How Taxes effect your ESOP Gains

What happens when you mix corporate planning with financial wizardry and HR strategy. The result is employee stock option plans (Esops). Esops, under which key employees are offered equity shares of their company as an incentive to remain in the company, have been used extensively by the IT industry to attract and retain talent.

However, Budget 2007 upset the apple cart of the industry when it was announced that Esops offered by a company would be sub -ject to Fringe Benefit Tax (FBT).

Though corporate houses have more or less reconciled themselves to this reality, there is still a lot of confusion about the implications of the new rule among employees. Let us understand the modalities of a basic Esop, the tax implications prior to the recent amendment in the Income Tax Act, 1961 and the tax laws as they now stand.

The laws governing Esops have been modified several times in the past two decades. Starting 1 April 1999, employees were taxed on the difference between the exercise price and fair market value (explained later) of shares as on the date of exercise. The difference was treated as a “perquisite” and was included in the salary income for tax purposes.

Also, employees were taxed on capital gains arising at the time of sale of shares on the difference between the sale price and fair market value (FMV) on the date of exercise of the option. This resulted in double taxation in the hands of the employees.

For simplifying the system and enforcing a single stage tax mechanism, the central government amended the tax laws with effect from 1 April 2000 to tax Esops only at the time of sale as capital gains. Accordingly, there was no case for a perquisite being paid to the employee at the time of exercise of stock options if these complied with the central government’s guidelines (also generally referred to as Qualified Esops). However, employees were subjected to capital gains tax at the time of sale of shares. For non-compliant Esops the double tax incidence continued.

What happens now? The amendments introduced by the Finance Act, 2007, have shifted the focus from employee taxation to employer taxation, as Esops now fall within the ambit of the FBT. The shares allotted to an employee post 1 April 2007, under Esops will now be treated as a fringe benefit offered to the employee by the company.

Therefore, the employer will be liable to pay FBT on the difference between the FMV of the shares on the date of vesting and amount recovered from the employee. The FBT rate on this difference is the normal corporate tax rate of 33.99%. Even if the options have been granted earlier, they would attract FBT if shares are allotted on or after 1 April 2007.

Computing fair market value

How does one determine the FMV of shares allotted under Esops. The Central Board of Direct Taxes (CBDT) guidelines say that if the company’s shares are listed on a recognised stock exchange, the FMV would be the average of the opening and closing price of the share on the vesting date. In case the shares are listed on more than one exchange, the price on the bourse which records the highest volume in that share on that date will be considered.I

f there is no trading in the share on any recognised stock exchange on the date of vesting of option, the FMV shall be the closing price on a date closest to the date of vesting of option and immediately preceding such date on the exchange.

In case shares are listed on more than one bourse, the exchange with the highest volume in that share on that date will be considered. In case on the date of vesting of options, the share is not listed on a recognised stock exchange, the FMV shall be the value as determined by a category 1 merchant banker. No specific valuation methodology has been prescribed for this purpose.

But if your employer has to bear the FBT obligations, why should you as an employee worry? The reason is simple. The tax laws specifically provide that an employer can recover the FBT from the employee. This can be done by tweaking the employee’s compensation package. This is explained through an example on the following page (see box: How FBT is calculated).

Tax on profits from sale

Employees will be subject to capital gains tax upon sale of shares. In those cases, where FBT has been paid, the capital gain will be the difference between the sale consideration and the FMV as on the date of vesting of the option (this will be treated as the cost of acquisition).

If shares are held for more than a year, then the capital gains arising on sale are long-term capital gains. Long-term capital gains are tax exempt if the transaction is routed through a recognised stock exchange and securities transaction tax (STT) has been paid on the sale. Assuming that the employee sells the shares allotted on 26 December 2008 after holding for a year on 25 January 2010 and pays STT, he will not have to pay any tax on the profits made.

If no STT is paid, long-term capital gains would be taxed at 20% (plus applicable surcharge and edu -cation cess) and benefit of indexa -tion on cost of acquisition would be available. Alternatively, one can choose to pay long-term capital gains at 10% (plus applicable surcharge and education cess) on the capital gain computed without indexation benefit.

But, if shares are held for less than one year from allotment, the resulting short-term capital gain will be taxed at 10% (plus surcharge and education cess), if STT has been paid upon sale. In other cases, short-term capital gains would be taxed at 30% (plus the applicable surcharge and education cess).

This tax will need to be paid either as advance tax by the employee concerned directly or he or she can disclose such capital gains to the employer and authorise that tax be withheld from salary income after taking into consideration the additional taxable capital gains component.

For employers the recently introduced notification which lays down the criteria for determination of FMV is not free from ambiguity. For instance, if the employer company is not listed in India, or the Esops of the global parent or foreign affiliate cover the employees of their subsidiaries in India, only a category 1 merchant banker can be engaged to determine the FMV of the shares granted under the plan. No valuation guidelines have been prescribed in such cases. This could result in tax litigation in the future.

However, it should be remembered that while the FBT burden can be passed on to the employee, the employee will not have to face any litigation related to the fringe benefit tax.

Cover you need but didn't know

Insurance is about as exciting as watching paint dry. But it's an essential financial tool — if you get the cover you need and not the one that's thrust upon you. We hunted down five policies you might never have heard of even though some have existed for years. These are not for everyone, but if you have special needs or are prone to specific risks, you will do well to consider them.
DISABLED, NOT BROKE
Permanent or temporary disability partial or total can cripple you financially as well as physically and emotionally. It’s worse if you are the sole breadwinner and are unable to work even for a few weeks or months.
That’s why you need an insurance policy that covers disability as well as death due to accidents. And there is one offered by most general insurers. As an income replacer, this policy is hard to beat. It costs as little as Rs 150 for every Rs 1 lakh of cover for disability and/or death due to an accident. In case of total disability due to an accident, you get the entire sum assured.
In case of partial or temporary disability that prevents you from working, you get a weekly compensation for as long as you are away from work (subject to conditions).
This cover is ideal for anyone with a hazardous job, and is also good for those who earn weekly wages, especially factory workers and those in the courier or delivery business.
TO YOUR NEWBORN’S HEALTH
The birth of a child is something almost everyone looks forward to, and it brings with it much joy and excitement.
However, for parents of children with congenital defects, consanguineous couples, and those belonging to communities where congenital defects are common, the anticipated birth comes with its share of worries.
Apart from the emotional trauma, there is the very real problem of being unable to meet the medical expenses for the baby. That’s why companies like New India Assurance and United India Insurance offer the birthright insurance policy to pay for the baby’s medical treatment.
The policy covers congenital anomalies and disabilities (both temporary and permanent total and partial) that set in within two years of birth. For a premium of Rs 1,500, you can get a cover of Rs 75,000.
INSURE EDUCATION
If you’ve got children in school or college, chances are that you’ve already thought of this: what if you suddenly die when the child is still studying? Have you saved enough to cover school/college fees? Star Health & Allied Insurance offers a low-cost insurance product to take care of this Student Care.
It’s far from comprehensive, but at Rs 60 for Rs 1 lakh death cover, it’s definitely affordable. Says V Jagannathan, chairman and MD, Star Health & Allied Insurance: “Many children are unable to continue their education because of sudden demise of parents who paid for their education.”
It’s a policy that’s suitable for ageing parents, especially when the child is in college. It’s also a good idea for students exposed to health risks. The policy also covers health costs if the student meets with an accident.
BRIDGING THE HANDICAP
Parents with handicapped children have felt the need for a long-term disability insurance policy. The need is not fulfilled, but LIC’s Jeevan Vishwas attempts to do so, albeit in a limited manner.
This policy is essentially a variant of an endowment plan if the policyholder survives the tenure, he gets the maturity proceeds. There is also a guaranteed 6% addition each year.
If the policyholder dies during the term of the policy, his handicapped dependent gets 20% of the proceeds as a lump sum, and the rest as an annuity for 5-15 years. Yes, the scope of the product is limited, but this is a policy that’s possibly best suited to risk-averse individuals who have handicapped financial dependents.
CASH IN HOSPITAL
Health insurance takes care of medical expenses that result in hospitalisation. But what about expenses that are not covered by health plans? The salary you lose, for instance? And your attendant might also be losing pay.
Some general insurers now offer a hospitalisation cover that pays a fixed sum for the time (number of days) you spend in hospital. The policy costs Rs 250-4,500, for which you get Rs 500-2,500 for each day in hospital.
The plan is valid for up to 30 days of hospitalisation a year, which can be split into stretches of, say, three or 10 days at a time. While this may not make hospitalisation pleasant, at least you don’t lose too much in monetary terms.

Economy slows down to 8.9% in Q2

The economy slowed down to register an 8.9 per cent growth during the second quarter of current financial year, down from 10.2 per cent in the comparable period of last year.

The sluggish performance of the manufacturing sector accounted for the slow down, according to the data released by the Government here today.

The agriculture sector showed an improved growth of 3.6 per cent compared to 2.9 per cent while mining and quarrying sector nearly doubled the growth to 7.7 per cent from 3.9 per cent.

The manufacturing sector, however, recorded a lower growth of 8.6 per cent compared to 12.7 per cent in the second quarter ending September last year.

There was no change in the growth pattern of construction, which has shown a growth of 11.1 per cent.

Analysts Picks

Kotak Mahindra Bank
CMP: Rs 1,122.35
Target Price: Rs 1,363
Motilal Oswal Securities has initiated coverage on Kotak Mahindra Bank with a buy rating and a price target of Rs 1,363. “Kotak (Bank) is aggressively building up its banking franchise, with focus on affluent customers and retail services. Its asset management business should see exponential growth,” the Motilal Oswal note to clients said.

“Though its insurance business has been losing market share, we expect better utilisation of Kotak’s distribution strength to change this. We believe KMB deserves premium valuations, given the strong growth expected across its businesses, fast traction in earnings, and quality management,” the note added.

Titan Industries
CMP: Rs 1,531.70
Target Price: Rs 1,850

Merrill Lynch has initiated coverage on Titan Industries with a buy rating and a price target of
Rs 1,850, terming it a “high growth domestic consumption story.” “We expect Titan’s watch business to benefit from mix up-trading and distribution moving more towards high margin channel of ‘World of Titan’”.

“In jewellery, we expect volume growth to remain explosive at around 40% as Titan forays into second-tier cities with the new value format “Gold Plus”,” the Merrill note to clients said. “In the premium “Tanishq” format, larger stores and higher efficiencies should drive margins. Lastly, we expect the new venture of prescription eyewear to take off and account for 4% of EBITDA (earning before interest, taxes, depreciation and amortisation) FY10,” the note added.

