Some gains emerge on positive overnight US cues despite continued concerns about debt worries in Greece
Asian equities ended mixed today, as an attempt by the bulls to reinvigorate the sentiments in their favor on positive overnight US cues were encountered by continued concerns about debt worries in Greece. The US dollar also stayed higher throughout the Asian trades, be weighing on the markets as commodities slipped and weekend profit booking also kept advances under check for most of the Asian equities.
The Australian market ended with modest gains. Volumes were relatively lower as traders preferred to adopt a wait-and-watch approach awaiting more clues on global economy. The benchmark S&P/ASX200 Index added 9.10 points, or 0.19% to close at 4,872, while the All-Ordinaries Index ended at 4,890, representing a gain of 12.40 points, or 0.25%.
The stock market in Japan closed in positive territory on Friday, the last day of the trading week, on optimism about the US economy where the latest weekly jobless claims, despite rising marginally than forecast, confirmed that the employment situation is improving. The benchmark Nikkei 225 Index advanced 80.69 points, or 0.75%, to 10,824, while the broader Topix index of all First Section issues gained 8.14 points, or 0.87%, to 949.
On the economic front, a report released by the Ministry of Trade, Economy and Industry revealed that all industry activity in the country climbed 3.8% in January from December. The report further noted that year-on-year, all industry activity was up 2.9% in January, rebounding from 1.5% fall in December.
Shares in China eked out small gains in a cautious session on Friday, with wary investors expecting Beijing to further tighten liquidity by lifting bank reserve ratios. The Shanghai Composite Index closed up 0.71 at 3,067 points, its highest close since March 9.
In Mumbai, volatility was witnessed in the latter part of trading session as the key benchmarks pared gains after surging to two month highs. IT and realty stocks fell. But, PSU banks, auto and consumer durables stocks rose. The BSE 30-share Sensex was provisionally up 37.22 points or 0.21%, up close to 50 points from the day's low and off close to 45 points from the day's high.
In the U.S., stocks ended Thursday's trading mixed, as the markets digested a series of economic reports that showed only small steps forward for the ailing economy. The Dow and the Nasdaq rose by modest margins, while the S&P 500 closed just below the unchanged mark. The S&P 500 slipped by 0.39 points or less than a tenth of a percent to 1,166, while the Dow advanced by 45.50 points or 0.4% to 10,779 and the Nasdaq edged up by 2.19 points or 0.1% to 2,391.
US dollar stayed upbeat throughout the day, hitting a 10 session high of 1.3506 against the Euro. European Central Bank President Jean-Claude Trichet stated that strengthening longer-term confidence is crucial for the post-crisis economy and robust policy frameworks will be needed against future challenges. Light sweet crude oil futures for April delivery slipped to a low of $81.51 a barrel in electronic trading. The commodity currently trades at $81.63, down 57 cents per barrel from previous close.
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Friday, March 19, 2010
S & P RATING HELPS BULLS CAUSE :--
Today's major news
S Kumars touches 52-week high; the stock surges 19.61%
Punj Lloyd bags Rs1281 crore contracts; the stock is up by 0.96%
Dalmia Cement demeger plan gets board nod; the stock slides 0.31%
Click here for more stories
Post-market summary
Global signals
The European stocks rose in early trade on Friday, March 19, 2010, hitting a 17-month high, with banking shares trading higher. At the time of writing this report, FTSE 100 was trading 0.78% higher.
Asian indices across the spectrum — Nikkie to Straits Times to Kospi — closed higher. The SGX Nifty closed at 5268, up 13 points.
The US stock futures pointed to a mixed opening on the Wall Street on Friday.
Indian indices
Higher Dow Jones yesternight and strong Asian indices this morning helped Indian indices open a marginal 12 points up at 17531. Leveraging on previous two days’ gains, the market traded with a positive bias all through the day. Upgradation of India’s debt-rating outlook from “negative” to “stable” by Standard & Poor’s (S&P) rating services helped the cause. However, as aforesaid in the morning report, it languished within a tight band of 17502-17600 due to lack of triggers.
Buying in the Sensex components such as Reliance Industries and Bharti Airtel propelled the index to 17600 levels. The Sensex, which had gained nearly 380 points in the last three sessions, added 59 points to its kitty to close at 17,578 points. The Nifty closed 17 points up at 5263.
Market sentiment
The choppy session saw declining shares slightly outnumbering the advancing shares. Of 2,950 stocks traded on the BSE, 1,381 stocks (46.81%) advanced, whereas 1,459 (49.46%) stocks declined. Hundred and ten stocks remained unchanged.
Sectoral & stock screening
Despite trading in the narrow range, all the sectoral indices closed higher, except realty and IT. The BSE realty slid the most, by 0.95%, followed by BSE IT that down by 0.45%. The BSE Consumer Durables (CD) surged the most and topped the sectoral list by 1.09%, followed by BSE Oil & Gas that rose by 0.78%. Other sectors closed positive in the range of 0.16% - 0.57%.
The top-3 gainers were — Bharat Electronics that surged by 5.71%, Chambal Fertilisers that rose by 4% and Bharti Airtel that was up by 3.95%.
The top-3 losers were — Indiabulls Real Estate that slid by 3.06%, CESC that was down by 2.51% and IVRCL Infrastructure and Projects that declined by 2.43%.
Viewing volumes
The stocks that drew investors interest were — India’s second largest realty company, Unitech, was the most traded share with over 0.43 crore shares changing hands on the BSE, followed by Exide Industries (0.38 crore shares), wind power major — Suzlon Energy (0.33 crore shares), sugar manufacturer — Shree Renuka Sugars (0.24 crore shares) and natural resources company — Reliance Natural Resources (0.20 crore shares).
S Kumars touches 52-week high; the stock surges 19.61%
Punj Lloyd bags Rs1281 crore contracts; the stock is up by 0.96%
Dalmia Cement demeger plan gets board nod; the stock slides 0.31%
Click here for more stories
Post-market summary
Global signals
The European stocks rose in early trade on Friday, March 19, 2010, hitting a 17-month high, with banking shares trading higher. At the time of writing this report, FTSE 100 was trading 0.78% higher.
Asian indices across the spectrum — Nikkie to Straits Times to Kospi — closed higher. The SGX Nifty closed at 5268, up 13 points.
The US stock futures pointed to a mixed opening on the Wall Street on Friday.
Indian indices
Higher Dow Jones yesternight and strong Asian indices this morning helped Indian indices open a marginal 12 points up at 17531. Leveraging on previous two days’ gains, the market traded with a positive bias all through the day. Upgradation of India’s debt-rating outlook from “negative” to “stable” by Standard & Poor’s (S&P) rating services helped the cause. However, as aforesaid in the morning report, it languished within a tight band of 17502-17600 due to lack of triggers.
Buying in the Sensex components such as Reliance Industries and Bharti Airtel propelled the index to 17600 levels. The Sensex, which had gained nearly 380 points in the last three sessions, added 59 points to its kitty to close at 17,578 points. The Nifty closed 17 points up at 5263.
Market sentiment
The choppy session saw declining shares slightly outnumbering the advancing shares. Of 2,950 stocks traded on the BSE, 1,381 stocks (46.81%) advanced, whereas 1,459 (49.46%) stocks declined. Hundred and ten stocks remained unchanged.
Sectoral & stock screening
Despite trading in the narrow range, all the sectoral indices closed higher, except realty and IT. The BSE realty slid the most, by 0.95%, followed by BSE IT that down by 0.45%. The BSE Consumer Durables (CD) surged the most and topped the sectoral list by 1.09%, followed by BSE Oil & Gas that rose by 0.78%. Other sectors closed positive in the range of 0.16% - 0.57%.
The top-3 gainers were — Bharat Electronics that surged by 5.71%, Chambal Fertilisers that rose by 4% and Bharti Airtel that was up by 3.95%.
The top-3 losers were — Indiabulls Real Estate that slid by 3.06%, CESC that was down by 2.51% and IVRCL Infrastructure and Projects that declined by 2.43%.
Viewing volumes
The stocks that drew investors interest were — India’s second largest realty company, Unitech, was the most traded share with over 0.43 crore shares changing hands on the BSE, followed by Exide Industries (0.38 crore shares), wind power major — Suzlon Energy (0.33 crore shares), sugar manufacturer — Shree Renuka Sugars (0.24 crore shares) and natural resources company — Reliance Natural Resources (0.20 crore shares).
Thursday, March 18, 2010
UNITED BANK OF INDIA LOGS TEPID GAINS ON DEBUT:-
Settles at Rs 68.80 on BSE, a 3.93% premium over the IPO price
Shares of the state-run United Bank of India (UBI) settled at Rs 68.80 on BSE, a 3.93% premium over the initial public offer price of Rs 66.
The stock debuted at Rs 77, a 16.66% premium over its initial public offer price of Rs 66 per share. The stock hit a high of Rs 77 and low of Rs 68.10
The counter clocked volume of 2.82 crore shares on the BSE.
