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Thursday, October 04, 2007
Banks plead with RBI for mercy
Bankers today pleaded with the Reserve Bank of India (RBI) against raising the cash reserve ratio (CRR) further to suck out excess liquidity in the banking system.
Banks do not want monetary actions that have direct implications on interest rates, as they are grappling with high deposit and lending rates amid flush liquidity and stagnant credit growth. Bankers, led by O P Bhatt, chairman of State Bank of India (SBI), today met the RBI governor Y V Reddy as part of the central bank’s consultation process ahead of the monetary policy review. The RBI will undertake second quarterly review of the monetary policy on October 30.
RBI has raised CRR, the proportion of deposits banks need to keep with the central bank, by 200 basis points since December 2006 to 7 per cent, as its interventions in the foreign exchange market resulted in infusion of rupee liquidity, which has the potential of fanning inflationary expectations. RBI has bought $30.24 billion of foreign exchange during December 2006-August 2007.
The other bankers who accompanied SBI’s Bhatt were K V Kamath, managing director and CEO of ICICI Bank, A K Khandelwal, CMD, Bank of Baroda, T Narayanasamy, CMD, Bank of India and Sanjay Nayar, CEO, Citibank India.
There are expectations that the RBI would either raise the ceiling on bonds the government can issue under the market stabilisation scheme (MSS) or raise CRR for absorbing liquidity. Liquidity is very high in the banking sector with the RBI absorbing Rs 57,480 crore through reverse repo auctions today, about twice the amount it sucked daily in the last week of September 2007.
Bankers also urged the RBi to resume payment of interest on CRR balances. Looking at the blunt character of CRR, bankers said CRR should not be increased as it adds to the cost of banks.
After conclusion of the meeting, SBI’s Bhatt told reporters that the international situation (tight liquidity in the aftermath of the US subprime crisis and slowing US economic growth) came up for discussion. The domestic credit growth, which remains subdued over the same period last year, was also in focus.
Bhatt said there is pressure to reduce the lending rates even as deposit rates remained at elevated levels, putting pressure on margins. Asked if the RBI hikes CRR, Bhatt said effort would be to absorb whatever is possible and the balance may be passed on to customers.
One of the bankers also suggested that the RBI could consider providing likely monthly liquidity trends. RBI was also urged to allow banks to issue bonds of up to three years, like financial institutions, for funding long-term projects including in infrastructure.
Bankers have sought longer period for provisioning with respect to IFCI bonds. At present RBI has given allowed banks to make provisions over four quarters for IFCI bonds. Public sector banks are expected to take hit of Rs 900 crore for these bonds.
They has have also asked RBI’s help to keep entire banking sector out of Central Vigilance Commission.
Kaveri Seed Company
Kaveri Seed Company, which listed on the bourses Thursday, closed at Rs 226.15, premium of 33 per cent to issue price of Rs 170.
The company listed at Rs 204 on NSE and touched a high of Rs 263 intraday.
On BSE, it opened at Rs 201.15 and moved up to Rs 262 before closing at Rs 226.45.
The total volume on both the exchanges was around 1.8 crore equity shares.
The company is into research, production, processing and marketing of high-quality hybrid seeds for crops like corn, sunflower, cotton, pearl millet, paddy, grain sorghum and has recently forayed into micro-nutrients and bio-products.
Kaveri Seed raised Rs 68 crore through IPO for acquisition of farmland for research and development near Hyderabad, Alwar and Ahmedabad, setting up marketing offices and godowns in Delhi, Lucknow, Jaipur, Ahmedabad and Aurangabad, and a biotechnology lab near Hyderabad
Gems exports rise
The country's gems and jewellery exporters will be able to meet their target of $18.5 billion this fiscal, despite a sharp appreciation of rupee.
Cheaper imported raw material, which constitutes 70 per cent of their finished products, is expected to neutralise the impact of a robust rupee.
The Gems and Jewellery Export Promotion Council had set a target of $18.5 billion for the current financial year against $17.2 billion achieved in 2006-07.
"We have already achieved exports worth $9.4 billion for the April-September period, a 26 per cent growth year-on-year," Council chairman Sanjay Kothari told reporters on Thursday.
Since the gems and jewellery sector is an import-based industry, the rupee appreciation makes the raw material less expensive.
He said the industry is looking at an growth rate of 8-10 per cent this year, adding that of the $17 billion exports achieved, diamonds constituted 80 per cent. The domestic gems and jewellery industry is valued at $15 billion.
"We are looking at a total market size of $50 billion by 2015, of which exports would be around $30 billion," he said.
Educomp Solutions
Educomp Solutions Ltd has informed that the Company has signed an Memorandum of Understanding (MOU) with Raffles Institution, Singapore. The Scope of Services would include consultancy advice & services of Raffles Institution for schools set up by the Company though its related entities. The essence of this MOU is to bring the best of global education in India. Raffles institution is the leading school in Singapore and renowned for its innovative practices and its curriculum.
Post Market Commentary
The market closed the session marginally lower with benchmark index BSE Sensex closed lower by 69.90 points at 17,777.14 while Nifty fell 2.15 points to close at 5,208.65. The market manages to shed most of the losses after the afternoon trade. Banking stocks are the most hit during the session on the expectations that reserve bank of India will raise the Cash Reserve Ratio. Metal, Capital goods and Consumer durables indices made a smart recovery as the closed higher with handsome gains. Overall, the market breadth remains weak as 1612 stocks are closed in red while 1164 stocks are closed in green. The BSE Mid Cap and Small Cap closed higher by 34.27 points and 39.61 points at 7,576.27 and 9,141.92 respectively.
NTPC was the top gainer from the Sesnsex pack, which closed up by 4.33% at Rs226.40 along with Tata Steel by 2.94% at Rs864.75, Cipla by 2.19% at Rs189.05 and Maruti Udyog by 2.10% at Rs1041.30.
BSE Metal index surged by 223.35 points to close at 14,384.87. The main gainers are Jindal steel (16.95%), JSW steel (5.22%), Jindal stainless (3.94%), Tata steel (2.94%) and Bhusan Steel (2.08%) closed in green.
The capital goods index grew by 184.13 points to close at 15,253.33. Leading the rally are Alstom projects (5.96%), BEML (5.66%), Suzlon (5.45%), Siemens (4.23%) closed higher.
BSE auto index closed higher by 20.59 points at 5,412.19. Pushing it up are Escorts ltd (2.81%), Maruti Udyog (2.10%), Bajaj auto (1.52%) and Tata Motors (1.13%) closed in green.
The oil and gas index closed litlle higher by 5.48 points at 10,000.75 as RPL (1.31%), Essar oil (1.24%) and Reliance industries (1.21%) closed higher .
The IT index closed lower by 13.29 points at 4,769.71. Pushing it down are Mphasis (2.38%), Wipro (1.99%), Tech Mahindra (1.04%), Infosys (0.31%), TCS (0.12%) closed in red.
