Thursday, December 27, 2007

Benazir Bhutto succumbs to injury

Pakistan opposition leader Benazir Bhutto died on Thursday from her injuries sustained in a suicide attack, a party aide said.

''At 6:16 pm she expired,'' said Wasif Ali Khan, a member of Bhutto's party who was at Rawalpindi General Hospital where Bhutto died.

A senior military official, who spoke on condition of anonymity because he was not authorized to comment, confirmed that Bhutto had died.

The death of the charismatic former prime minister threw the campaign for the January 8 election into chaos and created fears of mass protests and an eruption of violence across the volatile south Asian nation.

The attacker struck just minutes after Bhutto addressed a rally of thousands of supporters in the garrison city of Rawalpindi. She was shot in the neck and chest by the attacker, who then blew himself up, said Rehman Malik, Bhutto's security adviser.

Bhutto was rushed to the hospital and taken into emergency surgery.

''At 6:16 p.m. (6.46 pm IST) she expired,'' said Wasif Ali Khan, a member of Bhutto's party who was at Rawalpindi General Hospital.

''The surgeons confirmed that she has been martyred,'' Senator Babar Awan, Bhutto's lawyer, said.

Bhutto's supporters at the hospital exploded in anger, smashing the glass door at the main entrance of the emergency unit. Others burst into tears. One man with a flag of Pakistan People's Party tied around his head was beating his chest.

Some at the hospital began chanting, ''Killer, Killer, Musharraf,'' referring to President Pervez Musharraf, Bhutto's main political opponent. A few began stoning cars outside.

''We repeatedly informed the government to provide her proper security and appropriate equipment including jammers, but they paid no heed to our requests,'' Malik said.

Nawaz Sharif, another former premier and opposition leader, arrived at the hospital and sat silently next to Bhutto's body.

US officials said they were looking into reports of Bhutto's death.

''Certainly, we condemn the attack on this rally. It demonstrates that there are still those in Pakistan who want to subvert reconciliation and efforts to advance democracy,'' said deputy State Department spokesman Tom Casey.

The United States has for months been encouraging Musharraf to reach some kind of political accommodation with the opposition, particular Bhutto, who is seen as having a wide base of support here.

Bhutto served twice as Pakistan's prime minister between 1988 and 1996. She had returned to Pakistan from an eight-year exile on October 18. Her homecoming parade in Karachi was also targeted by a suicide attacker, killing more than 140 people. On that occasion she narrowly escaped injury.

The scene of the bombing Tuesday was awash in blood.

An Associated Press reporter could see body parts and flesh scattered at the back gate of the Liaqat Bagh park where Bhutto had spoken. He counted about 20 bodies, including police, and could see many other wounded people.

Party supporter Chaudry Mohammed Nazir said two gunshots rang out when Bhutto's vehicle pulled into the main street and then there was a huge blast next to her car.

Police cordoned off the street with white and red tape, and rescue workers rushed to put victims in ambulances as people wailed nearby.

The clothing of some of the victims was shredded and people put party flags over their bodies. Police caps and shoes littered the asphalt.

On Thursday, hundreds of riot police had manned security checkpoints to guard the venue. It was Bhutto's first public meeting in Rawalpindi since she came back to the country.

In November, Bhutto had also planned a rally in the city, but President Pervez Musharraf forced her to cancel it, citing security fears.

In recent weeks, suicide bombers have repeatedly targeted security forces in Rawalpindi, a city near the capital where Musharraf stays and the Pakistan army has its headquarters

(Source: www.ibnlive.com)

Sensex gains amid choppy trading

The market was poised for a negative close, but late bout of buying pulled the Sensex above 20,200 and halted its downturn. Frontline stocks traded within a narrow range on the back of expiry of December derivative contracts, but mid- and small-cap shares remained buoyant for entire trading session. Shrugging off the mixed trend in Asian markets, Sensex resumed 108 points above its last close at 20,193.It extended its upmove for a brief period and touched the day's high of 20,324, however profit bookings at higher levels saw it shed over 130 points and enter into negative territory by afternoon. Lack of buying interest kept the market lacklustre thereafter and Sensex touched the day's low of 20,160. But, consumer durables, metal, PSU and FMCG shares received some buying support towards the close and the market turned positive. Sensex finally closed the session at 20,217, up 24 points, while the Nifty ended the session with a gain of 11 points at 6,082.

The breadth of the market was positive. Of the 2,953 stocks traded on the BSE, 2,069 stocks advanced, 841 stocks declined and 43 stocks ended unchanged. On sectoral front,BSE CD index was up 1.79% at 6,339 and BSE FMCG index gained 0.92% at 2,253. However BSE Auto index, BSE CG index, BSE HC index, BSE IT index, BSE Teck index and BSE Realty index closed marginally down.

Among the major losers, Tata Motors shed 2.05% at Rs737, Satyam Computer declined 1.72% at Rs451, Reliance Communications fell 1.66% at Rs731, Bharti Airtel slipped 1.65% at Rs966, while Ranbaxy, L&T, Grasim, SBI, M&M and Infosys were marginally down. HDFC Bank, however, gained 2.77% at Rs1,750, followed by Wipro up 2.54% at Rs549, ICICI Bank added 1.85% at Rs1,242, ITC jumped 1.85% at Rs203 and Tata Steel was up by 1.52% at Rs906.

Over 2.62 crore IKF Technology shares changed hands on the BSE followed by GV Films (1.95 crore shares), Himachal Futuristic Communication (1.86 crore shares), Maars Software (1.71 crore shares) and Arvin Remedies (1.50 crore shares).

Valuewise, Essar Oil registered a turnover of Rs272 crore on the BSE followed by Reliance Energy (Rs225 crore), Reliance Industries (Rs179 crore), Reliance Petroleum (Rs173 crore) and Orchid Chemical (Rs120 crore).

Market Close: Choppy sessions post the santa rally?

It was a choppy day for the markets on last F&O expiry session for the year 2007. Indian markets had a good start with gapup points but sooner gave up most of its morning gains made and traded absolutely flat till mid session. Trading session continued to be choppy through out the day with occasional dips in negative territory. Alternate bouts of buying and selling activities restricted the movement of the indices within a narrow range but However 20K level was maintained till the final hour. For the December F&O series Nifty was up 8%, BSE smallcap up 21%, Nifty rollover position was seen at 75% Vs 60% last month and market wide turnover at 80% which shows market outlook looks positive. Small cap (up 2.2%) counter continued to witness buying interest and out performed the mid caps and index heavy weights. FMCG, Metal, Oil and Power stocks traded with buying support while Auto, Reality and Pharma counter were under selling pressure. Asian markets ended in mixed cue while European indices continued to trade marginally higher in green.

Sensex closed higher by 24 points at 20216.721. It was helped up by gains in Wipro (549.3,+3 percent), HDFC Bk (1744.95,+2 percent), ICICI Bk (1242,+2 percent), ITC (203.35,+2 percent) and TISCO (906.35,+2 percent). Restricting the gains were Tata Motors (736.7,-2 percent), Satyam (451.4,-2 percent), RCVL (730.8,-2 percent), Bharti Tele (966.3,-2 percent) and Ranbaxy (411.5,-1 percent).

Capex plans announced by Videocon Ind were the primary reasons for Videocon ind to be in lime light. Company intends to invest $ 5 bn in power projects in Gujarat and has announced bids for the project. Videocon is a well known player in the consumer durables industry. Margins from the consumer durable business of the country can come under pressure with increase in the organised retail by players with deep pockets. The other business of the company includes oil extraction, where company has 25% partnership. Unconfirmed reports state that the company intends to re structure its business and separate the oil exploration business and the consumer durables business. That would be done with an intention to unlock the share holders. Any fresh position in Videocon at this point is not recommended from the long term point of view till more information is revealed by the company. However, trading up sides are worth considering as the volumes have increased considerably on this counter. Videocon Ind closed higher by 9% for the day.

