Friday, August 12, 2005

Sensex ends at a new peak of 7817 as FII pours in


THE market scaled yet another new peak on Thursday on the back of strong liquidity support from FIIs. The sentiment remained positive after the US Federal Reserve chairman on Tuesday stated that rate hikes would continue at a measured pace, suggesting better growth prospects of the US economy. Raising interest rates by 25 basis points, the Fed Reserve, in its policy statement, said that longterm inflation expectations remain well-contained. The statement had a positive impact on the mood globally, with the US and Asian markets ending firm. Brokers, however, feel that surging oil prices continue to remain a major concern in the market. On Thursday, crude oil prices surged past $65 a barrel on supply fears. Indian equities have been rallying mainly on the back of strong FII inflows. Hence, the future trend will depend on how long foreign investors remain bullish on India, say brokers. FIIs have pumped in
over $7bn in the current calendar year so far.

In a volatile session on Thursday, the sensex opened 20 points higher at 7749, but shaved off the entire intra-day gains to touch the day's low of 7728 around noon. The index, however, bounced back later to hit the day's high of 7843, before settling at a life-time closing high of 7817, up 87 points or 1.1%. The Nifty gained 0.9% to end at 2381. According to Vallabh Bhanshali, chairman, Enam Financial Consultants, When investors continue discounting future earnings, the margin of safety also keeps on reducing. Even though fundamentals remain good, investors should be conscious about the fact that there is a risk involved in trading on the basis of forward earnings.

On Thursday, index heavyweights witnessed a mixed trend. Contributing to Thursday's 87-point rally, HLL spurted 4.7% to Rs 169.3, while SBI rose 1.2% to Rs 817. HDFC, Cipla, Ranbaxy, Grasim, Hero Honda, Tata Motors and ICICI Bank gained between 2.4% and 4.4%. Reliance Industries, ITC and Infosys lost ground on profit-booking.

FIIs turn net sellers

FOREIGN institutional investors (FIIs) were net sellers in the equity market for the first time in the past two-and-half months, reports Our Mumbai Bureau. On Wednesday, there was an outflow of Rs 98.2 crore even as the market gained over 130 points. According to Sebi data, FIIs bought shares worth Rs 837 crore, while their sales numbers stood at Rs 935 crore, an outflow of Rs 98.2 crore. Since June, there has been huge fund flows from foreign players who have pumped in a record $7.2bn in the first eight months of this year. The large inflows from foreign funds have pushed the market up by over 1,000 points since mid-May.

Oil's on fire - charges to record high of $66


EVEN as global crude prices on Thursday surged to a life-time high of $66 a barrel amid fears of security threat to US oil assets in the Middle East and planned shutdown of refineries, there are concerns that the phenomenon could stoke inflationary pressures in India. US crude was up $1 at $65.90 in afternoon trade after hitting a record-high of $66. London Brent was up $1.55 at $65.54 after touching $65.66. Although India imports about threefourths of its total oil requirements, rises in global crude prices are traditionally not fully passed on by the oil companies to stem inflationary fears. Indian oil companies had last raised product prices in July. "An impact on the economy is most likely, as, if the (crude) price rise is passed on by oil companies then the prices of most essential commodities will go up. If the government decides to bear the rise, then fiscal deficit would surge" said S Vartharajan, an analyst at Motilal Oswal Securities.

Petroleum prices are likely to be hiked as soaring global crude prices have put a heavy burden on oil PSUs. Some burden will have to be borne by consumers, Union petroleum minister Mani Shankar Aiyar told the Lok Sabha on ThursdayDiesel price hike seen raising raw material costsPRICES of petrol, diesel, kerosene and LPG which together account for about 70% of ndia’s total oil consumption — are indirectly controlled by
the government. As diesel is used by the transport sector to move raw
materials and finished goods across the country, a price hike in diesel is
expected to increase costs, say analysts. The price rise is also likely to
affect the profitability of state-run oil companies, says an analyst with a
European brokerage. The country is already facing a Rs 40,000-crore burden
from selling oil products at below market levels. “If the prices are not
passed (by the companies), then most oil companies will have to take a big
hit in the coming quarters,” he added.
The crude price rise affected shares of staterun oil companies, even as the
broader stock market index rose 86 points to a record high of 7,816.5
points. While Indian Oil Corp, India’s largest refiner, fell 0.7% to Rs 424,
HPCL was down 0.8% at Rs 302.

