Saturday, February 02, 2008
What should one buy in the Hotel Sector ?
Things one can consider
Hotels are trying to offset Rupee appreciation by charging Foreigners in Rupees
Delhi Commonwealth games is in 2010
Expansion kicking in for most of the hotels
What should one buy ?
After a week-long rangebound trading, the markets witnessed a decisive breakout on Friday. Volatility was seen throughout the week.
The 30 share index lost 128.24 points, to 18,233.42 in the week ended Feb. 01, 2008, whereas the broad based NSE Nifty fell 58.55 points, to 5,317.25 in the same period.
On Monday, the 30-share index, Sensex opened with a negative gap of 349.77 points at 18,011.89 mirroring weak global cues. The index further traded deep into the negative on account of aggressive selling pressure. The index recovered and came off from its day`s low in the afternoon trades. Sensex finally ended up the day in negative after touching an intraday low of 17,443.29.
BSE Sensex lost 208.88 points, or 1.14%, to close at 18,152.78; while the broad-based NSE Nifty closed at 5,274.10, down 109.25 points.
On Tuesday, the 30-share index, Sensex opened with a positive gap of 193 points at 18,346 and immediately rallied to a high of 18,491. However, the index lost all its firmness and slipped into the negative. Volatile movements were seen in the noon trades. The RBI in its third quarterly monetary policy review kept all key rates - bank rate, repo rate and the reverse repo rate - and the cash reserve ratio unchanged, as a result the market fell into negative, touching an intraday low of 17,928. The index finally closed on a flat note after shedding 563 points from the day`s high.
BSE Sensex lost 60.84 points, or 0.34%, to close at 18,091.94; while the broad-based NSE Nifty closed at 5,280.80, up 6.7 points, or 0.13%.
On Wednesday, the 30-share index, Sensex opened marginally higher by 28 points at 18,120.22 and soon slipped into the negative in the early trades. Accordingly, the index made further inroads into the negative on the back of intense selling pressure in frontline stocks. The index ended the day on a weak note after touching an intraday low of 17,683.51.
BSE Sensex plunged 333.30 points, or 1.84%, to close at 17,758.64; while the broad-based NSE Nifty closed at 5,175.15, down 105.65 points, or 2%.
On Thursday, the 30-share index, Sensex opened with a positive gap of 51 points at 17,810 and soon slipped into the negative zone in the initial trades. The index after trading for a short period in the negative, recovered smartly, to trade on a strong note on the back of intense buying interest in frontline stocks and touched an intraday high of 18,008.71. However in the subsequent session, the index lost all its strength and again fell into the negative amid volatility. The index ended the day on a sluggish note after touching an intraday low of 17,417.63.
BSE Sensex lost 109.93 points, or 0.62%, to close at 17,648.71 while the broad-based NSE Nifty closed at 5,137.45, down 30.15 points, or 0.58%.
On Friday, the 30-share index, Sensex opened with a positive gap of 172 points at 17,820.67, mirroring encouraging global market in the early deals. The index after trading in the positive, slipped into the negative for a short period of time.
However, the index regained its strength, touching a high of 18,312.40, on account of buying interest at lower levels. It finally wrapped the day with a gain of over 580 points on buying in blue-chip stocks like Reliance, ICICI Bank and Bharti Airtel.
BSE Sensex gained 584.71 points, or 3.31%, to close at 18,233.42; while the broad-based NSE Nifty closed at 5,317.25, up 179.8 points, or 3.50%.
On Friday, Retail czar, Kishore Biyani-promoted Future Capital Holdings (FCHL), the financial services arm of the Future Group, closed with a modest premium of 18.78% on the Bombay Stock Exchange (BSE).
The scrip got listed on Feb. 01, 2008, at Rs 1,044 at the BSE as against its issue price of Rs 765 a share, resulting into a 36.47% premium. Meanwhile, at the NSE, the scrip opened at a high of Rs 1,081 and touched a low of Rs 825. Here, the scrip closed at Rs 909.80, up Rs 144.80, or 18.93%, on volumes of over 12.54 million.
India`s wholesale price index (WPI) based Inflation rose to 3.93% for the week ended Jan. 19, 2008 as against 3.83% for the previous week.
The RBI in its third quarterly monetary policy review kept all key rates - bank rate, repo rate and the reverse repo rate and the cash reserve ratio unchanged.
The Federal Reserve, in line with street expectations, cut the interest rates by 50 basis points in yet another effort to stall the turmoil in financial markets worldwide. The Fed lowered the discount rate, or the interest the Fed charges on loans to banks, by a half-point to 3.50%. It also lowered the fed funds rate, (the interest banks pay one another for overnight loans) to 3%, the lowest level since spring 2005.
Larsen & Toubro registered a 40.10% growth in net profit to Rs 4,817.90 million for the quarter ended December 2007 as compared with Rs 3,439.00 million for the corresponding quarter, last fiscal. Total income for the quarter rose 52.69% to Rs 64,835.50 million as against Rs 42,463.50 million for the same quarter, a year ago.
