Market expected to trade with positive bias

According to Angel Broking report, the coming trading session is expected to trade with positive bias and on the upside Nifty may test 4200-4220 levels, if it convincingly trades above 4175 levels.

Angel Broking report on market outlook

Nifty opened on an optimistic note and traded with positive bias for most part of the trading session. The Sectoral Indices also witnessed buying interest and a short term upside in metal and Midcap sector cannot be ruled out. Nifty has taken strong support near 4100 levels and it is expected to trade positive with stock specific movement.

The coming trading session is expected to trade with positive bias and on the upside Nifty may test 4200-4220 levels, if it convincingly trades above 4175 levels. The immediate support for Nifty is at 4150-4140 levels and a further downside upto 4120 can be expected if it trades below such levels, though this seems unlikely for the coming trading session. The short term investors are advised to book partial profits at higher levels.

Learn the basics: http://knowmarket.blogspot.com/

Global markets to cue stocks next week!

The Indian stock market was largely influenced by global cues this week--interest rate concerns, liquidity constraints, and rising inflation. Adding to this, were the slew of domestic public offerings.

Bombay Stock Exchanges' Sensex gained 0.7% over the week to close at 14163 on Friday. National Stock Exchange's Nifty rose 0.6% week on week.

Capital goods shares saw good amount of buying interest and the BSE Capital Goods Index ended 2.9% higher over the week. BSE Metals Index also put up a good show and gained 2.5%. But autos witnessed selling pressure and the BSE Auto Index lost 0.6% week on week.

Asian equities continued their upward momentum on Monday and Tuesday on the back of Wall Street gains. But they came under a cloud as bond yields soared to a five-year high in the US on rate worries. But as the concerns eased, Japan's Nikkei and South Korea's KOSPI scaled new highs. Friday, Bank of Japan decided to leave interest rates unchanged at 0.5%.

Back home, the week kicked off with investor expectation high from the 17.5-crore share DLF issue. Vishal Retail's 47 lakh share, which also opened Monday, seemed ill-timed. But it was subscribed 69 times as it closed Wednesday.

In comparison, the DLF float was subscribed 3.5 times, but retail portion just 1.05 times. Analysts said the high price band of Rs 500-550 made retail investors shy away.

The Roman Tarmat issue, which opened on Tuesday closes on June 19, has not been as lucky as Vishal Retail and has evoked a lukewarm response.

Next week, investors will again ready themselves for the Rs 20,000 crore follow-on issue from ICICI Bank which opens Tuesday. The domestic issue is for Rs 8,750 crore, with a greenshoe option of Rs 1,312.5 crore. The bank also plans an American depositary share issue of Rs 10,100 crore. Both the ADS and domestic issues will run simultaneously.

Market watchers feel ICICI will receive more retail participation. The price band for the issue will be fixed Monday. It closes June 22.

Such a huge strain on liquidity will play on the secondary market, even as global happenings during the weekend give fresh cues.

"Till the Nifty spot decisively crosses 4200 and provided the cost of carry in derivatives stabilises at 10%, the gyrations in the market will continue," said Amit Hiremath, analyst at IDBI Capital Market Services.

Learn the basics: http://knowmarket.blogspot.com/

Sugar Sector led by Bajaj Hindustan will keep disappointing...

The news is filled with stories about inflation and food costs going up, but there is one market where prices have been cut in half since last year - Sugar! Sugar prices continue to remain weak, as consumption continues to lag world production. The market is currently awash in both raw and white Sugar, with India's crop expected to be revised upward and Brazil struggling to find buyers for its surplus. News that Brazil will increase the percentage of Ethanol in gasoline from 23% to 25% was mildly supportive, but traders remain focused on burdensome supplies, and physical buyers are holding off for even lower prices. Just yesterday, Tunisia cancelled a tender offer to buy Sugar, balking at current prices. With speculators busily rolling out of the July contract and into October ahead of First Notice Day, spread trading is in the spotlight. However, once the roll is out of the way, traders will resume looking at the fundamentals, which favor lower prices ahead.