Shasun Chemicals Stock Split 1:5 - Record Date 26th August 2005


Shasun Chemicals & Drugs Ltd has informed BSE that the members at the Annual
General Meeting of the Company held on July 23, 2005, inter alia, have
accorded for sub-division of the equity shares of the Company having a
nominal face value of Rs 10/- (Rupees Ten only) per share, into 5 (Five)
equity share having a nominal face value of Rs 2/- (Rupees Two Only) per
share and consequential amendment in Memorandum & Articles of Association of
the Company.

Shasun Chemicals fixes Record Date

Shasun Chemicals & Drugs Ltd has informed BSE that August 26, 2005 has been
fixed as the Record Date for the purpose of split of shares from the Nominal
Value of Rs 10/- per equity share to Rs 2/- pre equity shares.

Land sale deal takes BOC India higher


BOC India put on a decent 2.8% to Rs 138.50 following the company's saying
that it was selling the land of its closed factory at Yeshwanthpur,
Bangalore along with structures standing thereon for a price of Rs 48.95
crore.
2.3 lakh shares changed hands in the counter on BSE by the first one hour of
trade.
The stock experienced a wholesome rally since late June 2005. Strong Q1 June
2005 results further lifted the stock since late July 2005.
From Rs 115.10 on 22 July 2005, the stock spiraled up 16.8% in a short while
to Rs 134.65 by 11 August 2005.
From a low of Rs 92.25 on 30 June 2005, the stock moved up 45.9% to Rs
134.65 by 11 August 2005.
The extraordinary profit arising from the sale of land will be reported in
the financial results for the quarter ending 30 September 2005. It may be
recalled that BOC had discontinued all operations at its erstwhile
Yeshwanthpur plant in November 2004 consequent upon the commissioning of a
state of the art liquid compression plant in Peenya Industrial Area in
Bangalore.
For Q1 June 2005, BOC India reported a 162.9% growth in net profit to Rs
11.36 crore from Rs 4.32 crore in Q1 June 2004. Net sales increased 31.8% to
Rs 102.14 crore from Rs 77.49 crore.
BOC India (BOCI) is the leader in the gases business in India since 1935.
The company is a constituent of the $ 6-billion BOC Group Plc. of the UK.
Besides supplying gases, BOCI also has a project engineering division.
BOCI recently signed a long-term contract with Jindal Vijaynagar Steel
(JVSL) for supply of gases from an onsite plant at Bellary in Karnataka. The
855-tpd plant, expected to be commissioned by March 2006, will also cater to
the merchant market in the region.
Over the past couple of years, BOCI has undergone substantial restructuring
and rationalisation in the form of a huge VRS, the closing down of unviable
plants, the selling of unproductive assets, the reduction in working capital
and the adoption of international productivity, quality and customer service
norms.

