Eveninger - Sep 19 2007

Eveninger - Sep 19 2007

Market Mantra

Market Mantra

Experts on the Markets

The Sensex closed above 16,000-mark for the first time, and market experts feel more gains will follow with some hiccups on the way.

Though nobody is taking a call on where the index will be in the near-term, experts, across-the-board, continue to be bullish on Indian equities. Nimesh Kampani, chairman, JM Financial "The basic issue is that the way the markets have gone up. The flow of FII money will increase in India and that is the expectation of the market. With the interest rates being cut, the appreciation of rupee, and looking at the rise in Asian markets today, it can be assumed that there has been a flow of FII money into the Asian markets. Sectors such as infrastructure, cement, steel and power look good, as we expect growth in these sectors. Rakesh Jhunjhunwala, billionaire investor and stock trader I’m and I have been bullish on the Indian markets. There is no change in my view S Ramesh, COO, Kotak Investment Banking Markets will be driven by liquidity, and money will move into markets like India where the growth story remains intact. The rise from this level will be driven by sectors like banking, construction and engineering. We are just coming out of a global meltdown, and the rise from here will be sector-specific and global-event driven. Krishnamurthy Vijayan, CEO, JP Morgan Asset Management We believe that since India is one of the best investment opportunities in the next few years, we will continue to attract investments - onshore and offshore. We have been consistently overweight on sectors that capture the Indian growth story, and have been underweight on auto and downstream oil. Vijai Mantri, CEO, Deutsche AMC We are very positive on India. The Indian growth story is completely driven by domestic demand. While there may be some bouts of volatility, I don't see any constraint on corporate earnings growth. We are very bullish on capital goods, engineering and power. I think Indian markets are fairly valued but India may see a rate cut taking cues from FOMC. Alok Vajpayee, CEO, Dawnay Day AV The Indian market is following the global trend. I will not be surprised to see it at a much higher level. Some ups and downs will be there, but we will continue to see markets moving up. There could be a rate cut in India. There is lot of momentum in liquidity in Indian markets and I think they are at a fair valuation. Investors should look at specific companies rather than across-the-board buying. Second quarter results will be in line with our expectations. Ramesh Damani, member, BSE Markets have clinched 16,000 with a huge bang. Bulls are going to be in command. It reflects the strength of the Indian economy. We can say that it is India's time under the sun. The road from here onwards looks very good. India's domestic story is being driven by corporate fundamentals and earnings that are very strong. I am bullish on domestic sectors like logistics, cement, banking and underweight for the time being on technology. May be by Diwali this year, we can expect a rate cut. Amar Ambani, Vice President (research), India Infoline The 50bps rate cut by the Fed, the first in over four years, has keyed up global markets as well as Indian equities with investors breathing a sigh of relief. Talking about Indian markets in particular, the Fed cut, along with control over inflation and an improved political situation, has helped boost enthusiasm. A look at the advance tax figures also suggest that quarterly numbers are likely to be healthy. The feel-good factor of the Fed verdict will continue for some more time with increasing inflows in India where there are some very good investment opportunities. Suyash Choudhary, Fund Manager, StanChart Asset Management By delivering a 50 bps cut in the federal funds rate yesterday, the Fed has aimed at countering the detrimental effect on the broader economy arising from the tight credit conditions. The move has been accompanied by a cut by 50 bps on the discount window, which will further facilitate liquidity transmission into the financial system. While bonds world-wide are still cautious, equities have reacted very positively to the Fed move. Given that the move will help in restoring global financial stability, it is likely to positively affect domestic asset markets as well. Ritesh Jain, Fund Manager (Debt), Principal Mutual Fund The change in the Fed policy reinforces our near-term view on the benign interest rate environment. Inflation risk should continue to subside in this environment and will lend an element of flexibility to policy. The foreign flows in emerging markets may look up putting pressure on the domestic currencies to appreciate. The central bank may have to intervene aggressively to stem the uptrend in local currencies adding to domestic liquidity. While equity flows into emerging markets are likely to be good, the markets will also be watching for the corporate earnings in the current quarter. We expect the markets to remain strong. With the global interest rate environment turning benign and with most of the prominent central banks changing their stance in favor of growth than their concern on inflation, we may see even the domestic yield curve shifting lower over a period of time. Kaushal Sampat, Chief Operating Officer, Dun & Bradstreet India The cut in the Fed rate is likely to have some impact on the Indian economy. The widened interest rate differential between India and the US could result in a further surge of capital inflows (especially FIIs), which may lead to an appreciation of the rupee. The RBI may be under pressure to intervene in the forex market to preclude appreciation of the rupee beyond its comfort zone. The RBI could consider a decline in interest rates given the recent dip in the growth rate of industrial production and inflation being at a 17-month low thereby allowing the excess liquidity to flow into the economy through increased credit off take. Sandeep Nanda, executive vice president (research), Sharekhan The 50bps rate cut by the US Fed was ahead of expectation and thus a positive surprise. This prompt action has allayed concerns about a slowdown and will be positive for equities across the world including India. We expect cyclical and interest rate sensitive sectors such as banks, autos, metals to do well. There will now be greater pressure on the RBI to cut interest rates in India, which should boost earnings growth in FY2009. Kunj Bansal, CIO (portfolio management services), Religare With the FOMC announcing a 0.5% cut in the rate, the debate of an impending slowdown in the US has only increased. Moreover, the exact magnitude of the subprime crisis is yet to play out. Signals from Europe and Japan are not as salutary as they were in July. Crude has resumed its relentless pursuit of a three-figure price after a brief pause. These developments portend a steady increase of lows to those economies, which are essentially growing due to the domestic demand factor. Therefore, India would stand to benefit as a consequence. That does not mean that everything is fine in the domestic space and that we are likely to see an out performance across sectors. The political undercurrents are far from positive. Further, the latest set of IIP numbers has revived the talk of a possible slowdown in the industrial growth going forward. The performance of the monsoon, on the other hand, has given sufficient reason for cheer. In essence, what we are saying is that whereas directionally there is nothing much to worry as far as the way forward is concerned, and the markets shall continue their northward journey. However, intermittent blips cannot be ruled out.

