FII may keep Indian Stock Market Positive

Equities are expected to sustain their positive momentum as investors are betting on foreign funds to loosen their purse strings as a result of the US Federal Reserve’s decision last week to cut the interest rate. Though there is a feeling that prices of most frontline stocks have run ahead of fundamentals for the time being, many analysts and fund managers believe that the rush of money flow can drive prices to even higher levels. Analysts advise investors to stick to sectors that reflect India’s economic growth such as capital goods, banks, power and telecom, rather than those driven by exports such as software and pharma, at least in the near term. This is because the rupee is expected to strengthen further against the dollar in the long run, driven by strong foreign institutional inflows. On Thursday, the rupee closed beyond the 40-mark against the dollar for the first time in nine years.

Tata Steel

The country's largest private sector steel producer Tata Steel on Monday said it would raise Rs 9,654 crore by issuing securities to existing shareholders, apparently to part finance its acquisition of Anglo-Dutch firm corus. The board of directors of the company have approved the issue of equity shares in 1:5 ratio, wherein one equity share of Rs 300 each would be allotted for every five shares held, raising an amount of Rs 3,654 crore, the company informed the Bombay Stock Exchange (BSE).

Praj Industries

Praj Industries, knowledge-based firm engaged in bio-processing and engineering today said it will promote energy crops and technology for biofuels production in Philippines along with the Department of Agriculture of that country. Praj Industries has signed a Memorandum of Association (MoA) with Department of Agriculture, Philippines in this regard, the company said in a filing to the Bombay Stock Exchange.
The Government of Philippines has mandated 5 per cent blending of biofuels in all transport fuel sold in the country and are keen to increase the blending limits. At home, the company recently contracted an order from Tata Chemicals for setting up their first sweet sorghum to ethanol plant. In India, Praj Industries would set up a fully integrated, commercial scale plant for ethanol production at Nanded in Maharashtra.

Bajaj Auto

Motilal Oswal Securities has initiated coverage on Bajaj Auto with a ‘buy’ rating and a price target of Rs 3,065, citing increased focus on premium segment motorcycles as a key trigger. “While we expect core business profitability to improve, its insurance business is a potential value driver. We believe that Bajaj Auto’s earnings before interest, taxes, depreciation and amortisation (EBITDA) margin will improve 2QFY08 (July-October) onwards,” the Motilal Oswal note to clients said. “Our view is based on the company’s improving product mix, its reluctance to re-engage in price wars, completion of dealer inventory rationalisation, and accrual of higher duty entitlement pass book (DEPB) benefit,” the note added.

Power Finance Corporation (PFC)

ABN Amro Securities has initiated coverage on Power Finance Corporation (PFC) with a ‘buy’ rating and a target price of Rs 242.70, saying the company’s high business growth visibility, largely stable margins and status as the government’s infrastructure-financing firm make for a compelling proposition. “PFC is treated as a government-financing firm and is therefore exempt from a number of Reserve Bank of India regulations applicable to non-banking finance companies. The status allows PFC much flexibility in lending to power sector projects and in managing its capital structure,” the ABN note to clients said. “We believe this flexibility will be of even more value over the next few years as loan growth should surge ahead,” the note said, adding that while valuations looked rich at current levels, they reflected strong growth prospects.

Tata Power

HSBC Securities has maintained its ‘overweight’ rating on Tata Power, while raising its price target to Rs 1,198 from Rs 843 earlier. “We believe in Tata Power’s ability to expand its generation capacity over next five years. We now expect it to implement 10.3GW by FY2013 against our earlier estimate of 9.4GW,” the HSBC note to clients said. “The coal ministry has allocated coal mines in India to the company, which should reduce its fuel costs substantially.” the note added. “We expect the coal mines to be operational by the end of FY11 and hence we reduce our fuel cost estimates by 14% and 13% for FY12 and FY13, respectively,”

Grasim Industries

Merrill Lynch has upgraded its rating on Grasim Industries to ‘buy’ with a price target of Rs 4,450. “We continue to believe that the cement industry will witness large capacity additions by March 2009(estimated). However, we think the market is not focused on FY09E risks yet and greater focus seems likely only by March-June 2008 when some of the large capacity expansions will commission (seeing is believing),” the Merrill Lynch note to clients said.

Khoday India

Khoday India may see an upside on news that the liquor major is eyeing European markets. The company is gearing up to export two of its whiskies, Peter Scot and Red Knight, to Italy. The stock closed five per cent lower at Rs 253.90.

BHEL

BHEL is in talks with global power equipment firms Siemens, Areva and GE to set up a joint venture in the country to manufacture nuclear power plant equipment. The move is aimed at giving the company a head-start over competition after the nuclear power market opens up with the operationalisation of the Indo-US nuclear deal. This could boost the company’s shares. The stock was down 0.39 per cent at Rs 2032.75.

Moser Baer

Reports that Moser Baer has clinched a deal with Ultra Videos to acquire the latter’s entire movie library for about Rs 50-70 crore could spur the company’s shares higher. Moser Baer outnumber. The deal would instantly give Moser Baer ownership of 700 Hindi film titles, and 300 regional and English-dubbed titles. The stock closed 1.71 lower at Rs 318.50 on Friday.

Bajaj Auto Sept vehicle sales fall

Bajaj Auto Ltd. India's second-biggest motorcycle maker, posted a 23 percent annual fall in vehicle sales in September, but said a newly launched motorbike would help improve sales and operating margins.

Mahindra & Mahindra

M&M surges ahead with 35.8% cumulative growth in September, Mahindra & Mahindra, a part of the $4.5 billion Mahindra Group, consolidated its leadership in the automotive segment substantially in September. Cumulative sales YTD including exports grew by 35.8% in September ’07 with total sales of 1,06,094 vehicles as against 78,144 vehicles for the corresponding period last year. Excluding Logan, M&M sold 93,600 vehicles in the current fiscal as against 78,144 in the corresponding period in the preceding year, registering an approximate 20% YTD increase.

OPEN INTEREST

September series futures witnessed total rollover at 84 per cent, compared with the six months average of 82 per cent. The Nifty rollover was at 77 per cent compared with six months average of 72 per cent.

The October series begins with total open interest of Rs 69,800 crore as against Rs 64,300 crore in the September series. Nifty futures OI increased by 6.7 million to 32.3 million shares. The stocks with active rollovers were Birla Jute (95%), JSW Steel (94%) and GTL (94%).


The Nifty Put Call ratio in October series moved up from 1.03 to 1.20 largely due to the expiry of September futures contract. Nifty Puts added OI of 61.63 lakh shares (+129.1 per cent), while Nifty Call options added 58.16 lakh shares (+97.1 per cent) in open interest.

More than 50 per cent Call options OI was between the 4,900 and 5,200 strike prices. Similarly, the Nifty Put options OI was at the 4,700-5,000 strike prices. This indicates an indecisiveness on the part of the F&O players.