Market to remain rangebound; Stay in cash till release of Q4 results: By Sanjay R. Bhatia

The markets remained volatile and choppy last week. They witnessed the second biggest fall on Monday, 2nd April 2007, after the RBI credit measures announced after market hours on Friday, 30th March 2007. These measures surprised the markets. The markets have since then witnessed a pullback and relief rally. The advance decline ratio has remained positive but on lower volumes on advancing days, which is a cause for worry. Traders and speculators were active in auto, banking, IT, oil and gas, pharma and metal stocks. Incidentally, FIIs were net sellers in the cash as well as derivatives segment along with the mutual funds. Global cues were good with global markets witnessing a rally on the softening of crude oil prices. The only negative was on the Rupee front, which continued to appreciate against the US. dollar. It needs to be seen how IT companies react to this appreciation of about 2% while giving their future guidance. The markets are likely to remain rangebound with stock specific action ahead of the Q4 results. In the meanwhile the markets would continue to take cues from global markets along with the Rupee-Dollar levels and of course crude prices. The bellwether Infosys is releasing its results on 13th April, which would decide the future trend of technology stocks. The industrial production numbers are also being released on 12th April and they, too, would affect the sentiment. Any disappointment on the results front could lead to a bloodbath on Dalal Street. Technically, after Monday’s carnage the markets have been able to bounce back on back of short covering and value based buying. However, short positions have already been built in the system as Nifty Futures trade at Rs.38.30 discount to the spot index. The Q4 numbers would certainly dominate the trend from the mid week. On the upside, the 12884 and 13072 are important resistance levels for the Sensex, and it has support at 12512 and 12359 levels. In case of the Nifty, 3850 level is likely to act as a resistance level, while the 3608 and 3576 are its important support levels. Investors should stay in cash till the announcement of results.

Cement at just Rs 160 a bag from China:

AHMEDABAD: The Centre’s move to give negative duty protection to cement manufacturers by abolishing the countervailing duty (CVD) on imports has opened the floodgates for cheaper cement from China. Gujarat-based developers and traders have begun placing orders to import cement through agents who are offering the material at least 30% cheaper than locally available cement. Cement sells for around Rs 225 a bag in Gujarat. In Mumbai, branded cement sells in the range of Rs 230-250 a bag. Although domestic cement manufacturers may still blink and bring down prices to retain market share, developers say imported cement will be cheaper after the CVD abolition. One cement dealer, Rajesh Shah, whose South Africa-based company has been sourcing cement from China and supplying to other countries, has already received four orders from Ahmedabad alone. He will source 30,000 tonnes of cement from China for his client in the next couple of months. “We have a South African Bureau Standards certification and so our clients trust our quality standards. We have tied up with a Chinese company which is willing to sell cement at Rs 160 per 50 kg bag, inclusive of all costs,” Shah said. An Ahmedabad-based developer NK Patel, who has tied up with him, said: “We are close to finalising a deal. Even if the transportation and freight costs are factored in, Chinese cement would be at least 30% less than the domestic price.” Patel will team up with a cement trader and import five lakh bags. “We may place an order next week,” he said. The Gujarat Institute of Housing & Estate Developers (GIHED), too, is negotiating with a Chinese company and, according to its estimates, the cost of imported cement works out to be about Rs 161 per 50 kg bag, inclusive of the material cost, freight charges and transportation. This is a clear Rs 60-70 less than the domestic cement price. GIHED is negotiating with a Chinese company, Prettech Machinery Making Co, of the Taishan Group. "We have done our groundwork and if cement companies do not slash prices to Rs 190 per bag, we will import cement," said Jaxay Shah, president of GIHED. The association says its member developers need 10 lakh bags a month, but domestic supply has fallen drastically. Sources said that another reputed company, which is into gas distribution in Ahmedabad, has also ordered a huge consignment from China. Local cement manufacturers, meanwhile, were reluctant to comment on the issue. Gaurang Bhatt, vice-president, corporate affairs, Sanghi Industries, said: "I can't comment on the price issue at this point." [From Internet]

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