VSNL leads gainers in 'A' group

International carrier VSNL surged 5.2% to Rs 515.85. The scrip topped gainers in BSE's A group shares. VSNL today announced expansion of its international in-roaming service on Wi-Fi with the addition of NTT, Japan. Starhub, Singapore, already utilizes the company's Wi-Fi network across India for its customers, the company said in a filing to the Bombay Stock Exchange.

 

The company has been leading the growth of the Wi-Fi industry in India and has the largest Wi-Fi deployment among domestic Internet service providers ((ISPs) with over 350 hotspots. It has drawn up major plans this year to further enhance the footprint to over 1000 hotspots - bringing high-speed broadband internet more closer to the large Indian traveling population.

 

Software services firm focused on banking, financial services and insurance domain Hexaware Technologies gained 5.2% to Rs 118.45. It was the second biggest gainer in A group shares today. Hexaware's consolidated net profit rose 3% to Rs 26.92 crore on 3% fall in sales to Rs 254.62 crore in Q3 September 2007 over Q2 June 2007. The results were announced on Thursday, 18 October 2007.

 

Optical storage media maker Moser Baer India rose 3.5% to Rs 278.60 after the company said its board has approved the move to raise Rs 400 crore ($100 million) via the company's wholly-owned photovoltaic subsidiary. It was third biggest gainer in A group shares today. The investment will be made by a consortium led by IDFC Private Equity, GIC Special Investments, CDC Group PLC and Infrastructure Development Finance Company, Moser Baer said.

 

The subsidiary will use the proceeds to part-finance its plans to increase capacity to 500 megawatt by 2010 - making it one of the largest players in the global photovoltaic industry.

 

Orchid Chemicals rose 3.49% to Rs 229.70. It was fourth biggest gainer in A group shares today. The company on Thursday, 18 October 2007 reported, 114.8% growth in net profit to Rs 63.27 crore on 20.1% growth in net sales to Rs 295.13 crore in Q2 September 2007 over Q2 September 2006.

 

Biscuits major Britannia Industries rose 3% to Rs 1400. It was fifth biggest gainer in A group shares today. The board of Britannia meets on 23 October 2007 to consider Q2 September 2007 results.

Sensex wilts 717 pts as PN heat persists

 FIIs net sellers for the second day offloading Rs 3,916 crore.

The Bombay Stock Exchange's sensitive index, Sensex, fell nearly 4 per cent today after an early rally to a record high triggered a bout of selling in the last half hour by foreign funds, worried about the proposed curbs on inflows through participatory notes (P-notes).

The regulator, on October 16, suggested foreign institutional investors (FIIs) shouldn't be allowed to issue or renew offshore derivative instruments linked to futures and options.

The index ended the day at 17,998.39 points, down 717.43 points, or 3.83 per cent, after rising as much as 2.6 per cent to 19,198.66 — its 19th record in 21sessions — in the morning.

The sell-off picked up in the last half hour, and at one stage just before the close, the benchmark index had fallen more than 5 per cent. The broad-based Nifty 50 ended the day at 5,351, down 208.3 points, or 3.75 per cent.

FIIs were net sellers for the second consecutive day offloading to the tune of Rs 3,916 crore (Rs 1,130 crore in the cash market and Rs 2,786 crore in derivatives). Like yesterday, domestic institutions were net buyers at Rs 96 crore.

The Sensex rose rapidly in morning trade, even touching its all-time high of 19,198.66 points. Major buying was seen at IT and pharma counters following a weaker rupee and good corporate results. TCS was up 2.17 per cent to Rs 1,118.85 a share after it announced a $1.2 billion deal with Nielsen.

Market participants said that selling started on rumours that the National Stock Exchange (NSE) increased the SPAN margin for trading in the futures and option segment. The exchange did not confirm it but buying did not pick up.

"There was a bit of short covering in the market today in the morning. In the fall, the momentum stocks have been hit due to FIIs unwinding their positions," said Jayprakash Sinha, head of research, Ambit Capital. Others said the market today behaved the way it should have behaved yesterday.

Market participants believe that this could be a short-term trend since regulatory uncertainty is scaring FIIs.

"We would urge investors to keep buying in small tranches since the market is likely to behave in this manner for some more days. The markets went up at a breathtaking pace and so this is something that we expected. However, in two or three months, we should be back to the bull run," said Kartik Jhaveri, director of Transcend Consulting, a Mumbai-based private wealth management firm.

P-note hangover continues; technical rebound saves day

Volatility remained the order of the day Friday as traders remained unclear on the after effects of SEBI clamp down participatory notes. Indices, however, managed to come off lows on technical bounce back. Brokers said 'long-only funds' and domestic institutions could have prevented a drastic loss. Capital goods, metals and realty shares were the worst-hit.

"The Nifty has had a bad weekly close. It has formed a 'dark cloud' cover pattern which indicates bearishness. If 5000 on Nifty breaks, then the next support is at 4869," said Manas Jaiswal, senior technical analyst with Emkay Shares & Stock Brokers.

NSE's Nifty ended 126 points lower at 5215.3, recovering from the day's low of 5,102.

The market opened flat with a positive bias, but soon turned weak as selling pressure in the frontline shares intensified.

"There was delivery based selling. People with leveraged positions got badly beaten yesterday and didn't get a chance to exit at higher levels today. So people were exiting at whatever levels they get," said a broker with a local firm.

A fall in inflation numbers around noon did little to lift sentiment. Inflation rate based on wholesale price index for week to Oct 6 fell to 3.07 per cent from 3.26 per cent the previous week. The market estimate was 3.36 per cent.

But a technical bounceback from a crucial support of 17,250 on the Sensex provided some relief. Frontline staged a recovery, but midcaps still remained under pressure.

BSE's Sensex closed 438 points down at 17,559.98, but up from the day's low of 17,226.

The BSE Midcap Index ended 2.53 per cent or 187 points lower at 7,238.58 while CNX Midcap Index closed 3.07 per cent down at 6589.10.

Index pivotals Reliance Communications gained 2.21 per cent, Bajaj Auto advanced 2.07 per cent, Tata Steel rose 1.86 per cent, ONGC added 1.35 per cent and Infosys Technologies gained 1.06 per cent.

In the midcap space, Anant Raj Industries shed 8.91 per cent, Alok Industries slipped 8.24 per cent, Yes Bank fell 8.20 per cent and Mahindra Gesco lost 8 per cent.

Market breadth on BSE showed 2,162 declines and 570 advances, while on NSE, 1,023 shares fell and 161 gained.

Going forward, Manish Sonthalia, vice-president equity strategist at Motilal Oswal remains optimistic.

"It looks like most of the pain is out of the system and the market is offering good opportunities at these levels," he said.

ICICI Bank Q2 net up 33 pc, beats forecast

India's second-largest bank, ICICI Bank, reported a 33 per cent rise in quarterly net profit on Friday, beating forecasts and helped by growing demand for loans in the booming economy.

The bank, which is also listed in New York, said net profit in July-Spetember, its fiscal second quarter, was 10.03 billion rupees ($252 million), up from 7.55 billion rupees a year ago.

That compares with a forecast of a 23 per cent rise in net profit to 9.28 billion rupees, according to a poll of 11 brokerages. Unlike a number of US and European banks and some Asian peers, Indian lenders are believed to have little or no exposure to problems in the US subprime mortgage lending market, which have hammered many financials firms earning.

During the quarter, ICICI Bank's shares rose 11.3 percent, while the Mumbai market's banking index and the benchmark index rose 18 per cent.

India's high net worth population rises 20.5%, to 100,000

The number of high net worth Individuals (HNWIs) in India at the end of 2006, grew by 20.5% to 100,000. This makes India the second fastest growing population of HNWIs in the Asia Pacific Region, according to the second Asia-Pacific Wealth Report published by Merrill Lynch and Capgemini. HNWIs are people with net financial assets of at least US$1 million, excluding their primary residence and consumables.

Indian HNWIs held a combined US$350 billion in financial assets at the end of 2006, representing 4% of total Asia Pacific HNWI wealth. A demographic analysis also reveals that the majority of India's HNWIs are between the ages of 41- 55 years, said the report.

The growth was driven by the economic expansion as India experienced real GDP growth of 8.8% in 2006 as well as robust stock market performance. "Robust economic growth and strong financial markets, along with gains in income and credit expansion which drove private consumption, were the key drivers of growth in India's HNWI population," said Pradeep Dokania , head of Global Private Client at DSP Merrill Lynch.

Of the 100,000 HNWIs in India, an estimated 858 are Ultra –HNWIs with more than US$30 million in financial assets.

Non Resident Indians:
In 2006, the greatest concentration of wealthy NRIs was in Hong Kong , followed by Singapore, Indonesia, Thailand and Japan. Today the Non Resident Indian ( NRI) segment is

INDIA WWR:
Emerging as a niche segment within the HNWI market globally. Given the size of the segment's wealth within the Asia Pacific region, Singapore and Hong Kong are emerging as financial centers for this market. In 2006, the continued expansion of India's economy along with India's upbeat long term growth prospects led to increasing NRI investments into India.

"The performance of the Indian market along with the strength of its currency is making India more attractive to NRI investors," said Aseem Arora, Global Head of NRI markets at Merrill Lynch.

Fast- Growing Markets:
The latest Asia-Pacific Wealth Report takes an in-depth look at the high net worth population and behavior in nine regional markets – Australia, China, Hong Kong, India, Indonesia, Japan, Singapore, South Korea and Taiwan. There were 2.6 million HNWIs in Asia Pacific at the end of 2006, an increase of 8.6% from a year earlier, which account for almost 94% of the region's HNWIs. Asia-Pacific is home to 27.1% of the world's high net worth population.

The wealth of Asia-Pacific HNWIs totaled US$8.4 trillion in 2006, an increase of 10.5% over 2005. HNWI wealth was concentrated in Japan and China, which accounted for 43.7% and 20.6%, respectively, of the region's total wealth.

Asia-Pacific was home to five of the 10 fastest growing markets for HNWIs, including Singapore, India and Indonesia, where the HNWI populations grew by 21.2%, 20.5% and 16.0%, respectively, compared with the global HNWI expansion of 8.3%. Korea and Hong Kong were also in the top 10 fastest growing markets globally.

"Overall, it's a story of growth, growth and more growth for the HNWI marketplaces throughout the region," says Rahul Malhotra, Managing Director, Head of Asia Pacific, Merrill Lynch Global Wealth Management. "While HNWI investment behaviors differ from market to market, the underlying drivers of wealth remain strong overall and we expect the region will continue to outpace the global rate of growth in HNWI wealth."

