Wednesday, October 17, 2007

Market Close: Bails out after new high..

Skids after a great momentum which pushed indices above 19,000 levels in just 4 days. Start saw new high but profit booking pushed indice below 19k levels. Market juggled on both side till mid session but investors traded safe by booking profits as indices slipped over 250 down. Global market too traded in red as US Market slipped due to crude trading at new high. Buying interest during the final hour helped indices to recover the loss made. Banking, Consumer Durables and Reality counters fuelled the rally while Technology and Auto stocks weighed on the bourses. Small and mid caps were in demand and out performed the front line stocks which seemed to have been left out in the recent rallies. Asian indices slipped into red as the session progressed which also impacted Indian bourses. European indices continue to trade in red after a start in the negative territory.

Crude rallied to new high of $87.97 as intraday high due to tension's between Turkey and Iraq plus anxiety over winter supplies. This could prove negative for Oil marketing companies and Aviation Industry.

Sensex closed down by 7 points at 19051.859. Weighing on the Sensex are losses in Infosys (1868.25,-3 percent), HLL (212.45,-3 percent), L & T (3346.25,-2 percent), SBI (1924.35,-2 percent) and Bajaj Auto (2540.55,-2 percent). Losses are restricted by gains in ICICI Bk (1156.75,+5 percent), Hindalco (197.45,+5 percent), Rel Energy (1904.4,+3 percent), Maruti (1186.8,+2 percent) and NTPC (231.25,+2 percent).

Mold Tek Technologies Ltd delivered a good set of numbers for the ended of Sept quarter. Mold Tek is one of the leaders in packaging and an emerging player in the Structural Engineering KPO Services segment. Mold Tek managed a growth of 12 % yoy with total turnover of Rs. 28 cr as against Rs. 25 cr during last year. Sales in the Packaging Division rose by 4% from Rs. 22.28 cr to Rs.23.12 cr and that from the IT Division increased from Rs. 4.23 cr to Rs.5 cr with an impressive more than 18% growth sequentially. The overall net profit for the 2Q FY08 registered a growth of 66% from Rs. 2.2 cr of previous year to Rs. 3.7 cr for the current year. Marginal drop on sequential basis. The profits from the IT division jumped from Rs. 1.57 cr to Rs. 2.69 cr, thus registering a 71 % growth yoy while profits from Plastic divison grew by 55% to Rs 0.99cr. Do read the detailed result analysis of the latest quarter results to know more about the company.

We attended the analyst meet of Patel Engineering, the company is into civil infrastructure construction in the area of Hydro Power projects, Irrigation projects and Bridges, tunnels etc (transportation projects). The company derives 55% of revenues from hydro, 30% from Irrigation and rest from transportation. It reported a good numbers for the second quarter. On consolidated basis the top line grew by 38% to Rs 339 cr and the bottom line grew by 39% to Rs 35 cr. The EBDITA margins stood at 13.5% and the net margins is at 10.45%. The current order book is Rs 5400 cr. Patel has land bank of around 1000 acres which is outside the city of Chennai 230 acres, Hyderabad 640 acres, Bangalore 85 acres and in Mumbai 26 acres. The company now entering into real estate business by developing this land. It intends to Lease these lands after development. The average lease rent per year is expected to be around Rs 522 cr. Valuation seems to be too expensive at the current market price of Rs 765 the stock trades at 36 times of forward earnings. The Land bank is the big trigger here and we also like the business model of the company; one can wait for down side to accumulate for long term investment.

Technically Speaking: Sensex couldn't sustain the 19k levels as profit booking engulf across. Sensex could look for a consolidation phase.. after a heady run. The high volatility will continue. Bias is clearly upwards but its the sharp rise which brings in bouts of profit taking, followed by bouts of value buying and short covering 18300 remains a strong support which was the gap which the Sensex has left unfilled. It is tough to give targets for Sensex .. but clearly the bias is up.

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