Market Gossip - Patni Computers

We are hearing that Patni management is playing some fun and games with their shareholders. They want to sell or not ?

We are hearing that deal might happen at around Rs 700 but looks like they don't want to give out any statements or make as if nothing is happening

Disclaimer: This is just gossip, so you need not believe it.

Aztec Software

Aztec Software

Fed Cut Impact, Positive, Negative Sectors

Impact of fed rate cut

• Overall positive for emerging equity market due to increase in foreign institutional flows

- Liquidity concerns that emerged due to sub-prime crisis will get offset

• India to be among the out performers in the emerging markets

- Lower dependency on exports

- Domestic consumption growth remains intact (more so backed by good monsoon)

- High real interest rates

- RBI is in good position to counter any adverse developments with contained inflation

• Rupee to strengthen following dollar weakness

- Positive for FII in view of higher dollar return

- Negative for export oriented sectors

• Fed action more aggressive than the expectation highlights risk of US slowdown which will adversely affect global demand

- Commodities likely to see correction on the base of demand slowdown

We continue to recommend overweight on domestic consumption and infrastructure related plays and underweight on export oriented plays.

Our top picks are ITC, SBI, PNB, Bharti, L&T and DLF among large caps.

Positive for sectors

• Industrials/Infrastructure
• Financial services
• Real estate
• Telecom
• FMCG

Negative for sectors

• IT
• Textiles
• Auto components
• Metals

Neutral

• Health care
• Consumer discretionary
• Cement

Fed cuts 50 bps

The US Federal Reserve cut its FED Funds Target rate by 50 bps from 5.25% to 4.75% indicating - "Today's action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time".

In a related move it also cut the Discount rate by 50 bps to 5.25%.

Although the Fed Funds futures were indicating a 50.0% probability of a 50 bps cut, the broader market was expecting a 25 bps cut. So a 50 bps cut is definitely something to cheer about - and how!

The Dow gained 2.5% rising by 335 points. The 2 Year treasury yield crashed 15 bps to end at 3.98%. The dollar got knocked out to an all time low flirting with the 1.40 to the Euro mark. Financial stocks heaved a huge sigh of relief and posted strong gains across the board.

It is also great news for the 'export to US' dependent emerging economies - the Nikkei, Hangseng and the Kospi are up by 3.0% each. India would follow suit.

Concerns Remain - Inflation hawks have a different take on it -

With crude oil over $82/Brl, food inflation picking up, metals trending higher and a general higher inflation scenario around the globe - the 50 bps cut didn't enthuse the inflation hawks. They immediately reacted by sending the 30 yr Treasury bond yield up by 5 bps. Even the 10 year bond yield was up 5 bps after the decision. The US treasury yield curve is at its steepest. The spread of the 10 year yield over the 10 year inflation protected securities widened to 2.35%, an indicator of the expected inflation. Even Gold hit a 16 month high trading at $725 tracking the fall in dollar value and the overall concerns on inflations.

The euphoria should continue for a day or two and then what - Does it indicate the start of a long drawn easing of interest rates in the US?

The US economy has shown moderations in the first half of this year. Housing activity continued to worsen and employment slackened. Though retail sales showed a pick up last month, the general trend was one of a slowdown. Consumer confidence has been shaky. The after effects of the sub-prime mess threatened to derail the economic activity further. Credit conditions remain tight and mortgage lending activity has slowed down. The Housing industry is crucial to the US economy and the Fed sees a major risk to the economy on its deteriorating state.

One key reason for the rate cut would be to manage the amount of interest rate resets on mortgage loans happening in early 2008. Almost $520 bn of loans are due for repricing in the first half of 2008. A lower benchmark interest rate and a stable house price scenario then, would definitely aid in managing the re-pricing, without too much risk of higher delinquencies and foreclosures.

Foreclosures are bound to be higher at a time when house prices are falling and the EMI's are increasing. This cut in interest rates would lead to lenders lowering their PLR's and thus softening the relative impact of an interest rate reset. The lower lending rate could also spur new purchases of houses stabilizing the house prices.

Given this bleak scenario, the FED probably had no alternative but to cut interest rates and soften the impact. A 25 or 50 bps holds no relevance, I guess. It might need to do more if the problem worsens.

But does it alleviate the Credit market problem - ?

Risk aversion continues in the credit market with slack demand for structured assets. O/s Asset backed commercial paper (ABCP) issuance has dropped by 30.0% and rollovers are non-existent, indicating a lack of investor interest. So in such a scenario, does a rate cut help?