BSE bankex index slipped by 137.66 points to close at 9,415.02 as Oriental bank (3.01%), Canara bank (2.91%), Allahabad bank (2.54%), ICICI bank (2.45%) closed lower.
Rupee hits new high
The rupee on Thursday ended at a new nine and half year high of 39.49/50 versus the greenback, stronger by 8.50 paise from previous close of 39.5750/5850 on the back of consistent portfolio inflows and in the absence of any major dollar demand as well as weak Asian stocks.
In continued volatile trade at the Interbank Foreign Exchange (forex) market, the local currency resumed marginally lower at 39.58/60 a dollar and later fluctuated in a range of 39.3550 and 39.6350 during the day.
Earlier, the rupee ruled around this levels, when it closed at 39.65 a dollar on April 14, 1998 and at 39.40 a dollar on April 8, 1998.
Influenced by stock market activity, the rupee moved widely during the day even as the Reserve Bank of India (RBI) made a feeble attempt to contain the rupee's surge by making dollar purchases in favour of exporters, forex dealers said.
Foreign Institutional Investors (FIIs), which have poured in more than $4 billion in equity since September 19, remained heavy buyers in shares and supported the rupee sentiment, commented a banker.
Market Close: Just a Profit booking or ??
Profit booking engulfed across from Asian Markets as well in Indian Indices too. Major Asian markets ended in red, Hang Seng lost 505 points for the day and Nikkei slipped by 107 points. Indian indices started the day on a weak note but selling pressure intensified pushing the indices further into red zone and continued to trade in negative territory for the whole day. Mid session witnessed some value buying in index heavy weights helping Indices to recover from days low but profit booking contiued till the end. Banking stocks were the major hit on fear of CRR hike, weakness followed in FMCG too and IT stocks slipped as Rupee appreciated. Rupee ended at 39.49 after days high of Rs 39.35 against US Dollar. This is certainly not good for IT companies. Buying was seen in Auto, Metals, Consumer Durable, Engineering and Energy stocks cheered the day. Investors rejoiced mid and small caps, as they out performed the front line indices.
Sensex ended lower by 70 points at 17777.141. Weighing on the Sensex were the losses in HDFC (2494.6499,-4 percent), ONGC (985.95,-4 percent), ICICI Bk (1061.35,-2 percent), Wipro (461.3,-2 percent) and Hero Honda (721.1,-2 percent). Losses were restricted by gains in NTPC (226.4,+4 percent), TISCO (864.75,+3 percent), Cipla (189.05,+2 percent), Maruti (1041.3,+2 percent) and Rel Energy (1477.85,+2 percent).
Educomp Solutions Ltd has informed that the Company has signed MOU with Raffles Institution, Singapore. The Scope of Services would include consultancy advice & services of Raffles Institution for schools set up by the Company though its related entities. Raffles institution is the leading school in Singapore and renowned for its innovative practices and its curriculum. Educomp offers solutions in pre-school learning management, K-12 schools, school management and e-tutoring. It has Smart Class learning management modules e-tutoring products such as Mentoraide, Mathguru.com and Roots to Wings for the kinder garden. The company has been aggressively and wants to grow inorganically. The company in past few months has been acquiring many small firms across the globe. It acquired AsknLearn, a Singapore based e-learning content provider, then ThreeBrix E-Services which owns learninghour.com which is an online and offline learning solutions provider. It also took majority stake in Savvica, a Canadian company. Last but not the least it also partnered Microsoft Xbox 360 which is foraying into the educational arena. The edutainment product for the Xbox 360 is being developed by Lakshya Digital in Gurgaon and the company is planning to launch the product by December 2007. The aggressive Plans is to go global and spread his wings. Educomp being foremost and only listed company before has now competition from Everonn and Navneet. Educomp and Everonn trade at over 85 times estimated FY08 earnings. Do read the detailed note on Educomp, Everonn and Navneet.
Temptation Foods has earmarked a sum of Rs 180 Cr for acquiring three companies. This is in addition to the company's plan to purchase Marico's jam brand SIL and soy balls Meal Maker and Ever fresh, the second largest player in the frozen food business. The Ever fresh deal is likely to be priced at Rs 40 cr. The company is eyeing two companies in the northern region and one in the south and fall under the processed food category. Temptation foods is on acquisition frenzy. This is after the break up of acquisition plans with HUL's marine Business. The company is trying to chew much more than what it can digest. We are not positive on the stock at the moment. The stock closed down by 5% for the day.
Technically Speaking: It was a weak session for the whole day before closing. Sensex touched intraday high of 17890 and low of 17495. Overall breadth was in favor of Declines, where the Advances stood at 1152, while Declines at 1591. The turnover was good at Rs 7688 cr. As we mentioned earlier Sensex is looking steady for a move up to 18500-18600
Sensex wraps up its longest winning streak
The market took a halt after having recorded gains for eleven consecutive sessions that had lifted the Sensex to a record peak above 17,950. Tracking the weak Asian markets, the Sensex resumed the session with a negative gap of 47 points at 17,800 and continued moving southwards. As selling intensified by the afternoon in banking, FMCG and oil stocks, the Sensex touched the day's low of 17,495 below the 17,500 mark. The market saw a sharp upmove thereafter but the widespread selling assured that the Sensex remains in the negative territory. The Sensex finally ended the session with a loss of 70 points at 17,777, while the Nifty dropped by two points to close at 5,209.
The breadth of the market was negative. Of the 2,829 stocks traded on the BSE 1,612 stocks declined, 1,164 stocks advanced and 53 stocks ended unchanged. However, most of the sectoral indices of the Bombay Stock Exchange (BSE) ended in positive territory. The BSE CD index rallied sharply and gained 2.75% at 4,870. The BSE Metal index, the BSE CG index, the BSE Auto index, the BSE Oil and the BSE Realty index added over 0.50%-1% each. However, the Bankex index slipped 1.44% while the BSE FMCG index, the BSE IT index and the BSE PSU index slipped marginally.
Index heavyweight ONGC triggered a major sell-off in the market and tumbled by 3.77% at Rs986. Among the other major losers, HDFC dropped 3.65% at Rs2,500, ICICI Bank declined by 2.45% at Rs1,061, Wipro lost 1.99% at Rs461, Hindalco shed 1.84% at Rs176, M&M slumped by 1.61% at Rs758, Grasim slipped by 1.52% at Rs2,590 and ITC dipped by 1.33% at Rs185. However, NTPC managed to report gains and moved up by 4.33% at Rs226, Tata Steel advanced 2.94% at Rs865, Cipla added 2.19% at Rs189 and Maruti Udyog gained 2.10% at Rs1,041.
Over 2.57 crore Himachal Futuristic Communication shares changed hands on the BSE followed by Ispat Industries (2.54 crore shares), Nagarjuna Fertilisers (2.45 crore shares), Tata Teleservices (1.67 crore shares) and Reliance Natural Resources (1.66 crore shares).