Salora Intl
CMP: Rs 223
Target Price: Rs 312

Parag Parikh Financial Advisory Services has assigned a buy rating to Salora International with a price target of Rs 312. “The company derives 85% of its revenues from the telecom & infocom distribution business and more than 90% of the EBIT (earnings before interest and taxes) from the business of distribution, thus making it a clear contender for a re-rating from a CTV components manufacturer to a full-fledged distributor,” the PPFAS note to clients said.

“The company has active plans to get into retailing of products that it is already distributing; the modalities of the same will be out very shortly. The company is very well placed to show a topline growth of above 35% for some time in our expectations,” the note further said, adding that the recently initiated restructuring of the CTV components business will keep overall profitability intact.

3i Infotech
CMP: Rs 134.60
Target Price: Rs 175

ICICI Securities (I-Sec) has initiated coverage on 3i Infotech with a buy rating and a price target of Rs 175. “3i Infotech, with a balanced mix of software products and services (~1:1), has differentiated itself from peers by adopting a diversified business model with a strong foothold in high-growth areas.

With software services providing stability to revenue stream, products add non-linearity to the overall business model,” the I-Sec note to clients said. Additionally, the sharp rupee appreciation, which has baffled the whole software sector, is relatively a lesser concern for 3i Infotech as it derives around 31% revenues from the domestic market and the net dollar exposure is estimated to be less than 10%. Also, 3i Infotech remains comparatively aloof from other sectoral worries such as the subprime issue, impending economic slowdown in the US, wage inflation, attrition,” the note added.

Colgate Palmolive
CMP: Rs 410.35
Target Price: Rs 482

Citigroup Global Markets has assigned a buy rating to Colgate Palmolive with a price target of Rs 482. “Colgate’s business has demonstrated strong growth over the eight quarters, with sales growing in excess of 15%. It has gained share in rural areas through its ‘Cibaca’ brand and has also rolled out innovative toothpaste variants at the higher end, which have gained strong acceptance and helped accelerate growth,” the Citigroup note to clients said.

“With major capital expenditure behind it, and incremental tax and excise savings from its new plants, cash generation is likely to accelerate. We estimate about Rs 1,230 crore of free cash generation over the next three years, more than two times of what was generated over the previous three years and as such, dividend payout could increase,” the note added.

Disclaimer: The above stocks are picked up at random from research reports of brokerage houses. Investors are advised to use their own judgement before acting on these recommendations. Personalfinideas does not associate itself with the choices.

Mutual Return Options & their Tax Implications

An investor can receive returns at varying intervals. There are, however, tax implications for all the options available—growth, dividend or dividend reinvestment.

With a mutual fund an investor has the convenience of structuring his returns in a way that suits his requirement. The choice is between growth, dividend and dividend reinvestment options.

Growth option:

Returns are reinvested and no dividend is paid out. The aim is capital appreciation and compounding; suitable for investors with long-term goals. The impact of compounding on returns increases with the period of investment.

Dividend option:

Dividend is paid out, provided the fund has earned returns, either ad-hoc or at regular intervals; suitable for investors who need periodic cash inflow. Returns. Let’s say Rs 100 is invested in a growth option and dividend option of the same scheme. At 10 per cent, this grows to Rs 110 after a year in both the options. In the dividend option, at 5 per cent dividend, investor will get Rs 5.50 as dividend, and Rs 104.50 will remain invested. The next year, the growth option will give returns based on Rs 110 while the dividend option will return on Rs 104.50.

Dividend reinvestment option:

In this option, dividend is reinvested in the fund and the investor is allotted additional units. This option is good for long-term capital appreciation. Tax implications. Dividend from equity schemes is tax-free in the hands of the investor. However, there is short-term capital gains (STCG) tax of 11.33 per cent on growth option of equity schemes. Long-term capital gains (LTCG) from growth option or dividend option are tax-free. A debt scheme pays dividend distribution tax (DDT) of 14.20 per cent (28.32 per cent for a liquid fund) on the dividend given. This is an indirect charge on the investor. In the growth option of a debt fund, there is LTCG of 11.33 per cent if units are redeemed after one year, but there is no STCG. In a dividend reinvestment option, short-term investors in the 20 per cent and higher tax brackets pay no taxes. Others have to pay STCG at the marginal rate of taxation applicable to them.

Sensex garners 360 points on hopes of Fed rate cut; metal, IT stocks rally

The market surged today led by rally in IT, banking, metal and realty stocks. Robust Q2 GDP growth data which was released by the government at about 11:00 IST today, boosted the market sentiment. Reliance Energy surged. The market breadth was strong. 26 out of 30 stocks from the Sensex pack were in green. European markets, which opened after Indian markets, were trading firm. Key Asian markets, except China, edged higher.

India's gross domestic product (GDP) rose 8.9% in the second quarter ended 30 September 2007, which was below a robust 9.3% growth recorded in the first quarter ended June 2007.

The wholesale price index rose 3.21% in the 12 months to 17 November 2007, above the previous week's rise of 3.01%, government data released today, 30 November 2007, afternoon showed. The annual inflation rate was 5.56% during the corresponding week of the previous year.

The 30-share BSE Sensex rose 359.93 points or 1.89% to 19,363.19. The Sensex hit a high of 19,424.99 in late trade. At day’s high, the Sensex gained 421.73 points.

The broader based S&P CNX Nifty gained 128.15 points or 2.27% to 5762.75.

As per provisional data, FIIs bought shares worth a net Rs 1072.07 crore today, 30 November 2007. Domestic funds bought shares worth a net Rs 688.34 crore today.

The BSE Mid-Cap index ended up 2.28% to 8,553.56. The BSE Small-Cap index ended up 1.31% to 10,526.02.

Market breadth was strong. 1745 stocks advanced, 1056 stocks declined and 59 stocks remained unchanged on BSE.

BSE clocked a turnover of Rs 8416 crore compared to Thursday (29 November 2007)'s Rs 7677 crore.

Nifty November 2007 futures were at 5791, a premium of 28.25 points as compared to spot closing of 5634.60.

NSE’s futures & options (F&O) segment turnover was Rs 60313.99 crore, which was much lower than Rs 98225.56 crore on Thursday, 29 November 2007

India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries rose 1.15% to Rs 2850.75 on reports it plans to spend Rs 17000 crore on exploration in the next few years.

The BSE Bankex rose 2.54% to 10,870.88. Kotak Mahindra Bank surged 9.51% to Rs 1234, Bank of Baroda jumped 7.58% to Rs 381.90, Bank of India moved up 6.19% to Rs 350.70 and Union Bank (India) rose 4.39% to Rs 177.20.

India's largest private sector bank by assets ICICI Bank rose 1.53% to Rs 1177, off day's low of Rs 1192.

India’s largest commercial bank State bank of India rose 1.34% to Rs 2300.30 after the union cabinet on Friday, 30 November 2007, approved enhancing the capital of the largest commercial bank by subscribing to its rights issue of equity shares worth Rs 10000 crore.

The BSE IT index rose 2.74% to 4,197.62. Financial Technologies jumped 4.97% to Rs 2447.20, TCS climbed up 3.81% to Rs 1013.95, Wipro gained 2.18% to Rs 460.30 and Satyam Computers gained 3.37% to Rs 439.95.

India's second largest software exporter by sales Infosys Technologies gained 2.19% to Rs 1604.95. The company expects to maintain margins in coming quarters and the US subprime crisis had not hit IT spending by US clients, T. V. Mohandas Pai, Infosys' director for human resources said on Thursday, 29 November 2007. He further said Infosys has successfully coped with the appreciation of the rupee against the dollar.

The BSE Metal index jumped 5.09% to 17,730.53. Copper makers surged after copper prices hit a two-week high on the London Metal Exchange on Thursday, 29 November 2007, on hopes that lower US interest rates would help boost economic growth as well as demand for industrial metals. Sterlite Industries surged 12.58% to Rs 1034.75, Hindalco gained 2.43% to Rs 182.45.

Sesa Goa gained 5.80% to Rs 3453.60, Jindal Stainless rose 3.25% to Rs 217.70, and Steel Authority of India (Sail) 3.19% to Rs 258.45.

India’s largest steel firm by sales Tata Steel rose 2.94% to Rs 825.70 after the company said it has signed an agreement with Riversdale Mining to develop a hard coking and thermal coal project at key coal exploration tenements held by Riversdale in Mozambique.

The BSE Realty index moved up 3.94% to 10,626.31. DLF soared 7.04% to Rs 943.90, Phoenix Mills surged 10.71% to Rs 2516.60, Unitech gained 2.73% to Rs 382.60, and Puravankara Projects rose 3.80% to Rs 402.90.

Real estate developer Ansal Properties and Infrastructure jumped 4.12% to Rs 248.95 on reports that the company plans to foray into the field of bio-diesel.

Cement stocks were in demand. J K Cements soared 7.46% to Rs 234.80, JK Lakshmi Cements jumped 5.17% to Rs 196.45, Grasim Industries rose 2.59% to Rs 3792.35, ACC gained 1.87% to Rs 1089.45.

Among the public sector units, Shipping Corporation of India soared 10.70% to Rs 267.45, Neyveli Lignite surged 12.09% to Rs 235.55, MTNL jumped 6.59% to Rs 171.45, and Chennai Petroleum rose 6.45% to Rs 407.90.

India’s largest cellular service provider by market share Bharti Airtel gained 2.60% to Rs 939.45.

India’s second largest telecom service provider by sales Reliance Communications rose 1.47% to Rs 674.85 on reports that the company plans to place an order for 70 million GSM lines which could be valued at up to $5.6 billion. The order is likely to be placed sometime next year, the report added.

India's top tractor maker by sales Mahindra & Mahindra rose 1.60% to Rs 731.80, off day's low of 722.05.

India’s largest listed airlines firm Jet Airways moved up 1.02% to Rs 830.75 on reports that the government has permitted the airline to fly to Barcelona, Paris, Manchester and Vienna under a code-share agreement with Brussels Airlines.

The UB Group firm United Breweries (Holdings) rose 3.83% to Rs 1163.35 on reports that the company's aviation vertical is likely to raise upwards of $200 million some time mid next year. It could be through a follow-on public offer, if Deccan-Kingfisher merger goes through, or convertible bonds or through private placement.

Anil Dhirubhai Ambani group firm Reliance Natural Resources jumped 9.76% to Rs 168.20 on huge volumes of 2.81 crore shares.

