Trading with PT style

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The key indices moved in a narrow range this week, but closed at a 22-month high largely due to gains on the first trading day of the year. Volumes were low as index stocks struggled for direction in a listless market, as investors chose to remain cautious ahead of results. Finally, the BSE Sensex rose 0.4% and the NSE Nifty gained 0.8% over the week. The BSE Sensex hit an intra-week high of 17,790 and low of 17,378 while the NSE Nifty hit an intra-week high of 5,310 and low of 5,167.

The top gainers: The top gainers in the Sensex were Grasim Inds (up 11.4%), DLF (up 7.9%), Hindalco (up 7.7%), Tata Power (up 7.2%) and Reliance Capital (up 5.5%).

The Top Losers: The top losers in the Sensex were Maruti Suzuki (down 8.1%), TCS (down 6.7%), Infosys (down 5.3%), Hero Honda (down 4.2%) and HDFC (down 2.8%).

The BSE IT Index (down 4.4%): The top losers in the IT sector were TCS (down 6.7%), HCL Tech (down 5.3%), Infosys (down 5.3%), Sasken Communication (down 4.1%) and Mphasis (down 2.8%).The top gainers were Financial Tech (up 17%), Mahindra Satyam (up 14.9%), Patni Computer (up 1.8%) and Oracle Financial (up 0.2%).Despite 3QFY10 having fewer billing days, we expect the top-tier vendors to report US$ revenue growth of 3.5–4% QoQ (better than 2QFY10 for Wipro and Infosys). Wage hikes and an appreciating rupee would, however, put pressure on margins; we expect top-tier vendors to report declines of up to 150bps in EBITDA margins. We also expect Infosys to upgrade its FY10 EPS (INR) guidance by 3-5% on likely guidance-beating revenue growth and better EBITDA margins (our FY10 INR EPS estimate for the company is 8% above guidance). Wipro, TCS and HCL Tech remain our preferred picks among large-cap vendors.

The BSE Consumer Index: The top gainers in the consumer durables sector were Titan Industries (up 5.2%), Videocon Industries (up 3.9%), Mirc Electronics (up 3.3%), Samtel Color (up 2.9%) and Blue Star (up 1.1%).

The BSE Healthcare Index (up 2.3%): The top gainers in the Pharma space were Panacea Biotec (up 8.5%), Cadila Healthcare (up 6.3%), Wockhardt (up 5%) and Strides Arcolab (up 5%). Dr Reddy’a Labs surged 4% during the week the top losers were Zandu Pharma (down 4.7%), Astrazeneca Pharma (down 3.8%), Lupin (down 2.4%), Dishman Pharma (down 1.8%) and Aurobindo Pharma (down 1.7%).

The BSE Banking Index (up 1.2%): The top gainers in the banking space were Federal Bank (up 3.6%), Karnataka Bank (up 2.2%), Kotak Mahindra Bank (up 1.7%), Bank of Baroda (up 1.6%) and HDFC Bank (up 0.5%)Top losers in the banking space were Yes Bank (down 3.5%), Punjab National Bank (down 1.7%), Oriental Bank of Commerce (down 1.2%) and Union Bank of India (down 1.2%).ICICI Bank ended lower by 1.6% during the week. The bank reportedly cut interest rates on car loans from 10.5-11.5% to 9.75-10.5%.

The BSE Auto Index (down 0.5%): The top losers in the auto space were Maruti Suzuki (down 8.1%), Bajaj Auto (down 5.7%), Hero Honda (down 4.2%), Eicher Motors (down 1.2%) and Swaraj Mazda (down 0.2%), The top gainer in the auto space was Ashok Leyland. The stock accelerated 7.8% during the week. The company's total sales jumped 164% to 6,099 units in December 2009 over December 2008.Among the other notable gainers were Hindustan Motors (up 7.4%) and M&M (up 6.9%).

BSE Oil & Gas Index (up 2.4%): The top gainers in the oil & gas space were Cairn India (up 8.5%), Chennai Petroleum (up 7.7%), Gujarat NRE Coke (up 7.3%) and MRPL (up 7.3%). ONGC gained 3% during the week Essar Oil surged over 12.5% during the week. The company announced that its second product jetty for exporting refined petroleum products from its refinery was commissioned in Jamnagar district at Vadinar.

