity has run into trouble with the Foreign Investment Promotion Board. (ET)
Sagar Cements Ltd has allotted 1mn equity shares, totaling 6.67% of stake in the company, to Parficim SAS, a subsidiary of France-based Vicat SA. (BL)
Mundra Garments plans to set up premium lifestyle stores for men with an investment of Rs2.75bn from internal accruals. (ET)