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Sensex, Nifty gain on global spurt

This article was posted on Sep 11, 2009 and is filed under Market News

Sensex intra-week high of 16,434.7 and low of 15,793

Strong buying from FIIs helped propel the NSE Nifty to a new 52-week closing high. The BSE Sensex closed above 16,000, backed by strong volume. The advance did fizzle out in the last two days of the week. Headwinds such as sluggish loan growth, subdued tax receipts, poor rains and rising inflation kept the bulls in check. Finally, the Nifty closed the week higher by 3.2% and the Sensex added 3.3%.

Nify intra-week high of 4,889 and low of 4,679

Sensex intra-week high of 16,434.7 and low of 15,793

The Foreign Institutional Funds purchased Rs24.74bn during the week.

The Domestic Institutional Funds were net buyers to the tune of Rs1.8bn during the week.

The top gainers: The top gainers in the Sensex were Hindalco (up 18.3%), ICICI Bank (up 12.3%), Tata Steel (up 9%), SBI (up 9%) and Tata Motors (up 8.3%).

The Top Losers: The top losers in the Sensex were Hindustan Unilever (down 6.2%), Maruti Suzuki (down 5%), DLF (down 3.8%), Hero Honda (down 2.7%) and ITC (down 2.6%).

The BSE IT Index (up 2.3%): The top gainers in the IT sector were TCS (up 5.3%), Infosys (up 3%) and HCL Tech (up 2.6%).

The top losers were Patni Computer (down 6.3%), Financial Tech (down 5.3%), Mphasis (down 4.8%), Oracle Financial (down 2.7%) and Sasken Comm (down 1.2%).

Tech Mahindra lost 7.2% during the week. According to an IIFL report released during the week. “We are downgrading Tech Mahindra from BUY to Reduce and recommend to SELL Satyam. Fundamentals have deteriorated at both the companies whereas stock prices have run ahead of reality. Revenue run rate at Satyam is likely to fall to US$ 1.1 to 1.2bn in FY10 (below our earlier estimate of US$1.3bn), with further risks as clients walk away and employees quit. GE is prospecting other vendors whereas a number of others including Oceaneering, Lowe’s, Sony, Emerson etc. have either terminated or are likely to terminate contracts with Satyam. Steady senior management exits at Satyam increase the risk of client attrition with a lag. Tech Mahindra, too, is facing intensive pressures from BT. It is failing to enforce pricing and volume discipline on contracts for which it paid upfront. The BTGS deals, which were expected to offset declining volumes from BT’s other contracts, are undergoing re-scoping and re-pricing. Since our upgrade of Tech Mahindra in May’ 09, the stock is up 116% vs BSE IT which is up 46%. We believe the arbitrage opportunity that existed due to rock-bottom valuations at Satyam has come to an end”.

The BSE Consumer Index: The top gainers in the consumer durables were Blue Star (up 3.8%), Titan Inds (up 1.1%) and Mirc Electronics (up 0.6%).

The top losers in consumer durables space were Samtel Color (down 3.1%) and Su-Raj Diamonds (down 1.1%).

The BSE Healthcare Index (up 2%): The top gainers in the Pharma space were Zandu Pharma (up 54.2%), Emami (up 14.6%), Suven Life Science (up 9.4%), Lupin (up 6.2%) and Ranbaxy Labs (up 5.2%).

The top losers were Strides Arcolab (down 4.3%), Orchid Chem (down 3%), Torrent Pharma (down 2.5%), Glenmark Pharma (down 1.6%) and Glaxosmithkline (down 1.2%).

Glenmark Pharma was down 1.6% in the week. The company announced that the Committee of Directors of the company planned to make an issuance of equity shares of face value Re.1 each to Qualified Institutional Buyers.

The company would sell the shares to large investors for at least Rs221 each. Glenmark has hired Citigroup and Enam to advice on the share sale.

The BSE Banking Index (up 7%): The top gainers in the banking were Allahabad Bank (up 14.1%), OBC (up 12.7%), ICICI Bank (up 12.3%), SBI (up 9%), IOB (up 7.7%) and Kotak Mahindra Bank (up 1.5%)

The BSE Auto Index (down 1%): The top losers in the auto space were Swaraj Mazda (down 5.6%), M&M (down 5.3%), Maruti Suzuki (down 5%), Hindustan Motors (down 3%) and Hero Honda (down 2.7%).

The top gainers were Eicher Motors (up 11.5%), Tata Motors (up 8.3%) and Bajaj Auto (up 3.3%).

The BSE Oil & Gas Index (up 4.6%): The top gainer in the oil & gas space was Gujarat NRE Coke. The stock rose over 21% during the week. An IIFL report released during the week stated, “Gujarat NRE Coke, the biggest independent metallurgical coke producer in India, currently has a capacity of 1.25m tonnes per annum, and owns mines in Australia whose coking coal reserves total about 560m tonnes. The company seems set for strong growth, with its planned expansion of coke capacity to 4mtpa in the next 3-5 years and coking coal production to7mtpa by 2014-15. Historical valuations look high given a lacklustre 1HFY10 and 2QFY09. The stock’s current valuation—EV/EBITDA of 4.1x on FY11E—are attractive, in our view, under the assumption that management expectations on delivery timelines and realizations materialise”.