Look at it this way - the credit market problem was never a problem of borrowers; it was a problem of lenders. So if a lender was reluctant to lend at a higher rate yesterday, what is his motivation to lend today 50 bps lower??

The resurgence of the asset backed market is crucial for the housing activity. Mortgage lenders need MBS buyers. With the current risk aversion scenario, the appetite for MBS tranches of sub-prime borrowers seem remote. In 2006, Sub-prime, Alt-A and Home equity loans accounted for 50% of total mortgage loans and a substantial chunk of it was packaged and sold off as MBS.

Moral Hazard -

On the other hand the rate cut opens up the question of 'Moral hazard' - i.e by cutting rates, the FED is sort of bailing out the institutions and funds. As one Bank of Tokyo economist put it the FOMC now stands for 'Friend of the Market Committee'. There are concerns even on how the cut in rates could again spur the reckless lending in search for higher returns.

Where does all this leave us?

The markets are already pricing in further rate cuts by the end of the year. The rationale being that the FED has never in its history done a rate change and then sat still. They will follow it up with some more cuts.

Despite the 50 bps cut, future rate actions would be data dependent. This was an exceptional situation and with a 50 bps increase the FED has conveyed to the markets their concerns on economic growth being affected by problems in the financial markets. It would have to be data dependent going forward. A rough calculation on the normalized Fed Funds rate (as per the Taylor rule) points to a rate around 4.75%.

A big concern is inflation - dollar depreciation, oil and food prices should keep price levels under pressure. Also, recent retail sales and consumer confidence have been stronger than expected. Over and above that - US CPI Inflation has lot of positive base effects in the coming months. And even a stagnant index would lead to higher readings on the headline inflation.

We would go for a hold on rates in October for further clarity on the economic condition.

Would other Central Bank follow suit -

If not rate cuts, they certainly seem to have put on hold their tightening spree. The BOE and ECB held rates steady even before the Fed eased and the BOJ, which was most expected to raise rates, held steady today morning. The only major economy on a tightening spree is China.

But both the BOE and ECB are more inflation hawks than pro growth. The problems in the UK housing market has forced even the BOE to lend liquidity support and guarantee retail depositors. But we don't see any rate easing by the BOE and ECB in the short term. And also their economies weren't under as much stress as the US.

And the RBI?

Way to early to even think of a benchmark interest rate cut. The growth is strong, Credit off-take is picking up and concerns remain on inflation. Depending on the liquidity and credit off-take situation the RBI has the leg room to alter the CRR and the SLR ratios in the coming months.

Indian markets and Asset prices -

NO surprises from the way Indian asset prices would move post the rate cut. Equities are up 3.5%, the rupee at 40.25 is down 25 paise from yesterday's close, Indian long bond yields are down 5 bps and so is the swap curve.

The cut is seen to be alleviating the credit problem and also increase liquidity leading to higher flows in to emerging markets and thus to India.

But we believe that the long term impact of the sub-prime problem would be a reduction in leverage levels. Northern Rock, the UK mortgage lender, in a liquidity mess now, has an equity base of ₤3 bn and an asset base of ₤113 bn. Leverage of 37 times!! Most of the US and European investment banks also have leverage of around 20 times. Hedge Funds have known to leverage around 15-20 times on their capital. The industry would move to tighter lending standards over time and central banks would tighten prudential norms. This would impact the overall levels of leverage and liquidity.

Remember -

Leverage = Liquidity!!

Via Arvind Chari- Fund Manager, Quantum Liquid fund

Biggest-ever rally, Sensex ends above 16K

The Sensex opened with a bang at a new all-time high of 15,941 - up 272 points from its previous close - on the back of positive global cues.

The US Fed, on Tuesday, cut its benchmark rate by 50 basis points, for the first time in four years, to 4.75%. A move that resulted in a strong rally across the globe.

The buying momentum was so strong that the Sensex soon crossed a new landmark of 16,000, and went on to extend gains as the day progressed. The index hit an all-time, intra-day high at 16,335 - up 666 points from the previous close.

The Sensex finally ended with its biggest-ever single-day gain of 654 points at 16,323.

The index took only 52 trading sessions to move from 15,000 to 16,000.

While the BSE Mid-cap index advanced nearly 2% to 7117, the Small-cap index added 1% to 8871.

The BSE Realty index surged 5.8% to 8465. The Bankex and Oil & Gas indices rallied nearly 5% each to 8691 and 8924, respectively.

The market breadth was positive - out of 2,850 stocks traded, 1,541 advanced, 1,233 declined and 76 were unchanged.

BIG MOVERS...

All the Sensex stocks ended with gains today.

HDFC and HDFC Bank zoomed nearly 8% each to Rs 2,354 and Rs 1,326, respectively.

Bharti Airtel soared 6.5% to Rs 886. ONGC surged 6% to Rs 902, and Maruti was up 5.8% at Rs 926.

Reliance rallied 5.5% to Rs 2,173. Reliance Communications and ICICI Bank gained 5% each at Rs 564 and Rs 970, respectively.

Tata Steel and Bajaj Auto moved up 4.7% each to Rs 745 and Rs 2,512, respectively.

While Mahindra & Mahindra and SBI advanced 4.5% each to Rs 741 and Rs 1,770, respectively, Tata Motors and ITC added 3.7% each to Rs 722 and Rs 187, respectively.

