IPO and Deals Lift India

Elena
28 Aug, 2006
Mumbai

The Sensex on BSE traded firm during the session , but for most part of the day lacked buying impulses. In the final minutes of trading, though, blue-chips were again in demand, helping the benchmark index to record a modest gain. Reliance Industries, Hindustan Lever and State Bank of India led the turnaround. Stocks from aluminium, cement, engineering, petrochemical, power, software and steel sectors also advanced. Tech Mahindra IPO surges 51% from the offer price.

[R]10:30AM Sensex index continues to advance.[/R]
The Sensex on BSE gained 47.32 points, or 0.41%, to close at 11,619.52, above the psychologically important 11,600 mark. The turnover on BSE was Rs 1,897 crore, showing luckluster trading, and much lower than Friday’s turnover of Rs 3,197 crore. The market-breadth was positive on BSE as 1,418 shares advanced, 1,047 declined and 68 stocks remained unchanged. From the Sensex stocks 20 advanced while 10 declined.

Matrix Laboratories Ltd. Rose 7.5% but closed up a fraction on the news that the U.S. based Mylan Laboratories Inc. has agreed to buy 71.5% of the pharmaceutical company making it the largest foreign investment in the sector. Tech Mahindra IPO closed at Rs 552.80 up 51.5% from the offer price.

Larsen & Toubro led the advancers, climbing 2.81%, to Rs 2,417.90 on receiving the board''s approval for an issue of 1:1 bonus shares. The engineering and construction large-cap has set September 29, 2006 as the record date for awarding the bonus. Also, its consortium bagged an order worth around $ 150 million from Saudi Formaldehyde Chemical Company.

Hindalco also advanced, up 2.35% to Rs 176.70, StateBank of India rose 1.81% to Rs 920.10 and Ranbaxy added 2.02% to Rs 396.80. Reliance Industries gained in late afternoon trade on strong demand. It climbed 1%, to Rs 1,121.25. It traded in the range of Rs 1,124.50 as its high and Rs 1,108.10 as its low.

Cement shares rallied. Renewed buying pulled ACC up 0.65% to Rs 914.55, Saurashtra Cement gained 5% to Rs 68.35, Shree Cement advanced 2.50% to Rs 964, Prism Cement added 1.70% to Rs 36.40, Mangalam Cement gained 3.60% to Rs 171, Andhra Cement spurted 5% to Rs 35.35 and India Cement was up 3.50% to Rs 202.20.

Small-cap and mid-cap stocks also advanced. Kilburn Engineering surged 4.87%, to Rs 35.55 after securing a contract worth $ 315,000 from Columbian Chemicals, Canada, for the supply of drum dryers. Aurobindo Pharma gained 1.05%, to Rs 638 on receiving the South African medical body''s approval for its betalactam facility. And Sintex Industries edged up 2.08% to Rs 174, after the company said that it will spend Rs 410 crore to expand the textiles and plastics capacity.

Cipla led the decliners, slipping 1.40% to Rs 243.45. HDFC aslo fell 1% to Rs 1,267 and HDFC Bank shed 0.75% to Rs 843.60. Dr Reddy’s traded ex-bonus today, and ended at Rs 712 on a volume of 1.19 lakh shares. It issued 1:1 bonus shares. Bajaj Auto declined 1.40%, to Rs 2,713. The company said it has signed an agreement with the Maharashtra Government for a greenfield project in Chakan.


[R]9:45AM Stocks moved slightly higher at opening.[/R]
U.S. stocks moved modestly higher at opening. Market sentiment was supported by merger and acquisition news, including a report that Ford Motor Co. ((F)) is planning to sell a large stake in its Ford Credit financing arm. Ford shares added 1% at $8.07 on the NYSE. Kinder Morgan Inc’s ((KMI)) shares rose 2.6% after its board agreed to take the natural-gas pipeline operator private. In another deal, Western Refining Inc. ((WNR)) agreed to buy Giant Industries Inc, sending its shares up 14%. Technology stocks were driven by a deal between Internet search leader Google ((GOOG)) and auction Web site Ebay ((EBAY)). Google will begin selling advertising on EBay and help buyers quickly do business with online merchants. Ebay rose 2.4% to $25.91, while Google rose $3.07 to $376.33.

At the same time, energy stocks slipped amid a drop in oil prices as Hurricane Ernesto was downgraded to a tropical storm. Exxon Mobil Corp. (((XOM)) lost 0.4%. In the first hour of trading, the Dow Jones industrial average rose 8.89, or 0.08%. The Standard & Poor''s 500 index rose 0.34, or 0.03%, and the Nasdaq composite index added 4.57, or 0.21%. Bonds were mostly flat, with the yield on the benchmark 10-year Treasury note at 4.78% from Friday''s five-month low of 4.79%.


[R]9:00AM Stock futures pointed to a lower opening.[/R]
U.S. stock futures indicated a weaker start Monday due to losses in overseas markets and cautiousness ahead of a flood of economic data due out later in the week. Investors, concerned over the outlook for interest rates and a sharper-than-expected slowdown in economic growth, paid little attention to a drop in crude prices and a $22 billion buyout of Kinder Morgan.

Front-month crude futures dropped $1.44 to $71.07 a barrel, reaching a two-month low. In corporate news, Kinder Morgan ((KMI)) agreed to be acquired by a management-led investor group for $15 billion plus the assumption of $7 billion in debt. Company’s shares rose 3% in pre-market trading. In other merger news, Western Refining ((WNR)) said it would buy Giant Industries for $1.2 billion, or $83 per share. The offer represents a 16% premium over Friday''s closing price for Giant shares. S&P 500 futures slipped 1.60 to 1,296.00 and Nasdaq 100 futures eased 1.00 to 1,559.75.

