Wednesday, August 30, 2006

Pick up in FII puchases

Huge inflow of Rs 368.90 crore on 29 August.Foreign institutional investors (FIIs) were buyers for the fourth day in a row on Tuesday (29 August 2006). They bought shares worth a net Rs 368.90 crore compared to Monday’s (28 August) purchases of Rs 43.40 crore.

FIIs made gross purchases worth Rs 1,485.60 crore and gross sales worth Rs 1,116.70 crore on 29 August 2006. The 30-share BSE Sensex surged 87.33 points (0.75%), to settle at 11,706.85 on 29 August 2006.

FII inflows for August 2006, till 29 August, stood at Rs 4,306.20 crore compared to Rs 4,793.10 during the same period last year.

For the calendar year 2006, the total FII inflows aggregate Rs 17,052.50 crore, a decline of 47.68% compared to Rs 32,596.20 crore during the same period last year.

Stock Alert

Gujarat Gas may fall as it warns of Rs 6 crore hit in Q3 profits
Gas transporter Gujarat Gas Company said its pretax earnings for July-September 2006 quarter would be hit by Rs 6 crore after floods in Gujarat affected gas supplies and prices. "Lower offtake of gas by some of the customers and alternative sourcing of gas supplies at higher rates is expected to impact the company," Gujarat Gas said in a statement on Wednesday. The company, which is an arm of Britain's BG Group, said the impact was limited only to the present quarter. Gujarat Gas runs a city gas distribution network in the city of Surat and its operations were hit after flood waters entered its facilities in the region.

Packaging firm Essel Propack said on Wednesday it signed an agreement to buy out Packaging India, a unit of personal care and cosmetic products maker CavinKare Pvt. Ltd.

Sun Pharmaceutical Industries has received final approval from the US Food and Drug Administration to market gabapentin capsules and tablets. Gabapentin is a generic version of Pfizer Inc.'s epilepsy drug Neurontin.

Tractor and motorcycle maker Escorts said on Wednesday its board had approved the divestment of its entire shareholding in Carraro India to its joint venture partner Carraro S.p.A. of Italy for 20 million euros. Escorts decided to sell off the stake because the company wants to focus on three core areas - tractors, construction equipment and auto components.

NCL Industries said on Wednesday its board had approved the issue of one s0hare for every six held in NCL Energy for the merger of the two companies. NCL Energy is engaged in generation of hydel power, having two projects of 7.5 MW and 8.25 MW in Andhra Pradesh and Karnataka respectively, generating power for the last few years.

State-run Andhra Bank said on Wednesday its board approved forming a joint venture with Japan's Dai Ichi Mutual Life Insurance and Bank of India to enter the life insurance business.

How will the market be today??

Volatility may prevail ahead of derivatives expiry
Steady to firm Asian markets and figures showing a surge in FII inflow in the past two trading sessions may trigger firm opening on the domestic bourses today. Oil price rose slightly but it remains sharply lower that a record high of $78.40 a barrel hit last month.

Volatility may be high today due to alternate bouts of short covering and bull unwinding in the derivatives segment ahead of expiry of August 2006 derivatives contracts. August derivatives contrasts expire today. The rollover from August to September contracts has been about 55% so far.

Asian stocks edged higher on Thursday (31 August) after the US government on Wednesday reported that gross domestic product grew at a pace that was slightly faster than first reported, in the second quarter. Key benchmark indices in Hong Kong, Japan, South Korea and Singapore were up by between 0.42% to 1.6%.

The Nasdaq rose and the blue-chip Dow edged up on Wednesday after a government report showed economic growth, while slowing, remains fairly strong. But comments late in the session from Jeffrey Lacker, the president of the Federal Reserve Bank of Richmond, took some of the shine off the market's advance. The Dow Jones industrial average advanced 12.97 points, or 0.11% to end at 11,382.91. The Standard & Poor's 500 Index was down a mere 0.01 of a point, or unchanged on a percentage basis, to finish at 1,304.27. The Nasdaq Composite Index rose 13.43 points, or 0.62% to close at 2,185.73.

NYMEX crude for October delivery rose 34 cents to $70.37 a barrel in Asian trading on Thursday despite an unexpected build in US crude and gasoline inventories, as Iran appeared set to defy a UN deadline to halt nuclear fuel work -- exposing the world's fourth largest oil exporter to possible sanctions.

As per provisional data, FIIs bought shares worth a net Rs 287 crore on Wednesday (30 August), the day when Sensex rose 17 points. The net FII inflow on Tuesday (29 August) was Rs 369 crore. Sensex had risen 87 points on that day.

Mutual funds bought shares worth a net Rs 73 crore on 29 August. Mutual funds are sitting on good amount of cash and they may step up purchases at declines.

Nifty 50 Quotes at End Of Day

Company Prev Close LTP %Change
NSE Sensex 3425.7 3430.35 0.14
ABB 2826.95 2803.95 -0.81
ACC 912.35 922.25 1.09
BAJAJAUTO 2720.4 2689.6 -1.13
BHARTIARTL 415.25 413.8 -0.35
BHEL 2283.3 2283.6 0.01
BPCL 352.65 373.75 5.98
CIPLA 248.3 248.35 0.02
DABUR 138.2 138.3 0.07
DRREDDY 713.4 719.3 0.83
GAIL 271.55 270.6 -0.35
GLAXO 1202.05 1203.85 0.15
GRASIM 2225.8 2264.75 1.75
GUJAMBCEM 114.75 114.75 0
HCLTECH 580.6 578.85 -0.3
HDFC 1290.7 1300.7 0.77
HDFCBANK 845.45 840 -0.64
HEROHONDA 719.3 720.4 0.15
HINDALC0 175.4 173.4 -1.14
HINDLEVER 234.9 236.5 0.68
HINDPETRO 270.75 282.9 4.49
ICICIBANK 595.3 593.9 -0.24
INFOSYSTCH 1805.8 1801.2 -0.25
IPCL 294.2 293.7 -0.17
ITC 184.65 187.35 1.46
JETAIRWAYS 560.25 556.6 -0.65
LT 2433.95 2430.5 -0.14
M&M 656.85 657.35 0.08
MARUTI 855.2 862.3 0.83
MTNL 158.5 161.3 1.77
NATIONALUM 208.75 204.75 -1.92
ONGC 1221.6 1221.45 -0.01
ORIENTBANK 195.5 198.05 1.3
PNB 463.2 471.75 1.85
RANBAXY 395.5 405.3 2.48
REL 448.7 439.5 -2.05
RELIANCE 1118.85 1128.8 0.89
SAIL 77.2 74.7 -3.24
SATYAMCOMP 818.7 819.45 0.09
SBIN 922.05 930.75 0.94
SIEMENS 1052.8 1049.85 -0.28
SUNPHARMA 906.7 905.8 -0.1
SUZLON 1236.05 1235.6 -0.04
TATAMOTORS 845.4 854.25 1.05
TATAPOWER 538.8 526.3 -2.32
TATASTEEL 517.25 506.85 -2.01
TATATEA 829.2 821.45 -0.93
TCS 990.1 983.8 -0.64
VSNL 415.95 421.6 1.36
WIPRO 525.6 526.35 0.14
ZEETELE 287.75 289.6 0.64

Markets Today

Sensex ends nearly flat
The benchmark index ended positive after witnessing high volatility throughout the day. Index heavyweights RIL, SBI, ITC and Ranbaxy propelled the barometer index above the 11,750 mark in late afternoon trade.With today’s 17-point surge, the Sensex has advanced 317 points (2.78%) in the last five sessions, from 11,406.65 on 23 August 2006. RIL has led the rally from the forefront.

The BSE 30-shares Sensex ended 17.07 points (0.15%) higher, on 11,723.92. After opening firm at 11,735.05, the Sensex showed signs of nervousness and started declining. The slide continued till the Sensex hit a low of 11,643.38.The barometer index had surged to a fresh high of 11,756.08, in late afternoon trade as buying intensified.It oscillated 113 points, with a high degree of volatility, which is expected to remain high till Thursday, ahead of the expiry of Futures & Options contracts for August.The S&P CNX Nifty rose 4.65 points (0.14%), to 3,430.35.

The market-breadth, strong in early trade, turned negative as selling pressure ate into small-cap and mid-cap stocks. However, it has also recovered along with the broader market. For 1,064 shares that advanced on BSE, 1,461 declined. As many as 72 shares were unchanged.The BSE Mid-Cap index was down 0.09% while the BSE Small-Cap index lost 0.35%.The total turnover on BSE amounted to Rs 2,607 crore. It was lower than that of Tuesday’s Rs 2,715 crore.Among the 30-Sensex pack, 17 declined while 13 advanced.

Ranbaxy Laboratories jumped 2.40% to Rs 405 on a volume of 4.30 lakh shares after the company got a favourable ruling from a Norwegian court involving two patents on Atorvastatin. Atorvastatin is a cholesterol-lowering drug marketed by Pfizer as Lipitor. A Norwegian court ruled in its favour, and against Pfizer Inc., in a case involving two patents of a cholesterol-lowering drug. An Oslo city court found that Ranbaxy's Atorvastatin did not infringe upon Pfizer's Norwegian patents, the Indian pharma major said in a statement.

