Weekly Report-23/02/2008

Inflation figures stood at 4.35 % at the end of this week compared with 4.07% last week.
The yield on the 10-year G – Sec has remained flat at 7.17%.

Crude oil price stood at US$98.81 per barrel by the end of the week. Over the week crude oil prices
hovering around US$98.23 – 99.7 per barrel.

Rs per US$ exchange rate closed at 40.03 by the end of the week. Exchange rate Rs/US$ continued to trade around Rs.39.78to 40.03.

Market Commentary -22/12/2008

The market tumbled today as blue chips came under renewed selling pressure. Weakness in Asian stocks triggered the latest round of selling on the domestic bourses. Banking, IT and auto were the worst hit in today’s fall.

The 30-share BSE Sensex was down 435.98 points or 2.46% at 17,298.70, as per provisional closing. Sensex hit a low of 17,294.73 at the fag end of the trading session. At the day’s low, the Sensex lost 439.95 points. Sensex hit a high of 17,526.80 in early trade. At the day’s high, the Sensex lost 207.88 points.

The broader based S&P CNX Nifty was down 97.50 points or 1.88% at 5,094.30 as per provisional closing.

Daily News - 22/02/2008

RCom goes global, buys Uganda co

Reliance Communication’ (RCom), the country’s second largest wireless operator, has acquired Anupam Global Soft Ltd a telecom firm in Uganda and will spend Rs 2,000 crore($500 million) over the next five years in establishing a high quality, fully-IP enabled integrated telecom network to capture the significant growth potential in this emerging African market. This marks RCom’s foray in the international mobile services market. RCom, through the target firm’s licences, would offer mobile, fixed line, Internet, long distance, Wimax and Wi-Fi services in Uganda. Financial details were not provided as of now, but, according to industry sources, the total deal size is likely to be higher than the $211 million for FLAG and $300 million for Yipes.

Alstom Projects India Ltd (APIL), a subsidiary of Alstom SA France, has bagged exports orders worth Rs 592 crore. The company has received two orders -- a Rs 242-crore order for Fujairah independent water and power plant, Fujairah, UAE, and Rs 350-crore order for Bujagali hydro electric power station at Jinja in Uganda. Alstom Projects will supply heat recovery steam generator (HRSG) for Fujairah plant, one of the largest desalination plants in the world.

Larsen and Toubro Ltd has been awarded an engineering, procurement and construction (EPC) services contract by Cairn India for crude oil insulated pipeline and gas pipeline from Barmer (Rajasthan) to Salaya (Gujarat). The work involves laying across-country 24-inch skin heat traced pipeline from the Mangala terminal at Barmer (Rajasthan) to Salaya Oil Export terminal, near Jamnagar. However the amount of order could not be ascertained. • Simplex Infrastructures Ltd has bagged orders worth Rs 302 crore for the construction of six flyovers on Seeb Corniche Road in Muscat. The project is to be completed in 24 months. The company after spreading its wings to construction business in Qatar and the UAE has now bagged its first order from Oman. The order book now stands at Rs 9,500 crore.

Market Commentary - 21/02/2008

The market staged a strong rebound in late trade to wipe-off losses and post modest gains for the day. Firm European markets, which opened after Indian markets and good response to Rural Electrification Corporation public issue helped the recovery.

Volatility on the bourses was high today. The market had slipped into the red in afternoon trade after opening on a strong note. A firm opening was due to strength in Asian markets. The market breadth was positive after turning negative in afternoon trade. 21 shares from the 30-member Sensex pack rose.

The 30-share BSE Sensex was up 117.08 points or 0.66% at 17,734.68. It slipped to a low of 17,482.31 in mid-afternoon trade. At the day’s low, the Sensex lost 135.29 points. Sensex had opened 265.42 points higher at 17,883.02 and rose further to touch a high of 17,887.21 in early trade. At the day’s high, the Sensex rose 269.61 points. The Sensex oscillated in a range of 404.90 points for the day.

At current 17,734.68, Sensex trades at a PE multiple of 16.90 to 17.73, based on projected FY 2009 EPS of Rs 1000-to-Rs 1050 for 30 Sensex companies.

The broader based S&P CNX Nifty gained 37.35 points or 0.72% at 5,191.80. Nifty February 2008 futures were at 5201, a premium of 9.20 points as compared to spot closing.

Daily News-21/12/2008

41% rise in net direct tax collections

The Centre’s direct tax revenues continued to be buoyant, with collections during the period April 1, 2007 to February 15, 2008 recording 41.4% increase to Rs 228,745 crore. This collection level constituted 85% of the budgeted direct tax target of Rs 267,490 crore for 2007-08. The strong growth in direct tax collections so far in the current fiscal has raised hope among taxpayers that the Finance Minister, Mr P Chidambaram, would moderate direct tax rates in the forthcoming budget. While corporate tax collections grew 38.8% for the period under review at Rs 138,073 crore, up from Rs 99,488 crore in the same period during the previous fiscal, personal income tax (including FBT, STT and BCTT) grew by 45.6% at Rs 90,356 crore, up fromRs 62,040 crore. Securities transaction tax (STT) collections recorded 84.6% growth to Rs 7,878 crore (Rs 4,267 crore). Fringe benefit tax (FBT) collections were up 29.8% to Rs 5,216 crore (Rs 4,020 crore). Banking cash transaction tax (BCTT) collections grew 16.8 per cent to Rs 478 crore (Rs 409 crore)

REL gets Mumbai trans-harbour project.

