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Wednesday, February 27, 2008

Market Close : Bad cues from Europe... eats up gain

Markets opened in green and continued to trade higher 200 points the first half of the day with supportive global cues from US & Asian markets but could not maintain the momentum in late trade and slipped sharply on the back weak cues from the European markets. Value buying was seen in sectors like capital goods, metal, power, banking and Pharma space. While IT and FMCG stocks remained subdued for most part of the day. Airlines counter ended mixed ahead of Crude prices hit a record high of $102.08/bbl. Midcaps and smallcap indices also performed well in line with frontline counters. Market witnessed some sort of cautions approach as FnO expiry tomorrow. In Mid session markets sliped from the day's high on nervousness in European market on account of uncertain economic statements from U.K.'s biggest mortgage lender, HBOS which followed Indian Indices to lose the major gains to end flat with only 20 points in green. Asian indices ended in green but Europe started subdued and trading in red.

Sensex closed up by 20 points at 17825.99. It was helped up by gains in HDFC (2684.3999,+4 percent), Ranbaxy (436.35,+4 percent), BHEL (2262.8999,+4 percent), L & T (3630.95,+3 percent) and Maruti (832.1,+2 percent). Restricting the gains were Grasim (2888.6499,-5 percent), Rel Energy (1631.35,-4 percent), Satyam (437.1,-3 percent), Infosys (1617.4,-3 percent) and TCS (877.7,-2 percent).

Sugar companies based out of UP were under pressure. Supreme courts asked UP sugar mills to pay SAP at Rs 123/quintal for 2006-2007 against an appeal for Rs 110/quintal. This is negative for UP based sugar mills as they have to pay higher price for sugarcane. Against SAP of Rs 125/ qnt , UP mills had requested for cane price of Rs 110/ qnt. Bajaj Hindustan will be affected more, since it has taken less cane prices in accounting. This will reflect in next results. At current prices of sugar and the price to be paid, these mills make only marginal profits. But, global sugar prices are high and this provides some relief for sugar companies . Sugar mills outside UP follow SMP and this gives them an advantage over UP mills. We were negative on Bajaj Hindustan and Balrampur Chini the two major UP based sugar comanies and we also commented to look for a downside trade.

Paramount Communication was on 5% circuit today. the cable industry which is very much in focus has povided paramount to lead the game . Paramount is one of the leading manufacturers of Power Cables, Railway Cables and Telecom Cables. Paramount has two manufacturing units located at Dharuhera, Haryana and Khushkhera, Rajasthan. Paramount drives 85% of revenues from Power and Railway cable, 10% from Jelly Filled Telephone cables and rest 5% from Optical Fibre cable. Paramount is expanding the capacity in three phases with an investment of Rs 120 cr. Paramount acquired, AEI cables in UK one of the oldest cable manufacturing companies with a strong reputation. Paramount enjoys the acquisition synergy in terms of marketing network and good distribution in UK and helps to enter other countries also. At the current market price of Rs 34 valuations are attractive compared to its peers. We are positive on the business with long term view. Do read our note to know more.

Technically Speaking: Markets ended flat with profit booking seen in the later final hour trades. Sensex made an intra day high of 18137 and low of 17771. The breadth was in favor of Advances, as there were 1420 against 1308 Declines. Market turnover was fine at Rs 4848 Cr. Another lower top made today by Sensex. If now it goes below 17000, we can expect a target of 16300 and immediate support seen at 17650 while resistance at 18200-18500.

Post Market Commentary - Feb 27 2008

The Sensex opened with a positive gap of 177 points at 17,983 on positive cues from the Asian markets. The index touched a high of 18,137 - up 331 points from the previous close - in morning deals.

Selling emerged in mid-noon deals, and a heavy bout of selling in late trades saw the index drop to a low of 17,771 - down 366 points from the day's high.

The Sensex finally ended with a marginal gain of 20 points at 17,826.

The Nifty was down two points at 5,268.

The BSE market breadth was marginally positive - out of 2,805 stocks traded, 1,419 advanced, 1,306 declined and 80 were unchanged.