Index heavyweight Reliance Industries (RIL) rose 1.11%, to Rs 1,129.15 on a volume of 12.06 lakh shares. It surged to a high of Rs 1134.95, while the low for the day was Rs 1,107.

ITC (up 1.85% to Rs 188), Grasim (up 1.62% to Rs 2,260) and SBI (up 1.20% to Rs 932.15) were the other gainers.

REL (down 2.40% to Rs 437.45), Bajaj Auto (down 1.20% to Rs 2685) and NTPC (down 1.92% to Rs 125) were prime losers.

Reliance Communications lost 1%, to Rs 306 on a volume of 9.26 lakh shares. The company has deployed a next generation IP based ILD network, which will have a capacity to carry 12 billion minutes of voice traffic annually.

RIL was the top-traded counter on BSE with a total turnover of Rs 135.74 crore followed by Tata Steel (Rs 76.67 crore) and Tech Mahindra (Rs 64.61 crore).

Two block deals, of 8.17 lakh shares and 2.46 lakh shares, were executed in the Eveready Industries counter at Rs 99.50 and Rs 100 per share respectively by 12:30 hours. The stock ended 4.90% lower, at Rs 98.10, on a cumulative volume of 15.06 lakh shares.

Metal stocks came under pressure today following reports that steel prices may be cut by Rs 750 to Rs 1,000 per tonne, from 1 September 2006, in line with global metal prices. Also, PSU steel maker SAIL will decide the quantum of price cut Thursday. This soured the sentiment in metal stocks.

The BSE Metal index lost the most from among sectoral indices, plummetting 184.92 points (2.20%), to 8,221.80. Tata Steel (down 2.20% to Rs 515.65), SAIL (down 2.80% to Rs 75.10), Essar Steel (down 3.43% to Rs 36.60), Tata Sponge (down 1.93% to Rs 111.50), Hindustan Zinc (down 4.23% to Rs 577.20), Sterlite Industries (down 3.60% to Rs 421) and Hindalco (down 1.37% to Rs 173.10) were the major losers.

Refinery shares edged higher on renewed buying as crude oil price fell below $70 a barrel, its lowest in more than two-months. A fall in crude oil price, the government’s decision to issue oil bonds and value-buying has aided refinery shares in the past few days.

HPCL (up 4.30%, to Rs 283), BPCL (up 5.86% to Rs 373.25), Indian Oil Corporation (IOC) (up 1.66% to Rs 493.50), IBP (up 1.10% to Rs 486.50), Chennai Petroleum (up 1.4% to Rs 201) and Kochi Refineries (up 6.05% to Rs 163) advanced.

Among side-counters, Jay Bharat Maruti jumped 10.83%, to Rs 110.50 on expectations that it will shortly announce a record date for bonus issue. The company had already declared a liberal 1:1 bonus issue on 01 August 2006.

Infotech Enterprises rose 1%, to Rs 212 after its wholly-owned subsidiary, Infotech Enterprises America, signed an agreement with IBM to jointly provide services to assist clients across the globe in accelerating the deployment of product lifecycle management (PLM) and engineering solutions for the manufacturing industry.

United Phosphorus surged 3.67%, to Rs 240 on purchase of crop protection products from Bayer CropScience AG, Germany, to the tune of Euro 43.5 million, which also includes inventories. Among the products purchased are systemic carbamate herbicidal active ingredient Asulam (brand names Asulox Asilan ) and two insecticidal products. Bayer CropScience has retained certain rights related to non-agricultural uses in strategic markets.

Praj Industries surged 2.12%, to Rs 178.10 after its board earmarked Rs 100 crore for expansion and acquisitions of an engineering company in the US. The company has also planned investments in a new R&D center, two manufacturing workshops nearer to the port and in expanding the engineering center at Pune. This expenditure will be carried out over a period of 12-15 months.

Emco rose 0.70% to Rs 533 after it bagged a Rs 270 crore power transformer order from Karnataka Power Transmission Corporation.

Hercules Hoists spurted 6.30%, to Rs 2,380 on fixing 15 September 2006 as a record date for allocating 1:1 bonus shares.

Indo Asian Fusegear rose 1.66%, to Rs 137.50 on a high volume of 25.43 lakh shares after it was reported that Indo Asian Fusegear plans to invest Rs 30 crore in a joint venture with a unit of Spain's Simon Holding. The joint venture will make wiring accessories and home automation systems in India.

Cadila Healthcare turned ex-bonus today, issuing 1:1 bonus shares to shareholders. The scrip closed at Rs 338 on a volume of 16,929 shares.

The Hang Seng index rose 201.43 points (1.18%), to 17,284.71 while the Nikkei 225 index lost 18.54 points (0.12%), to 15,872.02.

US markets rebounded from their early lows and ended with steady gains on Tuesday after minutes from the last Fed meeting mellowed concerns about rate hikes. The Dow Jones advanced 18 points to 11,370, while the Nasdaq Composite rose 12 points, to finish on 2,172.

Crude oil prices rose after a sharp decline on Tuesday; the Nymex light crude oil for October delivery rose 51 cents, to $ 70.22 a barrel.

On 28 August 2006, FIIs were net buyers of stocks to the tune of Rs 43.40 crore (gross purchases worth Rs 806.50 crore and gross sales of Rs 763.10 crore) while domestic mutual funds were net sellers of stocks to the tune of Rs 10.84 crore (gross purchases worth Rs 331.73 crore and gross sales of Rs 342.57 crore).

Hot News

MIRC Electronics hits a purple patch
MIRC Electronics surged 20%, to Rs 22.10, with the scrip rising on a high volume of 23 lakh shares on BSE.Today the volume was much higher than the average daily volume in the past one year (1.3 lakh shares) on BSE .The stock has surged since early this month on the back of a recovery in small-cap and mid-cap shares. From a low of Rs 15.60 on 7 August 2006, it has gained 41.6% to the current Rs 22.10.

The current price of Rs 22.10 discounts its FY 2006 (year ended 31 March 2006) EPS of Rs 2.30, by a PE multiple of 9.60.

To reduce dependence on a single product for growth, MIRC ventured into the audio, air-conditioner and the home appliances market in recent months to leverage the strength of the Onida brand.

The company enjoys 13% share in the Indian colour television (CTV) market. During the recently concluded soccer world cup, the company initiated an aggressive advertising campaign to promote its premium electronics products along with its low cost products. This will augur well for the company during the coming festive season.

MIRC Electronics competes with leading MNC brands like LG Electronics, Samsung, Sony, Phillips in its core CTV business.

The company’s recent initiative to foray into telecom service is quite interesting. Although the business structure has not been decided on that front, the company may become a MVNO (Mobile Virtual Network Operator). In such an arrangement, the company provides the branded last mile mobile service to customers on a major telecom operators network.

For Q1 June 2006, MIRC Electronics reported 15% growth in net profit to Rs 7.29 crore, on 40% growth in sales to Rs 333.50 crore.

Hot News

Solar business consolidation plan makes Moser Baer volatile
Moser Baer rose 1.84% to Rs 193.50 in early trade after the company announced plans to invest $ 17 million in its solar technology arm, but soon pared gains.The scrip was trading flat at Rs 190.A thin volume 5,238 shares was traded on the BSE.The counter has seen much volatility in the last few weeks. From a low of Rs 169.85 on 24 July, it advanced amid much volatility to close at Rs 190 on 29 August 2006.

Moser Baer India's board has approved an investment of $ 17 million in Moser Baer Photo Voltaic (MBPV), its wholly-owned subsidiary, in the high growth global photo voltaic industry. This investment will be in a phased manner and provide further impetus to MBPV's technology and R&D initiatives.

MBPV is setting up a PV cell & module manufacturing project with an 80 Mw capacity in India's first renewable energy SEZ at Greater Noida, UP, India.

The global photovoltaic market is on a high growth curve - sales expected to grow over $ 40 billion by 2010. This demand is also highly price elastic. A lowering of PV electricity costs to conventional levels could exponentially expand this market as photo voltaic (PV) starts to penetrate into base load demand of electricity.

Last month, Moser Baer India proposed a 100% subsidiary in Cyprus with an initial capital of Euros 25,000 for acquiring / setting up optical media and other businesses, including acquiring future technology in Europe, US and the rest of the world. The proposed subsidiary would help identify opportunities in global R&D in optical media and other technologies and simultaneously, look for setting up greenfield projects in Europe and other global markets.

In late July, the company had begun exporting HD DVD-R (recordable), a next generation format, to its global original equipment manufacturer (OEM) customers. The HD DVD-R has a capacity of 15 GB and offers more than three times the data storage capacity of standard DVD media.

On 20 February, Moser Baer India announced that it will establish and invest in a new public limited subsidiary, to function as 'developer' of SEZs. The company has decided to set-up this firm as a special economic zone unit.

Moser Baer India registered a net profit of Rs 6.47 crore for Q1 June 2006 compared to a loss of Rs 11.15 crore in Q1 June 2005. Net sales rose 30% to Rs 454.52 crore from Rs 349.88 crore.