Reliance Energy was the most actively traded counter on the BSE with a turnover of Rs463 crore followed by Reliance Industries (Rs242 crore), Reliance Capital (Rs231 crore), Unitech (Rs186 crore) and DLF (Rs175 crore).
Market breaks 11 consecutive days’ rally
The market declined today, 4 October 2007, ending an 11-day winning streak that had taken it to record highs. It had made a smart recovery in late trade from its earlier lower levels in day of volatile trading. Reliance Industries sprang back into action. Banking stocks were the major losers. Mid-cap and small-cap indices gained. The market breadth remained negative. Asian markets ended in red, while European markets were trading in green.
The market had opened soft, following weak Asian and US markets. After recovering briefly, it once again sank into red, only to spring back later. The market slipped to its lower levels for the day in mid-afternoon trade.
The BSE 30-share Sensex ended down 69.90 points, or 0.39%, to 17,777.14 points . It had hit a high of 17,890.49 and a low of 17,494.70 during the day. At its day’s low, the Sensex had shed 352.54 points. The S&P CNX Nifty closed lower 2.15 points, or 0.04%, to 5,208.65. It had touched a low of 5,126.05 in mid-afternoon trade.
Of the 30 shares of the Sensex, only 12 settled in the positive territory. The remaining ended in red. The market breadth was weak on BSE: 1,134 scrips had advanced, 1,608 declined, while 332 remained unchanged.
The BSE Mid-Cap index rose 34.27 points, or 0.45%, to 7,576.27, and the BSE Small-Cap index 39.61 points, or 0.44%, to 9,141.52. Thus, both the indices outperformed the broad market.
IT stocks declined today.Top software exporters Infosys Technologies (down 0.31% to Rs 1,995.10), Wipro (down 1.99% to Rs 461.30),Tata Consultancy Services (down 0.12% to Rs 1,078.65)and Satyam Computer Services (down 0.12% to Rs 450.45) turned weak after the Indian rupee touched a nine-and-a-half-year peak against the dollar on Wednesday, 3 October 2007.
The BSE Capital Goods index recovered from its lower levels. L&T was flat at Rs 2,896.25, Bhel (up 0.84% to Rs 2,091.70) and Unitech (up 5.45% to Rs 338.95) edged higher.
The BSE Metal index was the second highest gainer in the sectoral indices. Tata Steel (up 2.94% to Rs 864.75) and Jindal Steel & Power jumped 16.95% to Rs 6,291.75 on reports that it will spend $600 million to build an electricity plant in Turkey.
The Bankex was the biggest loser among the sectoral indices on expectation that the Reserve Bank of India will raise the cash reserve ratio (CRR). Constituents ICICI Bank shed 2.45% to Rs 1,061.35, and HDFC Bank 1.28% to Rs 1,404.20 after their American depositary receipts fell 2.2 % and 3.2 %, respectively, on Wednesday, 3 October 2007.State Bank of India declined 0.47% to Rs 1,900.35.
NTPC (up 4.33% to Rs 226.40) was the top gainer among the Sensex pack. It hit an all-time high of Rs 228.90 today. Other gainers were Tata Steel (up 2.94% to Rs 864.75), Cipla (up 2.19% to Rs 189.05),Reliance Energy (up 1.89% to 1,477.85) and Maruti Suzuki (up 2.1% to Rs 1,041.30) edged higher.
The largest private sector company and oil refiner Reliance Industries was up 1.21% to Rs 2,422.55.
HDFC lost 3.84% to Rs 2,494.65 and was the top loser from the Sensex pack. ONGC (down 3.77% to Rs 985.950), Hindalco Industries (down 1.84% to Rs 175.70) and Wipro (down 1.99% to Rs 461.30) were the other losers from the Sensex pack.
Among the side counters, Ensa Steel Industries (up 59.55% to Rs 6.35), Nagpur Power (up 19.93% to Rs 65.30), AMD Multiplast (up 20% to Rs 48.95), and Nava Bharat Ventures (up 20% to Rs 279.15) were the major gainers.
Valecha Engineering (down 32.21% to Rs 201.75), SPL Polymers (down 9.96% to Rs 8.14), Link Pharma Chem (down 9.34% to Rs 8.25), Dynemic Products (down 9.11% to Rs 22.95) were the major losers.
Kaveri Seed Company ended at Rs 230.10 on it debut on BSE, a premium of 35.35% over the IPO price of Rs 170.
Jindal Steel & Power jumped 16.95% to Rs 6,291.75 on reports that it will spend $600 million to build an electricity plant in Turkey.
Crisil had declined 0.91% to Rs 3,613.75, its high for the day after reports suggested it had tied up with Corporation Bank for rating of small and medium enterprises and small-scale industries.
Biocon advanced 4.9% to Rs 515.70 on reports that it is in talks with German pharma major Bayer AG for co-development of innovative biotech drugs.
Ranbaxy Laboratories moved up 0.84% to Rs 442.30 on reports that it is planning to hive off research and development of its new chemical entities into a separate company.
Eicher Motors soared 16.61% to Rs 442.30 on reports that European automobile major Volvo is set to acquire a majority stake in the company.
Sobha Developers extended gains by 2.25% to Rs 899.50 after it joined hands with QVC Realty and Chintels India to develop an integrated township on 192 acres in Gurgaon.
Tata Chemical jumped 2.8% to Rs 313.75 on reports that its wholly-owned subsidiary Brunner Mond is eyeing forward integration.
Dabur India up 1.39% to Rs 109.30 after a block deal of one crore shares (1.16% equity) at Rs 107 per share on the National Stock Exchange.
CS Software Enterprise had surged 4.14% to Rs 39 after securing a contract from Maharashtra State Electricity Distribution Company to implement electricity billing in Nasik, Maharashtra.
Most of the Asian markets, which opened before the Indian markets, were in red today. These included Hong Kong’s Hang Seng (down 1.84% to 26,973.98), Taiwan's Taiwan Weighted (down 0.75% to 9,627.39) and Japan's Nikkei (down 0.62% at 17,092.49). Singapore's Straits Times (up 0.78% to 3,783.81), however, had edged higher.
Most of the European markets, which opened after the Indian markets, were trading in red, except UK’s FTSE 100 (up 0.52% to 6,568.90): France’s CAC (down 0.07% to 5,802.29) and Germany’s DAX (down 0.04% to 7,952.43) edged lower.
American markets ended in red on Wednesday, 3 October 2007. The Dow Jones Industrial Average index shed 79.26 points to 13,968.05 and Nasdaq 17.68 points to 2,729.43 after getting hit by tech sell-off and job data fears.
The Sensex had ended up 518.42 points, or 2.99%, to 17,847.04, an all-time closing high on Wednesday, 3 October 2007. The S&P CNX Nifty was up 141.85 points, or 2.8%, to 5,210.80, an all-time closing high.