Drivers of Wealth:
The key drivers of wealth in Asia-Pacific in 2006 were strong growth in real GDP and stock market capitalizations. The Asia-Pacific region showed among the highest GDP growth rates in the world. China and India drove the region with 10.5% and 8.8% real GDP growth, respectively. Additionally, savings rates, as a percentage of GDP, were higher in Asia-Pacific than most developed markets. China, Singapore and Hong Kong all had domestic savings rates in excess of 40%.

INDIA WWR:
China, Indonesia, India and Hong Kong benchmark stock indices outperformed most mature capital markets, as well as their peer markets in the region with returns over 30%.

"Our analysis has revealed several interesting findings on how distinctly different demographics can influence, and the subsequent impact on service models of wealth management providers. For instance, 76% pf the HNWIs in India were younger than 55 years of age. By contrast, as significant proportion of HNWIs were over 55 in Japan (73%) and South Korea (61%). While younger HNWIs are less risk averse in their approach to investing and desire higher returns within a shorter timeframe, HNWIs over age 55 tend to favor solutions that provide wealth preservation," said Salil Parekh, Executive Chairman, Capgemini India.

Non-traditional investment products are gaining in popularity as Asian investors seek better domestic returns and foreign institutions seek involvement in the high-growth region. For example, real estate investment in Asia-Pacific has grown due to the strong performance of commercial property and REITs (real estate investment trusts).

Asia-Pacific HNWI Investments:
Within the region, asset allocation differed significantly from market to market. Australian HNWIs, for example, allocated 37% of their assets to equities, the highest level in the region. Investors in China and Indonesia also had relatively high equity allocations. Investors in South Korea, on the other hand, allocated the largest percentage of their portfolios to real estate.

Asia-Pacific HNWIs are increasingly looking at internationalizing their investment portfolios and, over the longer term, re-balancing their asset allocations in favor of alternative investments, equities and fixed income. In addition, Asia-Pacific HNWIs are increasing their international exposure although still maintain a very regional portfolio focus. Slightly more than half of Asia-Pacific HNWIs' assets were invested within the region and slightly more than a quarter of their holdings were allocated to North America.

Spotlight on Asia-Pacific Distinctive Local Market Opportunities:
HNWI investment behaviors differ from market to market in key attributes such as sources of wealth, demographics, concentration of Ultra-HNWIs and the level of portfolio internationalization.

The primary sources of wealth for China and Australia, for example, are business and stock options, whereas inheritance and income are the main wealth sources for Japan's HNWIs.

INDIA WWR:
The majority of HNWIs in all markets are male; however, the proportions of male HNWIs are highest in India, Australia and South Korea at more than 80%. On the other hand, females represent 43% of Taiwan's HNWI population, and more than 30% in China and Hong Kong, the report found.

"The intensifying competition for HNWI clients, the strong growth in HNWI wealth and numbers and the varying individual product maturity across HNWI markets, pose significant challenges and complexities to the financial advisory firms servicing these markets," says Gregory Smith. "Already we are seeing sharper pricing, product commoditization and a shortage of qualified advisers across the region."

October occurrences.memories may haunt

Twenty years ago, Oct 19 was on a Monday. That day is even today referred to as Black Monday on Wall Street. The Dow had erased 23%. The situation may not be that scary, but the jitters in the Indian bourses may give market participants the blues this weekend. Developments on the political front, F&O expiry and overdose of information and interpretation regarding the P-Notes could keep markets edgy. Monday morning blues is something the markets may factor in but not a Black Monday again. The Congress-Left panel meeting on the nuke deal on Monday and the Oct. 25 meeting of SEBI on the P-Note issue will be the big events, apart from the slew of results.

Weekly Close: P Note Changes the Sentiment

Bull markets don?t turn bears overnight ! But Indian market is really unpredictable. The sharp rally for past month from 17k to 19k was just washed out in few minutes on Wednesday as SEBI announced curb on P-notes. The market slipped over 1700 points to hit lower circuit for second time in history. The run up from 17k to 19k was largely on back of FII inflow and curb of P-notes means putting a halt to foreign investment. However it was later clarified by FM as he said nothing to panic the FIIs can get register themselves and put the money in market. However, FM also added the sharp rally in not comfortable and this brought in profit taking. The sessions for the whole weak were extremely choppy and volatile. However, it?s the Government who wants to slowdown the strong liquidity inflow and to stop the rapid appreciation of rupee. After all "They can?t kill the goose that lays golden eggs.? But in one way it sounds good for banks as slow inflow of FII would slowdown liquidity and hence chance of CRR hike is reduced.

Crude touched intraday high of $ 90 before it trade near $89.49. This was jumped was due to Turkey?s military incursion into northern Iraq and also the fall in Dollar along with global supply worry added to the raise. Indian Oil market companies have been urging to hike the fuel price but due to political worries it?s not possible. This could favor sugar companies as Sugar cane could get diverted to Ethanol production.

Semsex swung over 1900 points for the week and nifty by over 600. Sensex ended down by 4.6% for the week and nifty ended down by 4%. Sensex Gainers were Satyam +4.97%, TCS, +4.04% , ONGC +2.42% and Wipro +2.79% while Losers were ACC slipped by over- 20% followed by REL (-18.6%), BHEL (-12.06%), LNT (-10.05%) and SBI (-9.79%).

We have entered into the results season, many biggies reported good results. Like HDFC, Infosys etc. Mukesh hinted of surprise from RIL on 18th Oct as it announced its results good numbers on the face but was helped by other income, lower interest lower taxes etc. But lacked the bonus and split news which saw some negative for the day. Reliance Communication of Anil Ambani received the formal approval to launch GSM technology of mobile. However the company has been operating GSM services in Northern and North Eastern parts of India. This is healthy new for RCom but could hamper Bharti Airtel?s market share in GSM. Rcom rallied for the day. An IPO plan for Reliance Power was rejected by the SEBI which derailed Reliance Energy stocks for last 2 days.

ACC , the cement major reported unimpressive results for Q3 FY07. The top line grew by 24% to Rs 1679 cr and the bottom line grew by 30% to Rs 292 cr. The EBIDTA profits grew by 23% to Rs 449 cr from Rs 366 cr on yoy basis. The EBIDTA margins remained unchanged at 27%. The decrease in cost of raw material helped to offset the increase in power and fuel cost. ACC Cement dispatch stood at 4.68 mn tones, higher by 10% on yoy basis. The average realization per ton stood at Rs 3587/- higher by 13% on yoy basis. Net Profit included the other income of Rs 28 cr which is the sale proceeds of its subsidiary ACC Nihon Casting Ltd and dividend income. However, there was a price hike in the month of August and September which helped to maintain the margins. But due to monsoon season sales have come down by 10% and net profits by 17% on QoQ basis. Do read our Results analysis here.

Rubber prices touched Rs 100 per kg. That a big negative for the tyre companies. Natural rubber accounts for 60% of the total input costs. Tyre companies now are increasing their dependence on Synthetic rubber. Earlier the ratio of natural and synthetic rubber was 80:20 but has been increased to 75:25 recently. Shift towards the synthetic rubber would fail to provide lower input costs as commonly used synthetic rubbers (SBR and PBR) are crude derivatives. With crude nearing $ 90 a barrel there is no relief from that counter as well. Crude derivatives account for 25% of the input costs. Expect the impact of higher crude and natural rubber to be reflected in the margins of tyre companies. Tyre companies were no exception and bore the brunt of chaos in market as well. Major tyre companies are available at an attractive a valuation of 10 times their trailing earnings. That seems to be attractive and can be considered as an entry point from the long term point of view. We are positive on Apollo tyres and Balkrishna Ind. Check out our result analysis here .

Baja Auto results the Sept ended quarter were marginally lower at Rs 2539 cr against Rs 2583 cr in the same quarter last Year. The net profit improved by 28% YoY. Net profit for the quarter stood at Rs 366 cr vs Rs 287 cr in the same quarter last year. Sept quarter is usually not a very exiting quarter for the 2 wheeler industry on account of sradh and Monsoon season. Expect sales to pick up in the next quarter on account of festivals. Bajaj recently had reduced the price of its Platina bike to Rs 30,000 and so have been by Hero Honda, its arch rival on selective models. However, the availability of credit options seems to have impacted the growth of two wheeler sales in the country. Watch out for our results analysis here soon.

Solar explosives had good results. It seems worst has left behind. The numbers were exceptional even though this is the weak season. Usually production during first two quarters is slow as construction and mining activities are restricted during the monsoon season. On a consolidated basis, the company posted revenue of Rs.64 crs against Rs 35 cr in the same quarter last year with a growth of 80%. The Ebidta margins had fantastic jump from 11% last year to 21% this year. The business is good with strong barriers to entry and Solar has the edge with its high market share and explosive experts. Valuation of 21 times trailing earnings for FY 07. But we believe earnings in 2009 and 2010 will explode as private sector gets going on its mining activities. 60% of revenues come from coal India and now this is the post consolidation phase for the Industry.

We worked on Allcargo logistics. This is a play on the logistics sector. It has a couple of CFS (container freight stations) and few more Inland container depots. The company gets a bulk of revenues from the MTO (multimodal Transport operator) which is the NVOCC (non vehicle owned container carrier) business. The company board approved for the acquisition of the business including the assets and liabilities of the projects and equipment division of Transindia Freight Services (TFSPL). TFSPL is a company owned by the promoter-family of the Allcargo and is primarily engaged in the business of contracting transportation of containers and project-related cargo and hiring of cranes, reach stackers and forklift trucks. The share swap ratio of 518 fully paid-up equity shares of the company for every 100 fully paid-up shares of TFSPL. The valuation of TFSPL would be around Rs 206 crore. The promoters who already hold 79.6% stake in the company (holding over 1.61 crore shares out of the total issued shares of 2.02 crore shares) promoters holding in the company will move up to 80.16% after the proposed swap. By this Allcargo leverages the balance sheet for a much higher growth potential which is in equipment and project division. Stock rallied ahead of its quarterly results.

Among the results, Kavveri Telecom had a blowout set of results. Exide was superb and this in the face of higher lead prices. Rallis numbers were good too. And many more results to be out in coming weeks.

Technically speaking: Sensex support lies at 17226 and Resistance at 18032. Sensex is ready for a bounce back from here. Traders can long with stoploss below 17300.

