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Thursday, August 02, 2007
Market pulls back after yesterday's crash
The Sensex slipped into the red immediately after a positive start, but rebounded as buying began at the lower levels. The market gained amid choppy trading as bargain hunting for blue-chips began, overlooking the weak Asian indices and yesterday's drop of over 600 points. The Sensex got a boost in the afternoon trades after some Asian markets, especially Japan and Taiwan, managed to recover. The sustained buying in capital goods, banking and realty stocks saw the index touch the day's high of 15,135. However, profit bookings in late trades saw the Sensex shed most of its gains and the index to touch yesterday's close. However, hectic buying at the lower levels helped the Sensex to recover and end the session on a firm note by gaining 50 points at 14,986. The Nifty closed the session at 4,356, up 11 points.
The breadth of the market was positive, with the gainers outpacing the losers in the ratio of 1.09:1. Of the 2,636 stocks traded on the BSE, 1,338 stocks advanced, 1,225 stocks declined and 73 stocks ended unchanged. Most of the sectoral indices closed with significant gains. The BSE CD index was the major gainer and soared 2.06% followed by the BSE Realty index (up 1.71%) and the BSE Bankex index (up 1.51%).
Most of the heavyweights gained on the BSE. Among the blue chips, SBI shot up by 2.87% at Rs1,593, Tata Steel soared 2.65% at Rs639,Reliance Communication surged 2.15% at Rs542, BHEL advanced by 2.13% at Rs1,699, Reliance Energy added 2.01% at Rs752, Maruti Udyog moved up 1.86% at Rs836, ACC scaled up 1.78% at Rs983 and Dr Reddy's Lab was up 1.37% at Rs631. Among the laggards, Wipro dropped 2.83% at Rs462, M&M slipped 2.59% at Rs676 and Tata Motors shed 2.23% at Rs652 while TCS, Infosys and ONGC fell over 1% each.
Consumer durables stocks were in the limelight and closed with strong gains. Gitanjali Gems jumped 6.13% at Rs270, Blue Star soared 5.03% at Rs291, Titan Industries surged 2.61% at Rs1132 and Videocon Industries added 1.47% at Rs373.
Over 2.60 crore IFCI shares changed hands on the BSE followed by Faccor Alloys (82.84 lakh shares), Reliance Natural Resources (74.10 lakh shares), Spice Telesystems (52.33 lakh shares) and IKF Technologies (38.28 lakh shares).
SBI clocked a turnover of Rs179 crore on the BSE followed by Everonn Systems (Rs154 crore), Reliance industries (Rs150 crore), IFCI (Rs146 crore) and Housing Development & Infrastructure (Rs143 crore).
Sensex settles just below 15,000
The market saw intense volatility throughout the day, on alternate bouts of buying and selling. It was going strong till mid-afternoon trade when profit booking emerged, dragging it lower. Most of the Asian markets stabilised after initial volatility while a majority of European indices were trading higher. Shares from real estate, cement and banking were in demand while those of IT and auto were offloaded.
The BSE 30-share Sensex rose 49.93 points or 0.33% at 14,985.70. It opened slightly higher at 15,022.87 and slipped to a low of 14,896.47 as selling began. However, the broad market index again started heading north to touch a high of 15,134.53 at 13:50 IST. The market came off higher level later.
Sensex oscillated in a range of 238 points for the day.
The S&P CNX Nifty rose 10.50 points or 0.24% at 4,356.35. The Nifty August 2007 futures settled at 4317, a discount of 39.35 points as compared to spot closing.
The market breadth, indicating the overall health of the market, eased as the day progressed. On BSE 1,390 shares advanced as compared to 1,275 that declined, while 57 remained unchanged. The breadth was much stronger in afternoon trade when the advance-decline ratio was 2:1.
The BSE Mid-Cap Index rose up 53.96 points or 0.84% to 6,515.42 while the BSE Small-Cap index gained 30 points or 0.4% to 7,805.46
Meanwhile, India's trade deficit in June 2007 widened to $7.33 billion, data released yesterday, 1 August 2007, showed. Imports surged 36.7% to $19.2 billion in June 2007, while exports rose 14% to $11.87 billion, over June 2006.
The turnover on BSE declined to Rs 4,419 crore from Rs 6656 crore on Wednesday, 1 August 2007.
The NSE F&O turnover was Rs 38783.38 crore as compared to Rs 55904.92 crore on Wednesday, 1 August 2007.
Among the Sensex pack, 16 advanced while the rest declined.
Auto stocks remained under selling pressure throughout the day, as the sentiment was dampened by poor monthly sales figures. The BSE Auto Index lost 0.51% to 4,747.08
India's top bus and truck maker Tata Motors slipped 2.26% to Rs 652. Its vehicle sales fell 6.6% in July 2007 to 42,098 units over July 2006. Sales of commercial vehicles dropped 3.8% to 20,705 units in July 2007 over July 2006. Exports fell 17% to 4,382 units.
India's top motorcycle maker Hero Honda Motors shed 1.36% to Rs 660 after it said on Wednesday, 1 August 2007, it sold 2,01,191 units in July 2007, down 14.5 % from 2,35,314 sold in June 2006. The announcement was made after trading hours.
Bajaj Auto slipped 0.17% to Rs 2284, after India's second-biggest motorcycle maker’s vehicle sales in July 2007 fell 7% to 185,890 units over July 2006.
Top utility vehicle maker Mahindra & Mahindra (M&M) declined 2.98% to Rs 673 on 3.30 lakh shares, despite its sales rising 46% in July 2007 to 19,163 units over July 2006. It was the top loser from the Sensex pack.