Among the other major gainers were Reliance Industries (up 8.1%), Chennai Petroleum (up 8%), RPL (up 7%) and Hindustan Oil (up 6.5%).

The top losers were Aban Offshore (down 4.6%), GSPL (down 3.9%), MRPL (down 2.7%), Essar Oil (down 2.2%) and Great Offshore (down 2.1%).

The BSE Capital Goods Index (up 2.2%): The top gainers in the capital goods space were Usha Martin (up 23.1%), Kirloskar Bros (up 15.8%), Lakshmi Machine (up 14.3%), Elgi Equipments (up 11.6%), Thermax (up 6.4%), L&T (up 4%) and Siemens (up 4%).

BHEL gained 2% during the week. The company won an order worth Rs13bn for the supply and installation of the Boiler, Turbine and Generator (BTG) Package as an extension of the upcoming Vallur Thermal Power Project at Ennore in Tamil Nadu, involving one unit of 500 MW.

The top losers were Gammon India (down 7.9%), Greaves Cotton (down 4.7%), Alfa-Laval (down 4.7%) and Praj Industries (down 3.9%).

The Cement Sector: The top gainers in cement sector were Binani Indus (up 8.1%), JK Cements (up 4.3%), Madras Cements (up 3.8%), Gujarat Sidhee (up 2.3%) and Shree Cement (up 2.1%).

The top losers were Dalmia Cement (down 4.2%), India Cements (down 2.8%), ACC (down 2.4%), Ultratech Cement (down 2.2%) and Prism Cement (down 2%).

The Telecom Sector: The top gainers in the telecom space were Gemini Comm (up 14.8%), Shyam Telecom (up 2.8%) and RCom (up 2%).

Bharti was up 4% in the week. According to a report released by IIFL in the week, “As per media reports, Bharti and MTN have modified the original deal, by raising the cash component, and making different offers to the top 2 and other MTN holders. In the new structure, MTN holders M1 and PIC would get $4bn in Bharti stock; all other shareholders would get cash; MTN plus MTN shareholders would hold 33% of Bharti; Bharti would hold 49% of MTN and Bharti would raise cash component to $10bn. We think the implied premium to the smaller shareholders is too miniscule to excite them. Either that or the news reports are inaccurate. Bharti has already denied the news reports. We rate Bharti ADD (TP of Rs433)”.

The top losers were Idea Cellular (down 4.5%), Tata Communication (down 3.6%), TTML (down 1.8%), Himachal Futuristic (down 1.5%) and WWIL (down 1.5%).

The Realty Sector (down 1.2%): The top losers in the real estate were Peninsula Land (down 10.5%), Ansal Props (down 5.3%), Anant Raj Indus (down 4.4%), Akruti City (down 4.1%) and DLF (down 3.8%).

The top gainer was Omaxe. The stock surged 5.8% in the week. The company through its subsidiary, will develop a Hi-tech Township in NCR adjoining Greater Noida in Buladshahar, Uttar Pradesh. Omaxe’s subsidiary Rivaj Infratech Pvt. Ltd has signed an MoU with Bulandshahar Development Authority for the development of the Hi-Tech Township. To be developed over an area of 3601.19 Acres (approx.), this township will have estimated revenues of over Rs75bn and will be executed in phases over a period of 5 to 7 years.

Among the other major gainers were HDIL (up 5.3%), Unitech (up 1.1%) and Mahindra Lifespace (up 0.5%).

According to an IIFL report during the week, “(Real Estate) – The residential segment has led the recovery in real estate, as developers cut apartment prices to improve affordability. However, with balance sheet problems easing, developers have increased prices sharply in Mumbai and NCR, the two largest markets accounting for 57% of the value of residential transactions across the eight key metros in the country. Higher prices have started to hurt as growth in disposable income has failed to keep pace. Any further price increases will hamper the revival, in our view. Instead, in our view, developers should focus on completing the large backlog of pre-sold projects; this is the only way they can restore faith in their execution capabilities among end-users”.

The Metals sector (up 7.7%): The top gainers in the metal space were Lloyds Metals (up 26.9%), Bhushan Steel (up 8.5%), JSW Steel (up 6.1%) and Jindal Stainless (up 3.5%).

Tata Steel rallied over 9% during the week. The company’s August domestic steel sales rose 25% from a year earlier to 492000 tons. The strong performance came on the back of an 81% jump in sales of long products, used in construction, from a year earlier.

The top losers were Bhuwalka Steel (down 4.8%), Monnet Ispat (down 2.4%), Sunflag Iron (down 1.9%), Adhunik Metaliks (down 0.8%) and Ispat Industries (down 0.7%).

An IIFL report released during the week stated that, “Zinc demand is expected to decline by ~8% in CY09 after falling 3% in CY08, as construction and transport segments (~70% of consumption) are the hardest hit sectors globally. Strong supply-side response with cuts of over 1mtpa is mitigating the price impact of the sharp fall in the demand. The sharp run-up in zinc price may lead to a reactivation of previously closed mines. This, coupled with rapidly declining Chinese imports (key source of strength in base metals) pose a risk to zinc prices in the near term. That said, the medium-term outlook for zinc is strong, given expected mine closures of around 2.7mtpa (~26% of CY08 production) over the period 2010-2015. We expect zinc to trade between US$1,400-1,900/tonne in the near term, with a possible break-out in price beyond 2012”.

source: Indiainfoline

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