Infrastructure, Banks Lift Sensex

123jump.com Staff
03 Aug, 2007
New York City

Sensex in India recovered but fell for the second week in a row. Real estate, banks, infrastructure, and cement stocks led the rally. Wholesale inflation declined at the end of the third week in July but remaied above the target range. JSW Steel reported 18% increase in July steel production. Banks gained for the second day in a row on the news that SBI is planning a stake sale in its asset management unit. Sensex is up 12% for the year so far.

[R]11:00AM New York, 8:30PM Mumbai – Banks and infrastructure stocks rally lifted Sensex in Mumbai trading.[/R]

Sensex gained 152.70 or 1.02% to close at 15,138.40. The index declined for the second week in a row. In the broader market 1,581 gained, 1,081 declined, and 73 were unchanged.

Total daily turnover on the exchange fell to 3,981 crore rupees from 4,435 crore rupees in previous session. In the Sensex 23 closed higher and 7 declined.

Economic News

Wholesale inflation index, measuring inflation for the last 52 weeks, declined to 4.36% at the end of July 21 from 4.41% a week ago.

NTPC increased 2.5% to 166.40 rupees after the news that Chattisgarh State Electricity Board has offered the company to build partner for four power projects. Reliance Energy fell today, after gaining 2% in the previous session. Era Construction jumped 5% after receiving order from NTPC for 136 crore rupees for thermal power project in Andhra Pradesh.

IPO

Simplex Projects listed its initial public offering of 67.2 lakhs or 6.72 million shares at 185 rupees. The stocks closed at a premium of 47% to 272 rupees on its first day of trading on oversubscription of 85 times.

Gainers

Cement companies jumped for the second day in a row. ACC increased 1.7% to 1,002 rupees on top of 2% rise in the previous day’s trading. The company reported shipment increase of 15% to 1.6 million or 16.4 lakh tons of cement. Ambuja Cements shipment jumped 20%.

Grasim jumped 2% and UltraTech Cement increased 0.7% on the news that the parent company the Aditya Birla Group shipment gained 13% to 2.4 million or 24 lakh tons in July from a year ago.

GMR Infrastructure surged 9% after it selected Apollo Hospital to add a wing in its new airport at Hyedrabad. Apollo Hospital gained 4% to 508 rupees.

Real estate stocks rebounded sharply after correcting on the worries in the global markets. Orbit Corporation surged 10%, Indiabulls Real Estate increased 4.6%, and DLF regained 2.2%.

JSW Steel, part of O. P. Jindal group of companies, reported that steel production rose 18% to 2.37 lakh or 237,000 tons. The hot rolled coil production rose 9% and that for plates increased 15%. After the news that company stock declined 2.06% to 679 rupees. Jindal Stainless Steel, another group company, increased 2.1% to 157 rupees.


[R]9:00AM New York, 2:00PM Frankfurt – Shanghai climbs the wall of worries to reach a record high.[/R]

Asian markets closed higher in the region on the bank of rising indexes in New York and European trading. Shanghai led the regions gainers for the second day with a rise of 3.5% followed by a gain of 1.2% in South Korea and Taiwan, 1% rise in India and Thailand. Hong Kong added 0.4% and Australia edged a fraction higher. Philippines led the decliners in the region with a loss of 0.2% followed by fractional losses in Japan and Indonesia.

In Shanghai trading CSI 300 rose 3.7% to close at 4,598.38, fourth higher close in a row this week. Rising stocks in financial and banking, property, and consumer sectors lifted the average. The 6.8% gain of the week lifted the average to a record high. The Shanghai Composite Index gained 3.5% to close at 4,560.77. China Vanke jumped 7%, Merchants Bank soared its daily limit of 10%, and Shanghai Pudong increased 6%. Citic Securities, the largest financial broker soared 10% as well. China reported that new daily account openings in the July month averaged 122,000.

