INTRADAY calls for 16th Nov 2009
+ve Sector, Scripts : Steel, MidcapIT, TCS,Sintex
Buy HCLTech-336 for 376-383+ with sl 331
Buy APIL-537 for 551-558+ with sl 531
Buy Bhusansteel-1297 for 1323-1342+ with sl 1280
Buy Maruthi-1478 for 1511-1537+ with sl 1460
Expected Breakout
Buy Educomp-774 above 782 for 818-823+ with sl 774
Buy Wipro-632 above 635 for 650-657+ with sl 629
POSITIONAL
Buy SAIL-182 for 195-199+ with sl 179
NIFTY FUTURES LEVELS
RESISTANCE
5007
5014
5036
5045
5074
SUPPORT
4993
4975
4944
4915
4906
4877
Strong & Weak futures
This is list of 10 strong futures:
McDowell-N, Mphasis, Ashok Ley, FSL, HCC, Patni, Neyveli Lignite, Jindal Saw, Crompton Greaves & Sesa Goa.
And this is list of 10 Weak futures:
EKC, RCom, Idea, Suzlon, GMR Infra, Aban Off shore, GTL Infra, Tata Comm, ICSA & India Cement.
Nifty is in Down trend
NIFTY FUTURES (F & O):
Above 5005-5007 zone, rally may continue up to 5014 level and thereafter expect a jump up to 5034-5036 zone by non-stop.
Support at 4975 & 4993 levels. Below these levels, expect profit booking up to 4944-4946 zone and thereafter slide may continue up to 4915-4917 zone by non-stop.
Below 4906-4908 zone, expect panic up to 4877-4879 zone by non-stop.
On Positive Side, cross above 5043-5045 zone can take it up to 5072-5074 zone by non-stop. Supply expected at around this zone and have caution.
Short-Term Investors:
1 Week: Bullish with a SL of 4531.55. Target at 5024.00.
1 Month: Bullish with a SL of 4620.00. Target at 6289.00.
3 Months: Bearish with a SL of 5080.00. Target at 2951.00.
1 Year: Bullish with a SL of 2575.00. Target at 6201.65.
Today's Expectation:
SGX NIFTY is trading at 5040.00. (09.09 AM IST)
As per technicals, positive surprise too.
As per this trend, if market goes up then it may continue to maintain uptrend for 1 (or) 2 days, 1 Week (or) even 1 Month.
If profit booking starts, then profit booking may continue for 1 day. If breaks & sustains below 5002.65 (NF) then profit booking may continue.
BSE SENSEX:
Buy with a SL of 16583.56. Target at 17210.06.
Short-Term Investors:
1 Week: Bullish with a SL of 15330.56. Target at 16909.74.
1 Month: Bullish with a SL of 14937.03. Target at 18381.96.
3 Months: Bearish with a SL of 17361.47. Target at 12425.52.
1 Year: Bullish with a SL of 15197.60. Target at 18289.88.
POSITIONAL BUY:
Buy ALKA SECURITIES (BSE Cash & BSE Code: 532166)
Buy with a Stop Loss of 4.22. Above 5.88, it will zoom.
Today: May hold on gains.
1 Week: Bearish, surprisingly going up.
1 Month: Bullish, as per current market conditions.
3 Months: Bullish, surprisingly going down.
1 Year: Bullish, surprisingly going down.
Buy JAIN STUDIOS (BSE Cash & BSE Code: 532033)
Buy with a Stop Loss of 10.80. Above 13.99, it will zoom.
Today: May hold on gains.
1 Week: Bearish, surprisingly going up.
1 Month: Bullish, as per current market conditions.
3 Months: Bullish, as per current market conditions.
1 Year: Bullish, as per current market conditions.
SPOT INDEX LEVELS
 | 4998.95 | ( 0.93 %) | 46.30 |  |
| | 1 | 2 | 3 |
| Resistance | 5030.35 | 5061.75 | 5105.60 |
| Support | 4955.10 | 4911.25 | 4879.85 |
 | 16848.83 | ( 0.92 %) | 152.80 | |
| | 1 | 2 | 3 |
| Resistance | 16950.15 | 17051.46 | 17193.19 |
| Support | 16707.11 | 16565.38 | 16464.07 |
FUNDS DATA
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) |
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 13-Nov-2009 | 2156.51 | 1685.39 | 471.12 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) |
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 13-Nov-2009 | 1076.34 | 1101.74 | -25.4 |
Interesting findings on web:
U.S. stocks climbed for a second week as the Group of 20 nations agreed to maintain economic stimulus efforts and profits at companies from Wal-Mart Stores Inc. to Walt Disney Co. beat analysts' projections.
Stocks finished the session higher Friday, helping cement solid gains for the week, as key corporate earnings from consumer names helped offset news that sentiment remained shaky among U.S. consumers.
U.S. stocks rose in light volume on Friday to achieve a second straight week of gains as upbeat retail news reinforced hopes for strong sales in the key holiday season.
The Dow Jones industrial average .DJI added 73.00 points, or 0.72 percent, to end at 0,270.47. The Standard & Poor's 500 Index .SPX rose 6.24 points, or 0.57 percent, to 1,093.48. The Nasdaq Composite Index .IXIC rose 18.86 points, or 0.88 percent, to close 2,167.88.
RUSSELL586.285.96+1.03%
TRAN3960.5722.73+0.58%
UTIL373.572.88+0.78%
S&P 100508.082.63+0.52%
S&P 400698.266.82+0.99%
NYSE7119.8956.84+0.8%
NAS 1001788.6115.47+0.87%
Strong earnings at Walt Disney Co. (DIS), an analyst upgrade of Goodyear Tire & Rubber Co. (GT) and a retreat in oil prices helped the market shake off a weak reading of consumer sentiment. Traders said that many bears also had placed bets early that the sentiment data would be glum, clearing the way for buyers to rush back following the data's actual release.
"We've been hearing for so long about the toll that weak employment and higher savings rates are having on consumer spending," said Todd Salamone, director of trading at Schaeffer's Investment Research in Cincinnati. "At this point, it might sting a little to see confirmation of that. But I think it's hard to have a sustained reaction."
The government reported that the U.S. trade balance widened more than expected in September, with import prices rising faster than export prices. The trade deficit widened to $36.5 billion in September, compared with expectations for an expansion to $32 billion, according to economists polled by MarketWatch.
Peter Cardillo, chief market economist at Avalon Partners, said the data were a mixed blessing for investors. While a widening trade gap hints at stronger- than-expected demand in the U.S. economy, many investors will not be pleased to see the dollar stabilize.
Cardillo added he still believes that the market is in a broad trend higher.
Lawrence Creatura, equity market strategist and portfolio manager at Federated Clover Capital Advisors, said investors looked past the consumer confidence figure to focus on earnings reports because they are a more reliable indicator about the economy.
"It's probably safe to say that investors are rationally more focused on what consumers do rather than what they say," he said.
U.K. Chancellor of the Exchequer Alistair Darling, hosting a meeting of finance ministers from G-20 nations, said that his colleagues decided to keep interest rates low and maintain record budget deficits until economic recoveries take hold.
About 80 percent of S&P 500 companies that have reported third-quarter results beat analysts' predictions, including Applied Materials Inc. and Priceline.com Inc. this week. That exceeds the record pace of 72.3 percent for the period ended in June, data compiled by Bloomberg show.
The S&P consumer discretionary sector .GSPD rose 1.6 percent even as the Reuters/University of Michigan preliminary November Surveys of Consumers showed U.S. consumer confidence fell to its weakest level in three months amid grim expectations for job and income prospects.
"I think people were paying more attention to JC Penney and Abercrombie & Fitch as indicative examples of people's sentiment toward retail," said Michael James, senior trader at Wedbush Morgan in Los Angeles.
Upbeat quarterly reports from Disney as well as Abercrombie & Fitch Co. and J.C. Penney Co. offset worries about a slide in consumer confidence.
Walmart, the world's largest retailer, and Disney, the world's biggest media company, climbed at least 3.8 percent. American Express Co., the top credit-card issuer by purchases, jumped 8.4 percent for the steepest gain in the Dow Jones Industrial Average after worldwide spending rose in October. Dow Chemical Co. surged as it predicted that cost cuts and rising sales will boost earnings more than analysts estimate.
"The consumer is going to start to come back, and it seems like the market got some confirmation of that," said Stephen Auth, the New York-based chief investment officer for equities at Federated Investors Inc., which oversees $390 billion. "They don't look dead and buried."
Walmart jumped 3.8 percent to $53.20. The Bentonville, Arkansas-based retailer said third-quarter profit rose 3.2 percent, helped by inventory reductions, and forecast higher full-year profit. Net income increased to $3.24 billion, or 84 cents a share, more than the 81-cent average estimate of analysts surveyed by Bloomberg.
Disney gained 6.6 percent to $30.44, its steepest weekly advance since September. The company reported fourth-quarter profit of 46 cents a share, excluding one-time items, beating the 41-cent average estimate of 21 analysts. Disney also reported sales that beat analysts' estimates by 6 percent.
"(Disney) is a big name that is very easy for large portfolio managers to continue to buy on good results, and I think you're seeing the fruits of that today," James said.
American Express rose 8.4 percent to $40.35 after the lender said customers spent more on their American Express cards in October than any other month this year as annualized billings advanced 3 percent in the month.
Newmont Mining Corp., the biggest U.S. gold producer, added 4 percent to $50.99 as gold climbed to a record $1,123.40 an ounce on Nov. 12 before paring its weekly gain.
An index of consumer discretionary stocks gained 3.3 percent, the second-most of the 10 industry groups in the S&P 500, led by Priceline.com. The online travel agency surged 17 percent to $201.93 after reporting third-quarter sales and profit that topped analysts' estimates. The company said it's gaining market share in hotel-room reservations and had an "exceptionally strong" summer season as consumers booked discounted trips to save money.
MBIA Inc. dropped 18 percent to $3.56, the steepest retreat in the S&P 500. The world's largest bond insurer posted a third- quarter loss of $3.50 a share, wider than the average estimate of analysts surveyed by Bloomberg. The results were affected by "continued weakness in the U.S. housing market and the economy," Chief Financial Officer Chuck Chaplin said in a conference call.
Goodyear was up more than 4% after Goldman Sachs analysts upgraded the tire maker to a buy rating from neutral, saying that recent selling in the company's shares was overdone following its weak fourth-quarter forecast.
Abercrombie jumped $3.92, or 10.7 percent, to $40.68, while J.C. Penney gained $1.82, or 6.2 percent, to $31.21.
High-end retailer Nordstrom [JWN 33.99 -0.52 (-1.51%) ] missed Wall Street's profit target but raised its full-year outlook.
Brokerage upgrades lifted shares of chipmaker Qualcomm Inc (QCOM.O) and Juniper Networks Inc (JNPR.N). Qualcomm rose 2.1 percent to $45.77 on the Nasdaq and Juniper shot up 5.9 percent to $26.15 on the New York Stock Exchange. The PHLX semiconductor index .SOXX rose 1.1 percent.
McDonald's [MCD 63.58 1.41 (+2.27%) ] and American Express [AXP 40.35 0.85 (+2.15%) ] rounded out the Dow's top three. AXP, which is one of Warren Buffett's key holdings, has doubled since the start of the year.
JPMorgan shares [JPM 42.90 -0.40 (-0.92%) ] slipped 0.9 percent after CEO Jamie Dimon said no bank should be considered too big to fail. Such an idea is "politically, economically and ethically bankrupt,'' Dimon wrote in an op-ed in the Washington Post.
Dollar General [DG 22.73 1.73 (+8.24%) ] rallied 8.2 percent in its debut on the New York Stock Exchange. Shares priced last night at $21 a share. The IPO raised $716 million.
And some big M&A news: British Airways [BAY-LN 214.116 2.00 (+0.93%)] and Iberia announced a $7 billion merger that would create the world's third-largest airline by revenue.
And, Liberty Global is planning to acquire Unity Media, Germany's No. 2 cable operator in a deal worth $3 billion.
An interesting deal on this side of the pond: Playboy [PLA 4.55 0.48 (+11.79%)] is apparently in talks to sell itself to Iconix [ICON 11.87 0.11 (+0.94%)], which owns the Candies, Joe Boxer and Rocawear brands.
Reports next week will probably show retail sales rebounded in October, production climbed and work began on more houses, allaying concern the U.S. expansion will unravel should the government withdraw stimulus, according to the median forecasts of economists surveyed by Bloomberg. Home Depot Inc., Target Corp. and Dell Inc. are among the 17 companies in the S&P 500 scheduled to report results.
"Next week is just chock-full of market-moving data," said Mike Ryan, the New York-based head of wealth management research for the Americas at UBS Financial Services Inc., which oversees $655 billion.
Investors on Monday will also pay close attention to speeches by Fed Chairman Ben Bernanke, New York Fed President William Dudley and Chicago Fed President Charles Evans.
The VIX, as the Chicago Board Options Exchange Volatility Index is known, dropped to 23.36. The index, which is known as Wall Street's fear gauge, is down from a record 80.86 in November 2008 yet above its 20.28 average over its 19-year history.
Oil,Gold & Currencies:
Oil futures fell 59 cents, or 0.8%, to end at $76.35 a barrel in New York.
Gold futures rose $10.10 to end at $1,116.70 per ounce in New York.
The dollar fell broadly on Friday after data showing a wider U.S. trade deficit and weaker consumer sentiment reinforced views that the United States may return to economic health more slowly than other countries.
Bonds:
Treasury prices edged lower. The 10-year note was off 2/32 to yield 3.428%.