Ranbaxy upbeat on favourable court verdict
Ranbaxy Laboratories surged 1.52%, to Rs 401.50 on getting a favourable ruling from a Norwegian court involving two patents on Atorvastatin.As many as 1.99 lakh shares were traded on the BSE.The scrip witnessed a bout of volatility in the first quarter of FY 2007. It moved up from Rs 393.15 on 23 March to Rs 504.15 on 21 April on three overseas acquisitions. Here, the scrip dropped to Rs 470.55 on 27 April, only to rise to Rs 522 by 2 May. Thereafter, it tumbled in a weak market to Rs 342.15 by 8 June 2006. After finding support at this level, the stock rose to Rs 391.20 on 25 June as the market recovered from a bearish hold. Thereafter, the stock slipped to Rs 320.40 on 17 July 2006 only to rally to Rs 395.50 on 29 August on strong Q1 results and on US FDA approvals for generic entities.

At the current market price of Rs 401.50, Ranbaxy Laboratories trades at 52.14 times its Q2 June 2006 annualized consolidated EPS of Rs 7.70.

Ranbaxy Laboratories has announced that a Norwegian court has ruled in favour of the company in its case against Pfizer, involving two patents on Atorvastatin. Atorvastatin is a cholesterol-lowering drug marketed by Pfizer as Lipitor.

Recently, Ranbaxy Laboratories launched its Soliten (Solifenacin) in India for managing chronic urological disorder. The product is being introduced for the first time in India. Soliten will be sold in dosage form of 5 mg and 10 mg tablets.

Ranbaxy Laboratories has plans to sell a manufacturing facility in Ireland and consolidate its Romanian operations. In June, Ranbaxy acquired Romania's Terapia S.A. for $ 324 million, to boost its presence in the fast-growing CIS markets.

Earlier this month, Ranbaxy Laboratories received tentative approval from the US Food and Drug Administration for risperidone oral solution, to treat schizophrenia, whose total annual sales touch $ 66 million. Further, the company had signed a deal in July with the Canada-based Janssen-Ortho to supply generic risperidone tablets in the North American nation.

In early July, Ranbaxy Laboratories received approval from the US Food and Drug Administration to manufacture and market Cefprozil oral suspension USP, 125 mg/5ml and 250 mg/5ml. The total annual market sales for Cefprozil are estimated at $93 million.

Faced with tough pricing pressure in the US, Ranbaxy has turned to Europe. It purchased Romania's Terapia for $324 million earlier this year, followed by Belgium's Ethimed NV, GlaxoSmithKline's Italian and Spanish generic business, and the rights and assets of Senetek Plc's autoinjector device. Europe is the largest generics market in the world after the US.

In mid-July Nihon Pharmaceutical Industry (NPI), a joint venture of Ranbaxy Laboratories and Nippon Chemiphar, launched the generic versions of Clarithromycin as well as Terbinafine tablets in Japan. Clarithromycin is an anti-biotic and Terbinafine an anti-fungal with market sizes of around $400 million and $300 million respectively in Japan.

In early June, Ranbaxy Laboratories struck a strategic partnership with US-based Invagen Pharmaceuticals to market Zonisamide capsules in the US.

Ranbaxy Laboratories registered a consolidated net profit growth of 20% to Rs 121.10 crore (Rs 101.30crore) for Q2 June 2006. Net sales during the period rose 9% to Rs 1,433.90 crore (Rs 1,317.70 crore).

Tuesday, August 29, 2006

SAT slaps Rs 2 lakh fine on Sebi

The Securities and Exchange Board of India (Sebi) has been penalised by the Securities Appellate Tribunal (SAT) for wrongly debarring a listed company and its promoters from accessing the capital market for a period of five years.

The tribunal has not only set aside the Sebi order debarring these entities but has also directed the regulator to pay the cost of the litigation to these entities.

SAT in its order, the copy of which is available with FE, has asked the Sebi to pay Rs 2 lakh within six weeks from the date of the order. The SAT order was passed on August 24, '06. This is the second instance of SAT asking the capital market regulator to cough up the cost of litigation to the market intermediaries.

Earlier this year, the three-member bench headed by presiding officer, Justice NK Sodhi had directed Sebi to pay Rs 50,000 as cost of litigation to Times capital Ltd, a stock broker. The broker was asked to pay the turnover fees, where none was due from him and the regulator withheld his various permissions.

In the instant case, Sawaca Business Machines Ltd (Sawaca) was debarred from accessing capital market through an order passed by Sebi whole time member AK Batra on July 13, 2004.

The Sebi contention was that the preferential allotment of shares made by the Sawaca was not in accordance with the law and that the company had resorted to fictitious book entries for showing receipt of subscription towards the preferential allotment and thereby violated Sebi's Fradulent and Unfair Trade Practices (FUTP) Regulations.

SAT in its order disposed off all the allegations made by Sebi in impugned order and said it is arbitrary to the case. By debarring the appellant (Sawaca), who is a listed company, its reputation has been damaged. The Sebi order has also worked as detriment to the shareholders of Sawaca.

“The damage caused is irreparable both to the company and its shareholders. We are, therefore, of the view that this is a fit case where the Board (Sebi) should be burdened with heavy costs.”

Stock Alert

EMCO may gain on new order win
EMCO has received power transformers order worth Rs 270 crore from Karnataka Power Transmission Corporation (KPTCL) which is funded by Power Finance Corporation and is to be executed within 1 year. With this order, the company's order book stands at a record high of Rs 810 crore, EMCO said in a statement.

Lloyd Electric & Engineering has signed a memorandum of understanding (MOU) with Hanyung Alcobis Company, a Korea based company, for manufacturing of Roll Bond and Fin Cross Evaporators including all type of Evaporator/condensor for refrigerators produced by the Korean Company.

Moser Baer India has received the approval from its board of directors for investment of an additional $ 17 million (Rs 79.20 crore) in Moser Baer Photo Voltaic Ltd (MBPV), a wholly owned subsidiary in the high growth global photo voltaic industry. This investment will be in a phased manner and provide further impetus to MBPV's technology & R&D initiatives in exciting & emerging technology verticals in the global PV space, Moser Bear India said in a statement.

Geometric Software Solutions Company has announced formation of a new group for Virtual Product Design. This would further align the focus of the company to that of the OEM's who are moving away from physical prototypes to virtual or digital mock ups to reduce cost and time to market entry of new models, the company said in a statement. The VPD group will facilitate additional capability to the company in terms of offering services in the area of advanced CAE and CFD for automobile, aerospace and the general engineering domains, the company said.

Packaging company Radha Madhav Corporation said late on Tuesday that its board had decided to allow foreign investment in the company up to 30% of the expanded capital.

Generic drugmaker Ranbaxy Laboratories on Tuesday said a Norwegian court ruled in its favor against Pfizer Inc. involving two patents on a cholesterol-lowering drug. The Oslo city court found that Ranbaxy's Atorvastatin was not infringing Pfizer's Norwegian patents, Ranbaxy said in a statement.

How will the market be today??

Volatility may heighten ahead of derivatives expiry
The market may open firm on the back of steady to firm Asian markets and on further fall in crude oil price. In the next two days, the market may turn volatile due to alternate bouts of short covering and bull unwinding in the derivatives segment ahead of expiry of August 2006 derivatives contracts on Thursday (31 August). Historically, short covering has been witnessed ahead of the futures expiry.

Asian stock markets inched higher on Wednesday on growing expectations of an extended pause in US interest rate rises, but gains were limited by worries of flagging consumer confidence in the world's biggest economy. Key benchmark indices in Hong Kong, Japan, Taiwan and Singapore were up by between 0.29% to 1.6%. South Korea’s Seoul Composite was slightly lower.

US stocks rose on Tuesday as minutes from the latest Federal Reserve meeting helped to cement investors' view that the Fed won't need to raise interest rates again any time soon and crude oil prices dropped below $70 a barrel. The Dow Jones industrial average gained 17.93 points, or 0.16% to end at 11,369.94. The Standard & Poor's 500 Index added 2.50 points, or 0.19% to finish at 1,304.28. The Nasdaq Composite Index climbed 11.60 points, or 0.54% to close at 2,172.30.

Crude oil recouped part of Tuesday’s fall. NYMEX crude for October delivery rose 29 cents to $70 a barrel in Asian trading on Wednesday, supported by an expected decline in US crude and gasoline stocks in statistics due later on Wednesday and Iran's determination to press ahead with its nuclear programme.

As per provisional data, FIIs bought shares worth a net Rs 203 crore on Tuesday (29 August), the day when Sensex had risen 87 points. On Monday 28 August, FIIs bought shares worth a net Rs 43.40 crore. There has been sustained FII buying since late July 2006.

Mutual funds sold shares worth a net Rs 11 crore on 28 August. Mutual funds are sitting on good amount of cash and they may step up purchases at declines.

Friday, August 25, 2006

Tech Mahindra to debut on BSE, NSE on 28 August

IPO was priced at Rs 365 per share
Shares of Tech Mahindra will be listed on BSE and NSE on Monday (28 August 2006). The IPO was priced at Rs 365 per share, the upper end of the Rs 315 - 365 price band.

The issue had received an overwhelming response from FIIs.The post-issue, paid-up equity capital of Tech Mahindra is Rs 115.87 crore. Each share has a face value of Rs 10.

