Sensex blinks; below 12,000 - The benchmark index, which consistently surged in the past four trading session, relaxed as profit-booking overcame the domestic bourses

The benchmark index, which consistently surged in the past four trading session, relaxed as profit-booking overcame the domestic bourses. Volatility was the key characteristic of the day, as the market suddenly collapsed under pressure at the fag end of the session. It sank below 12,000, as selling continued. The BSE 30-shares Sensex lost 100.83 points, or 0.84%, to finish at 11,970.47.

The benchmark index had opened higher, at 12,103.44, and surged to a fresh intra-day high of 12,152.60, during the late afternoon. Its intra-day low was at 11,915.21.

The BSE benchmark also oscillated a high 237.40 points during the session amidst high degree of volatility.

The S&P CNX Nifty slipped 35.40 points (1.01%), to settle at 3,457.35.

The market-breadth, strong for most part of the day, turned negative as a host of small-caps and mid-caps ran out of steam. Against 1,595 shares that declined on BSE, only 929 advanced. A total of 62 scrips remained unchanged.

The BSE Small-Cap Index slipped 61 points, to 5,971.59, while the BSE Mid-Cap Index lost 62 points, to 4,997.21.

Among the Sensex pack, 24 declined while only 6 advanced.

Car and commercial vehicle manufacturer Tata Motors slumped 3.80%, to Rs 826.50, on a volume of 2.88 lakh shares. It was the biggest loser from the Sensex pack.

REL (down 2.78% to Rs 455), Maruti Udyog (down 3.26% to Rs 911.90) and Cipla (down 3.26% to Rs 251.85) declined sharply.

Index heavyweight Reliance Industries lost 1.78%, to Rs 1,111.90, on a volume of 14.02 lakh shares. The counter suffered high volatility today, fluctuating in a broad range of Rs 1,144.95 - Rs 1,085.25.

State-run Oil and Natural Gas Corporation (ONGC) slipped 0.65%, to Rs 1,148. It said on Tuesday that it was aggressively pursuing opportunities to import liquefied natural gas (LNG), and intended to acquire petroleum assets in Kazakhstan and Cuba. ONGC, which accounts for 80% of the oil and gas produced in India, has bid for exploration blocks abroad and in India.

Among IT stocks, Satyam Computers (up 1.95% to Rs 839) and TCS (up 1.12% to Rs 1,008) witnessed renewed buying.

Reliance Communications rose 0.66%, to Rs 328.85, on 49.51 lakh shares. It had slipped sharply from an intra-day high of Rs 341.50, due to heavy selling.

Mahindra Gesco was the top-traded counter on BSE with a turnover of Rs 213.57 crore, followed by Tech Mahindra (Rs 200.08 crore) and Reliance Communications (Rs 165.35 crore).

The BSE Auto index was routed and ranked as the biggest loser among sectoral indices. It lost 1.81%, to 5109.03, under selling pressure. Major losers included M&M (down 2.91% to Rs 633.10), Escorts (down 4.7% to Rs 4.90% to Rs 116.50), TVS Motors (down 3.96% to Rs 110.40), Hero Honda (down 1.20% to Rs 762.50) and Bajaj Auto (down 1.62% to Rs 2,744).

Shares of Hercules Hoists, Sukhjit Starch, United Breweries, GM Breweries, WS Industries, Poddar Pigments, Ruchi Soya, El Forge, TIL, HOCL, Hercules Hoists and Tech Mahindra surged between 5- 20 % each.

Shares of Emco (down 0.07% to Rs 511), PTC India (down 1.36% to Rs 58.10), Igrashi Motors (up 4.58% to Rs 145) and Gammon India (down 2.86% to Rs 362) advanced after RBI allowed further FII buying, up to 49%, in Gammon India and PTC. The central bank also allowed FII purchases in Emco and Igarashi Motors up to 40% of the total paid-up share capital.

