Market may remain jittery

Victory goes to the player who makes the next-to-last mistake.

The Prime Minister was all smiles and flashed the "V" sign before moving the much-awaited confidence motion in the Lok Sabha. Fellow Congress leader and Foreign Minister Pranab Mukherjee went one step ahead, saying that the UPA had secured 276 votes. The confidence displayed by the two senior Congressmen rubbed off on the stock market, with the key indices gaining 1.5% each. A healthy trend in Asian markets and relatively stable oil prices forced the bears on the backfoot for the third successive day.

However, the broader market continued to buck the bullish trend. Market breadth was also negative. Also, institutions (both local and foreign) remained cautious ahead of the crucial trust vote.

In global markets, US stocks ended slightly lower after last week's rally. Oil prices have gained over $2 amid fears of disruption in the Gulf of Mexico from Tropical Storm Dolly. Lack of breakthrough in multilateral talks over Iran's nuclear program too pushed up prices. Markets in Europe rose while Asian markets are marginally down this morning. Japanese shares rose over 1% after yesterday's holiday.

Coming to today's outlook, the market could start off slightly lower. After that the trend is likely to be volatile and rangebound, as most players will stay cautious before the trust vote. The debate on the confidence motion will continue and the vote is unlikely before the close of trading. Uncertainty over the trust vote will keep most players nervous. So, it is difficult to predict a clear direction today. The market's reaction to the outcome of the trust vote will be known only tomorrow.

As for the much-talked about trust vote, it is still too close to call, as Indian politics is highly unpredictable. The UPA is banking on abstentions from the Opposition camp and a few defections as well. Its biggest threat is the emergence of the Third Front (Left-BSP-UNPA). Most political commentators and media expect the Government to survive the trial of strength by a small margin. The bulls will rejoice a UPA win, while a loss will lead to a knee-jerk fall. Once the dust settles, the focus will turn to the fundamentals, which remain fragile. Stay on the sidelines for the day due to the big event risk.

Key Results Today: Alfa Laval, Asian Paints, Bank of Rajasthan, Century Textiles, EMCO, Hanung Toys, IDBI Bank, Indraprastha Gas, Jindal Stainless, Lupin, NIIT Tech, NOCIL, Seamec, Sesa Goa, Siemens, Strides Arcolab, Tata Elxsi and Thermax.

FIIs were net sellers of Rs622.2mn (provisional) in the cash segment on Monday. The local institutions offloaded shares worth Rs2.31bn. In the F&O segment, the foreign funds were net buyers of Rs15.32bn. On Friday, FIIs were net buyers of Rs5.89bn in the cash segment. Mutual funds were net buyers of Rs1.3bn.

Asian markets were trading mixed. The Nikkei in Tokyo rallied 1.3% to 12,969 while the Hang Seng in Hong Kong was nearly unchanged at 22,531. The Kospi in Seoul was down 0.3% at 1557 while the Straits Times in Singapore dropped 0.7% at 2899. The Taiex in Taiwan lost 0.2% at 7074 and the Shanghai Composite in China shed 0.5% to 2847.

US stocks fell on Monday after oil prices rebounded, and investors turned cautious again on the financial sector. Sentiment was also affected by after pharma giants - Merck & Co. and Schering Plough - postponed reporting their quarterly results. Norwegian researchers said a study found a cholesterol drug marketed by the two companies to be ineffective in curtailing a cardiac condition.

The S&P 500 index closed nearly flat at 1,260. The Dow Jones Industrial Average dropped 29.23 points, or 0.3%, to 11,467.34, and the Nasdaq Composite Index lost 3 points, or 0.1%, to 2,279.53.

Market breadth remained positive. Seven stocks advanced for every five that fell on the New York Stock Exchange (NYSE), as all 39 energy companies in the S&P 500 advanced.

Oil prices rebounded strongly, following the largest four-day slide in trading history. Investors focused on a breakdown of negotiations with Iran, as well as Tropical Storm Dolly, which is making its way into the Gulf of Mexico. Light, sweet crude oil for August delivery settled up $2.16 to $131.04 a barrel.

Regular unleaded gas fell to $4.069 a gallon, down from $4.077 the previous day.

Yahoo announced a settlement with activist investor Carl Icahn over its lineup of candidates for board. Yahoo said the board is being expanded to 11 members, one of whom will be Icahn, along with two other added positions from Icahn's proposed slate of nine candidates. Shares of Yahoo slipped by more than 3%. Yahoo was scheduled to report its earnings Tuesday.

After the bell, Apple reported its third-quarter profit jumped 31%, beating Wall Street's expectations. The technology giant earned $1.07bn, or $1.19 per share, 11 cents ahead of Wall Street's expectations. Shares of Apple ended the trading day up 0.6%, but guidance for the coming quarter hit the stock in after-hours trading, pushing the stock down about 4.5%.