The state-run lender had priced initial public offer (IPO) at Rs 66 per share, at the upper end of the Rs 60-66 per share price band, raising Rs 324.98 crore. The bank offered the shares to retail investors and employees at 5% discount to the issue price.
The bank's IPO was subscribed 33.38 times and garnered bids for 166.88 crore shares as against 5 crore shares on offer. The bank's IPO remained open for bidding between 23 and 25 February 2010.
The UBI IPO saw high demand from institutional investors. The portion reserved for qualified institutional buyers (QIB) category was subscribed 47.08 times while that of non-institutional investors was subscribed 39.15 times. Retail investor portion was bid 9.80 times. However, employees quota remained undersubscribed and got bids for 13.25 lakh shares as against 25 lakh shares reserved for them
UBI has its presence predominantly in the north and north-east India. Following the IPO, the government's stake in the Kolkata-headquartered bank has declined to 84.20%, from 100%.
The bank would be utilising the IPO proceeds to expand its balance sheet and augment capital base
Shares of the state-run United Bank of India (UBI) settled at Rs 68.80 on BSE, a 3.93% premium over the initial public offer price of Rs 66.
The stock debuted at Rs 77, a 16.66% premium over its initial public offer price of Rs 66 per share. The stock hit a high of Rs 77 and low of Rs 68.10
The counter clocked volume of 2.82 crore shares on the BSE.
The state-run lender had priced initial public offer (IPO) at Rs 66 per share, at the upper end of the Rs 60-66 per share price band, raising Rs 324.98 crore. The bank offered the shares to retail investors and employees at 5% discount to the issue price.
The bank's IPO was subscribed 33.38 times and garnered bids for 166.88 crore shares as against 5 crore shares on offer. The bank's IPO remained open for bidding between 23 and 25 February 2010.
The UBI IPO saw high demand from institutional investors. The portion reserved for qualified institutional buyers (QIB) category was subscribed 47.08 times while that of non-institutional investors was subscribed 39.15 times. Retail investor portion was bid 9.80 times. However, employees quota remained undersubscribed and got bids for 13.25 lakh shares as against 25 lakh shares reserved for them
UBI has its presence predominantly in the north and north-east India. Following the IPO, the government's stake in the Kolkata-headquartered bank has declined to 84.20%, from 100%.
The bank would be utilising the IPO proceeds to expand its balance sheet and augment capital base
RISK AVERSION GLIDES ASIA LOWER:-
Continued worries on Greece, stronger dollar hurt sentiments
Risk aversion came back in action as the markets waited for more clarity on the Greece bailout talks. The country may turn for financial help from the International Monetary Fund and the Asian benchmarks slipped today on the continued worries that a sovereign default by Greece may rattle the other European economies as well. Commodities were under pressure and US dollar rallied; prompting investors to lock in some of gains after the US stocks hit two months highs yesterday. The economic data is doing little in the current scenario and even though most of the market participants think that Greece can muddle through this year, it is unlikely to manage to do so in the next year without the support of the EU. The conditionality of such a support is a different thing and right now, the most critical thing for the markets is clarity.
The DOW had ended in green yesterday but it failed to enthuse the Asian stocks. Japanese markets slipped as the exporters were dragged lower. A decline in business confidence also contributed to the weakness. The benchmark Nikkei 225 index declined 1% by the close.
Chinese stocks had a volatile outing. About four stocks rose for every three that dropped on the Shanghai Composite Index, which fell 4.39, or 0.1 percent, to 3,046.09 at the close. The Shanghai index has lost 7.1 percent this year as the government twice increased the proportion of deposits banks need to set aside as reserves and re-imposed a tax on home sales.
In other markets, New Zealand's NZX 50 rose 0.6% and Philippine stocks ended up 0.45.
However, the Australian stocks closed marginally higher on late buying. Defensive stocks such as telecommunications, utilities and consumer staples fared best although mining stocks capped their gains despite higher commodity prices. The benchmark S&P/ASX200 index was up 9.9 points, or 0.2 per cent, to 4863.1 points, while the broader All Ordinaries index added 10.8 points, or 0.22 per cent, to 4,877.7 points.
In Mumbai, the key benchmark indices surged to the day's highs at the fag end of the trade after global rating agency Standard & Poor's revised India's rating outlook to stable from negative. S&P affirmed the 'BBB-' long-term and 'A-3' short-term sovereign credit ratings on India. Banking and metal stocks rose. The BSE 30-share Sensex was up provisionally up 44.46 points or 0.25%, up close to 115 points from the day's low. But the market breadth was negative.
On Wall Street, stocks saw moderate strength on Wednesday amid fairly encouraging economic reports. The major averages ended the day firmly in positive territory, reaching their best closing levels in over a year. The Dow advanced by 47.7 points or 0.5% to 10,733.7, the Nasdaq closed up 11.1 points or 0.5% at 2,389.1 and the S&P 500 ended up 6.8 points or 0.6% at 1,166.2.
The US dollar hovered under 1.3700 mark against the Euro though the currency gave some of the yesterday's gains away, backtracking from a high of 1.3647. Crude oil slipped under $82 for a while and rebounded. The commodity was last seen quoting at $82.39, down 54 cents from the previous close.
Risk aversion came back in action as the markets waited for more clarity on the Greece bailout talks. The country may turn for financial help from the International Monetary Fund and the Asian benchmarks slipped today on the continued worries that a sovereign default by Greece may rattle the other European economies as well. Commodities were under pressure and US dollar rallied; prompting investors to lock in some of gains after the US stocks hit two months highs yesterday. The economic data is doing little in the current scenario and even though most of the market participants think that Greece can muddle through this year, it is unlikely to manage to do so in the next year without the support of the EU. The conditionality of such a support is a different thing and right now, the most critical thing for the markets is clarity.
The DOW had ended in green yesterday but it failed to enthuse the Asian stocks. Japanese markets slipped as the exporters were dragged lower. A decline in business confidence also contributed to the weakness. The benchmark Nikkei 225 index declined 1% by the close.
Chinese stocks had a volatile outing. About four stocks rose for every three that dropped on the Shanghai Composite Index, which fell 4.39, or 0.1 percent, to 3,046.09 at the close. The Shanghai index has lost 7.1 percent this year as the government twice increased the proportion of deposits banks need to set aside as reserves and re-imposed a tax on home sales.
In other markets, New Zealand's NZX 50 rose 0.6% and Philippine stocks ended up 0.45.
However, the Australian stocks closed marginally higher on late buying. Defensive stocks such as telecommunications, utilities and consumer staples fared best although mining stocks capped their gains despite higher commodity prices. The benchmark S&P/ASX200 index was up 9.9 points, or 0.2 per cent, to 4863.1 points, while the broader All Ordinaries index added 10.8 points, or 0.22 per cent, to 4,877.7 points.
In Mumbai, the key benchmark indices surged to the day's highs at the fag end of the trade after global rating agency Standard & Poor's revised India's rating outlook to stable from negative. S&P affirmed the 'BBB-' long-term and 'A-3' short-term sovereign credit ratings on India. Banking and metal stocks rose. The BSE 30-share Sensex was up provisionally up 44.46 points or 0.25%, up close to 115 points from the day's low. But the market breadth was negative.
On Wall Street, stocks saw moderate strength on Wednesday amid fairly encouraging economic reports. The major averages ended the day firmly in positive territory, reaching their best closing levels in over a year. The Dow advanced by 47.7 points or 0.5% to 10,733.7, the Nasdaq closed up 11.1 points or 0.5% at 2,389.1 and the S&P 500 ended up 6.8 points or 0.6% at 1,166.2.
The US dollar hovered under 1.3700 mark against the Euro though the currency gave some of the yesterday's gains away, backtracking from a high of 1.3647. Crude oil slipped under $82 for a while and rebounded. The commodity was last seen quoting at $82.39, down 54 cents from the previous close.
Wednesday, March 17, 2010
FED'S LOW - RATE PLEDGE BUOYS MARKET:-
Today's major news
Hindustan Unilever plans legal action against strikers at Haldia; the stock slides 1.28%
Reliance Industries eyes JV with Atlas Energy for Marcellus Shale; the stock is down by 0.02%
L&T gets Rs1013 crore order from ONGC; the stock surges 1.62%
Click here for more stories
Post-market summary
Global signals
The European markets were higher in the early trades on Wednesday, March 17, 2010, with banks benefiting from the US Federal Reserve's (Fed) move to keep the interest rates near zero for an extended period. At the time of writing this report, FTSE 100 was trading 0.60% higher.
All the Asian indices closed higher on Fed’s move. SGX Nifty closed 36 points higher.
US stock futures opened higher on Wednesday indicating a higher opening on the Wall Street.
Indian indices
Stocks continued to move up on the Fed’s and Japan’s decision to keep interest rates unchanged. On strong global cues, the benchmark indices extended their gains. The Indian indices opened almost flat at 17389, up by 6 points and did not see those levels again. In today’s session, BSE PSU, BSE HC and BSE Metal witnessed heavy buying.