However Maruti Udyog rose 1.7% to Rs 835 on the back of 24.8% rise in total vehicles sales to 57,909 vehicles in July 2007 over July 2006. The company sold 52,839 vehicles in the domestic market in July 2007, a rise of 18.33% over the same period last year.
IT stocks were subdued today. The BSE IT index declined 1.32% to 4,649.11, and was the top loser among the sectoral indices on BSE. Infosys (down 1.33 % to Rs 1904), TCS (down 1.33% to Rs 1101), Satyam Computers (down 1.50% to Rs 462.65), and Wipro (down 2.70% to Rs 462.85) were trading lower. The Indian rupee eased on Thursday, 2 August 2007 as investors awaited cues from the stockmarket as to whether foreign funds would continue cutting holdings on worries of a global credit crunch and declining risk appetite. The partially convertible rupee was at 40.44/45 per dollar in early deals.
India’s largest commercial bank State Bank of India jumped 2.95% to Rs 1594, on 11.23 lakh shares. It was the top gainer from the Sensex pack. It is holding talks with potential partners for its non-life insurance venture. It is also keeping options open for going alone in the general insurance business. SBI also plans to set up a holding company to transfer its share holding in its insurance and asset management subsidiaries. The new holding company, valued between $5 billion to $7 billion, would eventually be listed.
The BSE Bankex was up 1.5% at 7,946.80. It has gained 3.44% in the last one month from 7682.64 on 1 June 2007. Other banking stocks also posted gains on bargain hunting. Dena Bank (up 1.77% to Rs 51.65), Oriental Bank of Commerce (up 3.35% to Rs 228), Punjab National Bank (up 1.66% to Rs 495.50), Bank of India (up 1.67% to Rs 243), Bank of Baroda (up 1.67% to Rs 292), AXIS Bank (up 0.36% to Rs 620) and ICICI Bank (up 0.86% to Rs 899) gained.
Banks are seen cutting deposit rates after the Reserve Bank of India (RBI) on Tuesday, 31 July 2007, raised the cash reserve ratio (CRR) by 50 basis points. The hike in CRR means effective increase in cost of deposits for banks. The deceleration in credit offtake implies that banks have to roll back high deposit rates being offered on tenures of one year and above. Banks now have to maintain 7% of their deposits with the RBI. On these CRR deposits, banks will receive interest only on 3% of the deposits at `bank rate’, which is 6%. No interest is paid on the balance 4%. As RBI does not pay any interest on the 4% deposits, banks’ margin is impacted to that extent.
Telecom pivotals - Reliance Communications (up 2.34% to Rs 543), Bharti Airtel (up 1.95% to Rs 879.75), gained on bargain hunting.
Dr Reddy’s Lab, India's only drug maker listed on the New York exchange, gained 1.30% to Rs 630.50 after the company said it had reached an important milestone in testing an anti-diabetic molecule which could become the first patented drug from India.
Cement stocks showed strength on fresh buying. India’s second largest cement producer ACC advanced 2% to Rs 985. ACC's cement dispatches jumped 14.68% to 16.4 lakh tonnes in July 2007 over July 2006.
Ambuja Cements gained 1.55% to Rs 131 after its cement dispatches rose 20% to 13.9 lakh tonnes in July 2007 over July 2006.
Grasim gained 1.28% to Rs 2885 while UltraTech Cement slipped 0.91% to Rs 895.65. The Aditya Birla Group said on Wednesday its cement shipments rose 13.1% to 24 lakh tonnes in July 2007 over July 2006. Grasim and UltraTech Cement belong to the Aditya Birla Group
Reliance Energy (REL), India's second largest power generation and distribution company in terms of sales, rose 2.27% to Rs 754 on reports that it has emerged as the sole bidder for a Damodar Valley Corporation (DVC) power project in the Purulia district of West Bengal.
India’s largest private sector company Reliance Industries (RIL) which had surged to a high of Rs 1839, pared gains and managed to end just 0.18% higher at Rs 1801.25, on 8.27 lakh shares. As per reports, the government is likely to clear the price quoted by RIL for its gas from the Krishna-Godavari basin without seeking to control the price.
Battered real-estate stocks which were worst hit in Wednesday’s meltdown, made a comeback today on bargain hunting. The BSE Realty index gained the most among the sectoral indices on BSE. It rose 1.71% to 7,457.79. Unitech (up 3.82% to Rs 534), DLF (up 0.61% to Rs 588.15), Orbit Corporation (up 4.45% to Rs 334.40) and Indiabulls Real Estate (up 2.24% to Rs 511.85), edged higher.
Some of the top gainers from small-cap and mid-cap space were Hitachi Home (up 13.97% to Rs 143.95), Shree Precoated Steels (up 10% to Rs 368.05), Sulzer India (up 10% to Rs 513), JK Lakshmi Cements (up 8.53% to Rs 154), and Selan Exploration (up 8.10% to Rs 108.30).
Basnat Agro (down 8% to Rs 44), Simplex Castings (down 5.58% to Rs 58.40), Zensar Technologies (down 5.26% to Rs 246.50), and Praj Industries (down 5.21% to Rs 195.50), were the top losers from small-cap and mid-cap space.
Power Finance Corporation gained 1.52% to Rs 176.90 on reports it has raised $180 million via private placement in US.
Punj Lloyd rose 0.74% to Rs 267 after its subsidiary bagged a Rs 666-crore contract in Singapore for sub-structural works at the Sentosa Integrated Resort Development.
Northgate Technologies rose 1.85% to Rs 1379 on fixing 3 September 2007 as the record date for the purpose of issue of bonus shares in the ratio of 1:1.
Dhanalakshmi Bank jumped 2.16% to Rs 73.40. Its promoter offloaded 4.68% stake to a German Bank -MM Warburg Bank (Schweiz), through secondary market operations recently.