Mahindra & Mahindra and HDFC gained around 4.5% each to Rs 659 and Rs 2,684, respectively.

Ranbaxy and BHEL added around 4% each to Rs 436 and Rs 2,263, respectively.

Larsen & Toubro moved up over 3% to Rs 3,631. Maruti gained 2.4% at Rs 832, and ONGC was up 1% at Rs 1,038.


Grasim slumped 5% to Rs 2,889. Reliance Energy tumbled nearly 4% to Rs 1,631.

Satyam and Infosys dropped nearly 3% each to Rs 437 and Rs 1,617, respectively. TCS slipped over 2% to Rs 878.

ACC and SBI declined 1.8% each to Rs 816 and Rs 2,083, respectively.


Reliance led the value chart with a turnover of Rs 364.70 crore followed by OnMobile Global (Rs 311 crore), IRB Infrastructure (Rs 306.70 crore), Reliance Capital (Rs 262.50 crore) and Tulsi Extrusions (Rs 231 crore).

Ispat Industries topped the volume chart with trades of around 2.05 crore shares followed by Tulsi Extrusions (1.86 crore), IRB Infrastructure (1.53 crore), Reliance Natural Resources (1.21 crore) and Centurion Bank of Punjab (86.15 lakh).

REL, RCom, RPL February 2008 futures at discount

Nifty February 2008 futures were at 5241.05, at a discount of 27.35 points as compared to spot closing of 5268.40.

The NSE's futures & options (F&O) segment turnover was Rs 63,256.76 crore, which was higher than Rs 56,515.69 crore on Tuesday, 26 February 2008.

Reliance Energy (REL) February 2008 futures were at discount, at 1628, compared to the spot closing of 1634.50.

Reliance Communications (RCom) February 2008 futures were at discount, at 582.75, compared to the spot closing of 585.35.

Reliance Petroleum (RPL) February 2008 futures were at discount, at 164.65, compared to the spot closing of 165.75.

In the cash market, the S&P CNX Nifty lost 1.65 points or 0.03% at 5268.40.

Market ends positive

The market was poised for another positive finish, but a late bout of selling pressure dragged the Sensex below 17,800 and halted its resurgence. On the back of firm international indices, the Sensex opened with a positive gap of 177 points at 17,983 and moved up sharply to touch the day's high of 18,137. However, the market came under a sharp bout of profit taking and was 33 points down from the yesterday's close, with the index slipping to an intra-day low of 17,772. Finally, the Sensex erased most of its losses and ended 20 points up at 17,825, while the Nifty was down two points at 5,268.

The market breadth was marginally positive. Of the 2,805 stocks traded on the Bombay Stock Exchange (BSE), 1,435 stocks advanced, 1,294 stocks declined and 76 stocks ended unchanged. On sectoral front, BSE CG index flared up by 2.37% at 16,507 and BSE HC index gained 1.22% at 3,860, while BSE Power ended marginally higher at 3,733. Other sectoral indices were down around 1% each.

Among the major losers Grasim Industries declined 5.06% at Rs2,888.56, Reliance Energy lost 3.88% at Rs1,631.35, Satyam Computer Services slumped 2.81% at Rs437.10 and Infosys was down 2.69% at Rs1,617.40. Select heavyweights attracted buying support. M&M rose 4.52% at Rs658.65, HDFC moved up by 4.27% at Rs2,684.40, Ranbaxy advanced 4.10% at Rs436.35 and BHEL gained 3.78% at Rs2,262.90.

Over 2.05 crore Ispat Industries shares changed hands on the BSE followed by Tulsi Extrusion (1.86 crore shares), IRB Infrastructure (1.53 crore shares), Central Bank of Punjab (0.86 crore shares) and Power Grid (0.85 crore shares).

Market registers marginal gains

The key benchmark indices came off higher levels in late trade and ended almost flat due to selling in IT and banking counters. European markets which opened after Indian market, fell. The market had held firm for a better part of the day on firm Asian markets. Reliance Energy declined. Grasim Industries and Infosys were major losers from Sensex pack.

