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Friday, May 27, 2011

Buy Axis Bank, says VK Sharma

Buy Axis Bank, says VK Sharma of HDFC Securities.

Sharma told CNBC-TV18, "I think the weakest in the banking sector seems to be State Bank of India where fundamentally we would expect one more quarter of the Chairman picking up the broom and cleaning some more act. So from that perspective there is more to follow fundamentally.”

He further added, “If you look at the position from derivative perspective this is the only stock in which we have seen 78% open interest addition and this is still in the new settlement, it continues to be the largest company having the open interest at 1,593 crore, more than Reliance. So from this perspective there is lot of shorts that are still in the system and it needs to come out. So this is one sector, this is one company which could lead the sector down although you have seen buying coming in the likes of Axis Bank but although we have a buy call for a trader, one can buy Axis, one can buy 1,200 calls at Rs 40 and hope to sell at Rs 60.”

“But this is a function of where open interests are added on the last day. So we are not very sure, we don’t take what movement that happen on last day as sacrosanct so that will be suspect. So keep a stop loss of around Rs 30 in this.”

Rupee seen up as Asian peers, shares rise

indian rupee, us dollar

The rupee is expected to open stronger on Friday buoyed by gains in other regional currencies and shares, while the dollar's losses versus the euro is also seen helping sentiment.

The euro rose after a drop in US Treasury yields dented the dollar, and gave the single currency some respite from a recent sell-off on worries over the possibility of debt restructuring by Greece.

The index of the dollar against six major currencies was down 0.26% at 75.356 points at 0237 GMT, compared to 75.577 points when the rupee market closed on Thursday.

The MSCI index of Asian stocks ex-Japan was up 0.73% and the Nifty India stock futures traded in Singapore were up 0.7%, suggesting a firm start to the domestic sharemarket.

The partially convertible rupee ended 0.1% stronger on Wednesday at 45.30/31 per dollar.

Traders expect the rupee to open around 45.20 and move in a 45.15 to 45.35 band.

SEBI halts listing of Vaswani Industries shares

The Securities and Exchange Board of India (SEBI)

The Securities and Exchange Board of India (SEBI) has halted the listing of securities of Vaswani Industries , whose initial public offering of shares had closed on May 3, saying subscriptions in the qualified institutional and high networth categories was artificially inflated.

"Certain applications were submitted to artificially inflate the subscriptions in QIB and HNI category to attract and mislead the investors," the stock markets regulator said in a statement.

"Post the closure of the issue, the same applications are being withdrawn by way of stop payment, stop allotment, cheque return, wrong cheque dates, etc," it said.

Alleging that this was a "pre-planned move" amongst the promoters, lead managers and other operators, SEBI said the listing of securities of Vaswani should be stopped till an investigation of the withdrawal of applications is completed.

SEBI said a detailed investigation shall be initiated and completed within 30 days from the date of the order.

Investors should be given an exit option so that securities allotted to them during the IPO can be withdrawn, before permitting the listing, the regulator added.

Vaswani Industries had fixed a price band of of Rs 45 to Rs 49 per share for its initial public offering of 10 million shares. It had appointed Ashika Capital Limited as the book running lead manager to the issue.

Sensex, Nifty trading below 200-DMA; Indian market in bear phase

Stock market, stock market news, sensex, indian sensex news, nifty news
A key technical stock market indicator is signaling a protracted gloom for Indian equities, reviving memories of a similar downtrend two years ago. Benchmark share indices Sensex and Nifty as well as broader indices such as the BSE-200 are trading below their 200-day moving average, or 200-DMA, an indication that Indian markets are in bear territory.

A decline below 200-DMA means that new buyers of indices or stocks are not willing to pay more than the average price of the previous 200 days. While Sensex and Nifty are about 6% below their 200-DMA, more than 75% stocks on the BSE-200 are below the mark, a technical sign of pessimism.

The downswing in equities market is also evident in Asian peers such as China's Shanghai Composite and Singapore's Straits Times that are trading below this mark, analysts said. The classic definition of a bear market is when key indices fall 20% below their peaks, though the 200-DMA gauge is also widely used.

"We are clearly in a bear market at the moment," said Alex Mathews, head-research, Geojit BNP Paribas Financial Services . "Charts are pointing to a downtrend and a reversal looks difficult unless there are positive cues," he said.

The Indian markets last experienced a similar trend in March 2009 when shares were reeling under the impact of a global financial meltdown, and almost 78% stocks on the BSE-200 were below 200-DMA, Enam Securities said in a report. The difference between the two periods is that the Sensex is at about 18,000 now, almost 12% below peak, while it was nearing 8,000 in early March 2009.

Liquidity Remains Global Concern

Foreign funds have dumped Indian shares, pulling down the markets in recent weeks as stubborn price pressures and the central bank's aggressive monetary tightening threaten to hurt growth and dent corporate profits. Overseas investors have net sold Indian stocks worth Rs 8,200 crore so far in May, dragging down benchmark indices 5%. They have pulled out almost Rs 3,500 crore on a net basis so far this year, after investing about Rs 1.33 lakh crore in 2010.

Liquidity remains a concern globally and investors will closely watch the foreign flow trend post-June, when the Federal Reserve's bond purchase, or the second round of quantitative easing, comes to an end, analysts said. Overseas markets have been jittery over the closing of the bond buyback that pumped billions of dollars into global stocks and commodities in the last couple of years. Though there is consensus in the market that the undertone may remain weak, any sharp decline from current levels may take investors and traders by surprise, analysts said.

"Monthly and quarterly charts are showing bearish trends. While there may be a brief upmove to about 5,550 levels over the next couple of weeks, the trend over the next two months shows the Nifty is likely to fall 15% to around 4,500 levels," said Sandeep Wagle, managing director, Aptart Technical Advisors.

Nifty seen higher; Tech Mahindra, Tata Motors watched

The 50-share Nifty index is seen opening higher on Friday while Asian markets drifted in red after euro slipped to a record low against Swiss Franc and a slight pull back in commodity prices weighed on the markets.

US economic data on Thursday showed the economy grew at an annual 1.8 percent rate in the first three months of the year, weaker than most forecasts. The weak economic data weighed on commodity markets, particularly oil, which dropped more than 1 percent overnight, but showed some signs of stability on Friday, according to a report.

Increasing concerns of high inflation, rising borrowing costs along with Europe debt crisis will keep investors on the edge. Also, surging inflations fanned concerns of further tightening by the Reserve Bank of India.

Food inflation rose to a four-week high of 8.55% for the week ended May 14 as prices of cereals, vegetables and milk rose during the week. Food inflation was up a sharp 1.08 percentage points during the week from 7.47% in the previous week, official data showed.

Markets ended the May F&O series with intense last minute tussle between options buyers and sellers while the Nifty managed to close above 5400 should give some heart to the bulls.

"There is a fair chance that markets will see a sharp pullback back to 5500 levels on the Nifty in the next few trading sessions", says Kunal Saraogi, CEO, Equityrush. Traders must initiate long positions on select stocks with tight stop losses. Automobiles and pharma companies look best positioned on the charts and may lead the recovery, he adds.