Kissing 18000 today?
The market is likely to cross the 18,000 mark today. Volatility is expected as Asian markets opened on a subdued note and the American markets ended on a negative note. The market surged higher on Monday, 3 October 2007,foreign instutional investors pumping in a whopping Rs 2,662 crore worth of equity on Wednesday only reinforces confidence in the system.
Q2 September 2007 results is the next major trigger for the market. Figures of advance tax suggest that earnings will be decent to strong. IT bellwether Infosys Technologies kickstarts reporting season on 11 October 2007.
Reportedly,Union Finance Minister P Chidambaram has advised retail investors in the stock market to be cautious as the benchmark index nears the 18,000-point level even as he welcomed the interest evinced by foreing institutional investors (FIIs).
The market has been a roll with the BSE 30-share Sensex hitting a record high in each of the past ten trading sessions from 19 September 2007 to 3 October 2007. Heavy FII buying and hopes of a further cut interest rates by the US Federal Reserve at its next policy meeting on 30 October 2007-31 October 2007 have boosted the bourses. From a low of 13,989.11 on 21 August 2007, the Sensex galloped a whopping 3,857.93 points, or 27.57%, to 17,847.04 on Wednesday, 3 October 2007.
Most of the Asian markets, which opened before the Indian markets, were in red today. Hong Kong’s Hang Seng (down 1.81% to 26,974.60), Taiwan's Taiwan Weighted (down 0.56% to 9,645.57) and Japan's Nikkei (down 0.59% at 17,098.90) edged lower. Singapore's Straits Times (up 0.37% to 3,768.62) edged higher.
American markets ended in red on Wednesday, 3 October 2007. The Dow Jones Industrial Average index ended down 79.26 to 13,968.05 points and Nasdaq down 17.68 points to 2,729.43 after hit by tech sell-off and job data fears.
The rising rupee is a major concern for policymakers as it rose to its 9-½-year high on Wednesday, 3 October 2007: 39.5450 per dollar. This is its strongest level since April 1998, up from Wednesday's close of 39.575/585
Provisionally as per NSE data, foreign institutional investors (FIIs) were net buyers of Rs 2,662.06 crore while Domestic institutional investors were net sellers of Rs 221.73 crore on Wednesday, 3 October 2007.
The Sensex ended up 518.42 points, or 2.99%, to 17,847.04, an all-time closing high on Wednesday, 3 October 2007. The S&P CNX Nifty was up 141.85 points, or 2.8%, to 5,210.80, an all-time closing high on Wednesday, 3 October 2007.
Pre Market Watch
Indian market is likely to have a flat opening due to negative global cues. On Wednesday, the Indian markets ended on a strong note as BSE Sensex surged by 518.42 points to close at 17,847.04 while Nifty grew by 141.82 points to close at 5,210.80. We expect the market to remain cautious during the trading session, as the investors will take calculated steps in booking their position.
On Wednesday, the US market closed in negative territory. The Dow Jones Industrial Average (DJIA) dropped 79.26 points to close at 13,968.05. The S&P 500 (SPX) index decreased by 7.04 points to close at 1,539.59 and the NASDAQ Composite (RIXF) slipped 17.68 points to close at 2,729.43.
Indian ADRs ended in red. In technology sector, Patni computers fell (1.43%) along with Wipro by (1.28%), Satyam by (0.67%) and Infosys by (0.51%). In banking sector, HDFC bank and ICICI bank slipped by (3.17%) and (2.23%) respectively. MTNL and VSNL dropped by (5.95%) and (0.78%) respectively.
The major stock markets in Asia are trading weak. Japan''s Nikkei is trading lower by 100.99 points at 17,098.90. Hang Seng index slipped by 612.03 points to trade at 26,867.91. Taiwan weighted fell 70.06 points to trade at 9,630.01. Seoul Composite is trading down by 6.95 points at 2,007.14.
Yesterday, the gross equity purchased was Rs.4,933.70 (in crores) and the gross debt purchased was Rs525.40 (in crores). The gross equity sold was Rs2,737.70 (in crores), and the gross debt sold was Rs67.70 (in crores). The net investment of equity was Rs2196 (in crores) and the net debt investment was Rs457.70 (in crores).
Today, Nifty has support at 5,040 and resistance at 5,265 and BSE Sensex has support at 17,410 and resistance at 17,980.
Morning Call
Market Grape Wine :
In House :
Nifty at a supp of 5162 and 5132 with resis at 5261 and 5282
Intra day: Buy Zeetele above 348 with a TGT of 360 and a SL of 343
Buy TCS above 1079 with a TGT of 1115 and a SL of 1054
Positional: Buy ONGC . An upside of Rs100~150 expected.
Out House :
Markets at a support of 17171 & 17371 levels with resistance at 17979 & 18081 levels .
Buy : RIL at dips
Buy : Relcap & REL
Buy : Sail
Buy : Bhel
Buy : JpHydro & RNRL
Buy : DLF , HCC & NagarConst
Buy : GMRInfra
Buy : JpAsso
Buy : NTPC bullet
Dark Horse : GMrInfra , DLF , REL , Aban , RelCap , JPAsso & Grasim
Bullet for the Day : NTPC & REL with stop loss .
Volatility remains key factor
The market may move in tandem with the Asian markets which are currently trading weak followed by overnight fall in US markets. The Nikkei index, Hanng Seng index are currently down around 0.50%- 1% each. On liquidity front FIIs remaining net buyers in equities may help the sentiment to turn positive. On the upside, the Nifty could test the recent high around the 5260 level and may witness support around the 5180 level. The Sensex has a likely support at 17650 and may test higher levels of 18200.
US indices finished on a weak note on Wednesday, ahead of the September jobs report, due Friday. The Dow Jones dropped 79 points to close at 13968 while the Nasdaq slipped by 18 points at 2729 amid weak tech stocks.
The Indian floats trading on the US bourses closed with moderate to heavy losses. Among the major losers MTNL and HDFC Bank slipped over 3%-5% while Infosys, Satyam, Wipro, ICICI Bank, VSNL, Rediff and Patni Computers fell over 0.50%-2% each. However, Tata Motors gained marginally.
Crude oil prices in the global market declined yesterday. The Nymex light crude oil for November series slipped by 11 cents at $79.94 per barrel. In the commodity segment, the Comex gold for December delivery slumped 60 cents to settle at $736.30 an ounce.
