Friday, November 13, 2009
We recommend a buy in Rolta India from a short-term perspective. It is apparent from the charts of the stock that it has been on an intermediate-term uptrend, forming higher peaks and troughs since its March-low of Rs 40.70. However, the stock met with a significant long-term resistance around Rs 200 in early October and witnessed a corrective decline until it reached the support level at Rs 150, from where it bounced higher last week. On November 12, the stock gained 2 per cent accompanied with good volume and it is currently testing its 21- and 50-day moving averages. The daily and weekly relative strength indices are heading towards the bullish part of the neutral region. Considering that the stock’s intermediate-term up trendline is intact, we believe that it has the potential to surpass the moving averages and rally further until it hits our price target of Rs 196 in the approaching trading sessions. Traders with a short-term perception can buy the stock, while maintaining stop-loss at Rs 169.
Headlines for the day
Banks can sell forex options to clients - DNA Money
Domestic Airlines carry 27% more passengers in October - Business Line
L&T to sell part stake in Mahindra Satyam - Business Line
Pramod Jain makes open offer for Golden Tobbaco Company - Business Standard
GSPL to build gas pipeline from Gujarat yo Orissa - DNA Money
Events for the day
Major corporate action:
Ex-date for the interim dividend of Godrej Consumer Products, Gujarat Fluorochemicals and dividend of Rolta India
On Thursday, The European stocks ended flat with marginal gains as with weak cues from Asian markets and Telecom stocks shining on the bourses, after a choppy and range-bound session of trade. The FTSE 100 closed 0.19% higher.
A six-day winning streak for the Dow came to a halt on Thursday, as the drop in the oil prices dragged the energy stocks, while the worries on the consumer spending front and several policy makers around the world raising questions on economic recovery. The markets that opened weak dipped further to end lower by close to 1% each.
In today's trade, all the major Asian markets were trading mixed, wherein Indices like the Shanghai Composite, Nikkei 225 and Strait Times were trading lower in the range of 0.48%-0.80%, While the Hang Seng, Jakarta Composite and Taiwan Weighted were trading in green with marginal gains. SGX Nifty that opened weak was trading marginally lower by 15 points.
Considering such weak cues coming from the global markets, the domestic indices are expected to open weak and continue its volatile streak.
Among the local indices, the Nifty could test the 5000- 5050 range on the up side, while on the down side it could find support at 4900 and 4850. While the Sensex is likely to get support at 16371 and may face resistance at 17000.
Among the Indian ADRs trading on the US bourses, only Wipro, Tata Motors and Rediff closed in the green with the marginal gains, while rest all of the Indian ADR that closed in the red with the loss in the range of 0.37%-5.24% each.
In the commodity space, the Crude oil prices again declined, with the Nymex light crude oil for December series falling by $1.73 to settle at $77.55 a barrel.
In the metals space, the Comex Gold for December series declined sharply by $8.00 to settle at $1106.50 a troy ounce, while Comex Silver for December series fell by $0.28 to settle at $17.27 to a troy ounce.
Daily trend of FII/MF investment in equities
On November 12, 2009, FIIs were the net buyers of the Indian Stocks in the tune of Rs972.700 crore (with the gross purchase of Rs3087.10 crore and gross sales of Rs2114.30 crore).
While the Domestic mutual funds mutual funds, on November 10, 2009, were the net buyer of the stocks in the tune of Rs22.50 crore (with gross purchase of Rs67.50 crore and gross sales of Rs45.00 crore).
