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Wednesday, November 07, 2007
JP Morgan - 22.5K target for 2008
Stock markets in India are expected to rise further next year but at a slower pace as high valuations and a fall in corporate profit growth limit gains, analysts at JPMorgan said. The Mumbai market's benchmark index is expected to rise to 22,500 points by the end of next year, up 16 per cent from Tuesday's close of 19,400.67.
The index has gained nearly 15 per cent in October, its biggest monthly gain in almost four years, taking its rise this year to 40 per cent. It had gained 47 per cent last year and 42 per cent in 2005.
Bharat Iyer, head of research at JPMorgan in India, said corporate profits, which had grown 25-30 a year for the past three years, would slow from a high base.
"You have challenges in the form of rupee appreciation, volatility in interest rates, etc. So you expect earnings growth to structurally slow down.
"It's still very attractive in absolute terms at 19-20 percent, but the fact of the matter is that you are coming down from 30 percent to 19-20 per cent, which is a step down."
He said infrastructure, engineering and construction and steel sectors were likely to perform well, while drug makers and telecoms were not expected to be as strong as they have been.
Sensex sheds 111 points as IT stocks slump; RIL gains
Market ended a volatile session on a weak note as investors preferred booking profits in absence of any major triggers. Positive global cues lifted sentiment in early trade. In contrast, in late trade weak European markets pushed the domestic bourses lower.
Software, banking and telecom stocks were major losers. However, oil & gas and capital goods stocks remained strong. Reliance Industries soared. Turnover on the bourses declined sharply today.
The Sensex resumed on a positive note at 19,552.53 points above its last close of 19,400.67 and by mid-morning trades accumulated gains of 277.83 points on all-round buying to touch day's high of 19,678.50. Although the index managed to sustain in green amid volatility till afternoon, intense selling due to steep fall in European markets later dragged the markets lower.
The 30-share BSE Sensex ended down 110.84 points or 0.57% at 19289.83. Sensex touched a low of 19,249.47 in late trade, at which it had lost 151.20 points for the day.
The broader S&P CNX Nifty was down 4.15 points or 0.07% at 5782.35.
The market breadth was negative. On BSE, 1028 stocks advanced, while 1674 stocks declined and 77 stocks remained unchanged. 20 out of 30 stocks declined from the Sensex pack.
BSE clocked a turnover of Rs 6837 crore, lower than Tuesday (6 November 2007)’s Rs 9922 crore.
Nifty November 2007 futures were at 5762, at a discount of 20.35 points over spot closing of 5782.35.
NSE's futures & options segment clocked a turnover of Rs 62,678.11 crore, lower than Tuesday's Rs 82,952.01 crore.
The BSE Mid-Cap index was down 29.34 points or 0.37% at 7,985.96, outperforming Sensex. BSE Small-Cap lost 107.90 points or 1.10% at 9,695.13, underperforming Sensex.
The BSE IT index lost 197.27 points or 4.34% at 4,343.42. Major software stocks declined as rupee climbed to its highest since March 1998.
Infosys Techonogies, India's second largest software exporter, lost 5.78% to Rs 1743.85. Wipro (down 2.05% to Rs 477.35), Satyam Computer (down 4.03% to Rs 434.85), TCS (down 0.63% to Rs 998.25), edged lower. A rise in rupee hits IT companies as they get more than half of their revenue from the United States.
The BSE Auto index settled 18.15 points or 0.34% higher at 5,295.39. Amtek Auto jumped 4.17% to Rs 469.85, Mahindra & Mahindra gained 2.54% to Rs 759.80, Maruti Suzuki India rose 2.43% to Rs 996.80 and Hero Honda Motors grew 1.81% to Rs 680.10.
Telecom stocks declined. Reliance Communications lost 2.50% to Rs 726.75 and Bharti Airtel shed 1.98% to Rs 900.25.
The Department of Telecom (DoT), on Tuesday, 6 November 2007, announced setting up of a committee to revise the spectrum allocation criterion for existing operators in a scientific and practicable manner. It may be recalled that Telecom Engineering Centre had recently finalised spectrum allocation criterion, which had made it significantly more difficult for operators to get additional spectrum.
The BSE Bankex fell 166.29 or 1.54% at 10,620.22. HDFC Bank fell 5.16% to Rs 1617.95, ICICI Bank dropped 2.98% to Rs 1203.80, and Canara bank lost 3.36% to Rs 271.85. State bank of India rose 2.66% to Rs 2267.45.
The BSE Capital Goods gained 41.07 points or, 0.21% at 19,738.36. Bharat Heavy Electrical (Bhel) jumped 3.55% to Rs 2821, Jaiprakash Associates rose 1.66% to Rs 1551.25 and BEML gained 0.29% to Rs 1590. Larsen & Toubro (L&T) lost 0.27% to Rs 4114.50. L&T today said it had priced its $400 million global depositary shares issue at $100 each. Each GDS represents one equity share of the company.
Siemens fell 1.15% to Rs 1757.80. The company secured an order worth Rs 87 crore for supplying electricals to Rashtriya Nigam Ispat.