Lenovo Group first quarter revenue jumped 13% to $3.9 billion and pre-tax net income before restructuring soared to $123 million or 258%. The net income jumped to $67 million or an increase of 1,184%. Diluted earnings per share increased to 76 cents from 6 cents a year ago. The sales in Greater China form 39% of total sales jumped 14% to $1.5 billion and sales in the Americas form 29% of total sales. PC sales in the region increased 15%. With 19% sales in the Europe, Middle East, and Africa sales increased 22%. Shipments in Asia including India jumped 12% forming 13% of global sales.

Airlines and Shanghai International Airport jumped on the news that the industry returned to profitability of 4.6 billion yuan from a loss of 350 million yuan a year ago. There are 133 airports in the country and domestic passenger traffic has been increasing at 15% or more for the last five years.

[R]7:00AM New York, 8:00PM Tokyo – Nikkei closed 1.8% lower for the week. After the close Toyota reports 32% rise in earnings on sales gain of 16%.[/R]

Nikkei 225 in Tokyo closed or 4.25 or 0.03% to 16,979.86. For the week Nikkei lost 1.81% and Topix lost 1.6%. Despite a week of widening credit problems in the U.S. markets in Asia and Europe stabilized. The yen jumped above 119 for a dollar helping export sensitive stocks.

Sumitomo Realty & Development Company jumped 4.5% after the company reported first quarter earnings gain of 54% to 30 billion yen. The net income increase at the company has tracked rising real estate values in Tokyo and other locations in Japan. Central Tokyo has seen prices gain sharply in the last one year on tight inventory supplies. Mitsui Fudosan and Mitsubishi Estates gained 1.5%. Mitsubishi Estate income jumped three times on higher condo prices in Tokyo.

Asahi Breweries, Ltd reported its first half revenue gain of 1.2% to 672.6 billion yen and ordinary earnings fall of 10.2% to 26.6 billion yen. Net income declined 5% to 13.7 billion yen from a year ago. Net income per share was reported at 29.12 yen. Net income margin for the first half declined to 2.1% from 2.2% a year ago. The company guided for the fiscal year 2007 ending in Dec 31, 2007 net revenue gain of 2.9% to 1.448 trillion yen and net income gain of 0.5% to 45 billion yen.

Furukawa Electric fell 6% after reporting earnings decline of 40% in the second quarter. The maker of plastics, metals, and optical products in the fiscal year 2006 reported net revenue of 1.1 trillion yen and net income of 30 billion yen on a net margin of 2.7%.

Kubota Corporation reported first quarter revenue increased 6.3% to 269 billion yen and net income gain of 7% to 24 billion yen. Earnings per share in the quarter were reported at 93 yen or 76 American cents per ADS. Revenue growth in the quarter declined to 6.3% from 13.7% from a year ago. The company guided for the next quarter revenue gain of 0.4% to 560 billion yen and net income decline of 16.5% to 37 billion yen. For the fiscal year ending in March 2008 the company expects to generate net revenue of 1.14 trillion yen and net income of 76 billion yen.

The stock has underperformed in the last one year compared to its peers in machinery companies in Japan and its global peers in farm and machinery equipment.

After the close of regular trading in Tokyo market, Toyota reported first quarter earnings ending June 30. The earnings in the quarter jumped 32.3% to 491.5 billion, operating income gained 31.8% and net sales increased 15.7% to 6.52 trillion yen. The consolidated vehicle sales in the quarter jumped to 2.16 million, a rise of 71,000 units or more than 3% increase from a year ago. Vehicle sales in Japan declined 43,000 to 500,000 units, in the U.S. sales increased to 15,000 to 762,000, and in Europe 25,000 to 333,000. Asian sales jumped 29,000 to 222,000 in the quarter.

The company guided for the year ending in March, 2008 total sales of 8.89 million units generating 25 trillion yen sales with operating income of 2.25 billion yen, and net income of 1.65 billion yen.