Tech Mahindra (TML) is a leading provider of IT services and solutions to the telecommunications industry. Nasscom ranked TML as the eighth largest Indian IT services company in export revenue in 2005-06.

Traditionally, the focus of TML was on telecommunications service providers (TSPs). But after the acquisition of Axes Technologies in November 2005, the coverage has expanded to telecommunications equipment manufacturers (TEMs) and independent software vendors

Markets Today

Sensex ends above 11,500
The benchmark index finished stronger for the second straight day after experiencing hiccups in the afternoon session of trade, as blue-chip counters found support.The BSE 30-shares Sensex ended with gain of 40.25 points (0.35%), on 11,531.95.The benchmark index had opened strong, at 11,589.35, beginning from where it left off the 125-point surge from yesterday. It went ahead and struck 11,635.25, in early trade itself. It also slipped to a low of 11,542.10.The Sensex has moved in a range of 93 points for the day’s trading.The S&P CNX Nifty rose 16.75 points (0.50%), to 3,387.15

Even as the benchmark index scampered up and down, the market breath remained rock solid. The advance-decline ratio on BSE was pegged at close to 1.32:1; 1,424 shares advancing compared to 1,076 that declined. A total of 67 shares remained unchanged. The BSE Mid-Cap rose 0.89%, while the BSE Small-Cap index advanced 0.84%.

The total turnover on BSE amounted to Rs 3,165 crore, compared to Thursday’s Rs 3,165 crore.Among the 30 Sensex pack, 18 advanced while 12 slipped.

PSU banking major, SBI was the biggest gainer, up 3.37% to Rs 903.60 on 11.84 lakh shares. It has moved in a range of Rs 882 - 913.80. The Cabinet has approved amendments to the SBI Act, allowing RBI's stake to be cut from 55% to 51%. As per the SBI Act amendment, the bank will now be able to raise fresh funds from the capital market. The Union Cabinet has also allowed SBI to issue bonus as well as preference shares.

Aluminium and Copper major, Hindalco, jumped 3.05% to Rs 173 on a high volume of 29.26 lakh shares.

FMCG major, HLL, advanced 2.35% to Rs 237.15 on 12.57 lakh shares.

Tata Steel (up 2.15% to Rs 528.40 on 17.16 lakh shares) and Bajaj Auto (up 1.83% to Rs 2745 on 59,884 shares) were the other gainers.

Index heavyweight RIL added 0.31%, to Rs 1,110 on 20.24 lakh shares. It surged to a high of Rs 1,124.90, and also slipped to a low of 1,102.

REL (down 2.10% to Rs 446.80), Tata Motors (down 1.45% to Rs 848) and NTPC (down 1.30% to Rs 124.50) were the major losers.

RIL was the top-traded counter on BSE with a total turnover of Rs 225.29 crore, followed by Mahindra Gesco Developers (Rs 109.42 crore) and SBI (Rs 107.26 crore).

The Nikkei share average fell 0.14% on Friday, posting its first weekly loss in five weeks, as Toyota Motor Corp., and other recent gainers declined on lacklustre outlook for the key US market. The Nikkei 225 index ended 21.96 points lower, at 15,938.66. For the week, it fell 1.04%. It had risen as high as 1.23% during the morning, before falling in afternoon.

The Hang Seng index rose 72.41 points (0.43%), to 16,955.45.Crude oil prices inched higher, the Nymex crude oil rising 0.63 cents to $ 72.99 per barrel.As per provisional data, FIIs sold shares worth a net Rs 24 crore on 24 August (yesterday), the day when the Sensex surged 125 points.

US stocks ended flat on Thursday as consumer durable goods report exceeded forecast. The Dow Jones industrial average rose 6.56 points, or 0.06%, to 11,304.46. The Nasdaq composite index rose 2.45 points, or 0.11%, to 2,137.11.

Hot News

Voltas waltzes on Dutch tie-up
Voltas surged 4.75%, to Rs 876 on partnering with Netherlands-based Besseling Group to deliver turnkey solutions for storage of horticulture produce.As many as 46,003 shares were traded on the BSE.The stock has smartly recovered after depreciating since mid-June till earlier July. From Rs 854.30 on 16 June 2006, it had slipped to Rs 652.25 on 24 July 2006, under intense selling pressure. Here, it found support and advanced to Rs 836.30 by 24 August 2006 on strong Q1 results.

At the current market price of Rs 876, Voltas trades at 31.97 times its FY06 EPS of Rs 27.40.

Voltas and Netherlands-based CA/ULO storage technology specialist Besseling Group have announced the formation of a strategic partnership to deliver turnkey solutions for storage of horticulture produce in the controlled atmosphere (CA) / ultra-low-oxygen (ULO) atmosphere. The company will be Besseling-Group’s sole representative in India.

The Voltas-Besseling alliance has tremendous scope when one considers the scale and size of the storage solutions market in India, which is as large as Rs 5,000 crore. The company plans on targeting a sizeable chunk of this market and has bagged several projects including Adani project, International Flower Auction Sector in Bangalore, Abhirami in Chennai, and Jaya Cold Storage in Tamil Nadu.

Meanwhile, Voltas, the Rs 2,022 crore air-conditioning and engineering services company, of the Tata group, is betting big on water treatment as a future growth driver. Water treatment, purifying, recycling, and desalination are some areas the company is actively looking at and may acquire the technology in this space to service the sector.

The electro-mechanical projects division contributes 55% to the topline as well as bottomline, whereas the engineering products and services contributes 7-8% to revenues and 25% to net profit.

The company is setting up three plants in Himachal Pradesh for Rs 50 crore. The company has shut its Hyderabad unit, whose production line will be shifted to Pantnagar. Its voluntary retirement scheme bill for the year stood at Rs 65 crore.

Voltas registered a net profit growth of 31% to Rs 21.75 crore (Rs 16.55 crore) for Q1 June 2006. Net sales rose 33% to Rs 580.40 crore (Rs 436.71 crore).

Hindustan Motors hails land development clearance
Hindustan Motors jumped on heavy volumes for the second day in a row after the West Bengal government allowed it to develop land at its plant near Kolkata.The scrip was up 6% to Rs 42.60. As many as 36.4 lakh shares changed hands in the counter on BSE.
Anther announcement by the company that it will expand its auto components business also aided the rally in the stock. The stock has surged in the past few days amid intermittent rise in volumes. From Rs 31.60 on 7 August, the stock has risen 34.8% to current Rs 42.60. From an earlier low of Rs 25.70, the stock has gained 65.7%.

Hindustan Motors said it is planning to develop automotive forgings, automotive castings & automotive stampings business by cost effectively leveraging existing facilities & infrastructure. Hindustan Motors has been ramping up production of automobile components for other carmakers at its 63-year-old Uttarpara (Kolkata) factory using the facilities like foundries, which had become a drag on it.

McKinsey & Company and other reputed consultants have forecast auto component exports from India to grow manifold from current levels of $ 1.5 billion and Uttarpara is well placed to ride this growth wave, Hindustan Motors said in a press release today.

Meanwhile, Hindustan Motors has got clearance from the West Bengal government to develop land at its plant near Kolkata. Hindustan Motors plans to develop a residential township, auto parts cluster and an information technology hub in 314 acres, of the 700 acres, it owns near Kolkata.

Hindustan Motors (HM) makes Mitsubishi (Lancer) cars since 1998 under a tie-up with Mitsubishi Motor Corporation, Japan. Recently, the company launched premium sports utility Montero, which is being imported as a completely built unit from Mitsubishi, Japan.

HM also plans to launch a range of Mitsubsishi cars in India next year, and is entering into a special partnership for their exclusive marketing.

Hot News

SBI rejoices as Cabinet clears follow-on offer
State Bank of India jumped 3.7%, to Rs 906.90 after the Union Cabinet allowed it to raise fresh capital by issuing equity and preference shares.As many as 4.7 lakh shares changed hands in the counter on BSE.State Bank of India made a strong rebound from the lower level as bond prices started recovering from multi-year lows, raising hopes that domestic rates may not rise in the short term. Improved Q1 June 2006 results aided a rebound in the stock. From a low of Rs 689.50 on 19 July, it surged to Rs 887.10 on 16 August, before cooling off a bit to a low of Rs 862.60 on 23 August. It rose 1.3%, to Rs 874.10 on 24 August.

At the current market price of Rs 906.90, the stock trades at 14.9 times its Q1 June 2006 standalone annualized EPS of Rs 60.7 and 12.4 times Q1 June 2006 consolidated annualized EPS of Rs 73.

The Union Cabinet on Thursday sanctioned a follow-on public issue by State Bank of India, by approving the SBI (Amendment) Bill. The bill proposes to lower the floor for RBI’s holding in SBI to 51%. RBI, currently, holds 59.73% in India's largest commercial lender. The lowering of the floor for RBI's stake will create sufficient space for bank to hit the capital market with the follow-on offering.

The SBI (Amendment) Bill also proposes to allow SBI to raise Rs 5,000 crore of capital through an issue of preference shares. This will help the bank meet capital adequacy needs for growth, and also be prepared for implementing the reviewed capital adequacy norms which are referred to as Basel II. The implementation of Basel II norms is estimated to reduce the capital adequacy of banks by about 2 percentage points.