Mukesh Ambani-controlled Reliance Petroleum rose 1.26% to Rs 217.75 on volumes of 2.59 crore shares.

Engineering and construction firm Punj Lloyd jumped 7.36% to Rs 509.95 after the company said its subsidiary won a contract worth Rs 1270 crore for construction work in Singapore.

Abrasives maker Carborundum Universal moved up 6.93% to Rs 171.25 after said it sold off land and a manufacturing facility near southern city of Chennai for Rs 58 crore.

Software firm Parle Software was locked in upper limit of 10% at Rs 1,817 after its board recommended a three-for-one bonus share issue.

Reliance Petroleum clocked highest turnover of Rs 568.18 crore on BSE. Essar Oil (Rs 491.28 crore), Reliance Natural Resources (Rs 459.28 crore), Mundra Port & Special Economic Zone (Rs 282.85 crore) and Reliance Energy (Rs 218.14 crore), were the other turnover toppers on BSE in that order.

Ispat Industries registered highest volumes of 3.39 crore shares on BSE. Reliance Natural Resources (2.81 crore shares), Reliance Petroleum (2.59 crore shares), Essar Oil (2.08 crore shares) and IFCI (1.83 crore shares), were the other volume toppers on BSE in that order.

In Europe, key indices in UK, France and Germany were up between 0.82% to 1.25%.

Asian stocks extended gains on Friday, 30 November 2007, after comments on Thursday, 29 November 2007, by Federal Reserve Chairman Ben Bernanke reinforced expectations that the US central bank was willing to lower interest rates again at the 11 December 2007 meeting. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were up by between 0.57% to 1.65%. But China’s Shanghai Composite index was down 2.63%.

US stocks ended nearly flat on Thursday, 29 November 2007 and the dollar stayed off its record lows against the euro.

Nifty futures saw a healthy rollover of 76% to December 2007 series from November 2007 series when the November 2007 derivatives contracts expired on Thursday, 29 November 2007. The overall rollover in the futures & options segment was about 72% to 75%.

Sensex Closes at 19003

The market came sharply off higher level in late trade due to expiry of November 2007 derivatives contracts. Infosys slipped into the red in late trade in contrast to a decent gainers earlier during the day. Bajaj Auto, Ranbaxy, Reliance Energy slipped. ICICI Bank came off higher level. Market breadth turned negative from positive in the last one hour of trade. 16 out of 30 stocks from the Sensex pack were in green.
European markets, which opened after Indian market, were mixed. Asian markets, which opened before Indian market, surged after comments on Wednesday, 28 November 2007, from US Federal Reserve officials raised the chances of another US rate cut in December 2007.
The market has been volatile over the past few days due to alternate bouts of buying and selling amid FII sales caused by redemption pressure in their home countries and fears of a US recession arising from US housing slump and credit crisis.
The 30-share BSE Sensex rose 64.39 points or 0.34% to 19,003.26. Sensex hit a low of 18,930.31 at the fag end of the trading session. At day's low, Sensex shed 8.56 points for the day. The Sensex hit a high of 19,297.01 in early trade. At day's high, the Sensex gained 358.14 points.
The broader based S&P CNX Nifty gained 17.05 points or 0.30% to 5634.60. Nifty hit a high of 5725 in early trade. At day's high, Nifty had risen 107.45 points.
The BSE Mid-Cap index fell 0.25% to 8,362.55. The BSE Small-Cap index was up 0.14% to 10,389.75. Both these indices underperformed the Sensex.
The market breadth was negetive. On BSE, 1317 stocks advanced, 1468 stocks declined and 72 stocks remained unchanged.
BSE clocked a turnover of Rs 7596 crore, higher than yesterday (28 November 2007)'s Rs 7,472.89.
Nifty November 2007 futures were at 5641, a premium of 6.4 points as compared to spot closing of 5634.60.
NSE’s futures & options (F&O) segment turnover was Rs 98225.56 crore, which was higher than Rs 86287.52 crore on Wednesday, 28 November 2007
As per provisional data, FIIs sold shares worth a net Rs 1112.96 crore today. Domestic institutions bought shares worth a net Rs 606.25 crore today.
India’s largest private sector firm by market capitalisation & oil refiner Reliance Industries was up 1.15% to Rs 2818.40.
India's second biggest motorcycle maker in terms of market share Bajaj Auto fell 0.13% to Rs 2724.30. The stock came under selling pressure in late trade when it hit a low of Rs 2600.
India's biggest drug maker in terms of sales, Ranbaxy Laboratories fell 2.67% to Rs 378.95.
The BSE Bankex rose 2.04% to 10,601.41. It outperformed the Sensex. Indian Overseas bank surged 7.43% to Rs 157.65, HDFC Bank soared 4.30% to Rs 1677.15, Punjab National Bank rose 1.53% to Rs 593, and Kotak Mahindra Bank rose 1.52% to Rs 1127.15.
India’s largest private sector bank by assets ICICI Bank rose 3.15% to Rs 1162.20. The stock came sharply off the higher level in late trade. It came off session's high of Rs 1184.
The BSE IT index rose 0.11% to 4,085.76. It underperformed the Sensex. HCL Technologies jumped 3.18% to Rs 313.40, Wipro gained 0.23% to Rs 450.50, Satyam Computers rose 0.15% to Rs 425.60, and TCS rose 0.10% to Rs 976.75.
India’s second largest software exporter by sales Infosys Technologies was steady at Rs 1569.60.
Realty stocks jumped on television reports that Maharashtra State Assembly has passed a resolution repealing the Urban Land Ceiling Act, leading to more area available for real estate development in the state. The BSE Realty index was up 1.54% to 10,223.93. It outperformed the Sensex. DLF rose 0.27% to Rs 881.85, Unitech soared 3.56% to Rs 372.45 and Sobha Developers gained 0.12% to Rs 860.
The BSE Power index fell 1.03% to 4,253.43. It underperformed the Sensex. Areva T&D fell 3.46% to Rs 2604.30, Power Grid Corporation of India fell 2.39% to Rs 142.80, Reliance Energy declined 2.37% to Rs 1663.70. NTPC gained 0.32% to Rs 231.70, Tata Power rose 0.45% to Rs 1119.50 and Neyveli Lignite rose 0.69% to Rs 210.15.
India's largest public sector oil explorer ONGC fell 0.81% to Rs 1141.20. ONGC Videsh (OVL), the overseas arm of state-run Oil and Natural Gas Corp (ONGC), has reportedly bagged two oil and gas exploration blocks in Brazil. Meanwhile, some reports suggest that the company has found more natural gas in a block in the desert state of Rajasthan. This block was awarded to the company before India moved to a regime of auctioning its oil and gas exploration blocks.
Mukesh Ambani-held Reliance Petroleum surged 11.95% to Rs 215.05 on huge volume of 5.56 crore shares on BSE.
The BSE Auto index rose 0.28% to 5,419.51. It underperformed the Sensex. Tata Motors rose 0.25% to Rs 722.30, Hero Honda Motors jumped 3.53% to Rs 733.90 and Maruti Suzuki gained 2.46% to Rs 990.45.
Mahindra & Mahindra rose 1.47% to Rs 720.25. Mahindra Holidays and Resorts, part of Mahindra & Mahindra Group, is reportedly planning to develop holiday homes on ownership basis. It also plans to float an IPO by March 2008.
India's largest cellular service provider by market share Bharti Airtel rose 0.62% to Rs 915.65. India's second largest listed telecom service provider by sales Reliance Communications fell 1.98% to Rs 665.05.
Pharmaceuticals firm Jubilant Organosys fell 0.79% to Rs 302.25 on reports that the firm is evaluating various proposals to acquire companies in the contract research and manufacturing services, drug discovery and clinical research segments in the US and Europe. It has earmarked around $100 million for acquisition.
Electric equipment maker Kirloskar Electric Company rose 0.71% to Rs 370.20. The board of directors of Kirloskar Electric Company on Wednesday, 28 November 2007 approved the merger of the operating business of Kirloskar Power Equipments with itself. The board also approved merger of its subsidiary Kaytee Switchgear with itself.
Ship building firm ABG Shipyard jumped 8.34% to Rs 888.55 after the company said its board had approved raising funds through issue of equity shares to qualified institutional buyers and convertible warrants to the promoters.
Post-production firm Prime Focus gained 0.17% to Rs 1210 after the company said it was in advanced talks to buy US-based firms, Post Logic Studios and Frantic Films for $43 million.
Liquor firm Shaw Wallace & Company rose 1.05% to Rs 409.60, off day's high of Rs 434 after its board approved merging the firm with group firm United Spirits. Shaw Wallace shareholders will get four United Spirits shares for every 17 held. United Spirits, part of the UB Group, fell 0.41% to Rs 1844.30
Offshore logistics firm Sical Logistics jumped 4.97% to Rs 238.50 on foreign investment promotion board's approval for Old Lane Mauritius IV's $26 million investment in Sical's new infrastructure unit, Sical Infra Assets.
Reliance Petroleum clocked highest turnover of Rs 1137.84 crore on BSE. Mundra Port & Special Economic Zone (Rs 371.03 crore), Reliance Natural Resources (Rs 202.57), Reliance Energy (Rs 186.61 crore) and Jaiprakash Associates (Rs 186.22 crore), were the other turnover toppers on BSE in that order.
Reliance Petroleum registered highest volume of 5.56 crore shares on BSE. Gujarat State Petronet (2.42 crore shares), Ispat Industries (2.11 crore shares), Reliance Natural Resources (1.31 crore shares) and Tata Teleservices (1.20 crore shares), were the other volume toppers on BSE in that order.
In Europe, key indices in France and Germany were up by between 0.02% to 0.28%. UK’s FTSE 100 was down 0.24%.
In Asia, key benchmark indices in Hong Kong, Japan, China, South Korea, Singapore and Taiwan were up by between 2.06% to 4.06%. The Fed's next policy-setting meeting is scheduled for 11 December 2007.
US markets rallied overnight on expectations for an interest rate cut by the US Federal Reserve in December 2007. The Dow Jones industrial average jumped 331.01 points, or 2.55%, at 13,289.45 on Wednesday, 28 November 2007. The Standard & Poor's 500 Index was up 40.79 points, or 2.86% at 1,469.02. The Nasdaq Composite Index was up 82.11 points, or 3.18%, at 2,662.91.
Oil surged by more than $4 a barrel towards $95 a barrel today, 29 November 2007, after a pipeline explosion cut crude oil imports to top consumer the United States by nearly a fifth.

