Friday, June 30, 2006

The Week Ahead

Market may move in a trading band
The BSE Sensex surged 208 points for the week amid volatile trend. Mixed global markets, US interest rates, derivatives expiry and paucity of rains in June 2006 kept the markets on the edge throughout the week.

In the near term, the Sensex may trade between 9,000-10,700 levels. It will take cues from global and Asian markets. US markets will possibly consolidate and refrain from falling further as the US Federal Reserve toned down warnings and signaled a possible stop on further increase in key lending rates. As expected, the US central bank lifted its benchmark interest rate on Thursday by a quarter percentage point to 5.25%, its highest since March 2001.

The sentiment will be lifted by reports that India's monsoon rains in the crucial sowing month of July are likely to be 90% to 100% of the long-term average.Another major trigger for the market is the Q1 June 2006 results. These are expected to be strong but a section of the market feels that they have already been factored into share prices. Infosys kickstarts the earnings reporting season on 12 June.

FIIs turned net sellers once again and offloaded equities worth Rs 176.90 crore in the first three days of the week, till Wednesday. They have invested Rs 798.70 crore in the Indian equity market in June.

The Week That Went

Sensex gains 208 points
The market finished strong for the third consecutive week amid volatile trend, gaining 208 points. It commenced the week on a pessimistic note but ended highly optimistic. Mixed global markets, US interest rates, derivatives expiry and paucity of rains in June 2006 kept the markets on the edge throughout the week.

For the week-ended Friday (30 June), the Sensex appreciated 208 points, to settle at 10,609.25 and the NSE Nifty advanced 85.5 points to settle at 3,128.2.The market commenced the week in pessimistic fashion, with the Sensex plunging 371 points on Monday. On Tuesday, it recovered partially finishing 109 points higher. On Wednesday, the benchmark index lost 21.31 points only to rise 32.46 points on Thursday. On Friday, it gained a whopping 447 points, taking cue from firm global markets.

The US Federal Reserve toned down its warnings and signaled a possible stop on further increase in key lending rates. As expected, the US central bank lifted its benchmark interest rate on Thursday by a quarter percentage point to 5.25%, its highest since March 2001.

In the first three days of the week, FIIs turned net sellers once again and offloaded equities worth Rs 176.90 crore till Wednesday. They have invested Rs 798.70 crore in the Indian equity market in June.

Mutual funds offloaded stocks worth Rs 197.61 crore in the first three days of the week. They have offloaded Rs 2,451.54 crore in June till now.The BSE Metal index fell nearly 2% to settle at 8,454.69.The BSE Small-Cap index fell sharply by 3.18% to settle at 5,357.04.The BSE Auto Index gained 2.15% to settle at 4,753.58. Auto major Bajaj Auto was up 1.83% this week to finish at Rs 2,736.85, while Maruti rose 3.30% to Rs 797.60.

Cigarette major ITC rose 6.55% to settle at Rs 182.25. A block deal of 19.85 lakh shares was executed in the scrip on BSE at Rs 176 per share on Wednesday.Hero Honda gained 4.38% to settle at Rs 791.50. The company launched the Glamour FI 125-cc motorcycle. This is the first motorcycle in the Indian market to feature the fuel injection technology.RIL appreciated 4.62% to Rs 1,058.75. As per reports, RIL’s minority partner, Niko Resources, has upgraded reserves of their massive D-6 gas field, off India's eastern coast. The Canadian firm raised the reserves to 35.4 trillion cubic feet of gas, more than triple an earlier estimated 11.4 trillion cubic feet. Meanwhile, RIL Tuesday said it will spend Rs 25,000 crore over the next few years to create a giant retail network of shops to cash in on the consumption boom in big cities and the rural hinterland. The company’s chairman, Mukesh Ambani, said at its AGM that RIL had discovered oil in its exploration block in the Krishna-Godavari basin, off India's eastern coast.

Tata Steel was up 4.11% to Rs 533.30. The company started a massive $ 1 billion perpetual bond issue on Tuesday. It has also received approval to build a ferrochrome smelter in South Africa for Rs 550 crore.

PSU oil exploration major, ONGC, was up 1.16% to Rs 1,108.05. ONGC unveiled its fourth quarter results on Tuesday. The net profit declined 18.74%, to Rs 3,085.89 crore (Rs 3,797.66 crore). Total income for the period decreased to Rs 12,528.23 crore (Rs 12641.98 crore). The company’s FY06 net profit rose 11.15%, to Rs 14,430.78 crore (Rs 12983.05 crore). Total income for the period increased to Rs 50,277.86 crore (Rs 48,092.73 crore).

Ranbaxy plunged 7.63% this week to Rs 356.40. Ranbaxy Laboratories has received approval from the US Food and Drug Administration (FDA) to manufacture and market Simvastatin Tablets USP(80 mg) with a 180-day exclusivity in the US.

PSU steel major SAIL rose 2.46%, to close at Rs 81.20. The company is planning to form a joint venture with Jaiprakash Associates in order to set up a 2-million-tonne cement plant in Chhattisgarh. Accordingly, SAIL will pick up 26% stake in the joint venture while the rest will be held by Jaiprakash.

Videsh Sanchar Nigam (VSNL) surged 7.60%, to close at Rs 400.45 despite posting weak Q4 and FY06 results for the period ended 31 March 2006. For Q4 March 2006, the net profit of the company has declined to Rs 111.50 crore compared to Rs 399.20 crore in Q4 March 2005. Total income has increased from Rs 911 crore to Rs 1,029.30 crore.

Jet airways fell sharply by 14.84% to settle at Rs 589.20, as Jet’s Rs 2,300 crore deal to acquire Air Sahara was called off. It touched a 52 week low of Rs 585 on Friday.

Nifty 50 Quotes at End Of Day

Company Prev Close LTP %Change
NSE Sensex 2997.9 3128.2 4.35
ABB 2450.1 2501.9 2.11
ACC 740.1 783.95 5.92
BAJAJAUTO 2629.15 2748.75 4.55
BHARTIARTL 359.5 370 2.92
BHEL 1842.3 1949.45 5.82
BPCL 339.85 334.5 -1.57
CIPLA 209.8 216 2.96
DABUR 141.85 142.3 0.32
DRREDDY 1256.5 1267.95 0.91
GAIL 244.85 257.05 4.98
GLAXO 985.2 1037.3 5.29
GRASIM 1835.45 1934.8 5.41
GUJAMBCEM 93.85 99.45 5.97
HCLTECH 492.7 504.65 2.43
HDFC 1087.45 1139.8 4.81
HDFCBANK 749.35 795.95 6.22
HEROHONDA 787.8 793.65 0.74
HINDALC0 162.5 175.5 8
HINDLEVER 209.55 229.05 9.31
HINDPETRO 230.75 235.45 2.04
ICICIBANK 479.05 487.9 1.85
INFOSYSTCH 2993.65 3078.95 2.85
IPCL 246.05 263.6 7.13
ITC 175.8 182.4 3.75
JETAIRWAYS 611.9 589.75 -3.62
LT 2123.6 2242 5.58
M&M 599.95 621.8 3.64
MARUTI 733.65 796.7 8.59
MTNL 146.5 154.95 5.77
NATIONALUM 217.55 226.75 4.23
ONGC 1055 1108.05 5.03
ORIENTBANK 168.75 170.95 1.3
PNB 315.15 325.55 3.3
RANBAXY 359.5 356.35 -0.88
REL 438.85 453.5 3.34
RELIANCE 1008.35 1059.85 5.11
SAIL 74.9 81.25 8.48
SATYAMCOMP 678.65 709.65 4.57
SBIN 708.7 727.75 2.69
SIEMENS 854 887.15 3.88
SUNPHARMA 784.15 787.7 0.45
SUZLON 974.85 1041.7 6.86
TATAMOTORS 765.15 794.85 3.88
TATAPOWER 473.5 482.5 1.9
TATASTEEL 509.7 533.65 4.7
TATATEA 745 765.9 2.81
TCS 1680.8 1738.75 3.45
VSNL 386.35 400.1 3.56
WIPRO 496.7 513.35 3.35
ZEETELE 222 240.55 8.36

Markets Today

Market rallies on global cues
The benchmark index ended with a spurt, above the 10,600 level, as buying continued as the market headed higher. The markets across the world witnessed fresh buying, after the much-awaited US federal reserve meet ended in line with analyst’s expectations.It surged to hit a fresh intra-day high of 10,626.84 during last minute trade as buying intensified. The BSE 30-shares Sensex ended with a spurt of 447.09 points (4.40%), at 10,609.25.It oscillated 311 points between vital highs and lows of the day. The sharp spurt in the benchmark index is attributed to the smooth settlement of derivative positions for June 2006, yesterday (29 June 2006).

Earlier, the barometer index opened with a huge upward gap of 154 points, on 10,316.12, which is also the lowest for today. The initial surge came on the back of a rally in global markets. The sentiment was also boosted by reports that rains in the crucial sowing month of July are likely to be 90 - 100% of the long-term average.