Recently, SBI had obtained board permission for raising Rs 5,000 crore through either hybrid instruments or subordinated debt. SBI has already raised Rs 2,300 crore in June this year.

The banking sector has continuously raised lending rates over the past few months to protect their margins, when the cost of funds has been rising in a rising rates environment. SBI’s asset liability committee had recommended a 0.25% increase in PLR on 1 August. The rate hike came into effect from 2 August. After the hike was announced, the finance ministry directed public sector banks to obtain approval of their boards for increasing lending rates.

Earlier, public sector banks had raised their prime lending rates (PLRs) by 50 basis points on 1 May, even though the RBI had left its key rates untouched in the April policy, after hiking them by 25 basis points in January.The banking sector has been showing credit growth of over 31%, dominated mainly by non-food credit.

UTI Bank hardens on raising FII ceiling
UTI Bank jumped nearly 4%, to Rs 341.95 after RBI raised FII ceilng in the scrip to 49% of its equity capital.As many as 60,016 shares changed hands in the counter on BSE.As on 30 June 2006, total FII-holding in UTI Bank was 41.70%. This includes GDR holding of 5.19%. The hike in FII-holding provides scope for further increase in foreign investment in bank.

UTI Bank has surged over the past few months. Strong Q1 June 2006 results aided the rally. From a low of Rs 252.90 on 19 July, it advanced to Rs 329 by 24 August 2006.

At the current price of Rs 341.95, the stock trades at 19.88 times its Q1 June 2006 annualized EPS of Rs 17.2, and 3.5 times its end-June 2006 adjusted book-value of Rs 95.

The scrip has been a favourite of investors due to consistent earnings growth and because of its ability to protect margins in a challenging environment and sustain growth. UTI Bank has reported a consistent growth of over 25 % in its earnings per share (EPS) over the past several quarters. The June 2006 quarter was no exception, the bank clocking a 30% growth in its EPS. Driven by a robust growth in retail loans, UTI Bank's advances grew 65% in the quarter. The bank's increasing thrust on high-yielding retail loans has helped it improve the net interest margins (NIMs).

The bank's increasing thrust on the retail segment and a stronger focus on non-fund based banking are likely to ensure healthy growth over the next few quarters, analysts reckon.

Early this month, UTI Bank forayed into credit cards segment to further boost its fee-based income. UTI Bank, along with MasterCard, launched an international debit card for small and medium enterprises and self-employed professionals.

UTI Bank has a network of 369 branches, 95 extension counters and 1,987 ATMs across the country.

UTI Bank early this month raised capital abroad through a debt offering, the first one to take advantage of recent norms unveiled by the India's banking regulator. The bank raised $150 million in the form of upper tier bonds. UTI Bank's issue was priced at 170 basis points(bps) above the six-month Libor, which took the fixed coupon rate to 7.25%. UTI Bank plans to utilise the money raised abroad to fund its overseas operations.UTI Bank has maintained low NPAs for a long period of time.

Thursday, August 24, 2006

BSE to suspend trading in 42 companies

For non-payment of annual listing fees
BSE has decided to suspend trading in shares of 42 companies from 11 September 2006, due to non-payment of annual listing fees for 2006-07 by them. The companies still continue to default despite being issued reminders and show-cause notice, the BSE said in a circular.

The list includes Atcom Technologies, Baffin Engineering Projects, Core Healthcare, Global Boards, Mafatlal Dyes & Chemicals and Snowcem India.

Stock Alert

NTPC may gain on expansion plan
NTPC has signed a deal with Haryana Power Generation Corp. and Indraprastha Power Generation Co. to set up a 1,500 megawatt coal-based power plant in Haryana state. The state-run power generation company said on Thursday it also signed a preliminary agreement with Delhi Transco to expand a thermal power station in capital New Delhi.

The union cabinet on Thursday approved changes in an act to enable the country's largest lender, State Bank of India to raise more capital and improve its operations. "The State Bank of India (Amendment) Bill will be introduced in parliament with such modifications," Information and Broadcasting Minister Priyaranjan Dasmunshi told reporters on Thursday.

The government has reportedly approved Infosys Technologies’ plans to set up three special economic zones for software and backoffice services. Two zones will come up in Karnataka and one will be set up in Maharashtra.

Construction firm Hindustan Dorr Oliver said on Thursday it got an order worth Rs 16.49 crore from a Maharashtra state government agency to build a sewage treatment plant.

Pantaloon Retail India said on Thursday it plans to raise up to Rs 960 crore ($206 million) by selling some stake in subsidiaries and issuing debt and equity to fund expansion. Pantaloon said it would raise up to Rs 500 crore by selling a maximum of 24 percent in its subsidiaries. It would raise Rs 260 crore by selling shares or equity-related bonds to the public and qualified institutional buyers.

The company said it would also issue 1.2 million convertible warrants at Rs 1635 per share to promoters to raise nearly Rs 200 crore.

Drug maker Kopran said on Thursday its board approved the issue of 2,26,000 shares to State Bank of India and 4,48,370 shares to Industrial Development Bank of India.

The West Bengal government has reportedly cleared Hindustan Motors's proposal to develop land at its plant near Kolkata. Hindustan Motors plans to develop a residential township, auto parts cluster and an information technology hub in 314 acres of the 700 acres it owns near Kolkata.

VSNL on Thursday announced up to 40% cut in prices for its international bandwidth services. The company expects to generate higher volumes and market share, from the price cut.

Tata Steel said on Thursday said it had raised $750 million in syndicated loans to expand capacity. The seven-year loans were raised at 54 basis points over LIBOR, the company said in a statement. Tata Steel plans to more than double its steel output in the next four years from the current 5.1 million tonnes.

In the last 18 months, Tata Steel, which had bought assets such as Singapore's NatSteel and Thailand's Millennium Steel PCL had raised about $900 million in syndicated loans and from the International Finance Corporation, it said.

RIL armada drops anchor for SEZ at Rewas Port

MUKESH Ambani’s Reliance Industries (RIL) is foraying into the port sector in a big way. The group, which is setting up a mega special economic zone (SEZ) in Navi Mumbai, will pay around Rs 200 crore to pick up close to 40% stake in Rewas Port (RPL).

The Rs 5,000-crore greenfield port, around 10-nautical miles off Mumbai harbour, will be developed by Reliance and the initial promoters, Amma Lines. The deal is expected to be signed early next week, said sources close to the development.

As part of the deal with the Maharashtra government, Amma Lines is expected to hold a majority stake in RPL. Sources said Reliance will later increase stake in RPL. RPL may also rope in international port/terminal operators with an operational contract.

The acquisition will help Reliance secure a key supply and export route for the proposed mega SEZs in Navi Mumbai and Raigad districts. The two SEZs will cover a combined area of about 35,000 acres. A nearby all-weather port, with deep draft of 20 metres compared with Jawaharlal Nehru Port Trust’s 12.5 metres, will be of immense help to exporters and importers as the biggest container ships would be able to call on the port.

Reliance also plans to construct a 40-metre single buoy mooring facility that will help very large crude carriers offload their cargo. The port, the proposed airstrip and the road facilities, such as the Sewri-Nhava Sheva trans-harbour link, will help Reliance attract more clients to its SEZs, providing them with easy connectivity to Mumbai and the rest of the world.

As a prelude to the deal, Amma Lines has bought out the 50% held by IL&FS in Rewas Port Development Company (RPDCL) for Rs 50 crore, to make it a wholly-owned company. Vijay Papa Rao, CMD of RPL, will stay on as chairman as part of the agreement. RPL director Hemanth Meka Rao refused to comment on the issue.

The port, which will handle both containers and bulk cargo, will cater to the proposed SEZs in Navi Mumbai and Maha Mumbai. Sources said Phase-I, which will have six multipurpose berths, is expected to be operational in 24 months. The ground-breaking is expected to be in two months. RPL will acquire around 1,200 hectares of land, most of which is owned by the government, for developing the first phase of the port.

Maharashtra Maritime Board (MMB) will hold up to 11% in RPL, as per the valuation exercise to be undertaken after land acquisition. RPL has already received all the required regulatory approvals to develop the minor port as one of the largest ports in the country. It is also planning to set up a mega shipyard and dry-docking facility at Rewas.

RPL wants to dredge the port and the channel up to 20 metres to facilitate smooth transit of large mother vessels. Sources said it will involve only soft dredging. The channel does not require rock dredging and siltation is low. The Rewas Port was awarded to Amma Lines in ’02 under the build-own-operate-share-transfer (BOOST) agreement with a 50-year concession lease licence.

As per the MoU signed between Amma Lines and the state government, the greenfield port project will be developed by RPL, with a royalty of Rs 3 per tonne cargo handled at the port. Amma Lines was in talks with many international port operators and financial investors for offloading equity.

Its initial plan was to develop it as a lease port, where the berths and terminals could be leased to operators on a long-term basis.

Amma Lines had already commissioned the detailed project report and environmental impact assessment study to the Water and Power Consultancy Services India, and the model study of the port site, sea waves and currents, soil structure and navigational channel to the Pune-based Central Water and Power Research Station.

