Indian Stock Markets BSE Sensex & NSE Nifty Outlook for 16-20 Nov 09

Derivatives: Absence of global or domestic triggers may induce horizontal moves going ahead

Though F&O suggest bullishness, the absence of any global or domestic triggers can lead to some sideway moment during the forthcoming days, but retail investors remaining nervous

Following the global market the Indian market continued to spiral up during the week ended 13^th November 2009. The spiral-up during the previous week was mainly driven by the Foreign Institutional Investors (FII) as well as the Domestic Institutional Investors (DII) who were net buyers through-out the week while the participation by retail investors were irrelevant as far as the rise is concerned. They remained net sellers during the week. It shows evident signs of nervousness prevalent in the retail investors mind. Going ahead the market will closely watch any signs of unwinding of US Dollar carry trade. Many are borrowing the dollar and investing in high yielding risky asset, which has been a major factor behind the rally in the Indian market as well. Any rise in interest rate in the US besides US$ strengthening will reverse the carry trade trend and would hit the market severely. The hardening inflation in the domestic market besides policy tightening going ahead will have a significant bearing on the domestic market. The market continued its growth momentum during the previous week with the Nifty rising by 200.30 points to close the week at 4996.45. The Nifty future closed at a premium of 6.20 points at 5002.65 on Friday. The average futures & options (F&O) volume during the week ended 13^th November 2009 was Rs 79228.39 crore.

In the F&O segment both the nifty future and some of the front-line stock future significantly added open interest (OI). For e.g. during the week the nifty added 7.92 lakh shares in OI and the total OI stood at 2.77 crore shares as on Friday. 9.71 lakh shares of OI were added during Friday.

Reliance added 55 thousand shares whereas Tata Steel and Tata Motors added 13.45 lakh shares and 24.81 lakh shares in OI respectively during the week ended 13^th November 2009. Other major front-line stock futures viz- Infosys, ICICI Bank, DLF and Maruti added OI during the week under review, whereas Unitech, Sail and Rcom shed OI.

Volume in the Futures & Options segment of the NSE (Turnover (Rs. Crore.)
Date	Index Futures	Stock Futures	Index Options	Stock Options	Total
30-Oct-09	19335	20280	36957	1765	78337
3-Nov-09	18772	18585	42334	1883	81574
4-Nov-09	16337	18084	35787	2032	72239
5-Nov-09	24104	21408	48721	2265	96499
6-Nov-09	16576	19259	39632	1929	77395
9-Nov-09	15328	17800	38812	1863	73802
10-Nov-09	16991	21511	40210	2296	81008
11-Nov-09	17546	20564	46544	2310	86964
12-Nov-09	18831	19816	41012	2431	82090
13-Nov-09	15878	16889	37663	1849	72278
Source: NSE

Overall the market wide OI on Friday stood at 173.67 crore shares, thus gaining by 2.04 crore shares as compared to the previous trading day. Index future added just 11 lakh shares in OI whereas the major addition was witnessed by the stock futures. (See table OI breakup).

Open Interest (OI) break-up as on 13th November 2009
	Open Interest (OI)*	Change**
Market wide	173.67	2.04
Index Future	3.23	0.11
Stock Future	131.59	0.54
Index Options	11.96	0.25
Stock options	26.89	1.14
* No of shares in crores ** Change is vis-à-vis previous day Source: NSE

In the nifty option segment in-the-money strike nifty call witnessed unwinding of OI whereas at-the-money and out-of-the money nifty strikes witnessed addition of OI signifying fresh call buying at these strikes. However both out-of-the money and in-the-money nifty puts witnessed aggressive put writing signifying strong bullishness as far as the option indicators are concerned.

For the full week under review the nifty 5000 and 5100 strike call added 4.58 lakh shares and 14.34 lakh shares in OI and the total OI of both these strikes as on Friday stood at 38.72 lakh shares and 33.22 lakh shares respectively. The 4800 and 4900 strike puts added 32.25 lakh shares and 43.19 lakh shares in OI respectively during the week under review. Further the 5000 and 5100 strike puts added 32.96 lakh shares and 7.26 lakh shares in OI. Such aggressive put writing of these strikes indicates bullishness as the market expects the nifty underlying to easily cross these strike levels. (See most active Nifty options table).