The S&P CNX Nifty surged 130.30 points (4.35%), to end at 3,128.20.Investors took fresh positions, which was reflected by the spurt in the total turnover on BSE, amounting to Rs 3,301 crore. On Thursday, the total turnover was Rs 2,866 crore.
The benchmark index has surged 1,680 points, or 18.81%, from its recent low of 8,929.44, struck on 14 June 2006 as buying resumed after a sharp fall.

The market-breadth was strong with close to 2.5 gainers for every single loser, indicating strong buying momentum in the overall market. A host of small-cap and mid-cap counters participated in the rally today, contributing to the rock-solid market-breadth. As many as 1,695 shares advanced on BSE as compared to 680 that declined. A total of 81 shares remained unchanged.The BSE Mid-Cap index advanced 3.44% while the BSE Small-Cap index rose 2.81%.Among the Sensex pack, 29 advanced while only 1 of them was in the red.

Reliance Communication Ventures was the star of the day, up 12.43% to Rs 250.55 on a volume of 41.95 lakh shares. The Anil Dhirubhai Ambani Group (ADAG) has scaled up its holding in the telecom company by 2%, to 65% through open market operations, for nearly Rs 560 crore. Also, there are reports that the finance minister has allowed the telecom company to increase its foreign direct investment (FDI) limits to 74%.

Bharti Airtel also rose 3% to Rs 370.05 on the same proposal.FMCG major Hindustan Lever (HLL) jumped 8.73% to Rs 229.20 on a total volume of 65.84 lakh shares. Two block deals, of 25 lakh shares each, were executed on BSE at Rs 216.20 and Rs 220.
Maruti Udyog jumped 8.48%, to Rs 796 on 8.04 lakh shares. There are reports that the company will make more than 1 lakh cars for Japanese auto-giant Nissan motors.

Bhel surged 6.80% to Rs 1,965 while Tata Motors advanced 4.41% to Rs 792.95.Index heavyweight Reliance Industries (RIL) jumped 4.71% to Rs 1,056.70 on 21.49 lakh shares. The stock had surged to an intra-day high of Rs 1,062.Ranbaxy was the lone loser, down 0.83% to Rs 356.90 on 6.41 lakh shares.Reliance Industries (RIL) was a top-traded counter on BSE with a total turnover of Rs 225.78 crore, followed by Hindustan Lever (HLL) (Rs 144.74 crore) and Tata Steel (Rs 133.62 crore).

Metal stocks surged on renewed buying interest, taking cue from a rally in metal prices on the London Metal Exchange. The BSE Metal index was the biggest gainer among the sectoral indices. It surged 478.36 points, 6%, to 8,454.69.Hindustan Zinc (up 9.64% to Rs 560.05 on 10.85 lakh shares), Sterlite Industries (up 7.10% to Rs 403.55 on 17.11 lakh shares), Hindalco (up 8.25% to Rs 175.90 on 20.81 lakh shares), SAIL (up 8.21% to Rs 81.05 on 65.70 lakh shares), Tata Steel (up 4.65% to Rs 533.80 on 25.04 lakh shares), Jindal Saw (up 12.35% to Rs 265 on 2.75 lakh shares) and Nalco (up 3.82% to Rs 227.20 on 1.55 lakh shares) were the major gainers.

Jet airways slumped to hit a new 52-week low of Rs 585, following the ongoing uncertainty between Jet and Air Sahara merger. It ended 2.82% lower at Rs 592 on 67,031 shares.Bilcare spurted 10%, to Rs 418.85 on strong Q4 and FY06 results. The company’s net profit jumped 72% to Rs 13.70 crore in Q4 March 2006 compared to Rs 8 crore in Q4 March 2005. Net sales during the period increased to Rs 69.76 crore from Rs 48.43 crore. For FY06, the net profit jumped 62% to Rs 39.77 crore from Rs 24.55 crore in FY05. Net sales during the period increased to Rs 238.69 crore from Rs 163.54 crore.

Turnkey construction firm Gammon India jumped 13.06% to Rs 355 after it reported 101.3% surge in Q1 March 2006 net profit to Rs 28.81 crore (Rs 14.31 crore). Net sales rose 45% to Rs 406.88 crore (Rs 280.60 crore).A block deal of 49,999 shares was struck in the UTV Software counter at Rs 168.50 by 11:40 hours on BSE. The stock finished higher by 5.08% to Rs 167.50 on a total volume of 65,632 shares.

Aurobindo Pharma surged 6.73%, to Rs 581.90 on receiving tentative US FDA approval for its 15mg and 20mg Stavudine capsules, which is used as an HIV replication inhibitor.Mining machinery-maker Revathi Equipment slipped 1.34% to Rs 655.05 after its board approved spending up to Rs 10 crore for buy-back of shares at a maximum price of Rs 700 per share through open market purchases.

Wockhardt jumped 5.38%, to Rs 380 after the company announced that it acquired Dumex India, along with its two products Protinex and Farex, from Royal Numico NV, The Netherlands, for an undisclosed amount.Bata India surged 6.30%, to Rs 177.25 on announcement that the work on its proposed township in Kolkata will begin in October and the project will start yielding revenue by the end of 2008. The company, in a joint venture with unlisted Calcutta Metropolitan Group, is developing 262 acres (106 hectares) owned by Bata into a housing and hotel complex.

Colgate rose 2.50% to Rs 391.10 after reports that the company has hiked toothpaste prices by 4%.Zicom Electronic surged 4.20% to Rs 146.50 after its board approved hike in FII investment limit to 74%.

The Nikkei 225 index jumped 2.54% to finish at its highest close since 5 June on Friday as exporters such as Toyota Motor gained on rising hopes that the US interest rate-hike cycle may be nearing an end, easing concern of a slowdown in the world's largest economy. Stocks rose across the global after the US Federal Reserve toned down its warnings and signaled a possible stop on further increase in key lending rates. As expected, the US central bank lifted its benchmark interest rate on Thursday by a quarter percentage point to 5.25%, it’s highest since March 2001. But it added that slowing economic growth should help contain inflation.The Nikkei rose 384.03 points, to 15,505.18, its highest close in nearly four weeks. The TOPIX index surged 2.53% to 1,586.96, also the highest finish since 05 June.The Hang Seng index rose 408.52 points (2.57%) to 16,273.74.

US indices ended with a surge on Thursday, as the rate hike was in line with expectations. The Dow Jones jumped 217 points, to 11,190.80, while the Nasdaq Composite rose 63 points, to 2,174.

On 28 June 2006, FIIs were net sellers of stocks to the tune of Rs 39 crore (gross purchases worth Rs 2,084.50 crore and gross sales of Rs 2123.50 crore) while domestic mutual funds were also the net sellers of stocks to the tune of Rs 38.75 crore (gross purchases worth Rs 307.33 crore and gross sales of Rs 346.08 crore).

Hot News

Bata India beats the heat
Bata India surged 5.13%, to Rs 175.30 on announcement that the work on its proposed township in Kolkata will begin in October.As many as 2.23 lakh shares were traded on the BSE.The stock recovered from a lower level since mid-June 2006 after a sharp fall during mid-May to mid-June 2006 due to a meltdown in small-cap and mid-cap shares. From a low of Rs 143.10 on 14 June, the stock rallied to Rs 166.75 on 29 June 2006.

Bata India has announced that the work on its proposed township in Kolkata will begin in October and the project will start yielding revenue by the end of 2008. The company, in a joint venture with unlisted Calcutta Metropolitan Group, is developing 262 acres (106 hectares) owned by Bata into a housing and hotel complex. The Rs 1,300 crore project will help Bata consolidate its revenue streams informed chairman Priya Mohan Sinha to the shareholders at the company's annual general meeting.

The real estate development project is a part of Bata's revival process and is being undertaken at a time when the property market in India is booming.

The Q4 December 2005 result was the turning point in the net profit of the company as it was after a gap of three years that the footwear major had posted a net profit. The company said that focussed management initiatives aided the turnaround. It was the rationalisation of factory production that resulted in better turnaround through utilizing capacities, getting higher margins from launch of new designs of ladies, men and children shoes, reducing expenses and reinforcing brand promotion.

Bata India has registered a net profit jump of 782% to Rs 4.41 crore in Q1 March 2006 compared with Rs 50 lakh in Q1 March 2005. Net sales during the period increased to Rs 165.13 crore from Rs 160.55 crore.

Block deals prop up HLL
FMCG major Hindustan Lever (HLL) jumped nearly 6%, to Rs 223 on reports that good rains are expected in the crucial sowing month of July 2006.As many as 54 lakh shares changed hands in the counter on BSE. Two block deals of 25 lakh shares each, were executed in the stock on BSE at Rs 216.20 and Rs 220 in early trade.

After a sharp fall during mid-May 2006 to early-June due to a broad market decline, the stock recovered from its lower level since mid-June 2006. From a low of Rs 186.15 on 14 June, the stock bounced back to Rs 210.80 by 29 June.

