Sensex managed to hold 20000 level - Small Caps still rocks

The market ended slightly lower in what was a highly volatile trading session, seeing series of gyrations in either direction. Global cues were negative. The BSE Sensex cracked below the physcological 20,000 level at one point of in mid-afternoon trade, but managed to crawl back on buying support at lower levels.

Most of the European markets which opened after Indian market were subdued after strong opening while Asian markets which opened before Indian market also edged lower. US markets settled on a mixed note yesterday, 13 December 2007.

Despite the fall, there was plenty of action outside the index stocks, visible from the strong market breadth on BSE. BSE Mid-Cap and BSE Small-Cap indices struck fresh lifetime highs in afternoon trade.

Shares from FMCG, consumer durables, and Healthcare stocks rose while those of capital goods, IT, power and banking stocks declined. Annual inflation, based on the wholesale price index (WPI), climbed up 3.75% in the week ended 1 December 2007 from 3.01% in the week ended 24 November 2007.

The 30-share BSE Sensex declined 73.56 points or 0.37% to 20,030.83. It hit a high of 20,171.57 and a low of 19,936.49 during the day.

The S&P CNX Nifty declined 10.4 points or 0.17% to 6,047.70.

BSE clocked a turnover of Rs 9,122 crore in cash market today compared to yesterday’s 10,212 crore.

Nifty December 2007 futures settled at 6074.25, a premium of 26.55 points as compared to the spot closing of 6047.70.

The NSE futures & options (F&O) segment turnover declined to Rs 61,326.39 crore as compared to Rs 70,156.51 crore on Thursday, 13 December 2007.

Market breadth was strong on BSE. On BSE, 2,048 stocks advanced, 827 stocks declined and 27 stocks remained unchanged. 15 out of 30 stocks from the Sensex pack advanced.

BSE Mid-Cap index rose 1.02% to 9,471.94. It hit an all time high of 9,518.86. BSE Small-Cap index rose 1.57% to 12,195.50. It struck all time high of 12,262.12. Both these indices outperformed Sensex.

Sectoral indices displayed mixed trend. BSE PSU index (down 0.04% to 10,079.08), BSE Metal index (down 0.02% to 19,763),BSE Oil & Gas index (up 0.88% to 12,980.95), BSE FMCG index (up 1.44% to 2,263.93), BSE Consumer Durables index (up 2.51% to 6,204.25) and BSE Health Care index (up 2.52% to 4,308.27) outperformed Sensex.

BSE Auto index (down 0.38% to 5,743.80), BSE IT index (down 0.57% to 4,259.76), BSE Power index (down 0.76% to 4,435.53), BSE Capital Goods index (down 0.99% to 19,862.51) ,BSE Bankex (down 1.39% to 11,335.47) underperformed Sensex.

Banking stocks showed mixed trend. ICICI Bank (down 2.87% to Rs 1,206.85), HDFC Bank (down 1.65% to Rs 1,728.60). However State Bank of India rose 0.68% to Rs 2,410.55.

Power stocks paused after the recent rally. Reliance Energy (down 0.11% to Rs 1,909.45), Power Grid Corporation (down 1.09% to Rs 145.65), Neyveli Lignite (down 1.5% to Rs 248.85) and Tata Power Company (down 0.49% to Rs 1,301) edged lower.

IT stocks declined weighed by firm rupee against the US dollar. Infosys (down 0.72% to Rs 1,646.80), Satyam Computer Services (down 2.36% to Rs 411.10) and Wipro (down 1% to Rs 495.20) edged lower.However Tata Consultancy Services rose 1.43% to Rs 1,044.45.

Capital goods stocks declined. Bharat Heavy Electricals (down 1.16% to Rs 2,561.45), Larsen & Toubro (down 1.44% to Rs 4,174.10) and Bharat Earth Movers (down 2.75% to Rs 1,672.15) edged higher.

India’s largest private sector firm by market capitalization & oil refiner Reliance Industries rose 1.99% to Rs 2,889.05. Oil refining major is reportedly exploring ways to sell its petroleum products directly in the US and Europe. At present, the company sells its petroleum products through traders. Mulls setting up retail outlets in US.

Healthcare stocks rose. Fortis Healthcare (up 20% to Rs 104.30), Wockhardt (up 5.37% to Rs 429.65), Cadila Healthcare (up 5.01% to Rs 335.10), Cipla (up 2.65% to Rs 209.15), Dr. Reddy’s Laboratories (up 1.03% to Rs 717.90), Ranbaxy Laboratories (up 2.69% to Rs 422.20) edged higher.

FMCG majors rose. Marico Industries (up 2.66% to Rs 71.40),ITC (up 1.88% to Rs 200.60) and Hindustan Unilever (up 2.22% to 216.70) edged lower.

Consumer durable stocks rose. Videocon industries (up 6.75% to Rs 648.85), Blue Star (up 0.66% to Rs 488.25) and Gitanjali Gems (up 4.59% to Rs 416.75) edged higher.

Hindalco Industries rose 2.35% to Rs 213.80.

Tata Motors (down 2.03% to Rs 744.45),HDFC (down 0.26% to 3,058.80) and Bharti Airtel (down 3.57% to Rs 952.55) edged lower.

Sun TV Network clocked the highest turnover of Rs 482.36 crore on BSE. Kolte Patil Developers (Rs 246.7 crore), Jaiprakash Hydro Power (Rs 207.97 crore),IFCI (Rs 207.08 crore) and Lanco Infratech (Rs 179.01 crore) were the other major turnover grossers on BSE in that order.

Debutant Kaushalya Infrastructure Development Corporation settled with 37.08% premium at Rs 82.25 over issue price of Rs 60 per share on huge volumes of 3.21 crore shares on BSE.

Most of the European markets were weak. France’s CAC 40 (down 0.26% to 5,575.79) ,UK’s FTSE 100 (down 0.04% to 6,361.80) edged lower. Germany’s DAX (up 0.06% to 7,929) edged higher.

Asian markets were trading lower today, 14 December 2007. Hong Kong's Hang Seng (down 0.65% at 27,563.64), Taiwan's Taiwan Weighted (down 0.85% at 8,118.82), Singapore's Straits Times (down 0.37% at 3,466.38), South Korea's Seoul Composite (down 1.09% at 1,895.05), Japan’s Nikkei (down 0.14% to 15,514.51) edged lower. However Shanghai Composite rose 1.01% to 5,007.91.

