Monday, 20 August, 2007

Welcome bulls, Discount shop open

Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected. - George Soros.

On Friday afternoon, the bulls may not have had the confidence to step in. With the Federal Reserve throwing in an unexpected life jacket in the form of a 50 bps cut in the discount rate, a buying spree may take place on the local bourses today. Stocks across global markets have rallied, led by of course the Wall Street. The Dow jumped 1.8% while the Nasdaq did even better, climbing 2.2%. The FTSE 100 in London gained 3.5%. All Asian markets are up anywhere between 3.5-5% this morning. Expect a gap-up opening. But, investors will still have to deal with intra-day volatility and just as the market showed resilience on Friday and bounced back, there is every chance of some cooling at higher levels.

In all the euphoria, don't forget the rumblings going on in the national capital. The impasse between the UPA regime and the Left front just refuses to subside with both the camps maintaining their adamant stance. The Left has given an ultimatum to the Government, which is either have power at the Centre or the nuke deal. While the non-communist allies of the Congress party have thrown their weight behind Sonia Gandhi and the PM, the Left wants the Government to restrain from any further step till an expert panel's report on the fallout of the controversial deal is out. Watch developments in New Delhi closely as it could impact the stability of the Government.

In stock specific action, shares of Refex Refrigerants will list on the bourses today. The issue was subscribed 7 times and the company had fixed an issue price of Rs65 per share. Going by the current mood in the market, we won't be surprised if the stock falls below its issue price.

JSW Steel's Board is to meet tomorrow to consider an acquisition in the US.

Telecom stocks will be in action amid reports that the TRAI is considering scrapping the cap on the number of players in a circle, besides the proposal to allow a company to offer both GSM and CDMA services under the same license.

Century Textiles is likely to advance amid reports of an out-of-court settlement with the Wadias over the Mumbai land. In addition, there is a buzz in the market that the BK Birla Group company could go ahead and demerge its cement division and merge it with Grasim. Engineers India and Sanghvi Movers are good investment bets.

ICICI Bank will be among the gainers as the FIPB has cleared its plan to induct foreign investors in its proposed new wholly-owned subsidiary that will house its insurance and asset management businesses.

PNB and IFCI will attract attention as a financial daily has reported that the state-run bank is likely to bid for the 26% stake in the latter. Great Offshore is another stock that will be in the limelight on news of an acquisition

Continuous selling in the early trades and short covering in the later part of the session was the outline of the markets on Friday, not only in India, but also bourses across the globe followed the same pattern. After constantly losing ground in the first half; Indian bourses followed its Asian peers as an extraordinary pull back of over 1000 points by the Hang Seng market in Hong Kong lifted the sentiments of the traders at home.

However, Markets fell for the third trading session as the key indices recorded its worst weekly loss in five months. Tata Steel led the down fall as the world’s sixth largest steel maker lost 5.4% others heavyweights like Satyam Computer, ONGC and Infosys were the major lagging movers among the 30-scrip’s of Sensex. Finally, Sensex lost 216 points to close at 14141 and NSE Nifty slipped 70 points to close at 4108.

Sical Logistics lost by 1.5% to Rs222. The company yesterday announced that it acquired cutter section Dredger for $24.92mn. The scrip touched an intra-day high of Rs238 and a low of Rs200 and recorded volumes of over 14,000 shares on NSE.

IPCL gained by 1% to Rs350 as LIC raised stake in the company to 14.02%. The scrip touched an intra-day high of Rs354 and a low of Rs340 and recorded volumes of over 56,000 shares on NSE.

ICICI Bank declined 1% to Rs824. According to reports, India may give conditional approval to a plan of the company to set up a subsidiary to hold its insurance and mutual funds businesses. The scrip touched an intra-day high of Rs861 and a low of Rs806 and recorded volumes of over 57,00,000 shares on NSE.

Hindustan Zinc was down by 2.6%to Rs670 after the company yesterday announced that it had lowers lead prices to Rs137,000 per ton. The scrip touched an intra-day high of Rs704 and a low of Rs658 and recorded volumes of over 1,00,000 shares on NSE.

Siemens slipped by 1.3% to Rs1198 after the company announced that it secured an order for installing a new hot-strip Mill. The scrip touched an intra-day high of Rs1224 and a low of Rs1130 and recorded volumes of over 2,00,000 shares on NSE.

Petronet LNG declined 2.2% to Rs61. Asian Development Bank and KFW declared that they would lend $169mn to the company. The scrip touched an intra-day high of Rs63 and a low of Rs59 and recorded volumes of over 42,00,000 shares on NSE.

Fertilizer stocks ended firm in a falling market. Nagarjuna Fertilizer rallied by over 17% to Rs32. Chambal Fertilizer surged by 6%to Rs37 and Deepak fertilizer added 2% to Rs95.

Highly volatile Banking index lost 1% towards the end. Heavyweight SBI edged lower 0.2% to Rs1519, ICICI Bank was down by 1% to Rs824 and HDFC Bank lost 2.4% to Rs1068. OBC, Corp Bank and Andhra Bank were the major losers among the Mid-Cap stocks.

Realty stocks bucked the negative trend, as the index has gained by 0.5%. Unitech gained by 3.6% to Rs483, Sobha surged by over 5%to Rs780. However, Akruti slipped 2% to Rs486.

Fund Activity:

FIIs were net sellers of Rs35.36bn (provisional) in the cash segment on Friday and the local institutions pumped in Rs19.44bn. In the F&O segment, FIIs were net sellers at Rs10.49bn. On Thursday, foreign funds pulled out Rs28.5bn from the cash segment. Mutual Funds were net buyers at Rs2.39bn on the same day.

Major Bulk Deals:

Religare Securities has bought Alfa Transformers; Lotus Fincorp has picked up Diana Tea; Deutsche Securities has purchased PSL while Deutsche Bank has sold the stock; Citigroup Global has picked up Punj Lloyd; HSBC Financial has bought Century Bank of Punjab; HSBC Financial has sold Alok Industries; Citigroup Global has sold India Infoline; Citigroup Global has sold Orient Paper.

Insider Trades:

ITC Ltd: Mr Anup Singh (Wholetime Director) has sold in open market 20000 equity shares of the company on 10th August, 2007

Max India Ltd: Analjit Singh, Chairman has purchased from open market 28000 equity shares of the company on 10th and 13th August, 2007

Lower Circuit:

Goldstone Tech, Morepen Labs, Kothari Products, Yashraj Industries, Swan mills, IOL Broadband, Era Construction, Adhunik Metaliks, IID Forgings and BF Utilities.

Upper Circuit:

LML, Jai Corp and Assam Company.

Delivery Delight (Rising Price & Rising Delivery):

Assam Company, India Cements, Punj Lloyd, PNB and Sun Pharma.

Abnormal Delivery:
IPCA Labs, Chambal Fertilizers, NALCO, Gammon India and Bhushan Steel.

Major News & Announcements:

FIPB approves ICICI Financial Service stake sale to foreign companies - Reports

Inflation for the week ended August 4 was at 4.05%, against expectation of 4.30%

India's output at 6 key industries grew 5.3% in June

Educomp Solutions buys 51% stake in Authorgen Technologies

Gulf Oil Corp to consider stock split on 17th August

BHEL signs accord for 1000MW Sudan Project – Reports

Siemens bags an order for installing a new hot-strip mill.