Steel Authority of India (SAIL) disclosed a steady jump in net profit for the quarter ended December 2007. During the quarter, the company experienced a 31.50% rise in profit to Rs 19,346.60 million from Rs 14,711.90 million in the quarter ended December 2006. Total income rose 12.41% to Rs 98,476.40 million for the quarter ended December 2007 from Rs 87,601.60 million for the same period, last year.
State-run National Aluminium Company (NALCO) reported 42.46% decline in net profit to Rs 3,294.40 million for the quarter ended December 2007 as compared with Rs 5,726.00 million in the corresponding quarter, last fiscal. Total income for the quarter slid 19.34% to Rs 12,472.60 million from Rs 15,464.00 million in the corresponding quarter, a year ago.
Syndicate Bank registered a rise of 20.81% in net profit to Rs 2,731.90 million for the quarter ended December 2007 as compared with Rs 2,261.20 million for the corresponding quarter, last fiscal. Interest earned for the quarter rose 21.50% to Rs 19,870 million, as against Rs 16,353.00 million for the same quarter, a year ago.
Bharti Airtel, India`s top mobile operator, reported 41.74% increase in consolidated net profit, as per United States Generally Accepted Accounting Principles (US GAAP),to Rs 17,224.00 million for the quarter ended Dec. 31, 2007 as against Rs 12,151.30 million in the corresponding quarter, last year. Total income for the period in comparison rose 41.74% to Rs 69,639.00 million, compared with Rs 49,129.20 million.
Public sector lender Bank of Baroda (BOB) posted 52.23% growth in net profit to Rs 5,010.50 million for the quarter ended December 2007 as compared with Rs 3,291.30 million for the corresponding quarter in the last fiscal. Interest earned for the latest quarter rose 25.77% to Rs 30,021.90 million as against Rs 23,870.00 million for the corresponding quarter, a year ago.
Bajaj Auto, on consolidated basis, registered 16.60% drop of in net profit for the quarter ended December 2007. During the quarter, net profit stood at Rs 2,738.20 million as against Rs 3,283.50 million in the quarter ended December 2006. Net Sales & Income rose marginally 2.83% to Rs 26,960.30 million for the quarter ended December 2007 from Rs 26,332.60 million for the same period, last year.
Anil Ambani Group's Reliance Power has become the country's biggest company in terms of number of shareholders following the allotment of shares in its recently completed Rs 11,560 crore initial public offering.
Reliance Power, whose IPO ended on January 18 with a huge demand worth over Rs 7,50,000 crore and over-subscription of 73 times, has close to 42 lakh shareholders, the company said today after allotment of shares under the public issue.
This shareholder base is bigger than any other company currently listed on Indian stock exchanges, according to the shareholding data filed with the bourses.
Reliance Power has taken over another group company, Reliance Natural Resources Ltd (RNRL), in terms of number of shareholders.
According to the latest information available with stock exchanges, RNRL had close to 22.3 lakh shareholders at the end of December 2007 quarter, followed by Mukesh Ambani-led Reliance Industries with close to 20.6 lakh shareholders.
Interestingly, seven top companies in terms of the number of shareholders belong to either of the groups led by two Ambani brothers.
While the top two companies -- Reliance Power and RNRL belong to Anil Ambani Group; the third largest, RIL, and fifth largest, Reliance Petroleum (RPL) belong to the Mukesh Ambani group.
Anil Ambani Group's Reliance Communications is the fourth largest with a shareholder base of about 19.8 lakh. RPL had close to 16.9 lakh shareholders as on December 31, 2007.
Besides, Anil Ambani Group's Reliance Energy and Reliance Capital are sixth and seventh largest with 15.4 lakh and 12.5 lakh shareholders respectively.
Reliance POWER IPO Allotment can be checked here (Its delayed, Expected today )
Tata Steel, IOC, GAIL, Tata Motors, ACC, Concor, IOB, OBC, Jubilant, Mphasis, CCCL, JK Bank, AIA Engineering, Unitech, Siemens, Punj LLoyd, NCC, IVRCL
Tata Steel, IOC, GAIL, Tata Motors, ACC, Concor, IOB, OBC, Jubilant, Mphasis, CCCL, JK Bank, AIA Engineering, Unitech, Siemens, Punj LLoyd, NCC, IVRCL, IVR Prime, Tata Tea, Rajesh Exports
Turnover in F&O segment declines
Nifty February 2008 futures were at 5314, at a discount of 3.25 points as compared to spot closing of 5317.25.
The NSE's futures & options (F&O) segment turnover was Rs 35,830.69 crore, which was lower than Rs 78,768.81 crore on Thursday, 31 January 2008.
Reliance Energy February 2008 futures were at discount, at 2010.25, compared to the spot closing of 2013.75.
ICICI Bank February 2008 futures were at premium, at 1206, compared to the spot closing of 1198.15.
State Bank of India February 2008 futures were at premium, at 2209.95, compared to the spot closing of 2184.60.