Hindalco and Infosys were up 3% each at Rs 159 and Rs 1,853, respectively. ACC surged 2.7% to Rs 1,153.

MOST ACTIVE COUNTERS

DLF topped the value chart with a turnover of Rs 255.70 crore followed by Reliance (Rs 227 crore), ICICI Bank (Rs 148.70 crore), Reliance Capital (Rs 137.65 crore) and Renuka Sugar (Rs 127.80 crore).

IKF Technologies led the volume chart with trades of around 1.85 crore followed by Ispat Industries (1.82 crore), Balrampur Chini (1.08 crore), IFCI (89.70 lakh) and Himachal Futuristic (87 lakh).

SENSEX ZOOMS PAST 16,000….
Landmark	Strike Date	No of Days	Close	Gain/Loss
16,000	19-Sep-07	52	16,323	654
15,000	06-Jul-07	144	14,964	102
14,000	05-Dec-06	26	13,938	63
13,000	30-Oct-06	135	13,024	117
12,000	20-Apr-06	19	12,040	144
11,000	21-Mar-06	29	10,905	-36
10,000	06-Feb-06	48	9980	237
(Gain/Loss is the net change over previous day)

Post Market Commentary

The market surged to close the session in a positive territory as BSE Sensex closed higher by 653.63 points at 16,322.75 and Nifty grew by 186.15 points to close at 4,732.35. Today the market rallied as US Federal Reserve announced a 50 basis poinits cut in fed funds rate to 4.75% .The BSE mid cap and Small cap closed firm as it was up by 131.58 points and 90.11 points at 7,116.61 and 8,871 respectively. The market breadth was strong with 1541 stocks advanced and 1233 stocks declined. The total turnover on BSE crossed Rs 5,500 crore mark. Shares from real estate pack surged on the back of interest rates have peaked for the time being.
BSE Metal index surged by 461.22 points to close at 12,546.34 as SAIL (6.71%), Sterlite (5.35%), Tata steel (4.75%), Hindalco (3.75%) and JSW steel (2.73%) closed in green.
BSE bankex index surged by 400.91 points to close at 8,691.45 as HDFC (7.94%), HDFC bank (7.83%), ICICI bank (4.90%), PNB (4.90%) and SBI (4.52%) closed in green.
BSE oil & gas index grew by 425.29 points to close at 8,924.11 as GAIL India (6.30%), ONGC (5.95%), Reliance industries (5.56%), IPCL (5.10%) and RPL (2.44%) closed higher.
BSE Capital goods index advanced by 249.96 points to close at 14,112.99 as ABB (2.01%), Siemens (1.91%), L&T (1.88%) and BHEL (1.50%) closed in green.
BSE IT index closed higher by 105.80 points at 4,491.21 as Infosys (2.96%), TCS (2.03%), Satyam (1.84%), HCL tech (1.19%) and Wipro (0.93%) closed in green.
BSE Health Care Index closed up by 42.66 points at 3,704.27 as Glenmark (2.96%), Sun pharma (1.68%), Ranbaxy (0.73%), Dr Reddy lab (0.55%) and Cipla (0.59%) closed in positive.
BSE FMCG index increased by 42.95 points to close at 2,140.91 as ITC (3.72%), Bata (3.13%), Tata Tea (2.08%) and HUL (1.26%) closed higher.

Reliance - the most valued company

Mukesh Ambani-led Reliance Industries, the country's most valued firm, on Wednesday became the first company to attain a market capitalisation of Rs three trillion as its share price surged 5.6 per cent.

Shares of RIL rose Rs 114.50 to touch an all time high of Rs 2,185 before ending the day at Rs 2,172.90. The company's market cap stood at nearly Rs 3,02,800 crore at the end of trading.

Besides RIL, a number of other blue-chip stocks recorded strong gains, pushing the benchmark Sensex to a new peak above the 16,000-level.

ONGC, the second most valued firm, soared by nearly six per cent, attaining a market cap of Rs 1,92,820 crore.

Bharti Airtel's market cap soared to Rs 1,68,200 crore following a 6.5 per cent rise in its share price. The company ranks third in terms of market capitalisation.

NTPC, the fourth in market value ranking, had a market cap of Rs 1,56,250 crore, while real estate giant DLF became the fifth largest in terms of market cap. DLF's market cap stood at about Rs 1,21,600 crore, followed by Anil Ambani group's Reliance Communications at Rs 1,15,300 crore.

Sensex clocks new high, above 16,300

The benchmark index Sensex rose to its record high after the Federal Reserve slashed its benchmark lending rate by half a percentage point to keep the US economy growing. The Sensex had a gap-up opening of 272 points on the back of positive global cues led by an advance in banking stocks. Maintaining its upward bias thereafter, extensive buying in banking, metal and oil stocks propelled the index to touch an all-time high of 16,335, up 666 points for the day. The Sensex finally ended the session with a gain of 4.17% or 654 points at 16,323. The Nifty also moved up and touched its record high of 4,739 and closed the session at 4,732 up by 4.09% or 186 points.

The breadth of the market was positive, with gainers outnumbering losers in the ratio of 1.23:1. Of the 2,850 stocks traded on the BSE 1,541 stocks advanced, 1,233 stocks declined and 76 stocks ended unchanged. Among the sectoral indices, the BSE Realty Index flared up by 5.77%, the BSE Oil & Gas Index rose 5%, the BSE Bankex Index moved up by 4.84% and the BSE Metal Index was up 3.82%, while the other indices ended with the gains of over 1-3%.