US markets finished on a mixed note yesterday, 14 December 2007 as worries about a weakening economy and credit crunch continued. The Dow Jones Industrial Average gained 44.06 points, or 0.33%, to 13,517.96. The Standard & Poor's 500 index rose marginally by 1.82 points, or 0.12%, to 1,488.41, while the Nasdaq Composite index slipped 2.65 points, or 0.10%, to 2,668.49.

Meanwhile, the Government of India has reportedly allowed the Postal Life Insurance Fund (POLIF) and Rural Postal Life Insurance Fund (RPOLIF) to enter the stock markets through investments in public sector mutual funds. The Union Cabinet on Thursday, 13 December 2007 appointed UTI MF and SBI MF as managers for the over Rs 10,000-crore corpus of these two funds.

Markets Declines 271 Pts - Bluechips Tumbles

The market tumbled in the late trade following a sudden sell-off in blue-chip stocks, in sync with other markets across the globe. The day started on a firm note, with both the niche indices - BSE Sensex and S&P CNX Nifty striking record highs, but were not able to sustain at higher levels.

The market breadth, indicating overall health of the market was strong, despite the sharp fall, due to on strong buying momentum for small and mid-cap stocks.

FMCG, metal stocks rose. IT, power, Oil & Gas, capital goods & banking stocks declined. ITC & Tata Steel were top gainers while Bharti Airtel & ICICI Bank were top losers from Sensex pack. Reliance Industries declined sharply in late trade.

The 30-share BSE Sensex declined 271.48 points or 1.33% to 20,104.39. It opened with a upward gap to hit a all time high of 20,498.11 in early trade. At day’s high Sensex rose 122.24 points. It hit a low of 20,065.63 in late trade. At day’s low Sensex had lost 310.24 points.

The S&P CNX Nifty declined 101.2 points or 1.64% to 6,058.10.It hit a all time high of 6,185.40 in early trade.

Market breadth was strong on BSE. On BSE, 1,811 stocks advanced, 1,059 stocks declined and 28 stocks remained unchanged. 20 out of 30 stocks from the Sensex pack declined.

BSE clocked a turnover of Rs 9,873 crore in cash market today compared to yesterday’s Rs 9,614.65 crore.

Nifty December 2007 futures settled at 6,065, a slight premium of 6.90 points as compared to the spot closing of 6,058.10. The Nifty December 2007 futures hit a record high of 6181.90 in early trade.

BSE Mid Cap index rose 0.39% to 9,375.94. It hit a all time high of 9,460.50 today. BSE Small Cap index rose 1.03% to 12,007.33, It hit an all time high of 12,138.34 today. Both these indices outperformed Sensex.

BSE Consumer Durables index (down 1.27% to 6,052.12), BSE Capital Goods index (down 1.21% to 20,061.96), BSE Realty index (down 1.11% to 12,400.54), BSE Auto index (down 0.08% to 5,765.56), BSE Health Care index (up 0.68% to 4,202.18), BSE Metal index (up 0.71% to 19,767.72), BSE FMCG index (up 1.93% to 2,231.77) outperformed Sensex.

BSE IT index (down 1.59% to 4,284.37), BSE Bankex (down 1.85% to 11,495.40), BSE Oil & Gas index (down 2.17% to 12,867.24) underperformed Sensex.

India’s largest private sector firm by market capitalization & oil refiner Reliance Industries declined 1.88% to Rs 2,832.75.

Oil & Gas stocks declined sharply in late trade. Essar Oil (down 4.59% to Rs 295.30), Gail (India) (down 3.91% to Rs 520.65), ONGC (down 2.23% to Rs 1,227.80) & Reliance Petroleum (down 2.31% to Rs 223.75) edged lower.

Banking majors declined. ICICI Bank (down 3.7% to Rs 1,242.50) and HDFC Bank (down 1.48% to Rs 1,757.60), State Bank of India (down 1.89% to Rs 2,394.25) edged lower.

Capital goods stocks declined. Bharat Heavy Electricals (down 2.15% to Rs 2,591.50), Larsen & Toubro (down 1.14% to Rs 4,235.10) and Suzlon Energy (down 2.15% to Rs 1,966.85) edged lower.

Power stocks declined. NTPC (down 1.97% to Rs 246.05) and Tata Power Company (down 3.65% to Rs 1,307.40) Reliance Energy (down 1.05% to Rs 1,911.50) edged lower.

IT stocks declined. Infosys (down 1.55% to Rs 1,658.70), Satyam Computer Services (down 2.34% to Rs 421.05) and Wipro (down 1.06% to Rs 500.20 ) Tata Consultancy Services (down 1.84% to Rs 1,029.70) edged lower.

Cipla (up 2.1% to Rs 203.75) and Bajaj Auto (up 1.46% to Rs 2,818.65) edged higher.

Bharti Airtel (down 6.24% to Rs 987.80), Maruti Suzuki India (down 3.45% to Rs 1,038.35) edged lower.

FMCG stocks rose. ITC (up 4.12% to Rs 196.90) and Hindustan Unilever (up 0.76% to Rs 212), Tata Tea (up 4.31% to Rs 934.80) edged higher.

Metal stocks also inched up. JSW Steel (up 7.84% to Rs 1,334.65), Tata Steel (up 2.89% to Rs 889.40), Hindalco Industries (up 1.58% to Rs 208.95), edged higher.

Kolte Patil Developers settled at a premium of 26.95% to Rs 185.85 over the IPO price of 145 on its debut today. The stock will be placed in the B1 group on BSE. The company had fixed the IPO price at the top end of the Rs 125-145 IPO price band.

Mahindra & Mahindra rose 0.8% to Rs 794.10. As per reports Mahindra & Mahindra’s (M&M’s) all-Indian utility vehicle, Scorpio, will enter the quality-conscious US market, which is also the largest in the world with 15 million vehicles in annual sales. The company already has firm orders for 45,000 units of Scorpio for the first year, which is more than the 40,000 it sold in India in the last financial year. More importantly, 285 US dealers have signed up to sell the vehicle and are investing $178 million in setting up sales and service outlets.

European markets were trading weak today. France’s CAC 40 (down 1.86% to 5,636.33), Germany’s DAX (down 0.91% to 8,000.98) and UK’s FTSE 100 (down 1.85% to 6,438.30) edged lower.

Asian markets were trading lower today, 13 December 2007 on fears a quarter-point interest rate cut by the Federal Reserve announced on 11 December 2007 may not be enough to ward off a US recession. Japan's Nikkei (down 2.48% at 15,536.52), Hong Kong's Hang Seng (down 2.72% at 27,744.45), Taiwan's Taiwan Weighted (down 3.57% at 8,187.95), Straits Times (down 1.97% at 3,479.17), South Korea's Seoul Composite (down 0.6% to 1,915.90) edged lower.