The BSE Oil & Gas index rose 298.97 points or, 2.63% at 11,688.18. Oil & natural Gas Corporation of India (ONGC) fell 0.88% 1,289.25.
GAIL India soared 6.51% to Rs 457.30 on reports that the company is looking at acquiring stake in a Nigerian LNG plant and has expressed interest in setting up a gas-based petrochemical plant in Nigeria.
Reliance Industries was up 4.04% to Rs 2762.65. The company has struck gas in its block KG-OSN-2001/1 (KG-III-5) in the Krishna Godavari offshore basin. The company is still evaluating the commerciality of the discovery.
Sterlite Industries (India) was up 6.58% to Rs 1056.95. The company said today, 7 November 2007, it intends to participate in coal-based power generation projects and other ancillary activities through its subsidiary, Sterlite Energy.
National Thermal Power Corporation (NTPC) was up 0.61% to Rs 241. The company declared after trading hours on Tuesday, 6 November 2007, it has entered into an agreement with the Ministry of Railways for setting up a joint venture company namely "Bhartiya Rail Bijlee Company" for setting up a captive power plant of 1000 mega watt at Nabinagar, Bihar. NTPC will contribute 74% of equity and Indian Railways will hold the balance 26% equity. 90% of the power from the plant will be supplied to Indian Railways and 10% to others.
ABG Heavy Industries (ABG) fell 2.26% to Rs 481.05. The company has acquired the world's largest crane with a capacity of 3,200 metric tonne from Terex-Demag GMBH & Co of Germany. The crane, acquired for an undisclosed amount, will be used for the entire infrastructure requirements in refineries, petrochemicals, nuclear and bridge construction facilities.
Lupin was up 1.33% to Rs 555.10. The company reportedly plans to acquire a speciality pharmaceutical company in the United States to expand its portfolio of brands in the paediatrics segment.
Reliance Natural Resources clocked the highest turnover of Rs 852.21 crore on BSE. Reliance Petroleum (Rs 790.58 crore), Reliance Industries (Rs 222.28 crore), Larsen & Toubro (Rs 191.88 crore) and Reliance Energy (Rs 182.10 crore), were other turnover toppers in that order.
Reliance Natural Resources registered highest volumes of 5.56 crore shares on BSE. Reliance Petroleum (3.60 crore shares), Ispat Industries (3.37 crore shares), IFCI (82.97 lakh) and Facor Alloys (81.85 crore shares), were other turnover toppers in that order.
European equities dropped, wiping out gains registered earlier during the day as the euro hit a fresh record high above $1.47 stoking worries over the impact on corporate earnings. France’s CAC 40 was down 0.81% to 5,663.04, UK’s FTSE 100 was down 0.95% to 6,413.30 and Germany’s DAX was down 0.49% to Rs 7,788.97.
Asian markets were mixed. Hong Kong’s Hang Seng was up 0.92% at 29,708.93. Taiwan’s Taiwan Weighted was up 0.08% at 9,300.22. Singapore’s Straits Times was down 0.27% at 3,673.01. Japan’s Nikkei 225 was down 0.94% at 16,096.68. South Korea’s Seoul Composite was down 0.54% at 2,043.19.
On Wall Street, energy stocks such as Exxon Mobil gained ground on Tuesday, 6 November 2007, helping send the blue chip Dow up 0.9%. The tech-heavy Nasdaq Composite Index advanced 1.1%.
Foreign institutional investors (FIIs) bought shares worth a meagre Rs 5.10 crore on Tuesday, 6 November 2007. FIIs sold shares worth a net Rs Rs 656.90 crore on Monday, 5 November 2007, the day when Sensex had lost 385.45 points or 1.93% to 19,590.78 on renewed fears over the impact of US credit crisis after US financial giant Citigroup said it may suffer up to $11 billion in write-downs for subprime losses. FIIs had sold shares worth a net Rs 761.40 crore on Friday, 2 November 2007.
Recent FII sales/slowdown in inflow comes when Securities & Exchange Board of India (Sebi) put restrictions on issue of participatory notes (PNs) and it also directed unwinding of some exiting PNs within 18 months. The Sebi restrictions on use of PNs came into force from 25 October 2007.
Massive FII inflow had send the market surging in the last two months. FII inflow was a robust in the last two months - at Rs 16132.60 crore in September 2007 and Rs 20590.90 crore in October 2007. FII inflow had surged as huge liquidity infused by a steep 50 basis points cut in Fed funds rates in mid-September 2007 found its way into emerging markets.
The Q2 September 2007 results of India Inc.were decent to strong which means that strong fundamentals would support Indian equities at declines. At the macro level, the India’s economy is expected to post decent to strong growth for a long period of time, mainly due to favourable demographics. Mutual funds are said to be sitting on a strong cash pile of about Rs 14000 crore and they may step up buying if and when there is a steep correction on the bourses.
At current 19289.83, Sensex trades at a PE multiple of 18.37 to 19.29 based on projected FY 2009 EPS of Rs 1000-to-Rs 1050 for 30 Sensex companies.
Market falls FII stop buying
An extremely volatile market ended lower for third straight day on Wednesday, on concerns of foreign capital inflows drying up.