Most active Nifty options (November series)
	OI
Call
Nifty 4700	2278650
Nifty 4900	3045900
Nifty 5000	3872050
Nifty 5300	1869600
Put
Nifty 4800	6239200
Nifty 4900	5614200
Nifty 5000	4621700
Nifty 5100	1075350
Source: NSE

Top 10 Open Interest (OI) gainers in November series stock futures on 13th November 2009
Scrip Name	OI*	Change*	% Change
TECHM	948600	213600	18
SUNTV	339000	76000	18
JSWSTEEL	3567508	763024	18
PATELENG	726000	127000	15
BOSCHLTD	3000	500	14
PATNI	1004900	133900	12
NAGARCONST	2090000	260000	11
IVRCLINFRA	2666000	286000	10
TCS	4911000	516000	10
SINTEX	547400	56000	9
* No of shares Source: NSE

Top 10 Open Interest (OI) losers in November series stock futures on 13th November 2009
Scrip Name	OI*	Change*	% Change
BANKINDIA	1924700	-265050	-16
BRFL	5027800	-525550	-12
PTC	5205250	-538150	-12
APIL	680400	-70200	-12
ROLTA	3357000	-340200	-11
FSL	25156000	-2432000	-11
LITL	2139214	-160776	-8
UNIONBANK	1523550	-114450	-8
AXISBANK	2807100	-180000	-7
POLARIS	3679200	-226800	-7
* No of shares Source: NSE

Although the market remained at high and the F&O indication are also suggesting bullishness, a lot will depend on the activity in the foreign market in the absence of any major domestic triggers. The market may continue its growth momentum citing global market. Also in the absence of any global or domestic triggers some sideway moment is expected during the proceeding days. The nervousness among retail investors still persists as evident from their lack of participation in the recent rally.

Source:Capital Market

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Indian Stock Markets Review and 9-13 Nov Outlook BSE and NSE

e bulls managed to sustain last week’s momentum, with the BSE Sensex adding 4.3% to close at 16,848 and the NSE Nifty rising 4.2% to 4,998. Better-than expected IIP numbers helped the market in maintaining the bullish tempo. However, the Nifty continued to witness resistance at 5,000 levels through the week.

The BSE Sensex hit an intra-week high of 16,910 and low of 16,147 while, NSE Nifty hit an intra-week high of 5,017 and low of 4,790.

The Foreign Institutional Investors (FIIs) bought shares worth Rs30.15bn during the week. The Domestic Institutions were net buyers to the tune of Rs4.90bn during the week.

The top gainers: The top gainers in the Sensex were Tata Motors (up 8.8%), Reliance Industries (up 8.3%), TCS (up 7.7%), ICICI Bank (up 7.1%) and Infosys (up 6.4%).

The Top Losers: The top losers in the Sensex were Bharti Airtel (down 5.6%), DLF (down 3.1%), Hindustan Unilever (down 1%), Ranbaxy Labs (down 0.5%) and Reliance Power (down 0.2%).

The BSE IT Index (up 6.5): The top gainer in the IT sector was HCL Tech. The stock rose over 10% during the week. The company is reportedly looking for small acquisition over the next year to close gap in service offerings in certain areas like healthcare and lifesciences.

TCS rose over 7.7% during the week. The company said it plans to expand its strategic business alliance with US-based Dow Chemicals.

Infosys was up by over 6% during the week after the company announced that its BPO arm had acquired the US-based back-office firm McCamish Systems for around US$38mn.

Mahindra Satyam surged over 6% during the week. Nearly 27.25mn shares or 2.3% of the company’s equity were offloaded by L&T in a single block trade on the BSE on Friday. The transaction was seen at an average process of Rs112.45, raising almost Rs3.03bn for L&T.

Wipro surged over 6% during the week. According to a report released by IIFL during the week, “While margins are likely peaking at other IT services vendors, we believe Wipro’s IT services margins will continue to expand. Further, margin expansion in the combined entity could be greater, as its badly affected infrastructure unit (WIN) turns EBITDA-positive. YoY, Wipro has improved EBITDA margins in its IT services division by 350bps against 150-250bps of competitors. This is despite its higher hedges putting it at a marginal disadvantage during a period of rapid depreciation of the rupee (11% vs US$). Apart from tighter hiring (1.3% decrease in headcount vs Infosys’s and TCS’s 5% to 7% increase YoY in 2QFY10), the shift in pricing models (~9ppt increase in contribution from fixed-price projects YoY) has released new delivery levers. Guidance for 3QFY10 is strong (4.5% QoQ at top end) and we expect Wipro’s outperformance vs Infosys to continue (Wipro had better QoQ US$ revenue growth than Infosys in six out of the last nine quarters). We reiterate Wipro as our top pick in IT services and recommend a switch from Infosys to Wipro”.

The BSE Consumer Index: The top gainers in the consumer durables space were Su-Raj Diamonds (up 4.2%), Whirlpool (up 4%), Videocon Industries (up 1.8%), Blue Star (up 1.7%) and Mirc Electronics (up 0.9%).

Samtel Color lost over 5% during the week.

The BSE Healthcare Index (up 2.2%): The top gainers in the Pharma sector were Morepen Labs (up 34%), Panacea Biotec (up 12.5%), Strides Arcolab (up 9.9%), Orchid Chem (up 7.2%) and GlaxoSmithKline (up 4.9%).

The top losers were Aurobindo Pharma (down 6.1%), Cadila Healthcare (down 5.2%), Glenmark Pharma (down 2.4%), Dishman Pharma (down 2.3%) and Zandu Pharma (down 1.3%).

