PINC puts 'buy' on Everest Kanto for target Rs 385

MUMBAI: PINC Research has initiated ‘buy’ on Everest Kanto Cylinder for a target price of Rs 385. The company is a leading manufacturer of high pressure seamless cylinders for both industrial and compressed natural gas (CNG) uses. Besides serving domestic market, it also exports to countries across S.Asia, M.East and CIS.

Economic Times

IT stocks could be preferred investors' choice: analysts

MUMBAI: IT stocks could be the preferred investors' choice due to rupee depreciation and hopes of improvement in global market sentiment after the intervention of the US Federal Reserve for rescuing insurance giant AIG, according to market analysts. The persistent global financial turmoil is likely to ease following prompt efforts by the US government. And coupled with rupee’s weakness against the greenback, this can be seen as a positive trigger for IT stocks as the sector's revenue visibility is expected to improve, HDFC Securities, Head Retail Research, Deepak Jasani said. “The US financial crisis may be coming to end temporarily and sales orders would be visible for the IT companies in the near future,” he said. A weaker rupee would also help the sector earn more margins on their future orders, Jasani added. Echoing similar sentiments, an analyst with a leading broking house said this is the right time to enter the market and IT sector could be one of the better options as yields are more or less based on company profile in the current scenario. However, SBI Capital Securities’ Head of Research, Anil Advani, said, "Market is yet to come out of the adverse global financial crisis but the companies having less exposure can be a better option for the investors." Most of the IT stocks, on Wednesday, surged during the day on fresh buying, despite a down trend in the market, after a sharp fall in rupee and reports of softening credit crisis. Early buying also emerged in the tech counters on hopes that a weaker rupee would help the sector regain some of the lost sheen. IT sectoral index on BSE was one of the least affected indices that ended with a marginal negative gap. However, it moved up over 2 per cent in the afternoon and most of the IT stocks traded with a comfortable positive gap for most of the time during the session. Wipro was the top gainer ending up 2.04 per cent at Rs 399.75. Infosys Technologies ended up 0.75 per cent at Rs 1576.00, after moving up 3.6 per cent at Rs 1,612.10. However, Satyam Computer Services closed 1.91 per cent down and TCS down by 2.77 per cent. Continuous depreciation of rupee, to nearly 47.00 level on Tuesday, has raised hopes of improvement in IT stocks, which were hit badly in the last couple of years when the Indian unit kept on appreciating, according to market analysts. The partially convertible Indian currency fell to 46.98 against the dollar--its weakest level since July 24, 2006, on increasing demand from banks earning arbitrage between domestic and offshore markets amidst fluctuating sentiments in the stock market. Sustained high demand from oil companies and the banks indulged in non-deliverable forward contracts resulted in a sharp depreciation of rupee against the greenback this year due persisting global financial crisis but has raised hopes for companies much dependent on rupee movement, marketmen observed.
Economic Times

US rescue plan seeks $700 bn to buy bad mortgages

WASHINGTON: The Bush administration is asking Congress to let the government buy $700 billion in toxic mortgages in the largest financial bailout since the Great Depression, according to a draft of the plan obtained on Saturday by a news agency. The plan would give the government broad power to buy the bad debt of any US financial institution for the next two years. It would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue. The proposal does not specify what the government would get in return from financial companies for the federal assistance. "We're going to work with Congress to get a bill done quickly," President Bush said at the White House. Without discussing details of the plan, he said, "This is a big package because it was a big problem." The White House and congressional leaders hoped the developing legislation could pass as early as next week. Administration officials and members of Congress were to negotiate throughout the weekend. The plan is designed to let faltering financial institutions unload their bad debt on the government, and in turn the taxpayer, in a bid to avoid dire economic consequences.

Economic times

Comeback, and How!

The market rallied sharply, up 726 points, to close marginally above the 14,000 mark due to sharp appreciation in realty and information technology stocks.