The current price of Rs 223 discounts its Q1 March 2006 annualised EPS of Rs 5.30, by a PE multiple of 42.As per reports, India's monsoon rains in the crucial sowing month of July are likely to be 90 - 100% of the long-term average. Rural demand holds key for FMCG companies, which derive about 40% of their revenue from rural areas. Over the past few months, strong rural demand has contributed to the growth in the FMCG sector.

While growth for the FMCG sector from both rural and urban sector remains strong, there has been a return of pricing power to industry players. In the backdrop of rising input costs, market leaders such as HLL now have the leeway to hike prices without sacrificing their market share.

HLL only recently raised prices of some of its key laundry bars, detergent powders and toilet soaps. This is a big segment, contributing about 45% of its revenues, and the price-hikes will have a positive impact on margins. Volume growth in this category is also likely to remain robust, on the back of higher rural incomes.

HLL posted a good set of numbers in the quarter ended March 2006. Net sales were up 12%, to Rs 2,798.05 crore on a 16% rise in the soaps & detergent business and a 27% growth in the personal-care categories. The profit-after-tax (PAT) before extra-ordinary income grew 34%, to Rs 298.48 crore.

Real estate goals spur TCS
TCS surged 2.98%, to Rs 1,730 on plans to invest Rs 1,000 crore in real estate.As many as 76,465 shares were traded on the BSE.The stock has rallied after finding support at Rs 1,487.50 on 14 June to close at Rs 1,680 on 29 June 2006 as the market recovered from the bearish stronghold. Earlier, the stock had stumbled from the high of Rs 2,023.95 on 10 May to Rs 1,487.50 on 14 June 2006 under selling pressure in a weak market.

Tata Consultancy Services (TCS)' capital expenditure in the fiscal year to March 2007 was expected to be Rs 1,300 crore. This would include an investment of Rs 1,000 crore in real estate, Chairman Ratan Tata said at the company’s annual general meeting.

TCS is evaluating a bid for UK-based BPO company, Vertex, and has got a foreign currency rating from Moody's Investors Service in preparation for the takeover. Vertex has a revenue of £405 million and is owned by United Utilities (UU). The company plans to raise a foreign currency debt issue for funding the buy. Last month, TCS had acquired an A3 issuer rating and an indicative foreign currency debt rating of Baa1 from Moody's.

The company is looking to double its revenues from Latin American markets to $ 100 million, buoyed by clinching two more deals from the region. The Tata group company hopes to sign two multi-million dollar outsourcing deals in Brazil 'immediately'.

As per reports, TCS may also bid for the IT and Internet backbone to be set up by the Mukesh Ambani-controlled Reliance Industries (RIL) for its retail initiatives. The company, according to reports, is considering putting in its bid as a system integrator for the project, even as the Mukesh Ambani group is slated to come out with a functional requirement specification (FRS) shortly.

TCS is reported to have planned an investment of Rs 500 crore for a 5,000-seat campus in Pune according reports, even as it is planning to hire 9,000 people from Maharashtra in the current financial year. The Tata company will set up facility at its Hinjewadi IT park and has signed a memorandum of understanding with the Maharashtra government.

TCS’ net profit for Q4 March 2006 grew 75% to Rs 750.06 crore compared to Rs 426.70 in Q4 March 2005. Net sales during the period increased to Rs 3,068.39 crore from Rs 2,122.12 crore.The FY06 net profit grew 48% to Rs 2,716.87 crore from Rs 1,831.42 crore in FY05. Net sales during the period rose to Rs 11,214.86 crore from Rs 8,027.59 crore.

TCS said billing rates for new contracts will be higher, indicating continued strong global demand for software services. TCS, which counts General Electric as one of its key customers, added 89 new clients in the past quarter, taking its total customer base to 748. TCS also said it will shortly sign a five-year, $500 million deal. It gave no other details of the deal.

Thursday, June 29, 2006

NEWS

ONGC may buy 5% in Rosneft IPO for $4bn
ONGC is on the prowl again. And this time it is looking north for making some strategic investments in the Russian oil empire. Initial round of talks have been held between senior ONGC officials and the Russian government officials for a possible stake in some oilfields in Russia.

As an icing on the cake, OVL (ONGC Videsh), the overseas investment arm of ONGC, would buy up to 5% stake in Roseneft by subscribing to its IPO, which was opened earlier this week.The IPO would be open to foreign investors and institutional investors in the first week of July. Rosneft plans to mop up $11.6bn through the offering.

ONGC has told the Russian authorities that it might participate in the IPO provided it gets a stake in Sakhalin-3, Vankor or Timano-Pechora oil fields.“We are interested in the IPO only if we are taken on board as a strategic investor in some of the oil and gas blocks. We are not interested in picking up stake as a portfolio investor,” a senior ONGC official said.

“The IPO values Rosneft at between $60bn and $80bn. A 5% stake would mean $3-4bn investment,” industry sources said. ONGC had at one point evinced interest in OAO Yuganskneftegaz, the unit of Yukos which was up on the block.OVL managing director RS Butola had said last week: “We will take a call when we come to it.” But discussions have been held on Wednesday between the visiting delegation from Russia led by the deputy prime minister and ONGC officials on a possible strategic tie-up.

ONGC has been eyeing Russian oil properties for some time now after it made a foray into the country by taking a stake in the Sakhalin-1 blocks, which is now into production. OVL currently has 20% stake in ExxonMobil—operated Sakhalin-I project, which is to pump to 250,000 barrels of oil per day by ’06.

Stock Alert

Gammon India may gain on surge in Q1 March 2006 net profit
Turnkey construction firm Gammon India reported 101.3% growth in Q1 March 2006 net profit to Rs 28.81 crore (Rs 14.31 crore). Net sales rose 45% to Rs 406.88 crore (Rs 280.60 crore).

Tata Consultancy Services said on Thursday its capital expenditure in the fiscal year to March 2007 was expected to be Rs 1300 crore. This would include an investment of Rs 1000 crore in real estate, chairman Ratan Tata told the company's shareholders at the company’s annual general meeting.

NIIT on Thursday posted virtually flat net profit at Rs 8.30 crore for Q4 March 2006 as compared to Rs 8.20 crore in Q4 March 2005.

The board of ICI India on Thursday approved the sale of its speciality chemicals business for Rs 260 crore. The sell-off is part of a global deal entered by its parent.

Footwear maker Bata India said on Thursday work on its proposed township in Kolkata will begin in October and the project will start yielding revenue by the end of 2008. The company, in a joint venture with unlisted Calcutta Metropolitan Group Ltd., is developing 262 acres (106 hectares) owned by Bata into a housing and hotel complex. "Our company will fully take advantage of the retail, real-estate boom (in India)," chairman Priya Mohan Sinha told shareholders at the company's annual general meeting. The Rs 1300 crore project would help Bata consolidate its revenue streams, he said.

Mining machinery maker Revathi Equipment said on Thursday its board had approved spending up to Rs 10 crore for buyback of shares at a maximum price of Rs 700 per share.

Aurobindo Pharma may edge higher after the US Food and Drug Administration tentatively approved its stavudine capsules to treat Acquired Immuno Deficiency Syndrome.

How will the market be today??

Domestic bourses to take cue from firm global markets
A rally across global markets would boost domestic bourses today. The sentiment would also be lifted by reports that India's monsoon rains in the crucial sowing month of July are likely to be 90% to 100% of the long-term average. As per reports, rains in June 2006 were expected to be around 5% below normal with most parts of the country getting good showers in the last week of the month. A well-distributed rainfall will boost agricultural growth, which in turn will help sustain the economic growth momentum.

The US Federal Reserve raised on Thursday (29 June) its benchmark Fed funds rate by 25 basis points to 5.25% as expected, but went on to say that slowing economic growth should help rein in inflation. Analysts took that to mean that the central bank was set to pause having driven rates to a five-year high. Before the Fed meeting, markets had almost priced in another quarter percentage point rate rise in August and some investors had even expected the central bank to raise rates as much as 50 basis points on Thursday.

Key benchmark indices in Hong Kong, Australia, Japan, South Korea, Singapore, and Taiwan, were up by between 1.4% to 2.4% on Friday (30 June). US stocks surged on Thursday (29 June). The Nasdaq Composite Index shot up 62.54 points, or 2.96% to 2,174.38, its biggest percentage gain since March 2004. The Dow Jones industrial average surged 217.24 points or 1.98% to 11,190.80, the blue-chip average's biggest percentage gain since April 2005. The Standard & Poor's 500 Index climbed 26.87 points or 2.16% to 1,272.87, its biggest gain since October 2003.

As per provisional data, FIIs sold shares worth a net Rs 224 crore on Thursday 29 June, the day when Sensex had risen 32 points. There have been intermittent bouts of buying and selling by FIIs this month. Their cumulative inflow for June 2006, till 28 June, totaled Rs 760 crore.