According to a report, benchmark share indices - Sensex and Nifty as well as broader indices such as BSE-200 are trading below their 200-day moving averages indicating markets are in a bearish phase.

The benchmark index is still down 1.5 per cent on the week and nearly 6 per cent down for the month of May but losing interest of FII in Indian markets which pulled out nearly $1.7 billion this month remains key concerns for investors. The benchmark index slipped more than 12 per cent in 2011.

At 07:50 A.M, the Nifty India stock futures in Singapore trading 63 points higher.

Shares in Tata Motors will be in focus after the largest truck and bus maker posted its highest-ever quarterly consolidated profits for the March 2011 quarter in line with the Street's expectations. Profits were mainly driven by higher sales at home and at its Jaguar and Land Rover unit, but warned of competition and high commodity prices

Shares in State Bank of India will be in focus after the biggest lender said it will submit the revised proposal to the government for Rs 20,000 crore right issue next month.

Other important results to watch out in today are - Bank of Baroda , HDIL, NHPC, Reliance Infra and Reliance Power .

Stocks to watch:

HPCL after the state-run refiner posted 48 per cent jump in quarterly profits from a year earlier. The company has also revived plans to build in a consortium a $10 billion refinery-cum-petrochemical project in Vizag city.

BGR Energy after the power project firm said it expects its sales to grow by 15 per cent in FY12 and expect good order flow.

Zee TV after the company it has joined hands with Murdoch's News Corp, Star India to distribute their television channels in the domestic market.

According to sources, Coal India is in talks to buy up to 40 per cent stake in Indonesia's Golden Energy Mines. The shares of the company are expected to move higher in trade today.

Reliance Industries after the largest company by market value has submitted an expression of interest to buy Australia's Premier Coal. According to sources, RIL is likely to initiate due diligence on the assets of Premier Coal.

Tech Mahindra after the India's No. 5 software company reported 59 per cent drop in fourth quarterly profits on account of legal expenses incurred by Mahindra Satyam.

Shares in Aanjaneya Lifecare will be watched in today's trade which lists on India bourses today.

Cairn India after a Group of Ministers (GOM) are likely to decide today (1630 hours) if the government should approve Cairn Energy Plc's sale of stake in its Indian unit to mining group Vedanta Resources.

Wednesday, May 25, 2011

Sensex to touch 24000 sometime during the year: Raamdeo Agrawal

Sensex News, stock market news, sensex updates, stock market updatesIn an interview with ET Now, Raamdeo Agrawal , Jt. MD, Motilal Oswal Financial Services , talks about contra investing and his contra calls.

Define contra investing for us.

The stock which does not deserve popular opinion is what is called contrarian kind of view. You make money when you buy a stock which is absolutely unpopular, because most of the money is made in this kind of stock when the perception changes. Perception is the driver of PE. If the perception of the stock is negative and from there it changes to positive to a PE multiple of 10 to 100, it makes you a lot of money.

Has contra investing worked for you?

I am not a contra investing type. However, in one or two situations, I bought in the past and was very successful in those ideas. I had bought Calcutta Electric 5-6 years back at about Rs 13. The whole company was available at about Rs 90 crores. There were factors like monopoly into Calcutta, employing transmission and profitability and they were highly leveraged and the interest rates fell from 13-14% to around 6-7%. We did a ratio called interest cost to the market cap and it turned out that interest was 3 times or 4 times more than the total market cap and hence the impact of the interest rate decline would have been most on Calcutta Electric. People around me from Calcutta told me that it looked worse than BMC office and I couldn't even stand there. They told me not to look at it and that was the reason it was at Rs 13.

What prompted you to buy that stock?

I had a very bullish view on change in the value of a stock once the interest rates declined and we saw major decline in the interest rates. I wanted to buy something which was getting hurt due to the high interest rate scenario at that point of time and would be significant beneficiary. Calculated business was very stable and it had a good reputation in Calcutta under RPG management but yet the net profit after tax was low because it was heavily leveraged and West Bengal Government was disputing about what costs were allowed to be passed on. As the interest rate came down, the profits that were marginal or negative shot up by 4-5-6 times because all the interest became benefits to the company. The stock flew from Rs 13-14 to around Rs 150 in 2 years time and then I sold it at about Rs 120. The stock further went up to Rs 400-500.

Rupee nears 3-month low on local shares, euro weakness

The Indian rupee fell further in afternoon trades on Wednesday to hover near its three-month lows as concerns of dollar outflows heightened on the back of the continuing fall in local shares.

* The persistent weakness in the common European unit also weighed on the rupee, traders said.

* At 1:45 p.m., the partially convertible rupee was at 45.41/42 per dollar, weaker than the last close of 45.21/22.

* The rupee had last crossed the 45.43 level on Feb. 25, and if it breaches this level, it could drop to near 45.50 before any support is seen, traders said.

* The euro was at $1.4026 and the index of the dollar against six major currencies was at 76.227 points. * The euro fell on Wednesday, as investors including hedge funds cut bullish bets on mounting worries over Greece's finances, with many traders expecting the single currency to test key support levels on charts.

* Indian shares extended losses to more than 1 percent in afternoon trades on Wednesday as fresh worries about Europe's spreading debt crisis and weak Asian markets dampened investor sentiment.

* The actively traded one-year onshore forward premium was 247.75 points against 248.25 points last close.

Tuesday, May 24, 2011

Sensex close in green, Bankex gains.....Nifty below 5400

BSE Sensex ended at 18,011 adding 19 points. Nifty closed at 5,398 adding 12 points.

After a steep fall on Monday, the Indian markets ended with modest gains on Tuesday amid some volatility ahead of the F&O expiry. The key stock indices started off with smart gains despite weak cues from the US and European equity markets. However, the Asian indices recovered from the previous session's drubbing and European markets too managed to break the recent sequence of losses. As a result, the sentiment on Indian bourses too improved.

FMCG, Realty and PSU stocks were among the major laggards. On the other hand, Capital Goods, Consumer Durables and Banking stocks were in demand.

Domestic headwinds like inflation and policy stalemate on key issues continue to haunt the Indian markets. Technically, the NSE Nifty could find meaningful support around the 5340 levels. While on the upside the 5490 levels could be the near term resistance for the index.

The fact that the crude oil has softened in recent days also supported the Indian markets. Results from the likes of L&T, Bajaj Auto, BHEL, Gail and ITC have been well received by the markets as well.

"Volatility could escalate ahead of the F&O expiry. Overall mood will hinge on upcoming results, FII flows, possible policy announcement, monsoon and of course overseas markets.Safety of one’s portfolio should be top priority. So, avoid undue risk taking.
There could be a minor bounce after a steep selloff but don’t aggressively buy into it as there could be further weakness. One will get opportunities in the coming days to pick up quality stocks for medium- to long-term perspective," says Amar Ambani, Head of Research (India Private Clients) - IIFL.