Lupin ended almost flat during the week. A report released by IIFL stated that, “Key takeaways from investor meetings that we recently hosted for Lupin’s management add to our confidence that the company will continue its strong performance. The company believes that active promotion of the newly acquired Antara can push its sales significantly above the historical run rate of US$70m per year. Its entry into ophthalmology and oral contraceptives in the US will significantly contribute to overall growth rate. USFDA issues surrounding the Mandideep facility will be resolved sooner rather than later, and the weak margins of 2QFY10 were an aberration. We are raising our FY10 and FY11 core earnings estimate by 3-4%. We also raise our price target to Rs1,610 from Rs1402 and maintain our BUY rating”.

The BSE Banking Index (up 5.3%): The top gainers in the banking space were ICICI Bank (up 7.1%), IOB (up 6.5%), Axis Bank (up 6.2%), Kotak Mahindra Bank (up 6.2%) and Canara Bank (up 5.5%).

The top losers were Karnataka Bank (down 1.1%) and Andhra Bank (down 0.1%).

According to a report released by IIFL during the week, “Bank loan growth has been on a declining trend since peaking in October 2008 and grew at just 9.7% YoY for the fortnight ended 23 October 2009. The lower loan growth can be attributed to lack of demand from individuals and corporates alike. Alternate sources like QIPs and commercial paper have partly offset the fund flow to corporate sector. Banks have been parking their excess liquidity with mutual funds, which in turn have been subscribing to corporate CPs. While we expect some pick-up in loan growth in 2HFY10, full year growth is likely to be below 15%, well below RBI’s targeted 18%. But most private and front-line government banks are expected to grow their loan book at well above the system growth rate. Axis, Yes, PNB, BOB and SBI remain our preferred picks”.

The BSE Auto Index (up 4%): The top gainers in the auto sector were Hindustan Motors (up 27.9%), Tata Motors (up 8.8%), Eicher Motors (up 6.4%) and M&M (up 5.9%).

Hero Honda was up 3.2% during the week. According to reports, Honda said it is committed to its joint venture with the Hero Group, putting to rest speculations of a rift between the partners.

Maruti was marginally up by 0.5% during the week. According to a report released by IIFL during the week stated, “Reports of foreign automakers planning to set up plants in India have been a big overhang for Maruti stock for some time now. For a case study, we looked at the impact new entrants had on incumbents when a similar situation played out in Brazil ten years ago. In the last ten years, since the likes of Renault, Peugeot, Toyota and Honda set up shop in Brazil, they have been able to take only 10% market share from the top four auto makers (Fiat, Volkswagen, GM and Ford), who even now constitute 80% of the market. This corroborates our view that concerns over market share loss for Maruti are overdone. While we agree that increasing competition from the likes of Honda and Toyota will mean some market share loss for Maruti over the next few years, we think the decline will be far slower than what the market seems to be pricing in currently”.

The BSE Oil & Gas Index (up 5.3%): The top gainers in the oil & gas space were Hindustan Oil (up 12.4%), Gujarat NRE Coke (up 7.1%) and MRPL (up 4.3%).

Reliance Industries surged 8% and ONGC added 2.2% during the week after media reports stated that the Oil Minister has proposed a 31% hike in regulated gas prices.

GSPL rose by over 4% during the week after the company announced that it plans to lay, build and operate a natural gas pipeline from Gujarat to Orissa.

The top losers were IOC (down 5.9%), Jindal Drilling (down 1.2%) and Great Offshore (down 0.3%).

The BSE Capital Goods Index (up 3.4%): The top gainers in the capital goods space were LMW (up 7.4%), Greaves Cotton (up 7.2%), Siemens (up 6.7%), Praj Industries (up 5.9%) and HEG (up 5.2%).

The top losers were Dredging Corp (down 4%), Alfa Laval (down 1.8%), BEML (down 0.9%) and BEL (down 0.3%).

The Cement Sector: The top gainers in the cement sector were Gujarat Sidhee (up 18.4%), Grasim (up 5.6%), Kakatiya Cement (up 3.7%), Shree Cement (up 3.2%) and ACC (up 2.9%).

The top losers were JK Cements (down 7.3%), Birla Corp (down 1.5%) and Ultratech Cement (down 0.8%).

According to a report released by IIFL during the week stated, “Cement exports from India declined 40% YoY in the September 2009 quarter, as the key Middle East region turned from supply shortage to excess supply. Withdrawal of Saudi Arabia’s ban on cement export from second week of October further depressed the already-declining cement prices in the Middle East. For exports from India, FOB prices are currently at ~US$40 per tonne—down from US$60 per tonne two quarters ago. With diversion of supplies meant for exports, cement prices in Gujarat have declined sharply in the past month. We expect the decline in export volumes to continue, as supply in the Middle East region is likely to increase sharply”.