What to expect:
MONDAY: Government's report on retail sales; Bernanke speaks; Earnings from Lowe's
TUESDAY: PPI; industrial production; Fed's Lacker, Pianalto speak; Geithner speaks; NAHB housing index; Earnings from Home Depot, Target and TJX
WEDNESDAY: Weekly mortgage applications; CPI; housing starts; weekly crude inventories; Earnings from BJ's, Limited
THURSDAY: EU chooses new president; Fed's Plosser, Fisher speak; Ghosn, Rattner speak; weekly jobless claims; leading indicators; Philly Fed; Geithner speaks; Earnings from Sears, Dell, Gap
FRIDAY: Fed's Plosser speaks; state-by-state jobs report
Other Headlines:
Japan Economy Grew at 4.8% Pace in Third Quarter, Faster Than Anticipated
Obama Questioned on Trade, Fails to Win Backing for Stronger Yuan at APEC
China's Bank Regulator Joins Blame of Fed Rates for Spurring Asset Prices
Sands China to Open Most of Macau Resort in 2011, Rooms to Almost Triple
Airbus, Boeing Call Recovery for 2010 as Airlines End Deferrals of Orders
Brown to Allow U.K. Regulators to `Tear Up' Some Bankers' Bonus Agreement
APEC Leaders Conclude Climate Treaty Out of Reach for Copenhagen Summit
New York Terror-Suspect Trial Plan a `Mistake,' Former Mayor Giuliani Says
Obama presses Iran on atomic deal, Tehran defiant
World leaders back delay to final climate deal
Stronger yuan needed for rebalancing: IMF chief
U.S. Afghan strategy debate exposes split over price
Citi to sell Bellsystem stake to Bain for $1 billion
Families urge Iran to release U.S. hikers
Italy arrests Mafia boss, on run for 15 years
Drug Study Questions Effectiveness of Merck's Drugs
Warren Buffett to CNBC: 'I Haven't Bought American Express In Years'
Euro Advances Versus Yen as Economic Recovery Signs Boost Demand for Risk
Rio Tinto's Cloud Peak Unit Leads Year's Second-Busiest Week for U.S. IPOs
Mitsubishi UFJ May Announce Record Share Sale This Week to Bolster Capital
Swaps Signal Worst Yen Since '05 as Mounting Debt Overwhelms Market Demand
UBS Account Criteria Release May Unveil Model for IRS Tax Evasion Crusade
Dollar pressured after China official warns of risks
The dollar slipped Monday, a day after China's chief banking regulator criticized loose U.S. monetary policy as leading to increased speculation.
"The continuous depreciation in the dollar, and the U.S. government's indication that, in order to resume growth and maintain public confidence, it basically won't raise interest rates for the coming 12 to 18 months, has led to massive dollar arbitrage speculation," Liu Mingkang, chairman of the China Banking Regulatory Commission, said Sunday in Beijing at the International Finance Forum, according to news reports.
Low U.S. interest rates and a weaker greenback have "seriously affected global asset prices, fuelled speculation in stock and property markets, and created new, real and insurmountable risks to the recovery of the global economy, especially emerging-market economies," Liu said.
The dollar bought 89.45 yen, down from 89.72 yen in late North American trading on Friday. The euro bought $1.4956, up from $1.4903 late Friday.
China has kept its tightly controlled currency, the yuan, almost unchanged against the U.S. dollar for more than a year, in a move that gives Chinese exports a competitive advantage in U.S. markets.
Last week, China's central bank made a rare change of wording on its exchange-rate policy that was seen as a hint Beijing may let the yuan appreciate.
The People's Bank of China said in its quarterly policy report released Wednesday that it will consider "changes in international capital flows and the trends of major currencies" in managing the exchange rate. Read more on People's Bank of China currency statement.
U.S. President Barack Obama is on his first official visit to China this week to discuss a range of contentious issues, but is unlikely to push China too hard on currencies or anything else.
Asia:
Asian stocks gained as higher gold and copper prices boosted commodity companies, overshadowing concern share sales will dilute the value of existing holdings.
BHP Billiton Ltd., the world's biggest mining company, rose 1.9 percent, and Lihir Gold Ltd. climbed 3.3 percent in Sydney. Fast Retailing Co., Japan's biggest clothing retailer, advanced 2.5 percent after the nation's economy grew more in the third quarter than expected. Mitsubishi UFJ Financial Group Inc. and Hitachi Ltd. sank more than 4 percent in Tokyo on speculation the companies will sell new stock.
The MSCI Asia Pacific Index added 0.5 percent to 118.81 as of 11:46 a.m. in Tokyo, with five stocks advancing for every three that retreated. The gauge has lost 2 percent from a 13- month high on Oct. 20 on concern the withdrawal of government stimulus measures will cause the global recovery to falter.
"The fundamentals of the economy are continuing to improve. People in the market tend to underestimate the effects of stimulus measures, but they are always effective," said Masaru Hamasaki, a strategist at Toyota Asset Management Co., which oversees the equivalent of $14 billion in Tokyo. "Investors aren't convinced selling shares will boost companies' profitability and growth."
Australia's S&P/ASX 200 Index added 0.8 percent while the Kospi Index dipped 0.2 percent in Seoul. Japan's Topix index dropped 0.5 percent even as the Cabinet Office reported the economy grew at an annual 4.8 percent rate in the third quarter. Economists had estimated a 2.9 percent gain.
Merger Plan
Taiwan's Taiex Index, advanced 1.1 percent. Chi Mei Optoelectronics Corp. jumped 6.9 percent after agreeing to merge with Innolux Display Corp. to form Taiwan's largest maker of liquid-crystal display panels.
Futures on the Standard & Poor's 500 Index rose 0.6 percent. The gauge gained 0.6 percent on Nov. 13 in New York, as higher- than-estimated earnings at Walt Disney Co. and Abercrombie & Fitch Co. outweighing an unexpected drop in consumer confidence.
BHP added 1.9 percent to A$39.74 in Sydney, while Lihir gained 3.3 percent to A$3.47. Gold for immediate delivery climbed as much as 0.7 percent to a record $1,126.07 an ounce today. Copper futures in New York rose 1.4 percent in after- hours trading.
"With excess liquidity and still small risk appetite, people prefer gold over other assets, which is the ultimate way of avoiding risk," said Toyota Asset's Hamasaki.
Fast Retailing climbed 2.5 percent to 17,100 yen, becoming the biggest gaining contributor to the Nikkei 225 Stock Average, which increased 0.1 percent. Tokyo Electric Power Co., Asia's biggest utility, rose 2.1 percent to 2,195 yen.
Capital Spending
A government report showed Japan's capital spending rose 1.6 percent in the three months through September, contributing to the nation's faster-than-estimated economic growth in the quarter. Business investment accounts for about 15 percent of the economy and drove more than a third of Japan's growth between 2002 and 2007.
Mitsubishi UFJ, Japan's largest bank by market value, sagged 4.3 percent to 486 yen, while Hitachi, the fourth-largest company in the Nikkei, dived 8.5 percent to 269 yen.
The bank may announce Japan's biggest secondary share sale this week as it prepares for stricter global capital rules, eight of nine analysts surveyed by Bloomberg said.
Hitachi will raise as much as 418 billion yen ($4.66 billion) from a sale of securities, according to a filing with Japan's Finance Ministry. Reuters had earlier reported that Hitachi may raise as much as 400 billion yen through the sale of new stock and convertible bonds.
Chi Mei, Innolux
Mitsui Chemicals Inc. plunged 12 percent to 247 yen in Tokyo after saying it will raise as much as 64.3 billion yen for capital spending.
Chi Mei surged 6.9 percent to NT$20.1 in Taiwan, while Innolux slipped 0.9 percent to NT$46.6. Innolux, the world's No. 2 assembler of flat-screen monitors, will give one of its shares for every 2.05 shares in Chi Mei, the companies said on Nov. 14.
Elpida Memory Inc., Japan's largest computer memory maker, fell 3.3 percent to 1,180 yen. The price of the benchmark 1 gigabit dynamic random access memory chip retreated 3.3 percent, the most since April 1, according to Dramexchange Technology Inc., operator of Asia's biggest spot market for semiconductors.
Nikkei 225 9,782.69 +12.38 ( +0.13%). (08.40 AM IST)
HSI 22864.08 +310.45 +1.38%. (08.41 AM IST)
SSE Composite 3187.65 3245.46 3247.58 3206.43 + 1.81. (08.42 AM IST)
Rupee:
The partially convertible rupee INR=IN closed at 46.31/32 per dollar on Friday, stronger than its previous close of 46.66/67.
INDIA:
Indian stocks advanced, led by Steel Authority of India Ltd. and Oil & Natural Gas Corp., after the government said it will sell shares in state-run companies and increase the price of gas.
Steel Authority gained 3.4 percent after the finance ministry said it's among 60 state-run companies eligible for share sales, increasing optimism the government will act on election promises this year to reduce control of the economy. Oil & Natural Gas climbed 3.1 percent after Bloomberg-UTV reported that the government proposed a 31 percent increase in the administered price of natural gas.
"The government has the intention for reforms," said Principal PNB Asset Management Co.'s Pankaj Tibrewal, manager of the country's best-performing equity fund this year. "This is a step in the right direction, but still a lot needs to be done."
The Bombay Stock Exchange's Sensitive Index, or Sensex, added 152.80, or 0.9 percent, to 16,848.83. The Sensex has risen 4.3 percent this week, extending its biggest annual rally in 18 years with a 75 percent climb so far in 2009. The S&P CNX Nifty Index on the National Stock Exchange gained 0.9 percent to 4,998.95. The BSE 200 Index climbed 0.7 percent to 2,091.21.
Steel Authority advanced 3.4 percent to 182.3 rupees. The Ministry of Finance is in talks with the steel and coal ministries to sell stakes in Steel Authority and Coal India Ltd., Sunil Mitra, secretary for asset sales at the finance ministry, said in New Delhi today.
Oil & Natural Gas, India's largest state-owned oil explorer, rose 3.1 percent to 1,184.1 rupees. Oil India Ltd., the nation's second-biggest state-owned energy explorer, climbed 1 percent to 1,194.45 rupees.
Leading Indicator
Hero Honda Ltd. rose 3.8 percent to 1,578.9 rupees on optimism an economic recovery will benefit India's largest motorcycle maker and car manufacturers. India's economy may grow 6.2 percent in the year ending March 31, the Centre for Monitoring Indian Economy, a Mumbai-based research group, said in a statement. The group had in October forecast expansion of 6 percent.
Maruti Suzuki India Ltd., the nation's biggest carmaker, increased 3.9 percent to 1,478.35 rupees.
"The auto sector is a leading indicator and will benefit when the eventual economic recovery happens," said Jagannadham Thunuguntla, head of equities at SMC Capitals Ltd. in New Delhi.
Tata Consultancy Services Ltd. climbed 2.3 percent to 670.15 rupees. India's largest software-services provider will build a services center in Michigan as part of the accord with Dow Chemical Co., the largest U.S. chemical maker, the Mumbai- based company said in a filing to the Bombay Stock Exchange today.
Golden Tobacco
Golden Tobacco Ltd. jumped 5 percent to 114.85 rupees after the Economic Times said that the tobacco maker is the subject of a hostile takeover bid by investor Pramod Jain.
Network 18 Media & Investments Ltd., an Indian holding company that includes a television shopping channel among its assets, soared 16 percent to 86.05 rupees. The shopping channel unit raised $23.5 million to expand its business, the company said in a statement to the Bombay Stock Exchange today.
Overseas funds bought a net 9.73 billion rupees ($208.9 million) of Indian stocks Nov. 11, the Securities and Exchange Board of India said on its Web site. The funds have bought 711.6 billion rupees of Indian stocks this year to date, compared with record net sales of 530 billion rupees for the whole of 2008.
Main index gains 0.9 pct on day, up 4.5 pct on week
Banks, outsourcers lead gains on improving outlook
Indian shares climbed 0.9 percent on Friday led by banks and outsourcers and propelled the main index to its best weekly gain in 11 weeks, supported by rising foreign portfolio investment.
The 30-share BSE index .BSESN rose 4.5 percent on the week, taking gains this month to 6 percent after sliding 7.2 percent in October, which was its worst performance in a year.
"Ihe rally is driven by liquidity, which is fuelled by dollar weakness," said Manish Sonthalia, portfolio management services manager at Motilal Oswal.
Foreign funds have moved $14.8 billion into Indian stocks this year, lifting the BSE index nearly 75 percent. In 2008, they had pulled out more than $13 billion and the benchmark fell over half.
Private lenders ICICI Bank (
ICBK.BO: Quote, Profile, Research) and HDFC Bank (
HDBK.BO: Quote, Profile, Research) were among the gainers on hopes rising industrial activity will boost demand for loans and the long-term outlook.
"We expect bank credit growth to rise to 16 percent year-on-year by March 2010," Morgan Stanley said, adding it will accelerate to 22 percent by end-2010 as capital expenditure also begins to recover next year.
The BSE index closed up 0.92 percent, or 152.80 points, at 16,848.83. Twenty-five of its components advanced.
ICICI Bank and HDFC Bank rose 1.6 percent and 0.4 percent respectively while SBI gained 0.1 percent.
Export-focused software services companies climbed as the sector outlook was positive, with orders set to rise and hiring plans picking up, R. Ganesh, director of Systematix Shares, said.
Bellwether Infosys Technologies (
INFY.BO: Quote, Profile, Research) rose 1.5 percent to 2,358.80 rupees.
Sector leader Tata Consultancy (
TCS.BO: Quote, Profile, Research) added 2.5 percent to 670.20 rupees and Wipro (
WIPR.BO: Quote, Profile, Research) firmed 1.2 percent to 632.70 rupees.
State-run oil and gas producer Oil & Natural Gas Corp (
ONGC.BO: Quote, Profile, Research) rose 3.1 percent to 1,183.50 rupees on market talk the oil ministry had proposed a hike in gas prices.