The BSE Capital Goods Index (up 1.2%): The top gainers in the Capital Goods space were LMW (up 21%), Usha Martin (up 14.6%), Carborundum Universal (up 11.5%) and Siemens India (up 8.4%).The top losers were Crompton Greaves (down 2.5%), Kirloskar Bros (down 2.3%), SKF India (down 1.9%) and BEL (down 0.5%).

The Cement Sector: The top gainers in the cement sector were Binani Industries (up 17.8%), Shree Cement (up 14.9%), Dalmia Cement (up 14.6%), Grasim (up 11.4%) and JK Cements (up 10.9%).

The Telecom Sector: The top gainer in the telecom space was MTNL. The stock soared over 13% during the week after reports stated that the merger talks between BSNL and MTNL could be back on the agenda. But, later on the Government denied that it was considering the merger.Among the other notable gainers were Gemini Comm (up 9.3%), Tata Communication (up 7.8%), Himachal Futuristic (up 5%) and RCom (up 4.9%).Bharti Airtel fell 1.4% during the week. Bangladesh's telecom regulator approved the company’s proposed US$300mn investment for buying a 70% stake in Abu Dhabi Group's Warid.

The Realty Sector (up 5.6%): The top gainers in the real estate space were Peninsula Land (up 17%), Sobha Developers (up 11.9%), Omaxe (up 10.6%), DLF (up 7.9%) and Ansal Property (up 7.8%) The Metals sector (up 4%): The top gainer in the metals sector was Adhunik Metaliks. The stock rose over 13% during the week after the stock witnessed foreign fund buying. Merrill Lynch Capital Market acquired 6.78 lakh shares in the company at an average price of Rs109 per share in a bulk deal on the BSE on 6th January.JSW Steel surged over 10% during the week after the company announced that its production rose 88% to 14.69 lakh tons in the third quarter of the current fiscal year. Tata Sponge (up 12.7%), JSW Steel (up 10.3%), Bhushan Steel (up 10%) and Lloyd Metals (up 9.1%) were among the other major gainers.The top loser among the metal stocks was Bhuwalka Steel (down 2.1%).SAIL was down 1.1% during the week amid reports of concerns being expressed by the Ministry of Steel regarding the sudden hike in steel prices. The company may cut prices of some of its products in the near future, reports
 
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India's food price index rose 18.22 percent in the 12 months to Dec. 26, while
the fuel index was up 4.85 percent. The driest spell in nearly four decades
and then floods in parts of the country have pushed up food prices.
Capital Goods
BHEL has received orders worth Rs 900 crore from ONGC to supply six onshore
oil rigs.
Engineering major L&T bagged orders totalling to Rs 2,325 crore from
various vendors during the third quarter of the current fiscal. The company,
during the third quarter of the year 2009-10, has received contracts for
construction of residential towers, hospitals, exhibition centre, IT parks and
factory building projects.
Sunil Hi-Tech Engineers has bagged a power project worth Rs 487.82 crore
from Maharashtra State Power Generation Co (Mahagenco). Sunil Hi-Tech
has been awarded the balance of plant contract for Mahagenco's Parli TPS
Project.
Transmission Tower/ Equipments
Kalpataru Power Transmission (KPTL) has secured orders worth over Rs 250-
crore from two firms. It has bagged orders from the Algerian firm, Sonelgaz
and Tamil Nadu Electricity Board to construct transmission lines.
Oil & Gas
ONGC has been forced to exit from a gas block in Trinidad and Tobago after
its partner Lakshmi N Mittal walked out of the project. ONGC-Mittal Energy
Ltd (OMEL) — the joint venture of ONGC Videsh Ltd and Mittal Investment
Sarl — had in 2007 won the offshore block North Coast Marine Area-2 (NCMA-
2), that is estimated to hold in-place reserves of two trillion cubic feet,
beating Britain's Centrica Plc.
Indian Oil Corporation (IOC), the country's biggest oil marketing company, is
looking to acquire 50,000 hectares of wasteland in Uttar Pradesh for
plantation of non-edible oilseeds, such as jatropha and karanjia, that are
used for biodiesel production.
Indian Oil Corporation (IOC) has decided to commission a detailed feasibility
report (DFR) on a 2.5-million tonne a year liquefied natural gas (LNG) import
terminal at Ennore, on the outskirts of Chennai. The company is also
exploring the possibility of setting up a power plant with the terminal.
Pharmaceutical
Pharma major Wockhardt has received tentative approval from the US drug
regulator to market 'Memantine HCl' tablets, used for the treatment of
Alzheimer's disease and dementia.
Pharma Company Piramal Healthcare is looking for acquisitions in the fields
of patented drugs, contract research and research molecules and will raise
Rs 1,000 crore for this purpose.
Zydus Cadila, one of the five largest pharmaceutical companies in India, has
received the approval of the Drug Controller General of India (DCGI) to
conduct multi-centric clinical trials for the H1N1 (swine flu) vaccine in the
country. Zydus is the first company to get the nod, an essential step prior to
commercialisation.
Realty/ Construction
IVRCL Infra and Projects has bagged contracts worth Rs 958 crore for
providing infrastructure related works. The company has bagged a Rs 359.96
crore contract from the National Highways Authority of India (NHAI) for
construction related works including four laning of Bhogpur to Mukerian
section of NH-1A, to be completed within 30 months.
Automobile
Farm equipment and utility vehicle maker Mahindra & Mahindra announced
its foray into heavy commercial vehicle segment in partnership with Navistar
Inc of the United States. Under the joint venture, Mahindra Navistar
Automotive Ltd (MNAL), the two companies have unveiled 25 tonnes and 31
tonnes trucks, which have been developed for the Indian market at an
investment Rs 650 crore.
FMCG
The Malaysian arm of FMCG player Marico has acquired hair-styling brand
Code 10 from Colgate-Palmolive for an undisclosed sum. The buyout marks
the company's entry into the Malaysian hair-styling market. It is also the
company's first since the acquisition of Durban-based Enaleni
Pharmaceuticals in late 2007.
Casting, Forgings & Fastners
Bharat Forge will invest around Rs 1,500 crore over the next three years to
focus on its non-automotive business and on setting up some production
units.
 