The BSE Sensex ended at 18,011 adding 19 points. It had earlier touched a day's high of 18,110 and a day's low of 17,933. It opened at 18,016. The NSE Nifty closed at 5,398 adding 12 points.

The European markets were trading in the green, the FTSE index was up 1%, CAC index was up 1.3% and DAX index was up 1.4%.

Outside the index, the major gainers were Patni, Shriram Trans, Jub Food, Biocon and Canara Bank. Among the major loses were DB Realty, Bharat Forge, PFC and Tata Global.

Multi-cap MFs yield best in SIP

Systematic investment plans (SIPs) have been observed to be the simplest and most useful wealth creation tools in the hands of average retail investors. But here too, diversity in portfolio helps. SIPs in multi-cap or diversified equity mutual funds(MFs) have given more bang for the bucks both in the long and short run.

Analysis shows that while SIPs in the best performing diversified funds generated average returns of 7.4% in the past year (till April 30), top large-cap funds gained 5.5%. Mid-cap funds slipped 1.7% during the period. Diversified funds gave 32.4% annual gains in the three-year period under the SIP route compared to 22.7% and 25.9% returns generated by large-cap and mid-cap equity MFs. "SIPs work well with diversified equity funds," says Srikanth Meenakshi, co-founder and director, FundsIndia, an online investing platform.

The average annual returns through SIPs of diversified funds are higher than their peers in the five-year period as well. Multi-cap funds invest across market capitalisation and are not biased towards any particular theme, sector or style. This gives fund managers the much-needed flexibility to make quick changes depending on market conditions.

"Their (diversified funds) ability to move into different m-caps has given them the edge (over peers)," says Anil Rego, CEO, Right Horizons, a wealth management firm.

These funds have benefited from astute sector moves, which have ensured robust performance. For instance, a leading diversified MF nearly doubled its exposure to auto stocks between August 2010 and April 2011, which improved its fortunes.

The underperformance of small and mid-cap stocks, which usually rise and fall at a faster pace than other categories, has also enabled diversified funds to stay on top. Analysts say that diversified funds are also capable of outperforming large cap funds.

Analysts further say that though these funds tend to sway with market swings by investing more in momentary best performers, they are less risky than mid-cap and thematic funds. Though diversified MFs should form an essential part of the portfolio, investors should carefully examine the quality of fund management, their 3-5 year performance and track record of the asset management company before making a decision, say experts.

Satyam-Tech Mahindra merger likely in 2012: report

The report stated that the company is in talks with the US regulator, Securities and Exchange Commission (SEC), to clear certain issues

The merger of Mahindra Satyam with its parent company Tech Mahindra will take place by 2012, according to a report.

The report stated that the company is in talks with the US regulator, Securities and Exchange Commission (SEC), to clear certain issues and is hopeful of its relisting on the New York Stock Exchange (NYSE).

Mahindra Satyam chief executive C P Gurnani has reportedly said that the company plansto add about 12,000 staffers over the next four to five quarters.

Sensex regains 18,000 level in opening trade

BSE Sensex, Sensex News, News From NSEThe BSE benchmark Sensex regained the 18,000 points level in opening trade on Tuesday, shooting up by over 113 points on a fresh spell of buying by funds and retail investors, taking cues from the firming trend on other Asian bourses.

The 30-share index of the Bombay Stock Exchange, which lost 332.76 points in the previous session, recovered by 113.45 points, or 0.63 per cent, to 18,106.78 in the first few minutes of trade today, with oil and gas, auto, banking, realty and consumer durable stocks leading the recovery.

Similarly, the wide-based National Stock Exchange Nifty index also moved up by 28.50 points, or 0.53 per cent, to 5,415.05.

Brokers attributed the recovery in stocks to fresh buying by funds and retail investors, driven by a firming trend on other Asian bourses.

In addition, covering-up of pending short positions ahead of monthly expiry in the derivatives segment of the National Stock Exchange on Thursday also supported the recovery, they said.

Meanwhile, Japan’s Nikkei index was trading 0.11 per cent higher and Hong Kong’s Hang Seng Index gained 0.10 per cent in early trade today. The US Dow Jones Industrial Average ended 1.05 per cent lower in yesterday’s trade.

Monday, May 23, 2011

Rupee down 20 paise against U.S. dollar in early trade

The Indian rupee depreciated by 20 paise to Rs 45.21 against the U.S. dollar in early trade on the Interbank Foreign Exchange on Monday, weighed down by dollar gains against the euro and other currencies overseas and a subdued trend in the equity market.

Forex dealers said the strengthening of the dollar against major currencies overseas and a lower opening in the domestic stock market mainly put pressure on the rupee.

The rupee ended 4 paise lower at Rs 45.01/02 against the American currency in the previous session on Friday on the back of demand from importers as the dollar gained in the global market.

Meanwhile, the Bombay Stock Exchange benchmark Sensex fell sharply by 219.10 points, or 1.19 per cent, to 18,106.99 in opening trade today.

Nifty down below 5450; Sesa Goa, IDFC, HDFC down

Indian markets were witnessing profit booking as sentiments turned bearish globally on concerns of global economic recovery. Banks, metals and auto stocks led the decline while FMCG space showed some resistance.

"Things have turned a little sour for world equity markets in May. Investors seem to have taken the old axiom of 'sell in May and go away' seriously; and they have been lucky so far. India has been no exception with the key indices on a mostly downward spiral. The slide is likely to persist at least at the start of the last week of the month.

The US and European stocks slid amid lingering worries over the precarious fiscal conditions of Greece and other peripheral eurozone nations. The dollar has advanced while the euro has hit a record low versus the Swiss franc. Asian stock markets are down 1-2% this morning. Crude oil is hovering around $100 a barrel mark.

Indian markets did recover some ground late last week, but the overall outlook remains murky. Things could get volatile in view of the F&O expiry on Thursday. The near-term sentiment will hinge on global cues and results of a few top companies. The onset of monsoon will be another key event to keep an eye on," said IIFL report.

At 9:45 am; National Stock Exchange's Nifty was at 5432.25, up 54.10 points or 0.99 per cent. The broader index touched a high of 5456.70 and low of 5417 in trade so far.

Bombay Stock Exchange's Sensex was at 18159.68, down 166.41points or 0.91 per cent. The 30-share index hit a high of 18269.06 and low of 18106.99 in early trade.

BSE Midcap Index slipped 0.55 per cent and BSE Smallcap Index moved up 0.42 per cent lower.

Amongst sectoral indices, BSE Bankex was down 1.53 per cent, BSE Metal Index moved 1.46 per cent lower and BSE Auto Index slipped 1.29 per cent. BSE FMCG Index was up 0.37 per cent.

Sesa Goa (-3.74%), IDFC (-2.51%), HDFC (-2.25%) Tata Motors (-2.13%) and Kotak Bank (-2.13%) were the top Nifty losers.

GAIL (0.96%), ITC (0.91%), BHEL (0.71%), Bharti Airtel (0.16%) and Siemens (0.05%) were amongst the major gainers.