Cement shares strengthen


An across-the-board uptrend was witnessed in cement shares following reports
that there was a sharp surge in cement demand across northern, southern and
eastern regions in Q1 June 2005.
Among cement pivotals, Gujarat Ambuja Cements (GACL) gained 1.7% to Rs
66.30, ACC rose 2.2% to Rs 449.80, Ultratech Cement gained 2% to Rs 409,
India Cements gained 1.7% to Rs 91.55 and Madras Cement rose 1.1% to Rs
1,284.
Among second line cement shares, Priya Cement jumped 9% to Rs 55.25, Gujarat
Siddhi Cement gained 7.6% to Rs 12.72, Andhra Cement rose 7.9% to Rs 25.95,
Prism Cement gained 5% to Rs 22.75, Mysore Cement rose 4% to Rs 24.95,
Kakatiya Cement advanced 3.8% to Rs 103, JK Corporation gained 2.7% to Rs
66.70, Chettinad Cement rose 2.6% to Rs 165, and Mangalam Cement gained 1.4%
to Rs 77.90.
Cement scrips like ACC, Grasim, GACL and Ultratech Cement held firm in the
past few months. Strong Q1 results provided firmness to cement counters.
Cement consumption rose 11.6% in Q1 June 2005 to 33.05 million tonnes.
Cement despatches increased by 12% to 11.14 million tonnes in July 2005
driven by 21% increase in the southern region to 3.38 million tonnes
followed by the central region where the despatches grew by 14% to 1.89
million tonnes. Despatches in the east increased by 11% to 1.62 million
tonnes. Despatches in the north grew by 5% to 2.45 million tonnes driven by
the increased demand in the state of Chandigarh and Himachal Pradesh.
Domestic demand during the month increased by 13% to 10.84 million tonnes.
Cement exports during the month remained at the same levels of 0.29 million
tonnes as last year.
Analysts expect cement prices to hold firm in the medium term as no new
major capacity expansion is underway. Further, a recovery of monsoon in July
2005 – a crucial month of sowing augurs well for the cement sector given
that rural housing is one of the key demand drivers of cement.
Most cement companies reported strong Q1 results. Net sales of ACC for the
quarter ended June'05 increased by 18% to Rs 1107.25 crore. Its PAT rose 72%
to Rs 139.36 crore.

Print media scrips rally


Print media firms edged higher today after RBI notified changes in overall
FDI/FII ceiling in print media firms to 26%.
The strong response to the IPO of HT Media, which was completed recently,
too, boosted print media shares.
Deccan Chronicle Holdings (up 9.7% to Rs 293), Sandesh (up 7.5% to Rs 176),
and Mid-Day Multimedia (up 2.6% to Rs 80) made decent to huge gains. 2.3
lakh shares were traded in Deccan Chronicle Holdings, 3.5 lakh shares were
exchanged in Mid-Day Multimedia and 22,351 shares changed hands in Sandesh.
Last few months saw print media shares gain ground after the government
announced that it would allow FII investment in print media shares. For
instance, from a recent low of Rs 188.65 on 28 June 2005, Deccan Chronicle
Holdings leaped up to Rs 267.10 by 11 August. From a low of Rs 134.10 on 12
July 2005, Sandesh climbed to Rs 164.20 by 11 August 2005.
Government of India has permitted foreign direct investment and portfolio
investment within the composite limit of 26% of the paid-up capital of an
Indian company publishing newspapers, periodicals and dealing with news and
current affairs. Accordingly, RBI has issued a notification withdrawing the
prohibition placed on FIIs to purchase shares of print media companies.
Meanwhile, the IPO of HT Media, which runs the Hindustan Times newspaper got
heavy subscription, with FIIs aggressively bidding for the issue.

IDFC bangs 76% UP on the listing


IDFC attracts 76% premium on debut
IDFC got listed at Rs 60 on NSE – which was a 76% premium to the IPO price
of Rs 34.
A massive 34.3 lakh shares changed hands in the counter on NSE in the first
few minutes of debut.
IDFC had priced its IPO at Rs 34 – at the upper end of the Rs 29-Rs 34-price
band.
The post- issue equity capital of the company is Rs 1,122.45 crore.
IDFC is positioned as a specialised intermediary in infrastructure
financing. It also offers non-fund-based products such as guarantees, debt
syndication, and advisory services on project and financial structuring. The
company’s main focus is on energy (power generation & distribution),
telecommunication and transportation projects (roads, ports & airports).
IDFC was sponsored by the Government of India (GoI), the Reserve Bank of
India (RBI), and IDBI as a private sector enterprise to promote
infrastructure financing. In January 2005, RBI, transferred its shareholding
in IDFC to the GoI.
Post-issue, GoI and IDBI will continue to hold 23.29% and 3.12% stake,
respectively. A clutch of domestic and foreign institutions and banks (like
SBI, HDFC, Asian Development Bank, and International Finance Corporation)
will hold 37.41%.
IDFC has a strong asset quality with zero net NPAs.
For FY 2005 (year ended 31 March 2005), IDFC reported a 17% growth in
consolidated net profit to Rs 309.30 crore from Rs 264.25 crore. Total
income rose 14.2% to Rs 727.64 crore (Rs 637.08 crore).

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