In the mid session, the Sensex stood by near 1% to the two-month high at 17,550 levels and touched the day’s high at 17576, while the broad-based NSE index Nifty advanced by near 1.1% to 5,250. At the closing, the market erased some of its earlier gains, as the Sensex components like Maruti Suzuki, HUL and Tata Power under performed. The Sensex closed the session at 17490, 107 points or 0.61% higher, while Nifty finished the day at 5231, 34 points or 0.65% higher.
Market sentiment
The equities were witnessing a tremendous buying activity after the US and Japan decided to keep interest rates unchanged. Of the 2,928 shares traded on the BSE, 1250 (42%) shares advanced whereas 1586 (54%) shares declined, while ninety-two shares remained unchanged.
Sectoral & stock screening
All the 13 sectoral indices closed higher, except realty, auto, FMCG and consumer durables that fell for the day. PSU index topped the gainers list that was energised by ONGC, one of the 30-share index of Sensex that lifted the index by 2.04%, followed by Health Care index that rose by 1.66%.
The top 3 gainers included Hindustan Copper that rose by 18.71%, followed by NMDC that surged by 8.87% and MMTC that was up by 4.61%.
The top 3 losers included Shree Renuka Sugars that slid the most by 3.61%, followed by Jet Air India that was down by 3.30% and United Spirits that declined by 3.29%.
Viewing volumes
India’s second largest realty company, Unitech, was the most traded share with over 0.52 crore shares changing hands on the BSE, followed by steel maker — Ispat Industries (0.48 crore shares), wind power major — Suzlon Energy (0.44 crore shares), natural resources company — Reliance Natural Resources (0.34 crore shares) and copper maker — Hindustan Copper (0.31 crore shares).
Hindustan Unilever plans legal action against strikers at Haldia; the stock slides 1.28%
Reliance Industries eyes JV with Atlas Energy for Marcellus Shale; the stock is down by 0.02%
L&T gets Rs1013 crore order from ONGC; the stock surges 1.62%
Click here for more stories
Post-market summary
Global signals
The European markets were higher in the early trades on Wednesday, March 17, 2010, with banks benefiting from the US Federal Reserve's (Fed) move to keep the interest rates near zero for an extended period. At the time of writing this report, FTSE 100 was trading 0.60% higher.
All the Asian indices closed higher on Fed’s move. SGX Nifty closed 36 points higher.
US stock futures opened higher on Wednesday indicating a higher opening on the Wall Street.
Indian indices
Stocks continued to move up on the Fed’s and Japan’s decision to keep interest rates unchanged. On strong global cues, the benchmark indices extended their gains. The Indian indices opened almost flat at 17389, up by 6 points and did not see those levels again. In today’s session, BSE PSU, BSE HC and BSE Metal witnessed heavy buying.
In the mid session, the Sensex stood by near 1% to the two-month high at 17,550 levels and touched the day’s high at 17576, while the broad-based NSE index Nifty advanced by near 1.1% to 5,250. At the closing, the market erased some of its earlier gains, as the Sensex components like Maruti Suzuki, HUL and Tata Power under performed. The Sensex closed the session at 17490, 107 points or 0.61% higher, while Nifty finished the day at 5231, 34 points or 0.65% higher.
Market sentiment
The equities were witnessing a tremendous buying activity after the US and Japan decided to keep interest rates unchanged. Of the 2,928 shares traded on the BSE, 1250 (42%) shares advanced whereas 1586 (54%) shares declined, while ninety-two shares remained unchanged.
Sectoral & stock screening
All the 13 sectoral indices closed higher, except realty, auto, FMCG and consumer durables that fell for the day. PSU index topped the gainers list that was energised by ONGC, one of the 30-share index of Sensex that lifted the index by 2.04%, followed by Health Care index that rose by 1.66%.
The top 3 gainers included Hindustan Copper that rose by 18.71%, followed by NMDC that surged by 8.87% and MMTC that was up by 4.61%.
The top 3 losers included Shree Renuka Sugars that slid the most by 3.61%, followed by Jet Air India that was down by 3.30% and United Spirits that declined by 3.29%.
Viewing volumes
India’s second largest realty company, Unitech, was the most traded share with over 0.52 crore shares changing hands on the BSE, followed by steel maker — Ispat Industries (0.48 crore shares), wind power major — Suzlon Energy (0.44 crore shares), natural resources company — Reliance Natural Resources (0.34 crore shares) and copper maker — Hindustan Copper (0.31 crore shares).
Tuesday, March 16, 2010
NIFTY MOVES PAST 5,200.
The key benchmark indices hit their highest level in nearly two months in a late surge as encouraging advance tax figures of top Indian firms for Q4 March 2010 indicated better fourth quarter results. Higher European stocks aided the rally on the domestic bourses. Metal, capital goods, auto and consumer durables stocks rose. Two index heavyweights Reliance Industries and L&T surged. The market breadth was strong. The BSE 30-share Sensex was provisionally up 231.91 points or 1.35%, up close to 245 points from the day's low and off close to 20 points from the day's high.
After an initial rise the market pared gains in morning trade as some Asian markets reversed early gains. The market moved between positive and negative terrain near the flat line in mid-morning trade. The market nudged higher again in early afternoon trade. Stocks extended gains in afternoon trade. The market hit its highest level in nearly two months in mid-afternoon trade. It extended gains in late trade.
The stock exchanges have revised the settlement schedule due to a bank holiday today, 16 March 2010 on account of Gudi Padwa, the first day of the Marathi New Year. As a result, investors were not allowed to sell shares today which they had bought in the cash market on Monday, 15 March 2010.
The Q4 March 2010 advance tax payment numbers of top Indian firms were encouraging. Reliance Industries has paid Rs 770 crore as advance tax for the March quarter compared with Rs 365 crore a year ago. Infosys' tax outgo has doubled to Rs 250 crore from Rs 125 crore. Tata Consultancy Services paid Rs 178 crore, compared from Rs 53 crore earlier. State-run Union Bank of India paid Rs 185 crore compared with Rs 253 crore a year ago. ICICI Bank's Q3 advance tax stood at Rs 350 crore versus Rs 250 crore a year ago. Asian Paints paid Rs 60 crore, versus Rs 43 crore year earlier.
State Bank of India has paid Rs 1857 crore verses Rs 1810. HDFC paid Rs 280 crore, unchanged from a year earlier. Tata Motors paid Rs 115 crore versus Nil a year ago. Bank of Baroda paid Rs 300 crore verses Rs 280. Zee Entertainment Enterprises paid Rs 97 crore versus Rs 109. Tata Steel paid Rs 513 crore versus Rs 406 crore. L&T paid Rs 270 crore versus Rs 275 crore. Bajaj Auto paid Rs 177 crore versus Rs 60 crore. M&M paid Rs 235 crore versus nil a year earlier.
Cement maker ACC paid Rs 330 crore compared to Rs 340 crore a year ago. Ambuja Cement paid Rs 120 crore, compared with Rs 125 crore a year ago. Aditya Birla Group firm Grasim Industries paid Rs 216 crore as advance tax in the period under review, as compared to Rs 65 crore a year ago. Life Insurance Corp of India (LIC) has paid Rs 864 crore as advance tax for the March quarter, compared with Rs 810 crore year ago.
On the macro front, the headline inflation topped expectations and came within touching distance of double digits in February 2010, making a rate increase by the Reserve Bank all but inevitable at its scheduled April 2010 policy review. Annual wholesale price inflation accelerated to 9.89% in February, the highest since October 2008 and well above the Reserve Bank of India's end-March projection of 8.5% and the 8.56% January reading.
The inflation data comes on the heels of a 16.7% annual jump in industrial output in January, with the unexpectedly strong economic pickup also backing the case for the central bank to raise policy rates by at least 25 basis points. The December inflation figure was revised upwards to 8.1% from 7.3%. Rising inflation and the government's plan to borrow a record $100 billion in the fiscal year that starts 1 April 2010, most of which is expected in the first half, have weighed on bond prices.
The borrowing plan complicates the central bank's job as raising rates aggressively would also push up borrowing costs of the government.
India would be only the second Group of 20 country, after Australia, to raise interest rates as the global economy recovers from the financial crisis.
The high inflation was mainly due to the continued rise in food prices, which climbed 17.8% from a year earlier in February and central bank deputy governor Shyamala Gopinath said price growth should moderate over time. Inflation in manufacturing accelerated to 7.42% in February from 6.55% in January, indicating that inflation has now spilt over to the broader economy.
Coming back to stocks, equities have witnessed a good post-Budget rally driven by sustained buying by foreign funds since the presentation of the Union Budget 2010-2011 on 26 February 2010. As per data from the stock exchanges, foreign institutional investors (FIIs) bought stocks worth a net Rs 8847.36 crore this month, till 15 March 2010.