All the Sensex stocks ended at higher levels. Housing Finance major HDFC flared up 7.94% at Rs2,354, HDFC Bank shot up by 7.83% at Rs1,326, Bharti Airtel zoomed 6.46% at Rs886, ONGC moved up by 5.95% at Rs902 and Maruti scaled up 5.76% at Rs926. Reliance Industries surged by 5.56% at Rs2,173, Reliance Communication jumped by 4.96% at Rs564 and ICICI Bank gained 4.90% at Rs970. Tata Steel at Rs745, Bajaj Auto at Rs2,512, M&M at Rs741, and SBI at Rs1,770 rose by over 4% each.

Realty stocks were in demand and attracted strong buying support. DLF spurted by 8.76% at Rs713, Indiabulls Realestate shot up by 6.77% at Rs525, Purvankara Projects flared up 5.75% at Rs415 and Parsvanath Developers jumped by 5.38% at Rs338.

Over 1.84 crore IKF Technologies shares changed hands on the BSE followed by Ispat Industries (1.82 crore shares), Balrampur Chini (1.08 crore shares), IFCI (89.72 lakh shares) and Himachal Futuristic Communication (86.97 lakh shares).

Value wise, DLF clocked a turnover of Rs255 crore followed by Reliance Industries (Rs227 crore), ICICI Bank (Rs148 crore), Reliance Capital (Rs137 crore) and Renuka Sugar (Rs127 crore).

Sensex posts biggest ever point rise in a single day; soars 654 points

The market soared to record closing with high turnover. It opened with a bang and kept on advancing during the course of the trading session as buying continued for index pivotals. Short covering might also have propelled the market higher to some extent. The total turnover on BSE crossed Rs 7000 crore mark. While the BSE Sensex settled above 16,300, the S&P CNX Nifty closed above 4,700

Shares from across sectors and market capitalisation participated in the rally which was triggered after the US Federal Reserve announced a higher than expected 50 basis points cut in fed funds rate to 4.75% from 5.25% on Tuesday, 18 September 2007, easing concerns about housing slump driving the world's largest economy into recession. Prior to this, it had hiked rates for 17 consecutive times in the span of four years.

Asian markets, which opened before Indian market, rallied today, 19 September 2007, after the Fed decision. All European markets which opened after Indian market were also trading with gains.

The 30-shares BSE Sensex surged 653.63 points or 4.17% at 16,322.75. This is the biggest single-day point gain in Sensex. It opened with a sharp 271.67 point upward gap at 15,940.79 and advanced further to hit an all-time high of 16,335.30. Its previous all-time high was 15,868.85 hit on 24 July 2007.

Sensex surged 2,333.64 points or 16.68% to 16,322.75 from a recent low of 13,989.11 on 21 August 2007, in just 21 trading sessions.

The S&P CNX Nifty up 186.15 points or 4.09% at 4,732.35. It also struck an time high of 4,739. The Nifty September 2007 futures settled at 4,747, a premium of 8 points as compared to spot closing

The BSE Mid-Cap index rose 1.88% to 7,116.61 after hitting an all time high of 7,120.91. The BSE Small-Cap index hit an all time high of 8,943.23. It settled 1.03% higher to 8,871.00. But both these indices underperformed the Sensex

The total turnover on BSE crossed Rs 7,000 crore mark. It amounted to Rs 7,405 crore as compared to Rs 5,618.94 crore on Tuesday, 18 September 2007.

The NSE F&O turnover was Rs 68,643.65 crore as compared to Rs 45,069.25 crore on Tuesday, 18 September 2007.

All the sectoral indices on BSE posted gains. Interest rate sensitive sectors like banking, real estate, auto dominated gainers.

BSE Bankex (up 4.84% at 8,691.45), BSE Realty index (up 5.77% to 8,464.54), BSE Oil and Gas Index (up 5% at 8,924.11), outperformed the Sensex.

BSE Auto Index (up 3.49% at 5,094.31), BSE PSU index (up 3.48% to 7,642.77), BSE FMCG Index (up 2.05% at 2,140.91), BSE Metal Index (up 3.82% at 12,546.34), BSE Capital Goods Index (up 1.80% at 14,112.99), The BSE Consumer Durables index (up 1.25% to 4,743.75), BSE Health Care Index (up 1.17% at 3,704.27), BSE IT Index (up 2.41% at 4,491.21), and BSE TecK index (up 3.42% to 3,619.93) were underperformers

All the 30-members from Sensex pack advanced.

India’s largest listed cellular services provider by sales Bharti Airtel jumped 6.93% to Rs 890.20 on 2.91 lakh shares after its Sri Lankan unit signed a $150 million contract with China's Huawei Technologies Co to build and manage mobile infrastructure in the island nation over three years. It was the top gainer from Sensex pack.

Bank and financial shares rallied on the reckoning that the Fed move could put pressure on RBI to loosen its monetary policy. India’s top private sector mortgage lender in terms of revenue Housing Development Corporation (HDFC) surged 6.83% to Rs 2330. The stock eased form its all time high of Rs 2415 hit earlier during the day

HDFC Bank, the country’s second largest private sector bank in terms of net profit soared 6.83% to Rs 1314

State Bank of India, the country’s largest banking entity by net profit jumped 4.52% to Rs 1770. It topped the list of advance taxpayers, after it paid reportedly paid Rs 1,050 crore in the June-September quarter, which is nearly 50% more than the tax paid during the corresponding period last year.