Karuturi bloomed amid choppy sessions on the back of strong fundamentals and closed higher by 10%. Company is the largest Rose cultivator in the country. The proposed acquisition in Kenya would make company the largest cultivator in the world. Karuturi has 10 hectares in India where it produces 15 mn stems. The company has 50 hectares operational in Ethiopia with a capacity of over 80 mn stems. An additional 50 hectares is planned and expected to go live next year. Karuturi Networks has been allotted additional 450 hectares of land by the Government of Ethiopia for its expansion and diversification projects. Cost of air freight out of Ethiopia is $1 per kg of rose as against $2.5 per kg out of India, a 60% cost saving. Setting up operations in Ethiopia, it could avoid a customs duty of 28% levied on goods entering the US. We are positive on the company and have a wow call running on the company as well. Do read our note on the company to know more.

Technically Speaking: Markets traded in narrow range with positive market breadth . Intra day high for the day was 20,324 while sensex touched an intra day low of 20,160. Advances out numbered declines in the ratio of 3:1. Resistance is at 20,600 levels while support lies at 20,020-19,710 levels. Volume of Rs 8,232 cr was churned out through out the day.

Post Market Commentary

The market after struggling a lot through out the trading session finally managed to close on an upbeat note. A lot of volatility was seen in today''s trading session. The cues from the global markets, led the domestic market to open with good gains but the investors took calculated steps in booking their positions after the last two days of strong rally by the market. However, both the Mid Caps and Small Caps indices outperformed the benchmark indices as most buying is seen from these baskets. The BSE Mid Cap and Small Cap closed higher by 28 points and 286.25 points at 9,428.86 and 12,628.74 respectively. The Metal and Consumer durables indices remained in the limelight as the investor''s showed more interest in buying from these counters. The BSE Sensex closed with marginal gains of 24.20 points at 20,216.72 and NSE Nifty closed up by 10.75 points at 6,081.50. Overall, the market breadth was strong as 2,069 stocks are closed in green while 841 stocks are closed in red.

BSE Metal index surged 175.77 points to close at 19,467.11. Scrips that grew are NALCO (9.76%), Gujarat NRE (5.59%), JSW Steel (4.01%), Tata Steel (1.52%)

BSE Oil & Gas index grew by 7.04 points to close at 13,123.03. Pushed up by IOCL (2.92%), Essar Oil (2.52%), Cairn (0.68%) and ONGC (0.37%).

BSE Capital goods index declined by 12.05 points to close at 19,642.26. Slipped by Jyoti Structure (3.28%), Havell India (2.70%), Praj Industries (2.68%), Alstrom Project (1.24%).

BSE Realty index closed lower by 29.83 points at 12,080.16 as Phoenix mill (5.96%), Penland (3.43%), Omaxe (2.67%), Sobha developers (2.07%) and DLF (0.38%) closed in red.

BSE Bankex index closed higher by 80.25 points to close at 11,370.33. Scrips that grew are Yes bank (4.96%), HDFC bank (2.77%), BOB (2.44%) and ICICI bank (1.85%).

BSE IT index fell 22.73 points to close at 4,569.14. Scrips that fell are I-Flex (2.83%), Finance Tech (2.72%), GTL Ltd (2.52%), Satyam (1.72%) and Tech Mahindra (1.65%)

Market slips into the red

The market slipped into the red in afternoon trade. Auto and healthcare stocks declined. Metal stocks remained firm. FMCG stocks gained momentum. Market breadth was strong. 15 out of 30 stocks from the Sensex pack were in green. Asian markets, which opened before Indian markets, were mixed.

As per reports, Nifty rollover from December 2007 series to January 2008 series stood at 66% while total market wide rollover stood at 66%, by Wednesday, 26 December 2007.

At 13:20 IST, the 30-share BSE Sensex was down 24.67 points or 0.12% to 20,167.85. Sensex hit a low of 20,164.16 in afternoon trade. At day's low, the Sensex shed 28.36 points. Sensex had hit a high of 20,323.76 in early trade. At day's high, the Sensex gained 131.24 points.

The broader CNX S&P Nifty was down 5 points or 0.08% to 6065.75.

The BSE Mid-Cap index was up 0.32% to 9,430.72. The BSE Small-Cap index was up 1.93% to 12,580.69.

The market breadth was strong. On BSE, 2140 shares advanced as compared to 735 that declined. 37 shares were unchanged.

India's largest private sector firm by market capitalization & oil refiner Reliance Industries fell 0.20% to Rs 2890.95.

India's largest private sector bank by assets ICICI Bank rose 1.20% to Rs 1234.

India's second largest software exporter by sales Infosys Technologies rose 0.08% to Rs 1813.40.

Hindalco Industries moved up 2.53% to Rs 214.70, ITC rose 2.55% to Rs 204.75, Reliance Energy gained 1.95% to Rs 2153.10, ONGC climbed 1.63% to Rs 1256.30 and HDFC Bank flared up 1.36% to Rs 1726.10.

Bajaj Auto declined 2.77% to Rs 2607.70, Bharti Airtel fell 2.47% to Rs 958.25, Reliance Communications gave away 1.45% to Rs 732.25, Grasim Industries shed 1.13% to Rs 3576 and Tata Motors fell 0.94% to Rs 745.

Among the mid-caps, ISMT surged 20% to Rs 134.05, Raymond soared 8.15% to Rs 434, CMC spurted 7.94% to Rs 1,396.55, Castrol India jumped 7.47% to Rs 312.10 and SpiceJet rose 7.43% to Rs 74.50.

Among the small-caps, Sagar Cement surged 20% to Rs 435.90, Kalindee Rail Nirman (Engineers) soared 20% to Rs 517.35, KRBL spurted 20% to Rs 146.80, Hindustan Organic Chemicals jumped 16.67% to Rs 94.50 and Era Infra Engineering climbed 15.07% to Rs 333.20.

Some of the key Asian indices turned negative after a firm opening today, 27 December 2007. Key indices in China, Singapore, South Korea and Taiwan were up between 0.04% to 1.93%. However, key indices in Japan and Hong Kong were down between 0.57% to 0.67%.

US markets closed almost unchanged on Wednesday, 26 December 2007. Dow Jones industrial average rose 2.36 points at 13,552. Nasdaq Composite index gained 11 points at 2,724 and the S&P 500 index advanced 1.21 points at 1,498.

Back home, the 30-share BSE Sensex jumped 338.40 points or 1.70% to 20,192.52 on Wednesday, 26 December 2007. The broader CNX S&P Nifty rose 85.65 points or 1.43% to 6070.75 on that day.

As per provisional data, foreign institutional investors (FIIs) bought shares worth a net Rs 538.29 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 448.73 crore on Wednesday, 26 December 2007.

FIIs were net buyers to the tune of Rs 844.89 crore in the futures & options segment on Wednesday, 26 December 2007. They were net buyers of index futures to the tune of Rs 262.22 crore and bought index options worth Rs 698.49 crore. They were net sellers of stock futures to the tune of Rs 119.16 crore and bought stock options worth Rs 3.34 crore.

US Market fights for a late recovery

 Nasdaq outpaces other indices with help of Apple which crosses $200 for first time

US Market ended little higher today, Wednesday, 26 December, 2007 with the Nasdaq clearly outpacing the other two indices. Trading volume was quite light as expected due to the ongoing holiday season. Traders became concerned with disappointing holiday sales figure and also some weak housing report.

Apple shares crossed the $200/mark for the first time ever. Crude oil prices shot up and crossed the $96/barrel once again as traders expected a drawdown in crude inventories in tomorrow's report.

The Dow Jones industrial Average ended the day with a mere gain of 2.36 points at 13,551.7. The Nasdaq Composite Index, finished higher by 10.9 points at 2,724.41. S&P 500 finished edged higher by 1.2 points at 1,497.7.

Twelve out of thirty Dow stocks ended higher for the day. Citigroup and Walt Disney were a couple of the major Dow laggards. Exxon Mobil, Caterpillar and IBM were a few Dow winners. Alcoa and GE were a couple of main Dow winners for the day.

