Market Musings
Yesterday the markets started firm as mentioned in my morning post. It ended stronger as strong buying emerged for Index pivotals, after the Bank of Japan, at its meeting , left benchmark interest rates unchanged, at 0.25%. Japan's short-term rates have been left untouched for a second month after raising them from near zero percent in July, 2006, the first increase in almost six years.
The BSE Sensex rose 64.80 points (0.55%), to close at 11,918.65. It opened stong and gained strength as Japan's Nikkei rebound and oil price retreated close to a 5-month low. The Sensex surged to 11, 940.58 in the last session of trade as buying intensified. Its low was at 11,825.22, thus swinging a little over 116 points during the day.
The S&P CNX Nifty rose 16.90 points (0.49%), to 3,471.45.
The total turnover on BSE amounted to Rs 3,484 crore, higher than Thursday's Rs 3,312 crore.
The market-breadth remained strong with the advances to decline ratio pegged at 1.5:1. On BSE, 1,532 shares advanced, against 1,004 that declined. A total of 83 scrips remained unchanged. The BSE Small-Cap Index rose 1.33%, to 6,031.23 while the BSE Mid-Cap Index advanced 1.11%, to 5,041.35.
Jet Airways saw a turnover of Rs 149.11 crore. It witnessed a high degree of volatility today, fluctuating in a wide-range before it ended with sharp losses of 6%, to Rs 625 on 22.58 lakh shares. Spurred by whispers of an out-of-court settlement, Jet Airways had surged 12.49% to Rs 664.70 on the BSE, onThursday. The stock took wing on reports that a group of 1,000-odd travel agents had come together to buy a 30% stake in Air Sahara for Rs 700 crore, an offer which values the airline at Rs 2,300 crore, the price offered earlier by Jet Airways. In the event of a takeover of Sahara Airlines, there remains a possibility for an out-of-court settlement between Jet and Sahara, which can see some of the disputed money returning to the Jet kitty. The amount Jet may get is estimated at Rs 500 crore.
Auto stocks surged on the back of a steady decline in global crude oil price, with the BSE Auto Index rising 1.20% to 5,207.02. Punjab Tractors (up 6.47% to Rs 250), Kinetic Engineering (up 1.41% to Rs 143.50), Swaraj Mazda (up 2.53% to Rs 235.25) and VST Tillers (up 3.28% to Rs 113.20) were among the gainers. Punjab Tractors shone on sustained buying anticipating robust sales figures.
With good monsoon in north India and a generally increased flow of farm credit, sales of tractors in the region are expected to rise. Punjab, Haryana and Uttar Pradesh are some of the biggest markets for the industry, contributing about 29% to domestic sales. Punjab Tractors (PTL) is a leading player in north India.
The tractor industry had resurfaced from a de-growth phase that lasted from 1999-2003 and demand for new tractors is mounting. It grew 18% last fiscal, to 2.93 lakh units, from about 2.48 lakh units in 2004-05. However, competition in the industry remains intense with around 14 players battling for a bigger pie of the existing market, most of which is replacement led.
PTL plans to focus on expanding distribution network.The company currently has 433 dealers across India and about 9 models for all its products with variations.PTL has roped in consulting firm Accenture as consultants to plan and decide on a long-term growth strategy.
Refinery shares also cheered the consistent slide in global crude oil prices, moving to higher ground. HPCL (up 2% to Rs 304), Bongaigaon Refinery (up 5.31% to Rs 60.45), Chennai Petroleum (up 4.03% to Rs 227.10), MRPL (up 1.97% to Rs 43.90), and Indian Oil Corporation (up 1.70% to Rs 515) advanced.
BPCL rose 3.03%, to Rs 388 amid reports that it plans to buy sugarcane fields in Brazil to secure imports of ethanol.
Tyre shares surged as rubber price slid to an eight-month low. The price of natural rubber has been falling in domestic as well as global markets. Rubber is the main raw material for tyre companies. February-2007, rubber futures contract in Tokyo closed 2.2% down, at 218 yen ($1.87) per kg, on Thursday (7 September 2006). A host of tyre scrips surged today. Apollo Tyres (up 5.76% to Rs 333.10), JK Industries (up 8.87% to Rs 128.90), Goodyear India (up 5% to Rs 118.65), CEAT (up 5% to Rs 111.90), Falcon Tyres (up 2.26% to Rs 117.55), TVS Srichakra (up 4.58% to Rs 113) and MRF (up 3.30% to Rs 3,980) surged.
Select PSU shares surged on hopes of dis-investment in the near term. HMT (up 20% to Rs 85.50), ITI (up 13.89% to Rs 53.70), STC India (up 8.81% to Rs 157.55), BhEL (up 2.80% to Rs 2316), RCF (up 10% to Rs 45.70), GNFC (up 7.06% to Rs 109.90), Concor (up 3.03% to Rs 1668), Neyveli Lignite (up 1.77% to Rs 66) etc. surged ahead.
Hotels stocks advanced on renewed buying. EIH Associated (up 6.48% to Rs 819), Royal Orchid Hotels (up 1.31% to Rs 173.50), Indian Hotels (up 1.20% to Rs 1,318) and Viceroy Hotels (up 1.81% to Rs 92.60) rose. The hotel season has started and the Hotel Companies are expected to show robust growth in 2006-07 due to demand outstripping supply. ITC is currently looking at suitable places in the two metropolitan cities - Chennai and Bangalore for setting up 7-star hotels. ITC already has two luxury hotels in Chennai.ITC has consolidated its hotels business under one roof by merging ITC Hotels within itself [Gujarat Hotels Ltd].
United Western Bank was locked at 10% buyer freeze, to Rs 21, after Indiabulls Financial Services launched a bid to takeover the sick bank. As many as 1.64 lakh shares were traded on the BSE. There were pending buy orders for 18.22 lakh shares at the maximum price. Indiabulls Financial proposed to offer one share of Indiabulls, post demerger of the real estate business, for every six shares of United Western Bank. The bid, if it materialised, will result in the issuance of approximately 9 million additional Indiabulls Financial shares in exchange. I had on the first said that though UWB is a sick company but it has major presence in the sugar belt of Maharastra. But since the company has a negative net worth considering the NPAs and adjusted book value; hence I asked all to keep away from this counter. But the super-risk taking individuals can enter this counter, with a very short term horizon in mind.
Pipe maker -PSL spurted 3.14%, to Rs 205.15 on bagging a contract worth $ 17 million for a high pressure gas pipeline project in UAE.
Whirlpool India jumped 7.29%, to Rs 30.90 after announcing that the company expects to hit Rs 1,650 crore in sales during FY 06-07.
Videocon Industries rose 1.36%, to Rs 414.10 following reports that a consortium of Videocon Industries and RHJ International, the holding company of US-fund Ripplewood Holdings, has been nominated as a preferred bidder for the South Korean consumer durables company. The consortium had quoted $ 700 million for Daewoo Electronics, the maker of home appliances and televisions, put on the block by domestic creditors, who own 97.5% of the unlisted firm.[With inputs from the Internet]
Next, on the performance of my scrips and action needed......
Best wishes,
Suman Mukherjee
India.
Note: I could not post early due to nagging Internet problems.
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