After the close, Merck announced that its second-quarter profit beat analyst expectations. Several charges drove second-quarter profit for Schering-Plough down, but adjusted profit results for the quarter topped Wall Street expectations.

Bank of America reported better-than-expected earnings, even as it revealed that its profit plunged 41% in the most recent quarter. After the bell, American Express reported profits that missed expectations badly, citing an economic environment that "has weakened significantly.

In currency trading, the dollar lost ground against both the euro and the yen. In the bond market, Treasury prices mostly increased, and the yield of the 10-year benchmark fell to 4.06%, from 4.08% late on Friday. COMEX gold for August delivery settled $5.70 higher at $963.70 an ounce.

Europe stocks advanced, led by banks. The pan-European Dow Jones Stoxx 600 index rose 0.6% to 282.36 after Bank of America topped earnings estimates. UK's FTSE 100 gained 0.5% to 5,404.30, while Germany's DAX 30 added 0.7% to 6,424.84, and the French CAC 40 was up 0.6% at 4,327.14.

Volatile markets ended with smart gains extending winning streak to third straight trading session. Firm global cues coupled with declining crude oil prices lifted the Indian bourses to open with a positive gap. Thereon key indices turned volatile and witnessed alternate bouts of buying and selling.

However, bulls gained momentum ahead of the trust vote on back of short covering. Finally the Sensex gained 214 points to close at 13,850 and the Nifty surged 67 points to close at 4,159.

Among the 30-scrips of Sensex, RIL, ICICI Bank, HDFC Bank and SBI were among the major gainers. However, the laggards were Satyam and L&T.

In the overall market, 1,163 stocks advanced and 1,368 stocks declined. Whereas, 84 stocks were unchanged.

Volume Toppers…

IDFC was among the most traded counter on the bourses. Others like, RNRL, RPL, JP Associates, Chambal Fertilizer, Satyam, Idea, Renuka Sugar, RPower and ICICI Bank were among the stocks in demand in the liquid universe.

Shares of IDFC declined by over 14% to Rs93.4 after the company may need about US$250mn in equity capital, Morgan Stanley analysts said. A central bank requirement for finance firms to increase capital to 15% of assets, from 10%, will force IDFC to sell stock, the US brokerage added.

Rating companies have asked IDFC to maintain its leverage ratio at five times its capital if it wants to keep its triple A credit rating, Morgan Stanley said. IDFC has reported a 20% increase in net profit to Rs2.17bn in the three months ended June 30, from Rs1.81bn a year earlier.

IDFC's need to raise Tier-I capital in the current year, together with lower earnings growth estimates will cap near-term upside on the stock price, says another broking firm. The scrip touched an intra-day high of Rs112 and a low of Rs92 and recorded volumes of over 1,00,00,000 shares on NSE.

SCI ended flat at Rs207. The board of directors of the company at its meeting held on May 20, 2008 considered the proposal to issue 1 bonus share for every 2 equity shares held and decided to recommend the proposal to the administrative Ministry i.e. Ministry of Shipping, Road Transport & Highways for their approval in terms of the Articles of Association of the Company.

Further the company has said that, the Ministry of Shipping, Road Transport & Highways (MoSRTH) approved the proposal for issuance of 1 bonus equity share having nominal value of Rs10/ each for every 2 equity share held by the shareholders. Therefore, the Board may discuss the proposal at its meeting to be held on July 26, 2008. The scrip touched an intra-day high of Rs216 and a low of Rs203 and recorded volumes of over 1,00,000 shares on BSE.

3i Infotech gained by 1.6% to Rs95 after the company announced that it signed an agreement with Bank of India, to implement AMLOCK(TM), the company's award winning Anti Money Laundering (AML) software.

As part of this agreement, the company would undertake complete system integration, from procurement and installation of hardware including Storage, Database, Middleware, and Report Writer. The scrip touched an intra-day high of Rs99 and a low of Rs92 and recorded volumes of over 8,00,000 shares on NSE.

Dr Reddys Labs advanced by 2% to Rs675 after the company posted a net profit attributable to the shareholders of the parent of Rs919.70mn for the quarter ended June 30, 2008 as compared to Rs1872.30mn for the quarter ended June 30, 2007.

Total Income increased from Rs12624.90mn for the quarter ended June 30, 2007 to Rs15476.10mn for the quarter ended June 30, 2008. The scrip touched an intra-day high of Rs695 and a low of Rs650 and recorded volumes of over 3,00,000 shares on NSE.

SAIL gained by 3% to Rs125 after the company posted a net profit of Rs18.351bn for the quarter ended June 30, 2008 as compared to Rs15.251bn for the quarter ended June 30, 2007. Total Income increased from Rs83.464bn for the quarter ended June 30, 2007 to Rs114.219bn for the quarter ended June 30, 2008.