The Telecom Sector: The top gainer in the telecom space was WWIL. The stock shot up over 30% during the week after Union Cabinet approved the proposal of the Information & Broadcasting Ministry to issue policy guidelines for Headend-in-the-Sky (HITS) operators. The policy guidelines provides for a framework within which the HITS service providers has to provide services in the country.

Among the other major gainers were Gemini Comm (up 12.8%), Shyam Telecom (up 12%), MTNL (up 7.3%) and Himachal Futuristic (up 1.9%).

The top losers were Bharti Airtel (down 5.6%), RCom (down 2.6%) and Idea Cellular (down 0.2%).

A report released by IIFL during the week stated, “Industry’s QFY10 financial report released by TRAI shows a 0.4% QoQ drop in aggregate gross revenues (GR). The decline was led by B-circles (32% of total gross revenues), in which GR declined by 3.3% QoQ, while metro and C circles grew 2.5% and 2.8% respectively (A circles were flat). In the nine circles where Tata DoCoMo (TD) launched the per-second billing tariff plans, their revenues were up (12% QoQ), RCOM grew 3% QoQ (with this and the decline in the mobile revenues in 2Q reporting to exchanges, the hitherto inexplicable gap is decreasing), while revenues of Bharti, Vodafone and Idea dropped by 2% each. Expect more revenue declines when TD goes national”.

The Realty Sector (down 2.3%): The Realty index was the only loser among the sectoral indices. The top losers in the real estate space were Unitech (down 3.8%), DLF (down 3.1%) and HDIL (down 0.6%).

The top gainers were Sobha Developers (up 10.5%), Akruti City (up 8.8%), Parsvnath (up 4.2%), Mahindra Lifespace (up 3.4%) and Omaxe (up 1.1%).

The Metals sector (up 7.1%): The top gainers in the metal space were JSW Steel (up 17.7%), Bhushan Steel (up 6.4%), Jindal Steel (up 6.1%) and Tata Metaliks (up 4.9%).

SAIL rose over 10% during the week. The Finance Ministry is in talks with the Steel Ministry to sell stake in SAIL.

Source: Indiainfoline

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Time to Sell TTK Prestige and Hawkins ?

The unabated rise in aluminium prices and a possible roll back of excise duty cuts could adversely impact profit margins of two large players in the cookware segment — TTK Prestige Ltd and Hawkins Cookers Ltd. In fact, the next two quarters could be a test of brand strength and pricing power, which have helped sustain the jump in profit margins seen in the first two quarters of the current financial year.

Operating profit margins (OPM) for TTK and Hawkins were at 9.6% and 12.1% respectively during FY 2009. This jumped to 12.9% and 20.7% in the June quarter of FY2010, and to 20.8% and 15.5% respectively in the September quarter. Analysts state that the rise in margins is a function of cost rationalistion and also some pipeline low-cost inventory. For TTK Prestige, the ratio of raw material cost/net sales fell from 55.2% in FY2009 to 51.7% in the September quarter. Likewise, for Hawkins, the ratio dropped from 44.8% to 35.9% during the same period.

Also, benefits accrued on account of the government’s stimulus of an across the board excise duty benefit to boost consumption.

In the last one month, though, the price of aluminium, which accounts for 50-55% of the material cost has seen a price increase of around 10%. “How much of the cost increase can be passed on depends on market factors, although history states that we have been able to handle this,” said an official from TTK Prestige.

For now, the two companies have pulled off strategies to maintain a fair share of the market, although there’s stiff competition from the unorganised sector. This hampers the company’s ability to freely pass on any cost increases. Both these companies have a 62-65% slice of the market, leaving the rest to regional players.

Perhaps another judicious strategy which has paid off is that the two companies have expanded the product range to include a host of kitchenware items like non-stick pans, cookers and even electrical appliances. For example, TTK which was only into cookware, now has around 33% of its revenues coming from kitchen appliances.

In fact, both companies have done very well on the earnings front. Hawkins posted an earnings per share (EPS) of Rs 32.5 for the first half of FY2010, against Rs 36.2 during the full year FY2009. Likewise, TTK posted Rs 19 against Rs 20, during the same periods. But a similar performance in the second half of the year is an uphill task.

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Reliance Power Sell

We recommend a sell in the stock of Reliance Power from a short-term perspective. It is apparent from the charts that the stock was on an intermediate-term uptrend from March low of Rs 89 to its June high of Rs 210. Triggered by negative divergence and presence of significant long-term resistance around Rs 200, the stock resumed its long-term downtrend which has been in place since February 2008 high of Rs 374. Moreover, since June it has been on an intermediate-term downt rend. In early October, the stock breached its 21-day and 50-day moving averages and is hovering way below them. Both the daily relative strength index (RSI) and moving average convergence and divergence (MACD) indicators are featuring in the bearish territory. The weekly indicators are on the verge of entering in to the bearish territory. Our short-term forecast on the stock is bearish. We expect the stock’s downtrend to prolong until it hits our price target of Rs 124 in the approaching trading sessions. Traders with a short-term perspective can sell the stock while maintaining a stop-loss at Rs 146.