Sensex tanks 438 points

The market took a sharp dip after a positive opening and continued to move down, as shares across sectors witnessed substantial selling pressure amid worries over the Securities and Exchange Board of India's move to restrict participatory notes. The market opened with a positive gap of 34 points at 18032 and saw considerable volatility through the day. The selling pressure in the front-line stocks kept the capital goods, metal, realty, and oil stocks in the red that dragged down the index to an intra-day low of 17226. The Sensex ended the session with a loss of 2.44% or 438 points at 17560 while the Nifty tumbled 2.54% or 136 points to 5215.

The breadth of the market was extremely negative. Of the 2,767 stocks traded on the BSE, 2,186 stocks declined, 548 stocks advanced and 33 stocks ended unchanged. Among the sectoral indices, the BSE CG Index shed 4.41% at 15,429 followed by the BSE Metal Index (down 3.66% at 14480), the BSE Realty Index (down 3.51% at 9054) and the BSE FMCG Index (down 3.05% at 2022).

Among the Sensex stocks, few managed to close in positive territory. Reliance Energy tumbled 16.22% at Rs1,333; Hindalco plunged 6.58% at Rs175; Maruti Udyog slumped 6.47% at Rs1,074; BHEL dropped 5.99% at Rs2,052; Bharti Airtel shed 5% at Rs968; M&M lost 4.50% at Rs728; and ITC declined 4.40% at Rs175. The other front-line stocks were also down 1-4% each. However, Reliance Communication bucked the trend and gained 2.21% at Rs727; Bajaj Auto added 2.07% at Rs2,512; Tata Steel moved up by 1.86% at Rs852; ONGC surged 1.35% at Rs1,109 and Infosys advanced by 1.04% at Rs1,908 while Wipro and Dr Reddy's Lab were marginally up at Rs501 and Rs614 respectively.

Over 3 crore Saamaya Biotech shares changed hands on the BSE followed by Power Grid Corporation (2.72 crore shares), Reliance Natural Resources (2.62 crore shares), Reliance Petroleum (1.63 crore shares) and Tata Teleservices (1.59 crore shares).

United Spirits registered a turnover of Rs782 crore on the BSE followed by Reliance Energy (Rs594 crore), Reliance Industries (Rs582 crore), HDFC (Rs542 crore) and Reliance Communication (Rs520 crore).

Market may lose further ground

The market may extend losses after last week's setback caused by FII selling due to official attempts to moderate inflows. Stock market regulator Securities and Exchange Board of India (Sebi) is expected to take a decision on 25 October 2007 on its proposal to partially curb participatory notes, an instrument used by foreign investors to buy Indian shares without being registered with the regulator.

Volatility is expected to remain high ahead of expiry of October 2007 derivatives contracts on Thursday, 25 October 2007.

The major Q2 results scheduled next week include Satyam Computer on Tuesday, 23 October 2007, Cipla and Dr Reddy's Lab on Wednesday, 24 October 2007, Bharat Heavy Electricals on Thursday, 25 October 2007 and Tata Steel, L&T and ITC on Friday 26 October 2007.

Other key results next week include Reliance Capital, Ideal Cellular, Oriental Bank of Commerce, Indian Hotels, Punjab National Bank, Nicholas Piramal India, India Cements, Suzlon Energy, Britannia Industries, ABB.

FII selling hit the bourses, last week, following Sebi's proposals to clamp down FII inflow through the participatory notes (PN) route. After trading hours on Tuesday, 16 October 2007, Sebi issued draft proposals wherein the market regulator proposed restriction on use of the popular participatory notes (PNs) route of FII inflow and it also recommended unwinding of some PNs within 18 months. PNs are financial instruments used by foreign investors that are not registered with Sebi, to invest in Indian shares. FIIs and their sub-accounts buy Indian securities and then issue PNs to foreign investors with these securities as the underlying.

Given the large scale of the aggregate PN holding relative to new flows, even a partial unwinding of positions can put considerable pressure on stocks such as Reliance Energy, Reliance Petroleum, ONGC, IndiaBulls Financials, IndiaBulls Real Estate and Axis Bank which have had a significant run-up in the past few weeks or have high share of PN in their foreign holding, brokerage CLSA said in a recent note.

Further, analysts reckon that with restriction on participatory notes, the near term FII inflow may be affected given that the participatory notes contributed substantially to FII inflows on the bourses over the past few months and it will take some time for the FIIs currently using the PN route to get registered with the market regulator.

Franklin Templeton Investment (FTI), which operates one of the leading mutual funds in India, however, feels that inflow to India from long-term global investors will not be impacted due to these measures given that India's economic and corporate fundamentals remain robust. India's economy is expected to post decent-to-strong growth for a long period of time mainly due to favourable demographics.

Domestic liquidity remains strong. Insurance firms have been channelising money raised through unit-linked insurance plans (with a high weightage for equities) into the markets. A sharp correction, if any, may lead to bargain bunting by domestic mutual funds which are said to be sitting on a cash pile of about Rs 14000 crore.

The near term trigger for the market is RBI's Mid Term Review Of Annual Policy due on 30 October 2007. It remains to be seen whether the central bank does away with a hawkish stance in the policy. However, a near term rate cut by RBI looks unlikely given that consumer price based inflation and liquidity remain high.

Meanwhile, a meeting of the panel set up by the government to look into Left front's concerns over the Indo-US nuclear deal holds its fifth meeting on Monday, 22 October 2007.

Congress which earlier appeared quite firm and keen on operationalisation of the nuclear deal seems to have now softened its stand which has helped fears of mid-term polls receding. This was evident when party president Sonia Gandhi stated recently that she doesn't want early election. Gandhi said that the Left parties, which were opposing the deal, were not being unreasonable, and that the government was not looking for a confrontation with them because that was not the "coalition dharma."

Left front which is supporting the government from outside has been against operationalisation of the nuclear deal with the US, which had caused a rift between the government and the Left front. There had been fears that possibility of an early election could see the government announcing populist measures that would widen the fiscal deficit.

Market sees fourth straight session of losses on P-Note worries

The market posted losses for the fourth straight day, on sustained selling pressure triggered by worries that official attempts to moderate FII inflows would see foreigners pull out funds. The market declined sharply in first half of the trading session, but recovered some ground on value buying coupled with short covering at lower level later. Intense volatility was the hallmark of the day's session, with the market swinging sharply. European markets and Asian markets were trading lower today, 19 October 2007.

India's wholesale price index rose 3.07% in the 12 months to 6 October 2007, lower than the previous week's 3.26% rise, government data released today afternoon showed. It was the lowest annual rise in 5 years.

The BSE 30-share Sensex settled 438.41 points or 2.44% lower at 17,559.98. It opened slightly higher at 18,031.77. It immediately stated declining sharply. Sensex hit a low of 17,226.18, on intense selling pressure. At the day's low of 17,226.18, the Sensex had lost 772.21 points for the day. Sensex oscillated 805.59 points in the day.

The broader based S&P CNX Nifty lost 135.70 points or 2.54% at 5,215.30. The Nifty October 2007 futures settled at 5208, a discount of 7.30 points compared to spot closing

Sensex settled the week ended Friday, 19 October 2007 with a loss of 859 points or 4.7%. From an all time high of 19198.66 struck yesterday, 18 October 2007, the Sensex is down 1638.68 points.

The BSE Mid-Cap index was down 2.53% to 7,238.58 while the BSE Small-Cap index declined 3.07% to 8,800.32 today. Both these indices underperformed the Sensex.

All the sectoral indices on BSE posted losses. However BSE IT index was an exception.

BSE Auto Index (down 1.79% at 5,296.93), BSE Consumer Durables index (down 0.18% to 4,776.72), BSE PSU index (down 2.37% to 8,211.07), Bankex (down 2.18% to 8,837.55), BSE Health Care Index (down 1.61% at 3,714.90), BSE IT Index (up 0.21% at 4,685.91), and BSE TecK index (down 0.64% to 3,917.44) outperformed the Sensex.

BSE FMCG Index (down 3.05% at 2,021.67), BSE Capital Goods Index (down 4.41% at 15,429.29), BSE BSE Realty (down 3.51% to 9,053.64), BSE Oil and Gas Index (down 3.02% at 10,242.45), and BSE Metal Index (down 3.66% at 14,480.00), were underperformers.

The market breadth was quiet weak on BSE: 2,160 scrips declined as compared to 544 that advanced, while 35 remained unchanged. 21 of the 30 member Sensex pack declined.

The total turnover on BSE amounted to Rs 9611 crore as compared to record turnover of Rs 11,732.09 crore on Thursday, 18 October 2007.

The NSE F&O turnover was Rs 83,102.28 crore as compared to record turnover of Rs 110563.83 crore on Thursday, 18 October 2007.

FII selling hit the bourses for the third day in a row today following market regulator Securities & Exchange Board of India's proposals to clamp down FII inflow through the participatory notes (PN) route.

After trading hours on Tuesday, 16 October 2007, Securities & Exchange Board of India issued draft proposals wherein the market regulator proposed restriction on use of the popular participatory notes (PNs) route of FII inflow and it also recommended unwinding of some PNs within 18 months. PNs are financial instruments used by foreign investors that are not registered with Sebi, to invest in Indian shares. FIIs and their sub-accounts buy Indian securities and then issue PNs to foreign investors with these securities as the underlying.

Given the large scale of the aggregate PN holding relative to new flows, even a partial unwinding of positions can put considerable pressure on stocks such as Reliance Energy, Reliance Petroleum, ONGC, IndiaBulls Financials, IndiaBulls Real Estate and Axis Bank which have had a significant run-up in the past few weeks or have high share of PN in their foreign holding, brokerage CLSA said in a recent note.

Further, analysts reckon that with restriction on participatory notes, the near term FII inflow may be affected given that the participatory notes contributed substantially to FII inflows on the bourses over the past few months and it will take some time for the FIIs currently using the PN route to get registered with the market regulator.

Franklin Templeton Investment (FTI), which operates one of the leading mutual funds in India, however, feels that inflow to India from long-term global investors will not be impacted due to these measures given that India's economic and corporate fundamentals remain robust.

India's second largest power utility by net sales Reliance Energy was the top loser from the Sensex pack. It plunged 16.30% to Rs 1332 on 42.74 lakh shares. Yet, the stock recovered sharply from its day's low of Rs 1272.

Hindalco Industries (down 6.39% to Rs 175), Maruti Suzuki India (down 6.77% to Rs 1071), and Bharat Heavy Electricals (down 5.65% to Rs 2059), were the other losers from Sensex pack.