Engineering and construction firm Larsen & Toubro (
LART.BO: Quote, Profile, Research) gained 0.2 percent to 1,643.55 rupees, after sources said it sold a third of its holding in outsourcer Mahindra Satyam (
SATY.BO: Quote, Profile, Research) for about $66 million.
In the broader market, losers almost matched the number of gainers on relatively moderate volume of 423 million shares.
The broader 50-share NSE index .NSEI closed 0.9 percent higher at 4,998.95.
* Software services firm Patni Computer Systems (
PTNI.BO: Quote, Profile, Research) gained 3.9 percent to 505.90 rupees. Its CEO told Reuters the company expects revenue to rise more than 3 percent sequentially in the December quarter.
* State-run Steel Authority of India (
SAIL.BO: Quote, Profile, Research) rose 3.3 percent to 182 rupees, after a senior finance ministry official said they were in talks with steel ministry for a possible stake sale in the company.
Among the Sensex pack 25 stocks closed in green while 5 ended in red. The market breadth indicating the overall health of the market remained strong as 1,372 stocks closed in positive while 1,355 stocks closed in negative while 100 stocks remained unchanged in BSE.
The BSE Sensex closed with gains of 152.80 points or (0.92%) at 16,848.83 and NSE Nifty closed up by 46.30 points or (0.93%) at 4,998.95. The BSE Mid Caps and Small Caps closed with gains of 1.52 points and 14.76 points at 6,418.65 and 7,409.70 respectively. The BSE Sensex touched intraday high of 16,909.74 and intraday low of 16,666.70.
Losers from the BSE Sensex pack are JP Associates (1.99%), M&M (0.69%), DLF (0.62%), Reliance Communication (0.43%) and Tata Power (0.05%).
Gainers from the BSE Sensex pack are Hero Honda (3.99%), Maruti Suzuki (3.90%), ONGC (3.07%), TCS (2.45%), Tata Steel (1.84%), HUL (1.61%), ICICI Bank (1.60%) and Infosys (1.55%).
BSE REALTY indexwas at 3,902.09 down by 35.37 points or by (0.9%) The main losers were Anant Raj In down by (3.15%) at Rs.135.15, Orbitco down by (2.6%) at Rs.288.7, Housing Dev down by (2.49%) at Rs.357.05, Ansal Infras down by (2.02%) at Rs.65.45, Indbul Real down by (1.76%) at Rs.235.
BSE METAL index was at 15,540.99 up by 254.42 points or by (1.66%) The main gainers were Jsw Sl up by (8.43%) at Rs.896.5, Steel Author up by (3.29%) at Rs.182, Jindal Steel up by (2.32%) at Rs.696.05, Jindal Saw up by (2.29%) at Rs.786, Tata Stl up by (1.84%) at Rs.521.25.
BSE BANKEX index was at 10,202.18 up by 74.21 points or by (0.73%) The main gainers were Kotak Bank up by (2.44%) at Rs.810.65, Idbi Bank L up by (2.27%) at Rs.128.65, Axis Bank up by (1.78%) at Rs.996.6, Icici Bank L up by (1.6%) at Rs.909.4, Bank Of India up by (0.8%) at Rs.367.05.
BSE PSU index was at 9,210.74 up by 53.94 points or by (0.59%) The main gainers were Engineers In up by (4.16%) at Rs.1460, Steel Author up by (3.29%) at Rs.182, Ong Corp Ltd up by (3.07%) at Rs.1183.5, Contain Corp up by (3.01%) at Rs.1203.8, Idbi Bank L up by (2.27%) at Rs.128.65.
BSE OIL&GAS index was at 10,140.39 up by 105.29 points or by (1.05%) The main gainers were Ong Corp Ltd up by (3.07%) at Rs.1183.5, Bharat Petroleum Corporation L up by (1.57%) at Rs.522.75, Hindustan Petroleum Corp. Ltd. up by (1.22%) at Rs.351.8, Reliance up by (0.79%) at Rs.2116.7, Essar Oil Ltd. up by (0.71%) at Rs.134.65.
BSE IT index was at 4,744.29 up by 70.63 points or by (1.51%) The main gainers were Patni Comput up by (3.89%) at Rs.505.9, Tcs Ltd up by (2.45%) at Rs.670.2, Mphasis Ltd up by (1.94%) at Rs.772.5, Infosys Technologies Ltd.-Ordi up by (1.55%) at Rs.2358.8, Wipro Ltd. up by (1.22%) at Rs.632.7.
Ramsarup Industries Limited closed with gains of 4.95% at Rs. 87 as the company has signed a Power Purchase Agreement for its Waste Heat, CO-gas based 22 MW power plant with West Bengal State Electricity Distribution Company, a state government owned electric "utility company.
BGR Energy surged 5.10% to close at Rs. 492.55. The company has secured three contracts. First contract is for the supply of 72 bundles of Air Heaters for receiving and regassification terminal of Petronet LNG Ltd. The second contract is for supply of 46 numbers of Air cooled heat exchanges for Naptha hydro treating unit and vacuum gas oil hydro treating unit from HPCL-Mittal energy ltd. The third is for supply of 30 numbers of ACHE for its refinery expansion project at Vadinar, Gujarat.
Mahindra Satyam declined by 6.60% to close at Rs. 109.70 as L&T sold 27.2 million shares or about 2.31% stake in Satyam at Rs. 114.90 a share on BSE.
Alstom Projects India gained 2.65% to close at Rs. 537.65 as the company had bagged orders worth Rs. 470 crore from Hindalco Industries for supply and installation of four gas treatment plants. However, the scope of work includes design, engineering, supply and commissioning of two gas treatment plants each in Madhya Pradesh and Orissa.
Weekly:
The bulls managed to sustain last week's momentum, with the BSE Sensex adding 4.3% to close at 16,848 and the NSE Nifty rising 4.2% to 4,998. Better-than expected IIP numbers helped the market in maintaining the bullish tempo. However, the Nifty continued to witness resistance at 5,000 levels through the week.
The BSE Sensex hit an intra-week high of 16,910 and low of 16,147 while, NSE Nifty hit an intra-week high of 5,017 and low of 4,790.
The Foreign Institutional Investors (FIIs) bought shares worth Rs30.15bn during the week. The Domestic Institutions were net buyers to the tune of Rs4.90bn during the week.
The top gainers: The top gainers in the Sensex were Tata Motors (up 8.8%), Reliance Industries (up 8.3%), TCS (up 7.7%), ICICI Bank (up 7.1%) and Infosys (up 6.4%).
The Top Losers: The top losers in the Sensex were Bharti Airtel (down 5.6%), DLF (down 3.1%), Hindustan Unilever (down 1%), Ranbaxy Labs (down 0.5%) and Reliance Power (down 0.2%).
The BSE IT Index (up 6.5): The top gainer in the IT sector was HCL Tech. The stock rose over 10% during the week. The company is reportedly looking for small acquisition over the next year to close gap in service offerings in certain areas like healthcare and lifesciences.
TCS rose over 7.7% during the week. The company said it plans to expand its strategic business alliance with US-based Dow Chemicals.
Infosys was up by over 6% during the week after the company announced that its BPO arm had acquired the US-based back-office firm McCamish Systems for around US$38mn.
Mahindra Satyam surged over 6% during the week. Nearly 27.25mn shares or 2.3% of the company's equity were offloaded by L&T in a single block trade on the BSE on Friday. The transaction was seen at an average process of Rs112.45, raising almost Rs3.03bn for L&T.
Wipro surged over 6% during the week. According to a report released by IIFL during the week, "While margins are likely peaking at other IT services vendors, we believe Wipro's IT services margins will continue to expand. Further, margin expansion in the combined entity could be greater, as its badly affected infrastructure unit (WIN) turns EBITDA-positive. YoY, Wipro has improved EBITDA margins in its IT services division by 350bps against 150-250bps of competitors. This is despite its higher hedges putting it at a marginal disadvantage during a period of rapid depreciation of the rupee (11% vs US$). Apart from tighter hiring (1.3% decrease in headcount vs Infosys's and TCS's 5% to 7% increase YoY in 2QFY10), the shift in pricing models (~9ppt increase in contribution from fixed-price projects YoY) has released new delivery levers. Guidance for 3QFY10 is strong (4.5% QoQ at top end) and we expect Wipro's outperformance vs Infosys to continue (Wipro had better QoQ US$ revenue growth than Infosys in six out of the last nine quarters). We reiterate Wipro as our top pick in IT services and recommend a switch from Infosys to Wipro".
The BSE Consumer Index: The top gainers in the consumer durables space were Su-Raj Diamonds (up 4.2%), Whirlpool (up 4%), Videocon Industries (up 1.8%), Blue Star (up 1.7%) and Mirc Electronics (up 0.9%).
Samtel Color lost over 5% during the week.
The BSE Healthcare Index (up 2.2%): The top gainers in the Pharma sector were Morepen Labs (up 34%), Panacea Biotec (up 12.5%), Strides Arcolab (up 9.9%), Orchid Chem (up 7.2%) and GlaxoSmithKline (up 4.9%).
The top losers were Aurobindo Pharma (down 6.1%), Cadila Healthcare (down 5.2%), Glenmark Pharma (down 2.4%), Dishman Pharma (down 2.3%) and Zandu Pharma (down 1.3%).
Lupin ended almost flat during the week. A report released by IIFL stated that, "Key takeaways from investor meetings that we recently hosted for Lupin's management add to our confidence that the company will continue its strong performance. The company believes that active promotion of the newly acquired Antara can push its sales significantly above the historical run rate of US$70m per year. Its entry into ophthalmology and oral contraceptives in the US will significantly contribute to overall growth rate. USFDA issues surrounding the Mandideep facility will be resolved sooner rather than later, and the weak margins of 2QFY10 were an aberration. We are raising our FY10 and FY11 core earnings estimate by 3-4%. We also raise our price target to Rs1,610 from Rs1402 and maintain our BUY rating".
The BSE Banking Index (up 5.3%): The top gainers in the banking space were ICICI Bank (up 7.1%), IOB (up 6.5%), Axis Bank (up 6.2%), Kotak Mahindra Bank (up 6.2%) and Canara Bank (up 5.5%).
The top losers were Karnataka Bank (down 1.1%) and Andhra Bank (down 0.1%).
According to a report released by IIFL during the week, "Bank loan growth has been on a declining trend since peaking in October 2008 and grew at just 9.7% YoY for the fortnight ended 23 October 2009. The lower loan growth can be attributed to lack of demand from individuals and corporates alike. Alternate sources like QIPs and commercial paper have partly offset the fund flow to corporate sector. Banks have been parking their excess liquidity with mutual funds, which in turn have been subscribing to corporate CPs. While we expect some pick-up in loan growth in 2HFY10, full year growth is likely to be below 15%, well below RBI's targeted 18%. But most private and front-line government banks are expected to grow their loan book at well above the system growth rate. Axis, Yes, PNB, BOB and SBI remain our preferred picks".
The BSE Auto Index (up 4%): The top gainers in the auto sector were Hindustan Motors (up 27.9%), Tata Motors (up 8.8%), Eicher Motors (up 6.4%) and M&M (up 5.9%).
Hero Honda was up 3.2% during the week. According to reports, Honda said it is committed to its joint venture with the Hero Group, putting to rest speculations of a rift between the partners.
Maruti was marginally up by 0.5% during the week. According to a report released by IIFL during the week stated, "Reports of foreign automakers planning to set up plants in India have been a big overhang for Maruti stock for some time now. For a case study, we looked at the impact new entrants had on incumbents when a similar situation played out in Brazil ten years ago. In the last ten years, since the likes of Renault, Peugeot, Toyota and Honda set up shop in Brazil, they have been able to take only 10% market share from the top four auto makers (Fiat, Volkswagen, GM and Ford), who even now constitute 80% of the market. This corroborates our view that concerns over market share loss for Maruti are overdone. While we agree that increasing competition from the likes of Honda and Toyota will mean some market share loss for Maruti over the next few years, we think the decline will be far slower than what the market seems to be pricing in currently".
The BSE Oil & Gas Index (up 5.3%): The top gainers in the oil & gas space were Hindustan Oil (up 12.4%), Gujarat NRE Coke (up 7.1%) and MRPL (up 4.3%).
Reliance Industries surged 8% and ONGC added 2.2% during the week after media reports stated that the Oil Minister has proposed a 31% hike in regulated gas prices.
GSPL rose by over 4% during the week after the company announced that it plans to lay, build and operate a natural gas pipeline from Gujarat to Orissa.
The top losers were IOC (down 5.9%), Jindal Drilling (down 1.2%) and Great Offshore (down 0.3%).
The BSE Capital Goods Index (up 3.4%): The top gainers in the capital goods space were LMW (up 7.4%), Greaves Cotton (up 7.2%), Siemens (up 6.7%), Praj Industries (up 5.9%) and HEG (up 5.2%).
The top losers were Dredging Corp (down 4%), Alfa Laval (down 1.8%), BEML (down 0.9%) and BEL (down 0.3%).
The Cement Sector: The top gainers in the cement sector were Gujarat Sidhee (up 18.4%), Grasim (up 5.6%), Kakatiya Cement (up 3.7%), Shree Cement (up 3.2%) and ACC (up 2.9%).
The top losers were JK Cements (down 7.3%), Birla Corp (down 1.5%) and Ultratech Cement (down 0.8%).
According to a report released by IIFL during the week stated, "Cement exports from India declined 40% YoY in the September 2009 quarter, as the key Middle East region turned from supply shortage to excess supply. Withdrawal of Saudi Arabia's ban on cement export from second week of October further depressed the already-declining cement prices in the Middle East. For exports from India, FOB prices are currently at ~US$40 per tonne—down from US$60 per tonne two quarters ago. With diversion of supplies meant for exports, cement prices in Gujarat have declined sharply in the past month. We expect the decline in export volumes to continue, as supply in the Middle East region is likely to increase sharply".