In the cash market, the S&P CNX Nifty gained 179.8 points or 3.50% at 5317.25.
Volatility continued across the globe with anticipation from Fed on its attempt to rescue the US economy. All eyes were on Fed's decision as the interest rate was cut by 50 bps but really it had nothing to help. Even though Indian economy is said to be independent of US.. FII participation's is quite a marketmover in India. FII's sold nearly Rs.12k cr in the month of Jannuary 2008. RBI also had their meet on credit policy this week..Positively surprising there was no policy change. The markets did not see it positively though.. specially the banks. This independent thinking finds favour with us. Trading sessions this week continued to be highly volatile given the F&O settlement week. The expiry of the Januray serries brought in relief as in the poison was largely out of the system. Final day of the session witnessed bit of volatility but rallied with value buying at the final hours of trade which pushed sensex to close nearly 600 points up.
Sensex and Nifty both ended down marginally. Sensex was supported by HDFC +10.53%, Tata Steel +8.81%, Maruti +8.59%, Bajaj Auto +8.5%, TCS +5.95%, Cipla +7.94%, Tata motors +5.43%, HUL +4.37% and Infosys +4.21%. While the dragger's were DLF -13.77%, Rcom -8.29%, NTPC -7.76%, LNT -4.66%, BHEL -4.48%, ICICI Bank -4.39% and ACC -4.34%.
Mid cap index were down 4% and Small cap index slipped 3.5% down.
Inflation for the week ended Jan 19 Stood at 3.93%. Now its inching up. Inflation was low so far but it was a base effect. Now as the base effect is over we will come to know the actual inflation number. For now it seems to be headed up. But crude remains a worry. Govt. has been talking of increasing the petrol and diesel price for long but we believe that it will possible avoid hike on face of election.
The third quarter review of the Annual Monetary Policy for the Year 2007-08 brought in a surprise. RBI left key policy rates unchanged as against a cut which was widely anticipated. There is slower growth witnessed in certain sectors, but by and large the domestic economic fundamentals remain intact believes the RBI. The RBI had a hawkish stance on the back of excessive credit growth, overheating of economy and inflation worries. The stance is neutral now. There has been a high level of liquidity with strong FII inflows and the excess liquidity was soaked up with high CRRs. This we believe will be the first to change. We believe that over the next six months, the RBI would cut rates in line with the continued global easing. Not that it matters. FIIs have limited access to Indian debt and the interest rate differential does not still matter in the context of money flow. Thus, the RBI does have the privilege to play its independent tune and this is good. We believe that going ahead the banking sector will be a key beneficiary of lower interest rate environment and near term shocks would provide for opportunities in this sector.
Near term the focus will shift to the Budget. As always it has become a non event but thats some reason for hope for the markets. We call it a noon event as policy making no more often than not happens outside this event. Focus on Agriculture, Defense, Education we believe will offer the defensive plays.
Eveready numbers didn't seem good on the face of it but there are signs of improvement. The company made loss on the back of high deferred tax. Zinc moved down from the level of $ 4000 per tonne to $ 2900 on yoy basis. Currenly zinc is around at the levels of $2300 - $ 2500 per tonne and that augurs good for the margins. Do read our note for details.. Certainly this could be exciting.
Bajaj Auto numbers were lower than market expectations. Net profit was down 5%. The company posted an exceptional expense of Rs 102 cr with Rs 51 cr written off this quarter as 712 workers opted for VRS at the Waluj plant. Net revenues were down by 3%. The decline in the sales was seen due to lower volumes and the company took a one time hit of Rs 28 cr for Platina in its inventory where the selling price was reduced. The value unlocking talked off through the demerger could limit the downsides. One could hold the stock to benefit from the upsides post the demerger. Our note will give you better understanding on this one.
Garware Offshore (GOSL) reported healthy numbers. The increase is on the back of re-pricing exercise on one of the existing AHTSV and PSV priced at a significant higher price of $8800 from $4500 and PSV III Everest which has been deployed with British Gas for a period of 3 years at $17200. Garware operates vessels that support oil and gas drilling activities in India. Garware owns and operates four anchor handling tugs cum supply vessels (AHTSVs) and 3 platform supply vessels (PSVs). With the current upswing in oil exploration both globally and in India, Garware is well placed to benefit and grab the rising demand with competitive pricing. The favorable charter freight rate scenario is also likely to support Garware's growth in the medium term. But we are not convinced.
We will come with more result analysis next week. Mcleod and Paramount are in the pipe line.
Technically Bear Markets: Interesting to note that almost all markets, Technically are in a bear phase. A fall of the indices of round 20% from its highs within 2 months is defined as the entry point of the bear markets. All markets have seen a sell off and one can say that they have entered the bear market phase. Having said that, its important to understand that bear markets should reflect the expected economic conditions. For now economic conditions in India dont seem to be ready for a bear market. At least not yet.
Sensex traded with low volume of Rs 4479 cr with Declines ahead of Advances. Sensex Support lies at 17500 and Resistance lies at 18300 -18400 levels. For sensex we maintain a target of 19200.