After a subdued trend in the last few sessions, the market staged a solid comeback today. The bulls were back in action after closing flat yesterday.
Taking lead from buoyant international markets, the Sensex started the day at 13,764 (448 points above its previous close) on the back of strong buying in heavyweights, realty, information technology, Teck, oil & gas, power and banking stocks. At its day's high of 14,097 by afternoon, the Sensex closed the session 727 points higher at 14,042 and Nifty advanced 207 points to close at 4,245.
The market breadth was highly positive, Of the 2,700 stocks traded on the BSE, where 1,888 stocks advanced only 740 stocks declined. 72 stocks ended unchanged. All the sectoral indices notched up significant gains. BSE Realty index was the biggest gainer and soared 7.59% followed by BSE IT index (up 6.67%), BSE Teck index (up 5.86%), BSE Oil & Gas index (up 5.52%), BSE Power index (up 5.16%), BSE Bankex (up 5.03%) and the BSE CD index (up 4.72%).
Barring few, all the stocks in the Sensex basket ended at higher levels. Satyam Computer Services led the upsurge and flared 10.48% at Rs370.10. Among the other major gainers ICICI Bank surged 9.07% at Rs628.10, HDFC Bank moved up by 8.32% at Rs2308.45 and Tata Power advanced 8.30% at Rs1,027.30. DLF vaulted 7.78% at Rs426.90, ONGC shot up by 7.30% at Rs1072.10, Infosys Technologies added 6.59% at Rs1,623.85 and Tata Consultancy Services rose 6.37% at Rs766. However, HDFC Bank, BHEL, Reliance Industries, Jaiprakash Associates and Reliance Communications ended with gains of over 4-5% each.
Realty stocks were the stars of the day. Ansal Properties & Infrastruture soared 18.36% at Rs89.95, Indiabulls Realestate jumped 17% at Rs224.05, Akruti City added 11.52% at Rs908.20 and Peninsula Land gained 5.65% at Rs50.50.
Over 1.48 crore JP Associates shares changed hands on the BSE followed by Reliance Natural Resources (1.33 crore shares), IFCI (1.27 crore shares), Sesa Goa (1.12 crore shares) and Kohinoor Broadcasting Corporation (0.75 crore shares).

- Sharekhan

Stock Tip: Indian Overseas Bank

Hindu Business Line have given a buy on Indian Overseas Bank from a short-term trading perspective. They have given a stop loss of 104 with a target of Rs 122. CMP is Rs 110.45.

HOW SAFE IS INDIA?

Part – A: The Lehman Story

The deepening upheaval on Wall Street has been creating ripples throughout New York.
The fall of Lehman Brothers which headed for the biggest ever bankruptcy filing ever, sale of its
competitor Merrill Lynch & Co Inc in a $50 bn stock deal to Bank of America and the efforts of
insurer American International Group all headquartered in Manhattan definitely shook up the
Global economy.

Indian Government says:

The Government of India seems to be putting up a brave face. The government believes the
bankruptcy filing by America’s fourth largest investment bank will not impact India directly. India
has been more or less insulated from the sub prime crisis in the past and prima facie, the crisis in
the US may not have any impact on India.
The details in developments would have to be watched however. Bankruptcy experts pointed that
Western investment companies might be forced to sell off their assets in India at throwaway prices.

Our Outlook:

• Cost to Indian real estate could be dear given Lehman’s existing investments worth $500
mn in realty firms especially for firms which haven’t received funds yet from Lehman.
• Signals of a deepening credit crisis for Indian developers should be watched.
• Any distress sale by Lehman will impact valuation of existing realty projects.
• IT companies might find financial clients’ appetite for considering “transformational”
change in their business models practically gone.
• The shift to quality from cost could get hastened.
• Large Indian IT firms might include innovative products from smaller IT firms under their
umbrella.


Part-B: Losing sleep over the Rupee

The rupee which has in the recent months been battered to almost 47/US $ and the call money
rates spiking at 16%, triggered the RBI to come up with a slew of measures last evening to stanch
market instability. Comparisons with the 1997 Asian Financial Crisis seem to be springing up.