A consortium of Anil Dhirubhai Ambani Group (ADAG) company Reliance Energy has bagged the construction contract for the Mumbai trans-harbour link between Sewri in Mumbai and Nava-Sheva across the creek in Navi Mumbai. Anil Amabni group company outbid elder brother Mukesh's consortium to win the prestigious Rs 6,000 crore trans harbour link project.
The REL-Hyundai combine quoted a lower concession period for the build, operate and transfer (BOT) project of nine years and 11 months as against 75 years quoted by the Mukesh Ambani-controlled Sea King Infrastructure. Phase-I of the project will comprise a six-lane dual carriageway linking Nhava to Sewri and Phase-II, which is expected to be added in 2015 -18, will consist of a double track rail link that will run parallel to the road link on the north side. The project cost has been revised to Rs 6,000 crore with a construction period of five years. The REL-led consortium can charge Rs 250 per heavy vehicle and Rs 120 for cars and light commercial vehicles as toll charges. About 50,000 vehicles are expected to use the bridge every day. The toll will be subject to revision after every four years.

RCom to consolidate overseas business.

Anil Ambani controlled Reliance Communications (RCom), the country’s second-largest wireless operator, is consolidating its overseas business under one umbrella — Reliance Globalcom with a vision to create one of the top five global communications Companies in the world. It will be headquartered in London. The new entity brings under its fold Flag Telecom, Yipes Communications and RCom’s international business.
It will soon come up with an initial public offer. About $2 billion has been earmarked for capital expenditure over the next three years by the unit, which would be spun off shortly. The consolidation process will get over in the next 2-3 months. Reliance Globalcom would leverage the world class fully IP-enabled Global Infrastructure of Reliance Communications, and its subsidiaries, including 175,000 km of optic fibre and 20,000 km of Ethernet backbone in the US. Reliance Globalcom will have presence in over 50 countries including the top twenty financial centers in the world.

Market Commentary -20/02/2008

The domestic bourses tumbled today on negative cues from the global markets. Asian markets, which opened before Indian markets, suffered setback as oil prices hit a record high above $100 a barrel on Tuesday, 19 February 2008. European markets, which opened after Indian markets, declined. The market breadth was weak. 26 stocks from the 30-share Sensex pack declined. Shares from auto, banking and real estate were the hit the most in today's market fall.

Crude oil slipped on Wednesday, 20 February 2008 after surging nearly 5% to a record above $100.10 a barrel a day ago amid an influx of fresh investor capital into the commodities sector and concerns that Organization of Petroleum Exporting Countries (OPEC) will not hike output next month. US crude slipped 61 cents to $99.40 a barrel. London Brent crude fell 68 cents to $97.88 a barrel.

Market News -20/12/2008

Ranbaxy board okays de-merger of R&D unit

Pharmaceutical major Ranbaxy Laboratories Ltd has approved the hiving off of its research and development unit New Drug Discovery Research (NDDR) into a new subsidiary called Ranbaxy Life Science Research Ltd (RLSRL). As per the de-merger scheme shareholders will get one share of the new entity for every four shares held by them at present. The company said that the spin off will result in cost savings of about $25 million in the current year

ABB net up on robust order inflows
Buoyed by robust order inflows and a strong showing by power and automation businesses, ABB Ltd has reported a 34% jump in net profit at Rs 180.8 crore for the quarter ended December 31, 2007. The total income rose 30% to Rs 1,864.8 crore during the quarter. For the year ended December 31,2007, the company reported a 44% jump in net profit at Rs 491.7 crore, with total income rising 38% to Rs 6,001.4 crore. It has declared a dividend of 110 per cent (Rs 2.20 on each share with face value of Rs 2).

Biz jets on rent, next big play from Indian Hotels
Indian hotels, which is already in the business of private jet space with a company called Taj Air is now investing in BJets, a business jet operator, which intends to start services in May 2008. However this deal of BJets is independent of Taj Air. According to sources, Indian Hotels will be investing 36 to 37%, in a newly floated company, BJETS, in partnership with Singapore-based Briley Group. Briley, which has interests in aviation, hospitality and BPO around the globe, will be the majority owner in the company.

Market News

Everest Kanto Cylinders (EKC) is close to acquiring a US company for about $70 million.
Like EKC, the US Company also manufactures
compressed natural gas (CNG) and industrial gas cylinders. In October 2007, the
company raised $35 million through foreign currency convertible bond (FCCB) issue and
followed it up with a rupee funding worth $20-25 million. EKC could use these funds to
meet the acquisition cost.
On its way to become a leading CNG cylinder manufacturer with global scale, Everest
Kanto is on an ambitious expansion mode. It is building capacities at plants in India, China
and Dubai, and is currently seeing a $60 million capex plan.