Gold Funds - Book Profits

New highs in gold prices are leading to net redemption in gold exchange-traded funds (ETFs) even as investors are increasingly looking at this category for diversification of their portfolios. With the listing of Reliance gold ETF on the National Stock Exchange (NSE) yesterday, four fund houses (Benchmark, UTI Mutual Fund and Kotak Mutual Fund being the other three) currently offer gold ETFs to Indian investors. Their assets under management (AUM) under gold ETFs is estimated at about Rs 500 crore.

Industry officials said UTI Mutual Fund had seen redemption of Rs 5.63 crore in November, while Kotak MF had witnessed redemption for Rs 5.14 crore in the same period. Benchmark executives did not disclose the redemption figures, adding that they would clear only by the end of the month.

Gold ETFs are open-ended mutual fund schemes that invest the money collected from investors in standard gold bullion (0.995 purity). Investors’ holding is denoted in units, which get listed on a stock exchange. These are passively managed funds and are designed to provide returns that would closely track the returns from physical gold in the spot market. Though Kotak’s gold ETF has added Rs 10 crore in the last 2-3 months, new highs in gold prices are leading to some redemption now. “Gold prices have created new highs at the $800 level. But if gold continues to remain at this price for some more time, investors will begin to put in money into the gold ETF once again,” said Ritesh Jain, a fund manager of Kotak gold ETF.

UTI Mutual Fund’s Goldshare had AUM of Rs 142 crore as of November 27. Industry observers feel gold ETFs are picking up slowly. An indication of this is the fact that the latest entrant, Reliance Mutual Fund’s gold ETF, managed to mop up Rs 146 crore in its new fund offering. The fund got listed on November 26

Forthcoming IPO's

Deccan stock soars 18% on reverse merger hopes

Shares of Deccan rose to Rs254.75 on Tuesday before ending the day at Rs248.45, 18% more than the previous day’s close

A key minority investor in Deccan Aviation Ltd that runs an eponymous discount carrier says the firm will merge into privately-held Kingfisher Airlines Ltd, an aviation company of the UB Group, which already controls 46% of Deccan, soon.
Shares of Deccan rose to Rs254.75 on Tuesday before ending the day at Rs248.45, 18% more than the previous day’s close, on the National Stock Exchange. Nearly 14 million shares of Deccan changed hands on Tuesday, several times the average 1 million volume the company’s counter saw each trading day in November. The identity of the buyers could be immediately ascertained.
“Deccan has got a fresh lease of life with better performance parameters. It will shortly amalgamate with Vijay Mallya-promoted Kingfisher Airlines for better operational synergy,” said the minority investor, who added that the reverse-merger could take place within six months.
The investor, who together with associates controls more than one-10th of Deccan Aviation shares, said he preferred not to be named.
Several investors are interested in investing in Deccan, “but no promoter is willing to sell”, he said. “Nobody would want to sell when the airline is about to make profits in the next six months.”
The Bangalore-headquartered UB Group, chaired by billionaire businessman Mallya, which increased its initial 26% stake in Deccan to 46% recently, had earlier said that it intends to increase its equity to 51%. But on Tuesday, its chief financial officer said no merger was in the offing.
“I have not spent even one minute of time even considering any corporate change (since acquiring a stake in Deccan),” said Ravi Nedungadi, UB Group’s CFO. “Nothing has changed; our focus remains on rebranding. I would be very surprised” if there is a corporate change by the end of the year, he said.
Shares of Deccan had surged more than 23% on Tuesday last week, with analysts and industry insiders speculating a reverse merger into full-service carrier Kingfisher Airlines. On Tuesday too, analysts said the stock surge was driven by rumours. “The fundamentals of the business haven’t changed at all, so to a large extent a lot of the share movement has to do with the rumours of a merger,” said Surbhi Chawla, analyst at Angel Broking Ltd.
The recent volatility in the Deccan counter is a repeat of similar movement in its share price in May this year, when market speculation of a possible investment by the Reliance-Anil Dhirubhai Ambani Group led to a 20% jump in the Deccan scrip in one day.
A so-called reverse merger in which Deccan Aviation will merge into Kingfisher Airlines at an independently set out swap ratio of shares, thereby allowing investors of the first firm to also own shares of the unlisted UB aviation unit, is “the most logical thing to do”, another aviation expert said. “Reverse merger is not unheard of in the aviation space; they do it to make the bottom line look good. In the case of Kingfisher and Deccan…restructuring would lead to better profitability,” said Mark Martin, analyst at KPMG International’s New Delhi offices.
In 2002, for instance, suffering massive losses after the 9/11 terror attacks in New York, UAL Corp.’s United Airlines Inc., the second largest US carrier, restructured its business by hiving off a major chunk of its business into a low-fare carrier called Ted, to underwrite losses of the holding company. This led to lower operating costs for the subsidiary company and “they are doing well today”, Martin said.