India’s second largest bank by net profit, ICICI Bank jumped 4.44% to Rs 966.10. As per reports it paid Rs 450 crore advance tax for the June-September 2007 period. The bank had paid the same amount for the corresponding period last year.

India’s largest private sector entity by market capitalisation and oil refiner Reliance Industries (RIL) surged 5.99% to Rs 2181.70 on 10.59 lakh shares. It struck an all time high of Rs 2185. As per reports its subsidiary - Reliance Logistics (RLL) is planning to set up logistics parks within all the upcoming special economic zones (SEZs). The Reliance logistics parks will cater to the entire range of logistic requirements of the SEZs. RIL has reportedly paid Rs 650 crore in the June-September 2007 quarter. The tax outgo during the June-September period last year was about Rs 450 crore.

Oil and Natural Gas Corporation, the country’s largest oil exploration company by revenue surged 5.89% to Rs 901 after its Chairman R.S. Sharma said the company may consider a bonus issue and a share split in the future. He did not give a time frame for bonus issue and stock-split.

Infosys Technologies, the nation’s second largest software services exporter rose 3.14% to Rs 1856.55 on rumors the firm is interested in acquiring UK-based Sage Group. Infosys has denied the reports further clarifying that it also isn't negotiating with Cap Gemini SA about buying any part of the company.

Maruti Suzuki India, the country’s top car-maker by sales vaulted 5.11% to Rs 920.50 on reports that company will set up an auto component park with Japan's Futuba Industrial Company. Maruti will hold a 49% stake in the joint venture. This will be Futuba’s first project outside Japan

India’s second largest bike maker Bajaj Auto rose 4.55% to Rs 2510. It has reportedly paid Rs 120 crore for the second quarter of the current fiscal. The company has paid Rs 102 crore as the first installment during the quarter ending June 2007.

India’s second largest cellular services provider by sales Reliance Comunications, rose 5.11% to Rs 564.75 after its subsidiary Flag Telecom reportedly signed a five-year agreement with UK-based Vanco to increase its presence across 81 countries worldwide.

Sugar shares were star of the day’s trading session as they surged on frenzied buying after Agriculture Minister Sharad Pawar said the government plans to give more fiscal incentives to sugar mills. All of them saw a phenomenal spurt in volumes.

Dwarikesh Sugar (up 20% to Rs 66.60), Sakthi Sugar (up 20% to Rs 92.70), Triveni Engineering (up 22.68% to Rs 135.50), Balrampur Chini Mills (up 24.31% to Rs 83.60), Shree Renuka Sugars (up 24.68% to Rs 686.10), and Bajaj Hindustan (up 21.76% to Rs 178.50) surged. The government will detail the new financial incentives in 10 days, Pawar said today.

As per reports, sugar mills may be allowed to produce ethanol directly from cane juice, instead of molasses, to lower dependence on sugar prices. The South Asian nations may require oil refiners to double the ethanol level in gasoline to 10% from October 2008.

DLF was the top traded counter on BSE with total turnover of Rs 255.19 crore followed by Reliance Industries (Rs 226.36 crore), ICICI Bank (Rs 226.36 crore), Reliance Capital (Rs 134.16 crore), and Shree Renuka Sugars (Rs 127.42 crore).

Shares from real estate pack surged. Indiabulls Real Estate (up 6.60% to Rs 523.60), Unitech (up 3.91% to Rs 292.65), HDIL (up 2.92% to Rs 644) and Parsvnath Developers (up 5.75% to Rs 338.90) surged.

DLF galloped 8.91% to Rs 714.25 on reports that the company is getting into the retail of luxury brands and is in talks with some well-known retail chains, including Georgio Armani, Versace and Dolce Gabbana. DLF is in talks with 10-12 brands. Also another set of reports stated that DLF will tie up with a foreign major Carrefour for the supermarket business at a later stage.

Nagarjuna Construction Company surged 10.30% to Rs 240.70 after the company in consortium with POSCO E & C of South Korea bagged an engineering, procurement and construction contract valued at Rs 1558 crore from Steel Authority of India (Sail) for IISCO steel plant at Burnpur, West Bengal.

Jubilant Organosys surged 4.70% to Rs 305 after it signed a five-year multi million dollar contract with Switzerland based-Syngenta to supply chemical compounds used in manufacturing of medicines and agricultural products. The new contracts will start from early 2008.

Engineers India (EIL) jumped 6.82% to Rs 621.50. It soared 20% to Rs 582 yesterday 18 September on market talks that it is expected to bag a contract related to oil exploration. However the company denied such rumors.

The first batch of advance tax figures hint improved corporate earnings for the second quarter ended September 2007. Advance taxes are paid in four installments — in June, September, December and March. The June and September installments usually constitute about 15% and 25% respectively of the total advance tax payable in a fiscal.

European markets which opened after Indian market were trading with gains. Key benchmark indices from United Kingdom (up 2.20% to 6,621.70), Germany (up 2.10% to 7,734.35), and France (up 2.43% to 5,683.95), advanced.