Apollo, Ceat, MRF rev up to take on MNCs
Domestic tyre makers – Apollo, Ceat, MRF and JK Tyres – are expanding capacity, which
will take their combined capacity to 4.4 million units by 2010. This will help them to defend
their market share from the onslaught of global majors like Bridgestone, Michelin,
Yokohama, Goodyear and Pirelli, who are making inroads into the country’s Rs 19,000
crore tyre market.
Apollo Tyres is investing Rs 320 crore to increase the output. The company is
setting up a greenfield radial facility in Tamil Nadu for trucks, buses and cars.Besides, it has planned an off-the-road tyre facility in Gujarat.
Ceat Tyres, the country’s fourth largest tyre maker, will pump in Rs 800 crore to set up two facilities of 230 tonne/per day capacity.
JK Tyres, which has reportedly bagged the order for Tatas’ much-awaited Nano,
will invest Rs 150 crore in a new plant.
India’s largest tyre producer MRF is planning a new facility in Tamil Nadu.

Global Iron ore prices surge by 65%
Steel companies including Japan based Nippon Steel Corporation, JFE Holdings Inc and South Korea’s Posco have agreed to pay 65% .The world steel market is quite confident that it can protect its margins by passing on the rise in cost of inputs, including iron ore and steel. Given the decent demand growth, better pricing power due to consolidation, the steel sector has become more resilient in the past couple of years.
integrated steel companies like SAIL & Tisco which would not be affected by the surge in iron ore prices and in turn would command a better pricing as compared to its peers.

Market Commentary -18/02/2008

Breaking a three-day winning streak, the market edged lower today on profit taking. The market failed to sustain higher levels after a firm start. A firm opening was triggered by Reliance Power's surprise announcement on Sunday, 17 February 2008, that it would consider bonus issue. The market was down sharply in afternoon trade but managed to cut losses tracking firm European markets, which opened after Indian markets. The benchmark index, BSE Sensex, dipped below 18,000 mark only to regain that level in mid-afternoon trade.

Reliance Power soared on high volumes. Despite the market fall, the breadth was positive on buying in small-cap and mid-cap stocks. Asian markets were mixed.

Message for Retail Investors on MarginTrading

Why should there be margins?

Just as we are faced with day to day uncertainties pertaining to weather, health, traffic etc and take steps to minimize the uncertainties, so also in the stock markets, there is uncertainty in the movement of share prices. This uncertainty leading to risk is sought to be addressed by margining systems by stock markets.Suppose an investor, purchases 1000 shares of 'xyz' company at Rs.100/- on January 1,2008. Investor has to give the purchase amount of Rs. 1,00,000/- (1000X100) to his broker on or before January 2, 2008. Broker, in turn, has to give this money to stock Exchange on January 3, 2008.

There is always a small chance that the investor may not be able to bring the required money by required date. As an advance for buying the shares, investor is required to pay a portion of the total amount of Rs. 1,00,000/- to the broker at the time of placing the buy order. Stock Exchange in turn collects similar amount from the broker upon execution of the order. This initial token payment is called margin.
Remember, for every buyer there is a seller and if the buyer does not bring the money, seller may not get his/her money. Margin is levied on the seller also to ensure that he/she gives the 100 shares sold to the broker who in turn gives it to the Stock Exchange. Margin payments ensure that each investor is serious about buying or selling shares.

In the above example, assume that margin was 15%. that is investor has to give Rs. 15,000/- (15% of Rs. 1,00,000/-) to the broker before buying. Now suppose that investor bought the shares at 11 am on January 1.2008. Assume that by the end of the day price of the share falls by Rs. 25/-. That is total value of the shares has come down to Rs. 75,000/-. That is buyer has suffered a notional loss of Rs. 25,000/-. In our example buyer has paid Rs. 15,000/- as margin
but the notional loss, because of fall in price, is Rs. 25,000/-.. That is notional loss is more than the margin given.

In such a situation, the buyers may not want to pay Rs. 1,00,000/- for the share whose value has come down to Rs. 75,000/-. Similarly, if the price has gone up by Rs. 25/-, the seller may not want to give the share at Rs. 1,00,000/-. To ensure that both buyers and sellers fulfill their obligations irrespective of prices movements, notional losses are also need to be collected. Prices of shares may keep on moving everyday. Margins ensure that buyers bring money and sellers bring shares to complete their obligations even though the prices have moved down or up.

Reliance power to Issue Bonus

In a staggering move to cut the cost of the acquisition value of shareholders, Reliance power board will be meeting on 24th Feb 2008 to consider Bonus of shares excluding Promoters.
Promoters will be accepting to Dilute their holding.
the ratio will be decided in the board meeting scheduled for Feb24 2008