The Telecom Sector: The top gainer in the telecom space was WWIL. The stock shot up over 30% during the week after Union Cabinet approved the proposal of the Information & Broadcasting Ministry to issue policy guidelines for Headend-in-the-Sky (HITS) operators. The policy guidelines provides for a framework within which the HITS service providers has to provide services in the country.
Among the other major gainers were Gemini Comm (up 12.8%), Shyam Telecom (up 12%), MTNL (up 7.3%) and Himachal Futuristic (up 1.9%).
The top losers were Bharti Airtel (down 5.6%), RCom (down 2.6%) and Idea Cellular (down 0.2%).
A report released by IIFL during the week stated, "Industry's QFY10 financial report released by TRAI shows a 0.4% QoQ drop in aggregate gross revenues (GR). The decline was led by B-circles (32% of total gross revenues), in which GR declined by 3.3% QoQ, while metro and C circles grew 2.5% and 2.8% respectively (A circles were flat). In the nine circles where Tata DoCoMo (TD) launched the per-second billing tariff plans, their revenues were up (12% QoQ), RCOM grew 3% QoQ (with this and the decline in the mobile revenues in 2Q reporting to exchanges, the hitherto inexplicable gap is decreasing), while revenues of Bharti, Vodafone and Idea dropped by 2% each. Expect more revenue declines when TD goes national".
The Realty Sector (down 2.3%): The Realty index was the only loser among the sectoral indices. The top losers in the real estate space were Unitech (down 3.8%), DLF (down 3.1%) and HDIL (down 0.6%).
The top gainers were Sobha Developers (up 10.5%), Akruti City (up 8.8%), Parsvnath (up 4.2%), Mahindra Lifespace (up 3.4%) and Omaxe (up 1.1%).
The Metals sector (up 7.1%): The top gainers in the metal space were JSW Steel (up 17.7%), Bhushan Steel (up 6.4%), Jindal Steel (up 6.1%) and Tata Metaliks (up 4.9%).
SAIL rose over 10% during the week. The Finance Ministry is in talks with the Steel Ministry to sell stake in SAIL
Other Headlines:
Domestic demand helped contain crisis:FM
Indian ADRs gain $10 bn in a week
Paulson firm takes Citigroup
Burlington purchase 'not a bargain'
October inflation at 1.34%
BHEL, MP plan 1,600 MW plant in Khandwa
Local court restricts Maytas from loans
IRB Infra Q2 net up 72% at Rs 71 cr
APEC wary of withdrawing stimulus early
Gold, silver rally as dollar falls
Dollar falls as optimism spurs demand
Oil falls to a one month low
US stocks rise for second week
Govt asks SFIO to proceed in Satyam case
Govt moots Sebi's pricing for divestment
Europe emerges from recession on exports
Bombay HC refuses to quash Dalmia FIR
Sept 11 suspect to face trial in NY
Jet pilots' union de-registered
Koda scam: UBI chief to be quizzed
Hope floats in Tirupur
Cox & Kings plans int'l acquisitions
HDFC forays into education loan biz
'More companies should go for listing'
Banking revival talk premature
Brown says allies to boost Afghan force
Trade gap in US widens
Stay invested in PSU stocks: Religare
PVR sells 10% stake to Thai firm
SEs to set expiry date for F&O contracts
Immigration to UK gets tougher
Govt may seek advice on coal gas project
Liberty Global to buy Unitymedia
Govt eyes 20,000 MW solar power
NTPC stake sale to fetch govt Rs 8,100cr
Gas Opera: RIL to ignore 7 affidavits
UltraTech, Samruddhi Merge, Forming India's Biggest Cement Firm
UltraTech Cement Ltd., a unit of India's Aditya Birla Group, said it will absorb sister company Samruddhi Cement Ltd. to create the nation's biggest and the world's 10th largest maker of the building material.
Shareholders of Samruddhi will get four shares of UltraTech for every seven held in Samruddhi, according to an e-mailed statement in Mumbai. UltraTech said it will issue 149.5 million new shares to complete the program, which was approved by the boards of directors of the two companies today, boosting its capital to 2.74 billion rupees ($59 million). The Mumbai-based company's output will increase to 48.8 million tons per year on merging with Samruddhi, according to the statement.
India's cement makers are seeking to expand as the government aims to spend $500 billion by 2012 to build roads, ports and power plants to boost growth and incomes. The Aditya Birla Group said last month it plans to raise $3 billion in its cement business in the next five years to add 25 million metric tons to its 49 million ton annual capacity.
"The merger will achieve the group's objective of consolidating its cement business into a single entity, thereby creating a platform for pursuing aggressive growth," Chairman Kumar Mangalam Birla said, according to the statement.
The Aditya Birla Group started last month its plan to merge all its production and sales of the material into a single company by transferring the cement business of unit Grasim Industries Ltd. to Samruddhi. It bought the cement business of Larsen & Toubro Ltd., India's biggest engineering company, in 2003 and named it UltraTech. The cement company made its trading debut in August 2004.
UltraTech shares have risen 28.6 percent in the past six months to 729.95 rupees in Mumbai trading. The benchmark Sensitive Index climbed 38.4 percent during the same period.
Bharat Petroleum Corp. Ltd. (BPCL IN): The Indian refiner and Oman Oil Company signed an agreement to increase the latter's stake in Bharat Oman Refineries Ltd. to 26 percent, the companies said in a statement yesterday. The total estimated cost of building Bharat Oman's refinery at Bina in Madhya Pradesh is now expected to be $2.4 billion, according to the statement. Bharat Petroleum added 1.6 percent to 522.35 rupees.
Housing Development Finance Corp. (HDFC IN): India's biggest mortgage lender agreed to acquire a 41 percent stake in Credila Financial Services Pvt. from DSP Merrill Lynch Capital Ltd., it said in a statement on Nov. 13. Housing Development rose 0.7 percent to 2,757 rupees.
Infosys Technologies Ltd. (INFO IN): India's second-largest software exporter has set up a new unit in the U.S. to service government contracts and clients from the healthcare sector, the Economic Times reported Nov. 14, without saying where it got the information. Infosys advanced 1.4 percent to 2,359.7 rupees.
Larsen & Toubro Ltd., Mahindra Satyam (LT IN, SCS IN): The Mumbai-based construction company sold 27.2 million shares, or 2.3 percent, of Mahindra Satyam to raise 3 billion rupees on Nov. 13, data from the Bombay Stock Exchange showed. Larsen added 0.2 percent to 1,644.4 rupees. Mahindra Satyam lost 6.2 percent to 110 rupees.
Oil & Natural Gas Corp. (ONGC IN): India's largest state- owned oil explorer said yesterday the government is considering a proposal to increase the administered price of natural gas, without saying where it got the information. The gas price for ONGC during the financial year ending March 31 would rise to 4,142 rupees per million standard cubic meters as per the proposal, the company said in an e-mailed statement. The New Delhi-based company said it received a price of 2,850 rupees per million standard cubic meters for the gas it produced from October 1997 through June 2005. ONGC climbed 3.1 percent to 1,184.1 rupees.
PVR Ltd. (PVRL IN): The Indian movie theater-chain operator said Nov. 13 it plans to raise as much as 421.9 million rupees by selling 2.56 million shares at 165 rupees each to Thailand's Major Cineplex group Plc. PVR also plans to acquire DT Cinema, a unit of DLF Ltd., according to a statement to the Bombay Stock Exchange. The shares gained 0.9 percent to 140.25 rupees. DLF declined 0.4 percent to 368.15 rupees.
Steel Authority of India Ltd. (SAIL IN): India plans to begin selling its stake in the state-owned steelmaker this fiscal year, Steel Minister Virbhadra Singh said in Kolkata on Nov. 14. The proposed equity sale may be followed by a public offer of shares by the company, Steel Secretary Atul Chaturvedi said at the event. The two offerings may raise as much as 160 billion rupees, he said. Steel Authority climbed 3.4 percent to 182.3 rupees.
UltraTech Cement Ltd. (UTCEM IN): The cement maker said yesterday it will absorb sister company Samruddhi Cement Ltd. to create India's biggest and the world's 10th largest maker of the building material. Samruddhi's shareholders will get four UltraTech shares for every seven held in Samruddhi, according to an e-mailed statement. UltraTech will issue 149.5 million new shares to complete the program boosting its capital to 2.74 billion rupees. The Mumbai-based company's output will increase to 48.8 million tons per year on merging with Samruddhi. UltraTech rose 0.2 percent to 729.95 rupees.
Sugar May Advance on Deteriorating Supply Outlook, Survey Shows
INVESTMENT VIEW
Dhampur-Sweet As Sugar
Dhampur Sugar's (Sugar Year Ending September 2009) results were in line with estimates. What was different in Q3 and Q4 were lower margins on sale of imported raw sugar, and lower price for power and ethanol. With the State Government once again encouraging Sugar units to utilise power capacities in the non crushing season for supply to the State grid, and the Central Government once more mandating 5 per cent Ethanol mix with Fuel, someone in the Government circles is talking sense.
This combo move will benefit all Sugar producers in UP.
Average sugar realisation at Rs 27.5 per kg
The average realisation for Dhampur Sugar increased to Rs 27.5 per kg from Rs 22.0 per kg. The company has sold 81,000 tonnes of sugar in the quarter. The company will register significant volume growth in the coming quarter from sugar produced through raw sugar.
Power tarriff at Rs 4 per unit
Power tarriffs have gone up to Rs 4.2 per unit. This has directly contributed to the bottom line. The increase in power tarriffs by Uttar Pradesh (UP) state grid would result in higher EBITDA margin for the company going forward.
Valuation
At the current price of Rs 138.35, the stock is trading at 4x its SY10E EPS of Rs 33.4 and 4.9x its SY11E EPS of Rs 26.5. Given the soaring sugar prices and 2.5 lakh tones of raw sugar imported by the company, Dhampur is likely to witness a significant rise in volumes as well as sugar realisations.
This, in turn, would boost earnings for the company in SY10. A summer 2010 price target could be Rs 200.
(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
Interesting findings on web:
U.S. stocks climbed for a second week as the Group of 20 nations agreed to maintain economic stimulus efforts and profits at companies from Wal-Mart Stores Inc. to Walt Disney Co. beat analysts' projections.
Stocks finished the session higher Friday, helping cement solid gains for the week, as key corporate earnings from consumer names helped offset news that sentiment remained shaky among U.S. consumers.
U.S. stocks rose in light volume on Friday to achieve a second straight week of gains as upbeat retail news reinforced hopes for strong sales in the key holiday season.
The Dow Jones industrial average .DJI added 73.00 points, or 0.72 percent, to end at 0,270.47. The Standard & Poor's 500 Index .SPX rose 6.24 points, or 0.57 percent, to 1,093.48. The Nasdaq Composite Index .IXIC rose 18.86 points, or 0.88 percent, to close 2,167.88.
RUSSELL586.285.96+1.03%
TRAN3960.5722.73+0.58%
UTIL373.572.88+0.78%
S&P 100508.082.63+0.52%
S&P 400698.266.82+0.99%
NYSE7119.8956.84+0.8%
NAS 1001788.6115.47+0.87%
Strong earnings at Walt Disney Co. (DIS), an analyst upgrade of Goodyear Tire & Rubber Co. (GT) and a retreat in oil prices helped the market shake off a weak reading of consumer sentiment. Traders said that many bears also had placed bets early that the sentiment data would be glum, clearing the way for buyers to rush back following the data's actual release.
"We've been hearing for so long about the toll that weak employment and higher savings rates are having on consumer spending," said Todd Salamone, director of trading at Schaeffer's Investment Research in Cincinnati. "At this point, it might sting a little to see confirmation of that. But I think it's hard to have a sustained reaction."
The government reported that the U.S. trade balance widened more than expected in September, with import prices rising faster than export prices. The trade deficit widened to $36.5 billion in September, compared with expectations for an expansion to $32 billion, according to economists polled by MarketWatch.
Peter Cardillo, chief market economist at Avalon Partners, said the data were a mixed blessing for investors. While a widening trade gap hints at stronger- than-expected demand in the U.S. economy, many investors will not be pleased to see the dollar stabilize.
Cardillo added he still believes that the market is in a broad trend higher.
Lawrence Creatura, equity market strategist and portfolio manager at Federated Clover Capital Advisors, said investors looked past the consumer confidence figure to focus on earnings reports because they are a more reliable indicator about the economy.
"It's probably safe to say that investors are rationally more focused on what consumers do rather than what they say," he said.
U.K. Chancellor of the Exchequer Alistair Darling, hosting a meeting of finance ministers from G-20 nations, said that his colleagues decided to keep interest rates low and maintain record budget deficits until economic recoveries take hold.
About 80 percent of S&P 500 companies that have reported third-quarter results beat analysts' predictions, including Applied Materials Inc. and Priceline.com Inc. this week. That exceeds the record pace of 72.3 percent for the period ended in June, data compiled by Bloomberg show.
The S&P consumer discretionary sector .GSPD rose 1.6 percent even as the Reuters/University of Michigan preliminary November Surveys of Consumers showed U.S. consumer confidence fell to its weakest level in three months amid grim expectations for job and income prospects.
"I think people were paying more attention to JC Penney and Abercrombie & Fitch as indicative examples of people's sentiment toward retail," said Michael James, senior trader at Wedbush Morgan in Los Angeles.
Upbeat quarterly reports from Disney as well as Abercrombie & Fitch Co. and J.C. Penney Co. offset worries about a slide in consumer confidence.
Walmart, the world's largest retailer, and Disney, the world's biggest media company, climbed at least 3.8 percent. American Express Co., the top credit-card issuer by purchases, jumped 8.4 percent for the steepest gain in the Dow Jones Industrial Average after worldwide spending rose in October. Dow Chemical Co. surged as it predicted that cost cuts and rising sales will boost earnings more than analysts estimate.