US markets started the day sharply higher yesterday, 12 December 2007 fueled by news of Fed's plans to boost liquidity but eventually lost steam as negative developments out of the financial sector weighed on the broader market. The Dow Jones industrial average gained 41.13 points, or 0.31%, to 13,473.90. The Standard & Poor's 500 index rose 8.94 points, or 0.61%, to 1,486.59. The Nasdaq Composite index advanced 18.79 points, or 0.71%, to 2,671.14.

Back home, the Index of Industrial Production (IIP) jumped 11.8% in October 2007 from 4.5% in October 2006. IIP stood at 9.7% in April-October 2007 compared with 10.1% in April-October 2006. Industrial output data for September 2007 was revised upwards to 6.8% from 6.4%. The government released the IIP data early afternoon yesterday, 12 December 2007.

Edelweiss Capital soars on debut

Settles at Rs 1509.95 on BSE compared to IPO price of Rs 825

Edelweiss Capital settled at Rs 1509.95 on BSE, a premium of 83.02% compared to IPO price of Rs 825. The stock debuted at Rs 1443.75, a premium of 75% as compared to the issue price of Rs 825. The stock hit a high of Rs 1608.75 and low of Rs 1443.75

On BSE, 36.16 lakh shares changed hands in the counter on BSE.

The company had fixed the issue price at the top end of the Rs 725-825 price band. At the current market price of Rs 1509.95, the PE multiple works out to 103.42, based on the year ended March 2007 EPS of Rs 14.60.

The Edelweiss Capital IPO had ended on 20 November 2007 with 110.96 times subscription. The IPO received total bids for 93.05 crore shares, as against the issue size of 83.86 lakh shares.

The qualified institutional buyers (QIBs) category was subscribed 153.14 times. The non institutional investors category, made up of corporates and high networth individuals, was subscribed 164.30 times. The retail investors category was subscribed 17.21 times.

Edelweiss Capital provides investment banking, institutional equities, private client broking, asset management, wealth management, insurance broking and wholesale financing services to corporate, institutional and high net worth individual clients.

Edelweiss plans to utilise the IPO proceeds for enhancement of margin maintenance with stock exchanges, establishment of additional offices and acquisition of office infrastructure, enhancement existing technology capacity and prepayment of loans.

Edelweiss Capital’s total consolidated income in 2006-07 (April-March) was Rs 371.2 crore and net profit for the year stood at Rs 109 crore. For the five months ended August 2007, its consolidated total income stood at Rs 284.86 crore and net profit Rs 80.93 crore.

TV 18 - Buy with a 1Yr Horizon

Key Points on TV 18 from Leading Stock Broking Firm:

TV18 has acquired a 40% stake in Infomedia India (Infomedia) for Rs225 a share. The stake was acquired from ICICI Venture that held 62.74% stake in Infomedia.
The company has made an open offer to the shareholders of Infomedia for a further 20%stake in the company at Rs237 a share, as TV18 intends to increase its stake in Infomedia atleast to 53%.

Infomedia operates in three key business verticals- publishing, printing and publishing outsourcing. These verticals contribute 53%, 21% and 24% respectively to the company's revenues.

Infomedia is a leading publisher of special interest magazines and has a portfolio of eight business-to-consumer (B2C) and 12 business-to-business (B2B) titles. To further augment the magazine segment, the company has tied up with global majors such as Reed Elsevier, Ringier and Vogel Burda.

Infomedia is a dominant player in the Yellow Pages business in India with over 40% market share. While its Yellow Pages network currently covers 22 cities, the company targets to cover 48 cities by 2010 along with expanding the portfolio of product offerings.

To leverage on its strengths in content and search in print media, Infomedia targets offering them across emerging media platforms such as mobile, SMS, and Internet.
Infomedia has presence in global publishing outsourcing business with front-end offices in US and UK and back-end facilities in Noida and Bangalore. While the company would focus on acquisition-led strategy for growing the outsourcing business multifold, the business has a potential to grow by 30% annually.

We believe TV18's strength in electronic media provides a strategic fit with Infomedia's presence in directories and magazines. There is also a possibility for TV18 to exploit synergies with Infomedia especially in new media verticals.

We maintain our buy recommendation on TV18 based on our existing sum-of-the-parts price target of Rs571

Punj Lloyd - Buy with a 1 Yr Horizon

Story

Moving up the value chain: One of the significant achievements for Punj Llyod Ltd (PLL) over the years has been its increasing average order size. PLL started with an average order size of $30 million that has grown to $130-140 million, and the company intends to increase it to $250 million. We believe higher order size would improve the margins of the company and also make it a pre-qualified player for larger and more complex orders.
SEC turnaround—a key positive: PLL acquired Sembawang Engineers & Constructors (SEC) in June 2006. SEC's acquisition has added to the expertise of PLL in the field of oil & gas, airports, jetties, MRT/LRT, and tunneling. SEC has traditionally operated at lower margins, however the new orders are booked at healthy margins. Further, the company expects to execute all the legacy orders of SEC over the next 18-24 months. We expect, this will improve SEC's operating profit margin (OPM) from 3.5% in FY2008E to 7% in FY2010E.
Order book—more the merrier: PLL has had a spectacular flow of orders, with orders growing from Rs3,240 crore at FY2005 end to Rs15,944 crore (including Rs4,900 crore for SEC) by FY2007 end. In H1FY2008 the company bagged orders worth Rs2,070 crore. The company has a healthy order backlog of Rs14,852 crore, which is 2.9x its FY2007 revenues and this we believe imparts strong visibility to the earnings of the company.
Acquisitions—help plugging and bridging gaps: PLL is the second largest engineering, procurement and construction (EPC) company in the country. Acquisition of SEC and Simon Carves has helped PLL plug gaps in its offerings and increase its addressable markets. Post acquisition, PLL has considerably bridged the gap making it more competitive against Larsen and Toubro (L&T), the largest EPC player in the country.

Indian Markets buck weak global equities on strong IIP data

Weak global cues fail to dampen market spirit

The market surged to all-time high in late trade, in what was a choppy trading session today. The market had lost ground in afternoon trade after staging a rebound from lower level in early trade from an initial slump. IT, banking majors declined. Realty, healthcare and metal stocks gained. Reliance Industries was flat. HDFC and Reliance Communications were the major gainers while Infosys and Satyam Computer Services were major losers from the Sensex pack.