The stock market has applauded the Union Budget 2010-2011 due to its thrust on infrastructure development, government's pledge to reduce fiscal deficit over the next three years, a smaller-than-expected 2% hike in excise duties, and reduction in taxes for individuals which will boost disposable income. The Finance Minister has assumed a modest GDP of about 8% and inflation of about 4.5% for 2010-2011.
Going ahead, the key triggers for the stock market are structural reforms such as decontrol of petrol and diesel prices, targeting of food subsidies, and financial sector reforms such as increase in foreign direct investment in insurance sector.
Europe stocks rose on Tuesday with markets awaiting euro zone inflation and the German ZEW survey of investor confidence, along with a decision on interest rates from the Federal Reserve later. The key benchmark indices in France, Germany and UK rose by between 0.75% to 0.89%.
Asian shares turned mixed after a firm start on Tuesday ahead of a Federal Reserve policy meeting later in the global day and the Bank of Japan (BoJ) policy decision on Wednesday, 17 March 2010. The key benchmark indices in Japan, Hong Kong and South Korea fell by between 0.09% to 0.28%. But, the key benchmark indices in China, Singapore and Taiwan rose by between 0.12% to 0.80%.
The BoJ has maintained its benchmark unsecured overnight call loan rate at 0.1% since December 2008 -- the same month Fed policy makers cut their federal-funds rate target to a range of 0% to 0.25%. Japanese central bankers are expected to discuss additional liquidity-boosting steps at their two-day policy board meeting, which started Tuesday. They will likely focus on a proposal to double the scale of a lending facility introduced in December, according to recent media reports.
It is widely expected that the US Federal Reserve will keep the fed funds rate, its key lending rate, at a historic low near zero when it meets on Tuesday, 16 March 2010. That means investors and analysts will again pore over the economic assessment statement the Fed releases. They will be looking for changes to the Fed's wording and its members' voting patterns to get a sense of when rates might go up.
It could take several months of solid, significant economic growth before the Fed starts to tinker with the language of its statement or interest rates. Consistent job growth is probably the single biggest factor the Fed will look at when determining when to considering raising rates.
Trading in US index futures indicated that the Dow could rise 18 points at the opening bell on Tuesday, 16 March 2010.
After being down all day, the Dow Jones and S&P eked out some gains on Monday, 15 March 2010 led by Wal-Mart after Citigroup upgraded the stock to buy & raised the price target. Stocks had struggled throughout the session as the dollar gained after a warning from Moody's on US and other nations with triple A debt ratings. Moody's said its ratings remain intact but warned that credit risks have grown. There were also worries about tightening in China. The Dow Jones industrial average rose 17.46 points, or 0.16% to end at 10,642.15. The Standard & Poor's 500 Index edged up 0.52 point, or 0.05% to end at 1,150.51. The Nasdaq Composite Index lost 5.45 points, or 0.23% at 2,362.21.
Global economic recovery will be stronger than previously estimated this year, helped by robust growth in China and India, the OECD's Secretary General said on Monday.
Close home, the BSE 30-share Sensex was up 231.91 points or 1.35% to 17,396.90 as per provisional figures. The barometer index rose 251.56 points at the high of 17,416.55 in late trade, its highest since 21 January 2010. The Sensex fell 14.93 points at the day's low of 17,150.06 in morning trade.
The S&P CNX Nifty was up 73.15 points or 1.43% at 5202.05 as per provisional figures. It hit the day's high of 5209.25 in late trade, its highest since 21 January 2010.
The BSE Mid-Cap index rose 1.08% and the BSE Small-Cap index rose 1.27%.
BSE clocked a turnover of Rs 3729 crore, higher than Rs 3408.08 crore on Monday, 15 March 2010.
The market breadth indicating the overall health of the market was strong. On BSE, 1777 shares advanced as compared with 1057 that declined. A total of 75 shares remained unchanged.
Among the 30-member Sensex pack, 23 rose while the rest fell.
Index heavyweight Reliance Industries (RIL) rose 3.68%, extending Monday's 0.64% gains. As per the market buzz, RIL's Q4 advance tax surged to Rs 770 crore in Q4 March 2010 from Rs Rs 365 crore a year ago.
Reliance Industries on Sunday announced a sports and entertainment joint venture with IMG Worldwide, a global leader in sports marketing and management. The equal venture, IMG Reliance, will set up modern infrastructure and coaching facilities for sports and create and operate sports and entertainment assets including celebrity management.
Consumer durables stocks rose on hopes rise in disposable income following widening of tax slabs in the Union Budget 2010-11 may boost sales. Titan Industries, Videocon Industries, Blue Star, Lloyd Electric, Rajesh Exports rose by between 0.26% to 3.01%.
Most auto stocks rose on higher advance tax payment in the fourth installment. India's largest tractor maker by sales Mahindra & Mahindra (M&M) rose 3.13%. The company paid Rs 235 crore in advance tax in Q4 March 2010 versus nil payment a year earlier.
India's largest commercial vehicle maker by sales Tata Motors' rose 2.26%, extending Monday's 0.91% gains after group global sales rose 59% in February from a year earlier, the company said in a statement on Monday.
India's largest car maker by sales Maruti Suzuki India rose 1.03% on bargain hunting after falling in the last four days on fears increase in competition may dent sales. Last week Ford India entered the small car market with 'Figo'. Maruti Suzuki India, last week said that Japanese auto giant Nissan has placed orders for 35,000 units of its small car A- Star for 2010-11 to sell it in the European market. Nissan sources the A-Star from Maruti's Manesar facility and sells it in the European market as 'Pixo'.
India's largest bike maker by sales Hero Honda Motors was flat. Hero Honda has shortlisted Karnataka as one of the states for setting up its fourth manufacturing plant. Hero Honda Motors has reportedly proposed an investment of Rs 2,000 crore for the upcoming plant.
A rise in raw material prices coupled with costs associated with new emission norms could force them to increase prices further, which may hit volumes. The government raised excise duties on large cars and sport utility vehicles by 2%, which was immediately passed on by vehicles makers, including top carmaker Maruti Suzuki and utility vehicle makers Mahindra & Mahindra and Tata Motors. From 1 April 2010, all vehicles will have to comply with Euro IV emission norms across 13 major cities, adding to costs and setting the stage for another round of price hikes.
ndia's largest engineering & construction firm by sales Larsen & Toubro (L&T) rose 3.52%. The company on Monday said that it won orders worth Rs 2000 crore. L&T's advance tax payment fell marginally to Rs 270 crore in Q4 March 2010 from Rs 275 crore a year earlier.
Among other capital goods stocks, ABB, Bharat Heavy Electricals, BEML, SKF India and Crompton Greaves rose by between 0.28% to 1.85%.
Metal stocks rose on strong domestic demand. Steel Authority of India, Sterlite Industries, JSW Steel, Hindalco Industries rose by between 0.1% to 2.69%.
India's largest steel maker by sales Tata Steel rose 3.35%, extending Monday's 0.42% gains. Its Q4 advance tax payment rose to Rs 513 crore from Rs 406 crore a year earlier.
Gujarat NRE Coke gained 1.08%, after one of the promoter group companies revoked a substantial portion of the pledged shares
IVRCL Infrastructures & Projects advanced 3.40%, as investors scrambled to accumulate the stock ahead of the record date for a liberal 1:1 bonus issue.
NIIT Technologies rose 1.06%, after the company said it will implement a cargo ground handling solution for PT JAS in Indonesia.
Nucleus Software Exports gained 1.84%, after the company secured an export order for one its software products for an undisclosed sum..
After an initial rise the market pared gains in morning trade as some Asian markets reversed early gains. The market moved between positive and negative terrain near the flat line in mid-morning trade. The market nudged higher again in early afternoon trade. Stocks extended gains in afternoon trade. The market hit its highest level in nearly two months in mid-afternoon trade. It extended gains in late trade.
The stock exchanges have revised the settlement schedule due to a bank holiday today, 16 March 2010 on account of Gudi Padwa, the first day of the Marathi New Year. As a result, investors were not allowed to sell shares today which they had bought in the cash market on Monday, 15 March 2010.
The Q4 March 2010 advance tax payment numbers of top Indian firms were encouraging. Reliance Industries has paid Rs 770 crore as advance tax for the March quarter compared with Rs 365 crore a year ago. Infosys' tax outgo has doubled to Rs 250 crore from Rs 125 crore. Tata Consultancy Services paid Rs 178 crore, compared from Rs 53 crore earlier. State-run Union Bank of India paid Rs 185 crore compared with Rs 253 crore a year ago. ICICI Bank's Q3 advance tax stood at Rs 350 crore versus Rs 250 crore a year ago. Asian Paints paid Rs 60 crore, versus Rs 43 crore year earlier.
State Bank of India has paid Rs 1857 crore verses Rs 1810. HDFC paid Rs 280 crore, unchanged from a year earlier. Tata Motors paid Rs 115 crore versus Nil a year ago. Bank of Baroda paid Rs 300 crore verses Rs 280. Zee Entertainment Enterprises paid Rs 97 crore versus Rs 109. Tata Steel paid Rs 513 crore versus Rs 406 crore. L&T paid Rs 270 crore versus Rs 275 crore. Bajaj Auto paid Rs 177 crore versus Rs 60 crore. M&M paid Rs 235 crore versus nil a year earlier.