Infosys BPO buys US-based back office company McCamish Systems for US$58mn. (ET)
Mortgage major HDFC targets 20% loan disbursal growth in the current fiscal. (BS)
Tata Steel has approved an exchange offer for an existing US$875mn of securities into FCCB in a move to reduce costs and ease repayment. (BS)
L&T to sell a third of its 6.9% stake in Mahindra Satyam. (ET)
ONGC has decided to merge its energy trading JV with Lakshmi Mittal with their exploration tie-up. (BS)
Tata Group has formed a JV with US based Sirkosky Aircraft to make aerospace components in India. (BS)
SBI is likely to conclude the merger of its associate bank, State Bank of Indore, with itself by March 2010. (BL)
BHEL visited Singur for a possible project with West Bengal Power Development Corporation. (BS)
Ranbaxy receives pre-qualification from WHO for its anti-retroviral capsule Indinavir. (BL)
L&T to set-up India’s largest power transmission line research and tower testing centre in Kancheepuram district. (BS)
GAIL has proposed to incur a capital expenditure of over Rs490bn during FY2010-14. (FE)
Promoters of Patni demand a 25% premium to market price for their stake to General Atlantic. (ET)
CCEA approved additional investment by OVL, a wholly owned subsidiary of ONGC, for its offshore oilfield in Brazil. (ET)
Exide Industries targets a 25% market share in the tractor battery segment in the next two years. (BL)
Golden Tobacco is facing a hostile takeover attempt by investor Pramod Jain after Mr. Dalmia defaulted on loans to a host of lenders. (ET)
TC India is likely to have a minority stake in its proposed joint venture with UK based Ashmore Group for funding power projects in the country. (FE)
Mahindra Lifespace has entered into a JV with Arch Capital to promote a 55-acre premium residential community at Mahindra World City SEZ. (BL)
Aurobindo Pharma’s board approves the merger of wholly owned subsidiary, Trident Life Sciences, with itself. (BS)
Fortis Healthcare and Apollo Hospitals have ventured out to Mauritius by tying-up with strong local partners. (FE)
Great Eastern Energy Corporation has raised Rs2.3bn through a issue of 6.7% fresh equity of shares. (ET)
IDBI bank has revised the interest rates on retail term deposits by 25 to 50 basis points in different maturity buckets. (FE)
Bank of Rajasthan has announced reduction in interest rates in mortgage loan with immediate effect. (FE)
Simbhaoli Sugar to commercialize hybrid cane with 20% higher output. (BS)
Kirloskar Oil Engines to exit from six JVs by selling its entire holdings to Kirloskar Systems for Rs2.5bn (BS)
Steel Strips Wheels Ltd received Euro28mn Renault order (BS)
IIP grew by 9.12% in the month of September 2009. (BS)
Food Inflation climbs to 13.68% for the week ended October 31st. (BL)
Oil Ministry to ensure 5% ethanol blending by OMC. (BS)
Government approves policy for digitized cable content. (BS)
Kharif Crop output is likely to witness 12-13% fall in the current fiscal, says planning commission. (BS)
Domestic air traffic grew at 25% in October. (BS)
RBI has allowed banks to offer plain vanilla cross currency options to people in India. (FE)
Government has approved eight road projects, entailing an estimated cost of Rs109bn. (ET)
Textile industry demands a ban on cotton exports. (BS)
Cheaper finance and reservation in industrial plots for MSME will be considered by a panel headed by the Prime Minister’s top aide, on November 19. (ET)
The government will make electronic filing of service tax mandatory within a couple of months, said a senior official of the CBEC. (ET)
Australia has announced investment of US$50mn to develop green technologies in India. (FE)
Measure not the work until the day's out and the labor done.
What would life be without the stimulus and sea of liquidity? That is what could cause some discomfort among the bulls. The RBI has already kicked off the gradual process of ‘exit’ from the accommodative policy. With the latest IIP data turning out to be quite upbeat, the fiscal stimulus could also be withdrawn slowly. The unwinding of carry trade will be another big challenge.
We could end a topsy-turvy week on a subdued note. Another flat start is in the offing as global cues are indecisive. Asian markets are mixed. US stocks closed in the red despite an improved outlook from Wal-Mart. European stocks held their own though, thanks to fresh M&A action.
The Indian market has been struggling with no clear directional bias after hitting the year’s high in the middle of October. Investors are locking in some gains even as they await confirmation that the economic recovery will translate into better profits.
India Inc.’s earnings didn’t inspire the desired confidence, with only a few pockets emerging outperformers. Others managed to boost bottomlines owing largely to lower operating costs.
