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Tuesday, December 22, 2009

Right at start!


Money will come when you are doing the right thing.

The right thing appears to be really on a long holiday. The key indices have gone nowhere in the past 3-4 weeks and the trend has been extremely dull. Traded volume too has tapered off and is likely to remain low in the face of the upcoming holidays.

Thanks to firm global cues, we expect a higher opening and another choppy day. Can’t call it Christmas shopping, though! On the whole, the current lackluster trend is expected to continue. The Nifty will find some support and could surpass the 5000 mark again. The near-term trading range may be between 4900-5100.

Volatility will prevail given the murky outlook and F&O expiry next week. Stock centric action will continue based on the news flow. Short term traders are likely to take profit at every rise. A major break down is ruled out for now but avoid risky bets. Don’t read too much into what goes in the market these days as bulls and bears both seem to be lacking conviction.

Indices in the US and Europe started the week with decent gains, helped by signs of a weakening dollar. Upgrades to Alcoa and Intel boosted US stocks, helping to reverse last week's losses.

OPEC will almost certainly leave its production levels unchanged when it meets later today. Speculation of an impending reversal in monetary cum fiscal stimulus worldwide has increased. This has curbed inflation expectations to some extent and reduced gold's investment appeal.

FIIs were net sellers in the cash segment on Monday at Rs2.92bn on a provisional basis. The local funds were net buyers of Rs3.54bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs517.2mn. FIIs were net buyers of Rs834mn in the cash segment on Friday.

US stocks rallied on Monday, pushing the Dow back into positive territory for the month, as investors cheered a combination of analyst upgrades and corporate deal-making.

The Dow Jones Industrial Average gained 85 points, or 0.8%, to end at 10,414.14. The blue-chip average is now up 0.7% for December. The S&P 500 index rose 11 points, or 1.1%, to close at 1,114.05. The Nasdaq Composite index advanced 26 points, or 1.2%, to 2,237.66, its highest level since Sept. 2008.

Aluminum producer Alcoa's shares surged nearly 9% after analysts at Morgan Stanley upgraded the stock and the company announced a $10.8 billion joint venture with Saudi Arabia to develop a major mining operation.

Technology stocks advanced after analysts at Barclays Capital upgraded Intel to "overweight." Shares of the chip titan rose 2.4%.

Big health-care companies rose after the US Senate voted to end debate on revisions to a major healthcare reform bill, a key step toward finalizing the controversial legislation.

The healthcare sector was also supported by news that Sanofi-Aventis will buy retail health products maker Chattem for $1.9bn.

Wall Street will have a holiday-shortened week. The stock market will close early on Thursday and will remain shut on Friday for the Christmas holiday. In fact, many market participants will take the entire week off, which means trading volume will be lower.

Many money managers have closed their books. Those that are still trading will probably avoid risky bets. A lot of people have packed their bags for the week and for the year. So, one shouldn't read too much into any of the moves this week.

French pharmaceutical company Sanofi-Aventis announced plans to acquire Chattanooga, Tenn.-based Chattem, which makes over-the-counter healthcare products like Icy Hot. The deal, which would create the world's fifth-largest consumer healthcare company, is part of an ongoing plan to expand Sanofi's presence in the US market, the company said in a statement.

Elsewhere, mining equipment maker Bucyrus International said on Sunday that it would buy rival Terex Corp. for $1.3 billion in cash.

Also on Sunday, Dutch automaker Spyker said that it had made a new offer to General Motors (GM) for the Swedish car brand Saab. GM had announced on Friday that it would let the car brand die after failing to reach a deal with potential buyers, including Spyker and Swedish carmaker Koenigsegg. Spyker said late on Monday that it would extend the deadline on its offer until further notice. GM says it is considering the offer.

In other corporate news, Citadel Broadcasting Co., the nation's third-largest radio group, filed for Chapter 11 bankruptcy on Sunday. The company, which has stations in 25 states, listed liabilities of $2.5 billion on assets of $1.4 billion, according to court papers filed in the Southern District of New York.

No economic reports were released on Monday.

The dollar rose against major international rivals.

Crude oil for January delivery fell 89 cents to settle at $72.47 a barrel.

Gold for February delivery fell $15.50 to settle at $1096.00 an ounce.

European stocks climbed, led by energy plays due to the cold weather on both sides of the Atlantic. After finishing with a 0.4% increase last week, the Dow Jones Stoxx 600 index rose 1.3% to 249.41, led by oil producers including BP, as oil traded around $75 a barrel.