India’s largest zinc maker Hindustan Zinc gained 0.55% to Rs 714 after it had cut zinc prices by 3.8% to Rs 1,63,500 a tonne with immediate effect. It has also cut lead prices by 6.9% to Rs 1,37,200 per tonne.
India’s fourth largest term lending institution in terms of revenue IFCI jumped 8.71% to Rs 56.70 on media reports that Citigroup, Lehman Brothers, BNP Paribas, Deutsche Bank and Barclays are interested in buying 26% in it
Nitco Tiles was down 0.84% to Rs 219 coming off sharply from an initial 6% surge. RBI said on Wednesday, 1 August 2007, FIIs could buy up to 49% in the company after the firm's board passed a resolution to this effect.
Civil engineering firm Hindustan Dorr-Oliver was locked at the 5% upper limit of Rs 113.75 after the company said it has got an order worth Rs 70 crore from Bharat Oman Refineries.
Royal Orchid Hotels slipped 3.51% to Rs 181.40 after it went Rs 6 per share (60% on face value of Rs 10 per share) ex-dividend from today.
NIIT slipped sharply from its high of Rs 1048 to end marginally lower at Rs 980 after it fixed 31 August 2007 as the record date for the purpose of sub-division of 1 equity share of Rs 10 each into 5 equity shares of Rs 2 each. The company made this announcement after market hours on 1 August 2007.
Asian markets were trading mixed amid high volatility. Shanghai Composite (up 2.49% to 4,407.73), Nikkei 225 (up 0.67% to 16,984.11) and Taiwan Weighted (up 0.66% to 8,950.57) gained. Hang Seng (down 0.05% to 22,443.56), and Seoul Composite (down 0.18% to 1,853.07) slipped.
Wall Street shot higher in a last-minute buying yesterday, 1 August 2007, after careening through a session made turbulent by ongoing concerns about US home loans and the credit market. The Dow gained 150.38 points, or 1.14%, to 13,362.37. Broader stock indicators also advanced. The Standard & Poor's 500 index rose 10.54 points, or 0.72%, to 1,465.81, and the Nasdaq Composite index was up 7.60 points, or 0.30%, to 2,553.87.
US crude prices surged to a record high of $78.77 a barrel on Wednesday, 2 August 2007 after the US Department of Energy reported that US crude stocks sank by 6.5 million barrels in the week ended 27 July.
The Bank of England today, 2 August 2007 left interest rates on hold at 5.75% as expected. The European Central Bank (ECB) also meets today, 2 August 2007, to set interest rates amid growing concern that an expanding subprime credit crunch in the US may have knock-on effects in Europe. ECB is expected to keep its refinancing rate unchanged at 4%, but may signal an increase to 4.25% in September 2007.
Morning Call
Market Grape Wine :
In House :
Nifty at a supp of 4305 and 4257 with Resis at 4398 and 4447
Intra day calls: Buy Tisco with a TGT of 634
Buy LT with a TGT of 2550 and a SL of 2465
F&O: Buy Century text above 702 with a TGT of 724 and a SL of 692
Buy Petronet above 58 with a TGT of 64 and a SL of 55.50
Out House :
Markets at a support of 14898 & 14786 levels with resistance at 15151 & 15243 levels .
Buy : SBIN at dips
Buy : RIL & Rcomm at dips
Buy : Gacl & LNT
Buy : REL & ABB at dips
Buy : EKC & Educomp
Buy : Aban & IOLBroad
Buy : DishTV , TvToday & ENIL
Buy : JP & Century
Buy : HDIL & IBulls
Dark Horse : RIL , SKumar , SBIN , RComm , DishTV , REL , Century & IBulls
India Daily Results Update
Strategy: KS-Ownership Navigator, June 2007 quarter changes (qoq)
Results
National Thermal Power Corp.: 1QFY08: Prior period revenue and forex gains explain the higher profit
MICO: 2QCY07 recurring profits grow 4% yoy
VSNL: Performance of subsidiaries improve significantly. Maintain OP
Nestle India: 1QCY07: Strong topline growth, increase estimates on higher growth; retain IL
AIA Engineering: Rupee punishment for aiming global; maintain rating and target
Rico Auto Industries: 1QFY08 net profit declines 61% despite increase in margins
Updates
Shriram Transport Finance: Used-vehicle finance drives profit growth, retain OP
Automobiles: Jul 07 sales: New launches drive passenger car volumes as 2-wheelers continue to bleed
India Daily Results Update
Market may open weak
The market is likely to remain volatile on the back of weak Asian indices in current trades and a positive close in US markets. Traders may book profits on every rise after yesterday's bloodbath, which may create high volatility in the later part of the day. However, bias remains positive, investors should trade with caution as profit bookings may drag the index further down. Among the local indices, the Nifty could test 4390 on the upside and on breaching this it is likely to touch 4450 and it may slip to 4320 on the downside. The Sensex has a likely support at 14900 and may face resistance at 15135.
Major US indices rallied in the late session on Wednesday, as the Dow jumped 150 points at 13362, while the Nasdaq moved up by 8 points to close at 2554.
Except few all the Indian ADRs traded weak on the US bourses. Patni Computer received a heavy blow and tumbled 5.56% while MTNL and VSNL slipped over 2% each. Among the other laggards Infosys, Wipro, Tata Motors, HDFC Bank and Rediff were down around 1% each. However, Dr Reddy's and ICICI Bank bucked the trend and gained around 1% each.
Crude oil prices slipped further, with the Nymex light crude oil for September delivery was down by $1.68 to close at $76.53 a barrel. In the commodity space, the Comex gold for December delivery slipped by $3.40 to settle at $675.90 an ounce.