Yoganand D.

Source : businessline

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Market up-move continues to look uncertain

Though the activity in the global market will dictate, the fresh bearish position builds up in the nifty as well as the stock futures and options indicate market do not have the strength required to continue to maintain its growth momentum

The week started on an extremely negative note as the nifty corrected by 147.80 points to close at 4563.90 points. The sell-off was triggered by the news that the Comptroller and Auditor General (CAG) has set up a team to examine the expenses Reliance Industries (RIL) incurred on its D6 natural gas field in the Krishna-Godavari (KG) basin in the Bay of Bengal. The correction was further exasperated by the bleak scenario in the European markets and US index futures. During this day huge short positions were created in the stock and Nifty November series. However positive comments by the Finance Minister Pranab Mukherjee, that there are no immediate plans to place curbs on capital inflows, besides strong global stocks indices enabled the domestic benchmark to come back strongly. The Nifty rose 146.90 points to close at 4710.80. The shorts that were created the previous day were aggressively un-wound. For e.g. Nifty November series it self witnessed unwinding of 23.47 lakh shares of short position open interest (OI) created the previous day. The trend was the same in the front-line stock futures as well. Then for the proceeding three days the market closed on a positive note. For the full week ended 6^thNovember 2009 the nifty index rose 84.45 points to close at 4796.15. However the Nifty future closed at a discount of 6 points to the underlying. The global market weakness and the worry of unwinding of US $ carry trade and the consequent asset bubble burst and US$ appreciation continue to remain. Despite the rally the market does not signify convincing strength, as is evident from the future market activity during the past few days.

Volume in the Futures & Options segment of the NSE (Turnover (Rs. Crore.)
Date	Index Futures	Stock Futures	Index Options	Stock Options	Total
30-Oct-09	19335	20280	36957	1765	78337
3-Nov-09	18772	18585	42334	1883	81574
4-Nov-09	16337	18084	35787	2032	72239
5-Nov-09	24104	21408	48721	2265	96499
6-Nov-09	16576	19259	39632	1929	77395
Source: NSE

On Friday 6^th November the Nifty closed 30.60 points higher at 4796.15. The OI trend in the Nifty and the stock futures remained directionless. As the week closed the nifty continued to shed OI signifying short covering. Besides the trend in the stock futures were also the same. The total OI for the Nifty November series further shed 8.65 lakh shares to 2.76 crore shares. Overall the market wide OI on Friday stood at 158.62 crore shares, thus gaining by just 7 lakh shares as compared to the previous trading day. As mentioned earlier the index future and the overall stock future witnessed un-winding of OI signifying continued short covering. For e.g. the index future shed 6 lakh shares in OI compared to the previous day whereas the stock futures shed 1.77 crore shares in OI. The stock option contributed the major addition in OI. (See table OI breakup).

Open Interest (OI) break-up as on 6th November 2009
	Open Interest (OI)*	Change**
Market wide	158.62	0.07
Index Future	3.05	-0.06
Stock Future	125.44	-1.77
Index Options	10.15	0.31
Stock options	19.97	1.59
* No of shares in crores ** Change is vis-à-vis previous day Source: NSE

In the Nifty option front the most active call options were the 4600 to 4900 strike calls and 4500 to 4700 strike puts. The 4600 and 4700 strike calls unwound 1.98 lakh shares and 2.89 lakh shares in OI signifying covering of calls bought earlier whereas 4800 and 4900 call strikes witnessed 6.1 lakh shares and 5.1 lakh shares addition of OI. The concurrent premium decline of these strikes indicates call wrote at these levels. Besides 4400 strikes put witnessed unwinding of 6.2 lakh shares in OI, whereas 4500, 4600 and 4700 strike puts witnessed addition of 2.1 lakh shares, 9.7 lakh shares and 8.5 lakh shares addition in OI respectively. The concurrent premium increase indicates puts bought at these strikes. Thus these indicate bearish signal. The OI in the 4800 and 4900 strikes call increased to 40.02 lakh shares and 41.27 lakh shares respectively. The OI in the 4600 and 4700 strikes puts increased to 58.90 lakh shares and 46.46 lakh shares respectively. (See most active Nifty options table).