Sensex falls below 19,000 in volatile trade

In a completed reversal of the trend, the market lost ground in the latter part of the trading in contract to an initial surge. Oil & gas and metal stocks were worst hit. Index heavyweight Reliance Industries (RIL) lost ground. Auto stocks were in demand. The market breadth turned negative from positive in late trade. 23 out of 30 stocks from the Sensex pack were in red.
Asian stocks started the day stronger, tracking gains in US markets, but worries about the credit market soon returned, pushing most of the markets in the red. European markets, which opened after Indian markets, were mixed.
The market has been volatile over the past few days due to alternate bouts of buying and selling amid FII sales caused by redemption pressure in their home countries and fears of a US recession arising from US housing slump and credit crisis.
Prime Minister Manmohan Singh today, 28 November 2007, declared in Parliament that the Indo-US nuclear deal does not bar India from carrying out nuclear tests in future. "If a necessity for carrying out a nuclear test arises in future, there is nothing in the agreement that prevents us from carrying out tests," he said in a brief intervention in Lok Sabha. A discussion is going on today in Parliament on the nuclear deal.
The 30-share BSE Sensex ended down 188.86 points or 0.99% to 18,938.87. The Sensex hit a low of 18,884.20 at the fag end of the trading session. At day's low, the Sensex shed 243.53 points. The Sensex had hit a high of 19,316.76 in early trade. At day's high, the Sensex gained 189.03 points.
The broader based S&P CNX Nifty was down 80.60 points or 1.41% to 5617.55. Nifty had hit a high of 5749.95 earlier during the day. At day's high, Nifty had risen 51.80 points.
The BSE Mid-Cap index ended down 0.12% to 8,383.49. The BSE Small-Cap index ended up 0.03% to 10,375.30. Both these indices outperformed the Sensex.
The market breadth was negative. On BSE, 1306 stocks advanced, 1497 stocks declined and 70 stocks remained unchanged.
BSE clocked a turnover of Rs 7435 crore, higher than Tuesday (27 November 2007)'s Rs 7,281.08 crore.
Nifty November 2007 futures were at 5638.55, a premium of 21 points as compared to spot closing of 5617.55.
NSE’s futures & options (F&O) segment turnover was Rs 86287.52 crore, which was higher than Rs 75192.11 crore on Tuesday, 27 November 2007
India's largest private sector firm by market capitalisation and oil refiner Reliance Industries was down 1.96% at Rs 2786.15.
The BSE Auto index gained 1.05% to 5,404.15. It outperformed the Sensex. MICO surged 10.91% to Rs 4935.95, Cummins India soared 6% to Rs 412.50, Maruti Suzuki spurted 3.11% to Rs 966.70, Bajaj Auto gained 2.82% to Rs 2727.90.
TVS Motors declined 7.63% to Rs 64.80, Ashok Leyland fell 7.24% to Rs 44.20, Exide Industries fell 3.64% to Rs 70.10, and Hero Honda Motors fell 2.70% to Rs 708.90.
The BSE Bankex fell 1.01% 10,389.21. It underperformed the Sensex. Federal bank fell 3.65% to Rs 312.40, Axis Bank fell 2.81% to Rs 908.50, Punjab National Bank los 2.53% to Rs 584.15, Karnataka Bank fell 2.13% to Rs 211.35 and HDFC Bank fell 1.50% to Rs 1607.95.
India’s largest private sector bank by assets ICICI Bank lost 0.50% to Rs 1126.75, off day’s high of Rs 1160.
The BSE Metal index fell 2.12% to 16,976.36. It underperformed the Sensex. Steel Authority of India (Sail) dropped 4.57% to Rs 251.60, Hindalco Industries fell 3.66% to Rs 184.35, Tata Steel fell 3.51% to Rs 818.70 and Sterlite Industries fell 2.02% to Rs 889.95. National Aluminim Company (Nalco) plunged 5.87% to Rs 357.40.
The BSE Oil & Gas index dropped 2.29% to 11,917.58. It underperformed the Sensex. BPCL fell 4% to Rs 390.10, HPCl fell 2.25% to Rs 286.60, and ONGC fell 1.87% to Rs 1150.55.
GAIL India, which distributes natural gas and processes petrochemicals, declined 0.65% to Rs 424.85, off sessions high of Rs 445.90. As per reports, the company has won the rights to market the gas jointly produced by Reliance Industries, British Gas and ONGC from the Panna-Mukta-Tapti fields, which will boost revenues of the company by over Rs 5,00 crore.
The BSE Power index fell 1.14% to 4,297.82. It underperformed the Sensex. Neyveli Lignite slumped 6.12% to Rs 208.70, Reliance Energy 2.93% to Rs 1704, CESC fell 2.08% to Rs 582.10, Tata Power fell 1.885 to Rs 1114.45 and NTPC fell 1.70% to Rs 230.95.
The BSE IT index fell 0.63% to 4,081.40. It outperformed the Sensex. TCS fell 2.11% to Rs 975.75, Wipro fell 1.81% to Rs 449.45, and Satyam Computers fell 0.56% to Rs 424.95. India’s second largest software exporter by sales Infosys Technologies fell 0.40% to Rs 1569.55.
Realty major DLF fell 2.05% to Rs 879.50 after the company said on Tuesday, 27 November 2007, it had partnered the founder of Aman Resorts for a stake in the luxury hotel chain
Diversified construction firm Jaiprakash Associates soared 4.70% to Rs 1794.75. The company is believed to be in talks with the Aditya Birla group to acquire Bina Power (BPC) in Madhya Pradesh. The company, in a communiqué to BSE, said that as a sequel to exploring new business opportunities the company is examining various proposals including Bina power project in Madhya Pradesh
Engineering firm Punj Lloyd fell 1.82% to Rs 456.15. The company and New York-based private investment firm Global Technology Investment have reportedly bought 33% stake each in Airworks India. Airworks is one of the oldest family-owned aircraft maintenance firms in India. The two investors are putting in close to Rs 100 crore to rejig the Mumbai-based company.
Steel firm Ruchi Strips soared 20% to Rs 24.57 on reports that Japan’s Mitsui & Company has scaled up stake in the Ruchi-group-controlled Indian Steel Corporation to 20% by picking up 10% stake for Rs 65 crore.
Pharmaceuticals firm Ambalal Sarabhai Enterprises was locked at upper limit of 5% at Rs 36.90 after the company sold land admeasuring 28,430.58 square metres to DLF Retail Developers at a consideration of Rs 51.14 crore. The land that it sold constituted only a small part of the total land of the company.
Steel firm Bhushan Steel jumped 5.71% to Rs 1446.30. As per reports, Sanjay Singal, who holds 11% stake in Bhushan Steel, is said to have initiated preliminary talks with the AV Birla group for stake sale. Chairman of the group Brij Bhushan Singal and his younger son Neeraj Singal, the managing director of Bhushan Steel, have opposed any such move, reports suggest.
Electric equipment maker NEPC India was locked at upper limit of 5% at Rs 25.40 after the company said on 27 November 2007 its proposed foray into solar photo voltaic modules and power plant is proceeding on the right track.
Software firm Mindteck (India) gained 4.72% to Rs 54.35 after it said on Tuesday, 27 November 2007, it is acquiring ICI Tech Holdings Inc and its wholly-owned subsidiary.
Anil Dhirubhai Ambani-led Relaince Natural Resources (RNRL) rose 1.92% to Rs 15.45 on huge volumes of 1.89 crore shares on BSE amid speculations that Reliance Industries (RIL) may buyout RNRL as a solution to the seemingly intractable gas dispute between the two Ambani brothers. RNRL, in a communiqué to BSE, said that it is not the policy of the company to comment on speculation and rumours. Developments, if any, which concern stake-holders of the company, will be intimated in due course and at appropriate time, it said.
Mukesh Ambani-led Reliance Petroleum fell 2.98% to Rs 192.10 on volumes of 1.46 crore shares on BSE on reports that Securities & Exchange Board of India (Sebi) is likely to probe into the stock's recent price rise.
Software firm Valuemart Info Technologies rose 9.47% to Rs 7.86 after the company said that it has acquired a 74% stake in Datatalk Services (India), a Bangalore based IT & BPO Company for an undisclosed sum.
Cinema chain PVR soared 7.02% to Rs 293.60. Some recent reports suggested that the company plans to invest Rs 300-400 crore to open 250 screens by 2010.
Tyre maker CEAT rose 1.23% to Rs 197.60 ahead of the spin-off of the firm's investment business. Reports suggest that the company's manufacturing and investment business would be separated soon. Each shareholder of the firm would get shares in the investment company.
Mundra Port and Special Economic Zone clocked highest turnover of Rs 324.13 crore on BSE. Reliance Natural Resources (Rs 302.87 crore), Housing Development & Finance Corporation (Rs 291.87 crore), Reliance Petroleum (Rs 285.35 crore) and GMR Infrastructure (Rs 221.29 crore), were the other turnover toppers on BSE in that order.
Reliance Natural Resources regestered highest highest volume of 1.89 crore shares on BSE. Ispat Industries (1.88 crore shares), Reliance Petroleum (1.46 crore shares), Tata Teleservices (1.24 crore shares) and Ashok Leyland (1.19 crore shares), were the other volume toppers on BSE in that other.
In Europe, key indices in France, Germany and UK were up by between 0.27% to 0.92%.
Asian stock markets were mostly into the red. Key benchmark indices in South Korea, Japan, Singapore and Taiwan, China, were down by between 0.09% to 1.35%. Hong Kong’s Hang Seng was up 0.59%.
US stocks rose on Tuesday, 27 November 2007, after Abu Dhabi's $7.5 billion purchase of a stake in Citigroup Inc spurred a rebound in financial stocks and a drop in oil prices boosted shares of big manufacturers. The Dow Jones industrial average was up 215 points, or 1.69%, at 12,958.44. The Standard & Poor's 500 Index was up 21.01 points, or 1.49% at 1,428.23. The Nasdaq Composite Index was up 39.81 points, or 1.57%, at 2,580.80.
As per provisional data, FIIs sold shares worth a net Rs 978.96 crore today. Domestic funds bought shares worth a net Rs 331.82 crore today.
FII outflow in November 2007, till 26 November 2007, reached Rs 4158.60 crore. FIIs had made heavy purchases in September 2007 and October 2007. FIIs had bought shares worth a net Rs 16132.60 crore in September 2007 and Rs 20590.90 crore in October 2007.
The National Stock Exchange (NSE) today, 28 November 2007, said it has decided to add 15 stocks to futures & options (F&O) segment with effect from Friday, 30 November 2007.
The 15 new inclusions for trading in F&O segment include Jindal Saw, KPIT Cummins Infosystems, Development Credit Bank, Hindustan Zinc, MICO, Info Edge, NIIT, Great Offshore, Wire & Wireless India, Redington (India), Network18 Fincap, Global Broadcast News, Ispat Industries, Hindustan Oil Exploration and Gitanjali Gems.
BSE on Tuesday, 27 November 2007, announced that it was shifting a total of 414 scrips from trade to trade to normal rolling settlement. The shift will take place effective from Monday 3 December 2007. BSE said these scrips that are being shifted back to normal rolling settlement from trade to trade segment will continue to attract daily circuit filter of 5% or lower as applicable.
Among the stocks being shifted back to normal rolling settlement from trade to trade include ABG Heavy Industries, Aksh Optifibre, Ambalal Sarabhai Enterprise, Andrew Yule & Company, Assam Company, Birla VXL, BPL, Cable Corporation of India, Dhanalakshmi Bank, Emkay Share & Stock Brokers, Jai Corp, Jhunjhunwala Vanaspati, L.M.L., Ramkrishna Forgings.

DSP ML Equity Fund - Invest in Small Amounts the SIP way

A true multi-cap fund, DSPML Equity is one of the most preferred funds in its category today. Find out why both aggressive and conservative investors should give DSPML a look in

This fund has been putting its best foot forward lately. From a large-cap focus, it shifted to stocks of smaller companies in 2003 to coincide with the mid-cap rally. Now it displays the characteristics of a true multi-cap fund.

In the recent past, it has also developed the ability of holding up well in the face of the bear. One thing that sets the fund apart is its high sharpe ratio which is suggestive of a favourable risk-reward ratio. The sixth-highest in the category, it indicates that for the amount of risk taken, the fund is able to deliver much higher returns than the average diversified equity fund.

The current year-to-date return of 38.20 percent is ahead of the category average of 33.40 per cent. Neither has it been a slouch over the long term. In the last five years, it has under-performed the category in only three quarters.

The fund believes in a high degree of diversification. The number of stocks in the portfolio hovers around 70, with the top holding rarely accounting for more than 5.50 per cent. Half of its holdings account for less than one per cent of the portfolio. It is difficult not to like this fund.

With no market-capitalisation or sector bias, this diversified equity offering goes about generating returns in a very consistent fashion. Its versatility and consistency make it a suitable core holding for conservative as well as aggressive investors. Little wonder that its asset size has grown to cross Rs 1,000 crore.

Stock Recommendations - Dewan Housing Finance,Bombay Rayon Fashions,Core Projects & Technologies, Lanco Infra, Nestle India

DEWAN HOUSING FINANCE

Recommendation: Buy

Broking firm: Religare

Reco price: Rs 148

CMP: Rs 140

Target price: 302

Upside: 115%
Dewan Housing, a part of the Wadhawan Group, has a niche positioning in providing housing loans to lower and middle income segments in the tier II and tier III cities. The company plans to increase its existing 54 branches four-fold in order to more than double the asset base to Rs 10, 000 crore in the next two-three years.
Besides growth in the core business followed by improvement in net interest margin to 3 per cent, the company’s business growth would be supported by unrealised gains of Rs 200 crore on shares of HDIL (the real estate company) and a capital adequacy ratio of 17 per cent.
The company acquired 19.9 per cent equity stake in promoter-owned Wadhawan Food-Retail, operator of the Spinach store chain.
Based on sum-of-parts valuation method, the company is valued at Rs 302 per share with core business valuation of Rs 212 per share and Rs 90 per share due to stakes in DHFL Vysya, HDIL and Wadhawan Food–Retail.
BOMBAY RAYON FASHIONS

Recommendation: Buy

Broking firm: Prabhudas Lilladher

Reco price: Rs 322

CMP: Rs 302

Target price: Rs 620 (FY10)

Upside: 105%
Bombay Rayon is investing Rs 1100 crore over three years to set-up its fabric processing and garmenting units in Maharashtra. As a result, its fabric and garment capacity will increase by 4 times and 1.6 times to 235 million meters and 164000 pieces per day by FY10E.
Besides, its garment capacity will further improve to 246000 pieces per day due to other new capacities, acquisition of Leela Scottish Lace and LNG apparels. The company’s revenue and earnings are expected to grow at over 70 per cent CAGR over FY07-10.
Further, with better governmental support and greater operational synergies, the company could witness operating margin expansion of about 740 bps over FY08-10E.
However the full benefits of the expansion in Maharashtra will be reflected only in FY10. The appreciating rupee will have a limited impact on the company as it has managed to change its geographic mix of its revenue from US to Europe.
CORE PROJECTS & TECHNOLOGIES

Recommendation: Buy

Broking firm: Way2Wealth

Reco price: Rs 242

CMP: Rs 265

Target price: Rs 340

Upside: 28%
CPTL a niche player in education vertical having huge addressable domestic education infrastructure market. Its client list includes various state Governments such as Georgia, North Carolina, Michigan, Illinois, Florida and Maine in the US.
The company is aggressively looking at getting orders from various state governments of India and is scouting to expand its expertise across the globe in the EU and Australian markets.
The company is well positioned player in the long term due to its aggressive inorganic strategy and exponential growth in revenues and margins. The stock trades at 29 times and 19 times its estimated earnings for FY08 and FY09 respectively.
The company’s revenues and profit are expected to double by FY09E driven by its education vertical (especially SSA Project), its recent tie-up with Centre of higher Learning (CHL) in US and inorganic growth. Operating margin is expected to improve to 32.9 per cent in FY2009.
LANCO INFRATECH