Bargain hunting back in Wall Street
Financial stocks help indices finish in green in an extremely volatile day
A volatile US market witnessed an extremely choppy session today, Wednesday, 1 August, 2007. Fresh news about Bear Sterns kicked off things in a very sour note. But a late turnaround in financial sector helped the indices register good gains at the day’s close. Big swings in crude prices were also a major reason for today’s choppiness.
The only positive news during the day that cheered investors was National Association of Realtors reporting contract signings on existing homes climbing 5% in June, the largest advance in three years.
The Dow swung within a two hundred and sixty point range before finishing considerably up. The Dow Jones Industrials Average today rose by 150 points at the end to close at 13362. Tech-heavy Nasdaq gained 7.6 points to close at 2553. S&P 500 added 10.5 points to close at 1465.
Twenty-eight out of the thirty Dow stocks closed in green. Merck, Walt Disney and AT&T were the main Dow winners. Honeywell and Alcoa were the only Dow losers.
After market closed, Walt Disney declared its result. It handily beat Wall Street’s expectations. But shares slipped in after hours trading. The growth of the company was fueled by higher advertising rates at the ABC television network and sales of merchandise from its films.
Good economic data get ignored in a volatile market
When market opened in the morning, all the three indices were trading lower. Of the six sectors trading lower, materials paced the way closely followed by financials. Reports that another Bear Stearns hedge fund has halted redemptions kicked things off on a sour note.
The Institute of Supply Management (ISM index) fell to a lower than expected 53.8% in July; but since any reading above 50 signals growth and the prices paid component fell to 65% from 68%, sellers did not react much to the data.
But soon, market turned direction and Dow was trading up by 80 points at one time. But volatility was today’s mantra for the entire day. Within a couple of hours, indices again turned negative and Dow was down by almost 100 points at one time. This continued for the rest of the day. But in the final hours of trading, a rebound in financial stocks pushed up the indices and all three ended in the green. .
Merck shares rose almost 3% today after reports that vaccines made by the company are being promoted by U.S. health officials to increase potentially life-saving immunization for preteens.
Crude slips by more than 2% even after reaching a new intra-day high
Crude oil futures today hit a new intra day high but eventually slipped and closed almost 2% lower. Before the retreat, it rose as high as $78.77 surpassing the previous all-time electronic high for a benchmark contract of $78.40 in mid-July of last year.
Increase in refinery utilization for the week ended 27 July 2007 contributed to a 600,000-barrel climb in motor gasoline supplies to 204.7 million barrels. This pushed down gasoline prices which in turn had a negative impact on the rising crude price and it closed lower for the day.
At the New York Stock Exchange today, volume hit 2.4 billion shares, with declining stocks topping advancers 19 to 14. At the Nasdaq, 2.9 billion shares were exchanged, and decliners beat advancing stocks 3 to 2.
Apart from a host of companies eg, Bausch & Lomb, Southern Copper etc. reporting their earnings tomorrow, on the economic front, Initial Claims will be released at 8:30 ET, while June Factory Orders will hit the wires are 10:00 ET.
Intraday Calls
Nifty (4346) Supp 4282 Res 4410
Buy ICICI Bank (891) SL 885 Target 903, 907
Buy Ranbaxy (368) SL 363 Target 376, 378
Buy Uni Phos (320) SL 315 Target 328, 330
Sell IVRCL Infra (376) SL 381 Target 369, 366
Sell GAIL (325) SL 329
Target 317, 315
Think Global, act local
The whole of the global economy seems to be based on supplying the cravings of five per cent of the world's population.
The long-term India story may appear intact. After a thrashing on Wednesday, the bulls will pray for a turnaround Thursday. According to a newspaper report some months ago, on a global scale, the average US citizen uses far more than his or her fair share of the planet's resources - consuming more than four times the worldwide average of energy, almost three times as much water and producing more than twice the average amount of rubbish and five times the amount of carbon dioxide. What is the relevance of all this you may ask? But the Indian markets are back to blindly following the global cues. Nobody has a clue how bad the trouble in the US housing market possibly is or how big will be its fall out on the world's largest economy and the rest of the world.
And then, one also has to keep an eye on the yen, which has started to rise. This might lead to the unwinding of the so-called 'carry trades'. The Japanese currency rose against the dollar and euro as local investors sold foreign-currency denominated assets during the current global meltdown. Private equity deals and the big-ticket M&As, backed by leveraged funding, is also likely to take a hit. Plus you have the highly risk-taking creatures called the hedge funds, some of whom are facing huge losses. Bear Stearns has seen two of its hedge funds collapse last month and has stopped redemptions in a third one. Australia's Macquarie Bank has also warned of losses in two of its funds. All these factors may affect investments to global equity markets, especially emerging markets like India.
Back to the Indian markets, the critical issue at this juncture is how FIIs react to the situation. If they continue to unload their investments, expect more pain. On the flip side, if they stay put, the market will find some support after a selloff of a few hundred points more. Trying to ascertain the direction of the market in the near term appears futile. Stay invested in quality stocks. In fact, if you have the money pick up more at dips.
And now what you would like to hear. We expect a bounce back, on the back of the 150-point rally in the Dow Jones. But, bear in mind that the sentiment still remains jittery. If one looks at the Asian markets this morning, they haven't quite set the counters on fire. So, it would be wise to just stay on the sidelines for a while before taking a fresh plunge.
US stocks rallied late in the session on Wednesday as a rally in computer and consumer shares lifted the Dow Jones Industrial Average 150 points in the last 20 minutes of trading. Apple and Cisco climbed and computer shares added the most to the advance in the Standard & Poor's 500 Index.