India's largest private company in terms of market capitalization and oil refiner Reliance Industries (RIL) was down 3.72% to Rs 2480, off sharply from its day's low of Rs 2413.05. The stock clocked volumes of 23.35 lakh shares. It reported 27.9% growth in net profit to Rs 3837 crore on 6.6% growth in net sales to Rs 32,043 crore in Q2 September 2007 over Q2 September 2006. The results are after taking effect merger of IPCL in the company. RIL's gross refining margin was a robust $13.6 a barrel in Q2 September 2007 compared to $9.1 in Q2 September 2006.

Though the results were strong, there was no announcement of stock split/bonus which weighed on the stock today. The market was agog with speculation that RIL could announce a bonus issue or stock split at the time of announcing the Q2 results. The results hit the market after trading hours on Thursday, 18 October 2007.

Reliance Communications, the country's second largest listed telecom services provider in terms of market capitalisation was the top gainer from the Sensex pack. It surged 2.50% to Rs 729.50 on 71.86 lakh shares. The company said before market hours today, 19 October 2007, that it has obtained government approval to launch GSM services on a nation wide basis under its existing Unified Access Service Licenses.

Bajaj Auto, India's second largest bike market by sales, rose 2.41% to Rs 2519.95. The stock came off day's low of Rs 2400. Bajaj Auto's net profit rose 6% to Rs 336 crore in Q2 September 2007 over Q2 September 2006. The results hit the market during trading hours today, 19 October 2007

Tata Steel (up 1.67% to Rs 850.10), Infosys Technologies (up 0.88% to Rs 1905) and ONGC (up % to Rs 1118) were the other gainers from Sensex pack.

India's third largest software services exporter Wipro gained 0.78% to Rs 500. Wipro's consolidated net profit as per Indian GAAP rose 13.5% to Rs 823.70 crore on 13.1% rise in revenue to Rs 4,757.40 crore in Q2 September 2007 over Q1 June 2007. The results hit the market before trading hours today, 19 October 2007.

United Spirits was the top traded counter on BSE with total turnover of Rs 782.30 crore after 44.71 lakh shares change hands on the counter in a block deal on BSE at Rs 1652 per share by 12:12 IST.

Reliance Energy (Rs 594.25 crore), Reliance Industries (Rs 582.50 crore), HDFC (Rs 543 crore) and Reliance Communications (Rs 520.40 crore), were other turnover toppers on BSE.

Saamya Biotech was the volume topper on BSE with total volumes of 3 crore shares followed by Power Grid Corporation of India (2.72 crore shares), Reliance Natural Resources (2.63 crore shares), Reliance Petroleum (1.64 crore shares) and Tata Teleservices (Maharashtra) (1.59 crore shares).

Among the side counters, GL Hotels (up 10.61% to Rs 365), Shivam Auto (up 10.16% to Rs 97), Yuken India (up 8.44% to Rs 314), and Dalmia Cement (Bharat) (up 8.3% to Rs 1950), surged.

Prime Textiles (down 15.88% to Rs 20.40), Prajay Engineers Syndicate (down 11.49% to Rs 302), Union Bank of India (down 11.32% to Rs 151), and Dollex Industries (down 10.35% to Rs 86.30), slumped

Saamya Biotech (India) settled at Rs 15.30 on BSE, a premium of 53% over IPO price Rs 10. The stock debuted at Rs 17.50, a 75% premium over IPO price of Rs 10. The scrip hit a low of Rs 13.85 and high of Rs 24.35 during the day. On BSE, 3 crore shares changed hands in the counter.

Hero Honda Motors rose 3.51% to Rs 750. It reported 5.38% fall in net profit to Rs 204.33 crore on 5.4% rise in net sales to Rs 2352.09 crore in Q2 September 2007 over Q2 September 2006. The results were better than market expectations. The results announcement was made after the trading hours on Thursday, 18 October 2007.

KSL and Industries surged 9.84% to Rs 173 after it said on Thursday, 18 October 2007, its board approved alloting 2.17 million shares at Rs 253 each to four investors. The investors include Television Eighteen India and Bennett, Coleman & Company, it said in a statement.

Jagran Prakashan declined 1.14% to Rs 534. The company during the trading hours today, 19 October 2007, said its board will consider the sub-division of shares in a meeting to be held on 29 October 2007.

Himatsingka Seide rose 3.89% to Rs 109.05 on acquiring US based DWI Holdings Inc. for $30 million through its wholly owned subsidiary, Himatsingka America Inc. The announcement was made during the trading hours today, 19 October 2007.

VSNL surged 5.2% to Rs 515.85. It today announced expansion of its international in-roaming service on Wi-Fi with the addition of NTT, Japan. Starhub, Singapore, already utilizes the company's Wi-Fi network across India for its customers, the company said in a filing to the Bombay Stock Exchange.

Hexaware Technologies gained 5.2% to Rs 118.45. Its net profit rose 3% to Rs 26.92 crore on 3% fall in sales to Rs 254.62 crore in Q3 September 2007 over Q2 June 2007. The results were announced on Thursday, 18 October 2007.

Moser Baer India rose 3.5% to Rs 278.60 after the company said its board has approved the move to raise Rs 400 crore ($100 million) via the company's wholly-owned photovoltaic subsidiary. The investment will be made by a consortium led by IDFC Private Equity, GIC Special Investments, CDC Group PLC and Infrastructure Development Finance Company, Moser Baer said.

Orchid Chemicals gained 3.49% to Rs 229.70. The company on Thursday, 18 October 2007 reported, 114.8% growth in net profit to Rs 63.27 crore on 20.1% growth in net sales to Rs 295.13 crore in Q2 September 2007 over Q2 September 2006.

Britannia Industries edged higher by 3% to Rs 1400. The board of Britannia meets on 23 October 2007 to consider Q2 September 2007 results.

Omaxe slipped 3.15% to Rs 299.80 after National Stock Exchange barred further derivatives positions in the counter as 95% of marketwide limit was reached yesterday, 18 October 2007.

Arvind Mills lost 6.13% to Rs 62.75. As per reports, it has drawn up a blueprint to set up a chain of lifestyle formats straddling the entire spectrum of value retail, premium and luxury retail.

Aban Offshore shed 3.21% to Rs 3870.25. Aban Singapore, its wholly-owned subsidiary is slated to hit the Singapore stock exchange with India's largest IPO abroad for a subsidiary company. The $4-billion company, which acts as Aban's hub for its international activities, is to offload around 13-15% for $500 million, and the IPO is slated for December 2007.

Volatility is expected to remain high for in coming few days ahead of expiry of October 2007 derivatives contracts on Thursday, 25 October 2007.

Meanwhile, the finance minister P Chidambaram said after market hours yesterday, 18 October 2007 that Securities and Exchange Board of India (Sebi) can extend the 18-month window allowed for winding down of participatory notes already issued with derivatives as the underlying. Sebi will decide on 25 October 2007 on new rules to limit the use of offshore derivatives to invest in Indian stocks. He added that motivated rumours by Mumbai broker circles had brought down the stock market yesterday.

European markets opened lower today, 19 October 2007. Key benchmark indices in France (down 0.04% to 5,765.13), Germany (down 0.25 % to 7,901.39), and United Kingdom (down 0.12% to 6,601.13), slipped

Asian markets were trading lower today, 19 October 2007. Japan's Nikkei (down 1.71% at 16,814.37), Singapore's Straits Times (down 1.77% at 3,742.23), South Korea's Seoul Composite (down 1.75% at 1,970.10) and Taiwan's Taiwan Weighted (down 0.26% or 9,611.72) edged lower.

US markets ended mixed yesterday, 18 October 2007, after disappointing results from Bank of America Corp. provided further evidence that the credit crisis is hurting the economy. The Dow Jones Industrial Average slipped 3.58 points, or 0.03%, to 13,888.96. The Standard & Poor's index fell 1.16 points, or 0.08%, to 1,540.08. The technology-heavy Nasdaq Composite Index rose 6.64 points, or 0.24%, to 2,799.31.

Crude oil held firm within sight of its new $90 high on Friday, 19 October 2007, on rising fears over pre-winter fuel stocks lent support to an over 13% surge in under two weeks. US light crude for the soon-to-expire November contract rose 5 cents to $89.52 a barrel. The contract touched a record high of $90.02 in after-hours trade.

Stocks to buy

Current weakness in the market has given opportunity for investors with holding capacity to buy quality stocks at attractive levels (10-15% lower than the pick prices). Many clients have asked us about the stocks they should be buying with a time frame of 3-12 months. (No leverage positions)

Stocks that we like at current level of market (Nifty 5233 # Sensex 17,640) purely from delivery and investment point of view (more volatility is possible over next few days so one should keep 50% - 70% amount aside to buy at lower levels and actually accumulate when these stocks fall ) are :

1. J P Associates (cmp 1055) our Target is Rs. 1350

2. Bharti Airtel (cmp 970) our Target is Rs. 1100

3. SBI (cmp 1665) our Target is Rs. 2282

4. Shivvani (cmp 365) our Target is Rs. 480

5. BHEL (cmp 2075) our Target is Rs. 2450

6. Ranbaxy (cmp 420) our Target is Rs. 500

7. Aban Lloyds (cmp 3900) our Target is Rs. 4400

8. Maruti (cmp 1092) we shall put a new Target shortly.

Apart from these stocks we expect broking and financial services stocks to do well and our preferred pick is India Infoline cmp Rs. 850. This stock is not under our coverage.

Bhool bhulaiya.Bulls and bears lost in a maze

Just think how happy you would be if you lost everything you have right now, and then got it back again.

Yesterday's losers may well be today's gainers. The strong set of results announced by blue chip giants Reliance and Wipro could come to the rescue of bulls who got hunted or temporarily haunted by the bears. We also have other large cap companies like ICICI Bank, Bajaj Auto, Ambuja Cements and Tech Mahindra declaring their results today. Barring Bajaj Auto, which will be affected by lower sales volume, others should be able to meet market expectations. Against this background, the market should open better. Weakness in Asian and other global markets could check the advance of the local bulls though.

We don't want to reproduce the rumors but more or less all of them have been laid to rest. Having said that we still have the sword of P-Notes hanging over our heads. There is still a lot of uncertainty, confusion and nervousness with regard to the SEBI's proposal. This will take time to play itself out over the next few months. Hence, the market will remain volatile with intermittent bouts of buying and selling.

The global cues could also act as a spoil sport. The market movements may be a thriller. Comic for those who watch from outside and psychic for those in it.

The Finance Minister has said he may ask SEBI to consider extending the 18-month period for the unwinding of the outstanding investments in P-Notes. Any easing in the SEBI proposal could lead to a rebound. But we will have to wait and see if that actually happens. The overall outlook on the Indian economy and the market remains strong as ever. Outflows from FIIs are the biggest risk as of now. Plus, we have to take into account global factors like crude oil at $90 per barrel and concerns over the US economy.

