Thursday, October 06, 2005

Selling in the afternoon compels weakness in Sensex


The Sensex continues to be weak in afternoon trades on fresh bouts of selling at every rise. At 14:21 hours, the BSE Sensex is down 165 points or 1.9% to 8559 points.
The high for the day is at 8693.20 points while the low of the day so far is at 8557.80 points.
The Sensex has oscillated in a range of 135 odd points in high level of volatility
Among the Sensex stocks, 25 stocks were down while only 5 stocks were trading higher.
ICICI Bank was the biggest loser, down 4.88% to Rs 534.50 on volumes of 6.08 lakh shares
Tata Steel followed with a loss of 3.8% to Rs 408.50 on volumes of 18.44 lakh shares. There are reports that the company is looking at buying a construction grade steel company in Thailand.
ONGC lost 3.6% to Rs 1035 on volumes of 2.37 lakh shares
HDFC declined by 3.2% to Rs 998. 14.70 lakh shares changed hands
HPCL (up 1.2% to Rs 327.2) was the biggest gainer on BSE.
Ranbaxy rose 5% to Rs 515.40 by now.
The total turnover by now amounted to Rs 2675 crore.
The advance decline ratio was negative at 1:3.5 with 562 shares moving higher while 1883 shares lower. 46 shares remained unchanged by now.
Reliance Industries topped in turnover terms with a turnover of Rs 150.52 crore followed by HDFC with Rs 147.51 crore and Bharti Televentures with Rs 144.86 crore.
Side counters like ITL Industries, Lakshmi Mills and Modern Dairy were all higher by more than 7% each.
While, State Bank of Mysore, Sumeet Industries, IFSL, Elgi Equipment, Vadilal Enterprises, Modison Metals, Rathi Udyog, Pradeep Metals, lost in a range of 10% to 5% each.
MSK Projects advanced 1.3% to Rs 95. It secured orders worth Rs 33.25 crore including a contract for execution of civil and structural work for offsites for green fuel and emission control project at Mumbai refinery worth Rs 12.15 crore for HPCL, Mumbai. It has also bagged the contract for the development of the Kim Mandvi Road Project on BOT basis at an estimated project value of Rs 21.1 crore.
Sacheta Metals dropped 3.1% to Rs 18.60 despite obtaining export orders worth Rs 15 crore.
Federal Bank inched up 0.3% to Rs 196.50 after the bank’s board on Wednesday approved the acquisition of unlisted Lord Krishna Bank. The stcok hit a high of Rs 201 earlier.
Himatsingka Seide moved up 1.5% to Rs 543 after the company fixed 21 October 2005 as the record date for 2-for-1 stock split and a liberal 1:1 bonus. The stock jumped to Rs 560 level in early trades.

ONGC cools off


ONGC lost nearly 4% to Rs 1,031 following a sharp fall in global crude prices and following reports that the government is mulling hiving off ONGC Videsh into a separate company to be jointly by public sector oil firms.
3.1 lakh shares changed hands in the counter on BSE by late trading.
The stock lost 0.7% on Wednesday (5 October 2005) to Rs 1,071.70 from a lifetime closing high of Rs 1,079.45 on 4 October 2005.
Firm global crude oil prices, increase in prices of natural gas from 1 July 2005 and the scrip’s attractive valuation triggered off a sharp surge in the stock over the past few months. From a low of Rs 811.35 on 29 April 2005, the stock spurted 33% to a lifetime closing high of Rs 1,079.45 on 4 October 2005.
US crude slid towards $ 62 a barrel on Wednesday, its fifth straight session of declines, amid signs that US demand may be easing and as Washington was poised to tap emergency reserves if necessary. Oil futures for November delivery were at $62.23 in early Asian trade on Thursday -- a level last seen on Aug 8.
ONGC is currently getting a price of $55 a barrel for its crude oil at present.
Meanwhile, as per reports, the government is mulling hiving off ONGC Videsh (OVL) which bids for overseas oil blocks into a separate entity to be owned jointly by public sector oil firms. OVL is a 100% subsidiary of ONGC. It is reckoned that the proposed ownership structure will give OVL a better bargaining power, larger reach in the total value chain, better funds availability and risk mitigation.
Recently, OVL acquired a 30% stake in seven exploration blocks in Cuba. It hopes to start producing oil from three new fields in 18 months