The market breadth was strong. BSE Mid-Cap and Small-Cap indices hit all-time highs today and both the indices outperformed Sensex. Edelweiss Capital surged on debut.

The Index of Industrial Production (IIP) jumped 11.8% in October 2007 from 4.5% in October 2006. IIP stood at 9.7% in April-October 2007 compared with 10.1% in April-October 2006. Industrial output data for September 2007 was revised upwards to 6.8% from 6.4%. The government released the IIP data early afternoon today, 12 December 2007.

European markets, which opened after Indian market, were weak in. Asian markets edged lower today, 12 December 2007, after the US Federal Reserve's small 25 basis points interest rate cut on Tuesday, 11 December 2007, raised worries about US economic growth.

Prime Minister Manmohan Singh brushed aside on Tuesday, 11 December 2007, a new threat from his communist allies to force early elections over a controversial nuclear deal with the United States. In the government's first reaction to a call by the leader of the largest left-wing party for talks on the deal to be stopped, Singh said he would stick to a plan conditionally approved by the communists earlier to push the landmark pact.

The 30-share BSE Sensex rose 84.98 points or 0.42% to 20,375.87. Sensex hit all-time high of 20,419.11 in late trade. At day's high, Sensex rose 128.22 points. Sensex had slipped to a low of 20,045.42 in early trade. At day’s low Sensex had lost 245.47 points.

The broader S&P CNX Nifty rose 62.05 points or 1.02% at 6,159.30. It hit all-time high of 6,175.65 today in late trade.

Market breadth was strong. On BSE, 2,108 stocks advanced, 749 stocks declined and 28 stocks remained unchanged. 18 out of 30 stocks from the Sensex pack were in green.

BSE clocked a turnover of Rs 8922 crore, compared to Tuesday, 11 December 2007's Rs 8,227.36 crore.

Nifty December 2007 futures were at 6177, at a premium of 17.70 points as compared to the spot closing of 6159.30.

The NSE's futures & options (F&O) segment turnover was Rs 71,385.36 crore, which was higher than Rs 59,421.97 crore on Tuesday, 11 December 2007.

The BSE Mid-Cap index rose 1.66% to 9,338.49. It hit a all time high of 9,345.16 today. BSE Small-Cap index rose 1.86% to 11,884.99. It hit a all-time high of 11,899.96 today. Both these indices outperformed Sensex.

BSE Auto index (up 0.15% to 5,770.02), BSE Power (up 0.36% to 4,539.86), BSE Capital Goods index (up 0.04% to 20,308.27), BSE Bankex (down 0.57% to 11,712.12) and BSE IT index (down 1.78% to 4,353.59) underperformed Sensex.

BSE FMCG index (up 0.92% to 2,189.52), BSE Oil & Gas index (up 1.44% to 13,152.02), BSE PSU index (up 1.58% to 10,245.58), BSE Health Care index (up 2.75% to 4,173.98), BSE Realty index (up 2.94% to 12,540.32) and BSE Metal index (up 3.01% to 19,629.07) outperformed Sensex.

India’s largest private sector firm by market capitalization & oil refiner Reliance Industries rose 0.28% to Rs 2,886.90. The company said on Tuesday, 11 December 2007, it has signed exploration and production contracts with Colombia's Agencia Nacional de Hydrocarburos for two offshore blocks, Borojo North and Borojo South.

Banking stocks declined. ICICI Bank (down 1.96% to Rs 1,290.30) and State Bank of India (down 0.22% to Rs 2,440.40) edged lower. Interest rates in India are unlikely to come down in the short to medium term, T.S. Bhattacharyya, managing director of State Bank of India said today. HDFC Bank rose 0.52% to Rs 1,784.

IT pivotals were mixed. Infosys (down 3.34% to Rs 1,684.80), Satyam Computer Services (down 2.39% to Rs 431.15) edged lower. Wipro (up 0.08% to Rs 505.55) and Tata Consultancy Services (up 0.94% to Rs 1,049) edged higher.

Healthcare stocks advanced in late trade. Cipla (up 2.36% to Rs 199.55), Ranbaxy Laboratories (up 0.63% to Rs 407.70) and Dr. Reddy’s Laboratories (up 1.75% to Rs 685.80) edged higher.

Realty stocks rose. Hosing Development & Infrastructure (up 14.01% to Rs 978.30), Ansal Properties & Infrastucture (up 22.38% to Rs 418.35), Indiabulls Real Estate (up 3.19% to Rs 746.55) Unitech (up 1.28% to Rs 485.95), and DLF (up 0.74% to Rs 1,021.10) edged higher.

Metal stocks surged in late trade. Tata Steel rose 3.42% to Rs 864.45. The company today said it has signed a joint venture agreement with state-run mineral development company SODEMI for the development of Mount Nimba iron ore deposits in Ivory Coast, West Africa.

Jindal Saw (up 12.35% to Rs 1,036.45), Shree Precoated Steel (up 3.67% to Rs 395.15), National aluminium Company (up 11.54% to Rs 451.45), Hindalco Industries (up 3.06% to Rs 205.65), Steel Authority of India (up 3.85% to Rs 287.55) edged higher.

HDFC (up 5.33% to Rs 3,103.95), Reliance Communications (up 3.51% to Rs 765.75), NTPC (up 3.21% to Rs 251) edged higher.

Bharat Heavy Electricals declined 0.82% to Rs 2,648.35.

Reliance Energy declined 0.72% to Rs 1,931.70. It has bagged an engineering, procurement and construction (EPC) contract from Damodar Valley Corporation (DVC) to set up a coal based power station at Raghunathpur in West Bengal. The contract is valued at over Rs 3,725 crore. The EPC Group of Reliance Energy currently has orders on hand for execution aggregating over Rs 10,000 crore.

IKF Technologies rose 20% to Rs 11.38. It clocked the highest volume of 3.97 crore shares on BSE. G V Films clocked the second highest volume of 3.86 crore shares. It rose 18.03% to Rs 9.10. Tata Teleservices (Maharashtra) rose 2.74% to Rs 60. It clocked the third highest volume of 2.53 crore shares. Ispat Industries rose 1.48% to Rs 71.80. It clocked the fourth highest volume of 1.54 crore shares. Gujarat State Petronet rose 14.13% to Rs 96.50. It clocked the fifth highest volume of 1.52 crore shares on BSE.

Essar Oil clocked the highest turnover of Rs 315.32 crore on BSE. Reliance Natural Resources (Rs 256.48 crore), Reliance Petroleum (Rs 178.07 crore), Jindal Steel (Rs 173.25 crore) and Lanco Infratech (Rs 156.73 crore) were other turnover toppers on BSE in that order.