Asian markets surged today, 19 September 2007 tracking overnight gains on Wall Street. Hong Kong's Hang Seng (up 3.98% at 25,554.64), Japan's Nikkei (up 3.67% at 16,381.54), Singapore's Straits Times (up 3.35% at 3,594.36), South Korea's Seoul Composite (up 3.48% at 1,902.65) and Taiwan's Taiwan Weighted (up 0.30% at 8,926.50) surged.

Wall Street shares rallied yesterday, 18 September 2007 after the Federal Reserve cut its benchmark interest rate by a larger-than-expected 0.5%. The Dow Jones industrial average soared 335.97 points, or 2.51%, to 13,739.39. This was its biggest surge since 2 April 2003. The blue-chip index is now only about 1.9% below its record close of 14,000.41, reached in mid-July. The Standard & Poor's 500 index rose 43.13 points, or 2.92%, to 1,519.78. The Nasdaq Composite index gained 70 points, or 2.71%, to 2,651.66.

Crude oil climbed above $82 a barrel on Wednesday, 19 September 2007 near a record reached a day earlier after the US Federal Reserve slashed interest rates to calm worries over economic growth ahead of peak winter fuel demand. US light crude for October delivery rose 82 cents to $82.33 a barrel, after hitting a record of $82.38 yesterday, 18 September 2007. London Brent crude gained 72 cents to trade at $78.31 a barrel.

Nifty September 2007 futures hits all time high above 4700

Futures settle at premium

The Nifty September 2007 futures settled at 4,747, a premium of 8 points as compared to spot closing of 4,735.35. Nifty September 2007 futures also hit an all time high of 4749

This is the first time Nifty September 2007 futures settled at a premium as compared to spot closing for September 2007 series. It only indicates that short covering has taken place at lower levels.

The NSE F&O turnover was Rs 68,643.65 crore as compared to Rs 45,069.25 crore on Tuesday, 18 September 2007.

Reliance Capital September 2007 futures settled at premium, at 1515, compared to the spot closing of Rs 1509.20. It was the most active contract with turnover of Rs 1917.10 crore.

Renuka Sugars September 2007 futures settled at premium, at 692.10, compared to the spot closing of Rs 685.

However Reliance Industries September 2007 futures settled at discount, at 2174, compared to the spot closing of Rs 2180.

In the cash market, the S&P CNX Nifty up 186.15 points or 4.09% at 4,732.35. It also struck an time high of 4,739.

Trading Calls

Buy Yes Bank with a stop loss of Rs 172 for a short-term (3 Months) target of Rs 205.
Buy Uco Bank with stoploss of Rs 35 for target of Rs 53.
Buy Dena Bank with stoploss of Rs 60 for target of Rs 79.
Buy Aptech with stoploss of Rs 368 for a short-term (3 Months) target of Rs 470.

Daily Strategist - Sep 19 2007

Daily Strategist - Sep 19 2007

Sensex - 16000 :-)

Cheers - Party Party Party!

Reliance - Big Boy

The Bombay Stock Exchange’s benchmark 30-stock index, Sensex, has, over the past year, moved more on account of one single scrip, Reliance Industries Ltd (RIL), than the benchmark indices of 13 markets in Asia, Europe and the US.
The diversified Indian conglomerate, which enjoys about 13.8% weightage in the Sensex, has contributed more than 40% of the total gains made by the benchmark index in the past one year. That’s more than the contribution of the company whose scrip enjoys the largest weightage in each of the 13 other indices considered.
Indices are meant to be representative of the stock market, and are a proxy for a country’s economy. Their dependance on a single scrip makes them less representative of the larger market.
A stock’s weightage is simply its share of the index in terms of its market capitalization. Some indices such as the Sensex are calculated using free-float market capitalization. RIL had a free-float market capitalization of Rs1.41 trillion on 17 September, while all the Sensex constituents put together had a free-float adjusted market value of Rs10.25 trillion on the same day, giving it a weight of 13.8% in the index.
RIL’s stock price went up about 80% compared with the Sensex, which gained little more than 22% during the past 12 months.
South Korea’s Samsung Electronics Co. Ltd had the opposite effect of RIL on the index of which it was a part. The stock, which lost about 19% in the past one year, dragged down the Kospi.
Fanuc Ltd of Japan, the largest manufacturer of industrial robots, which has the highest weightage in the Nikkei, the benchmark index of the Tokyo Stock Exchange, was the second biggest contributor, accounting for more than 31% of the index’s gains in the past one year. Australia’s BHP Billiton Ltd, the world’s largest mining firm, ranks third in the list, contributing more than 22% of the growth of ASX-200.
Other notable contributors among the Asian markets were Singapore Telecommunications Ltd and Telecomunikasi Indonesia Tbk PT. Both the telecom firms enjoy the biggest weightage in the Strait Times and Jakarta Composite, the indices of Singapore and Indonesia, respectively, and contributed just above 10% to their respective indices.
In the US, International Business Machines Corp. (IBM), which has the largest weightage in the Dow Jones Industrial Average (DJAI) contributed about 14% of the index’s gains in the past one year. Oil major Exxon Mobil Corp. contributed more than 9% to the S&P 500 index. While IBM’s stock price rose about 40% in the past one year, Exxon gained more than 33%.
In Europe, another oil major BP Plc., the stock with the highest weightage on FTSE 100, the key European index, dragged down the growth of the index as its stock price slid from last year’s levels by 1.3%.
Similarly, in Asia, Hong Kong’s financial major HSBC Holdings Plc., eroded the gains of Hang Seng, the country’s benchmark index, falling by more than 7% during the past one year. As a result, HSBC’s weightage on the Hang Seng went down from about 25% in September 2006 to the current 14.4%.
The stock price of Industrial & Commercial Bank of China, the world’s largest bank in terms of market capitalization, had gone up by 110% since getting listed on the Shanghai Stock Exchange in October 2006. However, the Chinese benchmark index went up a staggering 212%, during the past one year. The bank’scontribution to this over the past year could not be calculated because it wasn’t listed in 2006.