The Dow erased a 79-point drop spurred by concern that mortgage losses are spreading after Bear Stearns suspended withdrawals from a hedge fund. The S&P 500 climbed after falling below its 200-day moving average for the first time in a year.
The S&P 500 rose 10.54 points, or 0.7%, to 1465.81. The Dow added 150.38 points, or 1.1%, to 13,362.37. The Nasdaq Composite Index increased 7.6 points, or 0.3%, to 2553.87.
US stocks bounced into the black briefly after the Institute for Supply Management reported that nationwide manufacturing activity fell more than expected and the National Association of Realtors' pending home sales index jumped more than expected in June.
Oil prices weighed in following the government's weekly report on crude inventories, which showed a huge drop last week. US light crude for September delivery sank $1.68 to $76.53 a barrel after reaching a peak of $78.77. The front-month contract was trading 17 cents higher at $76.70 a barrel in the extended trading in Asia.
Treasury prices fell, raising the yield on the benchmark 10-year note to 4.79% from 4.74% late on Tuesday. The dollar gained against the euro and was little changed versus the yen. COMEX gold for December fell $3.40 to $675.90 an ounce.
The Chicago Board Options Exchange Volatility Index rose to 26.22, the highest since April 2003. Higher readings in the so-called VIX, derived from prices paid for S&P 500 options, indicate more risk in stocks and are sometimes read as bullish signs. The VIX ended the day at 23.67.
European shares posted sharp losses. The German DAX 30 closed down 1.5% at 7,473.93, the French CAC-40 tumbled 1.7% to 5,654.30, the UK's FTSE 100 shed 1.7% to 6,250.60. The pan-European Dow Jones Stoxx 600 index gave up 1.5% to 374.37.
Major Latin American equity markets closed mixed. Brazil's Bovespa finished up 51 points, 0.09%, at 54, 233.87. But Mexico's IPC index fell 611 points, or 2% to 30,048.37. The benchmark index, however, finished above its lowest levels.
Asian markets are very choppy this morning. The Nikkei in Tokyo is up 80 points at 16,951 while the Hang Seng in Hong Kong is down 70 points at 22,385. The Kospi in Seoul is down 4 points at 1852 and the Straits Times in Singapore was up 13 points at 3445.
Markets tanked wiping off its previous sessions gains as global markets crumbled on concerns over the subprime mortgages and credit markets in the US. Huge down fall in the Asian markets further dampened the sentiments as the Nikkei in Tokyo lost 377 points while the Hang Seng in Hong Kong closed 729 points lower dragging the benchmark Sensex to hit a low of 14910.
RIL, ICICI Bank, L&T, Bharti Airtel and Infosys were the major lagging movers. However, Dr Reddy’s Lab, Cipla, Maruti, Ambuja Cement and Bajaj Auto were the top leading movers among the 30-scrip’s of Sensex.
All the key sectoral indices ended in deep red. BSE Realty index was down 6.64%, BSE Metal index was down 4.81% and Capital Good index was down 4.69% were the top losers. Even the Mid-Cap and the Small Cap indices lost over 3%.
Finally, BSE 30-share Sensex plunged 615 points to close at 14935, recording its biggest fall since April 2. NSE-50 Nifty lost 183 points to close at 4345 touching an in intra-day high of 4532 and a low of 4339.
Indian Hotel pared its gains as the scrip lost by 2.3% to Rs136. The company has reported good set of numbers for the first quarter. The company announced its Q1 result net profit at Rs547.6mn (up 39%), revenue at Rs3.64bn (up 21.3%). It is also planning to raise funds for expansion, including a Rights Issue. The scrip touched an intra-day high of Rs144 and a low of Rs134 and recorded volumes of over 15,00,000 shares on NSE.
Bajaj Auto was down by 3% to Rs2286 after the company July sales fell by 7% to 185890 units. The scrip touched an intra-day high of Rs2350 and a low of Rs2271 and recorded volumes of over 2,00,000 shares on NSE.
TVS Motors slipped by 1.7% to Rs57 after the company’s July Motorcycles sales were at 44392 units (down 3.5%). The scrip touched an intra-day high of Rs58 and a low of Rs56 and recorded volumes of over 2,00,000 shares on NSE.
Maruti also was in reverse gear as the scrip was down by 2% to Rs829. The company announced its July sales at 57909 units (up 24.7%). The scrip touched an intra-day high of Rs835 and a low of Rs806 and recorded volumes of over 6,00,000 shares on NSE.
M&M lost nearly by 5% to Rs693. The company announced its July sales at 19163 units (up 45.8%). The scrip touched an intra-day high of Rs730 and a low of Rs690 and recorded volumes of over 13,00,000 shares on NSE.
Cadila was trading firm in a falling market, the scrip was up by 1.2% to Rs355 after the company yesterday announced its Q1 result with net profit atRs739mn (up 26.5%) and net sales at Rs5.72bn (up 28.2%). The scrip touched an intra-day high of Rs365 and a low of Rs347 and recorded volumes of over 1,00,000 shares on NSE.
Sugar stocks were under pressure on back of selling pressure. Renuka Sugar dipped by 6% to Rs588, Balrampur Chini was down 2.2% to Rs66; Bajaj Hind declined 1.8% to Rs151 and Sakhti Sugar declined by 3% to Rs79.
PSU oil companies lost ground as crude oil prices were ruling very close to record levels. Oil prices in New York climbed to a one-year high above $78 per barrel. BPCL lost by over 4% to Rs307, HPCL was down by over 5% to Rs244 and IOC slipped by 1.3% to Rs398.