Edelweiss Capital ended at Rs 1,509.95 on BSE, a premium of 83.02% compared to IPO price of Rs 825. On BSE, 36.16 lakh shares changed hands in the counter. The stock debuted at Rs 1443.75, a premium of 75% as compared to the issue price of Rs 825.

In an important event, after Indian market hours yesterday, 11 December 2007, the US Federal Reserve lowered its benchmark interest rate by a quarter point to 4.25%, while signaling that it is open to further cuts if the housing slump and credit squeeze worsens. The Fed also lowered its discount rate, the interest it charges on direct loans it makes to banks, by a quarter-point to 4.75%.

European markets slipped today. France’s CAC 40 (down 1.25% to 5,653.29), Germany’s DAX (down 0.6% to 7,961.18) and UK’s FTSE 100 (down 0.85% to 6,480.80) edged lower.

Asian markets were weak today, 12 December 2007. Hong Kong's Hang Seng (down 2.41% at 28,521.06), Japan's Nikkei (down 0.7% at 15,932.26), Taiwan's Taiwan Weighted (down 1.71% points at 8,490.84), Straits Times (down 1.11% at 3,549.25) and Shanghai Composite (down 1.54% to 5,096.59), all edged lower. South Korea's Seoul Composite (up 0.12% 1,927.45) edged higher.

US markets tumbled after the Fed cut rates by a quarter point disappointing traders expecting double that amount. The Fed's statement said that elevated energy and commodity prices may put upward pressure on inflation.

The Dow Jones Industrial Average slumped 294.26 points, or 2.14%, to 13,432.77. The Standard & Poor's 500 index plunged 38.31 points, or 2.53%, to 1,477.65, and the Nasdaq Composite index declined 66.60 points, or 2.45%, to 2,652.35.

Arbitrage Funds - Bulls Eye All the times

The markets are still on a dizzying ride—up one day, down the next. Yes, the ups are more pronounced, but investors are nervous about relying too much on this. That’s why most investors are delighted at the prospect of lowrisk returns. And no, we are not talking fixed deposits or savings accounts—a relatively new breed of mutual funds offers around 9% returns. Plus, in most cases, there is no tax on long-term capital gains.

Arbitrage funds have strangely not caught the fancy of many investors, possibly because the word arbitrage does not evoke confidence. Arbitrage involves simultaneous purchase and sale of identical or equivalent instruments from two or more markets in order to benefit from a discrepancy in prices. The transactions offset each other, making the fund immune to market movements.

The profit is the difference in the prices of the instrument in different markets. “Arbitrage funds are also known as market neutral funds, since they do not have direct exposure to the equity market,” says Rajiv Anand, CIO, Standard Chartered Mutual Fund.

Still not sure what this means? Take the case of, say, Reliance Industries. On 14 November, Reliance Industries (RIL) shares closed at Rs 2,888 in the cash market; the November future closed at Rs 2,905. To cash in on the price differential of Rs 17, a fund can sell a future contract of 150 shares of RIL and buy an equal number of shares in the cash market.



On settlement day, the price of RIL shares and its future will coincide, when one should sell shares in the cash market and buy back the future contract. If RIL closes at Rs 2,700, the fund would make a loss in the cash market of Rs 28,200 (Rs 188 x 150 shares) and a profit of Rs 31,800 (Rs 212 x 150 shares) in the future contract, making a net gain of Rs 2,550 (Rs 17 x 150). If RIL closes at Rs 3,100, it would still make a profit of Rs 17 per share.

The risks. With only about 200 stocks permitted to trade in the derivatives market, it could get difficult to find enough arbitrage opportunities. Also, the buystock sell-future strategy will not work if the future price of the stock is at a discount to its spot price, which is common in a bearish phase.

When it is difficult to spot arbitrage opportunities, we invest in low spreads,” says Vivek Pandey, fund manager, State Bank of India Mutual Fund. “The minimum and maximum returns by doing this is about 5% and 10%, respectively,” he adds. Another problem with regard to arbitrage funds is the lower liquidity in the spot/future segment. Future contracts are traded in lots; one lot of a future contract of a stock will have multiple shares.

For instance, company X may have a lot size of 50 shares, while company Y may have 10,000 shares. If an arbitrage opportunity arises in company Y, the fund manager will have to buy 10,000 shares from the stock market and sell one future contract. If the fund manager decides to sell, say, 30 lots, he has to buy 3,00,000 shares. The manager may not be able to buy the desired number of shares at the given price.

While some arbitrage funds can be liquidated on any day, others can be redeemed only on the settlement day. “Ideally, we advise investors to redeem on expiry day since one locks in to the return”, says Nilesh Shah, CIO, ICICI Prudential Mutual Fund.

Tax-efficient. These risks should not put you off arbitrage funds. Bank fixed deposits (FDs), fixed maturity plans or money market funds might provide higher returns, but are not tax-efficient. An FD that gives 9%, for instance, results in a post-tax yield of 6.3% (in the highest tax slab). In debt funds, long-term gains (over one year) are taxed at a flat rate of 10% or at 20% after indexation.

Arbitrage funds invest 65-80% of the corpus in equities and equity derivatives. So like equity funds, short term gains are taxed at 10% and long-term gains are tax free. Some funds also have debt options, where equity and derivatives investments are restricted to 45%. Their tax treatment is similar to that for debt funds.

Sensex Crosses 20k

Market registered smart gains, but was off its new intra-day high and ended near the 20,300 mark.

The market exhibited awesome display in anticipation of more foreign fund inflows if US Federal Reserve cuts the interest rate further as expected

and achieved a new peak on the back of all-round buying. The benchmark share index, Sensex, rose to its record high of 20,333 as realty and banking stocks registered heavy gains. The market opened with a positive gap of 118 points and kept its upward bias for the entire day. The realty major Ansal Properties and Infrastructure, Unitech, and Omexe registered the biggest gains in today's trades. Bharti Airtel and HDFC Bank were also the major contributors in today's rally. The index moved within a range in the afternoon. However, Sensex witnessed hectic buying towards the close and ended the session near its all-time high with a gain of 360 points at 20,291. The Nifty closed the session at 6,097, up 137 points.

Among sectoral indices, Realty index led the upsurge with a gain of 3.04% at 12,182 followed by the BSE Bankex index (up 2.54% at 11,779), the BSE Metal index (up 1.89% at 19,055) and the BSE PSU index (up 1.80% at 10,086). The market breadth was extremely positive. Of the 2,914 stocks traded on the Bombay Stock Exchange (BSE), 1,981 stocks advanced, 894 stocks declined and 39 stocks ended unchanged.