"The consumer is going to start to come back, and it seems like the market got some confirmation of that," said Stephen Auth, the New York-based chief investment officer for equities at Federated Investors Inc., which oversees $390 billion. "They don't look dead and buried."
Walmart jumped 3.8 percent to $53.20. The Bentonville, Arkansas-based retailer said third-quarter profit rose 3.2 percent, helped by inventory reductions, and forecast higher full-year profit. Net income increased to $3.24 billion, or 84 cents a share, more than the 81-cent average estimate of analysts surveyed by Bloomberg.
Disney gained 6.6 percent to $30.44, its steepest weekly advance since September. The company reported fourth-quarter profit of 46 cents a share, excluding one-time items, beating the 41-cent average estimate of 21 analysts. Disney also reported sales that beat analysts' estimates by 6 percent.
"(Disney) is a big name that is very easy for large portfolio managers to continue to buy on good results, and I think you're seeing the fruits of that today," James said.
American Express rose 8.4 percent to $40.35 after the lender said customers spent more on their American Express cards in October than any other month this year as annualized billings advanced 3 percent in the month.
Newmont Mining Corp., the biggest U.S. gold producer, added 4 percent to $50.99 as gold climbed to a record $1,123.40 an ounce on Nov. 12 before paring its weekly gain.
An index of consumer discretionary stocks gained 3.3 percent, the second-most of the 10 industry groups in the S&P 500, led by Priceline.com. The online travel agency surged 17 percent to $201.93 after reporting third-quarter sales and profit that topped analysts' estimates. The company said it's gaining market share in hotel-room reservations and had an "exceptionally strong" summer season as consumers booked discounted trips to save money.
MBIA Inc. dropped 18 percent to $3.56, the steepest retreat in the S&P 500. The world's largest bond insurer posted a third- quarter loss of $3.50 a share, wider than the average estimate of analysts surveyed by Bloomberg. The results were affected by "continued weakness in the U.S. housing market and the economy," Chief Financial Officer Chuck Chaplin said in a conference call.
Goodyear was up more than 4% after Goldman Sachs analysts upgraded the tire maker to a buy rating from neutral, saying that recent selling in the company's shares was overdone following its weak fourth-quarter forecast.
Abercrombie jumped $3.92, or 10.7 percent, to $40.68, while J.C. Penney gained $1.82, or 6.2 percent, to $31.21.
High-end retailer Nordstrom [JWN 33.99 -0.52 (-1.51%) ] missed Wall Street's profit target but raised its full-year outlook.
Brokerage upgrades lifted shares of chipmaker Qualcomm Inc (QCOM.O) and Juniper Networks Inc (JNPR.N). Qualcomm rose 2.1 percent to $45.77 on the Nasdaq and Juniper shot up 5.9 percent to $26.15 on the New York Stock Exchange. The PHLX semiconductor index .SOXX rose 1.1 percent.
McDonald's [MCD 63.58 1.41 (+2.27%) ] and American Express [AXP 40.35 0.85 (+2.15%) ] rounded out the Dow's top three. AXP, which is one of Warren Buffett's key holdings, has doubled since the start of the year.
JPMorgan shares [JPM 42.90 -0.40 (-0.92%) ] slipped 0.9 percent after CEO Jamie Dimon said no bank should be considered too big to fail. Such an idea is "politically, economically and ethically bankrupt,'' Dimon wrote in an op-ed in the Washington Post.
Dollar General [DG 22.73 1.73 (+8.24%) ] rallied 8.2 percent in its debut on the New York Stock Exchange. Shares priced last night at $21 a share. The IPO raised $716 million.
And some big M&A news: British Airways [BAY-LN 214.116 2.00 (+0.93%)] and Iberia announced a $7 billion merger that would create the world's third-largest airline by revenue.
And, Liberty Global is planning to acquire Unity Media, Germany's No. 2 cable operator in a deal worth $3 billion.
An interesting deal on this side of the pond: Playboy [PLA 4.55 0.48 (+11.79%)] is apparently in talks to sell itself to Iconix [ICON 11.87 0.11 (+0.94%)], which owns the Candies, Joe Boxer and Rocawear brands.
Reports next week will probably show retail sales rebounded in October, production climbed and work began on more houses, allaying concern the U.S. expansion will unravel should the government withdraw stimulus, according to the median forecasts of economists surveyed by Bloomberg. Home Depot Inc., Target Corp. and Dell Inc. are among the 17 companies in the S&P 500 scheduled to report results.
"Next week is just chock-full of market-moving data," said Mike Ryan, the New York-based head of wealth management research for the Americas at UBS Financial Services Inc., which oversees $655 billion.
Investors on Monday will also pay close attention to speeches by Fed Chairman Ben Bernanke, New York Fed President William Dudley and Chicago Fed President Charles Evans.
The VIX, as the Chicago Board Options Exchange Volatility Index is known, dropped to 23.36. The index, which is known as Wall Street's fear gauge, is down from a record 80.86 in November 2008 yet above its 20.28 average over its 19-year history.
Oil,Gold & Currencies:
Oil futures fell 59 cents, or 0.8%, to end at $76.35 a barrel in New York.
Gold futures rose $10.10 to end at $1,116.70 per ounce in New York.
The dollar fell broadly on Friday after data showing a wider U.S. trade deficit and weaker consumer sentiment reinforced views that the United States may return to economic health more slowly than other countries.
Bonds:
Treasury prices edged lower. The 10-year note was off 2/32 to yield 3.428%.
What to expect:
MONDAY: Government's report on retail sales; Bernanke speaks; Earnings from Lowe's
TUESDAY: PPI; industrial production; Fed's Lacker, Pianalto speak; Geithner speaks; NAHB housing index; Earnings from Home Depot, Target and TJX
WEDNESDAY: Weekly mortgage applications; CPI; housing starts; weekly crude inventories; Earnings from BJ's, Limited
THURSDAY: EU chooses new president; Fed's Plosser, Fisher speak; Ghosn, Rattner speak; weekly jobless claims; leading indicators; Philly Fed; Geithner speaks; Earnings from Sears, Dell, Gap
FRIDAY: Fed's Plosser speaks; state-by-state jobs report
Other Headlines:
Japan Economy Grew at 4.8% Pace in Third Quarter, Faster Than Anticipated
Obama Questioned on Trade, Fails to Win Backing for Stronger Yuan at APEC
China's Bank Regulator Joins Blame of Fed Rates for Spurring Asset Prices
Sands China to Open Most of Macau Resort in 2011, Rooms to Almost Triple
Airbus, Boeing Call Recovery for 2010 as Airlines End Deferrals of Orders
Brown to Allow U.K. Regulators to `Tear Up' Some Bankers' Bonus Agreement
APEC Leaders Conclude Climate Treaty Out of Reach for Copenhagen Summit
New York Terror-Suspect Trial Plan a `Mistake,' Former Mayor Giuliani Says
Obama presses Iran on atomic deal, Tehran defiant
World leaders back delay to final climate deal
Stronger yuan needed for rebalancing: IMF chief
U.S. Afghan strategy debate exposes split over price
Citi to sell Bellsystem stake to Bain for $1 billion
Families urge Iran to release U.S. hikers
Italy arrests Mafia boss, on run for 15 years
Drug Study Questions Effectiveness of Merck's Drugs
Warren Buffett to CNBC: 'I Haven't Bought American Express In Years'
Euro Advances Versus Yen as Economic Recovery Signs Boost Demand for Risk
Rio Tinto's Cloud Peak Unit Leads Year's Second-Busiest Week for U.S. IPOs
Mitsubishi UFJ May Announce Record Share Sale This Week to Bolster Capital
Swaps Signal Worst Yen Since '05 as Mounting Debt Overwhelms Market Demand
UBS Account Criteria Release May Unveil Model for IRS Tax Evasion Crusade
Dollar pressured after China official warns of risks
The dollar slipped Monday, a day after China's chief banking regulator criticized loose U.S. monetary policy as leading to increased speculation.
"The continuous depreciation in the dollar, and the U.S. government's indication that, in order to resume growth and maintain public confidence, it basically won't raise interest rates for the coming 12 to 18 months, has led to massive dollar arbitrage speculation," Liu Mingkang, chairman of the China Banking Regulatory Commission, said Sunday in Beijing at the International Finance Forum, according to news reports.
Low U.S. interest rates and a weaker greenback have "seriously affected global asset prices, fuelled speculation in stock and property markets, and created new, real and insurmountable risks to the recovery of the global economy, especially emerging-market economies," Liu said.
The dollar bought 89.45 yen, down from 89.72 yen in late North American trading on Friday. The euro bought $1.4956, up from $1.4903 late Friday.
China has kept its tightly controlled currency, the yuan, almost unchanged against the U.S. dollar for more than a year, in a move that gives Chinese exports a competitive advantage in U.S. markets.
Last week, China's central bank made a rare change of wording on its exchange-rate policy that was seen as a hint Beijing may let the yuan appreciate.
The People's Bank of China said in its quarterly policy report released Wednesday that it will consider "changes in international capital flows and the trends of major currencies" in managing the exchange rate. Read more on People's Bank of China currency statement.
U.S. President Barack Obama is on his first official visit to China this week to discuss a range of contentious issues, but is unlikely to push China too hard on currencies or anything else.
Asia:
Asian stocks gained as higher gold and copper prices boosted commodity companies, overshadowing concern share sales will dilute the value of existing holdings.
BHP Billiton Ltd., the world's biggest mining company, rose 1.9 percent, and Lihir Gold Ltd. climbed 3.3 percent in Sydney. Fast Retailing Co., Japan's biggest clothing retailer, advanced 2.5 percent after the nation's economy grew more in the third quarter than expected. Mitsubishi UFJ Financial Group Inc. and Hitachi Ltd. sank more than 4 percent in Tokyo on speculation the companies will sell new stock.
The MSCI Asia Pacific Index added 0.5 percent to 118.81 as of 11:46 a.m. in Tokyo, with five stocks advancing for every three that retreated. The gauge has lost 2 percent from a 13- month high on Oct. 20 on concern the withdrawal of government stimulus measures will cause the global recovery to falter.
"The fundamentals of the economy are continuing to improve. People in the market tend to underestimate the effects of stimulus measures, but they are always effective," said Masaru Hamasaki, a strategist at Toyota Asset Management Co., which oversees the equivalent of $14 billion in Tokyo. "Investors aren't convinced selling shares will boost companies' profitability and growth."
Australia's S&P/ASX 200 Index added 0.8 percent while the Kospi Index dipped 0.2 percent in Seoul. Japan's Topix index dropped 0.5 percent even as the Cabinet Office reported the economy grew at an annual 4.8 percent rate in the third quarter. Economists had estimated a 2.9 percent gain.
Merger Plan
Taiwan's Taiex Index, advanced 1.1 percent. Chi Mei Optoelectronics Corp. jumped 6.9 percent after agreeing to merge with Innolux Display Corp. to form Taiwan's largest maker of liquid-crystal display panels.
Futures on the Standard & Poor's 500 Index rose 0.6 percent. The gauge gained 0.6 percent on Nov. 13 in New York, as higher- than-estimated earnings at Walt Disney Co. and Abercrombie & Fitch Co. outweighing an unexpected drop in consumer confidence.
BHP added 1.9 percent to A$39.74 in Sydney, while Lihir gained 3.3 percent to A$3.47. Gold for immediate delivery climbed as much as 0.7 percent to a record $1,126.07 an ounce today. Copper futures in New York rose 1.4 percent in after- hours trading.
"With excess liquidity and still small risk appetite, people prefer gold over other assets, which is the ultimate way of avoiding risk," said Toyota Asset's Hamasaki.
Fast Retailing climbed 2.5 percent to 17,100 yen, becoming the biggest gaining contributor to the Nikkei 225 Stock Average, which increased 0.1 percent. Tokyo Electric Power Co., Asia's biggest utility, rose 2.1 percent to 2,195 yen.
Capital Spending
A government report showed Japan's capital spending rose 1.6 percent in the three months through September, contributing to the nation's faster-than-estimated economic growth in the quarter. Business investment accounts for about 15 percent of the economy and drove more than a third of Japan's growth between 2002 and 2007.
Mitsubishi UFJ, Japan's largest bank by market value, sagged 4.3 percent to 486 yen, while Hitachi, the fourth-largest company in the Nikkei, dived 8.5 percent to 269 yen.
The bank may announce Japan's biggest secondary share sale this week as it prepares for stricter global capital rules, eight of nine analysts surveyed by Bloomberg said.
Hitachi will raise as much as 418 billion yen ($4.66 billion) from a sale of securities, according to a filing with Japan's Finance Ministry. Reuters had earlier reported that Hitachi may raise as much as 400 billion yen through the sale of new stock and convertible bonds.
Chi Mei, Innolux
Mitsui Chemicals Inc. plunged 12 percent to 247 yen in Tokyo after saying it will raise as much as 64.3 billion yen for capital spending.
Chi Mei surged 6.9 percent to NT$20.1 in Taiwan, while Innolux slipped 0.9 percent to NT$46.6. Innolux, the world's No. 2 assembler of flat-screen monitors, will give one of its shares for every 2.05 shares in Chi Mei, the companies said on Nov. 14.
Elpida Memory Inc., Japan's largest computer memory maker, fell 3.3 percent to 1,180 yen. The price of the benchmark 1 gigabit dynamic random access memory chip retreated 3.3 percent, the most since April 1, according to Dramexchange Technology Inc., operator of Asia's biggest spot market for semiconductors.
Nikkei 225 9,782.69 +12.38 ( +0.13%). (08.40 AM IST)
HSI 22864.08 +310.45 +1.38%. (08.41 AM IST)
SSE Composite 3187.65 3245.46 3247.58 3206.43 + 1.81. (08.42 AM IST)
Rupee:
The partially convertible rupee INR=IN closed at 46.31/32 per dollar on Friday, stronger than its previous close of 46.66/67.