Fresh equity issue proposal sends ICICI Bank tumbling


ICICI Bank plunged for the second day in a row after the bank said on Wednesday its board will consider a further issue of equity capital.
The stock was down 4.6% to Rs 535 on BSE in mid-afternoon trade. 6.7 lakh shares changed hands in the counter on BSE.
On Wednesday (5 October 2005), the stock had plunged 4.7% to Rs 561.35.
The stock had pared gains from a lifetime high ahead of the announcement. From a lifetime closing high of Rs 600.35 on 30 September 2005, the stock lost 1.8% in two trading sessions to Rs 589.45 on 4 October 2005.
The stock has been on a solid rally in the last few days. From a low of Rs 471.75 on 29 August 2005, the stock leaped up 27.2% to a lifetime pinnacle of Rs 600.35 on 30 September. On 28 September 2005, RBI placed a bar on any fresh FII buying in ICICI Bank, as the maximum permissible level for FII investment in the stock had been struck.
As per reports in a section of the media, ICICI Bank’s fresh equity issue may be either through a preferential issue to financial investors, a domestic public issue or another ADR issue.
One foreign brokerage predicts that ICICI Bank’s fresh issue may be a huge $ 1.5 billion issue which may result in a 16% equity dilution.
With immense credit growth and the date for the application of Basel II norms now round the corner, banks have been scaling up capital since the last one-year or so.
The bank's credit status in both the corporate and retail segments has been showing strong growth. During the period April 2005 to 23 September 2005, the banking sector made fresh non-food loans of Rs 1,24,301 crore compared to Rs 77,462 crore in the same period last year.
ICICI Bank is largely focused on retail lending. It happens to be the largest player in auto-financing, and is one of the leading players in housing finance. Retail assets constituted 61% of the bank's total lending at the end of March 2005, with portfolio having enlarged by a huge 68% year-on-year to Rs 56,133 crore in FY 2005 .
In May 2005, ICICI Bank acquired Russia's Investitsionno-Kreditny Bank (IKB). The asset size of the Russian bank is about $ 4.4 million (as on March 31, 2005).
For Q1 June 2005, ICICI Bank’s net profit rose 23% to Rs 530.01 crore. Net interest income rose 35% to Rs 851.24 crore.

DCM Shriram Consolidated continues with onward march


DCM Shriram Consolidated spurted for the fourth day in a row after the company set a record date for stock split and bonus.
In an otherwise weak market, the stock was up 4.5% on BSE today to Rs 1,072.95. The stock hit a high of Rs 1,076.40 which is an all time high for the scrip.
From Rs 895.95 on 30 September 2005, the stock jumped 14.4% in the past three trading sessions to a lifetime closing peak of Rs 1,025.15.
On 30 September, the company announced that it has set 17 October 2005 as record for a 5-for-1 stock split and a liberal 1:1 bonus issue.
The stock experienced a sharp rally since late June 2005. It got a further boost late July 2005 after it reported vibrant Q1 June 2005 results.
For Q1 June 2005, DCM Shriram Consolidated reported a 162% growth in Q1 June 2005 net profit to Rs 38.58 crore as compared to Rs 14.70 crore in Q1 June 2004. Revenues jumped 80% to Rs 584 crore as compared Rs 323.65 crore last year.
DCM Shriram Consolidated is a diversified firm with interests in sugar, farm inputs marketing, PVC resin and chlor-alkali chemicals.
The company recently commissioned a new furnace for calcium carbide, enhancing calcium carbide capacity from 190 TPD to 340 TPD. Further, it also completed the expansion cum conversion plan of its chlor-alkali facility at Kota in March 2005.
The company has decided to enhance its sugar capacities through brownfield and greenfield expansions from 14,000 TCD to 33,000 TCD (revised from 28,000 TCD announced earlier). This will be accompanied by increase in co-gen power capacity from 24MW to 81MW (revised from 72 MW announced earlier) including 38MW for export of power to the state grid. The expansion of sugar capacities is expected to be implemented by October 2006, while the last phase of the co-gen power augmentation is likely to be concluded by October 2007.
The chlor-alkali capacity at the Kota manufacturing complex is also proposed to be further expanded from 250 TPD to 310 TPD by February 2006.

Mahindra Gesco Developers bucks weak market trend


Mahindra Gesco Developers rose nearly 2% to Rs 317.05 after the company announced a project of the Mahindra Group to set up a special economic zone (SEZ) at Jaipur.
The stock rose in weak market. The Sensex was down 142 points at 8,581 as the weakness in global bourses weighed on domestic bourses.
Since late September 2005, Mahindra Gesco Developers (MGDL) witnessed a solid surge after RBI, on 20 September 2005, allowed fresh FII buying in the scrip with a higher FII investment ceiling of 30% from earlier 24%.
From Rs 203.10 on 20 September 2005, the stock spurted a staggering 53% in a short while to Rs 311.10 by 5 October 2005.
The proposed state SEZ in Jaipur will be executed by a Special Purpose Vehicle (SPV), Mahindra World City Jaipur (MWCJL) formed by MGDL and the Rajasthan State Industrial Development & Investment Corporation (RIICO). It will be spread over 3000 acres. The project is expected to generate an investment in excess of $ 2 billion (Rs 10000 crore) and will generate 1 lakh jobs, MGDL said.
MGDL is one of the larger players in the organised sector for property development and consulting. The company has presence in Mumbai, Delhi and Pune, and with an impressive list of clientele which include multinationals like Cisco, Ericsson, Heinz, Microsoft and Motorola.
The company plans to expand its activities to all major cities in the country.
For the quarter ended 30 June 2005, the company reported an 81.7% jump in net profit to Rs 2.29 crore (Rs 1.26 crore). Net sales increased 60.1% to Rs 24.61 crore (Rs 15.37 crore).