Mutual funds continue to press sales. Mutual funds sold shares worth a net Rs 39 crore on Wednesday 28 June, the day when Sensex had lost 21 points. The cumulative outflow of mutual funds for June, till 27 June, totaled Rs 2452 crore

The near term major trigger for the market is the Q1 June 2006 results. The Q1 June 2006 results are expected to be strong but a section of the market feels that they have already been factored into share prices. The Q1 results would start trickling in by 12th to 13th July 2006. Normally, Infosys kickstarts the earnings reporting season.

Markets Today

Unwinding in derivatives hampers Sensex's rise
Unwinding of long positions in the derivative contracts pulled the market sharply off the higher level after the Sensex had risen nearly 200 points at one point in afternoon trade, on the back of firm Asian markets. June 2006 derivatives contracts expired today. The 30-share BSE Sensex rose 32.46 points, to settle at 10,162.16. It had gained nearly 200 points, to a high of 10,326.05 at 13:18 IST.The S&P CNX Nifty rose 16.80 points (0.5%), to 2,997.90.

Most of the blue-chips pared gains in the last one hour. Metal shares retreated in late trading. ICICI Bank, Hindustan Lever and Bajaj Auto came under selling pressure in late trade. Bharti Tele-Ventures, GAIL India, Tata Steel and Gujarat Ambuja Cements suffered reverses in contrast to an earlier firm trend in the last one hour of trade. Auto and construction shares held firm.

The market-breadth was almost even. Against 1,187 stocks that rose on BSE, 1,158 declined. A total of 78 scrips were unchanged. The breadth weakened in the latter part of trading, when the Sensex gave away most of its gain. At 13:27 IST the advance-decline ratio was a strong 1.5:1.

Asian markets edged higher on Thursday on positive vibes from US stocks that rose on Wednesday. Key benchmark indices in Asia were up between 1 - 1.5%. The two-day US Fed meeting ends today. Financial markets have priced a 25 basis points rise in US interest rates to 5.25%. The markets have also largely priced in another 25 basis points rise in US rates at the Fed's next meeting in August. There are rising expectations that stocks could rise if the Fed's statement, following its two-day policy review, provides some certainty on the outlook for US rates. Any signs that the expected rate increase in August would be the last of the Fed's two-year tightening cycle, may boost Asian stocks.

The near term major triggers for the market are Q1 June 2006 results and progress of the monsoon. Well-distributed rainfall will boost agricultural growth, which in turn will help sustain the economic growth momentum. The progress of the monsoon will be known by mid-July 2006.

The Q1 June 2006 results are expected to be strong but a section of the market feels that they have already factored into share prices. The Q1 results would start trickling in by 12th to 13th July 2006. Normally, Infosys kickstarts the earnings reporting season.

Volumes declined today. The BSE clocked a turnover of Rs 2,803 crore compared to Wednesday’s Rs 3,624 crore.ICICI Bank lost 3.4% to Rs 472. In contrast, rival HDFC Bank surged 3.2% to Rs 750. State Bank of India lost 0.8% to Rs 709. Market men expect RBI to raise interest rates in its credit policy on 25 July. Early this month, RBI had raised short term interest rates by 25 basis points.

Gas transmission firm, GAIL India, lost 3% to Rs 245.50. GAIL said on Thursday that it will jointly bid with Brazilian Petrobras for oil blocks in India, that are being offered by the government under a new exploration licensing policy.

Oil exploration major ONGC rose 1% to Rs 1,044. The stock came off a session’s high of Rs 1,068. US crude oil for August delivery rose 27 cents to settle at $72.19 a barrel on the New York Mercantile Exchange on Wednesday, on concern about heavy US demand for gasoline before the July 4 Independence Day holiday. US government weekly inventory data showed US crude oil and gasoline supplies fell more-than-expected last week.

Reliance Industries (RIL) gained 0.7%, to Rs 1,008.50. The stock came off a session’s high of Rs 1,030. RIL’s minority partner, Niko Resources, on Wednesday, upgraded reserves of their massive D-6 gas field, off India's eastern coast. The Canadian firm raised reserves to 35.4 trillion cubic feet of gas, more than triple an earlier estimated 11.4 trillion cubic feet. RIL on Tuesday said it will spend Rs 25,000 crore over the next few years to create a giant retail network of shops to cash in on the consumption boom in big cities and the rural hinterland.

Auto shares were in demand. Tata Motors gained 1.7%, to Rs 755 on reports in a section of the media that it had firmed up plans to roll out the Indigo and Indica models fitted with fuel efficient DiCOR (direct injection common rail) engine beginning August-September.

Car major Maruti Udyog gained 0.8%, to Rs 730 on expectation of a rise in vehicle prices this week. Last week, the company said it will take a decision, in about a week, on raising prices of its cars on account of rising raw material cost.

Hero Honda rose 1.6% to Rs 770. The stock rose for the third day in a row after the company launched the Glamour FI 125-cc motorcycle. This is the first motorcycle in the Indian market to feature the fuel injection technology.But Bajaj Auto lost 2.6% to Rs 2,611. As many as 50,530 shares changed hands in the counter on BSE.

Tata Steel shed 1.3% to Rs 507.70. A massive 19.5 lakh shares changed hands in the counter on BSE.FMCG major Hindustan Lever shed 2.4% to Rs 210.90 as 6.6 lakh shares changed hands in the counter on BSE.

Ranbaxy gained nearly 3%, to Rs 362 despite a UK court ruling going against it on a generics. The UK Court of Appeal has rejected Ranbaxy’s appeal against UK High Court’s ruling that its atorvastatin product, the generic version of Pfizer’s blockbuster drug Lipitor, was infringing on the MNC’s European patent. The ruling prohibits Ranbaxy from introducing a generic version of Lipitor in the United Kingdom, before the expiration of the basic patent in November 2011, subject to a possible further appeal. In a statement, Ranbaxy said it is evaluating its options to respond.

Engineering & construction major L&T rose nearly 3%, to Rs 2,130. The stock has been high volatile over the past few days due to alternate bouts of buying and selling. Among other construction shares, Era Construction gained nearly 5% to Rs 277.80, Hindustan Construction rose 4.4% to Rs 105, Jaiprakash Associates rose nearly 4% to Rs 357, Nagarjuna Construction advanced 2.4% to Rs 252, and Punj Lloyd rose 1.3% to Rs 704.

IT bellwether Infosys gained 0.7%, to Rs 2,994.95. As many as 1 lakh shares changed hands in the counter on BSE.Bhel rose 0.2% to Rs 1,834 after the company said it had received a contract worth Rs 220 crore from Power Grid Corp., for two power projects in Afghanistan.Cement shares were mixed. Grasim rose 1.9%, to Rs 1,938 and UltraTech Cement rose 0.5%, to Rs 704. But ACC lost 0.4%, to Rs 743. Gujarat Ambuja Cements ended flat at Rs 93.40. Cement prices have come down by Rs 2 - 4 per 50 kg bag in Mumbai.

Suzlon Energy jumped 11%, to Rs 972 after its shareholders approved a plan to raise up to Rs 5,000 crore through the issue of a combination of equity and debt-linked instruments to repay debt of Rs 2,500 crore, which had been raised to finance overseas acquisitions. The company also expects to expand its order-book by 40% in 2006-07 from Rs 3,303 crore as on 1 April and is focusing on growing its business in the US, China, and Europe market.

Sai Service Station gained nearly 16%, to Rs 91.40 on the back of strong financial performance for FY 2006. Sai Service Station reported a net profit of Rs 2.97 crore for FY 2006 (year ended 31 March 2006) as compared to a net profit of Rs 1.73 crore for FY 2005. Income from operation rose 21.3% to Rs 724.51 crore (Rs 597.06 crore).

Tourism Finance Corporation of India lost 0.7%, to Rs 10.65. For FY 2006 (year ended 31 March 2006), Tourism Finance Corporation reported a 16.6% fall in net profit to Rs 11.85 crore (Rs 14.22 crore). Income from operations declined 20% to Rs 64.43 crore (Rs 80.89 crore).

Energy Development Company jumped 5%, to Rs 40.30 after the company said it had received orders worth Rs 68 crore for the supply of turbine and generation set with accessories. The orders are to be executed this financial year, the company said in a statement.

Sharyans Resources declined 1.2%, to Rs 188. The company’s board today approved raising up to Rs 100 crore through equity shares or convertible debentures. It said the securities would be placed with qualified institutional buyers.DCM Shriram Consolidated jumped 5% to Rs 85. A block deal of 15.9 lakh shares was executed in the stock on BSE at Rs 81 per share.National Mineral Development Corporation (NMDC) jumped 5% to Rs 3,150 after its board, on Wednesday, recommended a liberal 2:1 bonus issue and a 10-for-1 stock-split. The company has also decided to dematerialise its shares. Currently, the scrip is traded in the physical form.

Yes Bank gained nearly 1% to Rs 77.05 after the company said Thursday it had formed an alliance with management advisor, NABARD Consultancy Services, to offer joint advisory and technical consultancy services. The alliance will focus on the food and agri-business sector in India and abroad, the bank said in a statement.Mphasis BFL rose 2% to Rs 145 on reports that the company has reconstituted its board with EDD gaining controlling stake in the company recently.