The UK's FTSE 100 index rose 1.9% to 5,293.99, while the German DAX index added 1.7% to 5,950.53 and the French CAC 40 index added 2.1% to 3,872.06.

After enjoying a stellar 2009, some fatigue has surely set in the Indian equity markets towards the last two weeks of the year. Since we have two back-to-back extended weekends, traders and investors preferred booking profits and offload their positions as the year end gets closer.

Yet again Monday saw an insipid start and after staying lackluster for first half, key indices lost strength led by losses in the Capital Goods, Metals and the Auto stocks.

Technically also daily charts are showing signs of an intermediate correction. The benchmark Nifty index has taken out its 50 Day Moving average which has so far acted as a strong support for the index in the past. In addition, the medium term trend line has also been breached indicating possibility of further downfall.

Finally, the BSE Sensex fell 119 points to end at 16,601 after touching a high of 16,751 and a low of 16,578. The NSE Nifty slipped 35 points to end at 4,953.

In Asia, the Nikkei in Japan was up 0.4%, while Australia's S&P/ASX ended lower by 0.3%. Shanghai SE Composite was up 0.3% and Hang Seng index in Hong Kong was down 1%.

In Europe, stocks were trading in the green. The DAX in Germany was up 0.6% and the CAC 40 index in France was up 0.3%. The FTSE in the UK was up 0.3%.

Coming back to India, among the BSE sectoral indices, the Capital Goods index was the top loser, shedding 1.6%, followed by the Metal index that was down 1.6% and the BSE Auto index was down 1.5%.

Major gainers were BSE Consumer Durables index up 1.3% and BSE Oil & Gas index up 0.2%.

The BSE Mid-Cap index ended marginally lower by 0.5% while the BSE Small-Cap index was down 0.2%.

Among the 30-components of Sensex, 24 stocks ended in the red and 6 ended in the positive terrain. Hindalco, M&M, JP Associates, L&T, Bharti Airtel and DLF were among the top laggards.

On the other hand, among the major gainers were TCS, Reilance Industries, Wipro, NTPC and ICICI Bank.

Outside the frontline indices, the big losers in the broader market were Bajaj Holdings, Essar Oil, Central Bank, Balrampur Chini, IDFC and Asian Paints. On the other hand, gainers included Ackruti City, REI Agro, Titan, Apollo Hospitals and Godrej Cons.

Shares of Prime Focus erased early gains and ended higher by 3% to end at Rs2347 after reports stated that the company earned ~Rs180mn from a deal to create 200 shots of the 1,600-odd shots in Avatar. Fox Star Studios is believed to have spent over Rs8.4bn on special effects.

A significant part of Avatar, which had a budget of over Rs11bn, has been brought to life Prime Focus.

Reports stated that Prime Focus has worked on some box-office blockbusters like New Moon and GI Joe. Almost 80% of New Moon’s special effects were done by the company, added reports.

The scrip opened at Rs235 it touched an intra-day high of Rs252 and a low of Rs233 and recorded volumes of over 0.17mn shares on BSE.

BHEL secured a repeat order worth Rs6.4bn from Adhunik Power and Natural Resources for the main plant package of the second new-rating unit of 270 MW at its upcoming Thermal Power Project (TPP) in Jharkhand.

However, shares of BHEL slipped by 1.5% to end at Rs2282. The scrip opened at Rs2320 it touched an intra-day high of Rs2334 and a low of Rs2267 and recorded volumes of over 83,000 shares on BSE.

Zee Entertainment announced that the Board of Directors will meet on December 23, 2009, to consider a proposal for restructuring of the businesses of ETC Networks Ltd, a Subsidiary of the company.

Shares of Zee Entertainment surged by 4% to Rs262, the scrip opened at Rs248 it touched an intra-day high of Rs263 and a low of Rs248 and recorded volumes of 0.17mn shares on NSE.

Shares of PBA Infrastructure gained by 3.3% to end at Rs70.4 after the company announced that it won a contract worth Rs1.45bn from M/s. Oriental Structural Engineers Pvt. Ltd for 4 Laning of km 0 to km 20 in Nagpur Bypass Section of MH-7

The scrip opened at Rs71 it touched an intra-day high of Rs74 and a low of Rs70 and recorded volumes of over 20,000 shares on BSE.

Shares of ING Vysya Bank advanced by 1.7% to end at Rs267 after ~2.3mn shares, or 1.9% of its equity changed hands in two block deals on the NSE. The scrip opened at Rs292 it touched an intra-day high of Rs312 and a low of Rs291 and recorded volumes of over 2.4mn shares on NSE.