Our View:

Forex reserves with RBI seem reassuringly large at $288.81 billion week ended 5 September.
We say this because; we considered the following areas which are inherent to decide comfort
levels in Forex and we did get positive vibes:
a) Do we have enough forex to maintain stability in times of global turmoil?
b) How many months of imports can be bought with our forex?
c) Does forex exceed the foreign debt levels and are they larger than money
supply?etc

We think India looks safe.

However our concerns are as follows:

• Our dependence on volatile capital inflows to finance current account deficits puts us in a
highly risky situation. This is part of deeper alterations in our balance of payments.
• Foreign institutional investors (FIIs) have already sold close to $8 billion of Indian equities
this year, and it is quite likely that there will be further selling in the weeks ahead if the
global financial system slips into deeper trouble.
• The rupee has already dropped

Till now the focus was on oil and inflationary pressures but we think there could be growing
pressure on the Indian economy and RBI may have to use more of its reserves to protect the rupee.


From the Economist’s Desk
UTI Mutual Funds

Post Market Report - September 18, 2008

About-turn

An across-the-board rally saw the market bounce back sharply from its early losses of more than 700 points to end 52 points higher.
Today the market saw a smart rally despite weakness in global markets. Despite slipping over 700 points in early trades, the Sensex witnessed a relief rally led by across-the-spectrum buying.

The index recovered from its lows and closed posstive, as value buying emerged at lower levels. The Sensex received major support from banking, oil & gas and power stocks. The market gathered steam towards the close and the Sensex crossed the mark of 13,300 and touched the day's high of 13,347 before closing at 13,263, up 53 points. The Nifty too bounced back sharply and advanced 30 points to close at 4,038.

The breadth of the market was extremely negative, as of the 2,690 stocks traded on the BSE, where only 676 stocks advanced, 1,944 stocks declines. 70 stocks ended unchanged. Most of the sectoral indices closed with significant gains. The BSE Bankex was the major gainer and soared 2.68% followed by the BSE Oil & Gas index (up 2.36%) and the BSE CG index (up 0.95%). However, the BSE Realty and BSE CD index slipped over 4% each. The BSE IT index, BSE Teck index, BSE HC index and the BSE Metal index closed with marginal losses.Attracting strong buying support, Sterlite Industries surged by 3.43% at Rs454.50, HDFC Bank shot up by 3.17% at Rs1,222, Reliance Industries jumped by 3.16% at Rs1,932.85, NTPC advanced by 3.05% at Rs174, ICICI Bank scaled up 2.78% at Rs575.85, Maruti Suzuki India zoomed 2.70% at Rs718.45, Mahindra & Mahindra added 2.46% at Rs550.55, Reliance Infrastructure vaulted by 2.43% at Rs849.60, ONGC firmed up by 2.14% at Rs999.15 and ACC climbed 2.02% at Rs601.35. Among the laggards, Ranbaxy Laboratories slipped 10.06% at Rs340.95, Jaiprakash Associates shed 6.73% at Rs127.40, Satyam Computer Services declined by 4.16% at Rs335, while Infosys Technologies, Tata Steel, DLF, Tata Power and HDFC fell 1-4% each.
Banking stocks witnessed sustained buying support. Indian Overseas Bank soared 7.49% at Rs110.45, Bank of Baroda added 5.80% at Rs327.35, Kotak Bank scaled up by 4.72% at Rs579.45 and Punjab National Bank gained 4.38% at Rs517. Over 1.97 crore shares of Reliance Natural Resources changed hands on the BSE followed by IFCI (1.34 crore shares), S Kumars (1.33 crore shares), KS Oils (1.20 crore shares) and Jaiprakash Associates (1.10 crore shares).

Movers & Shakers
Pratibha Industries lost despite receiving orders worth Rs156 crore from Delhi Jal Board.

- Sharekhan