Recommendation: Buy

Broking firm: I-Sec

Reco price: Rs 445

CMP: Rs 427

Target price: Rs 591

Upside: 38%
The target price has been upgraded from Rs 332 earlier due to recent positive developments like the addition of 3,500MW to its power portfolio, increase in selling prices of residential project at Lanco Hills by 15-18 per cent, reduction in the cap rate for rental properties from 12 per cent to 10 per cent and value emanating from the potential addition of power projects.
As a result, revenue and profit estimates have also been revised upwards for the next three years. The stock trades at 21.6 times, 10 times and 6.3 times for FY08, FY09 and FY10 estimated earnings respectively. Lanco intends to have 12,000MW power capacity operational by ‘13.
Besides generation, the company is also mulling expansion in power transmission and distribution and will bid for setting up distribution networks.
Further, it has signed up a strategic agreement with Gulftainer, a leading port developer and operator from the UAE, to bid for port and transportation projects and is also planning to venture into airport development.
Within the construction segment, Lanco is planning to expand its road portfolio and is bidding for upcoming road projects in Punjab, Rajasthan, Andhra Pradesh and NCR.
NESTLE INDIA

Recommendation: Buy

Broking firm: Motilal Oswal

Reco price: Rs 1447

CMP: Rs 1370

Target price: Rs 1768

Upside: 29%
Nestle is one of the best plays on huge growth potential in food processing sector in India due to resurgent urban India and rising affordability in tier II and tier III cities. Strong brands and launch of new products and variants would enable the company post sales and net profit growth of 17.2 per cent and 24 per cent over CY07-09.
The company is uniquely placed to tap the potential of growing middle class and rising consumer confidence due to strong brands, R&D support of the parent and SBU focus.
Though volumes and value growth in the first nine months ended of calendar year 2007 (CY07) was impressive, the company witnessed strong rise in prices of all major inputs like wheat flour, coffee and milk. Raw material costs continue to be a concern in future.
The company’s focus on innovation and renovation has enabled it to launch new products like Milkmaid Funshake, Polo Zero, Cerelac Multigrain, Orange and lemonade Juice Drinks concentrate and NescafeMild Coffee in the past few months. The stock trades at 24 times and 19 times its estimated earnings for CY08 and CY09 respectively.

Stock Recommendations - L&T, BHEL,GMR Infra, Punj Lloyd, Jaiprakash Assocaites & Thermax

Larsen & Tourbo - Accumulate

Emkay Share & Stock Brokers has initiated coverage on Larsen & Toubro with ‘accumulate’ recommendation and target price of Rs 4,381, an upside of 7 per cent from current levels. The massive investment outlays by both the government and India Inc provide an investment climate that seems tailor-made to ensure L&T’s success. With L&T’s services and product offerings spanning the entire gamut of core infrastructure sectors, it is best suited to transform the available opportunity into orders, the brokerage says. Emkay expects L&T’s core business to report 30.7 per cent CAGR in revenue from Rs 18,660 crore in 2006-07 to Rs 41,640 crore in 2009-10. Given the strong growth potential of its core business, the brokerage has valued it at Rs 3,204 per share of L&T. Emkay believes that the record order book of Rs 44,000 crore as on September 2007 is just a curtain raiser to the immense potential that the current scenario presents. The brokerage expects the order backlog to grow at 34.8 per cent CAGR over 2007-10 period to Rs 90,400 crore in 2009-10. L&T’s subsidiaries have also reached sizeable scale and size over the past few years and contributed 23 per cent to 2006-07 consolidated net profit. Apart from strong contribution to net profit, there is huge value unlocking potential from the subsidiaries. These are valued at Rs 646 per share of L&T.

BHARAT HEAVY ELECTRICALS - Buy

Emkay has initiated coverage on the stock with ‘buy’ rating and price target of Rs 3,300, an upside of 25 per cent from current levels. An extremely strong order backlog of Rs 72,000 crore which is four times its 2006-07 revenues, combined with some of the recent big ticket order wins like the Rs 6,500 crore order from Deodar Valley Corp. and Rs 2,900 crore order from Argali Power company, against stiff competition from Chinese players have resulted in premium valautions for BHEL. BHEL and Tamilnadu Electricity Board recently joined hands to establish a 1,600 MW (2x800 MW) supercritical thermal power project in Tamil Nadu at an estimated cost of Rs 8,500 crore. The stock is currently quoting at 26.8 times 2008-09 estimated earnings. Major capacity expansion, technological upgradation to meet requirement for "supercritical" sets and a strong demand scenario for the 250/ 500 MW segment are likely to ensure sustenance of earnings growth momentum over next few years. Given its strong earnings visibility and robust growth prospects, Emkay believes that BHEL will continue to command the premium valuations that it currently enjoys. It understands that BHEL is close to winning its first order for supercritical boilers for NTPC's Barh II project (3x660MW), which could be another potential re-rating trigger for BHEL.

GMR INFRASTRUCTURE - Buy

Emkay has initiated cover on the stock with a ‘buy’ and target price of Rs 367, an upside of 42.2 per cent. GMR's fortunes are fully geared for take off with the Delhi airport generating revenues and the Hyderabad airport scheduled to become operational in 2008-09. GMR is one of the leading diversified infrastructure players with a prominent presence in the power, road and airport segment. GMR forayed into the lucrative airport segment when it was thrown open to private players in 2004. Emkay expects this segment to drive GMR's growth and valuations over the next few years. The brokerage believes that while revenues would grow at 32 per cent CAGR over FY2007-10 to Rs 4,530 crore, EBITDA would increase to Rs 1,600 crore, a CAGR of 43 per cent over the same period. Emkay has valued the airport project at Rs 296 per share, power segment at Rs 61 per share and road segment at Rs 10 per share, resulting in a sum of the parts total of Rs 367 per share.

JAIPRAKASH ASSOCIATES - Buy

Emkay has initiated coverage on the stock with ‘buy’ recommendation and price target of Rs 2,047, an upside of 25.7 per cent from current levels. Jaiprakash Associates is a play on the infrastructure assets like hydro power projects, high value real estate ventures and lucrative cash-cow businesses like cement and construction. The standalone businesses of cement and construction are simultaneously gathering steam as Jaiprakash Associates is all set to become India’s leading cement manufacturer with a four-fold increase in its cement capacity to 30 mtpa by 2010-11 and strong traction in its E&C business with an order backlog of Rs 11,750 crore, which is seven times 2006-07 E&C revenues. Jaiprakash Associates is on the threshold of gaining major presence in the lucrative real estate sector given the prime land bank it has accumulated in the form of Jaypee Greens and Taj expressway. Commissioning of new cement capacities, pick up in construction revenues and kickstart of high margin real estate revenues, are key triggers for a 24 per cent consolidated earnings CAGR over FY2007-10.

PUNJ LLOYD - Buy

Emkay has initiated coverage with ‘buy’ rating on the stock and an 18-month price target of Rs 602, an upside of 27.5 per cent. Punj Lloyd is one of the largest engineering & construction companies in India and operates through four business verticals- pipelines, storage tanks and terminals, infrastructure and process plants. To augment its skills in E&C and add new growth levers, Punj Lloyd acquired Singapore-based SembCorp and its UK subsidiary Simon Carves. Emkay is very bullish on the growth prospects of the company, especially after the Singapore acquisition which adds strong product offering and expands addressable market. The brokerage believes that Punj Lloyd will reap handsome gains from the ensuing opportunity in energy and infrastructure segment--the two strong pillars for growth by leveraging on its experience and skill sets. Emkay expects Punj Lloyd to report a healthy CAGR of 50.9 per cent in net profit in FY2007-10 period with net profit of Rs 670 crore in 2009-10. The brokerage expects earnings of Rs 16.6 and Rs 20.7 in 2008-09 and 2009-10 estimate respectively. The brokerage has valued the core business at average of price targets derived from price earning ratio of 25 times 2009-10, EV/EBIDTA of 14 times 2009-10 and three stage DCF Model with terminal growth rate of 4.0 per cent and discount rate of 11.0 per cent. Emkay has valued the core business at Rs 1,7630 crore or Rs 549 per share. New business is valued at Rs 1,730 crore or Rs 54 per share.

THERMAX - Buy

Emkay has initiated coverage with a “buy’ rating on the stock and an 18-month price target of Rs 954, an upside of 17.2 per cent. Thermax, India’s leading manufacturer of boilers, captive power plants and chillers, is fully geared to take advantage of the strong industrial capex and the continued supply-demand gap in power. Most of the sectors which Thermax caters to- like cement, steel, petrochemicals, fertilizers, paper, sugar and power are currently in the midst of huge capacity additions. Emkay believes Thermax, with its strong product portfolio, is likely to capitalise on this opportunity and reap handsome gains. This is clearly reflected through its Rs 3,060 crore order book as on June 2007. Emkay expects net profit to grow at a healthy CAGR of 38.1 per cent in FY2007-10 period from Rs 190 crore in 2006-07 to Rs 510 crore in 2009-10. Consequently, the brokerage expects earnings of Rs 24.2, Rs 33.3 and Rs 42.8 in 2007-08, 2008-09 and 2009-10, respectively. At Rs 814, Thermax is trading at a price earning ratio of 19 times 2009-10 and an EV/EBIDTA of 10.8 times 2009-10, quite attractive considering above industry return ratios, favorable outlook and inorganic growth opportunities.

Mundra Port and Special Economic Zone spurts on debut

Mundra Port and Special Economic Zone settled at Rs 961.70 on BSE, a premium of 118.56% over the IPO price of Rs 440. The stock debuted at Rs 770 a premium of 75% over the IPO price of Rs 440. The stock hit a high of Rs 1,150 and a low of Rs 770
Mundra Port and Special Economic Zone got listed on bourses today Tuesday, 27 November 2007. The company had fixed the IPO price at the top end of the Rs 400-440 price band.
On BSE, 1.48 crore shares changed hands in the counter.
At the current price of Rs 961.70, the PE multiple works out to 204.61, based on the year ended March 2007 anualised EPS of Rs 4.7.
The Mundra Port IPO ended on 8 November 2007 with 115.84 times subscription. The qualified institutional buyers (QIBs) category was subscribed 159.59 times. The non institutional investors category, made up of corporates and high net investors, was subscribed 156.45 times. The retail investors category was subscribed 16.19 times.
Mundra Port plans to use proceeds of the issue to part finance construction and development of basic infrastructure and the allied facilities in the proposed Special Economic Zone (SEZ) at Mundra; construction and development of a terminal for coal and other cargo; contribution towards investment in Adani Petronet (Dahej) Port; contribution towards investment in Adani Logistics and contribution towards investment in Inland Conware.
An Adani group company, Mundra Port and Special Economic Zone has received approval as a developer of a multi-product SEZ at Mundra in Gujarat and the surrounding areas from the government, making it one of the first port-based multi-product SEZs in India.
The port is located 70 kilometer (km) from Bhuj airport and includes road, sea links and all weather multi-purpose terminals. It is principally engaged in providing port services for bulk cargo, container cargo, crude oil cargo and value- added port services, including railway services. It also generates income from land related and infrastructure activities.
Mundra Port and Special Economic Zone reported a net profit of Rs 192.11 crore on sales of Rs 579.74 crore in the year ended March 2007.