FIIs were net buyers in the cash segment on Thursday at Rs687.6bn on a provisional basis. The local funds were net sellers of Rs1.08bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs11.68bn. The foreign funds were net buyers of Rs9.72bn on Wednesday. With this, FIIs' net investments in Indian stocks this year has crossed $14.8bn.
US stocks closed lower on Thursday, ending a six-day rally, as investors turned apprehensive after the recent spurt. Energy and financial shares led the decline, and 26 of the 30 Dow components ended lower.
The Dow Jones Industrial Average fell 94 points, or 0.9%, to close at 10,197.47. The S&P 500 slipped 11 points, or 1%, to end at 1,087.24, and the Nasdaq Composite index dropped 18 points, or 0.8%, to settle at 2,149.02.
The Dow has ended higher for the past six sessions. During that streak, it has soared more than 500 points, or 5.3%, to a series of 13-month highs.
Stocks had opened lower before reversing course several times, following a modest gain on Wednesday during which the Dow hit its third consecutive 13-month high. So, a pause after a big rally is pretty normal. It will be tough for US stocks to sustain gains given the underlying weakness in the labor and housing markets. For this rally to be sustainable, the consumer has to bounce back.
The dollar was slightly higher against major international currencies, and overnight gains in the greenback had triggered some selloff in foreign markets. A softer dollar encourages investors to move into higher-yielding assets like stocks; a firmer greenback tends to send the stock market lower.
With the Federal Reserve holding the key interest rate near zero and pumping money into the economy, the dollar has hovered near 15-month lows.
Wal-Mart announced that it beat third-quarter earnings estimates. The world's biggest retailer said earnings were 84 cents per share on sales of $98.7 billion. Analysts surveyed by Thomson Reuters expected 81 cents per share.
Intel and AMD announced an agreement to end all legal arguments between the companies, including antitrust litigation and patent disputes. Among other provisions, the agreement stipulates that Intel will pay AMD $1.25 billion and AMD will drop all pending litigation worldwide.
HP said late on Wednesday that it was buying networking company 3Com for $2.7 billion.
The Labor Department released its weekly report on initial jobless claims, which said there were 502,000 new filers last week. That's the lowest level since Jan. 3. Economists were expecting 510,000 claims.
The Treasury Department said the federal deficit hit $176.4 billion in October -- the 13th monthly deficit in a row and the first one of the fiscal year.
President Obama said on Thursday that he will hold a jobs forum at the White House in December, as the country faces a 10.2% unemployment rate.
Oil prices dropped 3% after a report from the Energy Information Administration showed crude supplies jumped more than expected. US crude fell $2.34 to settle at $76.94.
Gold prices also slipped, halting a run-up that has driven the metal almost 6% higher this month. December gold fell $8 to settle at to $1,106.60 an ounce.
Treasurys were mixed late on Thursday, with longer-dated securities edging lower, following a $16 billion auction of 30-year bonds that was met with lackluster demand. The benchmark 10-year note's yield was up 3.46% from 3.42%.
European shares shrugged off weakness in Asia and on Wall Street, holding small gains after BT Group, Peugeot and Vopak upgraded guidance and deal speculation fueled a steep climb for several airline stocks.
The Dow Jones Stoxx 600 index rose 0.2% to close at 246.61. On Wednesday, small gains took the pan-European index to a level not seen since Oct. 22 and back towards its 52-week closing high of 249.19 hit Oct. 21.
The French CAC-40 index slipped 0.2% to settle at 3,808.02, while the UK's FTSE 100 index gained 0.2% to finish at 5,276.50. The German DAX index edged down 0.1% to close at 5,663.96.
Indian markets have been on a roller coaster ride off late. After managing to shut above the 5,000 mark for the first time since Oct. 22 Nifty was unable to build on the momentum on Wednesday. Weak global cues coupled with profit booking at higher levels dragged the markets to end in the red.
Better than expected Industrial Production data also failed to cheer the bulls. India’s Industrial Production in the month of September rose to 9.1% as against 6% in the same month last year. Market had expected IIP to come in at around 7%. The government announced that it revised August 2009 IIP from 10.4% to 11%.