Shares of Saamya Biotech Ltd. will get listed on the bourses today.

Key Results Today: Ambuja Cements, Asian Paints, Bajaj Auto, Emco, Geometric Software, GE Shipping, Greaves Cotton, Grindwell Norton, GTL Infra, ICICI Bank, Kirloskar Bros., Tech Mahindra, Uttam Galva and Welspun India.

Disappointing results from Bank of America and Washington Mutual, coupled with oil hitting the $90 per barrel mark weighed on Wall Street on Thursday. At the same time, bond prices rose for a fourth straight day amid renewed concerns that the credit-market trouble may deepen, threatening economic growth.

The Standard & Poor's 500 Index finished almost flat at 1,540.08. The Dow Jones Industrial Average lost 4 points to 13,888.96. The Nasdaq Composite Index added 7 points, or 0.2%, to 2,799.31, helped by a 1% gain in Google.

Market breadth was mixed. On the New York Stock Exchange, losers and winners were narrowly mixed on volume of almost 1.27 billion shares. On the Nasdaq, decliners topped advancers by a slim margin on volume of 2.03 billion shares.

A government report showed initial jobless claims rose more than expected last week. The dollar fell to a record low against the euro on speculation that the Federal Reserve will cut interest rates again. Interest-rate futures show a 70% chance that the Fed will cut its target rate for overnight loans by 25 bps to 4.5%.

A jump in oil prices helped boost an index of S&P 500 energy shares by 0.4%. Crude for November delivery increased 2.4% to $89.47 per barrel in New York after the dollar's drop enhanced the appeal of commodities as an investment.

The front-month crude contract reached $90.02 a barrel in extended trading in Asia, the highest price since trading began in 1983. It was at $89.54 at 9:58 a.m. Singapore time.

Treasury prices rallied, lowering the yield on the benchmark 10-year note to 4.49% from 4.55% late on Wednesday. In currency news, the dollar fell to another all-time low versus the euro and also dipped versus the yen. Dollar-traded commodities including gold rallied on the weak dollar. COMEX gold for December delivery rose $6.40 to settle at $768.70 an ounce.

After the close of trade, Google reported higher quarterly sales and earnings that topped estimates. Shares were volatile in extended-hours trading. AMD reported a lower-than-expected quarterly loss.

Friday is also the 20th anniversary of Black Monday, one of the biggest market crashes in history, when the Dow lost 22.6% in a single day.

European shares closed lower, pressured by weakness in the banking sector, as investors considered mixed earnings from Nokia, SAP and Nestle. The pan-European Dow Jones Stoxx 600 index declined 0.84% to 383.37. The UK's FTSE 100 slipped 1% to 6,609.40, the German DAX 30 declined 0.8% to 7,921.40, and the French CAC-40 lost 0.9% to 5,767.24.

In the emerging markets, the Bovespa in Brazil was up 0.1% at 63,261 while the IPC index in Mexico gained 0.35% to 32,836. Russia's RTS index fell 1% to 2136 and the ISE National-30 index in Turkey slumped 3.3% to 71,446.

Most Asian stock benchmarks were down this morning, after Bank of Japan Governor Toshihiko Fukui said that problems stemming from US subprime mortgage losses persist and have increased uncertainty in financial markets.

The Morgan Stanley Capital International Asia-Pacific Index slipped 0.7% to 166.19 at 10:38 a.m. in Tokyo. Financial stocks were the index's biggest drags. The benchmark has lost 1.2% this week, set to decline for the first time since the five days ended Sept. 14.

Japan's Nikkei 225 Stock Average lost 1.7% to 16,811.50, set for its biggest drop since Sept. 18. Markets also fell in Australia, South Korea and Singapore. Hong Kong is shut for a holiday today.

In a highly volatile trading session benchmark Sensex plummeted over 700 points and NSE Nifty fell over 200 points with sensitive index registering its biggest ever single day fall.

Key indices witnessed wild gyrations as most of the key sectoral indices were in momentum for major part of the trading session and then fell sharply in afternoon trading erasing all their early gains on back of heavy selling pressure all over the bourses.

After hitting all time high of 19,198.6, Sensex hit a low of 17,771.1 finally closing below the 18k mark at 17,998.3. NSE Nifty also lost 208 points to close at 5,351.

ACC dropped the most in 17 months after India's biggest cement maker, reported third-quarter profit missing analyst estimates. The company reported Q3 net profit at Rs2.92bn (up 29.7%) and sales at Rs16.79bn (up 22.19%). The scrip fell over 13% to Rs1038 touching an intra-day high of Rs1244 and a low of Rs1000 and has recorded volumes of over 21,00,000 shares on NSE.

Shasun Chemical rallied by over 10% to Rs78 amid reports that Reliance, Ranbaxy and Mylan Labs are vying for the company's API business. The scrip touched an intra-day high of Rs85 and a low of Rs74 and recorded volumes of over 11,00,000 shares on NSE.

L&T lost by 3.5% to Rs3178. The company announced that they have secured won worth Rs4.62bn in Andhra Pradesh. The scrip touched an intra-day high of Rs3447 and a low of Rs3041 and recorded volumes of over 18,00,000 shares on NSE.

Hindustan Zinc slipped 5% to Rs894. The company announced that they have cut lead prices by 1.8% per ton and has kept zinc prices unchanged. The scrip touched an intra-day high of Rs968 and a low of Rs861 and recorded volumes of over 1,00,000 shares on NSE.

Reliance Communication dropped 3.6% to Rs711. The company announced that they added 1.5mn users in September. The scrip touched an intra-day high of Rs797 and a low of Rs689 and recorded volumes of over 18,00,000 shares on NSE.

Biocon slipped 1.7% to Rs506. The company announced that they received GDGI marketing approval to sell Abraxane and also would consider Key acquisition opportunities. The scrip touched an intra-day high of Rs544 and a low of Rs480 and recorded volumes of over 8,00,000 shares on NSE.

REL lost 10% to Rs1591. Reports stated that the company has bagged Rs1,000cr hydro power project. The scrip touched an intra-day high of Rs1843 and a low of Rs1541 and recorded volumes of over 71,00,000 shares on NSE.

Orchid Chemicals lost 4% to Rs223. The company announced its Q2 net profit at Rs632.7mn (up 114%) and sales at Rs2.95bn (up 19%). The scrip touched an intra-day high of Rs247 and a low of Rs219 and recorded volumes of over 9,00,000 shares on NSE.

Petronet LNG lost 1.7% to Rs73. The company's Q2 net profit rose 75% to Rs1.16bn and sales at Rs16.71bn (up 21.4%). The scrip touched an intra-day high of Rs82 and a low of Rs70 and recorded volumes of over 99,00,000 shares on NSE.

Gail lost 3.5% to Rs402. The company announced that they would form Joint venture for Vadodara city gas. The scrip touched an intra-day high of Rs438 and a low of Rs395 and recorded volumes of over 12,00,000 shares on NSE.

Stocks in News:

The DoT has granted GSM technology to three CDMA players, RCom, HFCL and Shyam Telelink in their existing license areas.

ONGC plans to invest $5bn to produce 25 mmscmd of gas from eastern offshore fields by 2013.

In July-Sept 2008, Kingfisher (12.4% v/s 8.8%) and SpiceJet (8.3% v/s 6.9%) gained market share while Jet Airways (22.5% v/s 30.4%) and Air Deccan (16.5 v/s 19.3%) lost market share on yoy basis.

HPCL has teamed up with Lakshmi Mittal to set up a refinery-cum-petrochemicals project in Vishakhapatnam, Andhra Pradesh.

Parsvnath to launch Rs8bn residential township project in Indore.

Reliance Industries is in talks with Volvo for a JV to manufacture trucks specifically to be used by Reliance Retail.

Nalco may put up a 0.5mn tons a year plant in South Africa.

A clutch of private equity players are planning to pick stake in GTL Infra for Rs12bn.

Bhushan Steel receives shareholders' approval for raising $300mn.

Thermax has signed a technical know how transfer with Backle-Durr GmbH, Germany for manufacture of dry and wet electrostatic precipitators - air pollution control equipment.

Biocon gets Govt approval to market breast cancer drug, Abraxane.

Rico Auto and Canadian based Magna Powertrain have form 50:50 JV to set up a new facility in Gurgaon.

Tata Motors has entered into a strategic partnership with Jamna Auto as per which the latter would buy one of the Tata Motor's shut units in Jamshedpur to make critical parts for CVs and SUVs.

JSW Energy has achieved financial closure for its proposed 1000 MW thermal power plant at Barmer in Rajasthan.

Bombay Rayon has bought a garment manufacturing unit of Rajasthan Spinning and Weaving Mills for Rs255mn.

Direct Tax collection jumps 40% yoy in April-October 2008 to Rs1220bn.

Government is planning to allow hydro-electric projects to undertake merchant sales of up to 40% of their saleable power output at spot market prices.

Government may extend 30% support from present 20% for metro rail projects.

Existing GSM operators seek PMO's intervention on spectrum and demanded additional spectrum of 15MHz.

KPMG-FICCI report expects food processing and agri business sectors to grow by 9-12%.

Fund Activity:

FIIs were net sellers of Rs11.3bn (provisional) in the cash segment on Thursday and the local institutions pumped in Rs960.2mn. In the F&O segment, foreign funds were net sellers of Rs27.85bn.

FIIs were net sellers to the tune of Rs17.78bn on Wednesday. Mutual Funds were net buyers of Rs221mn on the same day.

Major Bulk Deals:

Bear Stearns has sold Bihar Tubes; HSBC has sold Deep Industries; Merrill Lynch has picked up Infotech Enterprise while Morgan Stanley has sold it; Prudential ICICI MF has bought ION Exchange but UBS has sold the stock; Merrill Lynch has purchased Zee News while Morgan Stanley has sold it.

Upper Circuit:

RIIL, Jai Corp, TCI Industries and IID Forgings.

Lower Circuit:

Swan Mills, Karutari Networks, Marathon Nextgen, Goldstone Tele, Tanla, Shree Precoated and McNally Bharat.

FIIs in selling mode

On the day when the Securities & Exchange Board of India (Sebi) draft proposals on restriction of FII inflow through participatory notes (PN) caused a major jolt on the bourses, FIIs sold shares worth Rs 1776.60 crore on Wednesday, 17 October 2007.