Retailer Trent declined nearly 2% to Rs 707. Trent, on Wednesday, reported profit-before-tax and exception items of Rs 9.51 crore for Q4 March 2006 compared to Rs 7.89 crore in Q4 March 2005. Net sales has risen 43% to Rs 90.63 crore (Rs 63.36 crore). The company said the contribution of retail business to profits has improved substantially in FY 2006 (year ended 31 March 2006).Elecon Engineering ended flat at Rs 993 despite the company reporting strong Q4 March 2006 results. It reported a net profit of Rs 10.95 crore as compared to a net profit of Rs 6.03 crore for Q4 March 2005. Sales rose 82% to Rs 187.37 crore (Rs 102.78 crore). The company’s board also approved 5-for-1 stock split.

Manugraph India plunged 8.5% to Rs 215 after the company reported a fall in Q4 March 2006 net profit. It reported a 19.3% fall in Q4 March 2006 net profit to Rs 8.23 crore (Rs 10.21 crore). Sales declined nearly 8% to Rs 67.34 crore (Rs 73.13 crore).
Lakshmi Machine Works rose nearly 4% to Rs 19,600 on the back of strong Q4 results. However, volume in the stock was extremely low as only 134 shares changed hands on BSE. It reported a net profit of Rs 83.50 crore compared to a net profit of Rs 30.21 crore in Q4 March 2005. Sales rose 24.5% to Rs 394.74 crore (Rs 316.99 crore). Consequent to the merger of Jeetstex Engg, with effect from 01 April 2005, the previous year´s figures are not comparable, the company said.

NEWS

Stock lending rules now on RBI radar
The Reserve Bank of India (RBI) has told Sebi and the government to exercise caution on the proposal to introduce a revised stock lending and borrowing programme for institutional investors saying that it may violate provisions of the Foreign Exchange Management Act.

The proposal was discussed at the meeting of the Sebi board on Monday as part of a set of policy measures aimed at curbing excess volatility in the market. However, the RBI has said that FIIs could be allowed to participate in stock lending and borrowing only after ensuring that it is consistent with the provisions of the FEMA. The regulator wants the government and Sebi to ensure that FEMA provides for stock lending and borrowing by FIIs.

It has also raised concerns relating to Know Your Client (KYC) norms and audit trail for overseas portfolio investors with regard to the proposal to permit stock lending and borrowing and also short sales. According to senior government officials, the government will refer the proposal to the law ministry to check out whether it is within the bounds of FEMA.The officials said that the RBI was fine with these proposals in principle and it was now being studied legally. Once the views of the law ministry are obtained, the proposal would be taken up again at the next board meeting of Sebi over the next three weeks.The stock lending and borrowing programme was in vogue for institutional investors until 1997 under the old legislation — FERA — which was replaced with FEMA in 1999-’00.

Under the FEMA provisions, FIIs can invest in shares and debentures of companies and in exchange traded derivative contracts. The issue now is whether there is an explicit provision permitting FIIs to lend or borrow stocks.A revised scheme for lending and borrowing stocks which are covered in the futures and options segments was readied after the stock markets experienced a major bout of volatility last month. The proposal to allow institutional investors like FIIs to short sell (selling securities they do not own at the time of sale) is linked to the programme for stock lending and borrowing. The plan is to allow short sales in F&O stocks, with the clearing house corporations being the authorised intermediaries for the scheme. They will provide the platform for those who want to either lend or borrow stocks.

According to officials, short sales for institutional investors would be allowed after putting in place rigorous disclosure norms and ensuring that information or data on short sales is available in the public domain. The idea is that at any point of time there should be a realistic link to the extent of short sales and the inventory of stocks with the intermediaries.

Cheer up! Tax-free bonds are back
Two years after the withdrawal of the highly popular tax-free Relief Bonds, investors will soon celebrate the return of a new high-return, tax-free instrument. Municipal bonds, better known as Munis across the world, will now be a reality in the Indian financial market.The government has given the go ahead for the introduction of the bonds which will carry an 8% tax-free rate of return to be floated by municipal bodies across the country, with the government guarantee. The rate of return on these tradable bonds of varying maturities would be equivalent to 11.4% taxable.

It’s the guarantee which will make the bond a zero risk debt, and attract retail as well institutional players like banks, bond houses, mutual funds and insurance companies.The bonds have been in the works for quite sometime. Municipalities with their weak financials find it tough to raise fund. Till now only a few municipalities like Ahmedabad and Nasik have floated bonds. At present there is a cumulative ceiling on annual municipal bond issuances ( of as low as Rs 150-200 crore) and only select issues get a tax-free status. The government has now done away with both these restrictions.

The bonds are part of the UPA government’s attempt to give a big boost for development of urban infrastructure in the country. The National Urban Renewal Mission has set an ambitious agenda for investing in urban projects.While the municipal bodies can issue bonds with higher coupon rates of above 8%, they will not qualify for a tax-free status. Some of these bonds will hit the market in this fiscal.

The bond issues will be approved by the Central government. When the municipal bond market grows, and becomes a significant source of urban infrastructure financing, the Centre’s control over bond issue has the potential to become a source of friction between the Centre and state government.

Globally, municipal bonds constitute a huge market. In the US, investors hold about $1.7 trillion worth of municipal bonds. As of now, the only investment avenues that offer similar tax-free interest are the small savings instruments, including the PPF, KVP and the NSC. But these instruments face the threat of coming within the tax net, with a Central government committee examining the subject. The government proposes to bring in a new tax regime for savings in which they would be exempt from tax at the stages of contribution and accumulation, but taxed on withdrawal (EET).

The Government of India’s 8% savings bonds introduced in April ‘04 are taxable. The Senior Citizens Savings Scheme offer a 9% taxable return, but its subscription is limited to those above 60 years (55 for those taking voluntary retirement).

Since the bonds will be virtually risk-free, as they carry a government guarantee, the attraction for subscribing to these bonds among the investors, at the cost of other avenues like fixed deposits, will be immense.To take advantage of the scheme, the municipal corporations are working on a switchover to an accrual-based system of accounting, from the present cash-based system. The Institute of Chartered Accountants of India (ICAI) is already working on the draft norms for the new system of accounts, which the municipal bodies are expected to adopt soon.

Hot News

New design centre provides fillip to HCL Technologies
HCL Technologies surged 3.36%, to Rs 488.70 on setting up a dedicated design center for product engineering services in Bangalore for Augmentix Corporation.A total of 31,297 shares were traded on the BSE.The stock has been recovering since the last two weeks. From a recent low of Rs 411.93 on 13 June 2006, the stock rose to Rs 472.80 on 28 June 2006 as the market recovered from a bearish stronghold. Earlier, the stock dropped from a recent high of Rs 662.55 on 3 April to Rs 411.93 on 13 June 2006 under selling pressure in a weak market.

HCL Technologies is setting up a dedicated design center for product engineering services in Bangalore for Augmentix Corporation, one of the leading worldwide suppliers of mission critical solutions for rugged environments. This new dedicated center will allow the company to build on the range of services provided to Augmentix by working on next-generation server platforms and new initiatives.

HCL America, a subsidiary of HCL Technologies, had inked a multi-million dollar agreement with MSC Software Corporation, a global provider of simulation solutions, to participate in the 'One-Oracle' global rollout Oracle 11i applications project. The implementation will include the complete suite of Oracle applications, including financial, CRM, distribution, project and human resources modules.

Earlier this month, the company’s scheme of amalgamation of HCL Technologies (Mumbai), HCL Technologies BPO Services, HCL Enterprise Solutions, DSL Software, Shipara Technologies and Aquila Technologies, all wholly-owned subsidiaries of the company, was approved by the high courts of Delhi and Karnataka.

The company had also signed a distribution agreement for the Asia Pacific region with Qumus, the leading developer of enterprise compliance, governance and risk management solutions. The company is currently the sole distributor of Qumus products in the Asia-Pacific region.The company had also bagged a five-year outsourcing deal worth Rs 1,500 crore from a European electrical retailer, DSG International, in mid-January 2006.

The company had posted a strong third quarter report for the period ended 31 March 2006. The company’s net profit jumped 75%, to Rs 134.76 crore in Q3 March 2006 compared to Rs 76.76 crore during Q3 March 2005. The net sales for the same period jumped 99%, to Rs 708.50 crore from Rs 355.87 crore.

Gail India stiffens
Gail India rose 0.73%, to Rs 255 on signing the annual agreement for performance targets for the FY 2006-07.As many as 4.14 lakh shares were traded on the BSE.The counter had stumbled from a recent high of Rs 320.15 on 5 April to close at Rs 219.15 on 14 June 2006 under heavy selling pressure in a weak market, coupled with poor Q4 results as a result of the heavy subsidy burden. Here, the stock found support and appreciated, as the market recovered from the bearish stronghold, to close at Rs 253.15 on 28 June 2006.