Target was today's worst performing retail stock after the company warned its December same-store sales will come up short of expectations. The company said it now expects sales to be down 1% to up 1%, well below the previous forecast that called for sales to rise 3% to 5%.

Also, the S&P/Case-Shiller Home Price Index indicated October home prices dropped a more than expected 6.1% on a y-o-y basis. Market expected a drop of 5.7%.

Apple shares cross $200 mark for first time ever

Dow remained in the red for most part of the day. It inched up in the green territory in the final hour of trading after much dillydallying. Five out of ten economic sectors posted loss today.

Apple shares were mainly responsible for taking Nasdaq higher. Shares of Apple crossed $200 mark for the first time due to higher iPod, iPhone and Macintosh sales.

Indian ADRs ended in green today. ICICI Bank was the topmost winner gaining 3.4%. It was followed by Wipro Technologies which gained 2.3%.

Expectations of lower crude inventory and Turkish air strikes sent crude prices almost $2/barrel higher today. Prices have been on a roll since last Friday, 21 December and have gained more than $5/barrel since then. Prices once again crossed the $96/barrel mark today. Price also rose as the greenback slipped against its rival currencies.

Crude-oil futures for light sweet crude for February delivery closed at $95.97/barrel (higher by $1.84/barrel or 2%) on the New York Mercantile Exchange. Futures rose as high as $96.6 earlier in the day. Prices are 57% higher than the year before.

On the New York Stock Exchange, more than 838 million shares were traded, with declining stocks roughly equaling advancing stocks. More than 1.2 billion shares exchanged hands on the Nasdaq, with advancers outpacing decliners by 16 to 13.

Tomorrow, investors will focus on economic reports to set the tone of trading. The Commerce Dept.'s Durable Orders report is scheduled to hit the wires at 8:30 ET, along with unemployment claims for the week ended 15 December. Those reports will be followed by the Energy Dept.'s weekly inventories report at 10:30 ET.

Mid market report

The market has now slipped from the opening highs and is trading with marginal gain. The heavy buying is seen in the Metal and Capital Goods stocks. However the Health Care stocks today are facing the selling pressure. The BSE Mid Cap and BSE Small Cap however outperformed the benchmark index today. The overall market breadth remains positive, as 2069 stocks are advancing while 777 stocks are declining and the 42 stocks remained unchanged on BSE.

The BSE Mid cap is higher by 46.84 points at 9,447.70 and the BSE small Cap advanced by 242.94 points to trade at 12,585.43.

At 12.31 pm, BSE Sensex was at 20,224.98 up by 32.46 points whereas Nifty was at 6,076.85 up by 6.10 points.

BSE Metal index surged 186.40 points to trade at 19,477.74. The major gainers are Nalco (7.95%), Hindalco Industries (2.38%), SAIL (1.85%) and Tata Steel (1.01%).

Nalco has planned to invest Rs11,000 Crore in a mega Greenfield smelter and thermal power project in Indonesia.

BSE Capital goods index increased 52.26 points to 19,706.57. The main gainers are BEML (3.31%), Areva (3.23%), Bharat Electrical (2.14%) and L&T (0.35%).

BSE Banks index advanced by 61.70 points to trade at 11,351.78. The major gainers are Yes Bank (2.68%), HDFC Bank (1.96%), ICICI Bank (1.20%) and Union Bank (0.22%).

BSE Power index inclined by 16.29 points to trade at 4,460.05 as Power Grid (1.81%), Suzlon Energy (1.57%), Reliance Energy (1.10%) and Crompton Greaves (0.68%) are trading higher.

BSE IT index inclined by 21.75 points to trade at 4,613.62 as NIIT Techno. (1.47%), HCL Tech. (0.47%), Wipro (0.43%) and I-flex (0.29%) are trading in positive territory.

BSE Auto index increased by 4.69 points to trade at 5,647.59. Leading to its gain are MRF (1.93%), Cummins India (1.65%), Maruti Suzuki (0.54%) and TVS Motor (0.35%).

BSE Oil & Gas index was trading 4.13 points higher at 13,120.12 as Essar Oil (5.54%), ONGC (0.87%), Indian Oil (0.84%) and RPL (0.18%) are trading in green.

Govt approves FDI proposals

The government today gave its approval for 19 foreign direct investment proposals amounting to Rs 726.88 crore, which include Global Broadcast News Ltd's proposal to sell 26 per cent stake for Rs 500 crore. GBN is a part of media group Network 18.

The proposal of Cyprus-based Dunbay to acquire additional 5 per cent stake in Delhi Stock Exchange for Rs 10.61 crore has also been approved.

"The Finance Minister approved 19 FDI proposals recommended by the Foreign Investment Promotion Board (FIPB) in its meeting held on December 14," said a Finance Ministry statement here.

GBN has proposed to induct up to 26 per cent FDI worth Rs 500 crore, including investment by foreign institutional investors (FIIs).

The broadcaster, which runs English news channel CNN-IBN, had raised around Rs 105 crore from the capital market with an initial public offer (IPO) early this year.

The company has also announced to set up a joint venture with Jagran Group to bring out a business newspaper in Hindi language.

The government also gave its approval to the UK based- Middlebrough Oils to invest Rs 200 crore to set up a subsidiary to undertake extraction of crude Jatropha oil from Jatropha seeds.

Daimler Chrysler of Germany has also been allowed to set up a joint venture company to undertake body building of buses.

Year end gains

If you are looking for reasons pointing to the surge in equity markets and can't find any, well then try an unconventional explanation.

Go back to history, if the last ten years data is to go by, the markets have posted positive returns, or in other words rallied in the last week of every year. Further, FII inflows have also been positive during the same period, contrary to popular belief that they usually stay away from the markets due to holiday season.

The gains in the last week of every year can be called a 'Santa Claus rally', though in Wall Street terminology. A Santa Claus rally refers to a jump in the prices of shares in the week between Christmas and New Year. In the US, there are several explanations for this phenomenon. Some of them relate to tax considerations, plain happiness around the street or also the fact that a lot of people are on vacation that week.

There are no definite explanations for such a situation in India but there has been a rise in the markets between Christmas and New Year every year since 1997. Data to study this phenomenon in India was available since 1997 only as prior to that the markets remain closed the week after Christmas.

The highest gains during the same period were posted by Sensex in 2003, which is 3.5%. Similarly, the highest net FII inflow also has been during the same year. However, data suggests that this not due to FII inflow alone as even though in 2006, the net FII position was negative, the markets gave a return of 2.3% during the same period. For the past four years, markets have gained handsomely during the same period, followed by strong FII inflows (expect 2006).

Even if we go by today's market movement, Sensex surged 3.6% to close at 19,854 points, which could be a precursor to the rally over the next few days. The provisional FII data stood at Rs 176 crores, according to NSE provisional figures. It is to be seen whether in percentage terms, Indian equity markets are able to see its best rally this time. In the same period last year, the Santa Claus rally raised the market by 2.3%.

Many analysts believe that the rise during such a period is more in anticipation of a strong performance in the early months of the new year as it is believed that there is always a lot of action in the period surrounding the budget. They also attribute this rise to beginning of the pre-budget rally.

Wanbury

We recommend a buy in Wanbury at current market price. From the weekly chart of Wanbury it is clear that it has been on a steady long-term uptrend since the March 2007 low of Rs 99.

However, the stock met with a significant long-term resistance at Rs 155 level in early November and began to move sideways. Following a month's sideways consolidation, the stock is once again testing this resistance level. The stock is currentl y trading well above the 21-day and 50-day moving average line.

The daily and weekly momentum indicators are featuring in the bullish zone. Steady rally in the moving average convergence divergence indicator is a bullish sign. The immediate support for the stock is at Rs 140 level and the next support is at Rs 125 level.