Welspun-Gujarat Stahl Rohren rose 0.07%, to Rs 74.35 on a high volume of 6.56 lakh shares after it bagged a Rs 700 crore contract for line pipes for oil and gas applications. The LSAW and spiral-pipe orders are largely meant for US (Rs 450 crore) and Iran (Rs 200 crore). These orders take Welspun's current pending order-book position to around Rs 1,800 crore. It slipped from high of Rs 79.80.

Distillation equipment maker Praj Industries slipped 1.75%, to Rs 162.50, even as the company acquired US-based C.J. Schneider Engineering Co. Inc. (CJS) for Rs 22.50 crore. CJS provides detailed engineering services to the biofuel industry, including that for ethanol plants. CJS already has contracts on hand from leading ethanol producers.

Educomp Solutions spurted 7.72%, to Rs 573, on a huge 11.30 lakh shares after the company announced that it will raise funds up to $ 25 million through an issue of Foreign Currency Convertible Bonds (FCCB).

Bartronics India surged 5%, to Rs 71.65, on signing an agreement with Sri Lankan Hayleys Group to explore opportunities for automatic identification and data capture (AIDC) solutions in the island country.

Bilcare surged 3.45%, to Rs 485.50, on acquiring DHP, a UK-based clinical trial service provider, for $ 5 million. The clinical trial specialist had a revenue of $ 3 million for the year ended 31 March 2006.

Glenmark Pharmaceuticals lost 1.10%, to Rs 346.50. It received tentative approval from US FDA for ondansetron hydrochloride tablet. Ondansetron hydrochloride tablets are a generic version of GlaxoSmithKline's Zofram tablets and belongs to the anti-emetic category. The drug is prescribed to control nausea, vomiting and had annual sales of about $ 640 million.

The Nikkei average ended nearly flat on Tuesday as exporters rose on a weaker yen, but pared gains as Lehmann Brothers lowered its rating on Takeda Pharmaceutical Co., as well as the pharma sector. The Nikkei rose 7.35 points (0.05%), to 15,874.28.

The Hang Seng index slipped 40.51 points (0.23%), to end at 17,346.70.

Crude oil price rose for a third day on Tuesday, climbing above $ 64 a barrel, after a fresh delay to BP's giant Thunder Horse oilfield in the Gulf of Mexico underscored the difficulty in meeting future demand. US light crude for October delivery rose 25 cents, to $ 64.05 a barrel, extending a rebound from last Friday's intra-day, six-month low of $ 62.03 a barrel.

London Brent crude rose 33 cents, to $64.38 a barrel.

US indices ended almost flat on Monday amid worries of Tuesday's economic news, and ahead of the US Federal Reserve's meeting to decide interest rates on Wednesday. While the Dow Jones lost 6 points, to 11,555, the Nasdaq Composite ended flat, at 2,236.

As per provisional data on NSE, FIIs were net buyers of equities to the tune of Rs 377.88 crore on Monday. The 30-shares BSE Sensex rose 61.71 points (0.5%), to end at 12,071.30 – its highest closing since 17 May 2006.

Source: Capitalmarket

Tech Mahindra leapfrogs: Telecom software provider Tech Mahindra jumped nearly 12%, to Rs 609.55 on a high volume of 25.2 lakh shares.

Tech Mahindra leapfrogs: Telecom software provider Tech Mahindra jumped nearly 12%, to Rs 609.55 on a high volume of 25.2 lakh shares.  Volume in the scrip was much higher than the average daily volume of 10.9 lakh shares for the past 15 trading sessions, since its listing, between 28 August and 18 September on BSE.

After a strong debut at Rs 552.80 on 28 August (closing price on BSE on that day), the scrip turned range-bound. It moved between Rs 527 and Rs 553. Tech Mahindra's IPO in early August was oversubscribed 78 times and was priced at the upper end of Rs 315 - Rs 365 price band.

The current price of Rs 609.55 discounts its Q1 June 2006 annualised EPS of Rs 32.30 by a PE multiple of 18.8.