Capital goods stocks were in demand. The market breadth was positive

Asian markets, which opened before Indian markets, surged after weak US economic data and comments from a Federal Reserve official signalled that US interest rates will continue to head lower. Fed Vice Chairman Donald Kohn said on Tuesday that a weak US economy was a bigger worry than higher inflation risks.

The 30-share BSE Sensex rose 19.80 points or 0.11% at 17,825.99. Sensex touched a high of 18,137.28 in mid-morning trade. At day’s high, Sensex rose 331.09 points. Sensex hit a low of 17,770.65 in late trade. At the day's low, Sensex was down 35.54 points.

The broader CNX S&P Nifty ended down 1.65 points or 0.03% at 5,268.40.

BSE clocked a turnover of Rs 5859 crore today 27 February 2008 compared to a turnover of Rs 4,844.22 crore on Tuesday, 26 February 2008.

Nifty February 2008 futures were at 5241.05, at a discount of 27.35 points as compared to spot closing of 5268.40.

The NSE's futures & options (F&O) segment turnover was Rs 63,256.76 crore, which was higher than Rs 56,515.69 crore on Tuesday, 26 February 2008.

The next major trigger for the market is the Union Budget 2008-09. With general elections due in 2009, Union Budget 2008-09 to be presented on 29 February 2008 will be the last full-fledged budget of the Congress-led United Progressive Alliance government and it is therefore likely to be a populist budget. Thus, the Finance Minister (FM) is likely to provide higher allocations to several social initiatives like rural upliftment, employment, education, agricultural growth and public health.

Though populist measures will dominate the budget, FM is also expected to take steps to stimulate investment and consumption demand at a time when the economy is witnessing moderation from a solid growth last year. A reduction in personal income tax, if any, will result in increase in disposable incomes which in turn may boost demand for consumer goods.

Expectations are that the corporate income tax rate may be cut or the 10% surcharge on corporate tax may be abolished. The surcharge is 10% on a tax rate of 30%, making the effective corporate tax rate 33%. Another possibility is that of a cut in dividend distribution tax from 15% to 12.5%.

Meanwhile, FM may raise the Securities Transaction Tax (STT) slightly. STT is currently at 0.125% on delivery trades. STT is 0.025% on non-delivery trades on sell transactions. STT is 0.017 % in futures & options segment on sell trasactions.

It is also expected that the FM would announce some relief packages for troubled export sensitive sectors like textiles, rubber, jewelry, leather and IT services. These sectors have been hit by rupee’s surge in the past one year.

The BSE Mid-Cap index was up 0.43% at 7,723.56, while the BSE Small-Cap was up 0.26% at 9,673.86. Both these indices outperformed Sensex.

BSE Consumer Durables index (down 0.64% to 4,834.12), , BSE Metal index (down 0.95% to 16,642.01), BSE IT index (down 2.2% to 3,973.12), BSE Bankex (down 0.32% to 10,156.52), BSE Realty index (down 0.37% to 9,979.72) underperformed Sensex.

BSE PSU index (up 0.39% to 8,471.05), BSE Oil & Gas index (up 0.4% to 11,259.92), BSE Power index (up 0.73% to 3,733.77), BSE HealthCare index (up 1.22% to 3,860.02), BSE Captal Goods index (up 2.37% to 16,506.67) BSE Auto index (up 0.57% to 4,773.34), and BSE FMCG index (up 0.19% to 2,254.98) outperformed Sensex.

The market breadth was positive: on BSE 1,433 advanced as compared to 1,300 that declined. 41 stocks remained unchanged.

IT stocks declined in late trade. Satyam Computer Services (down 2.81% to Rs 437.10), Wipro (down 0.96% to Rs 439.90), Tata Consultancy Services (down 2.24% to Rs 877.70), Infosys (down 2.69% to Rs 1,617.40) edged lower.