Moreover, the long-term uptrend is intact. We expect the stock to break through the current resistance and move up to Rs 175 in the short-term. Short-term investors can buy the stock with stop-loss at Rs 138.

via BL

FIIs in buying mode

Inflow of Rs 167.40 crore on 24 December 2007

Foreign institutional investors (FIIs) bought shares worth net Rs 167.40 crore on Monday, 24 December 2007, compared to their selling of Rs 515.80 crore on Thursday, 20 December 2007.

FIIs inflow of Rs 167.40 crore on 24 December 2007 was a result of gross purchases of Rs 3498.50 crore and gross sales Rs 3331.10 crore. The 30-share BSE Sensex rose 691.55 points or 3.61% to 19,854.12 on that day.

FII inflow in December 2007 totaled Rs 1073.70 crore (till 24 December 2007). FII inflow in calendar year 2007 totaled Rs 66,981.10 crore (till 24 December 2007).

There are a total of 1,214 FIIs registered with the Securities & Exchange Board of India (Sebi).

Nifty December futures at premium

Turnover in F&O segment rises

Nifty December 2007 futures were at 6076.50, at a premium of 5.75 points as compared to the spot closing of 6070.75. December 2007 derivative contracts tomorrow, 27 December 2007.

The NSE's futures & options (F&O) segment turnover was Rs 96,144.43 crore, which was higher than Rs 80,577.10 crore on Monday, 24 December 2007.

Reliance Industries (RIL) December 2007 futures were at premium, at 2901.50, compared to the spot closing of 2896.50.

GMR Infrastructure December 2007 futures were at premium, at 249.60, compared to the spot closing of 247.60.

Jindal Steel & Power December 2007 futures were at premium, at 14,799, compared to the spot closing of 14,667.25.

In the cash market, the S&P CNX Nifty gained 85.65 points or 1.43% at 6070.75.

Gold heads for seventh straight annual gains

Boosted by dollar weakness and rising crude, gold crosses $830 mark once again

Precious metals ended higher today, Wednesday, 26 December, 2007 after the dollar slipped against almost all its rival currencies. Gold crossed the $830/ounce mark once again and marked the highest price in almost a month. Gold generally moves in the opposite direction of the U.S. currency. Gold, as a dollar-denominated commodity, suffers from dollar strength.

Comex Gold for February delivery rose $13 (1.6%) to close at $829.5 an ounce on the New York Mercantile Exchange today. Prices touched $830.2/ounce during intra day trading. Last week, the yellow metal gained $17.4/ounce (2.2%). On, 7 November, prices had touched $848/ounce. It was the highest price after a record $873 on 21 January, 1980.

Comex Silver futures for March delivery rose 17.5 cents (1.2%) to $14.835 an ounce. Prices touched 26 year high on 7 November, after reaching $16.275. The metal has climbed 15% this year.

Gold is headed for a seventh straight annual gain. In 2006, silver had jumped 46% while gold gained 23%.

Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices. Rising crude increases inflationary pressures and vice versa. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.

In the currency market today, the dollar index, which tracks the value of the greenback against a basket of other currencies, fell for a third day, down 0.6% to 77.14.

In the energy market, oil prices ended substantially higher after crossing the $96/barrel mark on supply concerns and Turkish airstrikes.

Gold had climbed 30% this year till date as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Dollar is still 9% down against the euro this year.

The Fed has reduced overnight lending rates by 1% in FY 2007. On 11 December, Federal Reserve lowered the federal funds rate by a quarter-point to 4.25%. The Fed also lowered its discount rate, the interest it charges on direct loans it makes to banks, by a quarter-point to 4.75%.

Before 11 December, Federal Reserve had cut the fed funds rate by a quarter-point to 4.50% on 31 October, 2007. Prior to that, Federal Reserve had cut interest rates by half percentage point on 19 September, 2007. With these interest rate cuts, dollar has been tumbling down. Market anticipates that there will be more rate cut in the coming year.

Crude oil rallies

Prices rise more than $2/barrel on anticipation that crude inventories will show a drop

Expectations of lower crude inventory and Turkish air strikes sent crude prices almost $2/barrel higher today. Prices have been on a roll since last Friday, 21 December and have gained more than $5/barrel since then. Prices once again crossed the $96/barrel mark today. Price also rose as the greenback slipped against its rival currencies.

For the day ending Monday, 26 December, 2007, crude-oil futures for light sweet crude for February delivery closed at $95.97/barrel (higher by $1.84/barrel or 2%) on the New York Mercantile Exchange. Futures rose as high as $96.6 earlier in the day. Prices are 57% higher than the year before.

The Turkish military announced today that its warplanes hit eight suspected Kurdish rebel hideouts in northern Iraq. Today's bombing raid was at least the third air operation in Iraq this month. Iraq has the world's third-largest crude-oil reserves.

Also, traders anticipated today that in tomorrow's weekly inventory report, EIA will report a drop of 1.2 million barrels in crude inventory. This also led to crude price shooting up.

In the currency market today, the dollar index, which tracks the value of the greenback against a basket of other currencies, fell for a third day, down 0.6% to 77.14.

Brent crude oil for February settlement today rose $1.24 (1.3%) to $93.94 on the London-based ICE Futures Europe exchange.

Today, January natural gas rose as crude oil and related products rose. Gas for January delivery rose 2.1 cents (0.3%) to settle at $7.046 per million British thermal units

Against this backdrop, January reformulated gasoline gained 6.86 cents to $2.4526 a gallon and January heating oil rose 4.65 cents to $2.6412 a gallon.

As per EIA, global oil markets will likely remain tight through 2008 and monthly average oil prices are expected to near $85 per barrel over the next year. The IEA, an adviser to 27 nations, said global demand in 2008 will rise 2.5% to 87.8 million barrels a day.

The Energy Department is scheduled to release its weekly report on inventories tomorrow at 10:30 a.m. in Washington, a day later than usual because of Christmas.

Daily Technical Analysis

Nifty — The index opened on a positive note and witnessed a steady rise throughout the day's trading session. It ended the day with gains of 86 points.

Sustains above 10 dma — The index is sustaining above the 10 dma on a closing basis, suggesting the upswing is likely to continue. On the upside, we expect the index can test higher levels around 6185 (high of 13 December 2007). On the downside, we believe that it has support around the 6025 levels with lower support around the 10 dma at the 5945 levels.

Conclusion — Expect the upswing to continue.

JK Cement, Pharmaceuticals

JK Cement
Cluster: Cannonball
Recommendation: Buy
Price target: Rs330
Current market price: Rs218

Capacity expansion to drive growth

Key Points

  • The capital expenditure (capex) plans of JK Cement are on track. The company completed its expansion at Nimbahera plant by raising the capacity from 3.5MTPA to 4MTPA. It is in the process of setting up a 3.5MTPA plant in Karnataka by December 2008 along with a 50MW captive power plant (CPP).
  • It has acquired Nihon Nirman with a capacity of 0.4MTPA at an acquisition and refurbishing cost of Rs100 crore, taking JK Cement's total capacity to 4.4MTPA.
  • Acquisition of Nihon Nirman will lead to savings of Rs200 per tonne in freight cost, as claimed by the management.
  • The company has also lined up a capex plan to set up CPPs. It plans to set up a 43MW CPP which will include a 20MW pet coke fired generation unit, a 13MW waste heat recovery power plant and 10MW turbines.
  • The company is investing in capacity addition along with investments in power generation. Going forward, the production cost per tonne will reduce because of initiatives taken by the company to invest in CPPs. At the current market price of Rs218 the stock is trading at a price-to-earnings multiple of 6.2x discounting our FY2008 earnings estimate and at 7.8x times discounting our FY2009 earnings estimate. On increased capacities JK Cement trades at an enterprise value (EV)/tonne of USD80.

SECTOR UPDATE

Pharmaceuticals

Teva launches generic Protonix
Teva, the world's largest generic company, has launched the generic version of Wyeth/Altana's Protonix tablets in the USA on December 24, 2007 triggering off 180 days of exclusivity period for the product. Protonix is Altana's blockbuster drug for acidity and oesophageal reflux and is marketed in the USA by Wyeth. The product generated sales of close to $2.5 billion in 2006.