Gail India has announced that the company and Petrobras, Brazil's energy giant, have signed a cooperation and confidentiality agreement last week to become partners during the forthcoming NELP VI bidding. Petrobras has also shown keen interest in partnering the company for exploration projects, including blocks in Iran such as block 12.Gail India has also signed an annual memorandum of understanding (MoU) for performance targets, for the financial year 2006-07. During the year 2006-07, the company has targeted transmission of 76.67 MMSCMD of natural gas from domestic sources and through LNG route. It includes the gas marketing target of 69 MMSCMD. It also provides for a production target of 3.20 lakh MT of polymers and about 1.25 million tonnes of liquid hydrocarbons.

Currently, the company's total exploration acreage is 91,350 sq. km. with the participating interest in 16 exploration blocks. Of these, 7 are on-land blocks and 9 are offshore blocks. The various consortium partners of the company in the 16 blocks are ONGC, GSPC, Gazprom, OIL, IOC, Hardy Exploration & Production, Enpro Finance, ENI India, Jubiliant, GGR Canada, Daewoo, OVL, Korea Gas, Oilex, Videocon, BPCL and HPCL. The company's participating interests in these blocks varies between 10 - 80%.

Recently, the company, along with its consortium partners, signed the exploration and production sharing agreement (EPSA) with the Government of the Sultanate of Oman for Block 56 in Oman. The company has 25% participating interest in the consortium.Gail had announced the incorporation of Aavantika Gas (AGL), a joint venture company between GAIL and Hindustan Petroleum Corporation (HPCL). The joint venture company will implement city gas projects for supply of piped natural gas (PNG) to domestic, commercial and industrial consumers and compressed natural gas (CNG) to automobile consumers in Madhya Pradesh.

The city gas project implementation initially in the city of Indore depending on gas availability and shall be expanded to other cities of Madhya Pradesh such as Gwalior and Ujjain on the basis of financial viability and gas availability.The company has so far formed eight joint venture companies, which are successfully implementing the city gas projects in various cities of the country. Continuing with the market leadership, the company is further planning to form state wise JVCs along with oil marketing companies for Rajasthan, Gujarat, Kerala, Karnataka and West Bengal in the near future.

Earlier this month, Gail India had sold out the entire quantity of the first ever LNG spot cargo bought from Algeria. The LNG, equivalent to 80 MMSCM of natural gas, was sold to consumers like NTPC, Delhi Vidyut Board, Birla Copper and some others. Going forward, the company is in discussion with major suppliers for bringing more LNG cargos from South East Asia, Middle East and North Africa. The first spot cargo of LNG from Sonatrach, Algeria, was received on 20 May 2006 at Dahej.

The company had made a provision of Rs 1,064 crore (previous year it was Rs 1137 crore) as subsidy to bail out the bleeding oil marketing companies as per a directive from the Ministry of Petroleum and Natural Gas.The company plans to invest Rs 5,460 crore in its Assam Gas Cracker project to be set up at an integrated petrochemical complex at Lepetkata, Dibrugarh. It will have a capacity of 2,20,000 tonnes per annum of ethylene and 60,000 tonnes per annum of propylene. It will also produce 55,000 TPA of Raw Pyrolysis Gasoline and 12,500 TPA of Fuel oil.

Gail India had also commissioned the Thulendi-Phulpur pipeline and gas supply has commenced to IFFCO in May. The 18 inch, 139 km pipeline, was commissioned ahead of the schedule committed to the customer for approximately Rs 150 crore.

On 3 March, Indian Oil Corporation (IOC) sold half of its stake in GAIL India for Rs 561 crore through block deals. A total of 20.4 million shares were sold at Rs 275 a share. Life Insurance Corporation (LIC) picked up 9 million shares, while Prudential Asia Fund Management bought around 2.8 million shares.

Gail India has announced that eight national and international firms have responded to the company's invite for the expression of interest (EOI) for transportation of CNG from the A1 block of Myanmar. CNG marine transportation has an inherent advantage over LNG shipping for transporting medium volume of gas up to a distance of 1,500 kms as it obviates the necessity of capital intensive investment towards liquefaction plant at source and degasification plant at delivery point, according to Gail.

On 11 March, Gail had announced that it would discontinue levying of marketing margin on the sale of natural gas covered under the Gas Pricing Order. This follows a communication from the Ministry of Petroleum and Natural Gas to ONGC, GAIL and OIL stating that they shall not levy any marketing margin on all category of consumers covered under the Gas Pricing order of 20 June 2005.

For the fourth quarter ended 31 March 2006, Gail reported 20.8% decline in net profit to Rs 409.26 crore compared to Rs 516.44 crore in Q4 March 2005. The net sales for the same period increased to Rs 3,659.81 crore from Rs 3,610.11 crore.GAIL India registered a net profit rise of 18%, to Rs 2,310.07 crore for the year ended 31 March 2006 as compared to Rs 1,953.91 crore. The net sales for the same period rose to Rs 14,459.41 crore from Rs 13,591.38 crore.

Wednesday, June 28, 2006

Hot News

Strong guidance raises hopes about Suzlon Energy
Suzlon Energy surged 5.36%, to Rs 922 following expectations to expand its order-book by 40% in 2006-07 from Rs 3,303 crore as on 1 April 2006.The company is also focusing on growing its business in the US, China, and Europe market. Suzlon’s members have approved a plan to raise up to Rs 5,000 crore through the issue of a combination of equity and debt-linked instruments to repay a debt of Rs 2,500 crore, which had been raised to finance overseas acquisitions.As many as 79,866 shares changed hands in the counter on BSE.Suzlon Energy has been included in NSE Nifty index effective from 27 June 2006.

The stock slumped sharply from its recent peak of Rs 1,407.60 on 05 April 2006, under selling pressure. The stock drifted to Rs 803.95 on 13 June 2006, as selling continued. Here, it found support and started rising to reach Rs 890 on 27 June 2006.

Suzlon Energy is planning a Rs 550-crore investment in wind power generation in Kerala. The company will invest around Rs 100 crore towards manpower and machinery for the wind farms. The rest of the funds would be raised from investors. Sites in Idukki and Palakad district have been identified for setting up the wind farms. The total project capacity would be of 100 Mw. The power generated from these projects will be offered to local industries and the state electricity board.

During the year, the company emerged as number five among wind turbine gear manufacturers worldwide, capturing 6.1% of the global market. It has 53% market share in India with a cumulative installation of 1,634 Mw.Suzlon claims to be a fully-integrated WTG manufacturer post-acquisition of the world's second largest windmill gearbox manufacturer, Hansen Transmission, for EV of $ 538 million. Suzlon's acquisition of Hansen and JVs for various components (Elin for generators, Kalthia for towers and Winergy for gearbox) provides it with significant time-to-market advantage.

Earlier in May 2006, the company’s wholly-owned subsidiary, AE-Rotor Holding, The Netherlands, had acquired 100% share capital of Eve Holding NV, Belgium, on 10 May 2006 for Euro 431.43 million.

Suzlon Energy posted a 42% rise in net profit to Rs 360.16 crore for the quarter ended 31 March 2006 compared with Rs 253.74 crore for the corresponding quarter previous year. Total income has increased from Rs 981.24 crore in Q4 FY 04-05 to Rs 1,579.60 crore for Q4 FY 05-06.The company has posted 127% surge in net profit to Rs 821.19 crore for the year ended 31 March 2006 (FY 05-06) as compared to Rs 361.46 crore for the year ended 31 March 2005. Total income has increased from Rs 1,940.7 crore in FY 04-05 to Rs 3,857.74 crore for FY 05-06.

Patni Computer Systems on high ground
Patni Computer Systems (PCS) rose 1.25%, to Rs 329 after forming a strategic alliance with Clear Technology.The counter clocked a thin volume of 919 shares on BSE.The stock slipped sharply from its recent high of Rs 485.35 on 16 March 2006, on account of profit-booking at higher levels. The selling continued till Rs 292.90 on 08 June 2006. Here, it found support and started moving higher to Rs 321.05 on 27 June 2006.

Patni Computer Systems has formed a strategic alliance with Clear Technology Inc., a leading global software solutions company serving the insurance financial services and healthcare industries. Under the terms of the agreement, the company will provide worldwide process consulting and system integration services for Clear Technology’s insurance and financial services solutions.

The new alliance will cater to insurance and financial services companies in the US, UK and Asia-Pacific regions.Clear Technology provides software solutions that allow insurance and financial services companies to dramatically reduce operating costs while delivering substantial increase in productivity. Using its patented technology platform, Clear Technology is able to deliver its solution faster and cheaper than existing alternatives.

Patni Computer Systems earlier this month, acquired ZAiQ Technologies, a small ASIC design company, in Woburn MA, by an asset purchase transaction for $ 425,000. The company is buying intellectual property in Application Specific Integrated Circuit (ASIC) design and validation space, active customer contracts and business pipeline along with a sales head and trademarks including other capital assets like hardware and software, Patni informed BSE.