The FII outflow of Rs 1776.60 crore on 17 October 2007 was a result of gross sales Rs 7853.10 crore and gross purchases Rs 6076.50 crore.

Sebi's proposals to clamp down participatory notes to restrict foreign inflows, announced after trading hours on Tuesday, 16 October 2007, created havoc on the bourses yesterday, 17 October 2007. Trading was halted on that day just within minutes of opening, as market wide circuit filters were triggered by a steep fall. Later, the market had staged a sharp pull back from day's lows, since afternoon trade after

Sebi chairman M Damodaran, clarified to television media that participatory notes (PN) are not being banned and there will be no bar on FII inflows. He also clarified that Sebi is not proposing a ban on offshore derivatives.

After trading hours on Tuesday, 16 October 2007, Securities & Exchange Board of India issued draft proposals wherein the market regulator proposed restriction on use of the popular participatory notes (PNs) route of FII inflow and it also recommended unwinding of some PNs within 18 months.

PNs are financial instruments used by foreign investors that are not registered with Sebi, to invest in Indian shares. FIIs and their sub-accounts buy Indian securities and then issue PNs to foreign investors with these securities as the underlying.

Nifty October 2007 futures settles just above 5,300

 Turnover spurts to Rs 110,563.83 crore

Nifty October 2007 futures settled at 5,307, a discount of 44 points as compared to spot closing of 5,351

Total turnover in NSE's futures & options (F&O) segment surged to Rs 110,563.83 crore as compared to Rs 98,395.58 crore on previous day, 17 October 2007.

Reliance Communications October 2007 futures was most active with turnover of Rs 3843.46 crore. Its futures settled at 774.50, a premium as compared to spot closing of Rs 762.40

Reliance Industries October 2007 futures settled at premium, at 2732.80, compared to the spot closing of Rs 2694.10.

RNRL October 2007 futures were at premium, at 101.20, compared to the spot closing of Rs 100.15.

In the cash market, the S&P CNX Nifty slumped 208.30 points or 3.75% at 5,351. It struck an all time high of 5,736.80 in intra-day trade.

Daily Technical Analysis

Nifty — The index opened on a flat note and saw a rise towards 5737 in the afternoon trade after which it declined throughout the day's trading session. It ended the ay with loss of 208 points.

Sharp decline — The index, following its morning hour rise, encountered stiff resistance around the recent high at 5708 levels. It was unable to hold above the 5708 level and saw a sharp intra-day decline.

Support & Resistance — The index has support around the 20 dma around 5207 levels, a break below the average can see further declines .Lower support levels are around 5107 and 5000. The index faces resistance around the 10 dma at the 5424 levels. Sustaining above 5424 could see an intra-day spike towards the 5556 levels.

Conclusion — Expect intra-day declines towards the 5207 levels.

Watch out - Rel Comm GSM Coming soon!

The Department of Telecommunications (DoT) has granted three companies – Reliance Communications, HFCL and Shyam Telelink – the right to use GSM technology in their existing licence areas, where they currently offer mobile services using CDMA technology.

Late tonight, sources said the approval letters had been issued to the operators. When contacted, two operators confirmed the development, but declined to give details.

The move makes Reliance, which runs GSM services in seven circles (the North-East, Assam, Orissa, West Bengal, Madhya Pradesh and Bihar) ready to operate GSM services in rest of the country.

All that the company needs to do now is to pay the required licence fee of Rs 1,617 crore to the DoT and install the relevant equipment.

According to sources, Reliance Communications is ready to pay the fees immediately and is in a position to get the network up and running within four to six weeks time.

The DoT will grant the company an additional 4.4 MHz in the 1,800 MHz band across the country for this purpose.This will be in addition to the existing CDMA network that Reliance runs nationwide.

Even Shyam and HFCL are eligible to get GSM spectrum in Rajasthan and Punjab respectively, where they run CDMA-based networks.

Once Reliance's GSM network is up and running, it would provide stiff competition to the likes of Bharti Airtel and Vodafone Essar in a bid to gain market share.

This will also impact CDMA vendors like Qualcomm, which receive royalties for the CDMA handsets that operators like Reliance use. With Reliance moving to a competing standard, there is a downside for the US-based company, analysts said.

Reliance had applied to the DoT for GSM spectrum for 15 circles in February 2006. HFCL had applied for 21 circles in May 2007. Shyam Telelink — in which Russian Sistema recently acquired a 10 per cent equity stake, applied in late September this year for nationwide licences.

The DoT had recently cleared the policy, allowing dual usage of technologies (CDMA as well as GSM) to existing licensees.

The department's move came at the end of an action-packed day, which started with representatives of the three companies being called to Sanchar Bhawan for discussions.

As the news broke, the Cellular Operators Association of India (COAI), which represents GSM operators like Bharti Airtel, Vodafone and others, cried foul and said the move was a violation of norms.

In an attempt to ward off the DoT move, the COAI shot off a letter to the DoT stating that crossover allocation of spectrum or dual frequency allocation is not permissible.

Director-General TV Ramachandran said: "We are greatly disturbed to hear rumours that the government has issued, or is considering of issuing, a letter to a large CDMA operator, permitting the company to hold a crossover allocation of spectrum. This is based on application filed by the company in February 2006, when such crossover allocation was clearly not permissible".

The GSM operators' body also claimed that crossover of technologies is not permissible under the present policy and license regime had been recognised by both DoT and Trai.

Further, Trai had also stated that "such crossover is not permissible", even though the same may be allowed through an amendment in license.

Bankex hit the most in market turmoil

 BSE's banking sector index Bankex slumped the most among the sectoral indices on BSE, declining 6.76% to 8,957.69.

The market saw a sharp trend reversal in the lattar part of the trading session. The BSE Sensex had surged 482.84 points to strike all-time high of 19,198.66 in afternoon trade.

However the market pared gains in mid-afternoon trade and Sensex lost as much as 944.66 points to touch a low of 17,771.16 in late trade. Sensex swung 1,427.50 points in today's trade.

As per provisional closing, Sensex settled 937.70 points or 5.01% lower at 17,778.12

All the sectoral indices on BSE posted sharp losses. BSE Auto Index (down 2.11% at 5,360.35), BSE FMCG Index (down 1.55% at 2,067.77), BSE Consumer Durables index (down 0.01% to 4,772.60), BSE Health Care Index (down 0.76% at 3,751.54), BSE IT Index (down 0.50% at 4,653.08), and BSE TecK index (down 3.47% to 3,903.76) outperformed the Sensex.

BSE Capital Goods Index (down 5.19% at 15,951.10), BSE PSU index (down 5.68% to 8,286.09), BSE BSE Realty (down 5.60% to 9,280.65), BSE Oil and Gas Index (down 5.34% at 10,376.17), and BSE Metal Index (down 5.71% at 14,821.50), were underperformers.

State Bank of India (down 10.04% to Rs 1645), ICICI Bank (down 7.78% to Rs 1030), and HDFC Bank (down 6.16% to Rs 1370), were the key losers banking pack.

Bank shares suffered a sharp setback today on speculation that Reserve Bank of India will hike cash reserve ratio (CRR) at Mid Term Review Of Annual Policy slated on 30 October 2007. The growth in the economy and unbated inflow of foreign capital might prompt central bank to intervene with the sterilisation tools. CRR is the amount the commercial banks need to maintain with the RBI.

The market breadth was weak on BSE with 936 scrips advancing as compared to 1,801 that declined, while 323 remained unchanged.

The total turnover on BSE amounted to Rs 11570 crore

Confined market rally

An internal study by the finance ministry has found that there were no surveillance or regulatory problems when the Bombay Stock Exchange (BSE) benchmark index touched new highs recently.

The rally was confined to select scrips and there was no real overall spurt in stock prices. Mid-caps and small-caps continued to remain laggards. These are some of the findings of a study undertaken by the North Block on the Sensex's journey from 12,000 to 18,000.

The Sensex crossed the 12,000-mark for the first time on April 20, 2006. It crossed the 18,000, mark on October 09, 2007.
However, Sebi proposals to restrict investments through participatory notes triggered a more than 1,700- point crash in the market on Wednesday, prompting suspension of trade for an hour.

While the market recovered after statements by finance minister P Chidambaram and Sebi chief M Damodaran, the volatility continued on Thursday. The Sensex closed with a loss of over 700 points.

Interestingly, more than a quarter, or 25%, of the listed stocks declined during this period, with the rally remaining confined to the top 30 scrips. In fact, the BSE-30 stocks were far ahead of the NSE-50 in terms of the quantum of increase, an official said.

The rise in mid and small-cap stocks was around 5% of the overall movement. The study, which analysed the movement of the index and the investment pattern, as it crossed each 1,000-point milestone, has revealed that the investment pattern remained the same during the rise. But, many promoters were found to be partly selling their stakes, taking advantage of the bull run.

Globus Spirits

 Globus Spirits, a Delhi-based alcohol beverage company, is planning an initial public offering (IPO) to raise Rs 68 crore.

The company has filed a daft red herring prospectus (DRHP) with Securities & Exchange Board of India (Sebi). The Book Running Lead Manager of the proposed issue is SREI Capital Markets.

The company posted a gross turnover of Rs 116.67 crore in 2006-07 with a CAGR of over 30% in the last three years, and registered a PAT of Rs 8.66 crore.

The company proposes to modernise and expand its production facilities at Behror, Rajasthan and Samalkha, Haryana, develop and acquire IMFL brands, and revamp its storage and bottling capacity

Post Market Commentary

The market tumbled after the mid afternoon to close the session in a deep negative territory with the benchmark index Sensex fell 717.43 points to close at 17,998.39, whereas Nifty closed at 5351, down by 208.30 points. The market started the day with healthy gains over the Wednesday''s loss but lost the grip after the mid session. A lot of volatility is seen in today''s trading session as the Sensex moved around 400 up and 700 points down. Earlier in the day, the market had gained nearly 500 points to touch a new peak of 19,198 points on aggressive buying by funds and surge in the capital goods and consumer durable shares. However, the market tumbled post session and traded at the day''s low of 17,771.16 as heavy institutional selling was witnessed. Overall, the market breath was weak for the day as 1716 stocks declined while 1053 stocks advanced on BSE. Further, BSE Midcap and BSE Smallcap closed lower by 174.70 points and 122.83 points at 7426.24 & 9078.75 respectively.

BSE Metal ended lower by 689.98 points at 15029.82. Pulling it down are JSW Steel by (6.97%), SAIL by (6.45%), Sesa Goa by (5.68%), Hindalco (5.56%) and Hindustan Zinc by (5.42%).