Stocks you can pick up

 Mahindra & Mahindra

CMP: RS 823.55

Target price: RS 939

Religare has initiated coverage on Mahindra & Mahindra (M&M ) with an 'accumulate' rating as it feels that new launches over the next two years will completely revamp the company's utility vehicle (UV) portfolio and help sustain its market position.

The brokerage also expects competition to remain moderate apart from a rebound in growth rates of tractors. "Tractor sales will recover in FY09 driven by good monsoons, increase in prices of agricultural products, increase in allocation of funds towards rural credit and softening of interest rates" , says the report. "Till FY10, M&M is unlikely to face any serious competition in its key segments ie UVs, LCVs, tractors and three wheelers. Threat from new entrants also appears to be low till FY10, after which competition in UVs could intensify" , adds the report.

The brokerage also feels that M&M's joint ventures with international players can create substantial value in the coming years and the near term trigger will be the listing of Mahindra Holidays. The brokerage has valued M&M at Rs 939 based on a sum-of-the parts (SOTP) valuation method.

Jaiprakash Hydro-Power

CMP: RS 125.60

Target price:

NA ICICI Direct has advised investors to book profits in Jaiprakash Hydro-Power (JHPL) as its feels that the stock is fairly valued at the current price factoring its business model and steady cash flows. "At the current price of Rs 128, the stock is trading at 34.43 times FY09 earnings, 25.50 times FY09 EV/EBITDA and 7.4 times FY09 P/BV. We advise investor to book profits" , says the report.

The brokerage further adds that the company plans to form a joint venture company, Jaypee Powergrid Ltd, with Power Grid Corporation of India (PGCIL) to set up the transmission system for the 1,000-MW Karcham Wangtoo Hydoelectric Project in Himachal Pradesh. While JHPL will hold 74% of the equity, the remaining 26% will be held by PGCIL. ICICI Direct has valued the the venture at Rs 16 per share for Jaiprakash Hydro-Power .

GMR Infrastructure

CMP: RS 239.55

Target price: RS 358

Emkay has maintained a 'buy' rating on GMR Infrastructure after the company announced the placement of 16.52 crore shares at a price of Rs 240 to qualified institutional buyers (QIBs).

However, the brokerage has revised the target price downwards to factor in the increased equity capital. "We continue to maintain a buy recommendation with a revised price target to Rs 358 per share (down 2% from Rs 367). We have revised our price target downwards to account the increase in the equity capital of the company" , says the report. "Our price target is arrived at from the embedded value of each of the projects undertaken by GMR Infrastructure and as the company develops more projects our target price would be revised to include the value of the new projects" , adds the report.

On a different note, the brokerage feels that the government's stand that GMR's Delhi Airport can raise funds by way of deposits and charge lower lease rentals for the commercial property to be developed adjacent to the Delhi International Airport will prove positive for the company. "This would enable GMR to collect about Rs 30 billion (Rs 3,000 crore) as interest refundable deposits for the first parcel of 50 acres of land" , says the report.

Tata Chemicals

CMP: RS 386.20

Target price: RS 444

Asit C Mehta Investments has initiated coverage on Tata Chemicals with a `buy' rating on account of growth from its fertilizers and inorganic segment. According to the brokerage, the company's net sales is expected to grow at a CAGR of 11% and PAT at a CAGR of 17% in the next two years.

"The company's competitive advantage stems from its inorganic segment, mainly soda ash business. The domestic demand is expected to grow at a CAGR of 6% to 3.037 mn. tonnes in 2010 from 2.546 mn. tonnes in 2007 led by increase in consumption from glass industry and soap & detergent industry," said the brokerage in a note to its clients.

TCL is also in the process of de bottlenecking its Urea plant at Babrala, where the Urea manufacturing capacity would increase from 0.86 mtpa to 1.2 mtpa. TCL's foray into new businesses like Khet Se and Bio-fuel , would help the company to exploit new opportunities arising from the growing retail segment and need for alternative energy segment respectively.

BSE Bulk Deals to Watch

 26/12/2007 532282 AMTEK INDI L WARBURG PINCUS INTERNATIONAL LLC AC STONERIDGE INVESTMENT LTD B 2900000 203.98
26/12/2007 532282 AMTEK INDI L BLUECREST SPECIAL SITUATIONS MASTER FUND LIMITED S 2900000 203.90
26/12/2007 532747 DECCAN AVIAT KINGFISHER RADIO LTD B 1640000 275.00
26/12/2007 526717 GOPALA POLYP INDUSTRIAL DEVELOPMENT BANK OF INDIA LTD S 100000 11.48
26/12/2007 500186 HIND.OIL EXP REKHA JHUNJHUNWALA S 1721355 169.01
26/12/2007 532187 INDUS IND BK HINDUJA VENTURES LTD B 1977391 124.00 26/12/2007 532187 INDUS IND BK ASHOK LEYLAND LTD S 2000000 124.01
26/12/2007 523218 KILBURN OFFI IDBI LTD S 75000 12.70
26/12/2007 532481 NOIDA TOL BR CREDIT SUISSE SINGAPORE LIMITED S 1400000 57.98
26/12/2007 532529 NDTV LTD. PRANNOY ROY B 4835850 400.00 26/12/2007 532529 NDTV LTD. G A GLOBAL INVESTMENT LIMITED S 4836000 400.00

Post Market Commentary

 The Sensex opened with a positive gap of 87 points at 19,941, and breached the 20,000-mark in early deals.

A minor bout of profit-taking saw the index drop to a low of 19,897, but renewed buying in heavyweights like Reliance, SBI and L&T saw the index zoom to a high of 20,211.

The Sensex finally closed with a gain of 338 points (1.70%) at 20,192.

The BSE Oil & Gas Index moved up 3% to 13115. The BSE Smallcap Index was also up 3% at 12,342.

The market breadth was extremely bullish - out of 2,945 scrips traded, 2,278 scrips logged gains today.

INDEX GAINERS....

Reliance led the rally with a gain of nearly 4% (Rs 109) at Rs 2,897.

SBI moved up 3% (Rs 69) to Rs 2,399.

L&T gained 2.6% (Rs 105) to Rs 4,194.

DLF moved up 4% to Rs 1,014.

Hindalco, Tata Steel, Tata Motors, BHEL and Reliance Energy also finished with gains of over 3% each today.

....AND LOSERS

Bajaj declined 1% to Rs 2,682. ONGC was also down 1% at Rs 1,236.

MOST ACTIVE COUNTERS

Reliance Petroleum was the most active counter with a turnover of Rs 241 crore followed by Essar Oil (Rs 219 crore), NDTV (Rs 213 crore), Reliance Energy (Rs 199 crore) and Reliance (Rs 173 crore).

Bulk Deal Watch

 26-DEC-2007,AIRDECCAN,Deccan Aviation Limited,KINGFISHER RADIO LIMITED,BUY,2360000,275.00,-
26-DEC-2007,HINDOILEXP,Hind. Oil Exploration ,MATTERHORN DY EQ FUND,BUY,1770000,168.90,-
26-DEC-2007,HINDOILEXP,Hind. Oil Exploration ,RAKESH JHUNJHUNWALA,SELL,1035250,168.80,-
26-DEC-2007,HINDOILEXP,Hind. Oil Exploration ,REKHA JHUNJHUNWALA,SELL,750000,169.07,-
26-DEC-2007,MICROTECH,Micro Technologies (India,RELIANCE CAPITAL TRUSTEE CO LTD,SELL,70507,280.31,-
26-DEC-2007,NOIDATOLL,Noida Toll Bridge Company,CREDIT SUISSE (SINGAPORE) LIMITED A/C CREDIT SUISSE (SINGAPO,SELL,2300000,57.74,-
26-DEC-2007,PRECWIRE,Precision Wires India Ltd,RELIANCE CAPITAL TRUSTEE CO. LTD-A/C RELIANCE TAX ,SELL,74147,159.92,-
26-DEC-2007,ZICOM,Zicom Electronic Security,ARISAIG INDIA FUND LTD,SELL,70269,229.27,-

Sensex moves above 20000

A late spurt in index heavyweight Reliance Industries on Wednesday saw the Sensex and Nifty close above the 20,000 and 6,000 marks, respectively, after remaining firm throughout the day. Even so, midcaps and smallcaps outperformed the benchmarks.