Nifty is likely to trade in a range of 5200-5400 levels over the week with 5175 levels being a crucial intermediate support. The Historical Volatility (HV) levels
for Nifty remained low due to a range-bound movement. However, the last couple of sessions witnessed marginal increase in volatility. The HV of the index
settled around 22% levels. Overall, the data indicates positive sentiment for Jan month. There were stock- and sector-specific movements during the week.
The 5200-mark held by the weekend, indicating a higher trading range in the near term. The put-call ratio of open interest finally closed at 1.46 indicating
support near lower strikes which once again is within the comfort zone. The options' open interest addition remained skewed towards put options during the
week. The options concentration shifted to the 5200-strike put, with the highest open interest of above 40 lakhs, followed by the 5400 and 5300 strike calls
with more than 35 lakh and 30 lakh shares, respectively. The options accumulation clearly indicates strong support around the 5200 level, and the upsides
have triggered a lot of short addition among puts. The Implied Volatility (IV) of call options decreased to 18.62% while the average IV of put options ended
higher at 20.21% on Friday. The current scenario is influenced by global cues and liquidity inflows, and the options activity indicates a move between 5200 and
5400 levels.
 
NIFTY ANALYSIS
Put Call Ratio Analysis : The Put-Call open interest ratio of Nifty has increased
to 1.46 from 1.43. At the end of week, the maximum stocks had negative trend of
change in put call open interest ratio.
Implied Volatility Analysis : The Implied Volatility (IV) for Nifty futures this
week has decreased to 18.62% from 22.04%. The IV of the stock futures has
changed this week ranging from -14.37% to 11.95%.
Open Interest Analysis : The open interest for the index at the end of this week
has increased by 9.79% as compared to the previous week. All future stocks saw
changes in their open interest ranging from -5.84% to 28.12%. JPHYDRO has the
maximum increase in open interest as compared to other stocks.
 
NEWS UPDATES
• Birla Shloka Edutech set price band of Rs 45-Rs 50 for its
upcoming follow-on public offer
• Ranbaxy Laboratories got approval from UK Medicine &
Healthcare products Regulatory Agency for Cefuroxime
powder in multiple strengths.
• Viceroy Hotels said the JP Morgan India Property
Mauritius, a real estate investment arm of JP Morgan has
picked up 49% stake in one its units for Rs 70 crore.
• Transgene Biotek signed a pact with Dr Reddy's Lab to
manufacture a drug named, Orlistat which is used for
treating obesity.
• Clutch Auto net profit surged 52.3% to Rs 2.33 crore in Q3
December 2009 over Q3 December 2008.
 
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