Most active Nifty options (November series)
	OI
Call
Nifty 4600	1459900
Nifty 4700	3126350
Nifty 4800	4002200
Nifty 4900	4126700
Put
Nifty 4500	4597950
Nifty 4600	5889500
Nifty 4700	4646100
Nifty 4800	3014100
Source: NSE

Top 10 Open Interest (OI) gainers in November series stock futures on 6th November 2009
Scrip Name	OI*	Change*	% Change
TATACHEM	1097550	333450	23
ASHOKLEY	10590950	3189700	23
POLARIS	2587200	655200	20
INDIANB	2083400	503800	19
TATAPOWER	1910800	415600	18
VOLTAS	2173500	413100	16
MPHASIS	2137600	368000	15
BAJAJHIND	14469450	2103300	13
INDHOTEL	4876632	706428	13
PANTALOONR	1782450	249050	12
* No of shares Source: NSE

Top 10 Open Interest (OI) losers in November series stock futures on 6th November 2009
Scrip Name	OI*	Change*	% Change
HCLTECH	1158300	-258700	-29
CROMPGREAV	409000	-87000	-27
SINTEX	347200	-57400	-20
SUZLON	60420000	-9549000	-19
BANKINDIA	1980750	-288800	-17
BHUSANSTL	424000	-58500	-16
NAGARCONST	1334000	-172000	-15
ASIANPAINT	14200	-1800	-15
ONGC	1253475	-144900	-13
IDFC	9761550	-1103300	-13
* No of shares Source: NSE

The market do not seem to have the strength required to continue to maintain its growth momentum as fresh bearish position builds up in the nifty as well as the stock futures and options. Going ahead the activity in the global market will be the key as the mood there is also gloomy.

Source : capitalmarket

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Indian Stock Markets Weekly Review 06-Nov-09

While the Monday blues were saved due to a local holiday, the indices came crashing down on Tuesday following extremely weak global cues. Bulls, however, managed to labor enough to stage a comeback on Thursday. The Finance Minister's remarks on disinvestment of PSUs, clarity on implementation of the direct tax codes and a rebound in global markets resulted in the Nifty closing at 4,796 up 1.8% and Sensex ending the week 1.6% higher at 16,158.

The BSE Sensex hit an intra-week high of 16,283 and low of 15,330 while, NSE Nifty hit an intra-week high of 4,836 and low of 4,563.

The Foreign Institutional Investors (FIIs) sold worth Rs11.46bn during the week. On the other hand, the Domestic Institutions were net buyers to the tune of Rs9.28bn during the week.

The top gainers: The top gainers in Sensex were ICICI Bank (up 10%), Reliance Capital (up 7.8%), Tata Steel (up 6.9%), Maruti Suzuki (up 6.7%) and Ranbaxy Labs (up 5.9%).

The Top Losers: The top losers in Sensex were Tata Power (down 9.4%), Ambuja Cements (down 5%), Wipro (down 5.2%), ITC (down 4%) and Hindustan Unilever (down 3.7%).

The BSE IT Index (up 0.5%): The top gainers in the IT sector were Financial Tech (up 16%), Mphasis (up 8.3%), Oracle Financial (up 5.3%) and Mahindra Satyam (up 3.2%).

The top losers were Sasken Communication (down 5.2%), Wipro (down 4.2%), TCS (down 1.9%) and HCL Tech (down 1.7%).

Patni Computer surged over 10.8% during the week after reports stated that L&T Infotech is planning to acquire the company.

Wipro was down by 5% during the week. The company acquired the business of Yardley in Asia, West Asia, Australia and certain African markets from UK-based Lornamead Group for Rs2.1bn.

According to a report released during the week, “Robust earnings upgrades (5-13% for FY10/11 for top 4 vendors) and stronger signs of a recovery (Wipro guided for 4.5% QoQ revenue growth for 3QFY10 at top end) sum up the review for the quarter. EBITDA margins continued to improve (50-150bps QoQ) on tight hiring and volume growth. That said, we believe most players’ margins have peaked in 2QFY10. Going forward, wage hikes and rupee appreciation remain the key risks, in our view. The demand environment has not recovered fully (Lloyds and RBS are set for a further US$51bn bailout and CIT has filed for bankruptcy), but we believe business conditions are conducive to strong growth in FY11, as: 1) IT spending has been low for over a year now; 2) deal pipelines are increasing; and 3) project rampdowns from badly affected industries like technology and telecom have also largely stabilised. Wipro and TCS remain our top picks among large caps. Among mid-cap firms, we prefer Patni, Infotech and Hexaware”.

The BSE Consumer Index: The top gainers in the consumer durables space were Mirc Electronics (up 3.2%), Su-Raj Diamonds (up 2.4%) and Blue Star (up 1.4%).

The top losers were Videocon Industries (down 7.6%) and Samtel Color (down 2.6%).

The BSE Healthcare Index (up 3.3%): The top gainers in the Pharma sector were Torrent Pharma (up 21.4%), Zandu Pharma (up 10.5%), Wockhardt (up 10.2%) and Lupin (up 7.3%).

The top losers were Dishman Pharma (down 10.3%), Natco Pharma (down 6.5%), Glaxosmithkline (down 2.5%), Orchid Chem (down 1.7%) and Morepen Labs (down 0.7%).

The BSE Banking Index (up 4%): The top gainers in the banking space were Yes Bank (up 8.8%), OBC (up 7%), Allahabad Bank (up 6.7%) and Kotak Mahindra Bank (up 6.6%).