Grey Market - Circuit, Consolidated, Kouton, Dhanus
Power Grid Corporation 52 32 to 33
Dhanus Tech. 280 to 295 45 to 50
Koutons Retail 370 to 415 70 to 75
Consolidated Construction 510 160 to 165
Supreme Infra 95 to 108 50 to 55
Saamya Biotech 10 2 to 3
MAYTAS Infra 320 to 370 140 to 150
Circuit Systems (India) Ltd. 35 3 to 4
Kaveri Seeds 170 20 to 25
Trading Calls
Nifty (5211) Sup 5141 Res 5294
Sell Zee (347) SL 352
Target 339, 337
Sell Sun TV (329) SL 334 Target 321, 319
Buy Maruti (1019) SL 1007
Target 1043, 1048
Buy Colgate (418) SL 414
Target 424, 427
Buy Praj Inds (239) SL 235 Target 246, 249
See-saw Sensex could stumble
Confidence comes not from always being right but from not fearing to be wrong.
We had said farewell to highs around a week back and markets have only added over a thousand points. Yesterday's highly volatile trade has taken most market participants by surprise. Weak hearted souls may have even skipped a beat as the bulls did an intra-day bungee jump. When penny stocks look set to gain attention don’t expect them to turn to pounds. In fact they could get pounded along with select mid-caps in the coming days. And don’t be surprised if we seek a Black Monday next week.
Quarterly results, RBI's mid-term review, this month's Fed meeting, the political battles between the Congress and the Left and of course liquidity are the events to watch out for.
We expect another choppy day. The key indices could fall on the back of weakness across global markets, led by Wall Street. Though the Sensex could cross 18,000 shortly, one should wait for the results before making fresh large commitments. Retail investors should be particularly careful, as volatility is likely to be quite high. For the near term, use any rally to lighten your positions, and every dip to add small quantity of sound stocks. Avoid aggressive purchases unless there is a sharp fall.
PS. The overoptimistic bulls have a word of advice for the bears. Those who missed the rally from the Sensex levels of 5200, don’t worry, the Nifty is around there.
US stocks fell the most in a week, led by technology companies, after Morgan Stanley told investors to sell shares of Intel and Advanced Micro Devices.
Intel declined the most in a month. Micron Technology posted its steepest drop in a year after the largest US memory-chip maker reported a third straight quarterly loss. ConocoPhillips, the third-biggest US oil company, tumbled after saying its refining margins narrowed last quarter.
The Standard & Poor's 500 Index lost 7.04, or 0.5%, to 1,539.59. The Dow Jones Industrial Average slid 79.26, or 0.6%, to 13,968.05. The Nasdaq Composite Index decreased 17.68, or 0.6%, to 2,729.43.
US stocks fell in the morning as investors considered mostly in-line reports on the service sector, and private sector employment, ahead of Friday's jobs report. But in the afternoon, stock losses accelerated a bit, with technology, commodity and material stocks leading the pull back.
Market breadth was negative. On the New York Stock Exchange, losers beat winners 5 to 3 on volume of 1.24 billion shares. On the Nasdaq, decliners topped advancers 3 to 2 on volume of 1.88 billion shares.
Oil prices were volatile after a mixed weekly oil inventory report. US light crude for November delivery fell 11 cents to $79.94 a barrel on the New York Mercantile Exchange, after having seesawed through the morning.
COMEX gold for December delivery fell 60 to settle at $735.70 an ounce. Treasury prices slipped, lifting the yield on the 10-year note to 4.56% from 4.53% late on Monday. In currency trading, the dollar fell versus the euro and inched higher versus the yen.
European shares closed higher after a day of volatile trading as investors weighed Deutsche Bank's encouraging comments against losses from oil giants and declines for EADS shareholder Lagardere.
The pan-European Dow Jones Stoxx 600 index added 0.2% to 383.65, with downside limited by another strong performance in the banking sector, up 1.1%. The UK's FTSE 100 closed up 0.5% at 6,535.20, while the German DAX 30 inched 0.1% higher to 7,955.30 and the French CAC-40 gained 0.1% at 5,806.18.
In the emerging markets, the Bovespa in Brazil tumbled 3% to 60,099 while the IPC index in Mexico shed 0.9% to 31,178. The RTS index in Russia lost 0.7% at 2092 and the ISE National-30 index in Turkey gave up 1.3% to 68,635.
Most Asian markets were down this morning. The Nikkei in Tokyo was down 100 points at 17,098 and the Hang Seng in Hong Kong slumped by 371 points to 27,108. The Straits Times in Singapore gained 10 points to 3765 and the Kospi in Seoul dropped 8 points to 2005.
BHP Billiton slid after crude oil closed below $80 a barrel in New York for the first time in more than a week. Posco fell after its biggest one-day gain in more the five years prompted South Korea's stock exchange to caution investors about buying the stock.
The Morgan Stanley Capital International Asia Pacific Index, set to close lower for the first time in six days, lost 0.7% to 165.33 at 10:54 a.m. in Tokyo. All markets open for trading in the region declined, except Singapore.
After coming close to the 18k mark, the benchmark BSE Sensex turned extremely choppy, as investors locked in some gains amid concerns about high valuations. The benchmark BSE index swung by over 650 points intra-day and recovered nearly 600 points from the days low. Resl Estate, IT, Oil & Gas, Power and Capital Goods shares did particularly well. Pharma stocks ended in the red. The Sensex closed at 17,847, up 518 points or 2.9%. The NSE Nifty ended at 5,210 adding 142 points.
Ambuja Cement slipped 2% to Rs145 after the company announced its September sales at 1.29mn tons (down 3.7%) and production at 1.27mn tons (down 4.5%). The scrip touched an intra-day high of Rs149 and a low of Rs144 and recorded volumes of over 18,00,000 shares on NSE.
ACC gained 1.5% to Rs1228 after the company announced its September sales at 1.55mn tones (up 10.7%) and production at 1.55mn tones (up 13.9%). The scrip has touched an intra-day high of Rs1261 and a low of Rs1175 and recorded volumes of over 9,00,000 shares on NSE.
Reliance Energy surged by over 7% to Rs1449 after its unit filed share sale document. The scrip touched an intra-day high of Rs1487 and a low of Rs1235 and recorded volumes of over 1,00,00,000 shares on NSE.
DLF rallied by over 16% to Rs892 after winning a contract with
Suzlon surged by over 5% to Rs1553 after the company announced that they have secured order to set up 150MW in Gujarat. The scrip touched an intra-day high of Rs1569 and a low of Rs1483 and recorded volumes of over 10,00,000 shares on NSE.
Flawless Diamond gained 0.3% to Rs96 after the company announced that they have received export order worth Rs325mn. The scrip touched an intra-day high of Rs103 and a low of Rs94 and recorded volumes of over 64,000 shares on BSE.
Everest Kanto surged by over 5% to Rs246 after the company announced that they would raise $35mn selling bonds. The scrip touched an intra-day high of Rs254 and a low of Rs230 and recorded volumes of over 14,00,000 shares on NSE.