Out of the 30 Sensex stocks, 25 managed to end in the green while five stocks ended with losses. Bharti Airtel was the leading gainer and soared 6.21% at Rs1,031. HDFC Bank jumped 4.81% at Rs1,775, ONGC shot up by 3.68% at Rs1,238, Hindalco advanced 3.34% at Rs200, ICICI Bank moved up by 3.32% at Rs1,316, Maruti Suzuki added 3.17% at Rs1,079 and Bajaj Auto gained 3% at Rs2,794. Among the laggards DLF dropped 1.20% at Rs1,014. Infosys, BHEL, Ambuja Cement and Reliance Energy slipped marginally.

Over 3.23 crore Tata Teleservices shares changed hands on the BSE followed by IKF Technologies (2.73 crore shares), Himachal Futuristic (2.43 crore shares), GV Films (1.77 crore shares) and IFCI (1.72 crore shares).

Lanko Infrastructure registered a turnover of Rs210 crore on the BSE followed by Reliance Petroleum (Rs209 crore), Tata Teleservices (Rs192 crore), IFCI (Rs186 crore) and Reliance Energy (Rs128 crore).

Analyst 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.

Brigade Enterprises - Invest with Caution

Originally set up as a partnership firm (Brigade Enterprises) between M R Jaishankar and Gita Shankar in 1990, Brigade Enterprises (BEL) was converted into a private company in 1995 and a public company in July 2007. It develops residential, commercial and retail properties primarily in Bangalore and Mysore, and has also developed and is managing around 115 serviced apartments under the brand, Brigade Homestead.

Since 1990 BEL has completed and delivered around 67 projects aggregating about 6.7 million square feet (sq ft) of space comprising residential (71% of the total developed area), commercial (IT parks/office buildings constituting 26% of the total developed area), and hospitality ventures (3%).

Land reserves stood at 403.45 acres with an estimated developable area of 44.16 million square feet on 23 November 2007. The reserves consist of land owned directly/indirectly: 112.13 acres (27.8% of the total land reserves)/14.2 million sq ft (32.2% of the developable area), land with sole development rights: 102.91 acres (25.5%)/4.83 million sq ft, land for which memoranda of understanding (MoU) for acquisition has been inked: 133.10 acres (33%)/ 16.38 million sq ft (37.1%), and land under joint development: 55.31 acre (13.7%)/8.75 million sq ft (19.8%). Of the total land reserves, about 56.5% is in Bangalore, 18.7% in Mangalore, 12.2% in Chickmagalur, and the balance in Mangalore, Chennai, Hyderabad and Kottayam.

On the land reserves, BEL is developing two integrated lifestyle enclaves (Brigade Gateway and Brigade Millennium), 12 residential properties, and two hospitality properties aggregating 13.84 million sq ft of developable area with a saleable area of 12.53 million sq ft on 23 November 2007. Brigade Gateway Hospital, the hospital project, is part of the integrated lifestyle enclave of Brigade Gateway and will become operational in another two-three months (interior, electrical and hospital equipment installation work is pending). The 200-bed hospital will be managed by Columbia Asia Hospitals and bring diversity to the revenue stream. Moreover, 18 projects are in the initial stage of development and necessary regulatory approvals are being obtained.

BEL engages external professionals for designing and construction of the projects in addition to its in-house competency developed over the years at every stage of the property lifecycle: land identification, project conceptualisation, and construction management, marketing and delivery. Leveraging the external expertise to specific tasks allows the company to focus on identifying appropriate land, project conceptualisation and marketing. Currently, majority of aggregate developable area is subcontracted to BE Billimoria & Company, Simplex Infrastructure, and Ahluwalia Contracts India.

Currently, BEL is constructing five hospitality properties in Bangalore including two service apartments and one hotel. In addition, the company is also about to start work on two hotels: one each at Mysore and Devanahalli (Bangalore), and two resorts: one each at Kottayam and Chickmagalur. The operation and management of these hospitality properties will be through arrangement with international hotel operators such as Starwood, Intercontinental, Banyan Tree and Accor. The company has signed agreement/ letter of intent (LoI) with these international hotel chains. Subsequent to the completion of these projects, BEL is expected to directly/ indirectly own or manage over 1,500 keys. The income from hospitality was just 2.2% of the income from operation in the financial year ending March 2007 (FY 2007) and 2.6% in the first half year ended September 2007. The rental income from commercial and retail properties was 3% and 3.2%, respectively.

Besides Bangalore, BEL has taken up a few projects in Mysore and recently initiated some development activities in other parts of south India including Mangalore, Hyderabad, Chennai.

BEL is tapping the capital markets to fund the Rs 47.97-crore acquisition of 41.85 acres of land in Bangalore and Kottayam, the Rs 512.04-crore construction and development cost of ongoing and forthcoming projects, and gemeral corporate expenses.

Strengths

An established player in the Bangalore realty market. Has successfully executed and delivered around 67 projects aggregating around 6.7 million sq ft of space comprising residential, commercial and hospitality properties.

Though revenue from management of serviced apartments is minimal currently, the development of five hospitality properties will significantly diversify the revenue base in the medium term.

The integrated lifestyle projects will fetch the company a 5%-10% premium over normal residential properties.

Weakness

The two integrated lifestyle projects, Brigade Gateway at Malleshwaram and Brigade Millennium at Whitefield in Bangalore, account for about 10.84 million sq ft of saleable area of the 12.53 million sq ft under construction and spread over 6 projects. Of late prices at Whitefield are stagnating due to glut in available properties. Also, just about 67% of the total space at the Whitefield property has been sold and hence vulnerable to fall in realty prices in these micro markets.

Interest cost has spiked from 6.9% in FY 2007 (on loans end March 2007) to 11.2% (annualised on loans end September 2007) in the six months ended September 2007. In the process, the interest cost has zoomed to Rs 17.25 crore in the six months ended September 2007. This is even higher than Rs 16.56 crore incurred in the entire FY 2007. The spike in interest cost can hurt, specially during a downtrend.

Current land reserves of 403 acres comprise acquisitions in the last one or two years, which was a period of hot realty prices. Thus, profitability is at risk if property prices cool down.

About 100.69 acres amounting to 24.96% of the total reserves is agriculture land. Realty development here is subject to conversion of that land.