The Rewas and Dighi ports were among the seven minor ports for which the state government had invited private investments in May 1996. However, poor response to the bidding had forced the government to strike the MoU route to develop them.

How will the market be today??

Market may extend gains
The market may edge higher tracking steady to firm Asian markets. On Thursday (24 August) 2006, Sensex jumped 125 points due to short covering in derivatives ahead of expiry of August 2006 derivatives contracts next week (on 31 August).

Volatility may remain high on the bourses till next Thursday (31 August) ahead of expiry of the August 2006 derivatives contracts.

Volumes had witnessed a surge in the middle of this month. But they have declined in the last two trading sessions. The daily total traded quantity of shares on BSE was about 16 crore shares in the past two trading sessions compared to a range of between 16 crore to 23 crore shares between 10 August to 22 August.

Asian markets were steady to firm on Friday (25 August). Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were up by between 0.25% to 1.23%.

Meanwhile, concerns that a new tropical depression could threaten oil facilities lifted US crude oil futures above $73. Frontmonth US crude for October delivery briefly touched $73.05 a barrel and was up 72 cents at $72.88 in Asian trading on Friday.

Back home, some cautiousness may emerge on the bourses in the near term on reports that there is a strong pipeline of IPOs of about Rs 18000 crore which could suck out liquidity from the secondary market. DLF alone expected to raise Rs 13000 crore. The timing of the DLF IPO is however not yet known.

As per provisional data, FIIs sold shares worth a net Rs 24 crore on 24 August, the day when Sensex had surged 125 points.

Nifty 50 Quotes at End Of Day

Company Prev Close LTP %Change
NSE Sensex 3335.8 3370.4 1.04
ABB 2770.8 2740.5 -1.09
ACC 894.55 912 1.95
BAJAJAUTO 2686.4 2696.8 0.39
BHARTIARTL 406 415.3 2.29
BHEL 2247.1 2240.85 -0.28
BPCL 349.35 350.75 0.4
CIPLA 245.9 246.95 0.43
DABUR 136.2 137.6 1.03
DRREDDY 1449.15 1455.9 0.47
GAIL 256.1 266.55 4.08
GLAXO 1164 1206.95 3.69
GRASIM 2195.45 2200.2 0.22
GUJAMBCEM 110.1 113.95 3.5
HCLTECH 566.15 572.15 1.06
HDFC 1278.4 1277.6 -0.06
HDFCBANK 852.95 853.35 0.05
HEROHONDA 700.15 713.4 1.89
HINDALC0 161.95 168 3.74
HINDLEVER 229.85 231.8 0.85
HINDPETRO 258.4 258.45 0.02
ICICIBANK 590.6 589.15 -0.25
INFOSYSTCH 1767.9 1766.9 -0.06
IPCL 283.65 300.75 6.03
ITC 178.8 180.05 0.7
JETAIRWAYS 556.9 563.85 1.25
LT 2360.1 2363.75 0.15
M&M 632.8 640.95 1.29
MARUTI 826 830.65 0.56
MTNL 152.8 155.5 1.77
NATIONALUM 199.9 201.55 0.83
ONGC 1198.45 1189.1 -0.78
ORIENTBANK 187.95 193.7 3.06
PNB 427.2 445.5 4.28
RANBAXY 385.2 389 0.99
REL 458.55 456.05 -0.55
RELIANCE 1061.9 1106.85 4.23
SAIL 76 75.65 -0.46
SATYAMCOMP 801.95 807.45 0.69
SBIN 863.15 874.65 1.33
SIEMENS 1043.65 1058.6 1.43
SUNPHARMA 895.2 896.95 0.2
SUZLON 1209.7 1210.7 0.08
TATAMOTORS 847.3 860.1 1.51
TATAPOWER 523.6 525.35 0.33
TATASTEEL 505.5 517.45 2.36
TATATEA 828.15 832.2 0.49
TCS 963.1 970.4 0.76
VSNL 414.4 416.2 0.43
WIPRO 511 515.4 0.86
ZEETELE 273.1 279.2 2.23

Markets Today

Highest closing level for Sensex in over 3-months
A solid intra-day rebound took the barometer BSE Sensex to its highest closing level in more than 3-months. The barometer index jumped 125.30 points (1.1%), to settle at 11,531.95, its highest closing since 17 May 2006. The S&P CNX Nifty gained 34.60 points (1%), to finish on 3,370.40.

After a initial 100-point fall caused by weak global markets, the market staged a solid intra-day rebound and ended upbeat on the back of a rise in bond prices to a two-month high, and on expectations that domestic fuel prices may not rise in the near term. When bond prices rise, bond yields fall on expectations that interest rates may not rise in the near term.

Index heavyweight Reliance Industries (RIL) surged, paving the way for the recovery. Most blue-chips firmed up towards the second half of trading, in contrast to an early slide. Metal, cement, auto, banking, IT and construction shares firmed up.

Following a surge in the Sensex in the latter part of the day, the market-breadth turned positive from negative. For 1,349 shares that rose on BSE, only 1,113 declined. As many as 81 shares were unchanged. Gainers outpaced losers by a ratio of 1.2:1. In early trade, declines had outpaced gainers by a ratio of 2.4:1. The BSE Mid-Cap index rose 0.25% to settle at 4,771.24 while the BSE Small-Cap index added 0.6%, to finish on 5,783.80.

The BSE clocked a turnover of Rs 3,146 crore, higher than Wednesday’s Rs 2,998 crore.
Volatility may be the order of the day on the bourses in the next few days ahead of the expiry of August 20006 derivatives contracts next Thursday (31 August).

Most of the analysts advocate a bottom-up approach of investment at this juncture. `Invest in only those stocks that are fundamentally sound and enjoy high earnings visibility’, states a retail brokerage in a report released early this month. Meanwhile, strong earnings growth witnessed by the corporate sector is expected to continue in Q2 September 2006, Brics Securities notes in a report.

Indian equity valuations remain higher compared to its emerging market peers because of the premium attached due to decent-to-strong earnings growth of the Indian corporate sector. The Sensex currently trades at a PE multiple of about 20, based on its trailing 12-month June 2006 earnings.

In today’s trade, RIL jumped 5.3%, to Rs 1,118. The stock rose on a heavy volume of 27.7 lakh shares on BSE.

Metal shares staged a solid intra-day rebound. Sterlite Industries rose 4% to Rs 424.95, Hindalco gained 4% to Rs 168.50, Hindustan Zinc gained 3% to Rs 594, and Tata Steel gained 2.4% to Rs 518.55. Metal shares had eased in early trade, following a weak US housing data. BSE Metal index rose 2% to 8,251.14.

Select cement shares advanced on expectation of a pick up in demand as the southwest monsoon nears its end. Gujarat Ambuja Cements rose 3.4% to Rs 113.80, ACC gained 2% to Rs 912, Grasim rose 1.2% to Rs 2,220, India Cements rose 3% to Rs 191.40, JK Lakshmi Cement added 3% to Rs 142.75, and Madras Cement gained 3% to Rs 2,870.

State Bank of India rose 1.5% to Rs 876 ahead of its board meeting later in the day to consider a hike in prime lending rates. The bank’s executive committee on 3 August approved the asset-liability committee’s decision to hike prime lending rate by 25 basis points, to 11.5%. However, the government later asked state-run banks to seek clearance of their respective boards for fixing lending rates, and hence the board meeting today.

Cellular services major Bharti Airtel gained 2.3% to Rs 415 on reports that it has offered a contract worth $ 1 billion to expand and upgrade its telecom network to telecom equipment maker Ericsson.

Gas transmission firm GAIL India surged 4.4% to Rs 267.25 as 4.3 lakh shares changed hands in the counter on BSE.

Select auto shares firmed up on expectations that the government will refrain from a hike in domestic fuel prices in the near term due to the recent cooling off of global crude oil price from a record high of $ 79 a barrel. Hero Honda rose 2.5% to Rs 718, Mahindra & Mahindra gained 1.6% to Rs 642.50, car major Maruti Udyog rose 0.7% to Rs 831.50 and Tata Motors rose 1.5% to Rs 860. The government is set to review domestic oil prices on 1 September 2006. BSE Auto index gained 1%, to settle at 4,930.82.

PSU banks edged higher on expectation that interest rates may not rise in the near term; more so as the Lok Sabha passed a bill on Wednesday that allows state-run banks to raise funds through private placements and preferential shares allotment. Punjab National Bank surged 4.9% to Rs 447, Oriental Bank of Commerce rose 3.9% to Rs 195.35, Bank of India gained 3.5% to Rs 132.75, Andhra Bank rose 2.8% to Rs 85, Syndicate Bank rose 2% to Rs 71, and Indian Overseas Bank gained 1.6% to Rs 91.50. BSE Bankex rose 26.58 points (0.5%), to end on 5,169.66.

Engineering & construction major L&T ended flat at Rs 2,360, off a session low of Rs 2,325 after the company in consortium with Haldor Topsoe, Denmark, was awarded a $150 million contract to set up methanol and carbon monoxide plants in Saudi Arabia.