Analysts are betting on Tech Mahindra due to the outsourcing boom in telecom vertical of the IT sector. Global telecom companies are investing enormous resources in developing innovative value-added services to stay competitive in a mobile market, where the average revenue per user will remain under pressure, or in fixed-line telephony where volumes will continue to shrink.

As the telecom industry enters this new phase, companies with specialised focus on select verticals will be better placed to grab a bigger slice of business volumes and will be preferred over generic second rung players. Tech Mahindra, with its exclusive focus on the telecom sector, will stand to gain from this trend in the medium term, analysts reckon.

Traditionally, the focus of TML with the telecom vertical was on telecommunications service providers (TSPs). However, after the acquisition of Axes Technologies in November 2005, the coverage has expanded to telecommunications equipment manufacturers (TEMs) and independent software vendors (ISVs).

For Q1 June 2006, Tech Mahindra reported a net profit of Rs 106.58 crore on net sales of Rs 587.12 crore. The paid-up equity capital of Tech Mahindra is Rs 115.87 crore.

Source: Capitalmarket

Praj Industries springs on inorganic foray into US

Praj Industries springs on inorganic foray into US. Distillation equipment maker Praj Industries rose 3.3%, to Rs 171, after the company acquired an engineering firm in the US. As many as 3.9 lakh shares changed hands in the counter on BSE. The stock, after a recovery during late July to early September, lost ground. From a high of Rs 182.45 on 4 September, it slipped to Rs 165.40 by 18 September.

As on 30 June, FIIs held 5.3% stake, whereas mutual funds held 6.7% in Praj.

Praj Industries has acquired 100% stake in US-based C.J. Schneider Engineering Co. Inc. (CJS) for Rs 22.50 crore. CJS is experienced in providing detailed engineering services to the biofuel industry, including that for ethanol plants. CJS already has contracts on hand from leading ethanol producers.

Only recently, Praj had announced an investment plan of up to Rs 100 crore for expansion, including a takeover of an engineering company in the US.

The company's investment programme of Rs 100 crore will be entirely through internal accruals. A couple of months ago, Praj Industries raised Rs 117 crore through a preferential allotment of shares and warrants to Japanese conglomerate Marubeni Corporation, Vinod Khosla, world renowned IT entrepreneur and Silicon Valley venture capitalist, and others.

After establishing its leadership in South-East Asia, Africa, Latin America and Australia, Praj Industries is slowly making inroads into the European and American markets.

Three US-based companies have already selected Praj Industries for supply of technology for ethanol projects. Total order size is Rs 50 crore ($11 million). The plants, with an annual capacity of 35 to 100 million gallons, are being installed in Iowa, Minnesota and Missouri. The earlier projects were in California.

Praj has earmarked investments in a new R & D Centre, two manufacturing workshops nearer to the port and expansion at its base in Pune. The company is also in process of setting up a facility near the port to reduce time taken to reach different markets.

The Pune-based Praj Industries is a global leader in setting up alcohol and ethanol plants. Praj Industries is also supplying technology and equipment to wheat and corn-based plants.

The company has been laying stress on R&D. It wants to focus on research in biofuels, and the latest technologies involved in production of alternative biofuels other than ethanol.

Praj Industries reported 50% growth in Q1 June 2006 net profit, to Rs 8.40 crore, compared to Rs 5.60 crore in Q1 June 2005. Net sales during the period rose 32.3%, to Rs 80.46 crore, from Rs 60.79 crore. At present, its earnings are almost equally divided between domestic and overseas contracts.

Praj recently forged an alliance with Aker Kvaerner, Netherlands, for a strategic co-operation in bio-ethanol projects in Europe. As per the memorandum of understanding, the companies will unite their expertise to jointly pursue business opportunities. While Praj will supply the process licence, process engineering and critical proprietary equipment for the process, Aker Kvaerner will provide basic engineering, procurement and construction expertise.