Cement stocks sharply slipped on back selling pressure. Heavyweight ACC dropped by over 9.5% to Rs962, Ambuja Cement was down by over 2.5% to Rs128, Kesoram Industries lost by over 6% to Rs463 and Mangalam Cement slipped by 3% to Rs164.
Mid-Cap index slipped by 3.82%. Hexaware dropped by over 8.5% to Rs127, Crompton Greaves was down by 6% to Rs275 and Patni plunged by 7.5% to Rs436 were the top losers among the Mid-Cap stocks.
IT stocks also were on the receiving end led by fall in heavyweight Infosys as the scrip was down by 2.2% to Rs1932, Wipro lost over 4.6% to Rs474 and Satyam Computer was down by 2.5% to Rs470. Hexaware, Patni and HCL Tech were the major losers among the Mid-Cap stocks.
Realty stocks also were badly beaten up. DLF slipped by 4.3% to Rs585, Unitech dropped by 8.3% to Rs511, Sobha declined by over 5% to Rs845 and Akruti declined 1.5% to Rs506Fund Activity:
FIIs were net sellers of Rs12.56bn (provisional) in the cash segment on Wednesday. At the same time, local institutions were net buyers of Rs9.35bn. In the F&O segment, FIIs were net sellers at Rs21.27bn.
On Tuesday, FIIs pumped in Rs4.34bn from the cash segment.
Major bulk Deals:
Reliance Capital has sold Ambika Cotton; Morgan Stanley has purchased Ansal Infrastructure, Apollo Hospitals, Aurobindo Pharma, GVK Power and Shriram Transport; Citigroup has picked up SMS Pharma while Morgan Stanley has sold the stock; Citigroup has sold Standard Industries; Merrill Lynch has sold United Breweries.
Insider Trades:
GNFC: Reliance Capital Asset Management Limited has purchased from open market 500000 equity shares of the company on 1st August, 2007.
Lower Circuit:
Amar Raja Batteries, Easun Reyrolle, Hindustan Oil Exploration, Zuari Industries, Tanla, Indus Fila, Bartronics, Evinix, Kothari Products, IOL Broadband, Taneja Aerospace, Kalindi Rail, Vakranjee Software, Bag Films, IID Forgings, Zenith Infotech and BF Utilities.
Upper Circuit:
Jai Corp, Marksons and Jaybharat Textile.
Delivery Delight (Rising Price & Rising Delivery):
Cadila and Marico.
Abnormal Delivery:
SBI, Kesoram, Reliance Capital, Jet, Hindalco, IDFC, ICICI Bank, VSNL, Lupin, Bharti Airtel, Voltas, SAIL, Grasim and Century Textiles.
India's June exports rise 14% to $11.87bn, imports rose 36.7% to $19.2bn
Gujarat Ambuja Cements July sales at 1.39mn tons (up 20%)
DCM Shriram Consolidated gets Rs7bn contract
Godrej Consumer plans to acquire companies, aims to buy low-cost hair colour companies overseas
Bajaj Auto July sales at 185890 units (down 7%)
Maruti July sales at 57909 units (up 24.7%)
TVS Motors July Motorcycles sales at 44392 units (down 3.5%)
Hero Honda July sales at 201191 units (down 15%)
M&M July sales 19163 units (up 45.8%)
Grey Market Premium
Alpa Labs - (Discount. The IPO was subscribed only 1.1 times.)
Omaxe - Rs 100.
Omnitech Info - Rs 110.
Zylog - Rs 320.
IVR Prime Urban - Rs 12.
Central Bank - Rs 38.
SEL - Rs 15.
Asian Granito India - Rs 18.
Purvankara - Rs 40.
Refex - Rs 18.
Take Solutions - Rs 270.
Stocks that gained when all others lost
The scrip of Jai Corp. Ltd isn’t among the most tracked shares on Bombay Stock Exchange’s (BSE) frontline stocks.
However, it has one unique distinction: It is the only scrip in BSE-500 that gained on four of the five days that witnessed the steepest falls in the Sensex. BSE-500 includes the top 500 firms on the exchange in ter-ms of market capitalization.
Jai Corp. had a market capitalization of Rs3,672 crore on 1 August and its shares rose from Rs3,777 each to Rs3,966 on Wednesday, even as the BSE’s benchmark 30-stock index, Sensex, fell by 3.96% (all the 30 stocks in the Sensex fell).
BSE-500, the broader index of the exchange, also fell 4.08% on a day when 472 of its constituent scrips declined and only 28 gained. And on 27 July, when the Sensex fell 3.42%, Jai Corp.’s shares gained 5%.
Jai Corp.’s distinction doesn’t automatically make it a good buy, say analysts.
“The stock has been on an upside because it owns a chunk of land in a controversial special economic zone in Mumbai. Besides this, I don’t see a fundamental reason for the upside in this stock,” says head of research of a broking house who didn’t wish to be identified.
Jai Corp. is based in Nanded, Maharashtra, and primarily operates in three business segments: steel, plastic processing and spinning. For the financial year ended 31 March, it reported a total income of Rs342 crore, up 63% from the previous year. It also reported a profit after tax of Rs71 crore, up 927% from the previous year. An average of 10 million shares of the company change hands every day and Jai Corp. recently announced a stock split: to split a share with a face value of Rs10 per share into 10 shares with a face value of Re1 per share.
Jaybharat Textiles, a textiles firm based in Gujarat, is another company whose shares seem resilient: it gained on 27 July and on 1 August.
It may look like a sound investment strategy for investors to look at scrips that rose while all around them fell, but experts do not share that sentiment. Most are wary of stocks that show this kind of behaviour.
“Such a drastic movement in few stocks in an otherwise bearish market is always suspicious,” says Devesh Kumar, managing director, Centrum Broking.