BSE Capital goods closed in deep red at 16140.49, down by 684.05 points. Scrips lost the ground are Havell India by (10.14%), Suzlon Energy by (8.32), Crompton Greaves Ltd by (6.77%), BEML by (6.74%) and Siemens by (5.60%).

BSE Bankex also lost the grounds by 572.93 points to close at 9034.68. Scrips plunged are SBI (8.26%), Union Bank (7.45%), ICICI Bank (6.99%), Bank Of India (6.88%) and Yes Bank (6.51%).

The Reality index slipped by 448.18 points to close at 9,382.94. Drifting it down are Purvankara (7.91%), Indiabulls Realty (7.86%), Parsvnath (7.55%) and DLF Ltd (5.85%).

The Oil and Gas index decreased by 398.40 points at 10,562.9 as Reliance (4.25%), GAIL (4.06%), ONGC (3.26%), Essar Oil (3.22%), RPL (2.32%) and HPCL (1.57%) closed in negative.

FIIs net sellers of Rs 1,130cr in cash market

Foreign institutional investors (FIIs) were net sellers of Rs 1,130.59 crore (provisional) today, according to data released by BSE.

While FIIs made gross purchases of Rs 7,066 crore, gross sales totalled Rs 8,196.59 crore.

Domestic institutional investors (DIIs) were net buyers of Rs 96.02 crore today. While DIIs made gross purchases of Rs 1,886.24 crore, gross sales totalled Rs 1,790.22 crore.

FIIs were net sellers of Rs 1,776.60 crore on Wednesday, October 17, according to data released by Sebi today. While FIIs made gross purchases of Rs 6,076.50 crore, gross sales totalled Rs 7,853.10 crore.

Market Close: Profit booking or Correction..?

After yesterday?s rollercoaster ride, the markets once again witnessed same volatile ride today. SEBI?s regulation to limit derivative instruments like P-Notes continued to haunt the indices. The markets today recorded its second biggest fall of over 700 points after the initial rally of 500 points in the morning. However, the whole market mood turned after mid session as it pared all the gains as it slipped into the negative terrain with intense selling pressure witnessed across the board. Indices saw some panic selling which saw a free fall in the red zone with rumors floating in the market that margin calls may be triggered and that the NSE would increase margin requirements. But NSE declined it saying there was nothing like this. Rumours of political uncertainty also surfaced saying that the PM would resign which only compounded the fall.

We also feel that the FII?s preferred to reduce their positions in the form of P notes because of no tax benefits after converting to hedge funds which saw some heavy selling. We can only assume that the FII?s have been the seller on the basis of the provisional data which stated it as a seller to tune of Rs 1776 cr. All sectors ended in deep red, some selective stocks in IT and Consumer Durables were able to close in green. Power and Banking stocks were hit badly. Even the mid and small caps ended with losses. Asian markets ended the mixed while Europe was in red.

Sensex ended the day down by 717 points at 17998. The major losers were ACC (-12.53%), REL (-12.13%), SBI (-10%) and Bharti Airtel (-9%) while the major gainers were Wipro (+1.87%), TCS (+1.27%), Dr Reddy (+1.12%) and Satyam (+1%).

ACC, the cement major reported unimpressive results for Q2 FY07. The top line grew by 23% to Rs 1678 cr and the bottom line grew by 30% to Rs 292 cr. The Ebidta margins remained unchanged at 27%. ACC dispatch were 4.68 mn tones, higher by 10% on yoy basis. The average realization per ton stood at Rs 3587 higher by 13% on yoy basis. Net Profit includes the other income of Rs 28 cr. This includes the sale proceeds of its subsidiary ACC Nihon Casting Ltd. Even the top line growth is not impressive because even in the monsoon season the sales were not down. At the current market price of Rs 1052 the stock trades at 15 times of trailing earnings. On EV/Ton basis the valuations are placed at US $ 221 per ton. This seems to be expensive. Look for down side for trading opportunities. For details do read our updated quarterly analysis on this.

SKF India Ltd (SKF) has reported good results for the third quarter September 2007. The top line grew by 14% to Rs 387 cr from Rs 339 cr. The bottom line grew by 92% to Rs 43 cr from Rs 22 cr on yoy basis. The Ebidta profit grew by 76% to Rs 68 cr from Rs 39 cr on yoy basis. The Ebidta margins enhanced by 600 bps to 17%. The cost of raw material decreased by 7% to 59% of net sales, that?s the main reason for increase in Ebidta margins. Valuation seems to be attractive at current market price of Rs 390, the stock trades at 14 times of trailing earnings. However company was able to maintain the growth despite slow down in Auto sector as the growth was mainly seen in the industrial bearing segment. We are positive on the business. The overall demand outlook for the future remains good; the company expects pressure on margins on account of intense competition and price of steel which is the key raw material. We expect the growth momentum to continue for future. SKF parent CEO informed that the company expects the shortage of raw material and components had worsened its third quarter earnings. This give may give more outsourcing opportunity to Indian unit.

Technically Speaking: Markets started the day with a gap up and saw an early rally of 500 points. Later it had free fall as the market ended in red. Sensex touched intraday high of 19,199 and low of 17,771. Overall breadth was in favor of Declines, where the Advances stood at 935, while Declines at 1806. Markets have been seeing preety good volumes since past few sessions. But today it broke all the records as the market churned Rs 11,570 cr. Sensex has closed below a good support of 18,500. Markets might try to pullback above this level tomorrow, incase of a failure to sustain the up move, lower targets of 16800 will be opened.

Sensex nosedives on panic selling

The market crashed by over 1,428 points from the day's high amid panic selling, pulling the front-line stocks to their day's low. Banking stocks were the worst hit followed by metal and oil & gas stocks. After slipping by over 300 points in yesterday's trades, the Sensex resumed 111 points higher at 18,827 and rallied sharply to touch another record high of 19199, up 483 points from yesterday's close, on sustained buying in front-line stocks. But, the panic selling towards the close dragged the index to its day's low of 17771. The index ended the session with a loss of 717 points or 3.83% at 17998. The Nifty tumbled 3.75% or 208 points to close at 5351.

The market breadth was negative, with the losers outnumbering the gainers in the ratio of 1.65:1. Of the 2,822 stocks traded on the BSE, 1,730 stocks declined, 1,043 stocks advanced and 49 stocks ended unchanged. All the sectoral indices were battered. Among the major losers the BSE Bankex Index lost 5.96%, the BSE Realty Index shed 4.56%, the BSE Metal Index dropped 4.39%, the BSE PSU Index fell 4.26% and the BSE CG Index slipped by 4.07%.

Excluding select IT and pharma stocks most of the Sensex stocks ended in the red. Among the major losers, ACC plummeted by 13.86% at Rs1,036, Reliance Energy tanked by 9.71% at Rs1,591, SBI dropped 8.26% at Rs1,677, Bharti Airtel slumped 7.67% at Rs1,019, ICICI Bank crumbled by 6.99% at Rs1,039 and NTPC shed 5.57% at Rs209. However, TCS, Wipro, Cipla, Satyam Computer, Dr Reddy's Lab, HLL and Ranbaxy managed to close in the green with gains of over 0.50-2%.

Banking stocks came under selling pressure and lost heavily. SBI tumbled by 8.26% at Rs1,677, Union Bank shed 7.45% at Rs154, ICICI Bank lost 6.99% at Rs1,039 and BOI declined by 6.88% at Rs278. Yes Bank, Punjab National Bank, Bank Of Baroda and HDFC Bank crumbled by 5-6% each.

Over 4.78 crore Reliance Natural Resources shares changed hands on the BSE followed by Power Grid Corporation (3.59 crore shares), Tata Teleservices (3 crore shares), Reliance Petroleum (2.33 crore shares) and IFCI (1.13 crore shares).

Reliance Industries was the most actively traded counter on the BSE and registered a turnover of Rs714 crore followed by Reliance Energy (Rs627 crore), ICICI Bank (Rs626 crore), Power Grid Corporation (Rs514 crore) and Reliance Natural Resources (Rs482 crore).

Reliance Natural Resource tops volumes on BSE

 Reliance Natural Resource (RNRL) was the volume topper on BSE, notching total volumes of 4.78 crore shares. The stock lost 5.73% to Rs 91.35. RNRL posted 175.83% spurt in net profit to Rs 19.17 crore on 5.94% fall in net sales to Rs 11.72 crore in Q2 September 2007 over Q2 September 2006. The company declared its results during market hours on Wednesday, 17 October 2007

 

Power Grid Corporation of India declined 4.94% to Rs 130 on volumes of 3.59 crore shares on BSE. As per reports, Power Grid Corporation of India (PGCIL) is planning equity investments to the tune of Rs 16500 crore over the next five years to fund a slew of transmission projects, aimed at nearly trebling the country's inter-regional transmission capacity. It was the second most traded counter on BSE in terms of volumes.

 

Tata Teleservices (Maharashtra) slumped 4% to Rs 39.55 on 3 crore shares, and stood third in terms of volumes.

 

Reliance Petroleum ranked fourth clocking volumes of 2.33 crore shares on BSE. The stock lost 3.95% to Rs 174. It has reportedly achieved over 70% overall progress in implementation of its large and complex refinery, coming up in a special economic zone at Jamnagar in Gujarat. Based on the progress made till date, in the engineering, procurement and construction activities, RPL expects to complete the project ahead of scheduled in December 2008.

 

IFCI plunged 7% to Rs 75.90 on volumes of 1.13 crore shares. Its net profit surged 329.33% to Rs 497.29 crore on 188.30% rise in operating income to Rs 944.01 crore in Q2 September 2007 over Q2 September 2006.

 

The market saw a sharp trend reversal in the lattar part of the trading session. The BSE Sensex had surged 482.84 points to strike all-time high of 19,198.66 in afternoon trade.

 

However the market pared gains in mid-afternoon trade and Sensex lost as much as 944.66 points to touch a low of 17,771.16 in late trade. Sensex swung 1,427.50 points in today's trade.

 

It settled 717.43 points or 3.83% lower at 17,998.39

 

The total turnover on BSE amounted to Rs 11570 crore today.

Sensex tanks 717 points in choppy trade; turnover surges

 Heavy selling towards the latter part of the trading session pulled the market sharply lower in what was a choppy trading session. The market earlier had witnessed choppy trade in mid-afternoon trade, swinging between positive and negative zone, on rumours that NSE had raised some futures & options margins. But television reports in mid-afternoon indicated that there is no change in margin structure on NSE.