Valuation

Consolidated revenue excluding other income recorded a growth of 103% to Rs 409.99 crore and net profit after accounting for share of profit from associates 70% to Rs 71.50 crore in FY 2007. EPS after adjusting for EO works out to Rs 6.3 on post-IPO equity. On the offer price band of Rs 351-Rs 390, the P/E is 56.7-61.9 times. Comparatively, Sobha Developers quotes at a P/E of 40.5 times and Puravankara Projects at 83.4 times.

Spike in interest cost, relatively low land bank compared with peers, relatively high cost of existing land bank, high concentration on a couple of projects, more of a regional play with focus on Bangalore seeing a glut of late are key concerns.

Transformers & Rectifiers India (TRIL) - Invest

Transformers & Rectifiers India (TRIL) manufactures electrical transformers for the power sector and industrial applications. Promoted by Jitendra U Mamtora and his family, the company was originally incorporated in 1994 as Triveni Electric Company. It subsequently changed its name to the present in 1995.

The two manufacturing units of TRIL are located at Changodar and Odhav near Ahmedabad in Gujarat. They had an aggregate installed capacity of 7,200 MVA end of the financial year ending March 2007 ( FY 2007). The company is in the midst of setting up a Rs 66.68-crore greenfield transformer manufacturing facility at Moraiya near Ahmedabad. The installed capacity of the new plant will be around 16,000 MVA per annum.

With an installed capacity of 6,000 MVA, the Changodar plant manufactures power transformers from 66 KV up to 220 KV. With an installed capacity of 1,200 MVA, the Odhav plant manufactured distribution and industrial transformers up to 33 KV class. The new plant at Moraiya will have the capacity to manufacture transformers up to 765 KV. But TRIL initially plans to manufacture 220-KV and 400-KV transformers at this facility. The Odhav plant came into the fold on the acquisition of the business of the sole proprietary concern of the promoters of the company, from August 20’06.

The average capacity utilisation over the last three years stood at 68%. Capacity utilisation peaked to 80% in FY 2007. Power transformers constituted 77% of the total sales in FY 2007, followed by furnace transformers, accounting for 13% of the sales, and distribution transformers 10%. Sales to state electricity utilities constituted about 51% of the total sales, and the remaining contributed by industrial and other sectors.

TRIL has two subsidiaries: Transweld Mechanical Engineering Works (TMEW) and Tanspares. While the wholly owned subsidiary TMEW manufactures tanks and core channels, Transpares (with 51% stake held by TRIL) produces pressed steel radiators. Aart from meeting captive requirement of its parent, TMEW also caters to a range of third-party public- and private-sector clients.

TRIL also proposes to undertake turnkey projects for setting up substations that form part of the power transmission and distribution (T&D) network, leveraging its established relationship with utilities, power T&D companies and in-house engineering capabilities. Once the new plant at Moraiya becomes operational (expected in FY 2009), the aggregate capacity of the company is expected to touch 23,200 MVA end March 2009.

To part fund the Rs 60.75-crore project and to meet incremental working capital requirement, TRIL is tapping the capital market with an initial public offering.

Strengths

Has wide product portfolio comprising power transformers, distribution transformers and industrial transformers such as furnace transformers and special transformers including mobile substation, rectifiers, and testing transformers. The wide product range is backed by strong longstanding relationship with customers, specially state electricity utilities. Is one of the largest manufacturers of furnace transformers in India.

The standalone order book was Rs 360 crore on 15 November 2007, with the order for power transformers amounting to Rs 325 crore and balance for distribution transformers.

The acquisition of 100% stake in TMEW and 51% in Transpares in FY 2007 has resulted in backward integration to critical components for manufacturing of transformers such as tanks, core channels, and pressed steel radiatiors.

Strong investment envisaged in the power sector, translating into strong demand growth for electrical equipment such as transformers.

Cushion of price-variation clause for supply to state and central power utilities to insulate margin from highly fluctuating inputs costs such as CRGO and copper. Derives around 50% of standalone sales from state utilities. But the share of sales to utilities has eased from 51% in FY 20’07, 51% to 47% in the six months ended September 2007.

Weaknesses
Still to pre-qualify for the supply of 400-KV and 765-KV transformers. Lacks strong technology in this class of transformers and will also face strong competition from MNC players with proven technology with domestic manufacturing facility in this category.

The Gujarat Pollution Control Board (GPCB) has rejected the application for no-objection-certificate for the Changodar unit, citing its operation without consent. The GPCB has stopped any expansion of the Changodar unit without prior permission and to obtain necessary approval for the existing production capacity. Application for Consolidated Consent and Authorisation (CC&A) for the unit is processing. However, if consent is not received in time, operations will be hampered.

Valuation

Consolidated revenue was Rs 221.20 crore and net profit after minority interest Rs 17.62 crore in FY 2007. On standalone basis, sales grew 67% to Rs 218 crore and net profit 118% to Rs 16.66 crore. The EPS on consolidated earning of FY 2007 on post-IPO equity is Rs 14.9 and the PE 28.5 times at the lower price band of Rs 425 and 31.2 times the upper price band of 465. Peers EMCO quotes at a PE of 37.1 times, Bharat Bijlee at a PE of 34.7 times and Indo Tech at a PE of 28.5 times.

Sensex ends slightly lower

The market ended slightly lower today in a choppy trading session. Concerns on the political front resurfaced after communist allies warned the government against going ahead with a civilian US nuclear deal.

European markets, which opened after Indian market, were mixed. Asian markets, which opened before Indian market, were subdued. Concerns arising from US sub-prime mortgage crisis resurfaced after Swiss bank UBS unveiled $10 billion in shock subprime writedowns on Monday, 10 December 2007, while simultaneously announcing that it had obtained an emergency capital injection from a Singapore government entity and an unnamed Middle East investor.

Hindalco Industries and ICICI Bank were top gainers from the Sensex pack. Tata Consultancy Services and Cipla were top losers from Sensex pack. Reliance Industries declined. Consumer goods and realty stocks gained. FMCG stocks declined. BSE Mid-Cap and Small-Cap indices outperformed Sensex.

Communist parties, a key ally of the ruling Congress party-led coalition, fired a fresh salvo on Sunday, 9 December 2007, asking the government to stop talks on a controversial nuclear deal with a UN nuclear watchdog.

The 30-share BSE Sensex provisionally ended down 38.22 points or 0.19% to 19,927.78.

The market was volatile. Sensex had hit a high of 20,095.69 in early trade. At day's high, Sensex had gained 129.96 points. Sensex hit a low of 19,834.01 in mid-afternoon trade. At day's low, Sensex had lost 131.99 points for the day.