Among other companies in focus, shares of U.S. Steel ((X)) fell 53 cents, or 0.9%, to $59.15 in pre-open trading on brokerage downgrade to underweight from neutral weight, citing concerns over near-term industry oversupply issues. EBay ((EBAY)) shares advanced more than 3% in pre-open trading after the online auctioneer announced a multi-year agreement with search giant Google ((GOOG)) in which Google will have exclusive rights to display text ads eBay''s Web sites outside of the U.S.

First Cash Financial Services Inc, ((FCFS)), pawn-shop operator, announced it has raised its 2006 profit estimate to 96 cents to 97 cents a share, up from a prior range of 94 cents to 95 cents a share. The revision is a result of the contribution to earnings expected from the company''s acquisition of Auto Master, a used-car retailer and finance company geared toward credit-challenged customers. The company sees the $33.7 million acquisition beginning to contribute to earnings in Q4.

Mylan Laboratories Inc, ((MYL)), drugmaker, will acquire as much as 71.5% of Matrix Laboratories Ltd., a Mumbai pharmaceutical-ingredients producer traded on that city stock exchange, Matrix announced. Under terms of the deal, Mylan will pay 306 rupees ($6.58) a share for Matrix. Mylan will buy 51.5% of Matrix''s shares outstanding from certain holders and will make an open offer to the rest of the holders to acquire as much as an additional 20%. If the open offer is fully subscribed, the total purchase price for the stake is about $736 million.

[R]8:00AM Natural-gas pipeline operator Kinder Morgan to be bought for $22 billion.[/R]
Kinder Morgan ((KMI)), Houston-based energy-transportation-and-storage company, agreed to be acquired by a group of investors including its chief executive for $15 billion plus the assumption of $7 billion in debt. Members of the buyout group include Chairman and CEO Richard D. Kinder, company co-founder Bill Morgan, other members of management and the board of directors, and investment companies Goldman Sachs Capital Partners, American International Group Inc., Carlyle Group and Riverstone Holdings LLC. Richard Kinder, who will continue as chairman and CEO of Kinder Morgan, is expected to reinvest all of his 24 million company shares.

The offer represents a 5.7% premium over the company''s closing stock price on Friday and a 27% premium over the closing price on May 26, the last trading day before the investor group made its proposal. Under terms of agreement, Kinder Morgan shareholders will receive $107.50 for each share of stock they hold. The deal is expected to close at the beginning of 2007.


[R]7:30AM Asian markets finished mostly lower on U.S economic slowdown.[/R]
Asian markets finished mostly lower. Japan''s Nikkei 225 Average edned 1.1% lower at15762.59. Hong Kong''s Hang Seng Index finished 0.2% lower at 16922.29, South Korea''s Kospi Index sank 0.11% to 1327.89, and Taipei fell 1.25% to close at 6444.76. Australia''s S&P/ASX 200 was flat, rising 0.01% to 5024.20, while the Shanghai Composite Index bucked the trend to end 1.7% higher at 1650.44, hitting its biggest single-day rise in the past two weeks.

Internet-related stocks, autos and electronics issues led the decliners. Softbank plunged 5.6%, while Toyota Motor shed 0.5%. Sony slipped 0.6%. Declining sectors also included machinery makers and pharmaceuticals, with Sumitomo Heavy Industries losing 2.6% and Chugai Pharmaceutical shedding 1.8%.

In Hong Kong, Hutchison Whampoa, fell 1.7%, while Sinopec, rose 0.2%. In South Korea, shares ended flat as declines from banking and brokerage issues were counterbalanced by gains in shares of shipbuilders. Kookmin Bank shed 0.6% and Shinhan Financial Group dropped 0.7%. Shipbuilders Hyundai Heavy Industries and Samsung Heavy Industries gained respectively 1.3% and 0.5%.

In Taiwan, shares closed at their lowest level in three weeks on domestic political worries and foreign-equity outflows. Huaku Construction fell 6.1%, and Hung Poo Real Estate Development dropped 5.8%. In Australia, the stock market ended in quiet trading as investors awaited more news from the corporate earnings season.


[R]6:30AM European markets were lower Monday morning on oil, banks.[/R]
European markets were lower by mid-morning on Monday. Broadly the French CAC 40 index dipped 0.4% at 5,091 and the German DAX 30 index fell 0.4% at 5,788 as the U.K. market remained closed Monday due to a bank holiday. The energy sector was hit, forcing Norsk Hydro down 1.2% and rival Statoil 1.1%. Banca Intesa and Sanpaolo IMI both pulled back from some of the previous week''s gains after they approved the outline of a merger plan over the weekend. Shares in Banca Intesa fell 1.5% as Sanpaolo IMI gave up 1.4%.

Other European banks also fell. Capitalia shed 1% in Italy and BNP Paribas slipped 0.8% in Paris, while Commerzbank added 1.1% in Frankfurt. In other corporate news, Unilever gained 0.4% in Amsterdam after the group agreed to sell the majority of its European frozen food business to Permira Funds for 1.73 billion euros ($2.21 billion).

Oil prices dipped Monday as concerns eased about threats to U.S. oil supply after a storm in the Caribbean weakened. Light sweet crude for October delivery fell 76 cents to $71.75 on the NYME. Gold was trading at $622.70 an ounce, up 45 cents from Friday''s close. The euro was higher against the U.S. dollar on Monday as investors examine whether European interest rates are likely to rise faster than those in the United States.

The euro bought $1.2794 in early European trading, up from $1.2758 in New York on Friday, regaining some of the ground it lost last week. The British pound gained to $1.8910 from $1.8868 on Friday, while the dollar slipped to 117.11 Japanese yen from 117.24 yen.