Anandrathi : Market Outlook (Medium Term View)

The sensex ended negative in what can be termed as one of the most volatile day in trading history. Market participants are clearly nervous due to the current uncertainty about the impact of the damage to banks and hedge funds from the sub prime mortgage crisis internationally. Add to this the delicate political situation, possibility of early elections have only added to the nervousness.

In the press conference post market, Left announced that it did not intend to destabilize the Government but is against the deal and will take appropriate action if Congress goes ahead with the nuclear deal. Meanwhile they intend to continue protesting the deal.

Sensex lost 0.59 percent while mid cap index lost 0.88 percent. The small cap index lost more than a percent. Among sectoral indices, fmcg managed to end the day in positive ending up more than a percent. We have seen buying interest here in stocks like ITC, Hind Lever. Any sharp dips can be used by value buyers to get into these stocks. Banking sector lost ground and ended the day 2.2 percent down. Frontline banking stocks like ICICI, SBI, PNB lost ground here while the mid-cap PSU banks were holding ground. Some stability is returning into the technology sector which also managed to hold on.

For all the talk about political crisis and given the extent of volatility, the FII and DII data does come as a surprise. Both were net buyers in the cash market. FIIs bought Rs 274 cr. while DIIs were net buyers of Rs 530 cr in cash market as per provisional data. Even in the futures segment, FIIs were net buyers of about Rs 1100 cr.

After a long period, we have seen FIIs turning net buyers in the cash market and this despite the fluid political situation. The international markets have held ground despite concerns continuing over the impact of sub prime crisis on the economy going ahead. BOJ held on to the rates for the time being given the current turmoil in financial markets. Market participants seem to have over reacted and panicked about the Left Press Conference and since nothing really came out of the same, we can expect markets to pull back. Telecom, capital goods, cement, auto are some of the areas which could see smart upmove in a pull back.

Corporate News:

Everest Industries Ltd (EIL) , has set a target of 20 per cent growth in sales this fiscal and is eyeing Rs 500 crore turnover by FY 2008-09. The company is setting up a manufacturing unit at Roorkee in Uttarakhand at an investment of Rs 75 crore and it will be commissioned this fiscal. The company is setting up a manufacturing facility at Roorkee in Uttarakhand at an investment of Rs 75 crore. The facility is nearly complete and is expected to start the commercial operation by the end of the present fiscal. The manufacturing capacity of Roorkee plant will be 122,000 metric tonnes of roofing sheets and 60,000 metric tonnes of flat boards per year and 600 solid wall panels per day.

Bajaj Electricals is looking to acquire premium brands in appliances in its pursuit of growth. The company plans to double its turnover in two years and quadruple it in six years, through acquisitions in its existing businesses and foraying into new areas that may include tie-ups with international players. The company would raise its turnover from the current Rs 1,100 crore to Rs 2,100 crore by 2009-10 and to Rs 4,000 crore by 2012-13. The journey to this Goal will be on the back of expanded market share in the existing lines of business as well as new product lines, including products sourced from international majors. The company has already tied up with Italian appliances major, Nardi, to market its gas-based cooking appliances in India . The range includes gas stoves and chimneys and this would be extended to premium and ultra premium offerings. These products may not form a major part of our business in terms of the number of units, but will add significantly to the top line.

Bharat Heavy Electricals Limited (BHEL ) is set to ramp up the capacity of its boiler auxiliaries plant (BAP) at Ranipet to 10,000 Mw in the next two years. The move is part of the corporate plan to scale up the overall capacity to 15,000 Mw, which includes contributions towards hydro power and nuclear power besides the thermal power sector. For the current year, the order book position is at Rs 1,457 crore as against Rs 1,266 crore in the previous year. The eastern region alone accounts for about 18 per cent of the total sales volume of Tata Motors and they are targeting to raise this share.’Ace’ clocked a sales volume of over 5000 in the state last year and is expected to cross the 8000 mark in 2007- 08,

Standard Chartered has entered into an agreement to acquire 49% stake in UTI Securities from the Securities Trading Corporation of India (STCI) with an option of increasing its stake to 100% over the next three years. It has picked up the 49% stake at Rs 147 crore, valuing UTI Securities at Rs 300 crore. STCI had in February 2006 bought UTI Securities from the Specified Undertaking of the Unit Trust of India (SUUTI) for Rs 265 crore. They have an option to purchase the balance at a pre-determined formula in 2010. The move will help give our customers a wider product portfolio.

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