Cement maker ACC paid Rs 330 crore compared to Rs 340 crore a year ago. Ambuja Cement paid Rs 120 crore, compared with Rs 125 crore a year ago. Aditya Birla Group firm Grasim Industries paid Rs 216 crore as advance tax in the period under review, as compared to Rs 65 crore a year ago. Life Insurance Corp of India (LIC) has paid Rs 864 crore as advance tax for the March quarter, compared with Rs 810 crore year ago.
On the macro front, the headline inflation topped expectations and came within touching distance of double digits in February 2010, making a rate increase by the Reserve Bank all but inevitable at its scheduled April 2010 policy review. Annual wholesale price inflation accelerated to 9.89% in February, the highest since October 2008 and well above the Reserve Bank of India's end-March projection of 8.5% and the 8.56% January reading.
The inflation data comes on the heels of a 16.7% annual jump in industrial output in January, with the unexpectedly strong economic pickup also backing the case for the central bank to raise policy rates by at least 25 basis points. The December inflation figure was revised upwards to 8.1% from 7.3%. Rising inflation and the government's plan to borrow a record $100 billion in the fiscal year that starts 1 April 2010, most of which is expected in the first half, have weighed on bond prices.
The borrowing plan complicates the central bank's job as raising rates aggressively would also push up borrowing costs of the government.
India would be only the second Group of 20 country, after Australia, to raise interest rates as the global economy recovers from the financial crisis.
The high inflation was mainly due to the continued rise in food prices, which climbed 17.8% from a year earlier in February and central bank deputy governor Shyamala Gopinath said price growth should moderate over time. Inflation in manufacturing accelerated to 7.42% in February from 6.55% in January, indicating that inflation has now spilt over to the broader economy.
Coming back to stocks, equities have witnessed a good post-Budget rally driven by sustained buying by foreign funds since the presentation of the Union Budget 2010-2011 on 26 February 2010. As per data from the stock exchanges, foreign institutional investors (FIIs) bought stocks worth a net Rs 8847.36 crore this month, till 15 March 2010.
The stock market has applauded the Union Budget 2010-2011 due to its thrust on infrastructure development, government's pledge to reduce fiscal deficit over the next three years, a smaller-than-expected 2% hike in excise duties, and reduction in taxes for individuals which will boost disposable income. The Finance Minister has assumed a modest GDP of about 8% and inflation of about 4.5% for 2010-2011.
Going ahead, the key triggers for the stock market are structural reforms such as decontrol of petrol and diesel prices, targeting of food subsidies, and financial sector reforms such as increase in foreign direct investment in insurance sector.
Europe stocks rose on Tuesday with markets awaiting euro zone inflation and the German ZEW survey of investor confidence, along with a decision on interest rates from the Federal Reserve later. The key benchmark indices in France, Germany and UK rose by between 0.75% to 0.89%.
Asian shares turned mixed after a firm start on Tuesday ahead of a Federal Reserve policy meeting later in the global day and the Bank of Japan (BoJ) policy decision on Wednesday, 17 March 2010. The key benchmark indices in Japan, Hong Kong and South Korea fell by between 0.09% to 0.28%. But, the key benchmark indices in China, Singapore and Taiwan rose by between 0.12% to 0.80%.
The BoJ has maintained its benchmark unsecured overnight call loan rate at 0.1% since December 2008 -- the same month Fed policy makers cut their federal-funds rate target to a range of 0% to 0.25%. Japanese central bankers are expected to discuss additional liquidity-boosting steps at their two-day policy board meeting, which started Tuesday. They will likely focus on a proposal to double the scale of a lending facility introduced in December, according to recent media reports.
It is widely expected that the US Federal Reserve will keep the fed funds rate, its key lending rate, at a historic low near zero when it meets on Tuesday, 16 March 2010. That means investors and analysts will again pore over the economic assessment statement the Fed releases. They will be looking for changes to the Fed's wording and its members' voting patterns to get a sense of when rates might go up.
It could take several months of solid, significant economic growth before the Fed starts to tinker with the language of its statement or interest rates. Consistent job growth is probably the single biggest factor the Fed will look at when determining when to considering raising rates.
Trading in US index futures indicated that the Dow could rise 18 points at the opening bell on Tuesday, 16 March 2010.
After being down all day, the Dow Jones and S&P eked out some gains on Monday, 15 March 2010 led by Wal-Mart after Citigroup upgraded the stock to buy & raised the price target. Stocks had struggled throughout the session as the dollar gained after a warning from Moody's on US and other nations with triple A debt ratings. Moody's said its ratings remain intact but warned that credit risks have grown. There were also worries about tightening in China. The Dow Jones industrial average rose 17.46 points, or 0.16% to end at 10,642.15. The Standard & Poor's 500 Index edged up 0.52 point, or 0.05% to end at 1,150.51. The Nasdaq Composite Index lost 5.45 points, or 0.23% at 2,362.21.
Global economic recovery will be stronger than previously estimated this year, helped by robust growth in China and India, the OECD's Secretary General said on Monday.
Close home, the BSE 30-share Sensex was up 231.91 points or 1.35% to 17,396.90 as per provisional figures. The barometer index rose 251.56 points at the high of 17,416.55 in late trade, its highest since 21 January 2010. The Sensex fell 14.93 points at the day's low of 17,150.06 in morning trade.
The S&P CNX Nifty was up 73.15 points or 1.43% at 5202.05 as per provisional figures. It hit the day's high of 5209.25 in late trade, its highest since 21 January 2010.
The BSE Mid-Cap index rose 1.08% and the BSE Small-Cap index rose 1.27%.
BSE clocked a turnover of Rs 3729 crore, higher than Rs 3408.08 crore on Monday, 15 March 2010.
The market breadth indicating the overall health of the market was strong. On BSE, 1777 shares advanced as compared with 1057 that declined. A total of 75 shares remained unchanged.
Among the 30-member Sensex pack, 23 rose while the rest fell.
Index heavyweight Reliance Industries (RIL) rose 3.68%, extending Monday's 0.64% gains. As per the market buzz, RIL's Q4 advance tax surged to Rs 770 crore in Q4 March 2010 from Rs Rs 365 crore a year ago.
Reliance Industries on Sunday announced a sports and entertainment joint venture with IMG Worldwide, a global leader in sports marketing and management. The equal venture, IMG Reliance, will set up modern infrastructure and coaching facilities for sports and create and operate sports and entertainment assets including celebrity management.
Consumer durables stocks rose on hopes rise in disposable income following widening of tax slabs in the Union Budget 2010-11 may boost sales. Titan Industries, Videocon Industries, Blue Star, Lloyd Electric, Rajesh Exports rose by between 0.26% to 3.01%.
Most auto stocks rose on higher advance tax payment in the fourth installment. India's largest tractor maker by sales Mahindra & Mahindra (M&M) rose 3.13%. The company paid Rs 235 crore in advance tax in Q4 March 2010 versus nil payment a year earlier.
India's largest commercial vehicle maker by sales Tata Motors' rose 2.26%, extending Monday's 0.91% gains after group global sales rose 59% in February from a year earlier, the company said in a statement on Monday.
India's largest car maker by sales Maruti Suzuki India rose 1.03% on bargain hunting after falling in the last four days on fears increase in competition may dent sales. Last week Ford India entered the small car market with 'Figo'. Maruti Suzuki India, last week said that Japanese auto giant Nissan has placed orders for 35,000 units of its small car A- Star for 2010-11 to sell it in the European market. Nissan sources the A-Star from Maruti's Manesar facility and sells it in the European market as 'Pixo'.
India's largest bike maker by sales Hero Honda Motors was flat. Hero Honda has shortlisted Karnataka as one of the states for setting up its fourth manufacturing plant. Hero Honda Motors has reportedly proposed an investment of Rs 2,000 crore for the upcoming plant.
A rise in raw material prices coupled with costs associated with new emission norms could force them to increase prices further, which may hit volumes. The government raised excise duties on large cars and sport utility vehicles by 2%, which was immediately passed on by vehicles makers, including top carmaker Maruti Suzuki and utility vehicle makers Mahindra & Mahindra and Tata Motors. From 1 April 2010, all vehicles will have to comply with Euro IV emission norms across 13 major cities, adding to costs and setting the stage for another round of price hikes.
ndia's largest engineering & construction firm by sales Larsen & Toubro (L&T) rose 3.52%. The company on Monday said that it won orders worth Rs 2000 crore. L&T's advance tax payment fell marginally to Rs 270 crore in Q4 March 2010 from Rs 275 crore a year earlier.
Among other capital goods stocks, ABB, Bharat Heavy Electricals, BEML, SKF India and Crompton Greaves rose by between 0.28% to 1.85%.
