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.