Market drifts lower as heavyweights slide

The market ended lower, after decent rise in the past two sessions, due to losses in the US markets on renewed worries over the fallout from the US subprime mortgage crisis. European markets, which opened after Indian markets, slipped into the red in volatile trade.
Earlier, select Asian markets recovered from an initial fall after Abu Dhabi Investment Authority reached a deal to buy an equity stake in Citigroup. US stocks tumbled on Monday, 26 November 2007, as investors worried rising US mortgage defaults and credit market losses will drag on the US economy, fueling fears that US consumers will slash spending during the vital holiday season.
Banking and metal shares declined. Realty, auto and IT shares were in demand. Two index heavyweights Reliance Industries (RIL) and ICICI Bank edged lower. Mid-cap and small-cap stocks bucked the weak trend. But the market breadth was negative. 18 out of 30 stocks in the Sensex pack were in red.
The 30-share BSE Sensex lost 119.81 points or 0.62% to 19127.73. The Sensex hit a low of 19,019.33 in morning trade. At day’s low, the Sensex shed 228.21 points.
The broader based S&P CNX Nifty lost 33.55 points or 0.59% to 5698.15.
The BSE Mid-Cap index was up 0.11% to 8,393.49, off session’s low of 8,310.55. The BSE Small-Cap index was up 0.28% to 10,372.07, off session’s low of 10,293.30. Both these indices outperformed the Sensex.
The market breadth was negative. On BSE, 1478 stocks declined, 1299 stocks advanced and 66 stocks remained unchanged. 18 out of 30 stocks from the Sensex pack were in the red.
BSE clocked a turnover of Rs 5795 crore, lower than Monday (26 November 2007)'s Rs 6,035.19 crore.
Nifty November 2007 futures were at 5727, a premium of 28.85 points as compared to spot closing of 5698.15.
NSE’s futures & options (F&O) segment turnover was Rs 75192.11 crore, which was lower than Rs 75903.04 crore on Monday, 26 November 2007.
India's largest private sector firm by market capitalisation and oil refiner Reliance Industries fell 1.42% to Rs 2842.
India's largest private sector bank by assets ICICI Bank lost 2.18% to Rs 1132.40.
The BSE Bankex fell 0.90% to 10,495.46. It underperformed the Sensex. Federal Bank fell 2.93% to Rs 324.25, Kotak Mahindra bank fell 1.70% to Rs 1122.35, Centurion bank of Punjab lost 1.48% to Rs 43.35 and HDFC Bank shed 0.68% to Rs 1632.45.
Telecom stocks declined. Bharti Airtel dropped 3.32% to Rs 916.50 and Reliance Communications fell 0.49% to Rs 684.55.
The BSE Auto index moved up 0.99% to 5,348.21. It outperformed the Sensex. Ashok Leyland surged 16.65% to Rs 47.65, TVS Motors spurted 12.24% to Rs 70.15, Hindustan Motors soared 10.53% to Rs 41.45 and MRF jumped 9% to 7377.10.
The BSE Realty index rose 1.24% to Rs 10,206.60. It outperformed the Sensex. DLF moved up 0.68% to Rs 897.95, Unitech rose 1.14% to Rs 364.60, Indiabulls Real Estate gained 2.94% to Rs 641.
The BSE IT index moved up 0.23% to 4,107.48. It outperformed the Sensex. TCS rose 1.20% to Rs 996.80, Wipro gained 1.12% to Rs 457.75, Satyam Computers rose 0.23% to Rs 427.35.
India's second largest software exporter by sales Infosys Technologies fell 0.03% to Rs 1575.80.
The BSE Metal index fell 1.03% to 17,344.05. It underperformed the Sensex. Jindal Saw dropped 3.28% to Rs 788.25, Hindalco Industries fell 1.52% to Rs 191.35 and Steel Authority of India (Sail) fell 0.57% to Rs 263.65. Sterlite Industries gained 1.27% to Rs 908.15 and Hindustan Zinc jumped 6.60% to Rs 737.15.
India’s largest steel firm by sales Tata Steel fell 0.16% to Rs 847.60. The company may reportedly pick up a 35% stake in its newly formed Mozambique joint venture for a consideration of Australian $100 million. Report suggests that the stake will help Tata Steel get exclusive rights to the coal being mined in the new coal mine and will use it as feedstock for its plants both in India and abroad.
The BSE Power index fell 0.67% to 4,347.50. It underperformed the Sensex. Tata Power fell 3.65% to Rs 1135.80, Torrent Power declined 3.12% to Rs 174.10, Power Grid Corporation of India fell 2.30% to Rs 148.50, Reliance Energy fell 1.91% to Rs 1755.45 and NTPC fell 1.53% to Rs 234.95.
Mundra Port and Special Economic Zone settled at Rs 961.70 on BSE, a premium of 118.56% over the IPO price of Rs 440. The stock debuted at Rs 770 a premium of 75% over the IPO price of Rs 440. The stock hit a high of Rs 1,150 and a low of Rs 770.
Steel strips maker Bhushan Steel slumped 13.17% to Rs 1368.20. Market regulator Securities & Exchange Board of India (Sebi) will reportedly look into the sudden share price rise in Bhushan Steel stocks which rose 46% from Rs 1,086 to Rs 1,576 on Monday. Reports suggest that Sebi would study the price movement before taking any action on it.
Realty firm Parsvnath Developers was down 1.11% to Rs 342.85. The company reportedly plans a consortium with a Turkish airport operator TAV Airports Holding and domestic infrastructure finance firm IL&FS Transport Network (ITNL) to bid for the Greater Noida airport. Parsvnath plans to hold majority stake in the consortium. The formation of the consortium will ultimately depend on whether the Central Government permits the development of the Greater Noida airport, the report added.
Brokerage firm India Infoline jumped 11.42% to Rs 1284.70. The company has inked a $76.7 million equity deal by selling stake in its consumer finance subsidiary India Infoline Investment Services (IIIS) to Singapore-based Orient Global. The latter has picked up a 22.5% stake in IIIS.
Consumer products maker Godrej Industries was up 5% to Rs 243.60. The company said on Monday, 26 November 2007, its board has approved entering into a strategic partnership, joint venture or sell its medical diagnostic business. An extra-ordinary general meeting will be held on 28 December 2007 to approve this, it said in a statement.
State-run Allahabad Bank was up 0.31% to Rs 111.95 on reports that the bank has plans to buy about 74% of a small bank in Africa for up to $15-20 million.
Detergent maker Nirma jumped 9.02% to Rs 224.10 after it said it would buy US-based soda ash maker, Searless Valley Minerals Operations Inc and Searless Valley Minerals Inc.
Debutant Mundra Port and Special Economic Zone clocked highest turnover of Rs 1458.51 crore on BSE. Essar Oil (Rs 361.87 crore), Reliance Petroleum (Rs 242.75), Jindal Steel & Power (Rs 185.95) and Deccan Aviation (Rs 143.70 crore), were the other turnover toppers on BSE in that order.
Ashok Leyland registered highest volumes of 2.12 crore shares on BSE. Essar Oil (1.69 crore shares), Mundra Port and Special Economic Zone (1.48 crore shares), Ispat Industries (1.35 crore shares) and IFCI (1.35 crore shares), were the other volume toppers on BSE in that order.
In Europe, key indices in UK, France and Germany were down by between 0.20% to 0.54%.
South Korea’s Seoul Composite index was up 0.24% and Japan’s Nikkei 225 index was up 0.58%. Key benchmark indices in Hong Kong, China, Singapore and Taiwan were down by between 1.3% to 1.97%.
The Dow Jones industrial average slid 237.44 points, or 1.83%, to close at 12,743.44 on Monday, 26 November 2007. The Standard & Poor's 500 Index sank 33.48 points, or 2.32%, to 1,407.22. The Nasdaq Composite Index plunged 55.61 points, or 2.14%, to close at 2,540.99.
As per provisional data, FIIs sold shares worth a net Rs 498.35 crore today. Domestic institutions bought shares worth a net Rs 298.33 crore today.

Indian Hotels

Research: Morgan Stanley

Rating: Overweight CMP: Rs 137

Morgan Stanley has maintained its ‘overweight’ rating on Indian Hotels. It believes that trends in the hospitality industry remain strong, with increase in average room rate (ARR) leading growth in revenue per available room (RevPAR). Further, room supply from other industry players seems to have been pushed into FY10/11, and hence, the demand-supply mismatch may continue for at least the next 18 months. While Citigroup forecast a 29% a compound annual growth rate (CAGR) in earnings for FY07-09, earnings per share (EPS) will be diluted due to the planned rights offering. Subsidiary companies constituted about 36% of consolidated revenue in FY07, but recorded very low profitability, largely due to international properties. Any improvement in the financial performance of these properties can boost the overall profitability. For instance, a turnaround in Pierre Hotel alone can push up overall net margins by more than 180 basis points. The company intends to raise Rs 1,440 crore through a rights issue of equity shares and non-convertible debentures. Further, it will issue warrants that will be convertible into equity 12 months after the rights offering. This should raise an additional Rs 780-90 crore. However, these rights offerings will dilute earnings by 30%. The stock has underperformed by 35% year-to-date (YTD) and in the past 12 months, largely due to acquisitions of international properties. IHCL’s valuations are cheaper than that of its Asian peers on most metrics.