Market breadth was negative on the NSE with 1051 declines as compared to 649 advances.

Meanwhile, Asian markets were witnessing some selling pressure. Nikkei 225 was down 1.34 per cent, Hange Seng fell 1.74 per cent and Taiwan Weighted slipped 1.31 per cent.

Saturday, May 21, 2011

ITC turnover up 17 pc to Rs. 30,604 crore

The ITC posted yet another stellar performance in its Centenary Year of operations recording an impressive topline growth and high quality earnings reflecting the robustness of its corporate strategy of creating multiple drivers of growth.

Gross turnover for the year grew by 17 per cent to `30,604.39 crore. Net turnover at `21167.58 crore grew by 17 per cent primarily driven by a 23 per cent growth in the non-cigarette FMCG businesses, 23 per cent growth in agri business and 18 per cent in the hotels segment.

Pre-tax profits increased by 21 per cent to `7268.16 crore, while post-tax profits at `4987.61 crore registered a growth of 23 per cent. Earnings Per Share for the year stood at `6.49 (previous year - adjusted for Bonus Issue - `5.34).

Vedanta plans $1.5 billion bond issue to fund Cairn deal

Vedanta Resources will issue $1.5 billion bonds to help it finance its $9.6 billion Cairn India deal, a move, experts say, shows the company is close to complete the deal, now pending for over 10 months.

Vedanta will start a global roadshow on Monday and expects the funds to replace its earlier short-term bridge loan.

“We’ll raise $3.5 billion from bank loans, $1 billion from equities and this bond issue,” Vedanta Resources chief financial officer, Tarun Jain told DNA, adding that this is a part of the $6 billion deal financing Vedanta has in place to acquire Indian assets of Scottish oil & gas explorer, Cairn Energy.

Barclays, Citigroup, Credit Suisse, Royal Bank of Scotland Group and Standard Chartered are managing the bond issue.

Vedanta has already tightened its grip over Cairn India after acquiring an 18.5% stake in it, including 10.4% stake from Malaysia’s Petronas for $1.5 billion and 8.1% stake through an open offer by subsidiary, Sesa Goa.

The company has been left frustrated as New Delhi dithers on approving the remaining control of 40% stake in the Rajasthan-focused oil explorer.

“Vedanta expects to use the proceeds of the offering for, among other things, to finance a portion of the purchase price for the acquisition and to pay related fees and expenses, which will result in a cancellation of commitments under a bridge facility for a total aggregate amount of up to $1.5 billion.,” Vedanta informed the LSE on Friday.

“(Today’s news) shows that the company is closest than ever to close the deal,” a Mumbai-based analyst at a foreign brokerage said on the condition of anonymity.

On Thursday, Cairn Energy extended the deadline for completing the deal without setting any new one ahead of the May 20 deadline expiry. The company first expected to close the deal by March 15 - after announcing the deal on August 16 last year - and later hoped to close the transaction by April 20.

Not surprisingly, Vedanta is still unsure if the group of ministers, which meets on May 27, will approve of the deal, as the company statement said that in case the acquisition failed to get government nod, it will use the proceeds to “fund capital expenditure, repay debt and for other general corporate purposes.”

Cairn India is locked in a messy royalty dispute with state-controlled Oil and Natural Gas Corporation (ONGC) and New Delhi is debating if the resolution of the issue should be set as a precursor to the country’s biggest cross-border acquisition.

ONGC, which pays 100% royalty on production from Cairn’s Rajasthan block to the Rajasthan government despite holding only 30% stake, wants the agreement to be tweaked. Both Cairn and Vedanta strongly disagree with the suggestion, saying any change in financials would make the deal less appealing for their investors.

Wednesday, May 18, 2011

Sensex steady at open...SBI extends losses

At 09:25 am (IST), theBSE Sensex was trading at 18,180, up 39 points over the previous close. It had earlier touched a day's high of 18,218 and a day's low of 18,114. It opened at18,177.

The Indian market has opeBSE Sensex, indian sensex news, sensex newsned with a positive bias, with the BSE Sensex and the NSE Nifty posting modest gains in early morning trade. However, the two main indices are struggling to hold on to the gains as weakness in banking major SBI continues to weigh on the sentiment. The market breadth is not great with the non-index counters too not going anywhere in a hurry.

At 09:25 am (IST), theBSE Sensex was trading at 18,180, up 39 points over the previous close. It had earlier touched a day's high of 18,218 and a day's low of 18,114. It opened at18,177.

NSE Nifty was trading at 5,444, up 5 points over the previous close. It had earlier touched a day's high of 5,460 and a day's low of 5,429.It opened at 5,448.

The BSE Small Cap index and the BSE Mid Cap index were trading flat.

In terms of sectors, FMCG and Capital Goods were leading the rise withthe indices up ~1%. Select, IT, Power and Metal were up marginally. PSU, Auto,Oil & Gas and Banking indices were down 0.5-0.2%.

Wipro, HDFC,ITC, L&T, BHEL, Hindalco, TCS, Bharti Airtel, Power Grid, Hero Honda, RCOMand HUL were among the clear winners on the Sensex and the Nifty.

SAIL, TataMotors, BPCL, Maruti Suzuki, ACC, NTPC, Cairn India and GAIL were among the major laggards in the Sensex and the Nifty.

Shares of mid-cap IT firm Mphasis are down sharply after its US parent Hewlett-Packard announced disappointing outlook overnight. HP shares fell 8% in the US trading.

Among the index heavyweights, Tata Motors and Reliance Industries are in thered while ONGC has recovered. ITC and L&T are up ahead of their results over the next couple of days.

In global action, most Asian markets are trading on a firm footing. European markets closed sharply lower amid sovereign debt worries. US stocks recovered to end off intraday lows. Crude oil in New York is up from a three-month low. In currencies, the yen is at a one-week low versus the euro while the British pound has gained against the dollar.

Market expert: SBI, RIL, Tata Steel may lead Nifty to 5330

In an interview with CNBC-TV18, Jatinder Sharma, Partner, Equity Strategists says, after trading between 5,450-5,460 and 5,600 for past nine sessions, the market has given very valid technical breakdown. “SBI results may have tilted balance firmly in favour of the bearish outcome,” he adds.

He believes that now the levels to look forward would be around 5,330-5,335. “SBI, Reliance and Tata Steel could be the leaders in this particular fall and they might lead it towards 5,330-5,335 kind of levels,” he adds.

Also read: See Nifty in range of 5450-5600 for few days, says Deven Choksey

Below is verbatim transcript of his interview with Reema Tendulkar and Gautam Broker Also watch the accompanying video.

Q: The Nifty has broken that 5,450 mark? Now, what is the kind of downside which is opened up on any kind of trade?

A: I think after trading between 5,450-5,460 and 5,600 on the upside for past nine sessions, the market has given very valid technical breakdown. SBI results may have tilted balance firmly in favour of the bearish outcome. So, I believe that now the levels to look forward would be around 5,330-5,335 levels with some support coming in between around 5,375-5,380 levels.

