The top player in chains
We had written about Coimbatore-based LG Balakrishnan & Brothers (LGBB) in the issue dated 3 June 2010. At that time, we had recommended buying the stock at the prevailing market price (around Rs218). At present, the stock is trading at Rs308. It is a good buy again.
LGBB is mainly into automotive components and manufactures metal forming (fine blanking,...
The Nifty will remain in the 4,800-4,665 range as of now
On Wednesday, the market started declining immediately on open in line with the weak Asian markets. The Nifty opened at 4,756.2 which was its intra-day high and soon after, the downward trend started that continued until 12.45pm at which time the Sensex hit an intraday low of 15,666.46 and the Nifty of 4,685.65. The Sensex fell 146 points (0.92%) to close at 15,727.85, while the Nifty fell 45 points (0.94%) to close at 4,705.80.
Except for BSE Power Index (up 0.78%) and BSE Capital Goods (up 0.32%) indices, all the other 11 BSE sectoral indices ended in the negative, with BSE Metal Index falling the most (fell 2.05%), while BSE Bankex index fell 1.98%
On Tuesday, the Reserve Bank of India (RBI) said that banks’ investments in paid up equity of financial entities, even if they are exempted from capital market exposure, will be assigned a 125% risk weight or risk weight warranted by external rating of the counter party, whichever is higher, from 1 January 2012. Previously, such investments were assigned a 100% risk weight, the central bank said in a statement.
There are no clues from the overseas markets about the possible market direction, since trading activity at the year end is low. The S&P 500 and the Nasdaq Composite ended in positive yesterday, while the Dow Jones ended flat as a better-than-estimated US consumer confidence report overshadowed a decline in the US home prices and concern about Europe’s debt crisis.
The Conference Board reported that its consumer confidence index came to 64.5 in December, up from 55.2 in November and outpacing market forecasts for a 58.2 reading. While the S&P/Case-Shiller Home Price Index showed home prices in a 20-city composite group fell 3.4% in October when compared to the same month in 2010, slightly worse than expected.
We expect the market to remain sideways in the tight range of 4,800 and 4,665 until a clear trend emerges after the derivatives expiry tomorrow and after trading in a new year begins on the 2nd January.
The Nifty hit our initial target of 4,800 today
For the second day today the National Stock Exchange (NSE) traded on a very low volume of 38.64 crore shares. As we mentioned in our yesterday’s closing report that the Nifty has to close strongly above 4,800 for the upmove to continue. But today the index reached this level in opening session itself and after range-bound movement in the morning session it went into the negative. At present the market is in an indecisive zone and is likely to stay sideways.
The market opened flat despite a rebound in infrastructure growth in November and in the absence of any global cues. Wall Street and Europe remained closed on Monday for Christmas holidays, resulting in the Asian pack opening weak this morning. The Nifty opened one point higher at 4,780 and the Sensex began the day at 15,984, up 13 points.
Volatile trade saw the indices slipping into the red in early trade. But select buying lifted the benchmarks into the green a short while later. The buying helped the market hit its intraday high at around 11am. At the highs, the indices breached their psychological levels with the Nifty scaling 4,801 and the Sensex touching 16,049.
The debate on the Lokpal Bill in the Lok Sabha made investors jittery which resulted in the indices paring their gains and entering the negative territory in noon trade. Intense selling in the second half of the day pushed the market to the day’s lows in post-noon trade. At the lows, the Nifty fell to 4,724 and the Sensex went back to 15,800.
The market made a minor recovery towards the end of trade but closed in the red. The Nifty settled 29 points lower at 4,751 and the Sensex lost 97 points to end the day at 15,874.
The advance-decline ratio on the NSE tilted in favour of the declining stocks at 685:981.
Among the broader indices, the BSE Mid-cap index declined 0.69% and the fell 0.35%.
With the exception of the BSE Consumer Durables index (up 0.15%), all other sectoral gauges ended lower. BSE Realty (down 1.72%); BSE Metal (down 1.38%); BSE Bankex (down 1.23%); BSE PSU (down 1.18%) and BSE Power (down 1.08%) were the top losers.
The key gainers on the Sensex were Tata Power (up 1.92%); Bajaj Auto (up 1.19%); ONGC (up 0.50%); ITC (up 0.37%) and Larsen & Toubro (up 0.30%). The losers were led by DLF (down 2.70%); Cipla (down 2.68%); Coal India (down 2.44%); Tata Steel (down 2.42%) and Tata Motors (down 2.36%).
Reliance Communications (up 5.11%); Ranbaxy (up 2.69%); Tata Power (up 2.38%); Siemens (up 2.35%) and Ambuja Cement (up 2%) gained the most on the Nifty. The laggards were led by Axis Bank (down 3.21%); IDFC (down 3.15%); Kotak Bank (down 2.88%); DLF (down 2.77%) and Coal India (down 2.66%).
Markets in Asia closed weak on negative economic news and low trading volumes. Japanese shares settled lower as minutes from a central bank meeting held last month cautioned that the Eurozone debt crisis could hamper growth. This apart, South Korean consumer index fell sharply in December from November on the back of an already slowing global economy.
The Shanghai Composite declined 1.09%; the Jakarta Composite slipped 0.20%; the Nikkei 225 fell by 0.46%; the Straits Times shed 0.11%; the Seoul Composite contracted by 0.79% and the Taiwan Weighted settled 0.11% lower. At the time of writing, the key European indices were trading 0.5% to 1% higher and US stock futures were in the green.
Back home, foreign institutional investors were net buyers of stocks amounting to Rs113.43 crore on Monday. On the other hand, domestic institutional investors were net sellers of equities amounting to Rs118.98 crore.
Hindustan Construction Company (HCC) has received its board’s approval to raise Rs120 crore through the issue of Secured Redeemable Non-Convertible Debentures (NCDs) on private placement basis to Axis Bank. The stock declined 2.23% to close at Rs17.55 on the NSE.
Gift and greeting cards major Archies on Tuesday said the Department of Posts has allowed the company to sell postal stamps at its retail outlets across the country. The order is valid till 31 March 2012, as a pilot project and can be extended for the future also, the company said. The stock fell by 1.75% to close at Rs25.25 on the NSE.
Sun Pharmaceutical Industries’ US arm Caraco Pharmaceuticals has received tentative approval from the US Food and Drug Administration (USFDA) for marketing its generic dexmedetomidine hydrochloride injection in the US. Dexmedetomidine is a sedative and anaesthetic medication, and provides sedation without causing respiratory depression. Sun Pharma fell 0.72% to settle at Rs497.55 on the NSE.