Bombay Stock Exchange's Sensex settled at 20,192.52, up 1.70 per cent or 338.40 points. It touched an intra-day high of 20,211.47. The low was 19,896.61.

National Stock Exchange's Nifty ended at 6070.75, up 85 points or 1.43 per cent. It scaled a high of 6085.25 from a low of 5988.45.

Investor interest in second rung shares saw the BSE Midcap Index end up 2 per cent and BSE Smallcap Index 3 per cent higher.

However, volume has been low the last few sessions on account of thin investor participation. The NSE today clocked a turnover of Rs 15,693 crore against Rs 18,235.85 crore week ago.

"Although the Nifty has recovered smartly, the low volume is a cause of concern. Only if the Nifty breaks 6185 decisively, can the index see a good upmove," said Manas Jaiswal, senior technical analyst with Emkay Shares & Stock Brokers.

Shares of oil & gas companies posted smart gains. State-owned HPCL surged 6.78 per cent, BPCL added 5.46 per cent and IOC gained 6.55 per cent. Reliance Industries rose nearly 4 per cent.

After lying low for most of the day, the BSE IT Index ended flat. Satyam Computer finished up 1.04 per cent, Infosys Technologies inched 0.15 per cent higher and Wipro was up 0.07 per cent.

DLF (up 4.35%), Hindalco Industries (4.18%), Reliance Industries (3.90%), Tata Steel (3.51%), Tata Motors (3.3%), State Bank of India ( 2.97%) and BHEL (2.63%) were the biggest Sensex gainers.

Bajaj Auto (down 1.14%), TCS (0.99%), ONGC (0.90%), Hindustan Unilever (0.39%), HDFC (0.27%) were the laggards.

Across BSE, 2,283 shares advanced, 639 declined and 23 remained unchanged.

Market Close : Party mood continues...!

It was a strong season for the markets after a gap up start despite global cues were quiet for the day. Markets continued its northward journey and ended higher on the back of value buying across the board. Buying support was seen is sectors like Auto, Capital goods, Metal, Power and Banking while selected IT & Pharma stocks saw some level of profit booking but markets managed to trade above the 20,000 mark . In the final hour of trading indices witnessed consolidation near the day's highs with strong gains. Market is anticipating a better 3QFY08 results which heads up investors confidences and led markets to continue the buoyant momentum. Midcaps and smallcap indices have outperformed. Market roller over position is healthy near to 60% roll over from Dec series to Jan 08 series which is inline with the market expectation. Key European markets were closed today.

Markets also reacted positively on the news that Government has allowed all trusts to invest in securities including shares and bonds of listed Companies. This move will have more inflow in markets which is booming. Large number of trusts such as schools, temples and private hospitals having huge resources will be able to invest their funds in the market. Trusts had a corpus of nearly Rs 25,000 crore by the beginning of the decade according to data gathered by the government for tax purposes.

Sensex ended up by 345 points at 20199.52.It was helped up by gains in Hindalco (209.4,+4 percent), RIL (2896.7,+4 percent), TISCO (892.75,+4 percent), Tata Motors (752.1,+3 percent) and SBI (2399.3501,+3 percent). Restricting the gains were Bajaj Auto (2681.8999,-1 percent), TCS (1097.75,-1 percent), ONGC (1236.2,-1 percent), HLL (214.7,0 percent) and HDFC (2889.45,0 percent).

Lok Housing was on limelight for the day & ended up10% circuit. Lok Housing & Constructions (LHCL) a company of Lok group mainly in the suburbs of Mumbai. Lok Surabhi , Lok Kedar , Lok Everest, Lok Malhar and Lok Nisarg at Mulund, Lok Yamuna at Marol , Lok Amber at Ambernath, Lok Prabhat at Virar are some of the projects executed by the company. It is planning to commence premium projects in Mumbai and at other places like Pune, Vasai, Bangalore,Turbhe. Till date Lok Housing has completed 31 projects over 17,000 units and 9mn sq.ft area. Lok housing has a good amount of land bank and some valuable salt pans plots are still under litigation. We like the business model. Chances are that the owners may manage it in their favour given the history of such cases between the Government and Corporates. Keep watching this space for more updates.

Karuturi Networks zoomed to close 10% up. Karuturi the largest rose player in the world. It has 2 segments of business, Horticulture and ISP. More than 90% of the revenue comes from the flower business. Karuturi has a total capacity of 650 mn stems. It has 10 hectares in India with 10 mn stems capability inhouse and another 25 mn stems which are managed through contract farming. 100 hectares are operational in Ethiopia with a capacity of over 100 mn stems. Karuturi Networks has been allotted additional 450 hectares of land by the Government of Ethiopia for its expansion and diversification projects. The Kenyan acquisition of Sher brought in about 525 mn stems. Globally 40,000 hectares of land is under rose cultivation. However, the field sizes globally are fragmented and are not over 200 acres. Karuturi is one of the big players here now. Feb is the peak season and we are positive on this business. Do read our research note to know more ??

Technically Speaking: Markets have outperformed the benchmark indices giving positive breadth. It made intraday high of 20,211 and days low of 19,897. Volume was good at Rs 7,620crs. The breath was in favor of Advances, where Advances stood at 2236 and Declines at 652. Sensex resistance stands at 20500 and support lies at 20,020.

Post Session Market Commentary

The market closed with handsome gains on the back of heavy buying pressures across the counters. The investors showed their eagerness in buying to book their positions. Since from the initial bell the market keeps on trading on the front foot through out the trading session. The market also got a further direction on the back of reports that government has allowed all trusts to invest in securities including shares and bonds of listed companies. The Metal, Capital Goods and Oil & Gas indices scrips remained in the limelight as most buying is seen from these baskets. Both the BSE Mid cap and Small Cap closed higher by 189.15 points and 361.92 points at 9,400.86 and 12,342.49 respectively. The BSE Sensex closed with heavy gains of 338.40 points at 20,192.52 and NSE Nifty closed higher by 85.65 points at 6,070.75. Overall, the market breadth was strong as 2,283 stocks are closed in green while 639 stocks are closed in red.

BSE Metal index surged 470.55 points to close at 19,291.34. Scrips that grew are Bhushan Steel 10.30%, Sh Precoated 6.57%, Hindalco 4.18%, Jindal Steel 3.56%, Tata Steel 3.51%.

BSE Oil & Gas index grew by 437.67 points to close at 13,115.99. Pushed up by Essar Oil 7.93%, HPCL 6.78%, IOCL 6.55%, BPCL 5.46%, Reliance industries 3.90% and RPL 3.39%.

BSE Capital goods index inclined by 430.43 points to close at 19,654.31. Jumped by Crompton Greaves 6.09%, BEML 3.79%, Punj Lloyd 3.78%, BHEL 2.63%, L&T 2.57% and ABB 2.39%.

BSE Realty index closed up by 291.47 points at 12,109.99 as Ansal Infra 9.42%, Parsvnath 7.87%, DLF 4.35%, Sobha Dev 2.72%, Mahindra Life 2.45% and Indbul Real 2.28% closed in green.

BSE Bankex index advanced by 188.34 points to close at 11,290.08. Scrips that grew are Kotak bank 4.74%, IOB 3.41%, Andhra bank 3.15%, Andhra bank 3.15%, BOI 3.05% and SBI 2.97%.

BSE IT index closed with marginal gains of 10.26 points at 4,591.87. Scrips that gained are Karut Net 10%, Aptech 4.41%, I-Flex 3.54%, Rolta India 2.97%, Finance tech 1.51% and Satyam 1.04%.

Sensex garners 338 points

The market surged today led by rally in index heavyweight Reliance Industries. The market got a boost from reports the government has allowed all trusts to invest in securities, including shares and bonds of listed companies.