Metal stocks rose on strong domestic demand. Steel Authority of India, Sterlite Industries, JSW Steel, Hindalco Industries rose by between 0.1% to 2.69%.
India's largest steel maker by sales Tata Steel rose 3.35%, extending Monday's 0.42% gains. Its Q4 advance tax payment rose to Rs 513 crore from Rs 406 crore a year earlier.
Gujarat NRE Coke gained 1.08%, after one of the promoter group companies revoked a substantial portion of the pledged shares
IVRCL Infrastructures & Projects advanced 3.40%, as investors scrambled to accumulate the stock ahead of the record date for a liberal 1:1 bonus issue.
NIIT Technologies rose 1.06%, after the company said it will implement a cargo ground handling solution for PT JAS in Indonesia.
Nucleus Software Exports gained 1.84%, after the company secured an export order for one its software products for an undisclosed sum..
PERSISTENT SYSTEMS (INDIA)IPO ANALYSIS.
Focused on outsourced software product development services
The company has good track record, except for the past few quarters, and holds good growth potential
Persistent Systems (India), promoted by technocrat, Dr Anand Deshpande, is one of the leading players in outsourced software product development services. The company designs, develops and maintains software systems and solutions, creates new applications and enhance the functionality of its customers' existing software products. Currently, the company is present in the telecom & wireless, life sciences & healthcare and infrastructure & systems space. It has been working on new technologies like cloud computing, analytics, enterprise mobility and enterprise collaboration. Along with services, the company has been acquiring intellectual property (IP) from its customers, sharing revenue with the clients. Currently, this stream contributes to about 7% of the revenue.
As of December 31, 2009, the company had added 251 new customers (net) since April 1, 2007, excluding one-time customers for license sales with a number of active clients at 270 clients. Top client contributed 9.98% and top 10 clients contributed 41.27% of the revenue for the nine months ended December 2009. The repeat business for the company is in and around the 90% levels.
The company had 4,639 employees as of January 2010. It added 430 employees (net) in FY 2010 till January 2010. The company is operating at high offshore levels. The offshore share of revenue is at 89.63% for the quarter ended December 2009 and was at 85.79% for the year ended March 2009. Time & material (T&M) contracts contribute 76% of the revenue, fixed price contributed 17.1%, and licensing products 7% for the nine months ended December 2009. For the year ended March 2009, T&M contracts contributed 80.5% of the revenue, fixed price 14.3%, and licensing products 5.2%.
Geographically, for the nine months ended December 2009, US & Canada contributed 84% of the revenue of the company, Europe contributed 9%, and Asia Pacific (APAC) contributed 7% of revenue. For the year ended March 2009, US & Canada accounted for 87% of the revenue of the company, Europe contributed 9%, and Asia Pacific (APAC) contributed 4%.
As far as industry verticals are concerned, a major portion of the revenue accrues from independent software vendors (ISVs), which contributed 47% of the revenue, telecom contributed 24%, and practices, enterprise & solutions contributed 29% for the nine months ended December 2009.
The issue includes offer for sale of about 12.81 lakh shares by former employees of the company. Of the net proceeds of the issue, about Rs 76.02 crore would be used towards expansion of existing facilities at Nagpur and Hinjewadi, Pune, taking the total capacity at the two locations to 4,200 seats; about Rs 2.96 crore would be used towards fit-outs at the premises leased in SEZ at Hyderabad; and Rs 20.45 crore towards hardware at facilities. Post commissioning, the company would have a seat capacity of about 7,500 seats. It has facilities at Nagpur, Pune, Goa and Hyderabad.
Strengths
* International Data Corporation (IDC), a market research and analysis firm specializing in information technology, telecommunications and consumer technology markets, forecasts a five-year compound annual growth rate (CAGR) of 14% for research & development/ product engineering (R&D/PE) services, reaching an estimated US$ 65.7 billion by 2013. IDC defines R&D/PE services as the taking over of the R&D of a product in the company's value chain (in part or full) by a third-party services organization.
* Revenues have grown at a fast clip except in the nine months ended December 2009. Revenues reported a compounded annual growth rate (CAGR) of 40% in rupee terms and 38% in US dollar terms for the period FY2006 – 2009. Impacted by the slowdown, the revenues for the nine months period ended December 2009 were down 8.5% in US dollar terms and 3.4% in rupee terms.
* Along with services, the company, with expertise in developing products, is looking at growing its IP. It has been acquiring IP from its clientele and investing in them and selling on a revenue share basis. The share of revenue from IP licensing increased from 1.5% in FY2007 to 7% for the nine months ended December 2009. The margins from this segment are higher than services margins.
Weaknesses
* With the sunset clause expiring on March 31, 2011, the tax rate applicable for the company would increase to 20%– 25%, up from the current 6.5%. It would be at 9% for FY2010 and FY2011, and would move up to 20-25% post expiry of the sunset clause in FY2012. The capital expenditure that the company has undertaken is not in SEZ, except for about Rs 2.96 crore at the Hyderabad facility, currently a 200-seater expandable to 1,000 seats. This would still be only about 20% of the business.
* The outsourced product development (OPD) market is very competitive. Competition comes from OPD centric players, divisions of large IT companies (Indian & multinational), offshore providers in other low cost countries. Of the various IT services, the OPD services are highly prone to reduction in spend as companies cut down on launch of new products in times of economic slowdown.
Valuation
For the nine months ended December 2009, the company reported a dip in revenues of 8.5% in US dollar terms to US$ 89.98 million and 3.4% in rupee terms to Rs 429.41 crore mainly due to slowdown in the global economy. As per the management, the second half of FY2009 and the first half of FY2010 saw the impact of global economic slowdown and cut in billing rates. However, for the quarter ended December 2009, the company reported very good numbers, with sales of Rs 158.36 crore, operating profit margin of 24.7%, and net profit of Rs 37.01 crore (46% of the nine months net profit).
For FY2009, the company reported forex loss of Rs 87.40 crore, which included MTM losses on hedges of Rs 16.27 crore, forex loss on cancellation of forward contracts of Rs 25.87 crore, and forex loss from lower realisation of Rs 45.26 crore. The company has changed its hedging policy and is now taking hedges of about 40-60% of the net receivables for 12 months forward. It has hedges of US$ 77.75 million at Rs 48.5/US$.
At the price band of Rs 290 – Rs 310 and consolidated TTM EPS of Rs 24.7, PE works out to 11.7 – 12.6 times. Excluding MTM losses and forex loss on cancellation of forward contracts of Rs 18.87 crore, the consolidated TTM EPS moves up to Rs 29.4 and PE works out to 9.9 – 10.5 times. There is no direct comparable company. But Mindtree, which has 45% of revenue contribution from product engineering services, is trading at TTM PE of 12.2 times. Geometric, which has 37% of its revenue accruing from OPD, is trading at a consolidated TTM PE of 24 times. On nine-month annualized basis, it is trading at 8.4 times.
The company has good track record, except for the past few quarters, and holds good growth potential
Persistent Systems (India), promoted by technocrat, Dr Anand Deshpande, is one of the leading players in outsourced software product development services. The company designs, develops and maintains software systems and solutions, creates new applications and enhance the functionality of its customers' existing software products. Currently, the company is present in the telecom & wireless, life sciences & healthcare and infrastructure & systems space. It has been working on new technologies like cloud computing, analytics, enterprise mobility and enterprise collaboration. Along with services, the company has been acquiring intellectual property (IP) from its customers, sharing revenue with the clients. Currently, this stream contributes to about 7% of the revenue.
As of December 31, 2009, the company had added 251 new customers (net) since April 1, 2007, excluding one-time customers for license sales with a number of active clients at 270 clients. Top client contributed 9.98% and top 10 clients contributed 41.27% of the revenue for the nine months ended December 2009. The repeat business for the company is in and around the 90% levels.
The company had 4,639 employees as of January 2010. It added 430 employees (net) in FY 2010 till January 2010. The company is operating at high offshore levels. The offshore share of revenue is at 89.63% for the quarter ended December 2009 and was at 85.79% for the year ended March 2009. Time & material (T&M) contracts contribute 76% of the revenue, fixed price contributed 17.1%, and licensing products 7% for the nine months ended December 2009. For the year ended March 2009, T&M contracts contributed 80.5% of the revenue, fixed price 14.3%, and licensing products 5.2%.
Geographically, for the nine months ended December 2009, US & Canada contributed 84% of the revenue of the company, Europe contributed 9%, and Asia Pacific (APAC) contributed 7% of revenue. For the year ended March 2009, US & Canada accounted for 87% of the revenue of the company, Europe contributed 9%, and Asia Pacific (APAC) contributed 4%.
As far as industry verticals are concerned, a major portion of the revenue accrues from independent software vendors (ISVs), which contributed 47% of the revenue, telecom contributed 24%, and practices, enterprise & solutions contributed 29% for the nine months ended December 2009.