Banking stocks also gained momentum towards the end. ICICI Bank advanced 2.8% to Rs1086, HDFC Bank was up by 1% to Rs1424 and SBI added 0.6% to Rs1907. However, Andhra Bank, Union Bank and Bank o f
Capital Good stocks gained smartly led by gains in the index heavyweights like L&T, the scrip was up by over 3% to Rs2903, BHEL rose over 4% to Rs2072 and Punj Lloyd added 2.5% to Rs321.
IT stocks staged a strong bounce back despite the rupee trading below the Rs40 per dollar mark. The index heavyweights like Infosys, the scrip surged over 5% to Rs2001, TCS was up by 3.6% to Rs1079, Wipro added 3.6% to Rs470 and Satyam Computer added 1.6% to Rs450.
Realty stocks were among the major gainers. The index was up by over 6%. DLF advanced 16% to Rs892, Akruti rose over 10% to Rs787, Parsvnath was up by 2.7% to Rs365 and Unitech added 3.5% to Rs327.
Stocks in News:
Ferro Alloys Corporation has been discharged by the
BIFR from the purview of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA).
Accordingly, Ferro Alloys Corp is no more a 'sick company' and is having a positive net worth of Rs837.50mn as of March 31, 2007.
ONGC will invest Rs57bn to increase production from its Mumbai High fields.
Ranbaxy is planning to set up a joint venture in China to manufacture active pharmaceutical ingredients.
SAIL's production of saleable steel grew by 18% in September 2007 over September 2006 to 1.1mn tons.
TCS is planning to increase its consulting business workforce five times to 4,000 globally by 2010.
Royal Dutch Shell will buy BPCL’s 45% stake in Bharat Shell Ltd for Rs1.45bn.
Neyveli Lignite is planning to spend Rs175bn for two projects: Mine-3 and thermal power station in Neyveli and mining and power project in Perambalur district.
Canara Bank has cut interest rates on housing loans by 50 basis points.
CapitaLand, Southeast Asia’s largest real estate investment trust is forming a 50:50 JV with D S Kulkarni Developers. CapitaLand will invest Rs7bn in the JV.
Bayer and Biocon may sign a pact involving co-development of new biotech drugs and research services.
Aban Offshore may sell its 20% stake in Norwegian company Petrojack to part finance its latest acquisitions.
HDFC Bank has capitalized its new NBFC at Rs45mn.
Jet Airways will start regular flights between India and the Gulf from early next year.
Gayatri Projects has bagged two construction orders worth Rs275mn.
Temptation Foods plans to acquire three companies for Rs1.8bn in addition to its plan to purchase Marico’s jam brand SIL and soy balls Meal Maker and Everfresh.
Capital gains tax for MNCs is likely to be reduced to 10%.
The Government is likely to exempt SEZ units from paying CST on supply of goods to domestic tariff area.
Additional spectrum for mobile companies will be available from November.
Imports of sensitive items increased by 0.9% during April-July 2007 compared to April-July 2006.
The Government is planning to allow FDI in retailing of Indian brands.
Private companies will be allowed to build small airports in West Bengal.
The Government is likely to review the limit on MSS bonds if asked by the RBI.
Rubber production for FY08 is expected to drop significantly due to heavy and untimely rains in Kerela..
Fund Activity:
FIIs were net buyers of Rs26.62bn (provisional) in the cash segment on Wednesday and the local institutions pulled out Rs2.22bn. In the F&O segment, foreign funds were net buyers at Rs24.43bn.
On Monday, FIIs were net buyers to the tune of Rs21.96bn in the cash segment. With this, the net investment by overseas investors in the past nine days has risen to more than US$4.1bn.
Major Bulk Deals:
Reliance Capital has bought Aksh Optifibre; Birla MF has picked up Arvind Mills; Citigroup has sold Century Bank of Punjab while Fidelity has purchased the shares of the private bank; UBS has picked up Elpro International; Credit Suisse has bought Gammon India; Morgan Stanley has purchased Murudeshwar Ceramics; Citigroup has bought Nirlon; HSBC has picked up Spice Telecom.
Upper Circuit:
RIIL, Bag Films, Zenotech Labs, Swan Mills, Karuturi Networks, Victoria Mills, Jai Corp, Genus Power and ABG Heavy.
Lower Circuit:
IID Forgings.
Daily Technical Analysis
Nifty — The index opened on a positive note and tested an intra-day high around 5261 after which it saw a sharp decline towards 5034 in afternoon trade. The index rallied towards the close and ended the day with gains of 142 points.
15-minute chart — The index is moving in an upward sloping channel from the low of 4489 (15 minute chart).The upper end of the channel is around the 5340 level and the lower end of the channel is around the 5090 level. Intra-day resistance can be seen around 5261; a break above 5261 could see the index exhibit intra-day strength and test higher levels around 5300. Intra-day support is around 5159, while a break below 5160 could see intra-day declines towards the 5090 level.
Conclusion — Intra-day trade a breakout from 5261-5159 range.
Penny stocks run
In a bull market speculators tend to turn penny wise and this is evident in the sudden interest in stocks of relatively unknown companies.
In the past one month, at least 20 stocks with ‘not-so’ inspiring background have climbed from below-par levels to achieve a ‘double-digit’ status. Analysts fear the movement may have been triggered by operator-driven activity and thus advise caution. In their view, investors, particularly retail, should carefully study company background and trading patterns before dealing in such shares.
ET tracked the movement of BSE-listed stocks across groups and found that many low-priced stocks have shot up to new highs, piggybacking on an euphoric Sensex. Brokers warn of getting carried away by the frenzy, especially when the gains are not supported by good fundamentals or any kind of development that would bring about a change in business prospects of companies.
Major gainers among the low-priced stocks include IEC Softwares, where the share price jumped 156% in over a month. The scrip, in fact, hit the 5% upper circuit on Wednesday when it closed at Rs 17.2.
The volumes, however, remained low with 300 to 27,645 shares changing hands during the period.
Yet the financials of IEC Softwares do not support the spurt in stock price. It posted a small net profit of Rs 8 lakh on sales of Rs 1.2 crore in the quarter ended June 30, 2007. The company, in fact, made a loss of Rs 30 lakh on a turnover of Rs 4.3 crore for the year ended March 31, 2007.
Media Matrix Worldwide (MMW) is another example where the share price has zoomed 155% over the past month to Rs 13.4. While the company has posted some profit in the past quarter and also in 2006-07, there has been no significant development for the share price to drive up. MMW posted a net profit of Rs 33 lakh on sales of Rs 8.1 crore in the past quarter.
The figures stood at Rs 20 lakh and Rs 22 crore, respectively, in 2006-07. The company board is meeting on October 10 to consider raising funds through a preferential allotment or any other route.
The share price of LN Polyesters has risen 113% to Rs 26.3 from Rs 12.3 a month ago. The rally is not backed by sound fundamentals as the company posted a loss of Rs 48 lakh on sales of Rs 6.8 crore for the April-June quarter. In 2006-07, it recorded a sharp fall in net profit at Rs 3 lakh from Rs 1.5 crore in the previous year.