The Sugar Export Corporation ISEC, which recently sold raws from India's next crop to the Dubai al-Khaleej refinery, will not sell raw sugar at current prices, its chief executive S.L. Jain said on Thursday.
"At today's levels prices are too low," Jain, head of the Indian Sugar Exim Corporation Ltd (ISEC), told Reuters during a trip to London to attend an industry function.
"We will not dump sugar," he added.
"Less than 10 cents per lb does not suit us."
New York Board of Trade (NYBOT) March 2008 raw sugar futures stood at 9.26 cents per lb, down by 0.11 cent, in late afternoon trading.
Jain said he expected Indian raw sugar export sales from the next crop not to exceed 500,000 tonnes, but the total export tonnage would depend on prices.
Referring to the recent slide in sugar futures following news of the Indian raw sugar sale to Dubai, Jain said of the sugar market: "The psychology is really bad."
A huge centre-south Brazilian harvest and the prospect of substantial Indian raw sugar exports from the next crop are weighing heavily on raw sugar prices, which have fallen by almost 30% this year.
Sugar merchant ED&F Man said on 14 June said it was bearish on sugar prices due to the weight of Brazilian and Indian supplies.
Dubai's al-Khaleej refinery last week confirmed it had bought more than 200,000 tonnes of Indian raw sugar for shipment later this year and into next year, its first purchase of Indian raw sugar, muscling out competition from Brazil.
Jain said the raw sugar sold to Dubai, for shipment between December 2007 and March 2008, totalled 235,000 tonnes.
He said the sale was agreed at $246.50 per tonne FOB India, and estimated India's net freight advantage over Brazil to the Dubai refinery at $35 per tonne.
He added that Indian production costs were higher than Brazil's, but said India's freight advantage boosted Indian sales prospects in nearby markets from south Asia to the Middle East.
Jain estimated Indian 2006/07 sugar output at 27.5 million tonnes, and forecast 2007/08 production at 28-29 million.

In all, there is no good news for Sugar in near future except some swelling here and there. Infact, even in longer term, probably 1-2 year, there is nothing great coming up fundamentally. Only technical curve rolling could be expected at times. If you already have bajaj hindustan, get rid of it with every rise, and certainly at a level of INR 220, if it reaches there. As we strongly believe that entire sugar sector led by bajaj hindustan will keep disappointing.

Learn the basics: http://knowmarket.blogspot.com/

Buy Infy if it comes below 1950 !

When we talk about technology sector, obviously there are two-three cues which has to be looked at. One is the rupee which on an average has appreciated quite a bit. In fact if you look at on an average it is less than Rs 41. Second if you look at the hedging, which has been increased by most of the technology heavyweights that clearly shows an indication that you are looking even more rupee appreciation from the current level. So surprise, which was expected, is anyways people have factored that into price as well. So we are not seeing much of the surprise from the current level in fact we are quite positive on the overall technology segment and from the current level it gives even better opportunities. One can certainly buy Infosys if it comes down to a level of Rs 1925-1950.

It's true that tech stocks have taken a bit of knock today, again the expectation is that the results for June quarter will not be too good for tech. But this is already known, this is already there in the prices, so in case the techs come down more from here it's a buying opportunity.In fact we are taking a contrarian call in tech and we were buying Infosys earlier at Rs 1925-1950 levels, which we exited partially yesterday and today. So again if the stock like Infosys comes down to those Rs 1900-1925 levels, we will again be buyers in that.

Learn the basics: http://knowmarket.blogspot.com/

Investors accumulate ICRA for 1 yr. perspective!

ICRA looks very good in long-term bet. If you look at ICRA in the recent past what it is doing is its tying up with the mid size banks where the banks lack appraisal skills further, credit proposals and that's why they are insisting arrangement with ICRA that they have to get first rated from ICRA kind of agencies and they have taken ICRA as the preferred rating agency. So to that extent the business growth will be there from SME segment of these mid size banks to ICRA.

In the recent past the stipulation that IPOs also needs to have a rating which also adds to the business of ICRA apart from its regular rating business for debt instruments. And all put together we feel the company is also showing good numbers. In fact if you look at the March 07 numbers, the company showed a profit of Rs 16 crore on a turnover of almost Rs 46 crore, that's a fantastic number. But in terms of multiples if we speak it definitely looks expensive but one can gain on this in terms of news flows so in terms of fundamentals maybe if one has perspective of one year and above maybe they wii get good rewards from this counter.