Q: If we go all the way down to the 5,350 mark, what is primarily going to be leading us downside over there? Any kind of strategy that you have on key banking names or even the banking index now?

A: Along with SBI today, two more heavyweights have seen technical breakdown, Tata Steel as well as Reliance Industries. Reliance Industries was finding support around Rs 935-940 levels. It was expected that it will bounce back again to about Rs 979-980 kind of levels, but it has broken support. Now, it could be headed towards Rs 880-885 levels.

Similarly Tata Steel, it has given a valid breakdown again on daily charts as well as weekly charts. It could shed some more weight in the coming days. So, SBI, Reliance and Tata Steel could be the leaders in this particular fall and they might lead it towards 5,330-5,335 kind of levels.

Q: Technically, what about State Bank of India? What are the charts telling you as key support levels for State Bank of India?

A: State Bank of India was precariously placed around Rs 2,600 levels before the results. It has given a breakdown now. The levels to look forward to in the short run would be around Rs 2,375-2,380 where strong weekly support is seen. So, there could be technical rebound from around those levels.

Q: Do you think there could be any kind of an opportunity in the financial space, any other smaller banks that you like?

A: In the morning, Bank of India was looking good because it was finding support around Rs 390-385 levels. It has found support around these levels for past so many months now. So, a technical rebound could have been expected. Even now, I believe that that stock could be bought at current levels with small risk trade because Rs 385 is the stop loss level for Bank of India and it could go to all the way up to around Rs 435-440 or maybe if the market support, it could even head higher.

Among the largecaps, I believe HDFC Bank is still showing some resilience around Rs 2,240-2,245 levels. So, maybe on semblance of some support around these levels, one could go long in HDFC Bank.

Q: What would you recommend buying in terms of the sectors in the defensive side, pharma, FMCG and maybe IT?

A: FMCG and pharma are looking much better than even IT. In IT, the whole chart pattern is not looking good because of Infosys. Infosys is trading just around its strong support levels, weekly support levels about Rs 2,835-2,850 levels. But it is not showing any inclination to move higher.

TCS might trade in a range. But it is not looking good to give you some decent returns even in the short run. So, we are left only with the FMCG as well as pharma.

In FMCG, Hindustan Unilever looks to be a better chart right now, in fact better than ITC because it has held on to most of its gain for past three-four sessions and absorbed all the profit taking above Rs 305-306 levels. So, it could head towards Rs 320-325 levels over next five-seven trading sessions.

Tuesday, May 17, 2011

Glenmark Pharma inks $613-million licensing deal with Sanofi

Glenmark PharmaceuticalsMumbai's Glenmark Pharmaceuticals has licensed a new biotech drug to France's Sanofi which has the potential to generate revenues of $613 million or 2,734 crore.

Glenmark will receive $50 million ( 223 crore) or 8% of the potential deal value as an upfront payment in the next three months, chairman Glenn Saldanha said at a press conference on Monday.The company also stands to earn double-digit royalties on sales, he said.

Glenmark has sold marketing rights to Sanofi in North America, Europe, Japan, Argentina, Chile and Uruguay. While it has retained co-marketing rights in Russia, Brazil, Australia and New Zealand, in India, it has exclusive rights.

The product, GBR 500, is still in early human trials and being evaluated as a treatment for Crohn's disease or chronic inflammation of the bowels. It could also work in case of number of other inflammatory conditions such as multiple sclerosis and ulcerative colitis, the company said.

Shares of the company touched a new one month high as institutions accumulated large chunks of the stock. The stock touched an intra-day high of 327.80 but then gave up some of its gains to close at 305.15, up 11% from its previous close with volumes nearly twenty five times its two week average. The Sensex closed down 1%.

Of the $50 million, half is expected to flow in June-when the transaction will close-while the balance is subject to assessment of data on the drug. The entire $50 million will be used to repay debt by Glenmark, which had about 1,900 crore debt in fiscal 2011, with a debt to equity ratio of 0.8.

The rest of the money, $563 million, is a total of all milestones or bullet payments that it stands to make if and when the drug makes progress in clinical trials and goes to market. The earliest it can reach the market is 2017.

"It's premature to calculate the drug's potential going forward," said Surajit Pal, pharma analyst at Elara Capital, pointing out that a lot depends on which disease conditions are pursued, and how that market will look in these many years. "As of now, it's a one-time deal," he said.

This is Glenmark's sixth licencing deal since it began new drug discovery a decade ago and it's first for a biologic.

"It is very difficult to cut such a deal, the licensing environment is very tough," said Michael Buschle, Glenmark's president (biologics). "It's hard work, it takes years and now we've been successful."

Siddhant Khandekar, Chief Manager (Research) at ICICI Securities said: "This is a first NBE outlicensing deal done by any Indian company, and we believe it will have a positive impact going forward in terms of revenues."

A majority of analysts across brokerages expects a 8-10 gain per share on an upfront basis from the Sanofi deal. The company's earnings per share (EPS) currently stand at 20.5 for FY12 which could go up to 23.30 for FY13. The stock has a "Buy" recommendation at most brokerages as it is currently trading at 17 times FY13 earnings, which consider to be an attractive level by most.

Drug R&D a high-risk endeavour

The long-term prognosis is less certain. The odds are often stacked against companies doing new drug research. For every drug that comes to market there are seven or eight that fail.

Since 2004, Glenmark has struck five licensing deals for chemical drugs that emerged out of its research laboratory in Navi Mumbai for diseases such as diabetes, pain, and respiratory disease. Of these, four were returned or killed in trials and one -for pain - is currently in development. GBR 500, a product of its lab in Switzerland, is its sixth such deal.

Glenmark entered biologics research in 2006 by establishing a small laboratory in Switzerland with 5 scientists. Unlike several Indian companies researching biotech copycats or biosimilars in the hope of launching them as they go off-patent, Glenmark focused on new biologicals.

In 2007, Glenmark snapped up two biotech drugs in early stages of research from Canadian firm Chromos Molecular Systems for an undisclosed sum. GBR 500 was one of them. Scientists at the Switzerland lab then re-engineered it, and put it through animal testing.

GBR 500 recently completed the first phase of human trials in the US. This judges the drug's safety while successive phases prove safety and efficacy.

Nifty hovers around 5500; market awaits SBI results for cue

Sensex News, BSE Sensex, Indian Sensex News

The Indian markets opened on a subdued note awaiting results of India's largest public sector bank SBI. The limelight was hogged by MSCI India addition stocks in early trade.

At 09.20 hrs IST, the Sensex was up 39.15 points or 0.21% at 18384.18, and the Nifty was up 5.80 points or 0.11% at 5504.80. About 530 shares advanced, 191 shares declined, and 2920 shares remain unchanged.

Buying was seen in capital goods, FMCG, IT and consumer durables stocks. The broader markets too were trading with nominal gains.

Titan Ind, Shriram Transport, Mundra Port, Dabur, Bank of India and Asian paints have been included in MSCI India Index. The stocks have rallied in the range of 2-11%.