ZAiQ would provide ASIC capabilities for Patni's PES business unit. Patni aims to benefit from ZAiQ's technical capabilities and would get access to ZAiQ's intellectual property for verification and validation.ZAiQ Technologies is a principal provider of outsourced design services and software products to companies that develop complex, high-performance systems and integrated circuits.

In May 2006, Patni Computer Systems launched Legacyx (tm) a new solution framework aimed at helping insurers develop and implement their legacy renewal strategy. The Legacyx (tm) framework is available now to companies in all insurance sectors.The Legacyx (tm) solution framework is a comprehensive suite of time-tested methodologies, tools, templates and best practices that provide insurers a low-risk and proven approach to modernizing their legacy environments.The Legacyx (tm) framework aims to enable insurers to achieve key business objectives such as, reduce IT portfolio total cost of ownership, streamline time and cost of legacy business processes, shorten lead time to respond to market challenges, enable faster new product introduction.

In March 2006, Patni Computer Systems signed a multi-service contract with Disney Mobile, a new mobile phone service designed just for families. The company will be responsible for development of consumer, retail and operational portals and end-to-end system testing across multiple vendors and technologies utilized by Disney Mobile.

Global IT services provider Patni Computer Systems posted 7.7% fall in net profit to Rs 64.24 crore for the first quarter ended March 2006, compared with Rs 68.22 crore recorded during the comparable period of the previous year. The company's profitability was impacted due to changes in onsite compensation structure, lower utilisation rates and an extraordinary cost of about $ 2 million.The company's revenues rose 30.6% to Rs 577.55 crore (Rs 433.74 crore).

Patni Computer Systems is a worldwide leader in information technology services for the telecom industry. It offers services through industry-focussed practices including insurance, manufacturing, financial services, and telecommunications, and through technology-focused practices.Patni’s service lines include application development, application maintenance and support, packaged software implementation, infrastructure management services, product engineering services, business process outsourcing and quality assurance services.

Stock Alert

Ranbaxy may slip on UK court ruling on Lipitor generics
The UK Court of Appeal has rejected Ranbaxy’s appeal against UK High Court’s ruling that its atorvastatin product, the generic version of Pfizer’s blockbuster drug Lipitor, was infringing on the MNC’s European patent. The ruling prohibits Ranbaxy from introducing a generic version of Lipitor in the United Kingdom before the expiration of the basic patent in November 2011, subject to a possible further appeal. In a statement, Ranbaxy said it is evaluating its options to respond.

VSNL has planned a capital expenditure of Rs 1,000 crore in India to primarily step up its network across the country. It plans to increase the points of interconnect (POIs) from the current level of 250 to 500.

ONGC and Reliance Industries (RIL) may slip on reports in a section of the media that the two companies have been asked by the central government to surrender 10 exploratory blocks across the country for failing to make promised investments in these blocks within stipulated timelines. ONGC has been asked to surrender six blocks and RIL four.

Retailer Trent has reported profit before tax and exception items of Rs 9.51 crore for Q4 March 2006 compared to Rs 7.89 crore in Q4 March 2005. Net sales has risen 43% to Rs 90.63 crore (Rs 63.36 crore). The company said the contribution of retail business to profits has improved substantially in FY 2006 (year ended 31 March 2006).

BPCL and HPCL have announced that the Government of the Sultanate of Oman has signed the exploration and production sharing agreement for the on-land exploration block 56 with the consortium comprising BPCL, Oilex (Operator), HPCL, GAIL India and Videocon Industries on 28 June 2006 at Muscat. HPCL’s and BPCL’s participating interest in the block is 12.5% each.

Aurobindo Pharma has announced that the US FDA has granted tentative approval for Abacavir oral solution, which is used in the pediatric AIDS population treatment. It is a class of drugs that helps prevent the AIDS virus from reproducing. It is used in combination with other antiretroviral agents for the treatment of HIV-1 infection. This is the first generic version approval given by US FDA. The company manufactures both API and formulation for this generic. With this approval, the anti-retro viral (ARV) product portfolio of the company has increased to 14.

Patni Computer Systems has formed a strategic alliance with Clear Technology, a leading global software solutions company serving the insurance financial services and healthcare industries. As per the agreement, the company will provide worldwide process consulting and system integration services for Clear Technology’s insurance and financial services solutions.

Icnet has developed and successfully tested a product called ‘Massman Genie’ and have received Rs 2.5 crore in advance from customers, during the quarter, for the supply of the product.

Suzlon Energy’s members have approved a plan to raise up to Rs 5,000 crore through the issue of a combination of equity and debt-linked instruments to repay debt of Rs 2,500 crore, which had been raised to finance overseas acquisitions. The company also expects to expand its order-book by 40% in 2006-07 from Rs 3,303 crore as on 1 April and is focusing on growing its business in the US, China, and Europe market.

AP Paper Mills has posted a net profit growth of 37.79% to Rs 35 crore (Rs 25.4 crore) in Q4 March 2006. Net sales increased to Rs 508.53 crore (Rs 502.34 crore).

How will the market be today??

Volatility expected due to derivatives expiry
Firm Asian markets may trigger firm opening on the domestic bourses today. However, volatility may remain high due to expiry of June 2006 derivatives contracts. Unwinding of long positions and short covering ahead of the derivatives expiry will keep the market volatile. June derivatives contracts expire today.

Asian markets edged higher on Thursday taking cue from Wednesday’s rise in US stocks. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore, Taiwan, Indonesia and Malaysia were up by between 0.5% to 1.5%.

US stocks advanced on Wednesday, led by gains in the energy sector on rising oil prices. But gains were tempered as investors hesitated to place major bets a day before the Federal Reserve's statement on the future direction of interest rates. The Dow Jones industrial average gained 48.82 points, or 0.45% to finish at 10,973.56. The Standard & Poor's 500 Index added 6.80 points, or 0.55% to end at 1,246. The Nasdaq Composite Index advanced 11.59 points, or 0.55% to close at 2,111.84.

The two-day US Fed meeting ends today. Financial markets have priced a 25 basis points rise in US interest rates to 5.25%. The markets have also largely priced in another 25 basis points rise in US rates at the Fed's next meeting in August. There are rising expectations that stocks could rise if the Fed's statement following its two-day policy review provides some certainty on the outlook for US rates. Any signs that the expected rate increase in August would be the last of the Fed's two-year tightening cycle may boost Asian stocks.

As per provisional data, FIIs sold shares worth a net Rs 69 crore on Wednesday 28 June, the day when Sensex had declined 21 points. There have been intermittent bouts of buying and selling by FIIs this month. Their cumulative inflow for June 2006, till 27 June, totaled Rs 799 crore.

Mutual funds continue to press sales. Mutual funds sold shares worth a net Rs 31 crore on Tuesday 27 June, the day when Sensex had risen 109 points in highly volatile trade. The cumulative outflow of mutual funds for June, till 27 June, totaled Rs 2413 crore.

The near term major triggers for the market are Q1 June 2006 results and progress of the monsoon. A well-distributed monsoon will boost agricultural growth, which in turn will help sustain the economic growth momentum. The progress of the monsoon will be known by mid-July 2006.The Q1 June 2006 results are expected to be strong but a section of the market feels that they have already factored into share prices. The Q1 results would start trickling in by 12th to 13th July 2006. Normally, Infosys kickstarts the earnings reporting season.

Nifty 50 Quotes at End Of Day

Company Prev Close LTP %Change
NSE Sensex 2982.45 2981.1 -0.05
ABB 2334.1 2421.2 3.73
ACC 754.75 746.25 -1.13
BAJAJAUTO 2585.95 2691.6 4.09
BHARTIARTL 361 362.25 0.35
BHEL 1801.5 1825.95 1.36
BPCL 331.2 334.65 1.04
CIPLA 214.85 212.85 -0.93
DABUR 130.05 134.15 3.15
DRREDDY 1305 1271.45 -2.57
GAIL 248.85 253.05 1.69
GLAXO 966.1 974.2 0.84
GRASIM 1792.35 1798.7 0.35
GUJAMBCEM 94.5 93.55 -1.01
HCLTECH 474.45 473.9 -0.12
HDFC 1089.05 1051.85 -3.42
HDFCBANK 741.05 726.65 -1.94
HEROHONDA 751.1 756.8 0.76
HINDALC0 161.4 164.75 2.08
HINDLEVER 220 216.15 -1.75
HINDPETRO 255.05 245.1 -3.9
ICICIBANK 498.6 488.9 -1.95
INFOSYSTCH 2967.45 2974.5 0.24
IPCL 252.9 252.2 -0.28
ITC 175.95 177.05 0.63
JETAIRWAYS 625.4 605.35 -3.21
LT 2084.25 2069.9 -0.69
M&M 569.4 582.55 2.31
MARUTI 721.3 723.25 0.27
MTNL 148 147.35 -0.44
NATIONALUM 220.75 220.15 -0.27
ONGC 1062.7 1034.45 -2.66
ORIENTBANK 163 163.35 0.21
PNB 313.95 313.4 -0.18
RANBAXY 361.1 351.5 -2.66
REL 436.85 443.7 1.57
RELIANCE 985.75 1000.95 1.54
SAIL 80.3 77.85 -3.05
SATYAMCOMP 689 684.3 -0.68
SBIN 730.05 714.6 -2.12
SIEMENS 841.85 835.4 -0.77
SUNPHARMA 763.2 760.45 -0.36
SUZLON 891.95 870.7 -2.38
TATAMOTORS 745.3 741.5 -0.51
TATAPOWER 451.7 454.5 0.62
TATASTEEL 518.55 514.3 -0.82
TATATEA 750.05 747.95 -0.28
TCS 1644.55 1698.6 3.29
VSNL 384 398.8 3.85
WIPRO 473.9 484.15 2.16
ZEETELE 224.2 226.5 1.03

Markets Today

Miniscule drop; RIL rises
After high volatility on Tuesday, the Sensex ended slightly lower today. Volatility was relatively lesser today. The benchmark index made an intra-day rebound after the initial fall, as traders resorted to short covering in derivatives ahead of expiry of June 2006 derivatives contracts on Thursday. The benchmark index lost 21.31 points (0.21%), to settle at 10,129.70. In early trade, the benchmark index had plunged as much as 241.25 points, to a low of 9,909.76.The S&P CNX Nifty declined slightly to 2,981.10 from Tuesday’s closing of 2,982.45.