Crude prices skyrocket

Crude prices close above $81 for first time as Fed cuts interest rate by half percentage point

Crude oil future prices surpassed $81/bbl at today’s close of regular trading and crossed $82/bbl in the after hours electronic trading. Prices got a boost after Federal Reserve cut interest rate by half a percentage point. Traders perhaps anticipated that this will boost energy demand across the country.

A potential storm risk in the Gulf of Mexico and speculation about falling inventories of fuel and fuel products in the past week also fuelled up crude price.

For the day ending Tuesday, 18 September, 2007, crude-oil futures for light sweet crude for October delivery closed at $81.51/barrel (higher by $0.94/barrel or 1.2%) on the New York Mercantile Exchange.

Today, the Fed lowered its benchmark interest rate by a half point to 4.75%, the first cut in four years, to help sustain economic growth in the world's largest oil-consuming nation.

Brent crude oil for November settlement rose 61 cents (0.8%) to $77.59 a barrel on the London-based ICE Futures Europe exchange.

In the after hours trading, crude oil for October delivery climbed as high as $82.38 a barrel in electronic trading.

For tomorrow, the weekly report by Energy Department is expected to show U.S. oil stockpiles fell 2 million barrels last week, the 10th decline in 11 weeks.

Goldman Sachs says oil will reach $85 by year end

Natural gas fell in New York on speculation supplies may rise to a record. Gas for October delivery fell 8.5 cents (1.3%) to settle at $6.568 per million British thermal units.

Against this backdrop, October reformulated gasoline climbed 1.61 cents to close at $2.0603 a gallon, while October heating oil added 1.36 cents to end at $2.2423 a gallon.

Yesterday, Goldman Sachs said its analysts raised their year-end forecast for oil prices to $85 a barrel for 2007 and pegged the year-end price at $95 a barrel for 2008.

Earlier last week, OPEC planned to boost daily oil production by 500,000 barrels. OPEC's production target is 27.2 million barrels a day, beginning 1 Nov. OPEC, has decided to raise their daily output by 500,000 barrels per day, starting 1 November.

Attacks on oil facilities in Nigeria have curtailed shipments and tight supplies from OPEC have bolstered crude prices this year. As per the U.S. Energy Information Administration, tight global energy supplies are expected to keep energy prices high through 2008.

Sensex may strike all time high

Local bourses are expected to rally tracking strong global indices after the US Federal Reserve announced a 0.50% cut in benchmark interest rate to 4.75% from 5.25%. The benchmark index BSE Sensex may strike all time high.

Investment banking giant Lehman Brothers yesterday, 18 September 2007 declared the worst of the credit crisis is over, despite reporting its first quarterly profit dip in five years. In spite of damaging hits in leveraged loans and mortgage arms, the bank benefited in other areas, with profits for the three months to August 2007 down by 3.2% at $887m (£443m), generating earnings per share of $1.54, which was slightly higher than consensus forecasts of $1.47 a share.

Asian markets surged today, 19 September 2007 tracking overnight gains on Wall Street. Hong Kong's Hang Seng (up 3.72% at 25,491.70), Japan's Nikkei (up 3.36% at 16,333.29), Singapore's Straits Times (up 2.48% at 3,563.87), South Korea's Seoul Composite (up 3.02% at 1,894.10) and Taiwan's Taiwan Weighted (up 0.50% at 8,944.08) surged.

Wall Street shares rallied yesterday, 18 September 2007 after the Federal Reserve cut its benchmark interest rate by a larger-than-expected 0.50% point. The Dow Jones industrial average soared 335.97 points, or 2.51%, to 13,739.39. This was its biggest surge since 2 April 2003. The blue-chip index is now only about 1.9% below its record close of 14,000.41, reached in mid-July. The Standard & Poor's 500 index rose 43.13 points, or 2.92%, to 1,519.78. The Nasdaq Composite index gained 70 points, or 2.71%, to 2,651.66.

Crude oil climbed above $82 a barrel on Wednesday, 19 September 2007 near a record reached a day earlier after the US Federal Reserve slashed interest rates to calm worries over economic growth ahead of peak winter fuel demand. US light crude for October delivery rose 82 cents to $82.33 a barrel, after hitting a record of $82.38 yesterday, 18 September 2007. London Brent crude gained 72 cents to trade at $78.31 a barrel.

As per provisional data, foreign institutional investors (FIIs) purchased shares worth a net Rs 23.38 crore, while domestic institutional investors (DIIs) were net sellers of shares worth Rs 232.93 crore on Tuesday, 18 September 2007

The BSE 30-share Sensex advanced up 164.69 points or 1.06% at 15,669.12, on Tuesday 18 September 2007. It is now 199.73 points away from its all time high of 15,868.85 hit on 24 July 2007. The S&P CNX Nifty rose 51.55 points or 1.15% at 4,546.20, on that day.