The top losers were Federal Bank (down 6.8%) and Union Bank of India (down 1.7%).

ICICI Bank was the top gainer during the week. The stock surged 10%. IIFL in a report released during the week stated, “ICICI Bank’s 2QFY10 results show some positive sequential developments as CASA improved, operating expenses fell and NPLs too declined. However, these improvements are unlikely to result in a sustained re-rating of the stock. While CASA improved sequentially, NIM expansion of 10bps QoQ was below that witnessed at other banks. With loans down 14%YoY, we expect interest income to remain weak in the 2H. Provision charges will remain high in the foreseeable future so as to raise NPL coverage to the minimum required 70%. While ICICI is on the right path by shedding unprofitable assets and refocusing on building the deposit franchise, the medium term profit outlook remains impaired. We expect ROE to remain in single digits over the next 2 years. ICICI remains expensive on PE and PEG terms, while appearing cheap on P/Bx term. We maintain REDUCE”.

SBI ended flat during the week. A report released by IIFL during the week stated, “SBI’s 2QFY10 standalone net profit growth was relatively weak at 10%YoY while consolidated profits grew by 18%YoY. Associate banks’ profits grew by 46%YoY. NII was up 12%QoQ driven largely by 25bps QoQ NIM expansion. ROE of 15.7% and ROA of 0.95% for 1HFY10 are respectable, but relatively weak compared to the peer group. Tier-I CAR remains comfortable at 9.8% and capital raising is unlikely to be required in the near future. Long standing concerns on low NPL coverage and low ROE remain. The stock has out performed both the Sensex and Bankex over the past three months and now trades at 1.5x FY11ii consolidated P/B. We expect the stock to perform in line with the market in the near-term”.

The BSE Auto Index (up 3.3%): The top gainer in the auto space was Ashok Leyland. The stock rose over 16.5% during the week after the company reported a jump of 57% in its commercial vehicle sales at 5,333 units in October as compared to the same month in 2008.

Maruti Suzuki was up over 6.7% during the week after the company reported a 32.45% jump in total sales at 85,415 units in October compared to the same period last year.

Eicher Motors advanced 6% during the week after the company’s commercial vehicles sales rose 71% in October. It sold 2,024 trucks and buses in the month, compared with 1,183 units in the year-ago period.

M&M gained 4.8% after the company’s utility vehicle sales grow 32% in October.

Bajaj Auto gained 4.1% during the week after the company's motorcycle sales rose 52% in October 2009.

The top losers were Swaraj Mazda (down 2.3%) and Hindustan Motors (down 0.5%).

Hero Honda was down 1% during the week after the company reported a marginal increase in October sales at 354,156 units as against 352,449 units in the same month last year.

The BSE Oil & Gas Index (up 2.1%): The top gainers were GSPL (up 8.3%), MRPL (up 4.9%), Shiv-Vani Oil (up 2%) and HPCL (up 1.6%).

Cairn India advanced 2.5% during the week, a report released by IIFL during the weekstated, “Cairn India’s flagship Rajasthan block is well set to reach production of 175kbpd by CY2011. Pricing for Rajasthan crude—benchmarked to Bonny Light, with appropriate discounts—would benefit from narrow light-heavy spreads on OPEC production discipline. Cairn’s balance sheet is adequately funded to execute the Rajasthan project, with operating cash flows supporting exploration activities. While uncertainties remain on Rajasthan cess and offtake of peak crude volumes from Rajasthan, Cairn’s pipeline provides access to 75% of India’s crude refining capacity.
Cairn’s strong leverage to crude, along with strong operating cash, makes it attractive, in our view. Cairn’s current stock price is 6.8x its stable cash flow per share. We initiate with ADD rating and target price of Rs278/share”.

The top losers in the oil & gas space were Hindustan Oil (down 7.6%), Chennai Petroleum (down 5.5%), Jindal Drilling (down 2.9%), Reliance Industries (down 2.1%) and Essar Oil (down 1.4%).

The BSE Capital Goods Index (up 1%): The top gainers in the capital goods space were BEL (up 15.2%), Usha Martin (up 14%), BEML (up 9.6%), Dredging Corp (up 9.2%) and Jyoti Structures (up 8%).

The top losers were Alstom Projects (down 5.6%), Aban Offshore (down 3.9%), ABB (down 2.1%), Gammon India (down 1.9%) and Siemens (down 1.6%).

The Cement Sector: The top losers in the cement space were India Cements (down 8.4%), Mangalam Cement (down 5.1%), Madras Cements (down 4.9%), Prism Cement (down 4.4%) and Dalmia Cement (down 4.1%),

The top gainers were JK Cements (up 9.9%), Binani Indus (up 5.2%), Shree Cement (up 4.6%), Grasim (up 1.8%) and Birla Corp (up 0.1%).