Learn the basics: http://knowmarket.blogspot.com/

ICICI FPO...just don't jump blindly!

We believe that correction is due in ICICI since long. In current brouhaha of FPO, it has got delayed a bit longer. And hence now shortly after getting listed it would be fair to say that a correction is anticipated. For the retailers and small investor, we suggest buy it post the announcement of the pricing for the issue. As we believe that once the issue comes if you look at the internals of ICICI it will be more prudent to buy after the issue because we believe there could be some short-term correction in the price of ICICI Bank, and it could be a steep one as well.

Learn the basics: http://knowmarket.blogspot.com/

FPO season... now its turn of BEML !

Bharat Earth Movers, BEML is eyeing over Rs 430 crore from the follow-on public issue which opens on June 27. The state-owned company will offer 49 lakh equity shares of Rs 10 each through a 100% book built offering, the price band for which is expected to be announced at the start of next week. The issue closes on July 3.

Of the total issue less 10% reserved for employees, 35% has been reserved for retail investors and 15% allocated for non-institutional. Qualified institutional buyers have a lion's share in the issue at 50%, of which 5% is for mutual funds. The issue constitutes 11.77% of the fully diluted post issue paid-up capital.

ICICI Securities is the book running lead manager to the issue.

The company plans to fund its expansion and capital expenditure from the issue. Of the proceeds, Rs 214.51 crore will go towards expansion of the Metro coach manufacturing facility at Bangalore, and Rs 90 crore on capital expenditure, including upgradation of current facilities.

The voluntary retirement scheme for employees would use up another Rs 90 crore of the proceeds. The company also plans 5MW windmill for captive consumption at a cost of Rs 27 crore and a R&D centre for Metro coaches at an investment of Rs 9 crore.

Any shortfall in funds for the said objectives would be met through internal accruals.

The government currently holds 61.23% in Bharat Earth. Mutual funds hold 13.89%, financial institutions/banks hold 7.26%, foreign institutional investors hold 7.8%, resident individuals hold 6.11% and corporate bodies hold 2.6%.

Post issue, the government's holding in the company will fall to 54.03%.

Bharat Earth is the second largest manufacturer of earthmoving equipments in Asia, and commands 70% market share in domestic industry. The company has a diversified portfolio of products catering to defence equipment, railways, mining, steel, cement, power, irrigation, construction and road building.

The ministry of defence is Bharat Earth's largest customer. The company's other customers are Indian Railways, Delhi Metro Rail Corporation and other metro rail transit agencies.

As on Feb 28, 2007, Bharat Earth's order book stood at Rs 1,200.74 crore. Of this, Rs 236 crore was from the defence business. The company also had orders from the New Delhi Railway Board worth Rs 102.96 crore.

What's interesting is the company will detail its results for the year ended Mar 31, 2007 on June 25, just two days before the issue opens, reports The Economic Times.

Learn the basics: http://knowmarket.blogspot.com/

Hold Voltas, Good returns expected!

Equity Advisors are of the view that one can definitely hold on to Voltas for good returns. In the first quarter, the company will be in a position to show good numbers.

Fundamentally, Voltas is looking quite strong because after the stock split though the stock has become less attractive on fundamentals front in terms of reduced EPS and increased PE multiple. But after the Q4 results that the company has declared it could show tremendous amount of growth rate in its fundamentals and that is a reason that the PE multiple has become attractive now.

Particularly the engineering contracts that it has bagged and the way it got good pipeline from the engineering contract side and between January and April this year it also got good amount of orders which has shown a 30% growth in its room air conditioners business.

All put together company could show good numbers and we feel even this Q1 also company will be in a position to show good numbers. Put together company could come quite very well on a part of improving its numbers irrespective of increased number of shares that make us feel that one can definitely hold on to this stock for good returns.

Learn the basics: http://knowmarket.blogspot.com/

DLF urges govt to down interest rates

Hurt by the establishment's statements that have the potential to dampen demand, the country's largest real estate player DLF Ltd today asked the government to rather focus on augmenting supply and cutting interest rates to further boost growth in the sector.

