Sunday, October 02, 2005

Federal Bank's interest in Lord Krishna Bank may propel the scrip forward

Federal Bank may edge higher on media reports that the bank is in
discussions with privately-owned Lord Krishna Bank for a possible take over.
Federal Bank has already held preliminary talks with Lord Krishna Bank and
it has sought its permission to conduct due diligence for Lord Krishna Bank,
reports suggest.

Hero Honda, Bajaj Auto and TVS Motors may edge higher on the back of strong
September 2005 bike sales. Hero Honda’s bike sales jumped 22% in September
2005 to 2.66 lakh units compared to 2.17 lakh units in September 2004. On a
month on month basis, sales rose 8.1% from 2.46 lakh units in August 2005.

Bajaj Auto’s bike sales jumped 43% in September 2005 to 1.8 lakh units from
1.26 lakh units in September 2004. On a month on month basis, sales rose
20.8% from 1.49 lakh units in August 2005. TVS Motors reported 27% growth in
bike sales in September 2005 to 75,310 units from 59,172 units in September

Apollo Tyres may see action after the company said on Friday it has decided
to sell its entire stake in its joint venture with French tyre maker
Michelin - Michelin Apollo Tyres in favour of Michelin. Apollo Tyres said
the board of the joint venture company, Michelin Apollo Tyres Pvt. Ltd had
deferred implementation of a project to manufacture truck and bus radials at
least by a year. Apollo Tyres also said that the technical assistance
agreement of Apollo Tyres with Michelin Group comes to an end.

Videocon International may edge higher after France's Thomson said on Friday
it had finalised the sale of its television tube operations to Videocon
Group completing its exit from consumer electronics. Thomson sold the tube
plants employing 11,500 staff in China, Mexico and Poland to Videocon Group
for 240 million euros ($ 289 million), which it said it would reinvest in
two Videocon units.

State Bank of India may slip after the company denied stock split rumours.

Tata Steel may edge higher on reports that it has posted sales at 1.18
million tonnes in Q2 September 2005 – a growth of 14% compared to the same
period last year. The improvement in sales was largely due to product mix.
The supplies to the auto sector comprising cold rolled and galvanized
products rose 10% and 221% respectively.

Prime Property Development and Konkan Tyres will find only sellers after
Securities & Exchanged Board of India (Sebi), on Friday barred promoters and
directors of these two companies from trading in the stocks of their
companies till further orders, for alleged price manipulation. Prime
Property Development is also prohibited from accessing the capital markets,
while KTL is directed not to issue any equity shares or alter its capital
structure till further direction.

Graphite India may edge higher after the company said it has issued $ 40
million unsubordinated, unsecured foreign currency convertible bonds,
redeemable after 5 years from closing date. The bonds are convertible into
equity shares at Rs 330.938 per share which represents a 20% premium over
the price on September 30, 2005 and carry a coupon of 1% per annum. Further,
the company has informed that the initial issue size was $ 30 million and
was raised upwards to $ 40 million to meet the strong demand from large
institutional investors.

State run Vijaya Bank may slip after RBI put restrictions on fresh FII
buying in the scrip. RBI said fresh FII buying can be made only with the
prior permission of RBI as the scrip has reached the trigger limit of 18%
FII investment. Maximum FII investment in state-run banks is capped at 20%
of equity.

Cadila Healthcare may edge higher after the company said it has received
tentative approval from the US FDA for its Abbreviated New Drug Application
(ANDA) for Ribavirin Tablets, 200 mg. This anti-viral therapy falls in the
anti-infectives segment and will go off patent in December 2005. The current
sales of Ribavirin Tablets (200 mg) in the US market as per NDC Health is
estimated at $ 220 million.

Jain Irrigation may edge higher after the company said it has constituted a
committee of directors to finalise the scheme of amalgamation (including
swap ratio) for merging Terra Agro Technologies Ltd., Coimbatore with the
company. The committee will finalise the scheme and swap ratio on October
04, 2005, Jain Irrigation said.

Valiant Communications may see action after the company's board of directors
allotted 6 lakh equity shares having face value of Rs 10 to Strategic
Ventures Fund (Mauritius) at an issue price of Rs 65 (including share
premium of Rs 55 each). Shares of Valiant Communications plunged 5.5% to Rs
69.75 on BSE on Friday (30 September 2005) on the eve of the announcement.

Mukand may edge higher on reports that the company has earmarked an
investment of Rs 120 crore to increase alloy steel capacity by 40% to and
stainless steel capacity by nearly 80% within a couple of years.

Jindal Stainless may edge higher on reports that the company is in advanced
stages of acquiring coal mines in Australia, the Middle East and Indonesia.
The company is also scouting for acquiring iron ore mines in South Africa.


Week Ahead: FII inflow to dictate trend

The next major trigger for the market is the Q2 earnings season which will
kickoff shortly with Infosys unveiling its numbers on 11 October 2005.
Profit taking may emerge on the bourses if the corporate earnings fail to
meet market expectations.

There are also some concerns that the valuations may be stretched. The S&P
CNX Nifty index current trades at a PE multiple of a little over 16.

FII inflow holds the key. The liquidity with FIIs remains strong. FIIs have
been shifting money in favour of emerging markets due to low yield in the
United States and Europe.

The cumulative FII inflow in September 2005 reached Rs 4,513.40 crore (till
28 September), on the top of an inflow of Rs 5,051.20 crore in August 2005.

The FII inflow for calendar 2005 so far (till 28 September 2005) has reached
$ 8.56 billion, which has surpassed an inflow of $ 8.51 billion recorded in
the whole of 2,004.

Liquidity has been intense with local mutual funds as well. The cumulative
inflow of local funds in equities in September 2005 reached Rs 2,752.27
crore (till 28 September). This follows the inflow of Rs 2,292 crore in
August 2005.

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