Market Close: Left was not right for the market..

Political Uncertainity weighted on the Indices as Investors went for profits pushing indices into deep red. Indices Opened up in green but sell off trigger looking at the Political issue. Global Markets opened strong looking at US indices but HangSeng witnessed Heavy selling before ending marginally in red. Stocks from Realty, Banks, Metals and Pharma all felt the selling pressure. IT was the only sector which traded in green. Smallcap & Midcaps also underperformed as they slipped by 4% with the heavyweights. Asian markets traded in mixed while European markets were subdued.

 

Sensex ended down by 363 points at 17410.59. Weighing on the Sensex were losses in ACC (1104.05,-6 percent), Rel Energy (1358.9,-6 percent), Ranbaxy (409,-6 percent), TISCO (787.1,-5 percent) and NTPC (203.5,-5 percent). Losses were restricted by gains in Satyam (455.5,+2 percent), TCS (1082,+1 percent), HDFC Bk (1415,+1 percent), Wipro (464.5,+1 percent) and BHEL (2168.3501,+1 percent).

 

On the reports that Government might delay the issue of fertliser bonds which drove down the fertliser stocks. The bond was announced two months ago and this may be delayed till the end of the current financial year. The bonds were proposed to resolve the working capital crunch faced by fertilizer units and spare the exchequer from subsidy burden worth hundreds of crore. This has left the fertiliser industry wondering if the bonds will help resolve the fund crunch faced by them at least marginally. Even at this juncture it is not clear to both the ministry and the industry, whether the finance ministry is planning to make the bonds tradable across the board or leave the industry will no option but to pledge it with banks. But a possible delay in relief in the form of subsidy given to the fertiliser sector has the stocks of these companies reversing the rally which they began after the Government's proposed investment policy. Stocks like Nagarjuna Fertilizers (-16%), Chambal Fertilizers (-13%), Godavari Fertilizers and Deepak were hit badly for the day.

 

Esab India had an event report which was underplayed by the media. Charter Plc, the parent has managed to increase stake in the company by around 19% to 55%. The company is one of the two large organised players in the welding consumable space. The market is around 1500 cr and 50% of that is unorganized. The Parent has increased stake with an open offer at a premium to market. We expect the increased stake to lead to higher commitment from the parent. Howden, another division of Charter is a player in gas handling equipment. It's just a guess that this increased stake could lead to Howdens offering be introduced sooner than latter in the Indian opportunity. The valuations are attractive at just around 14 x FY07 (Dec end) earnings. Do read our detailed note on this. We have positive view here.

 

Technically Speaking: Sensex open with a gap of 130 points but Selling pulled it down as it made days low of 17322 and High of 17982. Advances were outnumbered by Declines 1:5 ratio. Sensex turnover stood good at Rs 7206. Sensex support at 17183, 16922 and Resistance at 17844, 18423. Traders better to exit long if Sensex slips below 17300 and to stay in cash for now.