Technically, the Nifty has taken support at its 13 DMA and continues to sustain above its medium term trend line. The daily RSI (Relative Strength Index) also has enough room for another upswing. The Nifty could go as high as 5200-5250. Though, a close below 4,940 may again lead further cooling off.
The BSE Sensex was down 153 points to end at 16,696 after touching a high of 16,896 and a low of 16,605. The index opened at 16,822 against the previous close of 16,849. The NSE Nifty was down 51 points to shut shop at 4,952.
In Asia, the Nikkei in Japan was down 0.7%, while Australia's S&P/ASX ended lower by 0.2% at 4,747. Shanghai SE Composite was flat and Hang Seng index in Hong Kong fell 1%.
In Europe, stocks were trading in the red. The DAX in Germany was down 0.3% and the CAC 40 index in France was down 0.3%. The FTSE in the UK was flat,
Coming back to India, among the BSE sectoral indices, the Realty index was the top loser, shedding 3%, followed by the Metal index that was down 2.6% and the BSE Bankex was down 2.5%.
Even the BSE Mid-Cap index fell 1% and the BSE Small-Cap index was down 0.3%.
Among the 30-components of Sensex, 19 stocks ended in the red and 11 ended in the positive terrain. SBI, DLF, ICICI Bank, Tata Steel, Sterlite and HDFC were among the top losers.
On the other hand, among the major gainers were RCom, Wipro, TCS and Grasim.
Outside the frontline indices, the big losers in the broader market were Hind Copper, NMDC, Godrej Cons, Marico and MMTC. On the other hand, gainers included Spice Tele, Jubilant Org, Moser Baer and HCL Tech.
Shares of Infosys Technologies gained 0.5% to Rs2322. The company announced that it has signed a definitive agreement to acquire US-Based Insurance Business Process Solutions Provider, McCamish Systems; Deal Establishes Infosys BPO as a Key Player in Business Platform Services for the Insurance and Financial Services Sector.
Shares of Suzlon Energy and HDIL gained in the early trades after both the stocks were included to the MSCI India Index. On the other hand, Power Grid and Glenmark Pharma were removed from the index.
Suzlon gained 2.5% to Rs69 while, however, HDIL erased gained and ended lower by 2.2% to Rs366. On the other hand, shares of Power Grid fell 1.7% to Rs106 and Glenmark was down by 4% at Rs222.
Aurobindo Pharma announced that it’s tentatively approved ANDA for Perindopril Erbumine Tablets 2mg, 4mg and 8mg (ANDA No. 079070) has received the final approval from the US Food & Drug Administration (USFDA).
Perindopril Erbumine Tablets are the generic equivalent of Solvay Pharmaceuticals’ Aceon® Tablets and falls under the CVS segment and indicated for the treatment of patients with essential hypertension. The product will be launched shortly. Aurobindo has a total of 109 ANDA approvals (81 Final approvals and 28 Tentative approvals) from USFDA.
Shares of Aurobindo Pharma slipped 3.4% to Rs784. The stock opened at Rs830 and made an intra-day high of Rs830 and a low of Rs780. Total traded volumes stood at 0.16mn shares.
Shares of Mahindra & Mahindra Financials shot up by over 3% to Rs2769 after nearly 4mn equity shares of the company were transacted on the NSE. The transactions were in two blocks. ~3mn shares changed hands at an average price of Rs267 while ~1mn equity shares were traded at an average price of Rs264.
Shares of Indiabulls Real Estate slipped by 2.5% to Rs239. ~9.2% of equity or 39.9mn shares of the company was transacted in three blocks on the BSE. The stock opened at Rs242 and made an intra-day high of Rs248 and a low of Rs231. Total traded volumes stood at 60.7mn shares.
Venus Remedies surged over 2.5% to Rs221 after the company announced that it secured product patent from South Africe for Potentox.
CIPRO (Companies and Intellectual Property Registration Office) has granted third patent in South Africa after Sulbactomax and Tobaracef. This is also the third patent of Potentox within 5months of its grant in South Korea.