Tata Motors

Research: CLSA

Rating: Buy

CMP: Rs 715

CLSA has maintained its ‘buy’ rating on Tata Motors. However, near-term risk for the stock continues to be the potential acquisition of Jaguar and Land Rover. Freight rates witnessed an improvement in October. CLSA’s Index of Freight Rates went up 2% in October on a month-on-month basis. The index tracks freight rates across 25 major routes across India. While part of the improvement can be attributed to the pick-up in construction and industrial activity after the rainy season, CLSA also believes that demand-supply in the commercial vehicle (CV) industry is returning to normal after the lacklustre volume growth in the first half (H1) of FY08. Improving freight rates typically act as an incentive for truck operators as the latter start buying trucks and the rates also point toward an improvement in the CV cycle. Historically, CLSA’s Index of Freight Operator Profitability has acted as a good leading indicator of the CV cycle. Truck finance rates have dropped ~ 300 bps in the past 2-3 months to about 11% from a peak of 14% in April. Large truck operators are even getting deals at 10%. The conducive factors for CV industry recovery are now in place. CLSA maintains its view that the current weakness in medium and heavy CV (M&HCV) sales will be limited to the current fiscal and that the industry will return to growth in FY09.

Rico Auto

Research: Merrill Lynch

Rating: Buy

CMP: Rs 33

Merrill Lynch has reiterated its bullish stance on Rico Auto, albeit it has lowered its price target to Rs 60 from Rs 66. Negatives related to high input costs (aluminium, power, labour), exchange fluctuations and low capacity utilisation will be largely reflected in this fiscal performance.

Jyothi Laboraties IPO Fully Subscribed

The Initial Public Offer (IPO) of FMCG company Jyothy Laboratories was fully subscribed on the third day of the issue. It received bids for 56.27 lakh equity shares against 44.30 lakh shares on offer, latest data available on the bourses show. The offer would close tomorrow. The portion reserved for Qualified Institrutional Investors was subscribed more than two times with Foreign Institutional Investors (FIIs) bidding for 29.93 lakh shares and domestic financial institutions subscribing 29.93 lakh equity shares, the data available on NSE show. The portion reserved for non-institutional investors and retail investors has not been fully subscribed. The price band of the issue has been fixed between Rs 620 and Rs 690 per share. The company is planning to raise about Rs 274 crore at the lower end of the band and Rs 305 crore at the higher end. Jyothy Labs has drawn up Rs 40 crore capital expenditure plan for FY08. It plans to leverage the dominant Ujala brand with other branded fabric care products, utilise its wide distribution network and marketing expertise, improve efficiency and manage costs and increase focus on supermarket and hypermarket sale.

Sensex gains 395 points in global rally

The market ended on a strong note as US shares were buoyed on Friday, 23 November 2007, by a strong start to the US holiday shopping period. Short covering in futures & options segment ahead of expiry of November 2007 derivatives contracts on Thursday, 29 November 2007 also boosted the market. Heavy buying was seen in metal stocks while realty and software stocks also rose. Market breadth was strong. European markets, which opened after Indian market, were in green. Asian markets, which opened before Indian market, were firm.
The 30-share BSE Sensex surged 394.67 points or 2.09% to 19,247.54. Sensex hit a low of 19,137.66 in afternoon trade. At day's low, Sensex was up 284.79 points for the day. Sensex hit a high of 19,360.23 in mid-morning trade. At day’s high of 19,360.23, Sensex had risen 507.36 points.
The broader based S&P CNX Nifty rose 123.01 points or 2.19% to 5731.70.
The BSE Mid-Cap index was up 1.89% to 8,384.25, while the BSE Small-Cap index was up 1.69% to 10,343.25. Both these indices underperformed the Sensex.
The market breadth was strong. On BSE, 1820 shares advanced and 986 shares declined. 59 shares were unchanged. 28 out of 30 shares in the Sensex pack were in green.
BSE clocked a turnover of Rs 5823 crore compared to Friday (23 November 2007)'s Rs 6,348.22 crore.
Nifty November 2007 futures were at 5761.25, a premium of 29.55 points as compared to spot closing of 5731.70.
NSE’s futures & options (F&O) segment turnover was Rs 75903.04 crore, which was higher than Rs 66744.48 crore on Friday, 23 November 2007.
India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries gained 2.54% to Rs 2882.85. The company has sold 4.01% of the equity share in its subsidiary company Reliance Petroleum (RPL) by transactions through the stock exchanges. The aggregate sale consideration is Rs. 4,023 crore and post-sale RIL’s stake in RPL has come down to 70.99% from 75%.
Reliance Petroleum ended 2.60% lower at Rs 204.05 on huge volumes of 2.46 crore shares on BSE.
India’s second largest telecom service provider Reliance Communications moved up 0.87% to Rs 687.90. The company reportedly plans to sell another 5% stake in its wireless tower business in the second such transaction in this calendar year.
India’s largest commercial bank State Bank of India fell 0.40% to Rs 2242.25.
India's biggest truck maker by revenue Tata Motors slipped 0.62% to Rs 710.20.
The BSE Metal index moved up 5.61% to 17,524.54. It outperformed the Sensex. Jindal Saw gained 8.80% to Rs 814.95, Steel Authority of India (Sail) moved up 5.32% to Rs 265.15, Tata Steel rose 3.47% to Rs 849, Hindalco Industries rose 3.32% to Rs 194.32 and Sterlite Industries gained 2.01% to Rs 896.80.
The BSE Realty index jumped 3.05% to 10,081.27. It outperformed the Sensex. DLF moved up 2.68% to Rs 891.90, Unitech rose 6.05% to Rs 360.50 and Sobha Developer gained 7.15% to Rs 883.10.
The BSE IT index rose 2.02% to 4,098.23. It underperformed the Sensex. Infosys Technologies rose 1.18% to Rs 1576.35, TCS moved up 2.60% to Rs 985, Wipro rose 2.41% to Rs 452.70 and Satyam Computers gained 2.30% to Rs 426.35. The recovery in IT stocks was due to recent weakening of the rupee against the dollar. IT companies derive a lion's share of revenue from exports. They had been hit hard over the past few months due to rupee's surge.
The BSE Capital Goods index moved up 2.25% to 19,751.65. It outperformed the Sensex. Larsen & Toubro gained 1.83% to Rs 4175.50, Bharat Heavy Electricals (Bhel) rose 2.43% to Rs 2605.10, Jaiprakash Associates rose 3.285 to Rs 1679.35 and BEML jumped 9.26% to Rs 1775.70.
The BSE Bankex was up 1.70% to 10,590.95. It underperformed the Sensex. ICICI Bank rose 1.52% to Rs 1157.65, HDFC Bank jumped 5.18% to Rs 1643.70, Union Bank (India) rose 3.54% to Rs 174.20, Punjab national Bank gained 2.94% to Rs 599.60 and Axis Bank rose 0.74% to Rs 936.80.
The BSE Power index moved up 2.20% to 4,376.73. It outperformed the Sensex. Neyveli Lignite jumped 5.44% to Rs 225.95, CESC gained 2.94% to Rs 607.40, Tata Power jumped 2.53% to Rs 1178.80, and NTPC moved up 0.85% to Rs 238.60.
Power utility Reliance Energy gained 3.74% to Rs 1789.55. The company has entered into a joint venture with the country’s main transmission utility Power Grid Corporation of India to execute about 300 kilometre (km) transmission lines from Parbati to Koldam and Koldam to Ludhiana. The company will have a 26% equity holding in the venture while Reliance Energy will have 74% stake.
State-run transmission utility Power Grid Corporation of India was up 0.53% to Rs 152 on volumes of 45.46 lakh shares on BSE.
Walchandnagar Industries, which makes boilers for sugar and cement industry, hit upper circuit of 5% at Rs 8,478.25. The board of the company has approved the issue of one bonus share for each held and splitting each share into five. The board also set a special dividend of Rs 10 a share.
Infrastructure development firm Lanco Infratech rose 2.89% to Rs 444.70 after the company said it has received five letters of acceptance for supply and erection of 33/11 kilo volt substations and 33/11 kilo volt lines in five districts in Andhra Pradesh.
Television maker MIRC Electronics was up 3.48% to Rs 31.20. Sonu Mirchandani, who has a 33% stake in the company, has now offered to buy out his elder brother Gulu’s share in the company.
Sadbhav Engineering, which constructs roads and highways, moved up 3.10% to Rs 1091.35 after the company received road development projects worth Rs 99.01 crore from the government of Chhattisgarh.
Brokerage firm India Infoline spurted 3.42% to Rs 1153.05 on reports that foreign investors Goldman Sachs and Blackstone are in final stages of negotiations to buy a 26% stake in India Infoline Distribution Company, a distribution subsidiary of the brokerage.
Ceramic tiles maker Nitco Tiles soared 6.05% to Rs 302.25 on reports that leading foreign investors Lehman Brothers, Citigroup, Merrill Lynch, Deutsche Bank and Reliance Capital have picked up a total 15% stake in the company for around Rs 170 crore.
Balaji Telefilms, which provides content to most Hindi satellite channels, surged 12.46% to Rs 376.30 on reports that the company plans to offload 10% to 15% stake in its wholly owned subsidiary Balaji Motion Pictures.
Reliance Petroleum clocked the highest turnover of Rs 516.79 crore on BSE. Jindal Steel & Power (Rs 312.80 crore), Reliance Energy (Rs 202.21 crore), Empee Distilleries (Rs 176.85 crore) and Jaiprakash Hydro-Power (Rs 168.93 crore), were the other turnover toppers on BSE in that order.
Reliance Petroleum registered highest volumes of 2.46 crore shares on BSE. Tata Teleservices (1.56 crore shares), Ispat Industries (1.56 crore shares), Jaiprakash Hydro-Power (1.47 crore shares) and Reliance Natural Resources (1.03 crore shares), were the other volume toppers on BSE in that order.
Friday’s US rally boosted stocks across Asia and Europea. In Europe, key indices in France, Germany and United Kingdom were up by between 0.47% to 0.60%.
In Asia, key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were up by between 2.23% to 4.65%. China’s Shanghai Composite was down 1.46% to 4,958.849.
The Dow Jones industrial average jumped 181.84 points, or 1.42%, to close at 12,980.88 on Friday, 23 November 2007. The Standard & Poor's 500 Index gained 23.93 points, or 1.69% to finish at 1,440.70. The Nasdaq Composite Index advanced 34.45 points, or 1.34%, to end at 2,596.60.
FII sales caused by redemption pressure in their home countries and fears of a US recession arising from housing slump and credit crisis had spooked stocks across Asian over the past few days. Concerns about the health of the US economy remain.
As per provisional data, FIIs bought shares worth a net Rs 50.40 crore today, 26 November 2007. Domestic institutions bought shares worth a net Rs 274.06 crore today.
FIIs sold shares worth a net Rs 173.40 crore on Friday, 23 November 2007. Domestic funds bought shares worth a net Rs 525.86 crore on that day.