Top gainers on the Sensex: TCS, Sterlite Industries, Larsen, Bajaj Auto and Cipla were up 0.-1.1%.

Top losers on the Sensex: ONGC, Hero Honda, NTPC, Wipro and Maruti Suzuki were down 0.5-3.5%.

Government increased upstream subsidy share to 38.5% of total subsidy burden for FY11. Now upstream companies like ONGC will have to bear Rs 30,000 crore in FY11, reports CNBC-TV18, quoting Sources.

According to CNBC-TV18's estimates, SBI's January-March quarter net interest income (NII) is seen at Rs 9176 crore, a growth of 37% as against Rs 6721 crore, same quarter previous year. Its Q4 PAT is seen up 59% at Rs 2963 crore versus Rs 1866 crore, YoY.

Midcap gainers: Kalpataru Power, State Bank of Mysore, CMC, KSK Energy and Berger Paints were up 2.5-6.5%.

Midcap losers: Page Industries, SKS Microfinance, Greaves Cotton, Godrej Proper and Bharat Forge were down 1.4-2.6%.

Smallcap gainers: Unisys Soft, Prime Securities, Ashapura Mine, Nirlon and Money Matters were up 4-6%.

Smallcap losers: Empee Sugars, R M Mohite Inds, Apar Ind, Halonix and Consolidated Co were down 4-10%.

Stocks to watch

Gammon Infrastructure Projects Ltd after it said it would consider issue of preference shares to Gammon India on May 19.

Software services firm CMC Ltd after it won an order from the Life Insurance Corporation of India.

Shalimar Paints after the Financial Express cited sources as saying the paints maker was up for sale and Kansai Nerolac and Sherwin-Williams were in the race to buy it. The company's chief operating officer, Sandeep Sarda, told the newspaper it does not comment on market speculation.

The US markets slid as technology stocks unraveled, and investors worried about the euro zone debt crisis and its impact on the economic recovery. Asian markets also trading in red.

Market cues:
Results Today: SBI, Bajaj Finserv, HT Media, Opto Circuits, Prestige Estates, Petron Eng
FIIs net sell USD 825 million in the cash market on May 13
MFs net buy Rs 14.80 cr in cash market on May 13
NSE F&O Open Int was up by Rs 4393 cr at Rs 1.42 lakh cr
MSCI India additions: Titan Ind, Shriram transport, Mundra port, Dabur, Bank of India, Asian paints

F&O cues:
Total Futures Open Int up Rs 1008 cr and Total Options Open Int up Rs 3385 cr
Total Stock Futures OI add 1.63 cr shares in OI
Nifty Futures OI add 12.11 lakh shares in OI
Nifty discount at 10.3 pts Vs premium at 14.15 pts
Nifty Open Int PCR at 0.96 Vs 1.05
Total Put sheds 4.61 lakh shares in OI
Total Call adds 58.55 lakh shares in OI
Highest OI Outstanding At 5400 Put, 5800 Call and 5600 Call
Nifty 5500 Call adds 29.10 lakh shares in OI
Nifty 5600 Call adds 16.61 lakh shares in OI
Nifty 5400 Call adds 7.35 lakh shares in OI
Nifty 5700 Call adds 3.5 lakh shares in OI
Nifty 5400 Put adds 3.12 lakh shares in OI
Nifty 5600 Put sheds 9.05 lakh shares in OI
Nifty 5200 Put sheds 2.3 lakh shares in OI
Nifty 6000 Call sheds 2.22 lakh shares in OI
Nifty 5800 Put sheds 1.06 lakh shares in OI
Nifty 5500 Put sheds 1.06 lakh shares in OI
India VIX up 4.02 % at 21.46
Deccan Chronicle, PFC and Orchid Chem in F&O ban

(With inputs from Reuters)

Monday, May 9, 2011

Sensex in green; FMCG, metals, oil&gas advance

Buying activity near support levels helped the equities bounce-back in the positive terrain. FMCG, metals and oil&gas provided support while rate sensitive sectors like realty, auto and banks were marginally lower.

At 2:50 pm; Bombay Stock Exchange's Sensex was at 18584.22, up 65.41 points or 0.35 per cent. The 30-share index hit a high of 18643.58 and low of 18367.21 intraday.

National Stock Exchange's Nifty was at 5565.85, up 14.40 points or 0.26 per cent. The broader index touched a high of 5586.05 and low of 5502.40 in trade so far.

BSE Midcap Index was up 0.24 per cent and BSE Smallcap Index moved 0.14 per cent higher.

Amongst the sectoral indices, BSE FMCG Index was up 1.36 per cent, BSE Metal Index gained 1.04 per cent and BSE Oil&gas Index advanced 0.32 per cent. BSE Auto Index was down 0.73 per cent, BSE Bankex declined 0.06 per cent and BSE Realty Index edged 0.01 per cent lower.

Bharti Airtel (3.62%), Tata Power (2.39%), Hindustan Unilever (1.58%), Sterlite Industries (1.43%) and Jindal Steel (1.27%) were the major Sensex gainers.

Tata Motors (-1.74%), Jaiprakash Associates (-1.68%), Maruti (-1.52%), Hero Honda (-1.27%) and Reliance Infrastructure (-1.19%) were the top losers.

Market breadth was negative on the NSE with 1412 losers as compared to 1284 gainers.

Coal India Reaches Record as Price Increase May Lift Earnings

Coal India Ltd. (COAL), the world’s biggest producer of the fuel, reached a record in Mumbai on optimism higher prices will boost fourth-quarter earnings due this week.

Shares of the Kolkata-based company climbed as much as 5.2 percent to 388.9 rupees, the highest price since the stock’s trading debut in November, and traded at 387.8 rupees as of 2:32 p.m. local time. The shares have gained 23 percent this year, compared with a 9.5 percent decline in the benchmark Bombay Stock Exchange Sensitive Index.

The company raised prices by 30 percent for certain grades on Feb. 27., which will increase revenue by 6.5 billion rupees in the year ended March 31, it said in a statement on Feb. 28. Chairman N.C. Jha last month said the company will decide on increasing prices for the second time this year as a revision in wages is due July 1. Earnings are due on May 12.

“There is expectation that profit will rise significantly in the fourth quarter because of the hike in prices,” Rakesh Arora, head of research at the Indian unit of Macquarie Group Ltd., said from Mumbai. “That is boosting share prices.”

Coal India and its units may report a net income of 36.5 billion rupees in the quarter ended March 31, according to the average estimate of nine analysts surveyed by Bloomberg News. Profit was 26.3 billion rupees in the three months ended Dec. 31. The company hasn’t announced earnings from a year earlier.

To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.

RIL cuts headcount; mulls accountability-linked pay for staff

Mukesh Ambani-led Reliance IndustriesBillionaire Mukesh Ambani-led Reliance Industries has cut its headcount for third year in a row and is mulling a salary model where pay is based on accountability and responsibility of its staff.