Hindalco shines on proposing MP SEZ

Hindalco shines on proposing MP SEZ. Hindalco Industries rose 1.31%, to Rs 170.35, after it proposed a special economic zone in Madhya Pradesh. As many as 7.71 lakh shares were traded on the BSE. The counter has been highly volatile in the past few weeks. From a low of Rs 160.95 on 18 August, the stock rose to Rs 183.90 by 8 September, only to slip to Rs 168.15 by 18 September 2006.

At the current market price of Rs 170.35, Hindalco Industries trades at 6.98 times its Q1 June 2006 annualized EPS of Rs 24.40.

Hindalco Industries has proposed a sector specific special economic zone (SEZ) in Madhya Pradesh, which is expected to attract an investment of Rs 20,000 crore. Hindalco will itself contribute Rs 18,000 crore while the rest will be collected by way of downstream projects. The project is also expected to generate more than 10,000 jobs.

The company proposes to set up an aluminum smelter plant and a captive power plant in Sidhi in a phased manner. The SEZ will cover an area of 2,025 hectares, with a processing area of 1,200 hectares.

Hindalco Industries entered into a 50:50 joint venture with Essar Power, to form Mahan Coal Company (MCC) to start coal mine development at the Mahan block of Sidhi-Singrauli fields in Madhya Pradesh, in December, following the allotment of mine by the centre.

Essar Power is investing Rs 4,000 crore for a 1,000 Mw power project in the state, while Hindalco is setting up a 750-Mw captive power plant with an estimated investment of Rs 2,400 crore.

Both greenfield power plants are expected to start production by 2010. To source coal for the power plants, both companies had signed a shareholders' agreement and formed MCC.

Hindalco Industries had registered a net profit growth of 59%, to Rs 601.50 crore (Rs 379.20 crore) for Q1 June 2006. Net sales rose 94%, to Rs 4,273.70 crore (Rs 2,207.10 crore).

Welspun-Gujarat strikes it rich with big contract

Welspun-Gujarat strikes it rich with big contract. Welspun-Gujarat Stahl Rohren spurted 5.59%, to Rs 78.45 on bagging a Rs 700 crore contract for line pipes. A thin volume of 4,012 shares was traded on the BSE.

The stock had seen much volatility in the last few months. After declining from a high of Rs 89.20 on 10 May to Rs 54.90 on 8 June, due to a recent meltdown in mid-caps and small-caps, the scrip rose to Rs 73.50 by 25 June. Here, it slipped to Rs 49.65 by 25 July, only to surge to Rs 78.80 by 13 September 2006. Here, the scrip depreciated to Rs 74.30 by 18 September 2006.

At the current market price of Rs 78.45, Welspun Gujarat Stahl Rohren trades at 9.89 times its Q1 June 2006 annualized EPS of Rs 7.93.

Welspun-Gujarat Stahl Rohren has bagged orders worth Rs 700 crore for the supply of line pipe for critical oil and gas applications. The LSAW and spiral-pipe orders are largely meant for US (Rs 450 crore) and Iran (Rs 200 crore).

These orders take the Welspun's current pending order-book position to around Rs 1,800 crore.

Recently, it was reported that Welspun Gujarat plans to invest Rs 1,200 crore in a plates-mill with a 1.2 million tonne capacity. The new facility aimed at backward integration, will come up at Anjar, Kutch. The plant is expected to come up by December, and will produce plates of 4,500 mm width. The project will be funded by the money raised through an FCCB issue late last year.

Welspun Gujarat last month planned to float a 50:50 joint venture with Sanghi Industries, to jointly develop a port facility at Dahej, South Gujarat.

Welspun supplies pipes to the oil and gas sector. Analysts remain upbeat about pipe suppliers because oil, gas and product pipeline infrastructure in India is likely to triple in the next five years. Welspun, a leading pipe manufacturer focussed on quality product offerings, will definitely benefit from the boom.

Welspun-Gujarat Stahl Rohren has posted a net profit growth of 66.45% to Rs 26.30 crore for Q1 June 2006 compared to Rs 15.80 crore in Q1 June 2005. Net sales rose 63%, to Rs 536 crore, from Rs 328.40 crore.

Source: Capitalmarket