INDIA:
Indian stocks advanced, led by Steel Authority of India Ltd. and Oil & Natural Gas Corp., after the government said it will sell shares in state-run companies and increase the price of gas.
Steel Authority gained 3.4 percent after the finance ministry said it's among 60 state-run companies eligible for share sales, increasing optimism the government will act on election promises this year to reduce control of the economy. Oil & Natural Gas climbed 3.1 percent after Bloomberg-UTV reported that the government proposed a 31 percent increase in the administered price of natural gas.
"The government has the intention for reforms," said Principal PNB Asset Management Co.'s Pankaj Tibrewal, manager of the country's best-performing equity fund this year. "This is a step in the right direction, but still a lot needs to be done."
The Bombay Stock Exchange's Sensitive Index, or Sensex, added 152.80, or 0.9 percent, to 16,848.83. The Sensex has risen 4.3 percent this week, extending its biggest annual rally in 18 years with a 75 percent climb so far in 2009. The S&P CNX Nifty Index on the National Stock Exchange gained 0.9 percent to 4,998.95. The BSE 200 Index climbed 0.7 percent to 2,091.21.
Steel Authority advanced 3.4 percent to 182.3 rupees. The Ministry of Finance is in talks with the steel and coal ministries to sell stakes in Steel Authority and Coal India Ltd., Sunil Mitra, secretary for asset sales at the finance ministry, said in New Delhi today.
Oil & Natural Gas, India's largest state-owned oil explorer, rose 3.1 percent to 1,184.1 rupees. Oil India Ltd., the nation's second-biggest state-owned energy explorer, climbed 1 percent to 1,194.45 rupees.
Leading Indicator
Hero Honda Ltd. rose 3.8 percent to 1,578.9 rupees on optimism an economic recovery will benefit India's largest motorcycle maker and car manufacturers. India's economy may grow 6.2 percent in the year ending March 31, the Centre for Monitoring Indian Economy, a Mumbai-based research group, said in a statement. The group had in October forecast expansion of 6 percent.
Maruti Suzuki India Ltd., the nation's biggest carmaker, increased 3.9 percent to 1,478.35 rupees.
"The auto sector is a leading indicator and will benefit when the eventual economic recovery happens," said Jagannadham Thunuguntla, head of equities at SMC Capitals Ltd. in New Delhi.
Tata Consultancy Services Ltd. climbed 2.3 percent to 670.15 rupees. India's largest software-services provider will build a services center in Michigan as part of the accord with Dow Chemical Co., the largest U.S. chemical maker, the Mumbai- based company said in a filing to the Bombay Stock Exchange today.
Golden Tobacco
Golden Tobacco Ltd. jumped 5 percent to 114.85 rupees after the Economic Times said that the tobacco maker is the subject of a hostile takeover bid by investor Pramod Jain.
Network 18 Media & Investments Ltd., an Indian holding company that includes a television shopping channel among its assets, soared 16 percent to 86.05 rupees. The shopping channel unit raised $23.5 million to expand its business, the company said in a statement to the Bombay Stock Exchange today.
Overseas funds bought a net 9.73 billion rupees ($208.9 million) of Indian stocks Nov. 11, the Securities and Exchange Board of India said on its Web site. The funds have bought 711.6 billion rupees of Indian stocks this year to date, compared with record net sales of 530 billion rupees for the whole of 2008.
Main index gains 0.9 pct on day, up 4.5 pct on week
Banks, outsourcers lead gains on improving outlook
Indian shares climbed 0.9 percent on Friday led by banks and outsourcers and propelled the main index to its best weekly gain in 11 weeks, supported by rising foreign portfolio investment.
The 30-share BSE index .BSESN rose 4.5 percent on the week, taking gains this month to 6 percent after sliding 7.2 percent in October, which was its worst performance in a year.
"Ihe rally is driven by liquidity, which is fuelled by dollar weakness," said Manish Sonthalia, portfolio management services manager at Motilal Oswal.
Foreign funds have moved $14.8 billion into Indian stocks this year, lifting the BSE index nearly 75 percent. In 2008, they had pulled out more than $13 billion and the benchmark fell over half.
Private lenders ICICI Bank (
ICBK.BO: Quote, Profile, Research) and HDFC Bank (
HDBK.BO: Quote, Profile, Research) were among the gainers on hopes rising industrial activity will boost demand for loans and the long-term outlook.
"We expect bank credit growth to rise to 16 percent year-on-year by March 2010," Morgan Stanley said, adding it will accelerate to 22 percent by end-2010 as capital expenditure also begins to recover next year.
The BSE index closed up 0.92 percent, or 152.80 points, at 16,848.83. Twenty-five of its components advanced.
ICICI Bank and HDFC Bank rose 1.6 percent and 0.4 percent respectively while SBI gained 0.1 percent.
Export-focused software services companies climbed as the sector outlook was positive, with orders set to rise and hiring plans picking up, R. Ganesh, director of Systematix Shares, said.
Bellwether Infosys Technologies (
INFY.BO: Quote, Profile, Research) rose 1.5 percent to 2,358.80 rupees.
Sector leader Tata Consultancy (
TCS.BO: Quote, Profile, Research) added 2.5 percent to 670.20 rupees and Wipro (
WIPR.BO: Quote, Profile, Research) firmed 1.2 percent to 632.70 rupees.
State-run oil and gas producer Oil & Natural Gas Corp (
ONGC.BO: Quote, Profile, Research) rose 3.1 percent to 1,183.50 rupees on market talk the oil ministry had proposed a hike in gas prices.
Engineering and construction firm Larsen & Toubro (
LART.BO: Quote, Profile, Research) gained 0.2 percent to 1,643.55 rupees, after sources said it sold a third of its holding in outsourcer Mahindra Satyam (
SATY.BO: Quote, Profile, Research) for about $66 million.
In the broader market, losers almost matched the number of gainers on relatively moderate volume of 423 million shares.
The broader 50-share NSE index .NSEI closed 0.9 percent higher at 4,998.95.
* Software services firm Patni Computer Systems (
PTNI.BO: Quote, Profile, Research) gained 3.9 percent to 505.90 rupees. Its CEO told Reuters the company expects revenue to rise more than 3 percent sequentially in the December quarter.
* State-run Steel Authority of India (
SAIL.BO: Quote, Profile, Research) rose 3.3 percent to 182 rupees, after a senior finance ministry official said they were in talks with steel ministry for a possible stake sale in the company.
Among the Sensex pack 25 stocks closed in green while 5 ended in red. The market breadth indicating the overall health of the market remained strong as 1,372 stocks closed in positive while 1,355 stocks closed in negative while 100 stocks remained unchanged in BSE.
The BSE Sensex closed with gains of 152.80 points or (0.92%) at 16,848.83 and NSE Nifty closed up by 46.30 points or (0.93%) at 4,998.95. The BSE Mid Caps and Small Caps closed with gains of 1.52 points and 14.76 points at 6,418.65 and 7,409.70 respectively. The BSE Sensex touched intraday high of 16,909.74 and intraday low of 16,666.70.
Losers from the BSE Sensex pack are JP Associates (1.99%), M&M (0.69%), DLF (0.62%), Reliance Communication (0.43%) and Tata Power (0.05%).
Gainers from the BSE Sensex pack are Hero Honda (3.99%), Maruti Suzuki (3.90%), ONGC (3.07%), TCS (2.45%), Tata Steel (1.84%), HUL (1.61%), ICICI Bank (1.60%) and Infosys (1.55%).
BSE REALTY indexwas at 3,902.09 down by 35.37 points or by (0.9%) The main losers were Anant Raj In down by (3.15%) at Rs.135.15, Orbitco down by (2.6%) at Rs.288.7, Housing Dev down by (2.49%) at Rs.357.05, Ansal Infras down by (2.02%) at Rs.65.45, Indbul Real down by (1.76%) at Rs.235.
BSE METAL index was at 15,540.99 up by 254.42 points or by (1.66%) The main gainers were Jsw Sl up by (8.43%) at Rs.896.5, Steel Author up by (3.29%) at Rs.182, Jindal Steel up by (2.32%) at Rs.696.05, Jindal Saw up by (2.29%) at Rs.786, Tata Stl up by (1.84%) at Rs.521.25.
BSE BANKEX index was at 10,202.18 up by 74.21 points or by (0.73%) The main gainers were Kotak Bank up by (2.44%) at Rs.810.65, Idbi Bank L up by (2.27%) at Rs.128.65, Axis Bank up by (1.78%) at Rs.996.6, Icici Bank L up by (1.6%) at Rs.909.4, Bank Of India up by (0.8%) at Rs.367.05.
BSE PSU index was at 9,210.74 up by 53.94 points or by (0.59%) The main gainers were Engineers In up by (4.16%) at Rs.1460, Steel Author up by (3.29%) at Rs.182, Ong Corp Ltd up by (3.07%) at Rs.1183.5, Contain Corp up by (3.01%) at Rs.1203.8, Idbi Bank L up by (2.27%) at Rs.128.65.
BSE OIL&GAS index was at 10,140.39 up by 105.29 points or by (1.05%) The main gainers were Ong Corp Ltd up by (3.07%) at Rs.1183.5, Bharat Petroleum Corporation L up by (1.57%) at Rs.522.75, Hindustan Petroleum Corp. Ltd. up by (1.22%) at Rs.351.8, Reliance up by (0.79%) at Rs.2116.7, Essar Oil Ltd. up by (0.71%) at Rs.134.65.
BSE IT index was at 4,744.29 up by 70.63 points or by (1.51%) The main gainers were Patni Comput up by (3.89%) at Rs.505.9, Tcs Ltd up by (2.45%) at Rs.670.2, Mphasis Ltd up by (1.94%) at Rs.772.5, Infosys Technologies Ltd.-Ordi up by (1.55%) at Rs.2358.8, Wipro Ltd. up by (1.22%) at Rs.632.7.
Ramsarup Industries Limited closed with gains of 4.95% at Rs. 87 as the company has signed a Power Purchase Agreement for its Waste Heat, CO-gas based 22 MW power plant with West Bengal State Electricity Distribution Company, a state government owned electric "utility company.
BGR Energy surged 5.10% to close at Rs. 492.55. The company has secured three contracts. First contract is for the supply of 72 bundles of Air Heaters for receiving and regassification terminal of Petronet LNG Ltd. The second contract is for supply of 46 numbers of Air cooled heat exchanges for Naptha hydro treating unit and vacuum gas oil hydro treating unit from HPCL-Mittal energy ltd. The third is for supply of 30 numbers of ACHE for its refinery expansion project at Vadinar, Gujarat.
Mahindra Satyam declined by 6.60% to close at Rs. 109.70 as L&T sold 27.2 million shares or about 2.31% stake in Satyam at Rs. 114.90 a share on BSE.
Alstom Projects India gained 2.65% to close at Rs. 537.65 as the company had bagged orders worth Rs. 470 crore from Hindalco Industries for supply and installation of four gas treatment plants. However, the scope of work includes design, engineering, supply and commissioning of two gas treatment plants each in Madhya Pradesh and Orissa.
Weekly:
The bulls managed to sustain last week's momentum, with the BSE Sensex adding 4.3% to close at 16,848 and the NSE Nifty rising 4.2% to 4,998. Better-than expected IIP numbers helped the market in maintaining the bullish tempo. However, the Nifty continued to witness resistance at 5,000 levels through the week.
The BSE Sensex hit an intra-week high of 16,910 and low of 16,147 while, NSE Nifty hit an intra-week high of 5,017 and low of 4,790.
The Foreign Institutional Investors (FIIs) bought shares worth Rs30.15bn during the week. The Domestic Institutions were net buyers to the tune of Rs4.90bn during the week.
The top gainers: The top gainers in the Sensex were Tata Motors (up 8.8%), Reliance Industries (up 8.3%), TCS (up 7.7%), ICICI Bank (up 7.1%) and Infosys (up 6.4%).
The Top Losers: The top losers in the Sensex were Bharti Airtel (down 5.6%), DLF (down 3.1%), Hindustan Unilever (down 1%), Ranbaxy Labs (down 0.5%) and Reliance Power (down 0.2%).
The BSE IT Index (up 6.5): The top gainer in the IT sector was HCL Tech. The stock rose over 10% during the week. The company is reportedly looking for small acquisition over the next year to close gap in service offerings in certain areas like healthcare and lifesciences.
TCS rose over 7.7% during the week. The company said it plans to expand its strategic business alliance with US-based Dow Chemicals.
Infosys was up by over 6% during the week after the company announced that its BPO arm had acquired the US-based back-office firm McCamish Systems for around US$38mn.
Mahindra Satyam surged over 6% during the week. Nearly 27.25mn shares or 2.3% of the company's equity were offloaded by L&T in a single block trade on the BSE on Friday. The transaction was seen at an average process of Rs112.45, raising almost Rs3.03bn for L&T.
Wipro surged over 6% during the week. According to a report released by IIFL during the week, "While margins are likely peaking at other IT services vendors, we believe Wipro's IT services margins will continue to expand. Further, margin expansion in the combined entity could be greater, as its badly affected infrastructure unit (WIN) turns EBITDA-positive. YoY, Wipro has improved EBITDA margins in its IT services division by 350bps against 150-250bps of competitors. This is despite its higher hedges putting it at a marginal disadvantage during a period of rapid depreciation of the rupee (11% vs US$). Apart from tighter hiring (1.3% decrease in headcount vs Infosys's and TCS's 5% to 7% increase YoY in 2QFY10), the shift in pricing models (~9ppt increase in contribution from fixed-price projects YoY) has released new delivery levers. Guidance for 3QFY10 is strong (4.5% QoQ at top end) and we expect Wipro's outperformance vs Infosys to continue (Wipro had better QoQ US$ revenue growth than Infosys in six out of the last nine quarters). We reiterate Wipro as our top pick in IT services and recommend a switch from Infosys to Wipro".