The company's staff strength fell by 704 workers during the fiscal year ended March 31, 2011, and stood at 22,661 employees.

RIL has disclosed its latest headcount in its 2010-11 annual report, where it also disclosed a new compensation model being mulled over at the company.

"FY-11, saw a significant change in the company's compensation and banding management process. On the variable pay front, efforts are afoot to move towards accountability and responsibility driven variable pay programmes designed uniquely for various levels," it added.

The company's headcount stood at 23,365 employees at the end of fiscal ended March 31, 2010, during which its employee strength had fallen by 1314. During the fiscal year 2008-09 also, the company's headcount had fallen by 808 people.

RIL is one of the biggest employers among the non-IT private sector companies in the country and the company's profitability has been on a sharp uptrend in recent years. During 2008-09, RIL's total headcount had declined for the first time in six years, despite the company hiring more than 1,500 engineers that year.

The steepest fall so far has been in 2003-04, when the headcount fell from 12,915 to 11,358 employees. During 2006-07 it rose by a massive 12,156 people while in 2007-08 the headcount rose by close to 791 employees.

Along with its subsidiaries such as Reliance Retail , the company had a total workforce in excess of 48,000 at the end of 2007-08, according to the company's annual filing for that year for its shareholders.

RIL has not disclosed specific numbers of employees of subsidiaries for the years 2008-09, 2009-10 and 2010-11.

RIL's average employee age stood at 41 years during 2010-11, unchanged from the level in previous fiscal. The average age of employees at the company had increased from 34 years to 39 years during 2008-09.

Saturday, May 7, 2011

Shares of gold lender Muthoot Finance list at 12 per cent premium

Shares of India's largest specialist gold lender Muthoot Finance Ltd listed At Rs 196.60 on the NSE , a premium of 12.34 percent to its issue price.

The company, which raised Rs 9 billion by selling 51.5 million shares through the initial public offering, set its issue price at the upper end of its Rs 160-175 price band.

At 10:35 a.m., the shares were trading at Rs 177.40, a marginal premium to the issue price.

In all eleven anchor investors including Citigroup Global Markets Mauritius, Abu Dhabi Investment Authority , Goldman Sachs India Fund and Baring India Private Equity Fund invested Rs 1.3 billion in the company.

ICICI Securities and Kotak Mahindra Capital Co were the book running lead managers to the issue while HDFC Bank was the co-manager.

The rising prices of gold makes the company's core business stronger, Managing Director George Alexander Muthoot said.

"Borrowing powers of gold owners rise with the prices and this would prove beneficial for us going forward."

Commenting about the interest rates for gold loans, Muthoot said "RBI (India's central bank) has given the direction...hence we will have to take a decision on raising interest rates soon".

The company has a network of about 3,000 branches of which about 60 percent are based in southern India.

Gold prices slips on Akshaya Tritiya

Silver nose-dived by Rs. 6,000 to Rs. 53,200 per kg and gold plummeted by Rs. 225 to Rs.22,120 per 10 grams.

Gold prices has been declined despite heavy buying on Akshaya Tritiya.

Gold plummeted by Rs. 225 to Rs. 22,120 per 10 grams, while Silver nose-dived by Rs. 6,000 toRs. 53,200 per kg.

Akshaya Tritiya, also known as Akha Teej is a Hindu and Jain[citation needed] holy day, that falls on the third Tithi (Lunar day) of Bright Half (Shukla Paksha) of the pan-Indian month of Vaishakha.

The word "Akshaya" means the never diminishing in Sanskrit and the day is believed to bring good luck and success.

There are reports that gold buying festival ‘Akshaya Trithiya’ is expected to boost growth in gold sales in the country by at least 15%..

Air India strike called off

Government agrees to reinstate sacked and suspended pilots

Air India pilots called off their 10-day strike on Friday night (6 May 2011), after the government agreed to reinstate the sacked and suspended pilots and look into their demands within a timeframe.

After the several hours negotiations with the officials of Civil Aviation ministry and the assurance from the Civil Aviation minister Praful Patel that status quo will prevail on cost cutting measures relating to productivity-linked incentive (PLI), the strike was called off by Indian Commercial Pilots Association (ICPA).

The 10-day strike by the Air India pilots demanding pay parity and better working conditions resulted in cancellation of about 90% of the domestic Air India flights and an estimated loss of Rs. 150 crore to the airlines. But it expected that Air India operations will be normalized in the next two days as the pilots have resumed their work from Friday (6 May 2011) night.

Bear hug costs Sensex 1392 pts in 8 days; Hero Honda up 6%

BSE Sensex, Hero Honda Motors, India Stock Market News, KR Choksey Securities, Nifty News, Ranbaxy Laboratories Ltd, SensexThe mood on Dalal Street has not improved yet after the key rates hike and hawkish tone set by the RBI governor Duvvuri Subbarao in a policy meeting on May 3. The Sensex shed nearly 259 points on Thursday, with continuing downtrend for eighth consecutive session.

Experts see earnings downgrade in the quarter ended June 2011 after the 50 basis points hike in repo and reverse repo rate. Interest cost of the companies will increase going ahead as banks have slowly been increasing their lending rates.

Deven Choksey of KR Choksey Shares & Securities feels that people basically want to sit on cash for a simple reason that there is a kind of possibility of earning downgrade happening going forward once this particular oil price hike is announced.

Inflation is a major cause of concern, says Finance Minister Pranab Mukherjee. "Food and oil prices are major inflation factors," he said. Food articles inflation for the week ended April 23 was at 8.53% as against 8.76% in previous week. Fuel group inflation was unchanged at 13.53% during same period. RBI governor has made the move to contain inflation without hurting country's growth.

Robert Prior-Wandesforde, Credit Suisse says that the Indian economy and markets are facing a particularly unpleasant combination of macroeconomic circumstances right now. "This includes high inflation, rising interest rates and the likelihood of downside growth surprises. This situation may continue for some months making us pessimistic about the equity market outlook," he said.
The 30-share BSE Sensex dropped 258.78 points or 1.40%, to close at 18,210.58 and the 50-share NSE Nifty closed below the 5500 mark for first time since March 23, down 77.30 points or 1.40% to 5,459.85, dragged down by 42 shares out of 50.

Choksey feels that the Nifty could possibly stay in range of 5400-5700 because the option traders are basically taking a strong long bet on the 5400 level.

Amit Dalal, Executive Director, Tata Investment Corporation said there would be some more pressure mainly because people have to still adjust their portfolios worldwide. "So there maybe some largecaps where there maybe selling based on global perspective," he said.

Realty, power, FMCG, healthcare, banking, metal, technology and capital goods stocks saw selling pressure today, with respective indices falling 1-3%.

Bharti Airtel plunged more than 3% after less than expected bottomline reported in fourth quarter on dip in margins. India's largest telecom operator reported net profit of Rs 1,401 crore on consolidated basis as against street expectations of Rs 1,740 crore.