The broader S&P CNX Nifty provisionally ended down 14.05 points or 0.24% at 5,960.25.

Market breadth was strong. On BSE, 2,025 stocks advanced, 788 stocks declined and 30 stocks remained unchanged. 19 out of 30 Sensex stocks ended in the red.

BSE clocked a turnover of Rs 7,359 crore, compared to Friday (7 December 2007)'s Rs 8,677.98 crore.

The BSE Mid-Cap index rose 1.08% to 9,119.14 and BSE Small-Cap index gained 1.66% to 11,530.16. Both these indices outperformed Sensex.

India’s largest private sector firm by market capitalization & oil refiner Reliance Industries declined 0.93% to Rs 2,815.10. As per reports, it has intensified restructuring of its retail venture Reliance Retail to create up to 30 independent business activities, each targeted to be a profit centre. Speculation is rife of a mega initial public offer in 2008 of Reliance Retail.

Consumer durables stocks rose. Videocon Industries (up 10% to Rs 609.70), Blue Star (up 1.98% to Rs 477) and Rajesh Exports (up 1.27% to Rs 918.30) edged higher.

Realty majors edged higher. India’s largest real estate developer in terms of market capitalisaion DLF rose 1.3% to Rs 1,023.05.

Unitech rose 3.29% to Rs 443.05. As per reports, India’s second-largest real estate developer, Unitech has major plans, which look beyond real estate. After announcing its plans of entering the telecom business, Unitech now wants to concentrate on positioning itself as a full fledged infrastructure development company with interests in power, roads, airports and also in other areas wherever it sees an opportunity. Besides, it also plans to enter the international market.

Indiabulls Real Estate rose 3.56% to Rs 711. The company said before trading hours today, 10 December 2007, its wholly owned subsidiary, Indiabulls Wholesale Services (IWSL), is proposing to make an open offer for Piramyd Retail, a retail company.

Banking stocks were mixed. ICICI Bank (up 1.8% to Rs 1,270 edged higher. HDFC Bank (down 1.43% to Rs 1,697), State Bank of India (down 0.44% to Rs 2,426) edged lower.

FMCG stocks lost ground. ITC (down 1.01% to Rs 187) and Hindustan Unilever (down 1.22% to Rs 205.80) edged lower.

Bharti Airtel rose 0.88% to Rs 968.10. Bharti Airtel announced before the market hours today 10 December 2007 that, Bharti Infratel, Idea Cellular and Vodafone Essar have agreed to form an independent tower company, Indus Towers to provide passive infrastructure services in India to all operators on a non-discriminatory basis. Idea Cellular rose 3.64% to Rs 137.90.

Hindalco Industries (up 2.71% to Rs 193.25), Infosys (up 1.74% to Rs 1,748), Reliance energy (up 0.98% to Rs 1,951) edged higher.

Tata Consultancy Services (down 2.44% to Rs 1,035.35) Satyam Computer Services (down 1.62% to Rs 436.55), Cipla (down 2.08% to Rs 192.0), and Bharat Heavy Electricals (down 1.92% to Rs 2,690.25) edged lower.

European markets were mixed today. France’s CAC 40 (up 0.15% to 5,728) and UK’s FTSE 100 (up 0.33% to 6,576.20) edged higher. Germany’s DAX (down 0.18% to 7,980.88) edged lower

Most of the Asian markets were trading in the red today, 10 December 2007. Taiwan Weighted index (down 1.43% to 8,598.03), Nikkei (down 0.2% to 15,924.39), Straits Times index (down 0.14% to 3,553.08), Hang Seng (down 1.18% to 28,511.07) and Seoul Composite index (down 1.44% to 1,906.42) edged lower. Shanghai Composite index (up 1.38% to 5,161.92) edged higher.

US stocks ended on a mixed note on Friday, 7 December 2007 in spite of better than expected employment data. November non-farm payrolls increased and unemployment rates remained steady. While the numbers helped to ease recession concerns, they also reduced probability of the US Federal Reserve cutting the Fed funds rate by a steep 50 basis points at its 11 December 2007 meeting.

The Dow Jones industrial average rose 5.69 points, or 0.04%, to 13,625.58. The Standard & Poor's 500 index declined 2.68 points, or 0.18%, to 1,504.66. The Nasdaq Composite index slipped 2.87 points, or 0.11%, to 2,706.16.

As per provisional data, foreign institutional investors (FIIs) sold shares worth a net Rs 253.84 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 339.64 crore on Friday,7 December 2007.

Crude oil fell for a second day today, 10 November 2007, in New York on speculation slowing US economic growth may limit demand as fuel stockpiles rise. Crude oil for January 2008 delivery declined as much as 53 cents to $87.75 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for January settlement declined 24 cents, or 0.3%, to $88.40 a barrel.

Calculation Returns - Absolute and Annualized Returns

In a portfolio, how does one calculate Annualised returns? I would like to know the mathematical formula used, especially in a complex case such as:
1. SIP
2. Partially realized gains
Returns of fund's performance for a period of less than 1 year are Absolute Returns and that in excess of 1 year are Annualised Returns.

For Annualised returns, we use the CAGR formula i.e. Compound Annualised Growth Rate formula.
If an investment of Rs 5,000, made five years ago has grown to Rs 6,500 today, then the absolute gain would be Rs 1,500 - a 30 per cent growth on initial investment. A 30 per cent return on investment would normally qualify as good but for the fact that it was realized over five years. If you want to know how much the investment has grown on a yearly basis, you will have to take a look at the compounded Annualised growth rate (CAGR).

The CAGR tells you the return a fund turned in every year during the five-year period, provided the gains were re-invested every year. In this case, the CAGR works out to 5.38 per cent. So, in the first year the investment would have grown to Rs 5269. In the second year, it would have been Rs 5552.4 (by adding 5.38 per cent of Rs 5269) and so on. In India, mutual fund regulations require that all returns over one year should be stated in Annualised terms.

On our website, we calculate the returns for less than a year using the absolute method and those above a year as Annualised.

For calculations of SIP returns, the complex formula of XIRR is used. You can access this formula in a software like MS Excel. To calculate you should list your monthly SIPs as an outflow respective to a date and then write the final value on the respective date of calculation. The XIRR formula would give you the internal rate of return of your investment.

In the above table you see a monthly SIP of Rs.1000 which is taken as outflow every month. On December 10, 2007 the value of the investment stands at Rs. 13000. The XIRR function helps you calculate your annualised return i.e 17.7 per cent.

Mutual Fund -NFO Update

IPO Update