Tata Tea rose just 0.6% to Rs 832.90. The stock came off the higher level after an initial surge of 5% to Rs 870. Tata Tea said on Wednesday that it had agreed to buy 30% of Energy Brands Inc, maker of fast-growing brand Glaceau vitaminwater, for $677 million.

IPCL surged nearly 7% to Rs 303.05. A huge 14.1 lakh shares changed hands in the counter on BSE.

Hot News

Crompton Greaves thrives on block deal
Crompton Greaves rose 1% to Rs 208 following a block deal of 3.75 lakh shares on BSE at Rs 205 per share by 10:55 hours.The counter clocked a cumulative volume of 4.24 lakh shares on BSE, compared to the two-week average volume of 77,891 shares.The stock has witnessed high volatility in the past couple of trading sessions. From Rs 191.67 on 28 July 2006, it surged to Rs 222 as buying continued. Here, it slipped to Rs 205.20 by 23 August 2006, on profit-booking.

Recently, Crompton Greaves concluded an arrangement for the acquisition of transformers, gas insulated switchgear, rotating machines and contracting businesses of Ganz Transelektro Villamossagi Zrt, together with the business of Transverticum kft, which is engaged in supporting areas of design, erection, commissioning and commercial activity; both in Hungary, for Euro 35 million.

The company also proposed a new unit in Madhya Pradesh. The company, which already has two units for power transformer manufacturing in Madhya Pradesh, will set up the unit in Malanpur (near Gwalior) in Bhind for an investment of Rs 5 crore.

Earlier in June, Crompton Greaves announced its plan to invest up to Rs 16.03 crore in the share capital of Malanpur Captive Power (MCPPL) comprising 59% of MCPPL's share capital. As a result, MCPPL will become a subsidiary of the company. Further, MCPPL plans to develop, finance, construct and operate a 25.5 Mw gas-based group captive power plant in Malanpur, Madhya Pradesh.

Earlier in May, the company’s transformer division chalked out a capex of Rs 32 crore in its existing Mandideep (near Bhopal) plant. The new investment will be for technology upgradation. Crompton Greaves will make 800 kvA capacity transformers to become the first company in India to make the product. This capex will be completed by September. The company will make 7,000 transformers each year in this capacity.

Crompton Greaves offers a wide-range of products such as power & industrial transformers, HT circuit breakers, LT & HT motors, DC motors, traction motors, alternators/ generators, railway signaling equipment, lighting products, fans, pumps and public switching, transmission and access products. In addition, the company undertakes turnkey projects from concept to commissioning. It supplies the products to power and industrial sectors like power utilities, process industries, railways, mines, electricity boards and industries in domestic as well as world markets.

Crompton Greaves is the biggest Indian exporter of power transformers. Its products are exported in more than 40 countries worldwide.

Crompton Greaves registered a net profit rise of 16.38% to Rs 36.37 crore for Q1 June 2006 compared to Rs 31.25 crore in Q1 June 2005. Total income during the same period under consideration has increased from Rs 527.51 crore to Rs 745.55 crore.

ACC darts ahead as monsoon looks to make an exit
Associated Cement Companies rose 1.99% to Rs 912 on continued buying interest due to expectation of pick up in demand as the southwest monsoon nears its end.As many as 3.12 lakh shares were traded on the BSE.The stock has advanced sharply since late-July 2006. From Rs 788.45 on 21 July, the stock appreciated 13.41% to Rs 894.20 on 23 August 2006 on strong Q2 and dispatch figures.

At the current market price of Rs 912, Associated Cement Companies (ACC) trades at 14 times its Q2 June 2006 annualized EPS of Rs 64.70 based on consolidated earnings.

ACC despatch for July 2006 rose 10.9% to 1.42 million tonnes as against 1.28 million tonnes for the same period last year. The cumulative cement despatches increased 7.57% to 11.08 million tonnes as against 10.30 million tones for the same period last year.

With the continued emphasis on infrastructure and housing sectors, the demand for cement is expected to remain strong.ACC is expanding its Bargarh cement works from 0.96 million tonnes per annual to 2.14 million tones. It is also setting up a 30 Mw captive power plant. The total outlay for this expansion project is Rs 537 crore.Last year, Holcim acquired a controlling stake in ACC.

ACC had registered a consolidated net profit growth of 176% to Rs 411.79 crore (Rs 148.95 crore) for Q1 June 2006. Net sales rose 22% to Rs 1,440.07 crore (Rs 1180.97 crore).

Hot News

Tata Tea stronger on buying stake in US co
Tata Tea surged 2.19%, to Rs 846 on acquiring 30% stake in Energy Brand, US, for $ 677 million.As many as 86,830 shares were traded on the BSE.At the current market rate of Rs 846, Tata Tea trades at 14 times its Q1 June 2006 annualized consolidated EPS of Rs 60.30.

Tata Tea and Tata Sons will together invest $ 677 million to buy 30% stake in US-based Energy Brands (EBI). Commonly known as Glaceau, EBI is engaged in the high growth business of enhanced water and markets vitaminwater, smartwater and fruitwater.

Of the $ 677 million, Tata Tea will invest $ 192 million and Tata Sons $ 58 million in the equity of Tata Tea GB through which, the transaction will be done. Tata Tea GB will raise the rest by way of debt.

Tata Group will initially nominate the chairman of the company, in addition to which, two directors from the group will attend all board meetings of the company.

The company is also planning to come out with new tea-based products for organic growth, both in the domestic and international markets. It is also open to the idea of coming out with multiple forms of tea - speciality tea, flavoured tea, strawberry tea and others.

Earlier, Tata Tea bought the UK-based Tetley for $ 407 million in 2000 and its subsidiary, Tata Coffee, bought the US-based Eight o’Clock Coffee for $ 220 million in June this year.

In May, Tata Tea’s UK-arm acquired the assets of Jemca, a tea company in Czech Republic, from food processing company, Alima Znackova Potravina, for an undisclosed amount. The Tetley group had funded the acquisition.

Jemca has 26.6% share by volume in the tea market of the Czech Republic and has a turnover of 300 million Czech Koruna (around $ 12.5 million). According to the agreement, Jemca will continue to pack tea at its production facility in Jemnice, Czech Republic, and will sell it under the Jemca brand.

Tata Tea had reported a decline of 5.53% in consolidated net profit for the Q1 June 2006 to Rs 83.45 crore (Rs 88.33). Net sales rose 11.47% to Rs 798.92 crore (Rs 716.69 crore).

HCL Infosystems up on decent earnings report
HCL Infosystems advanced 2.40%, to Rs 166.50 after it announced on Wednesday that its Q4 consolidated net profit rose 18.6%.As many as 58,164 shares were traded in the counter on BSE.A steady rally in the counters materialised in the past due to a strong appetite for it. From Rs 128.45 on 24 July 2006, it advanced to Rs 162.65 by 23 August 2006, as buying continued.

HCL Infosystems' consolidated Q4 net profit rose 18.6% to Rs 70 crore compared to Rs 59 crore during the corresponding period last year.

Riding on better sales of computers, mobile phones and office automation products, HCL's consolidated total revenue surged to Rs 3,149 crore during the quarter ended 30 June 2006, from Rs 2,198 crore in the corresponding period last year. The consolidated results include those of its wholly-owned subsidiaries, HCL Infinet and Microcomp.

On a standalone basis, HCL's net profit dipped 17% to Rs 26.88 crore during the fourth quarter compared to Rs 32.42 crore during the corresponding period last year. Total revenue rose 13.90% to Rs 601.41 crore (Rs 527.81 crore).

Revenue from the computer systems business grew 21% to Rs 2,381.4 crore against Rs 1,970.9 crore in the previous year. Revenue from the telecommunication and office automation business is Rs 9,049.8 crore (Rs 5779.3 crore), a growth of 57%.

For the full year ended 30 June, the company's consolidated net profit jumped to Rs 280 crore (Rs 228 crore). Total revenue during the year grew 46.2% to Rs 11,454 crore from Rs 7,787 crore.

Earlier in January, HCL Infosystems bagged Rs 250 crore orders in the domestic market in telecom, education and government verticals. The orders are primarily for the computer business, including system integration and hardware.

Bull run is just 4-5-day long story

A study of the daily records of closing values of the sensex since the beginning of the current bull run (April 2003) by the ET Intelligence group reveals that upticks last on an average for around 4-5 days.

Any thing else is like a six sigma event – very rare. The other interesting element of the study is that the retracements after the consecutive rise are bare minimal, barring one occasion when the market shed more than it gained. Volumes also rise during consecutive upticks indicating the bullish undertone in the market.

The study shows that there are only two occasions when the market actually went up consecutively for 10 trading sessions or more. The sensex rallied consecutively for a maximum period of 11 days between September 26, ‘03 and October 13, ‘03. It gained almost 12% during these 11 sessions, adding 466 points on the back of increasing volumes. The other spectacular consecutive rise was a 10-day rise from August 30, ‘05 to September 13, ‘05. Though the sensex added 448 points during this period, there was only 7% gain. The consecutive gains seem to be tiring down as the market touches newer highs.

The current consecutive seven day rise in the market ended on Friday (August 18) when the sensex closed 12 points lower after rising for seven consecutive trading sessions. Volumes almost doubled during these sessions indicating a very bullish undertone.