Largecaps like TCS, NTPC, ITC, ICICI Bank, Sterlite, HDFC Bank, HUL and BHEL were down 1-3%. Tata Power, Reliance Power, PNB and Reliance Communications plunged 5-6%.

Ranbaxy Labs was the biggest loser on Nifty, with falling 6%. US Federal prosecutors are negotiating a settlement with Ranbaxy that could result in fines and payments exceeding USD 1 billion, as mentioned in the Fortune Magazine, for fraudulent conduct alleged by the FDA, reports CNBC-TV18 quoting sources.

ACC and Ambuja Cements tumbled about another 4% after Holcim increased stake above 50% in both companies.

However, Hero Honda showed outstanding performance today, with rising 6% on short covering. Analysts feel that company's fourth quarter EBITDA performance was better than street expectations.

The broader indices too were down around 1%. Midcap stocks like HDIL, Shriram City, Redington, Hathway Cable and Marico lost 5-8%.

However, Jyothy Labs, Apollo Hospital, United Phosphorous, Tulip Telecom and Religare Enterprises gained 3.5-7%. Rs 474.75 3.51%

About 899 shares advanced as against 1955 shares declined on Bombay Stock Exchange.

Thursday, May 5, 2011

Hold Bharti Airtel; target of Rs 410: KRChoksey

Hold Bharti Airtel; target of Rs 410: KRChokseyKRChoksey has maintained hold rating on Bharti Airtel with a target price of Rs 410 in its May 4, 2011 research report.

“Bharti Airtel, India’s the largest telecom service provider may raise up to USD 1 billion in the form of debentures and will have a tenure of 10 years. The proposal will be put up before the company's board on May 4, when it meets to discuss results for the financial year-ended March 11. The proposal is expected to be cleared during the meeting.Banks and individuals in the global market will subscribe the debentures. The final amount to be raised will depend on the interest rate the company gets and the response from promotional roadshows, the official added.The proceeds of the issue will go towards refinancing part of the debt raised by Bharti to acquire Kuwaiti Zain's operations in 15 African countries.”

“Bharti has debt of USD 13.5 billion as on end of Q3FY11. The average interest rate for the same is 5.5% per annum. We assume that the company will raise USD 1 billion via bonds with coupon rate of 3.5%. Considering this money will be used to retire debt taken for Zain acquisition, it would have a very small impact on net profit margin. Although net profit margins will improve, we believe it will have a neutral impact on valuation as net debt remains unchanged.”

“In the current environment which is growing increasingly competitive, Bharti’s leading market share and diversified business model will give it a strategic advantage over peers. While the results of Q1FY10 clearly indicate a plateau in terms of profitability from the mobile business, the company’s dominant volume growth, visibility of earnings and diversified business model justify its premium compared to peers. 3G roll out; increasing revenues from African market will boost revenues going forward. We have HOLD recommendation on the stock with target price of Rs 410, by assigning 9.5 EV/Ebitda to FY12E earnings,” says KRChoksey research report.

FIIs holding more than 30% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management.Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment

Attachments : BhartiAirtel_KRC_050411.pdf

Wednesday, May 4, 2011

Nifty ends in red; auto, tech, metals down

Indian markets ended in the red after briefly moving into positive terrain. Gains in oil&gas, FMCG and capital goods were offset by losses in auto, technology and metals space.

National Stock Exchange’s Nifty ended at 5537.30, down 27.95 points or 0.50 per cent. The broader index touched a high of 5578.80 and low of 5503 intraday.

Bombay Stock Exchange’s Sensex closed at 18469.36, down 65.33 points or 0.35 per cent. The 30-share recovered from intraday low of 18339.53 and high of 18604.36.

BSE Midcap Index was down 0.45 per cent and BSE Smallcap Index moved 0.54 per cent lower.

Amongst the sectoral indices, BSE Auto Index was down 1.33 per cent, BSE IT Index moved 1.08 per cent lower and BSE Metal Index slipped 1.05 per cent. BSE Oil&gas Index was up 1.2 per cent and BSE FMCG gained 0.36 per cent.

ACC (-6.20%), Ambuja Cement (-5.61%), Bajaj Auto (-4.91%), Dr Reddy’s Laboratories (-4.64%) and Grasim (-4.57%) and were the top losers.

ONGC (5.73%), BPCL (4.18%), Punjab National Bank (3.47%), HDFC Bank (1.76%) and Ranbaxy Laboratories (1.62%) were the major Sensex gainers.

Market breadth was negative on the NSE with 1687 declines against 1110 advances.

GoAir plans $150 million IPO: Sources

Indian budget airline GoAir is planning to raise about $150 million through a public offer (IPO) to fund its operational expenses, two sources with direct knowledge of the matter told Reuters.

The airline has hired Bank of America Merrill Lynch and Edelweiss Capital to manage the offering, said the sources, who declined to be named as the information was not yet public.

The airline will file for the share sale shortly, they said. GoAir’s chief executive officer Kaushik Khona declined to comment.

GoAir is run by Go Airlines (India) Pvt Ltd, promoted by the Wadia group which also runs textiles firm Bombay Dyeing and Manufacturing Company Ltd.

Monday, May 2, 2011

Markets continue to trade lower, bankex slips

Markets continue to trade in the red after opening lower due to weakness in banking and PSU shares. The Nifty declined 27 points, at 5,722 and the Sensex was down 74 points, at 19,065.

Selling pressure was witnessed in Bank Nifty; the index was down 1.8%, at 11,276 due to short build up of positions ahead of the monetary policy tomorrow. Economists expect 25-50 bps rate hike as food prices continue to remain at elevated levels.

Markets may decline further due to selling pressure in State Bank of India (down 3%), ICICI Bank (down 0.8%) and HDFC Bank (down 1.2%) which is dragging the Nifty down.
Navneet Daga, Derivative Analyst, KR Choksey Securities said, "options data is indicating a further decline on the index to sub 5629 levels and 5600 may act as support because it has maximum open interest build up." Daga added, "If Nifty fails to hold above 5750 on closing basis for next two to three sessions, we may see selling pressure getting intense in the market towards 5620 levels and a close below 5750 would lead to further long liquidation of positions."

Selling pressure was also witnessed in BSE PSU index as well, it was down 1.8%. Top losers were mainly PSU Banks-UCO Bank, down 6.7%, Bank of India declined 5.6% and United Bank dipped 4.6%.

BSE Consumer Durables shares continued to the lead the gains; the index was up 1.2%. Videocon Industries zoomed 2.2%, Titan Industries added 1.8% and Gitanjali Gems gained 1.8%. Investors are betting on the consumer driven sectors for the next led of rally. TS Harihar, Co-Head-Institutional Derivatives, ICICI Securities, “the next 10 years belong to consumer driven industries that will benefit from the spending power. Long-only fund managers are betting on consumer driven companies which will experience a multiplier effect on their bottom-line because of increasing demand and shifts in demand patterns."

From the broader markets, midcap and smallcap indices were down 0.5% each. Market breadth was negative, 1442 stocks declined for 982 stocks which advanced.

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