Amitabh Chakraborty, president at Religare Securities, says the gainers in this kind of market will always be broad-based across sectors.
“Especially in BSE-500 stocks, there will always be a set of stocks which may go up despite the falling market—the reason being that the traders normally use these stocks as a collateral for taking position in the futures and options market,” he added.
Markets Crash
The markets opened in the red today on the back of weak global cues. The day continued to disappoint and the Sensex closed 615 points lower and the Nifty, 183 points. ACC, Reliance Energy, Hindalco were among the biggest losers.
With selling across sectors, all sectoral indices also closed in the red with the realty index the worst hit.
The market breadth showed 1,951 declines and 570 advances on the BSE and 993 declines and 143 advances on the NSE.
Asian indices also closed in the red while Europe opened in the red.
If you remember, last Thursday global markets crashed on the back of rising interest rate concerns caused by high inflation and rising oil prices. The fall was initiated by the US market where the concern was that higher corporate borrowing costs would curb the rapid pace of takeovers and aggravate the sluggish environment for home sales and the continued defaults in sub-prime loans.
Today's fall is said to be attributed to negative news flow on subprime motgage worries from the US.
The RBI & You
The Reserve Bank of India Governor, Dr Yaga Venugopal Reddy, has taken three significant steps in the first quarter credit policy review.
1) The Cash Reserve Ratio (CRR) has been hiked by 50 basis points from 6.5% to 7%. This is the amount that banks need to deposit with the RBI.
2) The repo (7.75%), reverse repo (6%) and bank rates (6%) have been left unchanged.
3) The ceiling of Rs 3,000 crore currently set on the daily reverse repo has been withdrawn.
Now banks are expected to review their credit and deposit rates following the CRR rate hike. The hike in CRR would suck out an estimated Rs 15,000 - 16,000 crore from the banks. Though they will not act hastily and lower rates in a hurry, bankers have already hinted at a downward revision of deposit rates.
The CRR rate hike will leave the banks with lesser funds available for loans. Hence, their margins are likely to come under pressure. So one may expect deposit rates to lower, but not loan rates.
Till date, for every CRR hike, banks raised the interest charged on loans to preserve their margins. Since interest rates on loans are already high, they may no longer want to increase them. Secondly, credit growth is slowing down and banks have plenty of money that they mobilised in the past year ever since rates were moving up. So this time around, they may lower the interest paid to depositors.
Sensex falls 3.9% on global jitters
Stock market indices in India and other major Asian markets plunged on Wednesday as investors worried about the real magnitude of the US credit woes scrambled to exit.
The Sensex, the benchmark index of the Bombay Stock Exchange, lost more than 615 points, or 3.9%, and ended the day at 14,935.77. The broader Nifty index of the National Stock Exchange lost more than 183 points, or 4.04%, to close at 4,345.85.
Foreign institutional investors (FIIs) were net sellers to the tune of Rs1,255 crore on Wednesday, while domestic institutional investors were net buyers of about Rs935 crore worth of equities, according to data available on the Bombay Stock Exchange’s website. FIIs were net buyers on Tuesday after selling well over Rs1,000 crore each of Indian equities in the previous two trading sessions.
However, FII action in the futures and options (F&O) segment of the market tells the real story—one of flagging interest in Indian stocks in the short term at least. FIIs were net sellers of about Rs1,000 crore worth of index futures on Tuesday, according to data from the website of stock market regulator Sebi. Interestingly, FIIs have been big sellers in the futures market for the past several days. On Friday, 27 July, FIIs were net sellers of more than Rs6,400 crore worth of stock and index futures.
The situation was much worse in some other markets, such as Taiwan, where foreign investors sold about $4.5 billion worth of stocks in the last four trading days.
Stock markets across Asia floundered on worries that the US sub-prime loans (or risky loans) woes were spreading into the prime mortgage market, after American Home Mortgage Investment Corp. stated it had run out of both cash and borrowing facilities. Banks outside the US were affected, too, as they were exposed to either sub-prime loans in the US housing market or to other loans that had been impacted by the re-pricing of risk.
All major Asian indices lost ground on Wednesday. The Taiwanese index, down more than 4.2%, was the biggest loser. Representative indices of China, South Korea and Indonesia, apart from India, also lost close to 4%. While indices in Thailand and Singapore lost more than 3%, those in Philippines and Malaysia shed more than 2%. The Japanese index was also down more than 2%. Macquarie Bank of Australia warned investors of up to 25% loss in two high-yield funds, due to its indirect exposure to the US sub-prime loans market.
Macquarie Bank shares closed 10% lower on Wednesday.
Vanessa Donegan, head of Far Eastern equities and manager of the Asian fund at London-based Threadneedle Investment Services Ltd, says: “Risk premiums have been raised across the world causing volatility in Asian markets. These (Asian indices) have risen strongly this year and investors are sitting on profits which are a relatively easy sell if they need to cover positions elsewhere.” Donegan adds that nothing has changed in the region in terms of fundamentals.
“Economic growth remains robust and companies are delivering strong earnings growth. Therefore, we would regard any falls in markets as an opportunity to add to holdings on a medium-term view,” she adds. Threadneedle Investment Services Ltd manages assets worth more than $138.2 billion across the world.
Kitty Chan, a director and fund manager at Hong Kong-based CASH Asset Management Ltd, a subsidiary of CASH Financial Services Group Ltd, says the mortgage problems in the US are taking a toll on Asian equities. There are no fundamental problems in most of these markets, she adds. “Global funds are doing risk-arbitrage. The impact of these problems could continue for a few weeks. We expect huge volatility to continue in Asian markets during this period.”