The issue includes offer for sale of about 12.81 lakh shares by former employees of the company. Of the net proceeds of the issue, about Rs 76.02 crore would be used towards expansion of existing facilities at Nagpur and Hinjewadi, Pune, taking the total capacity at the two locations to 4,200 seats; about Rs 2.96 crore would be used towards fit-outs at the premises leased in SEZ at Hyderabad; and Rs 20.45 crore towards hardware at facilities. Post commissioning, the company would have a seat capacity of about 7,500 seats. It has facilities at Nagpur, Pune, Goa and Hyderabad.
Strengths
* International Data Corporation (IDC), a market research and analysis firm specializing in information technology, telecommunications and consumer technology markets, forecasts a five-year compound annual growth rate (CAGR) of 14% for research & development/ product engineering (R&D/PE) services, reaching an estimated US$ 65.7 billion by 2013. IDC defines R&D/PE services as the taking over of the R&D of a product in the company's value chain (in part or full) by a third-party services organization.
* Revenues have grown at a fast clip except in the nine months ended December 2009. Revenues reported a compounded annual growth rate (CAGR) of 40% in rupee terms and 38% in US dollar terms for the period FY2006 – 2009. Impacted by the slowdown, the revenues for the nine months period ended December 2009 were down 8.5% in US dollar terms and 3.4% in rupee terms.
* Along with services, the company, with expertise in developing products, is looking at growing its IP. It has been acquiring IP from its clientele and investing in them and selling on a revenue share basis. The share of revenue from IP licensing increased from 1.5% in FY2007 to 7% for the nine months ended December 2009. The margins from this segment are higher than services margins.
Weaknesses
* With the sunset clause expiring on March 31, 2011, the tax rate applicable for the company would increase to 20%– 25%, up from the current 6.5%. It would be at 9% for FY2010 and FY2011, and would move up to 20-25% post expiry of the sunset clause in FY2012. The capital expenditure that the company has undertaken is not in SEZ, except for about Rs 2.96 crore at the Hyderabad facility, currently a 200-seater expandable to 1,000 seats. This would still be only about 20% of the business.
* The outsourced product development (OPD) market is very competitive. Competition comes from OPD centric players, divisions of large IT companies (Indian & multinational), offshore providers in other low cost countries. Of the various IT services, the OPD services are highly prone to reduction in spend as companies cut down on launch of new products in times of economic slowdown.
Valuation
For the nine months ended December 2009, the company reported a dip in revenues of 8.5% in US dollar terms to US$ 89.98 million and 3.4% in rupee terms to Rs 429.41 crore mainly due to slowdown in the global economy. As per the management, the second half of FY2009 and the first half of FY2010 saw the impact of global economic slowdown and cut in billing rates. However, for the quarter ended December 2009, the company reported very good numbers, with sales of Rs 158.36 crore, operating profit margin of 24.7%, and net profit of Rs 37.01 crore (46% of the nine months net profit).
For FY2009, the company reported forex loss of Rs 87.40 crore, which included MTM losses on hedges of Rs 16.27 crore, forex loss on cancellation of forward contracts of Rs 25.87 crore, and forex loss from lower realisation of Rs 45.26 crore. The company has changed its hedging policy and is now taking hedges of about 40-60% of the net receivables for 12 months forward. It has hedges of US$ 77.75 million at Rs 48.5/US$.
At the price band of Rs 290 – Rs 310 and consolidated TTM EPS of Rs 24.7, PE works out to 11.7 – 12.6 times. Excluding MTM losses and forex loss on cancellation of forward contracts of Rs 18.87 crore, the consolidated TTM EPS moves up to Rs 29.4 and PE works out to 9.9 – 10.5 times. There is no direct comparable company. But Mindtree, which has 45% of revenue contribution from product engineering services, is trading at TTM PE of 12.2 times. Geometric, which has 37% of its revenue accruing from OPD, is trading at a consolidated TTM PE of 24 times. On nine-month annualized basis, it is trading at 8.4 times.
Monday, March 15, 2010
SENSEX ENDS FLAT WITH NEGETIVE BIAS :-
Indian markets continued to fall for the second day on Monday. The benchmark index Sensex ended the volatile session on a flat note with negative bias as sell-off was seen in PSU, capital goods and banking stocks, while IT and teck gained marginally. Broader markets also traded flat. It opened in the red zone amid negative Asian shares and continued to trade lower on profit booking seen in frontliners. In the second half, index recovered by moving into the positive terrain on select buying amid volatility. Finally, it closed on a quite note after touching a high of 17,195.49 and low of 17,061.14.
At the close, the 30-share benchmark index, BSE Sensex ended flat with a decline of 1.63 points or 0.01% at 17,164.99, 14 components registering drop. Meanwhile, the broad based NSE Nifty went down by 8.10 or 0.16% at 5,128.90 with 30 components registering drop.
On global front, European stocks dropped and US index futures fell on concern China will take more steps to cool its economy and as Moody`s Investors Service said the US and UK are closer to losing their AAA credit ratings. Whereas, Asian stocks fell for the first time in three days, led by energy and commodity producers, on concern China will boost measures to cool economic growth that has been driving a global recovery.
Meanwhile, Wholesale price based inflation rose to 9.89% in February from 8.56% in the previous month due to increase in prices of certain food items such as sugar and the hike in excise duty on fuel announced last month.
Sensex Movers
ICICI Bank contributed fall of 19.84 points in the Sensex. It was followed by Housing Development Finance Corporation (13.48 points), State Bank Of India (11.15 points), Mahindra & Mahindra (8.99 points) and Oil & Natural Gas Corporation (8.54 points).
However, Infosys Technologies contributed rise of 18.39 points in the Sensex. It was followed by Reliance Industries (14.02 points), Tata Consultancy Services (13.96 points), Hindustan Unilever (8.27 points) and Wipro (7.44 points).
Biggest gainers in the 30-share index were Wipro (2.71%), Hindustan Unilever (2.62%), Jaiprakash Associates (2.38%), Tata Consultancy Services (2.27%), Infosys Technologies (1.07%), and Tata Motors (0.91%).
On the other hand, MAahindra & Mahindra (2.77%), Reliance Infrastructure (2.33%), Sun Pharmaceutical Industries (1.77%), ACC (1.61%), Housing Development Finance Corporation (1.46%), and State Bank Of India (1.45%) were the major losers in the Sensex.
Mid & Small-cap Space
The BSE Midcap index was at 6651.26 down by 49.59 points or by 0.74%. The major losers were Reliance MediaWorks (2.32%), Aban Offshore (1.93%), A I A Engineering (1.39%), Alfa-Laval (India) (1.02%) and Core Projects and Technologies (0.15%).
The BSE Smallcap index was at 8362.2 down by 70.29 points or by 0.83%. The major losers were Abhishek Industries (2.57%), Aarti Industries (1.95%), A B G Shipyard (1.22%), Action Construction Equipment (1%) and A B G Infralogistics (0.27%).
Sectors in Limelight
The Capital Goods index was at 13,634.19, down by 149.84 points or by 1.09%. The major losers were A B B (2.43%), BEML (1.92%), A I A Engineering (1.39%), Bharat Electronics (1.31%) and Bharat Bijlee (1.11%).
The Bankex index was at 10,235.13, down by 106.07 points or by 1.03%. The major losers were Federal Bank (2.78%), Canara Bank (1.98%), Bank Of India (1.77%), Allahabad Bank (1.1%) and Bank Of Baroda (0.9%).
The Realty index was at 3,361.10, down by 26.82 points or by 0.79%. The major losers were Indiabulls Real Estate (2.84%), Mahindra Lifespace Developers (1.36%), Anant Raj Industries (1.13%), Ansal Properties and Infrastructure (1.11%) and D L F (0.58%).
On the other hand, the IT index was at 5,411.69, up by 73.34 points or by 1.37%. The major gainers were H C L Technologies (2.7%), Tata Consultancy Services (2.27%), Oracle Financial Services Software (1.15%), Infosys Technologies (1.07%) and Patni Computer Systems (0.78%).
Market Breadth
Market breadth was negative with 989 advances against 1,860 declines.
Value and Volume Toppers
Man Infraconstruction topped the value chart on the BSE with a turnover of Rs. 1,266.77 million. It was followed by Texmo Pipes and Products (Rs. 1,008.24 million), Aban Offshore (Rs. 967.96 million) and Shree Renuka Sugars (Rs. 768.86 million).
The volume chart was led by Cals Refineries with trades of over 27.54 million shares. It was followed by Shree Renuka Sugars (10.05 million), Tamboli Capital (8.55 million) and Texmo Pipes and Products (6.60 million).
At the close, the 30-share benchmark index, BSE Sensex ended flat with a decline of 1.63 points or 0.01% at 17,164.99, 14 components registering drop. Meanwhile, the broad based NSE Nifty went down by 8.10 or 0.16% at 5,128.90 with 30 components registering drop.