The scrip touched an intra-day high of Rs128 and a low of Rs121 and recorded volumes of over 50,00,000 shares on NSE.

Kohinoor Foods surged by over 4.5% to Rs107 after the company announced that it is planning to put up own spices manufacturing unit,synergic to its operational Indian food domain. The company is eyeing the chilled foods business and intends to augment its current manufacturing facility by bringing in chilled foods processing capabilities.

KFL's overseas arms in the US and UK - aiming to garner leadership status in their respective countries in the Indian foods business; in UK, Kohinoor has become 4th most popular Indian food brand. The scrip touched an intra-day high of Rs117 and a low of Rs100 and recorded volumes of over 10,00,000 shares on NSE.

Tata Motors is set to roll out pilot batch of 25 Nanos by September 15, 2008. (ET)
Reliance Communications has launched blackberry smartphone in the Indian market. (ET)
ONGC Videsh Ltd, subsidiary of ONGC is gearing to bid for blocks in Eucador jointly with Petro Eucador. (ET)
Tech Mahindra bags US$700mn order from BT for transformation of its IT systems. (ET)
Cipla India may launch copycat version of 20 patented drugs of leading global drug makers.
GVK Power is in talks with three PE players to offload 25% stake in its power business. (Mint)
Idea Cellular offers to surrender two licenses to gain DoT nod for its proposed merger with Spice Communications. (Mint)
Tata Group and Reliance Industries have applied for allocation of captive coal blocks for converting coal into liqui8d fuels. (DNA)
Omaxe Ltd to raise funds for its ambitious affordable housing project from PE players. (DNA)
BSNL defers opening of US$6bn GSM tender to August 30 from July 16. (DNA)
Tata Power to pick up 26% stake in Government of Bhutan promoted 114MW Hydro electric power projects. (BS)
Satyam Computer Services plans to set up IT and BPO development centres in Mexico and Chile. (BS)
Reliance Communications total subscriber base has touched the 50mn mark. (BS)
Bombay High Court will hear the KG Basin gas dispute between Reliance Industries and RNRL today. (ET)
Canara Bank plans to launch a Rs5bn venture capital fund. (BS)
Air India plans to cut tariffs on international routes. (ET)
LIC Housing Finance plans to enter venture funding and plans to start a Rs5bn real estate fund by the end of current fiscal. (BS)
Voltas to raise prices of air conditioners to offset rising input costs. (BS)
Petronet LNG hopes to close a long-term LNG contract soon following its board's in-principle nod. (BL)
IVRCL Infrastructure has bagged five orders worth Rs3.5bn. (ET)
Bank of Baroda plans to open 10 new overseas branches. (ET)
Max Group is looking to list three of its subsidiaries Max India, Max New York Life and Max Healthcare. (ET)
UCO Bank may raise Rs3.25bn through preference allotment of equity shares. (ET)
Dr Reddy to buy out stake of ICICI ventures and Citigroup Venture Capital for US$18mn in Perlecan. (ET)
Glenmark Pharmaceuticals may acquire a medium to large scale specialty pharmaceutical company in US. (BS)
Garware Offshore has taken delivery of its eighth vessel "MV Poorna", a AHTSV at Singapore. (FE)
Bilcare along with US company MeadWestaco Corporation has acquired International Labs, an American pharmaceutical packaging firm. (BS)
Global Vectra plans to start helicopter shuttle services in Mumbai, Bangalore and Kolkata. (ET)
Elder Pharmaceuticals has signed an agreement with California based Cymbiotics to market the latter's six patented drugs in India. (ET)
Max Healthcare set to add four more hospitals tp its network by 2010. (BL)
Max India restructures its JV with New York Life to allow the latter to acquire additional 24% stake at 10% discount to fair market price. (BL)
Kirloskar Pneumatic Co to set up roadrailer manufacturing plant at Nashik. (FE)
Precision Automation and Robotics India bagged a Chrysler deal to build the US car maker's axle assembly plant. (FE)

Economic Front Page

TRAI has questioned all telecom operators with respect to high SMS tariffs. (ET)
TRAI has told DoT to hike entry fee for an all India telecom license, if it wants to impose a one time spectrum fee on all GSM operators who hold radio frequencies above 6.2MHz. (ET)
The government is planning to simplify procedure for warrants issue MNCs on auto FDI route by allowing them to bypass FIPB approval. (ET)
The finance ministry has decided to form a panel to suggest possible changes in the proposed Insurance bill. (ET)
National Housing Bank is planning to buy housing loans from banks and housing finance companies. (ET)
Government has decided to ban all companies from Dubai, China, Hong Kong and Pakistan from investing in port infrastructure projects in the country. (ET)