 

Banking, metal, realty and power stocks witnessed heavy selling. IT stocks held the fortress in market meltdown. The market breadth turned weak. Reliance Industries and Reliance Energy declined sharply. ACC plunged after announcement of Q3 results. European markets were trading weak. Asian markets were in green.

 

Earlier, shrugging off concerns arising from Securities & Exchange Board of India's proposal to clamp down FII inflow through participatory notes (PN), the market had surged to all-time high in early afternoon trade. Reliance Industries (RIL) declined after hitting all-time high ahead of its results today.

 

The BSE 30-share Sensex ended down 717.43 points, or 3.83%, to 17,998.39 points. It opened with an upward gap of 111.64. It hit all-time high of 19,198.66 in early afternoon trade. At day's high Sensex had risen 482.84 points for the day. It hit a low of 17,771.16 in late trade. At day's low of 17,771.16, Sensex had lost 944.46 points. Sensex swung 1,427.5 points in today's trade.

 

The broader based S&P CNX Nifty was down 208.3 points, or 3.75%, to 5,351. It hit all-time high of 5,736.80 in early afternoon trade. It hit a low of 5,269.65 in late trade.

 

Of the 30 shares of the Sensex, 7 had moved up, while the remaining were trading down. The market breadth was weak on BSE in: 1,027 scrips advanced, 1,707 declined, while 326 remained unchanged.

 

BSE clocked a turnover of Rs 11,570 crore today compared to Wednesday (17 October 2007)'s Rs 10,308.13 crore.

 

Nifty October 2007 futures were at 5,309.90, a discount of 41.1 points or 0.76% over the spot price of 5,351.

 

NSE's futures & options (F&O) segment clocked a turnover of Rs 1,10,563.83 crore today, 18 October 2007, compared to Wednesday's Rs 98,395.58 crore

 

BSE Mid Cap index declined 2.3% to 7,426.24 and BSE Small Cap index declined 1.33% to 9,078.75. Both these indices outperformed Sensex.

 

BSE Capital Goods index (down 4.07% to 16,140.49),BSE Bankex (down 5.96% to 9,034.68), BSE Metal index (down 4.39% to 15,029.82), BSE PSU index (down 4.26% to 8,410.73), BSE Realty index (down 4.56% to 9,382.94) underperformed Sensex.

 

BSE Auto index (down 1.51% to 5,393.48), BSE IT (flat at 4,676.27)BSE Health Care index (down 0.12% to 3,775.79) outperformed Sensex.

 

Sebi's proposals to clamp down participatory notes to restrict foreign inflows, announced after trading hours on Tuesday, 16 October 2007, created havoc on the bourses yesterday, 17 October 2007. Trading was halted on that day just within minutes of opening, as market wide circuit filters were triggered by a steep fall. Later, the market had staged a sharp pull back from day's lows, since afternoon trade after Sebi chairman M Damodaran, clarified to television media that participatory notes (PN) are not being banned and there will be no bar on FII inflows. He also clarified that Sebi is not proposing a ban on offshore derivatives.

 

After trading hours on Tuesday, 16 October 2007, Securities & Exchange Board of India issued draft proposals wherein the market regulator proposed restriction on use of the popular participatory notes (PNs) route of FII inflow and it also recommended unwinding of some PNs within 18 months. PNs are financial instruments used by foreign investors that are not registered with Sebi, to invest in Indian shares. FIIs and their sub-accounts buy Indian securities and then issue PNs to foreign investors with these securities as the underlying.

 

Sebi's recommendations are clearly negative in the extreme short term as far as direction of FII inflow in India are concerned, brokerage Motilal Oswal Securities said in a note to clients. Investors having delivery can hold to their positions, it said. Traders should have strict stop loss particularly so if they are trading on the long side, the brokerage said in the note.

 

The Sebi proposals on participatory notes may cast a shadow on investor sentiment to an extent, according to Franklin Templeton Investment (FTI), one of the largest financial services groups in the world. More clarity on market impact will emerge after issuance of final guidelines by the market regulator, it reckons. Any sharp FII outflows will impact the markets in the near term, according to FTI.

 

The financial services group which has also one of the leading mutual funds in India, however, feels that inflow to India from long-term global investors will not be impacted due to these measures given that India's economic and corporate fundamentals remain robust.

 

India's largest private company in terms of market capitalization and oil refiner Reliance Industries (RIL) was down 4.25% to Rs 2,575.90. It had hit an all-time high of Rs 2,805 earlier during the day. The stock pared gains in mid-afternoon trade. Reliance Industries (RIL) unveils its Q2 September 2007 results today.

 

RIL is expected to report results taking into consideration merger of IPCL in it that was effected recently. Analysts expect a modest growth in RIL's net profit in Q2 September 2007 over Q2 September 2006 on the back of higher refining margins.

 

Banking majors declined sharply. BSE's banking sector index Bankex was the major loser from sectoral indices on BSE. ICICI Bank (down 6.99% to Rs 1,038.80), HDFC Bank (down 5.51% to Rs 1,379.20) and State Bank of India (down 8.26% to Rs 1,677.45) edged lower.

 

Heavy selling was seen in metal counters. Tata Steel (down 3.79% to Rs 836.15), Sterlite industries (down 1.57% to Rs 890.35), Steel Authority of India (down 6.45% to Rs 23.30) and Hindalco Industries (down 5.56% to Rs 186.95) edged lower.

 

Realty stocks also declined. DLF (down 5.85% to Rs 843.55), Indiabulls Real Estate (down 7.86% to Rs 532.20) and Unitech (down 3.19% to Rs 330.40) edged lower.

 

Power stocks fell sharply. NTPC (down 5.57% to Rs 208.50), Power Grid Corporation of India (down 2.3% to Rs 133.60), Reliance Energy (down 9.71% to Rs 1,591.35) and Tata Power Company (down 8.27% to Rs 1,078.75) edged lower.

 

TCS rose 2.17% to Rs 1,118.85 after India's top software services exporter secured a $1.2 billion 10-year contract from information and media firm Nielsen Co. to provide IT services for the latter's global operations.

 

Other IT stocks Wipro (up 2.17% to Rs 496.45) and Satyam Computer Services (up 1.16% to Rs 462.55) edged higher. Infosys (down 0.08% to Rs 1,888.40) edged lower.

 

Ranbanxy Laboratories rose 0.4% to Rs 421.85. The company today reported 72.8% rise in net profit at Rs 168.16 crore on 4.78% decline in sales to Rs 1038.12 crore in Q3 September 2007 over Q3 september 2006. The results hit the market in afternoon trade. Cipla (up 1.76% to Rs 182.50) and Dr. Reddy's Laboratories (up 1.05% to Rs 612.55) edged higher.

 

ACC declined 13.86% to Rs 1,036 after it reported 30.14% rise in net profit to Rs 292.42 crore on 22.22% rise in sales to Rs 1678.78 crore. The results hit the market in afternoon trade. It was the major loser from Sensex pack.

 

Bharti Airtel declined 7.67% to Rs 1,019.40.

 

Reliance Communications declined 3.51% to Rs 711.45 after the company said it added 1.5 million subscribers in September 2007. It hit an all-time high of Rs 794 earlier today.

 

Hero Honda Motors declined 1.5% to Rs 724.60. Hero Honda unveils Q2 September 2007 results today.

 

Capital goods stocks pared gains. Larsen & Toubro declined 4.37% to Rs 3,149.70 after it won Rs 462 crore orders for projects in Andhra Pradesh. Bharat Heavy Electricals was down 4.42% to Rs 2,182.25. The stock came off session's high of Rs 2,375.

 

Reliance Natural Resource (RNRL) was the volume topper on BSE, notching total volumes of 4.78 crore shares. The stock lost 5.73% to Rs 91.35. Power Grid Corporation of India declined 4.94% to Rs 130 on volumes of 3.59 crore shares on BSE. Tata Teleservices (Maharashtra) slumped 4% to Rs 39.55 on 3 crore shares, and stood third in terms of volumes. Reliance Petroleum ranked fourth clocking volumes of 2.33 crore shares on BSE. The stock lost 3.95% to Rs 174. IFCI plunged 7% to Rs 75.90 on volume of 1.13 crore shares.

 

Reliance Industries with a turnover of Rs 714.87 crore was turnover topper on BSE. Reliance Energy clocked second highest turnover of Rs 627.59 crore. ICICI Bank clocked the third highest turnover of Rs 626.45 crore. Power Grid Corporation of India clocked fourth highest turnover of Rs 514.11 crore. Reliance Natural Resources fifth highest turnover of Rs 482.85 crore.

 

Side counters, Krone Communications (up 20% to Rs 154.85), Ashco Industries (up 20% to Rs 48), MPIL Corporation (up 20% to Rs 114.45), Borax Morarji (up 20% to Rs 64.30) edged higher.

 

Sanguine India (down 17.01% to Rs 38.55), Mangalam Cement (down 15.53% to Rs 195) edged lower.

 

ABB rose 1% to Rs 1502.15, after it secured orders worth Rs 512 crore from JSW and its associated companies, to provide turnkey power and automation solutions for steel and power plant projects.

 

GAIL India declined 4.06% to Rs 400.45. GAIL's net profit rose 27.70% to Rs 572.54 crore on 22.2% growth in net sales to Rs 4,528.90 crore in Q2 September 2007 over Q2 September 2006.

 

Great Offshore declined 3.52% to Rs 780.85, after the Reserve Bank of India allowed foreign institutional investors to buy upto 49% of the company's paid-up capital.

 

Supreme Infrastructure India ended at Rs 175.25 on BSE, a premium of 62.26% over IPO price of Rs 108.

 

Polaris Software Lab rose 0.31% to Rs 115.05, on reporting 3.90% fall in net profit to Rs 12.56 crore in Q2 September 2007 over Q1 June 2007.

 

European markets declined after opening on a positive note. France's CAC 40 (down 0.63% to 5,782.32) and UK's FTSE 100 (down 0.73% to 6,628.10) edged lower. Germany's DAX (up 0.17% to 7,999.39) edged higher.

 

A majority of Asian markets ended higher today, 18 October 2007. Hong Kong's Hang Seng (up 0.57% at 29,465.05), Japan's Nikkei (up 0.89% at 17,106.39), Taiwan's Taiwan Weighted (up 0.78% at 9,637.07), South Korea's Seoul Composite (up 1.07% at 2,005.09) edged higher. However, Singapore's Straits Times fell 0.78% at 3,809.69.

 

Crude oil were almost unchanged on Thursday, 18 October 2007 as one OPEC minister raised the prospect of another output hike and U.S. data showed rising inventories and weak demand. US crude slipped 12 cents to $87.28 a barrel.