The US rate outlook continued to cloud sentiment among equity investors in Asia on Wednesday. A meeting of the US Federal Reserve is scheduled on 28-29 June. Financial markets have priced a 25 basis points rise in US interest rates to 5.25%. Some market expectations see a small chance of a bigger half-point rise in US rates this week. A 50-basis-point increase would undoubtedly hit markets. Investors will also look to the Fed's statement for hints on future action. Analysts say the Fed's policy statement is likely to leave the door open to another increase at the next meeting in August.

At home, IT stocks, select auto shares and power sector related shares advanced. Metal shares recovered from their lower level. Cement pivotals were mixed. Index heavyweight Reliance Industries (RIL) firmed up. Oil shares and banking shares declined.

GE Shipping surged on reports that oil exploration major, ONGC, had cleared the demerger of the offshore services unit of GE Shipping into a separate company.Large block deals were executed in Sintex Industries, Geodesic Information, Indiabulls, Mount Everest Mineral Water, DCM Shriram Industries and Assam Company.

BSE clocked a turnover of Rs 3,592 crore compared to Tuesday’s Rs 3,644 crore.The market-breadth was weak. Against 1,487 stocks that declined on BSE, 854 rose. A substantial 77 scrips were unchanged. Losers outpaced gainers by a ratio of 1.7:1.

RIL gained 1.5% to Rs 1,001 as 44.1 lakh shares changed hands in the counter. As per reports, RIL’s minority partner, Niko Resources, has upgraded reserves of their massive D-6 gas field, off India's eastern coast. The Canadian firm raised the reserves to 35.4 trillion cubic feet of gas, more than triple an earlier estimated 11.4 trillion cubic feet. Meanwhile, RIL on Tuesday said it will spend Rs 25,000 crore over the next few years to create a giant retail network of shops to cash in on the consumption boom in big cities and the rural hinterland.

Two-wheeler major Bajaj Auto gained 4% to Rs 2,695. As many as 32,759 shares changed hands in the counter on BSE. Hero Honda (up nearly 1% to Rs 759) rose for the second day after the company launched the Glamour FI 125-cc motorcycle. This is the first motorcycle in the Indian market to feature the fuel injection technology.

GE Shipping jumped 10% to Rs 228 on reports that oil exploration major, ONGC, had cleared the demerger of the offshore services unit of GE Shipping into a separate company. ONGC is a major customer for offshore services of GE Shipping and had earlier objected to the de-merger.

Cement stocks were mixed. Grasim gained 1.9% to Rs 1,822 and UltraTech Cement rose 1.8% to Rs 700. But ACC shed 1.4% to Rs 743 and Gujarat Ambuja Cements lost 1% to Rs 93.25 crore. Cement makers have reportedly cut prices in Mumbai between Rs 2 - 4 per 50 kg bag.

IT shares advanced. TCS rose 3%, to Rs 1,693, Wipro gained 1.7% to Rs 483, and Infosys rose 0.8% to Rs 2,980.

Power-equipment makers advanced. Bhel rose 1.4% to Rs 1,825, ABB gained 3.7% to Rs 2,425, Crompton Greaves gained 3.5%, to Rs 866, and Thermax gained 1.8%, to Rs 256.
Cigarette major ITC rose 0.7%, to Rs 177.60. A block deal of 19.85 lakh shares was executed in the scrip on BSE at Rs 176 per share.Oil shares faltered. Oil exploration major ONGC lost 2.6% to Rs 1,034.40. Among refiners, HPCL lost 4% to Rs 244, and Indian Oil Corporation declined nearly 1% to Rs 400.15. But BPCL rose 0.2% to Rs 332. Gas transmission firm GAIL India gained 2.3% to Rs 255.

Prospects of further rise in domestic interest rates weighed on bank shares. ICICI Bank shed 2.3% to Rs 487, State Bank of India shed 2% to Rs 715 and HDFC Bank shed 1.9% to Rs 725.55. Housing finance major HDFC lost 3.5% to Rs 1,051.80.Iron ore exporter Sesa Goa lost 5% to Rs 1,051. As many as 75,689 shares changed hands in the counter on BSE.Sintex Industries gained 0.2% to Rs 158. A block deal of 19.7 lakh shares was executed in Sintex Industries on BSE at Rs 154 per share.

Pfizer rose 1.1% to Rs 769. Pizer today reported 131.9% growth in Q2 May 2006 net profit to Rs 35.89 crore (Rs 15.47 crore). Total income rose 22.6% to Rs 177.98 crore (Rs 145.13 crore).

Areva T&D jumped 5% to Rs 524.50 and Hindustan Construction rose 4.4% to Rs 102 after a key US committee on Tuesday took the first step toward approval by the US Congress of a nuclear cooperation deal with India. Areva is seen benefiting from Indo-US nuclear cooperation, which may pave the way for setting up a nuclear power plant in India as its parent unit in France is the biggest builder of nuclear reactors.It is also reckoned that continued Indo-US relations will be good for the market at the macro level as it will boost bilateral trade.

Vadilal Industries lost 3.3% to Rs 20. The company said on Wednesday it will set up a new plant in West Bengal at a cost of Rs 9.74 crore.Apar Industries ended flat at Rs 198. The company on Tuesday reported a 82.4% growth in Q4 March 2006 net profit to Rs 16.15 crore (Rs 8.85 crore). Net sales rose 49.8% to Rs 327.99 crore (Rs 218.89 crore).Jain Irrigation lost 1.1%, to Rs 206. The company on Tuesday reported a 86.7% growth in Q4 March 2006 net profit to Rs 33.19 crore (Rs 17.77 crore). Sales rose 50.7% to Rs 329.97 crore (Rs 218.87 crore).

RPG Life Sciences lost 0.7% to Rs 118.05. The company on Tuesday reported turnaround Q4 March 2006 results. It posted a net profit of Rs 3.52 crore for Q4 March 2006 as compared to a net loss of Rs 5.12 crore for Q4 March 2005. Net sales rose 26% to Rs 33.85 crore (Rs 26.82 crore).Birla Corporation surged nearly 4% to Rs 218.95 on the back of strong Q4 March 2006 results. Birla Corporation’s net profit jumped 76% to Rs 67.14 crore for Q4 March 2006 compared to Rs 38.14 crore in Q4 March 2005. Total income has increased from Rs 352.23 crore to Rs 396.91 crore.Avaya GlobalConnect gained 3% to Rs 284.90. The company today said the dividend of Rs 4.50 per share for FY 2006 will be payable on and after 11 August 2006.Elecon Engineering dropped 1.9% to Rs 980 after the company’s board today approved a 5-for-1 stock split.

WS Industries lost 2.2% to Rs 47.10 after the company said it intends to set up a Rs 100 crore greenfield plant to produce 8,000 tonnes of electrical insulators. The new plant will be fully operational by April 2008 and will expand the capacity by 60%.
Punj Lloyd lost 3.3% to Rs 697. The company on Tuesday reported a net profit of Rs 35.14 crore for FY 06 (year ended 31 March 2006) compared to Rs 8.14 crore in FY05. Total income has decreased to Rs 1,403.03 crore from Rs 1,492.41 crore.Asian Paints lost 0.5% to Rs 577. As per reports, the company has raised prices of some of the products by Rs 2 to Rs 3 a litre.

The near term major triggers for the market are Q1 June 2006 results and progress of the monsoon. A well-distributed monsoon will boost agricultural growth, which in turn will help sustain the economic growth momentum. The progress of the monsoon will be known by mid-July 2006.The Q1 June 2006 results are expected to be strong but a section of the market feels that they have already factored into share prices. The Q1 results would start trickling in by 12th to 13th July 2006. Normally, Infosys kickstarts the earnings reporting season.
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