Market experts reactions
| Sudip Bandyopadhyay Director & CEO, Reliance Money |
| “The medium and long term outlook on the markets is very positive. Retail investors should therefore select the right sector and stay invested.” |
| Nilesh Shah CEO, AMBIT CAPITAL |
| “The market is at a stage where it is fairly overvalued. We are cautiously optimistic over the longer term, though short term blips will continue. It is driven by liquidity flows, the likes of which we have not seen earlier. September witnessed inflows worth $4.5 billion. The market will continue to go north as long as the inflows continue. We expect the results to be in line with expectations or a shade better. |
| Vibhav Kapoor chief investment officer, IL&FS |
| “There is a big frenzy in the market. It is difficult to say how long the momentum would continue. It won’t be surprising if the Sensex rises by 1000 points. There are no logical levels and even good results have been factored in to the current prices. The only explanation for the rally is the absence of negative news and the continuing foreign inflows. The market will consolidate for 6-8 months after the momentum stops. ” |
| Deven Choksey, MD, KRC shares |
| “The earnings growth is expected to continue, which means that valuations are not expensive. Foreign investors are looking for safe currency as the US dollar is weakening. They are confident about the rupee strength and thereby tempted to park money in India, at least for now. There are no targets in a momentum-driven market, but 5300 on the Nifty and 18200 for Sensex are short term targets.” |
Tata Technologies IPO next year
Tata Technologies, the engineering design and technology arm of India’s leading corporate house, is looking to tap the capital market through an initial public offer by the next year, a senior company official said here.
“We are looking to list Tata Technologies in Indian market through an IPO in 2008,” David Myers, the Chief Financial Officer of UK-based INCAT Ltd, a Tata Technologies company, said here.
“The funds would be used to repay some of the debt and for our future expansion programmes,” Myers told a group of visiting Indian journalists here.
“We have set a goal to increase our total revenue to $500 million by 2010, from about $220 million currently,” he said.
Tata Technologies had acquired INCAT in October 2005. Prior to this, INCAT had listed on the London Stock Exchange’s AIM market nearly a year ago in November 2004, but remain listed for just about a year.
INCAT was listed on AIM at a price of 128 pence per share, after raising a total of 13 million pounds in the IPO. However, in less than a year, its 53 million pound acquisition by Tatas valued it more than 200 pence a share.
INCAT was established in 1989 and in 1991 it was on the verge of bankruptcy when the company’s employees chipped in and bought it from the then owners. Later in 2005, it was acquired by Tata Technologies, but the INCAT brand name was retained as it was already established in the UK and other European markets, Myers said
Cheapest colour phone from Reliance
In a bid to break entry barrier for coloured-display phones, Reliance Communication on October 3 launched ‘Classic 732’ at a price of Rs999, the lowest in Indian market.
Classic is India’s largest operator-driven handset brand introduced by Reliance at a very low entry level pricing, a company official said.
“We have crossed the one crore sales mark in Classic handsets. Now, the Classic 732 will become the entry level handset for new mobile users in the country,” Reliance Communications President, Personal Business S P Shukla told reporters here.
Earlier in May, the company had launched the Classic monochrome phones at a price of Rs777.
“With about 200 million mobile users in India, the penetration still is at a low of 20 per cent. Apart from affordability for new customers, we have to enhance the experience of existing customers,” Shukla said.
He declined to comment on the handset manufacturing cost or the cost at which the company was purchasing it.
“The pricing is through a comparison of acquisition cost of a new customer and the customer life cycle value,” he said.
Reliance Communication has a total customer base of over 38 million including 1.2 million individual overseas retail customers. Its average revenues per users (ARPUs) was Rs375.
Gold slides down but silver crawls up at New York
Dollar’s gains push the yellow metal marginally lower
Gold prices continued to drop today at New York. A drop in crude oil and a continuation of the strengthening of the dollar against other currencies continued to hurt gold's appeal as an inflation hedge. But silver prices climbed up today.
Comex Gold for December delivery fell $0.60 (0.08%) to close at $735.7 an ounce on the New York Mercantile Exchange today, 3 October, 2007. On Monday, 1 October, gold had climbed to an intraday high of $755.7. That was the highest intra day price seen since the last 28 years.
Comex Silver futures for December delivery rose 20 cents (0.2%) to $13.47 an ounce. The metal has climbed 4.1% this year.
The dollar climbed today after reports on employment and service industries suggested the U.S. economy is weathering the housing slump. The Institute of Supply Management’s index showed modest expansion on the non-manufacturing side of the U.S. economy during September.
On the currency markets today, the dollar extended gains against the Japanese yen, the British pound and the euro. The Dollar Index, which tracks the performance of the greenback against a basket of currencies, rose 0.3%. Crude prices continued to trade below $80/barrel.
Till last Monday, 1 October, the weakening of dollar had continued to affect the price of the metal. Investor sentiments were boosted by the fact that gold and silver were alternate sources of good investment in the face of declining dollar and rising energy prices
Gold prices have jumped 15% during the third quarter and it is the most since 1999. The yellow metal has climbed 14.8% this year.
As per Nymex data on Monday, Gold warehouse inventories were unchanged at 7.1 million troy ounces and silver supplies rose to 132.8 million troy ounces, up 250,716 troy ounces.
At the MCX, gold prices for December delivery closed at Rs 9463 per 10 grams. The closing price is Rs 176 (1.8%) lower as against previous closing price. Prices fell to a low of Rs 9418 per 10 grams during the day’s trading.
At the MCX, silver prices for December delivery closed Rs 443 (2.3%) lower at Rs 18,025/Kg. Prices opened at Rs 18,421/kg and went to a low of Rs 17,911/Kg during the day’s trading.
Crude slips after crawling up
Crude futures register fall after Energy Department shows unexpected rise in crude inventory
Crude oil futures dropped marginally today after an Energy Department report showed that U.S. inventories unexpectedly increased last week. Prices climbed earlier in the session, but then slipped closing 11 cents lower for the day.
For the day ending Wednesday, 3 October, 2007, crude-oil futures for light sweet crude for November delivery closed at $79.94/barrel (lower by $0.11/barrel or 0.14%) on the New York Mercantile Exchange. Earlier in the session, crude rose as high as $80.72 and fell as low as $79.65. Prices are up 36% from a year earlier.
Brent crude oil for November settlement declined $0.19 (0.3%) to close at $77.19 a barrel on the London-based ICE Futures Europe exchange.
As per the weekly inventory report issued by the Energy Dept today, crude supplies rose by 1.2 million barrels to stand at 321.8 million barrels in the week ended 28 September. Market was expecting a decline in crude supplies. Refineries activity rose to 87.5% from 86.9%.
Motor gasoline inventories fell to 191.3 million barrels, down 100,000 barrels. Distillate supplies were pegged at 135.9 million barrels, down 1.2 million barrels on the week.