Oil & gas, metal, capital goods and power stocks were in demand. IT stocks slipped. Mid-cap and small-cap shares gained momentum. The market breadth was strong. 25 out of 30 stocks from the Sensex pack were in green. Asian markets, which opened before Indian markets, were mixed. Key European markets were closed today, 26 December 2007.

The government on Monday, 24 December 2007 allowed all trusts to invest in securities, including shares and bonds of listed companies. Accordingly, charitable trusts, including educational institutions, hospitals and religious trust, will be able to access the market. The move will give a boost to the already-booming equities market as a large number of trusts, such as schools, temples and private hospitals having huge resources will be able to invest their funds in the market. Trusts had a corpus of nearly Rs 25,000 crore by the beginning of the decade, according to data gathered by the government for tax purposes.

The 30-share BSE Sensex jumped 338.40 points or 1.70% to 20,192.52. Sensex touched a high of 20,211.47 in late trade. At day's high it rose 357.35 points.

The broader CNX S&P Nifty rose 85.65 points or 1.43% to 6070.75.

Investors appear to have begun building positions in anticipation of strong Q3 December 2007 results which are due next month.

The BSE Mid-Cap index rose 2.05% to 9,400.86. The BSE Small-Cap index rose 3.02% to 12,342.49. Both these indices outperformed the Sensex.

The market breadth was strong. On BSE, 2283 shares advanced as compared to 639 that declined. 23 shares were unchanged.

BSE clocked a turnover of Rs 7620 crore compared to Monday (24 December 2007)'s Rs 5,694.27 crore.

Nifty December 2007 futures were at 6076.50, a premium of 5.75 points as compared to the spot closing of 6070.75.

The NSE's futures & options (F&O) segment turnover was Rs 96,144.43 crore, which was higher than Rs 80,577.10 crore on Monday, 24 December 2007.

India's largest private sector firm by market capitalization & oil refiner Reliance Industries jumped 3.90% to Rs 2896.70.

The BSE Oil & Gas index rose 3.45% to 13,115.99. It outperformed the Sensex. HPCL spurted 6.78% to Rs 340.10, Indian Oil Corporation jumped 6.55% to Rs 692.55, BPCL flared up 5.46% to Rs 475.45, and GAIL India rose 2.92% to Rs 538. However, ONGC, India's biggest oil exploration firm in terms of revenue, fell 0.90% to Rs 1236.20.

The BSE Metal index rose 2.50% to 19,291.34. It outperformed the Sensex. Hindalco Industries jumped 4.18% to Rs 209.40, Sterlite Industries gained 2.64% to Rs 1026.85, and Hindustan Zinc rose 2.59% to Rs 791.25. National Aluminum Company lost 1.66% to Rs 438.10.

The world's sixth-largest steel maker Tata Steel rose 3.51% to Rs 892.75 on reports the company is eyeing the Western Cluster Iron Ore deposits in Liberia, for which it has already submitted a bit. The Western Cluster consists of several deposits spread over 207.58 square kilometer and the investment is likely to be around $1.5 billion.

India's largest steel producer in terms of sales Steel Authority of India (Sail) rose 0.60% to Rs 270.05 on reports the company will invest Rs 20,000 crore in West Bengal.

The BSE Capital Goods index rose 2.24% to 19,654.31. It outperformed the Sensex. Bharat Heavy Electricals jumped 2.63% to Rs 254.65, Larsen & Toubro rose 2.57% to Rs 4193.85, HEG spurted 3.83% to Rs 562.65, BEML gained 3.79% to Rs 1669.79, and Jaiprakash Associate rose 2.70% to Rs 431.65.

The BSE Auto index was up 1% to 5,642.90. It underperformed the Sensex. India's top tractor maker by sales Mahindra & Mahindra (M&M) rose 1.21% to Rs 833.55 on reports that the company is all charged up for its retail foray. The retail foray will be through Mahindra Intertrade, a subsidiary of M&M that has thus far been selling LEGO toys and other kids products.

India's top car maker by sales Maruti Suzuki India rose as much as 0.31% to Rs 993.25 after the company said it will raise prices of some vehicles by 2-3% in January 2008 because of higher raw material costs.

Tata Motors gained 3.31% to Rs 752.10, Hindustan Motors jumped 4.37% to Rs 54.90, Ashok Leyland rose 1.83% to Rs 50.20, Exide Industries spurted 5.07% to Rs 77.70 and Escorts gained 2.59% to Rs 150.55.

The BSE IT index rose 0.22% to 4,591.87, off day's low of 4,526.14. It underperformed the Sensex. Infosys Technologies rose 0.15% to Rs 1813.60, Wipro gained 0.07% to Rs 535.70, and Satyam Computers rose 1.04% to Rs 459.30. However, TCS fell 0.99% to Rs 1097.75.

The BSE Banking index rose 1.70% to 11,290.08. India's largest private sector bank by assets ICICI Bank rose 0.95% to Rs 1219.40.

India's largest commercial bank State Bank of India rose 2.97% to Rs 2399.35 on reports it plans to merge all the associate banks with itself by March 2009.

Kotak Mahindra Bank jumped 4.74% to Rs 1252, Indian Overseas Bank rose 3.41% to Rs 180.55, Karnataka Bank flared up 3.27% to Rs 217.75, and Andhra Bank gained 3.15% to Rs 106.50.

Telecom stocks were in demand. India's largest listed cellular service provider by market share Bharti Airtel rose 1.28% to Rs 982.55. India's second largest listed telecom service provider by sales Reliance Communications jumped 2.46% to Rs 743.15. India's third largest listed telecom service provider by sales Idea Cellular rose 0.73% to Rs 131.55.

North-based telecom service provider Spice Communications jumped 5.36% to Rs 62.90 on reports that the board of the company has decided to sell 875 telecom towers to a tower operating company.

Telecom service provider Gemini Communication soared 10.05% to Rs 230.60 after the company bagged an order worth Rs 200 crore from BSNL.

State run telecom equipment maker ITI was locked at upper limit of 10% at Rs 63.40 on reports the firm is seeking a Rs 2,000 crore government aid to wipe out accumulated losses and to obtain working capital for telecom equipment manufacturing. A committee has been set up by the centre to finalise the package. The share may be under action on likely government aid.

The BSE Power index rose 2.08% to 4,443.76. It outperformed the Sensex. Reliance Energy gained 2.58% to Rs 2111.95, Power Grid Corporation of India rose 3.33% to Rs 141.05, Tata Power gained 1.66% to Rs 1348.15, and NTPC rose 1.31% to Rs 239.35.

Diverisified firm Assam Company was locked at upper limit of 5% at Rs 47.05 on reports that the company plans to hive off oil and gas business unit into separate subsidiary.

Anil Dhirubhai Ambani group firm Reliance Capital (RCL) soared 7.25% to Rs 2624.85. Earlier on 22 December 2007, some reports suggested that Reliance Capital's unlisted subsidiary Reliance Technology Ventures (RTVL) had invested in US-based telecom solution provider Stoke Inc for an undisclosed sum. The US-based firm enables telecom operators to solve security services problems across different broadband access.

Reliance Petroleum clocked the highest turnover of Rs 241.99 crore on BSE. Essar Oil (Rs 219.91 crore), NDTV (Rs 213.27 crore), Reliance Energy (Rs 199.78 crore) and Reliance Industries (Rs 173.99 crore), were the other turnover toppers on BSE that order.

GV Films registered the highest volumes of 2.41 crore shares on BSE. Ispat Industries (1.93 crore shares), IKF Technologies (1.79 crore shares), Bellary Steels & Alloys (1.23 crore shares) and Reliance Petroleum (1.08 crore shares), were the other volume toppers on BSE in that order.

Asian markets were trading mixed today, 26 December 2007. Key indices in China, Japan and Singapore were up between 0.62% to 1.23% . However, key indices in Taiwan, and South Korea were down between 0.13% to 0.66%.