"The government should think of augmenting supply and not curtailing demand, which is a theoretical exercise," DLF chairman Kushal Pal Singh said.

Only last week, finance minister P Chidambaram said that the government was keen to curb demand in overheated sectors like real estate and housing. Incidentally, the finance minister's statement came when bidding process for the initial public offer of DLF was going on and the impact was seen immediately on Dalal Street with a sharp fall in the share prices of listed realty firms. Market observers said that the statement also hurt the investors' sentiment toward the IPO.

DLF could raise Rs 9,625 crore through the public issue - subscription for which closed on Thursday. Bids were received for 3.5 times the size of the issue comprising 17.5 crore shares of Rs 2 each.

"The only way to contain the increasing (property) prices is to flush the market with more supply than demand. (and) by thinking positive," Singh said.

Learn the basics: http://knowmarket.blogspot.com/

DLF fixes issue price at Rs 525/sh. Gains on listing is least expected !!

Real estate major, DLF, which entered entered capital market with an initial public offer, IPO of 175,000,000 equity shares of Rs 2 each, has fixed its issue price at Rs 525 per share.

Considering an issue price of Rs 525, at an interest rate of 15% (Rs 22 per share), the breakeven comes to Rs 547 . If retail investors have DLF shares, they cannot expect anything exciting in terms of listings and if it does it will be highly unexpected. We feel that there is not much to play on listings in terms of how subscriptions panned out and real-estate companies have done, in terms of how they listed vis-a-vis subscription numbers. With 575 million sq ft of land to be developed over the next 10 years, DLF is one company to be held over a longer period of time. If you are there in queue, be there for long... you'll get reward. Short term player...well DLF is not for You!

Learn the basics: http://knowmarket.blogspot.com/

DLF somehow subscribed amid all brouhaha!

DLF IPO has wrapped up its issue. The subscription numbers are 3.47 times overall, while the qualified institutional buyer, or QIB, category was subscribed 5.13 times. And the high networth individual, or HNI, category was subscribed 1.17 times. However, retail was subscribed only 0.97 times.
Analysts feel that the numbers are inline in terms of how the overall and QIB picture panned out. But on the retail front, they find the numbers disappointing as it did not get subscribed even once as was expected.
A lot of big investors came and put in money in the issue. Deutsche AMC put in bids of USD 500 million, while HSBC pumped in USD 650 million, the Dubai Investment Group put in USD 550 million, TPG Axon brought in USD 250 million, Aberdeen put in USD 100-150 million. Three firm, Blackstone, Blackrock and Nomura brought in together in between USD 50 and USD 100 million.
LIC has put in a bid of roughly Rs 500 crore, while SBI has bid with Rs 500 crore. RIL, Reliance Capital and Reliance MF put in bids of Rs 200 crore each.

Considering an issue price of Rs 500, at an interest rate of 15% (Rs 21 per share), the breakeven comes to Rs 521. If the issue price is Rs 515, with the interest rate remaining the same, the breakeven comes to Rs 536. Similarly, if the issue price is Rs 525, the breakeven is at Rs Rs 547 and in a best case scenario, at an issue price of Rs 550, the breakeven comes at Rs 573, with the interest rate at 15%.
Analysts say that if retail investors have DLF shares, they cannot expect anything exciting in terms of listings and if it does it will be unexpected. They feel that there is not much to play on listings in terms of how subscriptions panned out and real-estate companies have done, in terms of how they listed vis-a-vis subscription numbers.
With 575 million sq ft of land to be developed over the next 10 years, DLF is one company to be held over a longer period of time, feel analysts.
The positive factors for DLF are its brand value, execution capabilities and its large land bank. The concerns are its concentration of land bank in Gurgaon and NAV per share value of Rs 475. Most South East Asian real estate giants trade at 1-1.3 times market cap per NAV.

Finally I should say DLF manage to succeed. With all initial malpractice issue with minor shareholders, then almost a year delay due to market crash and finally all media news about its aggressive pricing DLF emerged as a winner. They almost did everything that they could have to make it success and they did it. DLF finally succeeded in its purpose amid all brouhaha. Well done DLF!!

Please share your views in comments, if you have anything to say...

Learn the basics: http://knowmarket.blogspot.com/