Natural gas prices drop; gasoline and heating oil rise
November natural gas dropped 15 cents (2%) at $7.277 per million British thermal units. The Energy Department will release data on natural-gas supplies tomorrow.
Against this backdrop, November reformulated gasoline gained 1.31 cents to end at $1.9959 a gallon and November heating oil gained 1.64 cents to finish at $2.1787 a gallon.
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.
Nifty futures at premium
Turnover surges to Rs 100000 crore
The Nifty October 2007 futures were at 5229.70, at a premium of 18.9 points as compared to spot closing of 5210.80.
The NSE F&O turnover was Rs 1,00,056.19 crore, higher than Rs 61,451.29 crore on 1 October 2007.
DLF October 2007 futures settled at premium, at 894.25 compared to the spot closing of Rs 892.40.
NTPC October 2007 futures settled at premium, at 217, compared to the spot closing of Rs 216.80.
Tata Steel October 2007 futures settled at premium, at 844.50, compared to the spot closing of Rs 840.50.
In the cash market, the S&P CNX Nifty rose 141.85 points or 2.80% at 5210.80, an all-tme closing high. It struck an all-time high of 5,261.35 in intra-day trade.
Semiconductor stocks pull US Markets down
Service sector report fails to fully offset the pressure on stocks led by comments from Morgan Stanley
US market closed lower today, Wednesday, 3 October, 2007 as investors received mixed news on the service sector of the economy. Seven out of ten economic sectors posted losses today. But the stock market managed to cut half of its losses following the report from Institute for Supply Management on service sector. Comments from Morgan Stanley weighed heavily on technology sector today.
The Dow Jones industrial Average closed lower by 79.3 points at 13,968. The Nasdaq Composite Index, finished lower by 17.68 points at 2,729.43. S&P 500 finished lower by 7.41 points at 1,539.4.
Nineteen of thirty Dow stocks ended in red. Alcoa and Intel led the group of Dow decliners with crude prices slipping even today. General Motors and Home-Depot were a couple of the few Dow advancers.
Technology, specially Semiconductor, sector came under heavy selling pressure today after Morgan Stanley said it expects the companies to under perform due to inventory corrections and an increasingly aggressive pricing environment. Intel, AMD and NVIDA were the main socks that were affected. Intel closed lower by 2.3%.
Crude oil futures dropped marginally today after an Energy Department report showed that U.S. inventories unexpectedly increased last week. Crude-oil futures for light sweet crude for November delivery closed at $79.94/barrel (lower by $0.11/barrel or 0.14%) on the New York Mercantile Exchange.
Market sheds half of its loss after service sector reports hits wires
When market opened in the morning, indices lingered in the red. All ten economic sectors were in red figures with energy and materials pacing the retreat.
ADP, a payroll services company, estimated private employment for September of 58K, which was in-line with the consensus estimate. But market awaited the report from Institute for Supply Management. Dow was trading lower by 72 points.
At the top of the hour, the Institute for Supply Management's services report came in at 54.8. That was down slightly from 55.8 in August, but still above the 50 level that is indicative of growth. The consensus estimate was for a reading of 55.0. Market took the report in a positive way and indices started shedding off their losses.
A weak showing from Micron, which reported its third straight quarterly loss, was an added factor behind the semiconductor group's and therefore technology’s weakness today.
All Indian ADRs ended in red today. MTNL and HDFC Bank were the top two losers dropping 5.9% and 3.2% respectively.
On the New York Stock Exchange, volume topped 1.2 billion shares with decliners topping advancing stocks nearly 5 to 3. On the Nasdaq, nearly 1.9 billion shares exchanged hands, and declining issues outpaced those advancing 9 to 5.
For tomorrow, investors will have the weekly Initial Claims and the August Factory Orders report to set their eyes upon to get further clues about the economy.
Consider only us - Cellular Operators Association of India
Cellular Operators Association of India (COAI) — the lobby for service providers using GSM technology — has demanded that all spectrum allocation for new circles and existing one should be made transparently on a first-come first-serve basis based on the date of application.
In its 30-slide presentation to Communications Minister A Raja, GSM operators have also demanded that incumbent GSM operators, whose licence applications are pending since December 2006, must be placed on a “different footing from other applicants and accorded top priority for issue if license and initial spectrum”.
The move will benefit telecom operators like Spice Telecom (which has applied for a licence in 20 circles) and Idea Cellular (which has applied for licences in nine circles) since December 2006 . It will also benefit Aircel, Vodafone Essar and Bharti Airtel, which have licences but are waiting for spectrum for over a year or two.
The meeting which was called by Raja to hear out the telecom operators was attended by Sunil Mittal, chairman of Bharti group , Asim Ghosh, CEO of Vodafone-Essar Ltd, Manoj Kohli, president of Bharti Airtel, Spice Telecom promoter B K Modi, Idea Cellular chief Sanjeev Aga and representatives of Reliance, COAI and the Association of United Telecom Service Providers — the CDMA-technology association.
Said T V Ramachandran, director general of COAI, “We have requested the government to differentiate between serious and non-serious telecom players.” Concerned with the deluge of applications for telecom licences — some 30 companies have applied for over 300 licences — the GSM lobby has suggested preference be given to companies with telecom experience and who are ready to accept a five-year lock-in period before they can sell their equity.
It has also recommended that the cross-holding restriction, under which one company cannot take more than 10 per cent in another company in the same service area, should be enforced rigorously.
Strongly attacking the recent deluge of applications, COAI in its presentation pointed out that interest from non-telecom companies appears to be driven only by financial speculation as a result of the flawed recommendations of the Telecom Regulatory Authority of India (Trai), which has created an impression of abundant spectrum availability. GSM operators pointed out that they did not rule out prospect of spectrum grabbing and subsequent sale at profit to foreign telcos.
Bharti peeved by govt's schoolmasterly treatment
Bharti Airtel, India's largest private mobile operator, today expressed concern over the government imposing penalties on "small issues", saying this hampers growth of the sector and spreads fear among investors.
"It is unfair to impose penalties. The Department of Telecom pulls out show cause notices for every small issue. This is hampering the growth of the sector," Bharti Airtel chairman Sunil Mittal said at a meeting of telecom minister A Raja with the operators here today. "It spreads fear among investors."
He cited an example of notices issued by the government to private telecom operators for having mobile telephony signals along the country's borders.
He also asked the minister to rationalise the duties being paid by telecom operators.
Raja held an hour-long meeting with operators and their associations to review the telecom scenario, and sought their suggestions before finalising guidelines and any policy relating to allocation of spectrum or issuing fresh licences.
Mittal also criticised the Telecom Regulatory Authority of India (Trai) over its recent recommendations on spectrum saying there were many technical faults. Trai issued eight corrections last week itself and asked Raja not to accept them without analysing their impact on the sector, he added.
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