Andrew Holland, managing director of Merrill Lynch in India, says Wednesday’s dip was a continuation of the severe bout of risk aversion across the globe. “Global credit concerns are forcing investors to book profits and exit high-risk assets such as emerging market equities,” he adds.
Traditionally, when equity markets go through bad times, institutional investors seek safe havens in assets such as government bonds and gold. Interestingly, gold prices have also fallen across the globe in the past few days. “Normally, investors flock to low-risk bonds or gold when equities are down. However, this time, the investors are just pulling out cash. There is uncertainty on how long these problems are going to extend. It (cash) could be deployed back to equities, but may take some time,” says Holland.
It’s not only the stock markets that have been hit. According to the latest global property and REIT report from Standard & Poor’s, property indices in the US and Europe have taken a hit while that in Asia remained relatively flat during the second quarter of 2007. The S&P/Citigroup US property index was down 9.4%.
Emerging market currencies, too, have lost ground against the dollar and the Indian rupee ended at 40.45/46 a dollar, down from Tuesday’s closing price of 40.3725/3800.
However, most analysts and fund managers expect markets to pull back. Richard J. Hunter, head of equities at UK-based Hargreaves Lansdown Stockbrokers Ltd, says: “The general unease over credit markets is enough to keep the market on nervous alert for a little while yet. However, we remain positive on the market for the rest of the year once this uncertainty has been defined.”
Cues from India’s derivatives market, however, do not give a positive picture for the next trading session. Nifty futures for August were selling at a discount of 65 points at the end trading Wednesday, indicating heavy selling interest.
Market Close: Mayhem across and in India too.
Fall again in the market with global meltdown. After yesterday rally, the euphoria was outshined with the gloabl cues as it remained weak throughout the day in the red zone. US brougth in the jitter with its weakness looking at subprime market followed by weakness in Asia and European markets which further dampened the sentiment as selling intensified on the bourses. Nikkei tumbled 2.19%, Singapore's Straits Times was down by 3.27%, Taiwan's Taiwan Weighted down 4.26%, Hang Seng down by 3.15% and South Korea's Seoul Composite down 3.97%. China's Shanghai Composite was down 3.81%.
As the day progressed, Indices lost further ground with the Sensex waiving off by as much as 500 points. In the final hour of trading market thought of recovering some of the gains but selling towards the end deepened the wounds and forcing the Sensex to lose more than 600 points at the end. Selling was seen across all board as no sectors were spared from the heat. The Realty index was the worst hit as it was down by 6.64% followed by the Metal, Capital Goods and Oil & Gas indices which drifted down by 4.81%, 4.69% and 4.4% respectively. The other indices lost 3% - 4% from their previous closing levels. Midcap and Smallcap indices tumbled 3.82% and 3.65% respectively.
Sensex Slipped to end down by 615 points at 14935.77. Weighing on the Sensex were losses in ACC (965.9,-9 percent), Rel Energy (737.3,-7 percent), Hindalco (159.15,-6 percent), Ranbaxy (367.8,-6 percent) and RCVL (530.6,-5 percent).
Financial Technologies reported a phenomenal jump on a consolidated basis in net profits for the quarter ended June 2007. During the quarter, the company experienced an 87% rise in profits to Rs 71.5 cr from Rs 38.2 cr in the quarter ended June 2006. Total income rose 2.01 times to Rs 165.3 cr for the quarter ended June 2007 from Rs 82.2 cr for the same period last year. On standalone basis the company posted a net profit of Rs 60.8 cr for the quarter ended June 2007 as compared with Rs 10.1 cr for the quarter ended June 2006, an increase of 6.02 times. For the quarter ended June 2007, the company's total income jumped 4.43 times to Rs 102.8 cr compared with Rs 23.2 cr for the quarter ended June 2006. The total number of trading licenses has grown to 184,000 as on June 30, 2007. The company has promoted India's leading multi commodity futures exchange (MCX) and inter bank forex trading platform (IBS-Forex). MCX stands as the third largest bullion exchange in the world after New York Mercantile Exchange (NYMEX) and Tokyo Commodity Exchange (TOCOM).
Hindalco reported its first quarter results which were subdued. The topline grew by 9.5% YoY driven by higher aluminium and copper sales. The company had 6% YoY growth in revenues of the aluminium division which couldn?t help to sustain the PBIT levels as it was hit by the 10% YoY drop in segmental PBIT that really impacted the company's performance. The continued strong performance of the copper division which was up by 12% YoY did provide some support to the overall performance of the company. As far as the overall EBITDA margins of the company are concerned, barring power and fuel costs all the other three cost heads witnessed significant appreciation and which pulled down the margins by a significant 290 basis points. Growth in the bottomline was seen at 0.2% YoY. The stock ended the day with a 6% decline.
Even as the market fell sharply, Everonn Systems India settled at Rs 478 on BSE with a 242% premium over the offer price of Rs 140. The huge premium on listing was due to 131 times subscription of the IPO as the company received total bids for 52.58 crore shares compared to total issue of 40 lakh shares. The Everonn Systems India scrip debuted at Rs 245 on BSE and touched a intraday high of Rs 560 and a low of Rs 245 during the day. About 71.77 lakh shares were traded on the counter on BSE. Everonn Systems India is a fully integrated knowledge management, education and training company.
Technically Speaking: Weak global cues made the market open gap down by 200 points. Sensex could not recover from the gap as it sliped further. Sensex made a high of 15334 and low of 14911 with the Declines out numbering advances. The declines stood at 2147 against the advances of 533. Volumes were good as the market churned Rs 6267 cr. Sensex has moved into a short term downtrend with supports at 14800 and 14450. Having left unfilled gap on the higher side, there is chance of some bounce back up to 15200..15400 levels.
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