The BSE Consumer Index: The top gainers in the consumer durables space were Su-Raj Diamonds (up 4.2%), Whirlpool (up 4%), Videocon Industries (up 1.8%), Blue Star (up 1.7%) and Mirc Electronics (up 0.9%).
Samtel Color lost over 5% during the week.
The BSE Healthcare Index (up 2.2%): The top gainers in the Pharma sector were Morepen Labs (up 34%), Panacea Biotec (up 12.5%), Strides Arcolab (up 9.9%), Orchid Chem (up 7.2%) and GlaxoSmithKline (up 4.9%).
The top losers were Aurobindo Pharma (down 6.1%), Cadila Healthcare (down 5.2%), Glenmark Pharma (down 2.4%), Dishman Pharma (down 2.3%) and Zandu Pharma (down 1.3%).
Lupin ended almost flat during the week. A report released by IIFL stated that, "Key takeaways from investor meetings that we recently hosted for Lupin's management add to our confidence that the company will continue its strong performance. The company believes that active promotion of the newly acquired Antara can push its sales significantly above the historical run rate of US$70m per year. Its entry into ophthalmology and oral contraceptives in the US will significantly contribute to overall growth rate. USFDA issues surrounding the Mandideep facility will be resolved sooner rather than later, and the weak margins of 2QFY10 were an aberration. We are raising our FY10 and FY11 core earnings estimate by 3-4%. We also raise our price target to Rs1,610 from Rs1402 and maintain our BUY rating".
The BSE Banking Index (up 5.3%): The top gainers in the banking space were ICICI Bank (up 7.1%), IOB (up 6.5%), Axis Bank (up 6.2%), Kotak Mahindra Bank (up 6.2%) and Canara Bank (up 5.5%).
The top losers were Karnataka Bank (down 1.1%) and Andhra Bank (down 0.1%).
According to a report released by IIFL during the week, "Bank loan growth has been on a declining trend since peaking in October 2008 and grew at just 9.7% YoY for the fortnight ended 23 October 2009. The lower loan growth can be attributed to lack of demand from individuals and corporates alike. Alternate sources like QIPs and commercial paper have partly offset the fund flow to corporate sector. Banks have been parking their excess liquidity with mutual funds, which in turn have been subscribing to corporate CPs. While we expect some pick-up in loan growth in 2HFY10, full year growth is likely to be below 15%, well below RBI's targeted 18%. But most private and front-line government banks are expected to grow their loan book at well above the system growth rate. Axis, Yes, PNB, BOB and SBI remain our preferred picks".
The BSE Auto Index (up 4%): The top gainers in the auto sector were Hindustan Motors (up 27.9%), Tata Motors (up 8.8%), Eicher Motors (up 6.4%) and M&M (up 5.9%).
Hero Honda was up 3.2% during the week. According to reports, Honda said it is committed to its joint venture with the Hero Group, putting to rest speculations of a rift between the partners.
Maruti was marginally up by 0.5% during the week. According to a report released by IIFL during the week stated, "Reports of foreign automakers planning to set up plants in India have been a big overhang for Maruti stock for some time now. For a case study, we looked at the impact new entrants had on incumbents when a similar situation played out in Brazil ten years ago. In the last ten years, since the likes of Renault, Peugeot, Toyota and Honda set up shop in Brazil, they have been able to take only 10% market share from the top four auto makers (Fiat, Volkswagen, GM and Ford), who even now constitute 80% of the market. This corroborates our view that concerns over market share loss for Maruti are overdone. While we agree that increasing competition from the likes of Honda and Toyota will mean some market share loss for Maruti over the next few years, we think the decline will be far slower than what the market seems to be pricing in currently".
The BSE Oil & Gas Index (up 5.3%): The top gainers in the oil & gas space were Hindustan Oil (up 12.4%), Gujarat NRE Coke (up 7.1%) and MRPL (up 4.3%).
Reliance Industries surged 8% and ONGC added 2.2% during the week after media reports stated that the Oil Minister has proposed a 31% hike in regulated gas prices.
GSPL rose by over 4% during the week after the company announced that it plans to lay, build and operate a natural gas pipeline from Gujarat to Orissa.
The top losers were IOC (down 5.9%), Jindal Drilling (down 1.2%) and Great Offshore (down 0.3%).
The BSE Capital Goods Index (up 3.4%): The top gainers in the capital goods space were LMW (up 7.4%), Greaves Cotton (up 7.2%), Siemens (up 6.7%), Praj Industries (up 5.9%) and HEG (up 5.2%).
The top losers were Dredging Corp (down 4%), Alfa Laval (down 1.8%), BEML (down 0.9%) and BEL (down 0.3%).
The Cement Sector: The top gainers in the cement sector were Gujarat Sidhee (up 18.4%), Grasim (up 5.6%), Kakatiya Cement (up 3.7%), Shree Cement (up 3.2%) and ACC (up 2.9%).
The top losers were JK Cements (down 7.3%), Birla Corp (down 1.5%) and Ultratech Cement (down 0.8%).
According to a report released by IIFL during the week stated, "Cement exports from India declined 40% YoY in the September 2009 quarter, as the key Middle East region turned from supply shortage to excess supply. Withdrawal of Saudi Arabia's ban on cement export from second week of October further depressed the already-declining cement prices in the Middle East. For exports from India, FOB prices are currently at ~US$40 per tonne—down from US$60 per tonne two quarters ago. With diversion of supplies meant for exports, cement prices in Gujarat have declined sharply in the past month. We expect the decline in export volumes to continue, as supply in the Middle East region is likely to increase sharply".
The Telecom Sector: The top gainer in the telecom space was WWIL. The stock shot up over 30% during the week after Union Cabinet approved the proposal of the Information & Broadcasting Ministry to issue policy guidelines for Headend-in-the-Sky (HITS) operators. The policy guidelines provides for a framework within which the HITS service providers has to provide services in the country.
Among the other major gainers were Gemini Comm (up 12.8%), Shyam Telecom (up 12%), MTNL (up 7.3%) and Himachal Futuristic (up 1.9%).
The top losers were Bharti Airtel (down 5.6%), RCom (down 2.6%) and Idea Cellular (down 0.2%).
A report released by IIFL during the week stated, "Industry's QFY10 financial report released by TRAI shows a 0.4% QoQ drop in aggregate gross revenues (GR). The decline was led by B-circles (32% of total gross revenues), in which GR declined by 3.3% QoQ, while metro and C circles grew 2.5% and 2.8% respectively (A circles were flat). In the nine circles where Tata DoCoMo (TD) launched the per-second billing tariff plans, their revenues were up (12% QoQ), RCOM grew 3% QoQ (with this and the decline in the mobile revenues in 2Q reporting to exchanges, the hitherto inexplicable gap is decreasing), while revenues of Bharti, Vodafone and Idea dropped by 2% each. Expect more revenue declines when TD goes national".
The Realty Sector (down 2.3%): The Realty index was the only loser among the sectoral indices. The top losers in the real estate space were Unitech (down 3.8%), DLF (down 3.1%) and HDIL (down 0.6%).
The top gainers were Sobha Developers (up 10.5%), Akruti City (up 8.8%), Parsvnath (up 4.2%), Mahindra Lifespace (up 3.4%) and Omaxe (up 1.1%).
The Metals sector (up 7.1%): The top gainers in the metal space were JSW Steel (up 17.7%), Bhushan Steel (up 6.4%), Jindal Steel (up 6.1%) and Tata Metaliks (up 4.9%).
SAIL rose over 10% during the week. The Finance Ministry is in talks with the Steel Ministry to sell stake in SAIL
Other Headlines:
Domestic demand helped contain crisis:FM
Indian ADRs gain $10 bn in a week
Paulson firm takes Citigroup
Burlington purchase 'not a bargain'
October inflation at 1.34%
BHEL, MP plan 1,600 MW plant in Khandwa
Local court restricts Maytas from loans
IRB Infra Q2 net up 72% at Rs 71 cr
APEC wary of withdrawing stimulus early
Gold, silver rally as dollar falls
Dollar falls as optimism spurs demand
Oil falls to a one month low
US stocks rise for second week
Govt asks SFIO to proceed in Satyam case
Govt moots Sebi's pricing for divestment
Europe emerges from recession on exports
Bombay HC refuses to quash Dalmia FIR
Sept 11 suspect to face trial in NY
Jet pilots' union de-registered
Koda scam: UBI chief to be quizzed
Hope floats in Tirupur
Cox & Kings plans int'l acquisitions
HDFC forays into education loan biz
'More companies should go for listing'
Banking revival talk premature
Brown says allies to boost Afghan force
Trade gap in US widens
Stay invested in PSU stocks: Religare
PVR sells 10% stake to Thai firm
SEs to set expiry date for F&O contracts
Immigration to UK gets tougher
Govt may seek advice on coal gas project
Liberty Global to buy Unitymedia
Govt eyes 20,000 MW solar power
NTPC stake sale to fetch govt Rs 8,100cr
Gas Opera: RIL to ignore 7 affidavits
UltraTech, Samruddhi Merge, Forming India's Biggest Cement Firm
UltraTech Cement Ltd., a unit of India's Aditya Birla Group, said it will absorb sister company Samruddhi Cement Ltd. to create the nation's biggest and the world's 10th largest maker of the building material.
Shareholders of Samruddhi will get four shares of UltraTech for every seven held in Samruddhi, according to an e-mailed statement in Mumbai. UltraTech said it will issue 149.5 million new shares to complete the program, which was approved by the boards of directors of the two companies today, boosting its capital to 2.74 billion rupees ($59 million). The Mumbai-based company's output will increase to 48.8 million tons per year on merging with Samruddhi, according to the statement.
India's cement makers are seeking to expand as the government aims to spend $500 billion by 2012 to build roads, ports and power plants to boost growth and incomes. The Aditya Birla Group said last month it plans to raise $3 billion in its cement business in the next five years to add 25 million metric tons to its 49 million ton annual capacity.
"The merger will achieve the group's objective of consolidating its cement business into a single entity, thereby creating a platform for pursuing aggressive growth," Chairman Kumar Mangalam Birla said, according to the statement.
The Aditya Birla Group started last month its plan to merge all its production and sales of the material into a single company by transferring the cement business of unit Grasim Industries Ltd. to Samruddhi. It bought the cement business of Larsen & Toubro Ltd., India's biggest engineering company, in 2003 and named it UltraTech. The cement company made its trading debut in August 2004.
UltraTech shares have risen 28.6 percent in the past six months to 729.95 rupees in Mumbai trading. The benchmark Sensitive Index climbed 38.4 percent during the same period.
Bharat Petroleum Corp. Ltd. (BPCL IN): The Indian refiner and Oman Oil Company signed an agreement to increase the latter's stake in Bharat Oman Refineries Ltd. to 26 percent, the companies said in a statement yesterday. The total estimated cost of building Bharat Oman's refinery at Bina in Madhya Pradesh is now expected to be $2.4 billion, according to the statement. Bharat Petroleum added 1.6 percent to 522.35 rupees.
Housing Development Finance Corp. (HDFC IN): India's biggest mortgage lender agreed to acquire a 41 percent stake in Credila Financial Services Pvt. from DSP Merrill Lynch Capital Ltd., it said in a statement on Nov. 13. Housing Development rose 0.7 percent to 2,757 rupees.
Infosys Technologies Ltd. (INFO IN): India's second-largest software exporter has set up a new unit in the U.S. to service government contracts and clients from the healthcare sector, the Economic Times reported Nov. 14, without saying where it got the information. Infosys advanced 1.4 percent to 2,359.7 rupees.
Larsen & Toubro Ltd., Mahindra Satyam (LT IN, SCS IN): The Mumbai-based construction company sold 27.2 million shares, or 2.3 percent, of Mahindra Satyam to raise 3 billion rupees on Nov. 13, data from the Bombay Stock Exchange showed. Larsen added 0.2 percent to 1,644.4 rupees. Mahindra Satyam lost 6.2 percent to 110 rupees.
Oil & Natural Gas Corp. (ONGC IN): India's largest state- owned oil explorer said yesterday the government is considering a proposal to increase the administered price of natural gas, without saying where it got the information. The gas price for ONGC during the financial year ending March 31 would rise to 4,142 rupees per million standard cubic meters as per the proposal, the company said in an e-mailed statement. The New Delhi-based company said it received a price of 2,850 rupees per million standard cubic meters for the gas it produced from October 1997 through June 2005. ONGC climbed 3.1 percent to 1,184.1 rupees.
PVR Ltd. (PVRL IN): The Indian movie theater-chain operator said Nov. 13 it plans to raise as much as 421.9 million rupees by selling 2.56 million shares at 165 rupees each to Thailand's Major Cineplex group Plc. PVR also plans to acquire DT Cinema, a unit of DLF Ltd., according to a statement to the Bombay Stock Exchange. The shares gained 0.9 percent to 140.25 rupees. DLF declined 0.4 percent to 368.15 rupees.
Steel Authority of India Ltd. (SAIL IN): India plans to begin selling its stake in the state-owned steelmaker this fiscal year, Steel Minister Virbhadra Singh said in Kolkata on Nov. 14. The proposed equity sale may be followed by a public offer of shares by the company, Steel Secretary Atul Chaturvedi said at the event. The two offerings may raise as much as 160 billion rupees, he said. Steel Authority climbed 3.4 percent to 182.3 rupees.