A report released by IIFL during the week stated, “Cement prices in south and west regions have been falling steeply over the past two weeks, as the increase in supply is outstripping that in demand. At present, cement is cheapest in Hyderabad, at Rs123–145 per 50kg bag—down 18% in the past two weeks and 45% from the peak price reached in April 2009—the sharpest price fall in the past 15 years. According to dealers, price cuts have become a daily occurrence in the southern markets. In Gujarat, price declines have accelerated as supplies originally intended for exports have been diverted to the domestic market, given dwindling demand from the Middle East. Prices in the north have dropped by 2-3% in the past two weeks as supplies to the central region have reduced”.

The Telecom Sector: The top gainers in the telecom space were Gemini Comm (up 25.3%), MTNL (up 2.7%) and Shyam Telecom (up 1.7%).

The top losers were Idea (down 9.2%), Tata Communication (down 6.9%), RCom (down 6.1%), WWIL (down 4.4%) and TTML (down 2%).

Bharti Airtel advanced 2.6% during the week. According to a reports released by IIFL during the week stated, “A revenue decline of 1% QoQ, strong cost management (30bp increase in EBITDA%), FX loss of Rs0.7bn; a reduction in tower capex guidance ($1bn to $0.7bn), Rs2.2bn tax write back and PAT drop of 7.8% QoQ to Rs23.2bn characterised 2QFY10. Management commented that they would not match prices, but Bharti has just released a 1p/s (on-net) and 1.2p/s (off net), following a recent Rs0.5/min on-net and Rs0.6/min off-net plan. These plans make no distinction between local and STD calls (per minute plan is for pre-paid with voucher of Rs77 for 1yr validity). We model Rs0.55/min RPM for FY10, 580bn mobile min in FY10 (little elasticity assumed) and trim EPS by 12%-18%. We re-iterate REDUCE rating with a TP of Rs312”.

The Realty Sector (up 4.4%): The top gainers in the real estate space were HDIL (up 9.2%), Unitech (up 7.6%), Parsvnath (up 7.4%), Mahindra Lifespace (up 6.7%) and Peninsula Land (up 4.3%).

The top losers were Sobha Developers (down 8.2%), Omaxe Ltd (down 4.2%), Anant Raj Indus (down 1.4%) and Ansal Properties (down 0.2%).

The Metals sector (up 4.1%): The top gainers in the metals were Tata Steel (up 6.9%), Bhushan Steel (up 6.8%), JSW Steel (up 6.3%), Sunflag Iron (up 4.3%) and Lloyds Metals (up 3.2%).

The top losers in Metal were Ispat Industries (down 18.9%), Adhunik Metaliks (down 15.9%), Tata Sponge Iron (down 14.5%), Bhushan Steel (down 13.8%), Sunflag Iron (down 11.9%),

SAIL fell 1% during the week. IIFL in its report released during the week stated, “SAIL’s 2QFY10 PAT at Rs16.6bn (down 17% YoY and up 25% QoQ) was ahead of our estimate (Rs15.7bn) but in line with consensus.

• The positive surprise came from write-back of employee cost provisions.

• SAIL’s employee cost is unsustainably low and we expect it to increase by ~50% from this quarter’s level.

• SAIL has the highest conversion cost among Indian companies, on account of its bloated employee base and inferior product mix.

• Support from cash balance cannot be taken for granted, as we expect SAIL to turn net-debt in FY11 once full payment of the increased wages as per Sixth Pay Commission has been made and capex has increased.

• At its current price, the stock is trading at PE of ~14x on FY11ii—at a significant premium to its historical trading band. We retain SELL”.

Source : Indiainfoline.com

Aggregated by

Equity Research team

Ravina Consulting

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BANGALORE 560048

Call / SMS 9880080321

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List of IPOs coming up soon

MUMBAI: Fourteen Initial Public offerings (IPOs) are ready to hit the market in the next 3-6 months. Since June, 12 IPOs have hit the market, raising Rs 14,600 crore.

More than 40 companies have raised Rs 33740 crore through Qualified Institutional Placements (QIPs) since April.

QUICKTAKES

Funds to be deployed for expansion plans, retiring debt, and for working capital
On back of rising stock prices, companies managed to raise funds. OIL India only IPO holding strong on bourses, Power IPOs laggards since listing

IPO pipeline
Company Issue size( in Rs cr)

JSW Energy 3000
Jindal Power 4000
Sterlite Energy 5100
GMR Energy 1500
Reliance Infratel 4200
Sahara Prime City 3450
Ambience 1293
Lodha Dev 2500
Emaag MGF 3850
BPTP 2000
Nitesh Estates 550
DB Realty 1500
Godrej Properties -
Hathway Cables -
Total amount 32943

Break-even price for QIB

Oil India Rs 1128
Adani Power Rs 105
Pipavav Shipyard Rs63
NHPC Rs 42

Weak IPOs

NHPC, Adani subscribed more than 20 times
Adani, NHPC priced at top of their price bands
Huge selling seen from high net worth individuals

Source : UTVI.com