On global front, European stocks dropped and US index futures fell on concern China will take more steps to cool its economy and as Moody`s Investors Service said the US and UK are closer to losing their AAA credit ratings. Whereas, Asian stocks fell for the first time in three days, led by energy and commodity producers, on concern China will boost measures to cool economic growth that has been driving a global recovery.
Meanwhile, Wholesale price based inflation rose to 9.89% in February from 8.56% in the previous month due to increase in prices of certain food items such as sugar and the hike in excise duty on fuel announced last month.
Sensex Movers
ICICI Bank contributed fall of 19.84 points in the Sensex. It was followed by Housing Development Finance Corporation (13.48 points), State Bank Of India (11.15 points), Mahindra & Mahindra (8.99 points) and Oil & Natural Gas Corporation (8.54 points).
However, Infosys Technologies contributed rise of 18.39 points in the Sensex. It was followed by Reliance Industries (14.02 points), Tata Consultancy Services (13.96 points), Hindustan Unilever (8.27 points) and Wipro (7.44 points).
Biggest gainers in the 30-share index were Wipro (2.71%), Hindustan Unilever (2.62%), Jaiprakash Associates (2.38%), Tata Consultancy Services (2.27%), Infosys Technologies (1.07%), and Tata Motors (0.91%).
On the other hand, MAahindra & Mahindra (2.77%), Reliance Infrastructure (2.33%), Sun Pharmaceutical Industries (1.77%), ACC (1.61%), Housing Development Finance Corporation (1.46%), and State Bank Of India (1.45%) were the major losers in the Sensex.
Mid & Small-cap Space
The BSE Midcap index was at 6651.26 down by 49.59 points or by 0.74%. The major losers were Reliance MediaWorks (2.32%), Aban Offshore (1.93%), A I A Engineering (1.39%), Alfa-Laval (India) (1.02%) and Core Projects and Technologies (0.15%).
The BSE Smallcap index was at 8362.2 down by 70.29 points or by 0.83%. The major losers were Abhishek Industries (2.57%), Aarti Industries (1.95%), A B G Shipyard (1.22%), Action Construction Equipment (1%) and A B G Infralogistics (0.27%).
Sectors in Limelight
The Capital Goods index was at 13,634.19, down by 149.84 points or by 1.09%. The major losers were A B B (2.43%), BEML (1.92%), A I A Engineering (1.39%), Bharat Electronics (1.31%) and Bharat Bijlee (1.11%).
The Bankex index was at 10,235.13, down by 106.07 points or by 1.03%. The major losers were Federal Bank (2.78%), Canara Bank (1.98%), Bank Of India (1.77%), Allahabad Bank (1.1%) and Bank Of Baroda (0.9%).
The Realty index was at 3,361.10, down by 26.82 points or by 0.79%. The major losers were Indiabulls Real Estate (2.84%), Mahindra Lifespace Developers (1.36%), Anant Raj Industries (1.13%), Ansal Properties and Infrastructure (1.11%) and D L F (0.58%).
On the other hand, the IT index was at 5,411.69, up by 73.34 points or by 1.37%. The major gainers were H C L Technologies (2.7%), Tata Consultancy Services (2.27%), Oracle Financial Services Software (1.15%), Infosys Technologies (1.07%) and Patni Computer Systems (0.78%).
Market Breadth
Market breadth was negative with 989 advances against 1,860 declines.
Value and Volume Toppers
Man Infraconstruction topped the value chart on the BSE with a turnover of Rs. 1,266.77 million. It was followed by Texmo Pipes and Products (Rs. 1,008.24 million), Aban Offshore (Rs. 967.96 million) and Shree Renuka Sugars (Rs. 768.86 million).
The volume chart was led by Cals Refineries with trades of over 27.54 million shares. It was followed by Shree Renuka Sugars (10.05 million), Tamboli Capital (8.55 million) and Texmo Pipes and Products (6.60 million).
Friday, March 5, 2010
PERFORMANCE OF THE MONTH OF FEBRUARY,2010
I. DALMIA CEMENT BOUGHT @180.00 ON 5.02.2010.....
DALMIA CEMENT MADE HIGH OF 222.50 AS ON 28.02.2010...........
II. TISCO BOUGH @530.00 ON 10.02.2010....
TISCO MADE HIGH OF 603.00 AS ON 28.02.2010.........
III. BARTRONICS BOUGHT @156.00 ON 13.02.2010........
BARTRONICS MADE HIGH OF 178.00 AS ON 28.02.2010......
KINDLY NOTE: IN FUTURE SEGMENT ROLTA INDIA & INDIAN HOTELS SHORT CALL
HAS GIVEN AND DID OUR TARGET SUCCESFULLY.......
Thursday, February 4, 2010
PERFORMANCE OF THE MONTH OF JANUARY,2010
KINDLY NOTE:- THIS MONTH ONLY TWO CALLS GIVEN IN
CASH SEGMENT AND OPEN STILL NOW DUE
TO BAD MARKET CONDITION..
IN FUTURE SEGMENT WE RECOMENDED
TO SHORT BAJAJ HIND & EKC .THE TARGET
REACHED SUCCESSFULLY.....
Wednesday, January 13, 2010
PERFORMANCE OF THE MONTH OF DECEMBER 2009.
I. DALMIA CEMENT BOUGHT @143.00 ON 8.12.2009
DALMIA CEMENT MADE HIGH OF @194.20 AS ON 10.01.2010...
II. INDIA GLYCOLS LTD BOUGHT @120.00 ON 16.12.2009....
INDIA GLYCOLS LTD MADE HIGH OF @137.80 10.01.2010....
III. JSL LTD BOUGHT @110.00 ON 24.12.2009........
JSL LTD MADE HIGH OF @131.70 AS ON 10.01.2010...
Saturday, December 5, 2009
PERFORMANCE OF THE MONTH OF NOVEMBER 2009.
I). PVR LTD BOUGHT @127.00 ON 9.11.2009..
PVR LTD MADE HIGH OF 153.45 AS ON 1.12.2009....
II). INDIA CEMENT LTD BOUGHT @104.50 ON 16.11.2009..
INDIA CEMENT LTD MADE HIGH OF @114.80 AS ON 1.12.2009.....
III). TATA METALIKS LTD BOUGH @102.00 ON 18.11.2009.......
TATA METALIKS MADE HIGH OF @132.50 AS ON 2.12.2009.....
IV).BHARAT SHIPYARD LTD BOUGHT @164.00 ON 26.11.2009.....
BHARAT SHIPYARD LTD MADE HIGH OF @234.70 AS ON 4.12.2009.
PVR LTD MADE HIGH OF 153.45 AS ON 1.12.2009....
II). INDIA CEMENT LTD BOUGHT @104.50 ON 16.11.2009..
INDIA CEMENT LTD MADE HIGH OF @114.80 AS ON 1.12.2009.....
III). TATA METALIKS LTD BOUGH @102.00 ON 18.11.2009.......
TATA METALIKS MADE HIGH OF @132.50 AS ON 2.12.2009.....
IV).BHARAT SHIPYARD LTD BOUGHT @164.00 ON 26.11.2009.....
BHARAT SHIPYARD LTD MADE HIGH OF @234.70 AS ON 4.12.2009.
Saturday, October 31, 2009
PERFORMANCE OF THE MONTH OF OCTOBER,2009
I. KSK ENERGY VENTURES LTD GIVEN ON 5.10.2009 @199.00...
KSK ENERGY VENTURES LTD MADE HIGH OF 224.90 AS ON 31.10.2009
II. ALLAHABAD BANK GIVEN ON 9.10.2009 @ 113.00...
ALLAHABAD BANK MADE HIGH OF 135.00 AS ON 31.10.2009.
KSK ENERGY VENTURES LTD MADE HIGH OF 224.90 AS ON 31.10.2009
II. ALLAHABAD BANK GIVEN ON 9.10.2009 @ 113.00...
ALLAHABAD BANK MADE HIGH OF 135.00 AS ON 31.10.2009.
KINDLY NOTE:- THIS MONTH OUR SOME CALLS ARE STILL OPEN DUE TO VERY BAD KIND OF MARKET CONDITION.
Friday, October 2, 2009
PERFORMANCE OF THE MONTH OF SEPTEMBER 2009,
I. IDBI BANK BOUGHT @101.00 ON 2.9.09 ..IDBI BANK MADE HIGH OF RS.129.30
AS ON 1.10.09.........
AS ON 1.10.09.........
II. RELIANCE POWER BOUGHT @163 ON 9.9.09..RELIANCE POWER MADE HIGH
OF RS175.00 AS ON 1.10.09.
III. UCO BANK BOUGHT @43.50 ON 11.9.09..UCO BANK MADE HIGH OF RS. 58.00
AS ON 1.10.09.
IV. SHRI LAKSHMI COTSYN (BSE CODE:526049) BOUGHT @90.50 ON 16.9.09...
SHRI LAKSHMI MADE HIGH OF 101.00 AS ON 1.10.09...
KINDLY NOTE: OUR ALL CALLS ARE NOT POSTED HERE COZ SOME OF STILL
OPEN NOW.......
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