UltraTech Cement Ltd. (UTCEM IN): The cement maker said yesterday it will absorb sister company Samruddhi Cement Ltd. to create India's biggest and the world's 10th largest maker of the building material. Samruddhi's shareholders will get four UltraTech shares for every seven held in Samruddhi, according to an e-mailed statement. UltraTech will issue 149.5 million new shares to complete the program boosting its capital to 2.74 billion rupees. The Mumbai-based company's output will increase to 48.8 million tons per year on merging with Samruddhi. UltraTech rose 0.2 percent to 729.95 rupees.
Sugar May Advance on Deteriorating Supply Outlook, Survey Shows
INVESTMENT VIEW
Dhampur-Sweet As Sugar
Dhampur Sugar's (Sugar Year Ending September 2009) results were in line with estimates. What was different in Q3 and Q4 were lower margins on sale of imported raw sugar, and lower price for power and ethanol. With the State Government once again encouraging Sugar units to utilise power capacities in the non crushing season for supply to the State grid, and the Central Government once more mandating 5 per cent Ethanol mix with Fuel, someone in the Government circles is talking sense.
This combo move will benefit all Sugar producers in UP.
Average sugar realisation at Rs 27.5 per kg
The average realisation for Dhampur Sugar increased to Rs 27.5 per kg from Rs 22.0 per kg. The company has sold 81,000 tonnes of sugar in the quarter. The company will register significant volume growth in the coming quarter from sugar produced through raw sugar.
Power tarriff at Rs 4 per unit
Power tarriffs have gone up to Rs 4.2 per unit. This has directly contributed to the bottom line. The increase in power tarriffs by Uttar Pradesh (UP) state grid would result in higher EBITDA margin for the company going forward.
Valuation
At the current price of Rs 138.35, the stock is trading at 4x its SY10E EPS of Rs 33.4 and 4.9x its SY11E EPS of Rs 26.5. Given the soaring sugar prices and 2.5 lakh tones of raw sugar imported by the company, Dhampur is likely to witness a significant rise in volumes as well as sugar realisations.
This, in turn, would boost earnings for the company in SY10. A summer 2010 price target could be Rs 200.
(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
Index Outlook: Towards a new 2009 high
Sensex (16,848.8) The correction from the 17,493-peak that threatened to bring the eight-month old party on our bourses to an end, turned chimeral once again as bulls pulled Sensex to a position of relative safety aided by some benign government-speak, strong industrial production numbers and a hapless US dollar.
Last week's rebound received impetus from foreign institutional investors who were been net buyers through the week. Volumes were tepid in cash segment and brisk in derivative section. Breadth was indifferent on most days as stock prices witnessed large intra-day swings. Open interest on the bourses has surged above Rs 1,10,000 crore but excessive short build-up can prove conducive to this rally.
Momentum oscillators in the daily chart that were threatening to dip in to the bearish territory recovered last week. The 10-day rate of change oscillator has moved above the zero line implying that the current up-trend can continue. The 14-day relative strength index too has move from the bearish zone in to neutral region. Weekly oscillators are however moving sideways in neutral region indicating the possibility of a swing in either direction.
Sensex moved slightly above the key short-term resistance of 16,700 to the intra-week peak of 16,910 but the movement over the last two sessions cannot be termed an emphatic break-out. In other words, the quandary regarding the medium term trajectory remains. A downward reversal from these levels can drag the index down to 15,560 or 14,734 while a strong move above 17,000 will pave the way for a rally to 17,500 or 18,000.
The fact that Sensex is holding above both the 21 and 50-day moving averages and strength in daily oscillators implies that the index could move higher in the short-term to test its 2009 high.
As far as the medium-term view is concerned, the index could now establish a wide trading range between 16,000 and 18,000 which can be the terminal corrective of the move from March lows. The last two months of the calendar seldom see dramatic reversals and a sideways move with a positive bias seems likely for the rest of this year. Weekly close below 16,000 is the first requirement to announce the onset of a deeper decline.
The Sensex faces immediate resistance at 17,000 in the week ahead. Targets above this level are 17,261 and then 17,629. Turbulence can be expected around the recent peak of 17,500 and short term investors can take some money off the table at this level. Subsequent target for the index is 18,224. Supports for the week are at 16,292, 16,108 and 15,930. Fresh purchases should be avoided below the third support.
Nifty (4,998.9)
Nifty chugged higher merrily to the intra-week peak of 5,017. There were multiple wave counts towards the end of the previous week and the picture has not become any simpler this week. Though the first possibility has been discarded, the other two remain in contention. They are,
A pull-back rally that halts around 5,000 will result in a sideways move between 4,500 and 5,000 for a few more sessions.
Strong move beyond 5,000 would imply that the worst is over and the index is headed towards 5,300.
Oscillator charts are now indicating that a move towards 5,227 or 5,238. Traders holding long positions can therefore continue to hold them with a stop at 4,800. Next support is at 4,720. Decline below 4,700 is required to mitigate the positive short-term bias and signal that the down-move from 5,182 peak is continuing with the prospect of a decline to 4,620 or 4,374.
Our medium term view is veering towards a sideways move between 4,400 and 5,300 for a few more weeks as the Nifty establishes a broader trading range.
Global Cues Global equities rebounded strongly on Monday and then held on to the gains for the rest of the week to finish on an optimistic note. CBOE volatility index fell to a low of 21.6 on Wednesday before closing slightly higher at 23. But the steep slide from the recent peak of 31.8 implies that the path of least resistance stays downward for this index. Some of the Asian benchmark indices such as Philippines PSE Composite Index, KLSE Composite Index, Straits Time Index and so on are nudging new 2009 highs.
The index that appeared indomitable last week was the Dow that moved on to a fresh 2009 peak of 10,342. The 61.8 per cent retracement of the fall from the October 2007 peak gives us the target of 10,333 that was achieved by the Dow last week. 1:1 extrapolation of the move from March trough gives us the target of 10,496. The ensuing weeks are critical in signaling if the index is going to end the intermediate term uptrend from March lows here on go on to the next Fibonacci target of 11,245. Corresponding targets in the S&P 500 are 1,121 and 1,228.
The commodity rally that began in the second week of July is currently pausing. CRB Index that tracks the movement of a basket of commodities is retreating from the peak of 475 after retracing half the losses made last year.
Index Strategy: Long straddle to play the volatility
Traders looking to play the volatility in the markets can consider setting a long straddle on Nifty 5,000 November series. This option spread can be set by buying Nifty 5,000 November put and call options, which are trading at Rs 91.5 and Rs 90.7 respectively. The spread would entail an initial outgo of about Rs 182 a share. Note that a long straddle derives strength from high volatility and or the likelihood of a decisive move in the underlying, which in this case is Nifty. Since technical pointers do indicate the possibility of a swing in either direction during the week, setting a straddle may help. Relatively high open interest on the puts side, suggesting excessive build up in short positions, may also help the Nifty make a crucial move.
Risk-return payoff
The maximum risk in this strategy is limited to money used to set the spread, in this case, Rs 182 a share if the market fails to move as expected. Though the upside potential is theoretically unlimited, note that the spread will turn in the money only if the Nifty breaches its breakeven points. These can be arrived at as follows:
Upper breakeven (5182) = Strike price (5000) + premium outflow (182)
Lower breakeven (4818) = Strike price (5000) - premium outflow (182)
This essentially means that your straddle will become profitable only when the index moves either above 5,182 or falls below 4,818. Between these two points, the position will suffer a range of losses with the maximum loss (limited to the premium outflow) at the strike price.
When to exit
If Nifty makes a decisive move beyond the breakeven point (either side), consider cutting the loss-making leg first, while leaving the profitable leg open so as to maximize the profits. Similarly, in case the index fails to move as expected, do not wait for too long to close the position. Though the maximum loss is limited to Rs 182, premature closure of the position would help in cutting losses
Pivotals: Reliance Industries (Rs 2,116.7)
Reliance rallied strongly and closed above the key resistance if 2,100 indicated in our last column. We would however wait for a firm close above Rs 2,150 before assuming that the medium-term view has turned neutral. Presence of both the 21 and 50 day moving averages in the zone between Rs 2,050 and Rs 2,150 makes it a very critical resistance zone. Strong move above this band would imply an impending rally towards Rs 2,300 or Rs 2,400 again.
If we consider the long-term chart, RIL faces key resistance at 2,400 which is 61.8 per cent retracement of the decline in 2008. The sideways move between Rs 1,700 and Rs 2,400 could be the second leg of the up-move from the March trough with the third leg upward set to unfurl over the ensuing months taking the stock to Rs 2,770 or higher over the medium term.
SBI (Rs 2,298)
SBI moved in line with our expectation to the intra week peak of Rs 2,395. Though the stock moved briefly above the key short-term resistance of Rs 2,335, it could not sustain above that level for long and reversed lower on Thursday. Supports for the week ahead would be available at Rs 2,267 and Rs 2,187. Short-term traders can hold their longs as long as the stock holds above the second support.
Decline below Rs 2,187 would imply that the down-trend that began from the peak of Rs 2,500 is extending and the stock could decline to Rs 2,113 or even Rs 1,953.
Tata Steel (Rs 521.2)
Tata Steel moved up to our short-term target of Rs 529 on Wednesday and moved tantalisingly around this level for the rest of the week without making a clear move in either direction. As indicated last week, reversal from here will imply that the medium term trend continues to be down and the stock can decline to the zone between Rs 405 and Rs 420 once more. However, if the uptrend continues, the stock can head towards Rs 560 or Rs 660 over the medium-term.
Short-term traders can hold the stock with a stop at Rs 490. Next support for the week would be at Rs 470. Fresh purchases are not recommended if the stock declines below Rs 470.
Infosys (Rs 2,358.8)
Infosys made a surprise lunge to move higher to the intra-week peak of Rs 2,371. Since the stock has moved above the key short-term resistance at Rs 2,320, it can now rise to its former peak of Rs 2,415. Short-term traders can hold their long positions until the stock trades above Rs 2,275. Some profit can be booked close to the stock's former peak since a reversal from that level can drag the stock down to Rs 2,100 again.
ONGC (Rs 1,183.5)
The impediment at Rs 1,200 blocked ONGC's progress last week. As indicated in our last column, a strong move past Rs 1,210 is needed to mitigate the bearish short-term bias. Fresh purchases are therefore recommended only on a rally above Rs 1,210 with the short-term target of Rs 1,270.
Maruti Suzuki (Rs 1,479.8)
Maruti Suzuki witnessed two-way movement last week with the stock first falling to the intra-week low of Rs 1,366 only to recover smartly on Friday to erase all the losses. Key resistance for the short-term is at Rs 1,520 and fresh longs should be initiated only on a move above this level. Medium-term supports stay at Rs 1,368 and Rs 1,250. —
Style and sector funds: Is passive exposure optimal?
A typical core-satellite portfolio carries large-cap index funds for the equity core and active style and sector funds for the satellite portion. One of our readers asked us this question: Can satellite portfolio carry style index funds and passive sector funds?
This article explains the hierarchy of investments, ordered according to their volatility and returns process. It then explains the importance of style investing and the relevance of active management within this investment process.
Risk-free asset
To start with, the optimal investment choice is taking exposure to Treasury Bills, termed as risk-free investment. Such exposure can be taken through money market mutual funds. In the Indian context, term deposits in public-sector banks are closest to risk-free assets. Risk-free investments are the least volatile and also provide the lowest return.
The next in the hierarchy are the risky assets such as equity, bonds and alternative investments such as commodities. An investor would choose to invest in such risky assets only if she is convinced that such exposure would provide higher risk-adjusted returns. At the asset class level, such exposure can be taken through a broad-market index fund. Funds benchmarked to the S&P CNX 500 Index, for instance. Investors can choose to stop their exposure at the asset class level. But most do not. At the next level, investors can choose to take exposure to styles and sectors within each asset class.
Style benchmarks
Empirical evidence shows that returns pick-up is high at the level of style in the hierarchy of investment process. That is, a significant component of the total portfolio returns is due to investment styles.
Style refers to the common factors other than market factors that move a cluster of stocks together. Style classification is based on size and valuation and has been used extensively for constructing portfolios and building benchmarks.
Suppose an investor chooses to take exposure to mid-cap style. The optimal choice would be to take exposure to mid-cap index fund. It would, therefore, not be sub-optimal to construct the satellite portfolio with passive style and sector funds. The excess return from style over the broad asset class benchmark return (S&P CXN 500) is called misfit returns.
At the next level, an investor may take exposure to active style and sector funds if she believes that portfolio managers can generate excess returns over their benchmarks. Can they?
Active styles
According to Morningstar category returns, active style and sector funds typically generate higher returns than their benchmark index. The Birla Sun Life Mid-cap Fund, for instance, generated a three-year annualised return of 16.50 per cent against 11.50 per cent on the BSE Mid-cap Index.
While consistently generating excess returns may be difficult, the potential to do so is high, for two reasons. One, portfolio managers can overweight/underweight stocks relative to the benchmark without being unduly penalised. Typically, a conscious decision to change portfolio weights could prove costly if the fund underperforms the benchmark. Fortunately, weights of individuals stocks are very high in sector indices. ITC, for instance, has 48 per cent weight in the BSE FMCG Index. An FMCG sector fund cannot carry such concentrated exposure to any one stock. The portfolio manager is, hence, justified in changing the portfolio weight to reduce the concentration risk. And such weight drifts — whether tactical or not — can help the fund generate excess returns.
Two, style benchmarks constitute well-known as well as under-researched companies. The BSE Midcap Index, for instance, constitutes Tata Chemicals and KGN Industries. A peer universe of companies with such diverse fundamentals enables astute portfolio managers to engage in security selection to generate excess returns.
Conclusion
Passive style and sector funds fit well within a satellite portfolio. Investors can choose between ETFs and index funds for such exposure. For reasons mentioned above, taking exposure to active funds could generate higher returns. Care should be, however, taken in selecting active funds.
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Arvind Parekh
+ 91 98432 32381