US market finished higher on Monday, 24 December 2007 after credit worries eased following news Merrill Lynch will receive an investment of up to $6.2 billion from Singapore's government-controlled investment fund, Temasek Holdings, and US-based money manager Davis Selected Advisors. The Dow Jones industrial Average rose 98.87 points at 13,549.33. The Nasdaq Composite Index, finished higher by 21.51 points at 2,713.5. S&P 500 finished higher by 11.99 points at 1,496.45.

Oil prices edged higher today, 26 December 2007, on new supply concerns amid expectations that data from the US will show a new decline in its oil inventories. Light, sweet crude for February delivery added 26 cents to $94.39 a barrel in Asian electronic trading on the New York Mercantile Exchange, Singapore.

Sensex ends on bullish note

Riding on the back of three straight sessions of gains, the Sensex opened firm at 19,941 and crossed the 20,000 mark by mid-morning trades. Short coverings in December derivative contracts and firm global cues triggered major buying in Sensex stocks in morning trades. The Sensex rallied sharply as investors continued to roll over positions to January series and the Sensex touched an intra-day high of 20,212 by afternoon. The market remained buoyant for the entire trading session on substantial buying support from oil, metal, and capital goods stocks. The Sensex finally wrapped up the session with gains of 1.70% or 338 points at 20,193. The Nifty advanced by 1.43% or 85 points at 6,071.

The breadth of the market was positive. Of the 2,945 stocks traded on the BSE, 2,283 stocks advanced, 639 stocks declined and 23 stocks ended unchanged. All the sectoral indices on the BSE ended in positive territory. The BSE Oil & Gas ended firm with gains of 3.49% at 13,121,the BSE Realty index rose 2.82% at 12,152 and the BSE Metal index added 2.34% at 19,262.

Action in several index heavyweights lifted the market. DLF led the pack and shot up by 4.35% at Rs1,014. Hindalco soared 4.18% at Rs209, Reliance Industries surged 3.90% at Rs2,897, Tata Steel flared up by 3.51% at Rs893, Tata Motors jumped by 3.31% at Rs751, SBI added 2.97% at Rs2,399, BHEL advanced by 2.63% at Rs2,555, Reliance Energy moved up by 2.58% at Rs2,112 and L&T was up 2.57% at Rs4,194. However, Bajaj Auto slipped 1.14% at Rs2,682, while TCS at Rs1,098, ONGC at Rs1,236, HLL at Rs215 and HDFC at Rs2,889 dropped marginally.

Over 2.41 crore GV Films shares changed hands on the BSE followed by Ispat Industries (1.92 crore shares), IKF Technologies (1.79 crore shares), Bella Steel (1.23 crore shares) and Reliance Petroleum (1.08 crore shares).

Valuewise, Reliance Energy registered a turnover of Rs199 crore on the BSE followed by reliance Industries (Rs173 crore), Reliance Communications (Rs145 crore), L&T (Rs68 crore) and DLF (Rs52 crore).

Wednesday, December 26, 2007

INOX

The Inox stock has gained almost 60 per cent in one month. Can it hold up the trend?
The Indian entertainment industry has just about started evolving into an organised value chain, with a demarcation of the producer from the distributor, and further, the latter from the exhibitor.
It may so happen that few businesses attempt to capture more than one of these stages of the value chain, depending upon their business mix.
Despite this, whether it is Bhool Bhulaiya, Om Shanti Om or Saawariya, there is one common benefactor of each of such blockbusters who reaps the rewards long after the producers have moved on to their newer ventures and the distributors start hunting for the next big thing.
Ideally, it would be a multiplex that can screen all the three flicks together! However, the tide is strong enough to sweep gains to the feet of all the theatres, single screen or multiplexes, dabbling in these waters.
Inox Leisure, one of the four strong contenders in the organised movie exhibition business, has been aggressively opening new multiplexes. It also has a robust pipeline of signed properties that should help it in having about 170-180 screens by FY09.
Although competitors are scaling up fast, there still appears plenty of headroom for multiplex players to increase their spread in tier-II and tier-III cities where the middle class is burgeoning with ever fatter pockets full of rising disposable incomes.
On track
Inox has tied up over 45 properties for its outlined expansion plan of increasing the number of screens to 170-180 by FY09, from 76 screens at 22 properties currently. Besides enhancing its footprint in tier-I cities, the company's focus has also been on a number of tier-II and tier-III cities in order to maintain an even spread across the vast geography.
After being signed up, these properties may take anywhere between 6-24 months to be ready for operations. Alok Tandon, chief operating officer at Inox Leisure outlines the benefit of this lead time: "Since we sign up our properties at the early stages of a mall, Inox does not only get lower rentals, but also is an anchor tenant."
Unlike its peers such as Cinemax or Adlabs, Inox has a low exposure to Mumbai with just two properties in the city, comprising of six screens. Mumbai earns the highest box-office revenues, which pumps up the fortunes for other players.
However, as movie-going culture spreads across the country, other territories too are likely to match up the box office contribution from the financial capital, thus putting Inox in a better position to compete at a pan-India level.
More in store
In order to spread its foothold in quality locations, Inox has signed an exclusivity agreement with Pantaloon Retail. This agreement entitles Inox with a right of first refusal for setting up a multiplex at those properties where a Pantaloon outlet is being set up.
At its existing multiplexes, in order to attract higher realisations, Inox plans to convert a row or two of its seats to recliners. This would help the company catch up with its competition, of which a couple of players already offer recliner-seats at their multiplexes, raising the average ticket price (ATP).
Grim numbers?
During the second quarter of FY08, Inox's financials included the results of the amalgamated entity, Calcutta Cine, which rendered the consolidated numbers incomparable with the previous quarters.
However, occupancy rates fell q-o-q – from 39 per cent in Q1 FY08 to 37 per cent in Q2 FY08 -thus suggesting that revenue growth came only from the rise in the number of seats.
But, the lower occupancy rates in the last quarter was due to an increase in total number of seats consequent to the launch of two new properties; occupancy rates at new multiplexes typically take some time to take-off.
Operating margins too, remained subdued due to an overall increase in entertainment tax, as the tax exemption tenure for a number of its properties ended.
"As new tax-exempt properties will be added, the increase in entertainment tax is likely to be nullified," claims Tandon. Going by the expansion plans, this appears likely to take effect.

Although the numbers of Calcutta Cine have not been published, analysts believe that it operated at lower margins compared to Inox. This too, could be one of the reasons behind lower operating profits of Inox during the last quarter. However, expanding its profitability hereon may be a tough cookie for the company as it may be vulnerable to higher lease rentals at new properties.
On the positive side, the contribution from food and beverages has been high for the company, which takes its spend per head (SPH) to about Rs 150, which is toward the higher end, by industry trends.
Again, its multiplexes are located at prime locations in the cities it is present, which attracts a higher income consumer footfall, thus providing it a potential cushion in the event of an economic downturn.
Valuation
After trading flat at around Rs 116, the Inox stock has risen 63.7 per cent in a month, to Rs 194.15. The spurt is likely to have come due to rumours of the Reliance ADA group, which owns Adlabs, intending to make a bid for the company.
Reliance Capital has increased its stake in Inox from 7 per cent to 9 per cent this month, thus providing additional fuel to the fire.

Rumours aside, the company has charted out its growth plan for an aggressive expansion. It has also witnessed an appreciation in the value of its two owned properties owing to the real estate boom, which has increased the value of the company. However, the extent of the increase in the value of its real estate remains to be estimated.
At Rs 194.15, the stock trades at a price-earnings multiple of 34.7 times and 27.3 times estimated FY08 and FY09 earnings respectively. Over the past year, Inox has been underperforming the sector consistently. Merely going by the fundamentals, the counter still appears to have quite some steam left in it.
If the rumours materialise, they may provide important triggers for a further rise. Long term investors may however want to keep an eye on the counter and enter at dips, considering Inox's ambitious plans vis-à-vis the potential of the multiplex sector. Risk takers may want to take a plunge right away.