This probably pointed that the retracement may be marginal. Friday’s marginal 12-point fall and a rise on Monday concluded that fact. During these seven trading sessions, sensex gained 6% by adding 462 points.

Since the beginning of the current bull rally, the sensex closed three times consecutively for nine trading sessions. These were during July 23, ‘03 till August 4, ‘03, July 22, ‘05 till August 4, ‘05 and April 28, ‘06 till May 10, ‘06. The percentage gain during these periods was 7.9%, 6.6% and 6.4%, respectively.

However, during the following next eight trading sessions following the nine-day rise between the April 28, ‘06 and May 10, ‘06, the sensex shed 18%, reflecting a steep drop from a close of 12,612.38 on May 10, ‘06 to 10,481.77 on May 22, ‘06. This was the only time that the sensex retraced more than what it had gained. In earlier cases the sensex lost not more than 2.19% and even gained further in other cases.

Bonus issues lose lustre against market volatility

Most companies usually offer bonus issues as a strategy to add to shareholders’ value. However, this strategy appears to have gone awry in the current calendar year, with the adjusted prices of ex-bonus stocks now ruling 10%-30 % below the closing cum-bonus prices before their respective record dates.

These scrips include Cipla, Kalpataru Power, Atlas Copco, Karur Vysysa Bank, Sterlite Industries, Jayant Agro, National Peroxide, among others. This list also includes a couple of such stocks in whose case management has made twin offers of bonus as well as stock splits simultaneously.

Take the case of pharma major Cipla. The company proposed a liberal bonus issue in the ratio of three shares for every two shares held in February this year. Before its record date for bonus, the stock was quoting at Rs 660. However, since then, the stock has slipped after adjusting the bonus, and is now quoting around Rs 250. This means that by spending Rs 1,250, the investor could mop up five shares of Cipla now, which were earlier available cum-bonus, at a price of Rs 1,320 before the stock went ex-bonus . Similarly, in the case of Kalpataru Power Transmission, the company proposed a bonus of one share for each share held in the company towards the end of March.

Before the stock went ex-bonus on April 13, it was commanding a price of Rs 1,932. Since then, the stock has been beaten down, and is now quoting around Rs 770. This effectively means an erosion in stock prices by close to 20% on an adjusted basis since the time it has gone ex-bonus. The case is similar for multinational company Atlas Copco, which is in the engineering business. The stock was quoting at Rs 1,406 before going ex-bonus on June 14. After a 1:1 bonus issue, the scrip is trading around Rs 591, down 16% on an adjusted basis since going ex-bonus.

Other companies such as Karur Vysysa Bank and Jayant Agro too, have shown similar erosion in prices on an adjusted basis after going ex-bonus. This phenomenon of adjusted ex-bonus share price being less than the cum-bonus price is the result of high volatility in markets over the past three months. This trend can also be spotted in companies that went in for simultaneous stock splits and bonuses during the current year. The few stocks that have defied the trend amidst the changed scenario are the tech heavyweights such as TCS, Infosys and few others like Lupin.

Stock Alert

Tata Tea may gain on major US acquisition
Tata Tea and Glaceau(R), the maker of vitaminwater(R), on Wednesday announced that they have signed a definitive agreement whereby Tata Tea will invest $677 million in Glaceau to purchase the stake previously held by TSG Consumer Partners and provide additional growth capital. As a result of this investment, Tata will own 30% of Glaceau, based on a valuation of more than $2.2 billion.

Tata Tea’s investment in Glaceau strengthens its US presence and provides opportunities for global growth for Tata's beverage businesses. Glaceau brands include vitaminwater, which is nutrient-enhanced, smartwater(R) which is electrolyte-enhanced, and fruitwater(R), which is flavor-enhanced.

JSW Steel said on Wednesday it had signed a preliminary agreement with an entity in Mozambique, which had been allotted rights for coal exploration.

The US Food and Drug Administration has approved Glenmark Pharmaceuticals’ epilepsy drug gabapentin. The approval is for 600-milligram and 800-milligram dosage tablets.

Essar Shipping & Logistics parent of Essar Shipping said on Wednesday it had raised $200 million from a consortium of overseas banks to finance its subsidiary's ship-buying plans. The a 10-year facility was fully underwritten by De Nationale Investeringsbank N.V. Inc. and was availed at a pricing of 120 basis points over the LIBOR rate, the company said.

Auto parts maker Rane Madras said on Wednesday it would set up a manufacturing unit in northern Uttaranchal state with an initial investment of about Rs 9.30 crore. The unit would supply steering gears exclusively to Tata Motors.

PSU banks may edge higher after the Lok Sabha passed a bill on Wednesday that seeks to allow state-run banks to raise funds through private placements and preferential shares. The banking companies bill, however, restricts banks from diluting the government's holding below 51% while selling shares. Many PSU banks are planning to raise more funds to meet stringent Basel-II regulations by March 2007 and to sustain high loan growth. The bill still has to pass in Rajya Sabha and get presidential approval before it becomes law.

Zenith Infotech said the world's largest computer chip maker, Intel has agreed to use its software in motherboards on a revenue-sharing basis. Zenith said on Wednesday it had signed a software licence and distribution deal with Intel.

How will the market be today??

Domestic bourses may track weak global markets
Profit taking which was set on the domestic bourses in the past two days after a recent rally may continue today. Asian stocks edged lower on Thursday following weak US home sales data and on jitters over Iran's nuclear program.

On the flip side a sharp fall in global crude oil price and reports in a section of the media that the government was unlikely to raise domestic fuel prices may limit fall on domestic bourses.
Volatility may take place in the next few days ahead of expiry of August 2006 derivatives contracts next Thursday (31 August).

Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were down by between 0.16% to 1.3% on Thursday.

US stocks fell on Wednesday after a report showed existing home sales declined to the lowest level in more than two years, stoking fears that consumer spending will slow and hurt economic growth. An Iranian news agency said Tehran soon will announce a "very important achievement" in an unspecified area of nuclear technology, which added to the negative sentiment. The Dow Jones industrial average fell 41.94 points, or 0.37% to end at 11,297.90. The Standard & Poor's 500 Index declined 5.83 points, or 0.45% to finish at 1,292.99. The Nasdaq Composite Index dropped 15.36 points, or 0.71% to close at 2,134.66.

US crude was hovering at just below $72 a barrel in Asian trading on Thursday after a 2% drop overnight on higher US stockpiles data. The Indian government is set to review domestic fuel prices on 1 September 2006 but it is unlikely to raise prices at a time when the global crude oil prices have cooled off from record highs, reports suggest.

Wednesday, August 23, 2006

Nifty 50 Quotes at End Of Day

Company Prev Close LTP %Change
NSE Sensex 3364.6 3335.8 -0.86
ABB 2796.95 2770.8 -0.93
ACC 907.6 894.55 -1.44
BAJAJAUTO 2759.8 2686.4 -2.66
BHARTIARTL 409.4 406 -0.83
BHEL 2237.8 2247.1 0.42
BPCL 352.65 349.35 -0.94
CIPLA 252.05 245.9 -2.44
DABUR 138.8 136.2 -1.87
DRREDDY 1441.15 1449.15 0.56
GAIL 254.15 256.1 0.77
GLAXO 1179.8 1164 -1.34
GRASIM 2224.55 2195.45 -1.31
GUJAMBCEM 109.8 110.1 0.27
HCLTECH 579.95 566.15 -2.38
HDFC 1324.35 1278.4 -3.47
HDFCBANK 858.7 852.95 -0.67
HEROHONDA 705.35 700.15 -0.74
HINDALC0 164.4 161.95 -1.49
HINDLEVER 232.6 229.85 -1.18
HINDPETRO 265 258.4 -2.49
ICICIBANK 595.15 590.6 -0.76
INFOSYSTCH 1781.15 1767.9 -0.74
IPCL 288.4 283.65 -1.65
ITC 181.9 178.8 -1.7
JETAIRWAYS 577.9 556.9 -3.63
LT 2396.05 2360.1 -1.5
M&M 659.75 632.8 -4.08
MARUTI 836.65 826 -1.24
MTNL 155.3 152.8 -1.61
NATIONALUM 199.9 199.9 0
ONGC 1205.7 1198.45 -0.6
ORIENTBANK 186.65 187.95 0.7
PNB 437.35 427.2 -2.32
RANBAXY 392.15 385.2 -1.77
REL 461.35 458.55 -0.61
RELIANCE 1064.8 1061.9 -0.27
SAIL 77.65 76 -2.12
SATYAMCOMP 794.15 801.95 0.98
SBIN 878.45 863.15 -1.74
SIEMENS 1027.45 1043.65 1.58
SUNPHARMA 891 895.2 0.47
SUZLON 1195.35 1209.7 1.2
TATAMOTORS 845.35 847.3 0.23
TATAPOWER 523.65 523.6 -0.01
TATASTEEL 515.45 505.5 -1.93
TATATEA 846 828.15 -2.11
TCS 975.4 963.1 -1.26
VSNL 407.05 414.4 1.81
WIPRO 512.15 511 -0.22
ZEETELE 271.25 273.1 0.68
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