Banking stocks fell in late trade. ICICI Bank (down 0.38% to Rs 1,113.75), HDFC Bank (down 0.22% to Rs 1,451.75) and State Bank of India (down 1.76% to Rs 2,082.55) edged lower.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries rose 0.46% at Rs 2,587.55. It came off from session's high of Rs 2,624. The company said on Tuesday, 26 January 2008 it had discovered more gas in an exploration block off India's east coast. This is the company's eight discovery in the block.

Among the top gainers from Sensex pack were Mahindra & Mahindra (up 4.52% to Rs 658.65), Housing Development Finance Corporation (HDFC) (up 4.27% to Rs 2,684.40) and Ranbaxy Laboratories (up 4.1% to Rs 436.35).

Among the Sensex losers from Sensex pack were ACC (down 2.24% to Rs 812.25), and Grasim Industries (down 5.06% to Rs 2,888.65).

India's second largest power utility firm by revenue Reliance Energy declined 3.88% to Rs 1,631.35. It came off from day's high of Rs 1,745. The company said yesterday its board will meet on 5 March 2008 to consider, buy back of equity shares of the company.

Capital goods stocks were in demand. Larsen & Toubro (up 3.2% to Rs 3,630.95), Bharat Heavy Electricals (up 3.78% to Rs 2,262.90) edged higher. However, Suzlon Energy declined 3.54% to Rs 303.70.

India’s largest truckmaker by sales Tata Motors rose 0.76% to Rs 707.45. Tata Motors and Ford reportedly plan to sign a memorandum of understanding possibly on 5 March 2008 for Tata Motors' possible acquisition of Ford's luxury British brands, Jaguar and Land Rover. The complete sale of Jaguar-Land Rover to Tatas will take 6-8 weeks.

Ispat Industries clocked highest volume of 2.05 crore shares on BSE. Tulsi Extrusions (1.86 crore shares), IRB Infrastructure Developers (1.53 crore shares), Reliance Natural Resources (1.2 crore shares) and Centurion Bank of Punjab (86.15 lakh shares) were the other volume toppers in that order.

Reliance Industries clocked highest turnover of Rs 364.71 crore on BSE. OnMobile Global (Rs 310.87 crore), IRB Infrastructure Developers (Rs 306.7 crore), Reliance Capital (Rs 262.46 crore) and Tulsi Extrusions (Rs 231.1 crore) were other turnover toppers in that order.

A per provisional data on NSE,foreign institutional invstor (FIIs) purchased shares worth Rs 350.45 crore today, 27 February 2008. Domestic funds bought shares worth Rs 341.35 crore.

European shares eased after results from British mortgage lender HBOS weighed on banks, although the decline was limited by a rally in crude oil that supported energy shares. France’s CAC 40, Germany’s DAX and UK’s FTSE 100 were down by between 0.33%-0.87%.

In Asia, the key benchmark indices in Hong Kong, China, Japan, South Korea, Singapore and Taiwan were up by between 0.69% to 2.7%.

US stocks rose for a third day on Tuesday as technology companies gained on IBM's plans to buy back $15 billion of its shares and the energy sector advanced on a record high close for oil in New York. The Dow Jones industrial average was up 114.70 points, or 0.91%, at 12,684.92. The Standard & Poor's 500 Index was up 9.49 points, or 0.69%, at 1,381.29. The Nasdaq Composite Index was up 17.51 points, or 0.75%, at 2,344.99.

On the New York Mercantile Exchange, April 2008 crude settled at a record $100.88 a barrel, up $1.65, on Tuesday.

On Tuesday, 26 Februray 2008, the market had extended Monday (25 February 2008)'s gains after Railway Minister Lalu Prasad Yadav provided thrust on modernising rail infrastructure in Railway Budget 2008-09 which he presented to parliament on that day. The 30-share BSE Sensex rose 155.62 points or 0.88% at 17,806.19. Keeping the common man in mind, the railway minister also cut passenger fares, with parliamentary elections due in 2009. Firm global markets also helped support domestic bourses.

Trading Call - Network 18

Buy Network 18 with a stop loss of Rs 338 for target of Rs 411

Pre Budget Expectations - 2008

Pre Budget Expectations - 2008