Market had a firm opening with the indices retaining the momentum from
Friday's strong closing. Disappointing most traders, the market slipped into
the red soon after and lost major ground in the last hour of trade. Sensex
closed at 6657, down 43 points and the Nifty at 2096, down 13 points. The
Nifty futures again slipped into a discount of 7 points to the spot index.
On
Friday, oil posted its highest closing ever at $56.73 to a barrel. US markets
were mixed with the Dow closing marginally higher while the NASDAQ closed
lower after slipping into the lowest levels for the year. Indian tech ADR's
had a good day with Infosys, Wipro and Satyam all managing to close with gains.
ICICI Bank and Tata Motors were major gainers with gains of more than 2 per
cent each. Infosys
was one of the few winners today as foreign brokerage CLSA said it expects
the next year guidance for the company to be around 25-30 per cent growth
in revenue and 35-40 per cent growth in profits. The stock rallied on this
news and closed with gains of close to 2 per cent. Satyam
announced a deal with global tyre major Bridgestone for ERP solutions on SAP
platform. ERP services margins are better than those for general IT services
and this deal means Satyam is trying to grow out of its low margin businesses.
The stock closed with gains of more than a per cent. Oil
marketing stocks saw good demand on news that government is considering a
hike in the prices of petrol and diesel. The petroleum ministry confirmed
that a cabinet note for the purpose has been circulated. The market is expecting
a hike of at least Rs2 to Rs2.50 per litre as against the Rs4 per litre demanded
by the oil marketing companies. There
was a lot of positive news flow from ONGC today. The company expects a revenue
growth of close to 40 per cent for the current year on the back of high oil
prices. Profitability is expected to remain flat as it expects a subsidy burden
of close to Rs4,500 crore for the year. It is also planning to hike the capacity
of its refining subsidiary MRPL to 15 million tonnes per annum and set up
a new refinery in Rajasthan.
Tata Steel received a rating of Baa2 from Moody's for its overseas debt issue.
The rating agency has given a stable outlook for the company on the basis
of strong financials and integrated operations. The management indicated that
the company is trying to grow faster than ever before and is taking vertical
integration further by acquiring more coal mines. Going forward, the company
expects iron ore, scrap and coal prices to harden making life difficult for
non-integrated steel manufacturers. The company is confident of maintaining
its profitability as it is an integrated player and steel demand is expected
to grow at around 8 per cent per annum. Mahindra
& Mahindra signed a joint venture agreement with French auto major Renault
to manufacture the mid size sedan Logan in India. Logan is a low cost model
developed by Renault's Czech subsidiary Dacia for emerging markets like India.
The car is expected to be launched in 2007 and the company expects to manufacture
50,000 cars per year. M&M will hold a 51 per cent stake in the JV and
Renault will hold the balance. In
the Zee-BCCI case, the Madras High Court ruled that cancellation of contract
by BCCI was incorrect and Zee can sue BCCI for compensation. The stock rallied
more than 2 per cent on this news. Tobacco
major ITC announced a price hike in select brands of cigarettes to off set
the hike in excise duty announced in the budget. The stock rallied on announcement
of this news but declined later to close in the red. Auto
stocks were weak with Maruti being the biggest loser. The pending fuel price
hike is expected to further dampen the slowing demand growth. Auto companies
are also facing pressures on margins because of rise in input costs like steel
prices. Frontline
telecom stocks like Bharti, VSNL and MTNL all ended in positive territory.
The department of telecommunications has reportedly initiated discussions
with MTNL and BSNL on the proposed merger. Mid-cap
action
Allahabad Bank
shot up on reports of a public issue to raise around Rs900 crore. The market
expects the price to be around Rs90, which is a discount of more than 10 per
cent to the current price. Investors should recall the experience in Punjab
National Bank which had appreciated substantially on news of the public issue
but declined after the issue was closed. Hexaware
Technologies announced two order wins from the US worth a combined $10 million.
Hexaware is one of the largest IT service providers in the PeopleSoft platform.
PeopleSoft is now a part of Oracle. The stock closed more than a per cent
higher. Offshore
services company, Dolphin Offshore, announced yet another order for $14 million
for work in the Bombay High oil field. The stock was locked in the upper circuit
of 5 per cent. Bajaj
Electricals was another winner in the mid-cap space after a domestic brokerage
came out with an extremely positive view. Analysts expect the company's power
transmission tower business to grow at a fast rate. The stock gained 10 per
cent. Sugar
stocks saw some action with Bajaj Hindustan and Balrampur Chini attracting
good interest. EID Parry, which has some sugar capacity, has announced a stock
split. Small
steel stocks were very volatile once again. After posting good gains in morning
trades, many of them closed in the red. All
the positive signals from Friday's late rally have been wasted in the weakness
of today's last half an hour of trade. FII inflows have slowed down though
they were net buyers to the extent of $30 million
on Friday. Market may remain sideways with a downward bias as it is a short
trading week, Friday being a holiday.
*Disclaimer:
The author doesn't have any position in the stocks specifically mentioned
above at the time of writing this article. This analysis/report is only
for the purpose of information and is not an investment advice. Readers
are advised to consult a certified financial advisor before taking any investment
decisions. While efforts have been made to ensure the accuracy of the information
provided in the content the author or publisher shall not be held responsible
for any loss caused to any person whatsoever.
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