ITC loses ground on brokerage downgrade


ITC declined on high volumes for the second day in a row today.
The stock was down nearly 2% on BSE in early afternoon trade at Rs 129. 35.9 lakh shares changed hands in the counter on BSE.
The stock plunged 3.7% on Wednesday (5 October 2005) to Rs 131.50 on huge volume of 69.6 lakh shares.
The stock has cooled off in the past few days. From a lifetime closing high of Rs 143.15 on 26 September 2005, it declined to Rs 131.50 by 5 October 2005.
From 21 September 2005 - the day when the stock became ex-bonus and simultaneously a stock split was carried out in the counter, the scrip has been witnessing high volumes. The daily volumes since 21 September 2005 were between 15 lakh shares to 85 lakh shares on BSE.
The stock was beaten down today following a downgrade by a foreign brokerage to `underperform', which cited stiff valuations following a solid rally in the stock over the past few months. ITC is the most expensive cigarette scrip globally, the brokerage said.
ITC's stock price jumped up to a lifetime high of Rs 143.15 on 26 September 2005 from a low of Rs 89.30 on 29 March 2005 (price adjusted for stock-split and bonus).
Reports also suggest that 4% VAT (value added tax) is likely to be levied on cigarettes. Additionally, WHO’s Framework Convention on Tobacco Control (FCTC), to which India is a party, may make it mandatory to print graphic warning covering 30% area of the cigarette packs. These measures can impact cigarette volume, analysts feel.
Cigarette remains ITC’s mainstay, accounting for about 77% of its revenue.
For Q1 June 2005, ITC’s net profit rose 20% to Rs 558.30 crore. Sales rose 25% to Rs 2,266.88 crore

Lord Krishna Bank acquisition initiaitve spurs Federal Bank


Federal Bank gained 1.5% to Rs 198.60 after the bank’s board on Wednesday approved the acquisition of unlisted Lord Krishna Bank.
1.07 lakh shares changed hands in the counter on BSE by early trade.
The market was agog with rumours recently that Federal Bank was eyeing Lord Krishna Bank (LKB). Amid such rumours, Federal Bank edged higher ahead of the announcement. From a recent low of Rs 176.40 on 22 September 2005, the stock surged 10.9% in a short while to Rs 195.65 on 5 October 2005 on the eve of the announcement.
Federal Bank said the acquisition of LKB is subject to satisfactory details, financial and legal due diligence, obtaining all statutory, regulatory and other approvals and arriving at an acceptable valuation.
Both Federal Bank and LKB have focus on Kerala. Federal Bank has a network of 456 branches covering almost all the important cities in the country with 339 branches in Kerala. Till 1972, Federal Bank had its network of branches only in Kerala, but post 1972, it began to expand further, and established itself in all metropolitan centres of India. The bank has a huge non-resident Indian client base of over 4.5 lakh account holders
LKB has a branch network of 112 spread across 11 states and the union territory of Chandigarh.
Federal Bank’s capital adequacy as of 30 June 2005 was 11.98% while Lord Krishna Bank (LKB) had a capital adequacy of 13.07%. LKB’s net profit for the quarter ended 30 June 2005 was at Rs 7.66 crore while its net NPA stood at 4.12%. Federal Bank, on the other hand, posted a net profit of Rs 48.68 crore and it had a net NPA of 1.96%.
Recently, Federal Bank’s board decided go in for a GDR issue.

Himatsingka Seide surges on setting record date for bonus, stock split


Himatsingka Seide jumped 4% to Rs 557.90 after the company fixed record date for a bonus issue and stock split.
7,355 shares changed hands in the counter on BSE by the first few minutes of trade. Himatsingka Seide has fixed 21 October 2005 as the record date for 2-for-1 stock split and a liberal 1:1 bonus.
The stock also got a boost from reports that the company plans to raise up to $ 60 million by issuing global depositary receipts.
The company recently said it plans to invest Rs 400 crore in setting up a bed linen fabrics unit and that, on reaching full capacity, the turnover of the unit will be about Rs 475 crore. The company had sales of Rs 137.98 crore for the full year FY 2005 (year ended 31 March 2005).
Himatsingka Seide is a 100% EOU, manufacturing and marketing natural silk fabric. Its products are well-received in the highly sophisticated markets of Europe and the US.
For Q1 June 2005, the company posted a 11% growth in net profit to Rs 11.27 crore (Rs 10.11 crore). Net sales rose 11% to Rs 34.17 crore (Rs 30.79 crore).

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