Indices opened with a gap-up led by oil majors Reliance Industries and ONGC but soon lost steam. Bulls staged a comeback mid-session, lifting the market and indices up. But the recovery was short-lived as wary investors booked profits at every rise.
Bombay Stock Exchange's benchmark Sensex ended 110 points or 0.57 per cent lower at 19,289.83. The 30-index touched a high of 19,678.50 and low of 19,249 intraday.
National Stock Exchange's 50-stock Nifty closed down 4.15 points or 0.07 per cent at 5782.35.
“Profit booking seems to be taking place. Market had gone up on concerted buying by FIIs. As they are not participating in buying, there is nervousness. Volatility is not going to reduce tomorrow either,” said Arun Kejriwal, director, Kejriwal Investment Services.
Foreign institutional investors pulled out around Rs 1,419 crore from the Indian market over Friday and Monday, while they bought shares worth Rs 7.62 crore on Tuesday.
Kejriwal advises investors to look at stock specific movement rather than Sensex movement.
The Sensex got support from heavyweight Reliance Industries which rose over 4 per cent to Rs 2762.65 on reports of gas find in one of its blocks in Krishna-Godavari offshore basin.
Some late buying in State Bank of India lent further support to the index. SBI closed up 2.66 per cent at Rs 2267.45.
Amongst the sectoral indices, BSE Oil & Gas Index closed 2.63 per cent higher at 11,688.18 , BSE Metal Index closed up 0.94 per cent at 17,367.72.
BSE IT was the worst hit on account of rupee appreciation. The currency touched a peak of 39.16 early in the day but eased later to 39.28. BSE IT Index fell 4.34 per cent to 4,343.42.
IT bellwether Infosys Technologies was the biggest loser. It closed down Rs 106.90 or 5.78 per cent at Rs 1,743.
BSE Midcap and Smallcap closed lower 0.37 per cent and 1.10 per cent, respectively.
Among stocks, Reliance Natural Resources and Reliance Petroleum managed to trim losses to 7.02 per cent and 0.73 per cent respectively. RNRL had plunged 16.89 per cent to Rs 135 and Reliance Petroleum fell 6.69 per cent to Rs 205.60 in early trade.
Sugar stocks were in focus, led by Bajaj Hindustan, Balrampur Chini and Dhampur, on reports that Sri Lanka may increase purchases of the commodity next year having cut import tax on the commodity to check inflation and after a drought and pest attacks cut sugarcane output this year.
GAIL India advanced on reports it is looking at acquiring stake in a Nigerian LNG plant and has expressed interest in setting up a gas-based petrochemical plant. The stock closed 6.51 per cent up at Rs 457.30.
Sterlite Industries climbed up on plans to enter coal based thermal power projects through subsidiary Sterlite Energy. The share closed up 6.58 per cent at Rs 1,056.95.
Nifty November 2007 futures turn to discount from premium over spot price
Turnover declines sharply
Nifty November 2007 futures were at 5762, a discount of 20.35 points over spot Nifty closing of 5782.35. On Tuesday, 6 November 2007, Nifty November 2007 futures had settled at a premium of 15.75 points over spot price.
Turnover on NSE’s futures & options (F&O) segment was Rs 62678.11 crore today, which was much lower than Tuesday’s Rs 82952.01 crore.
Reliance Industries (RIL) November 2007 futures were at 2774, at a premium over spot price of Rs 2770.90.
Reliance Natural Resources November 2007 futures were at 152.60, at a premium over spot closing of Rs 151.25.
Reliance Petroleum (RPL) November 2007 futures were at 214, at a discount over spot closing of Rs 218.80.
In cash market, Nifty lost 4.15 points or 0.07% to settle at 5782.35.
Post Market Commentary
The market closed the session on a negative note as the investors are in a mood to book profits. A lot of volatility is seen in today''s trading session. The BSE Sensex closed lower by 110.84 points at 19,289.83 while fell dropped by 4.15 points to close at 5782.35. Overall, the market breadth was weak as 1674 stocks are closed in red while 1028 stocks are closed in green. The BSE Mid Cap and Small Cap closed lower by 29.34 points and 107.90 points at 7,985.96 and 9,695.13 respectively.
The oil and gas index grew by 298.97 points to close at 11,688.18. Scrips that jumped are GAIL India (6.51%), HPCL (5.25%), Reliance industries (4.04%), IOCL (3.30%) and BPCL (1.80%) closed higher.
BSE Metal index grew by 161.66 points to close at 17,367.72 Pushing it up are Sterlite (6.58%), Jindal Saw (5.15%), Seasa Goa (4.96%) and Nalco (4.73%) closed in green.
The capital goods index grew by 41.07 points to close at 19,738.36. Leading the gainers pack are BHEL (3.55%), ABB (1.53%), Punj Lloyd (1.01%), BEML (0.29%) and Praj industries (0.16%) closed higher.
BSE bankex index dropped by 166.29 points to close at 10,620.22. Pulling it down are HDFC bank (5.16%), Canara bank (3.36%), ICICI bank (2.98%), Yes bank (1.35%) and AXIS bank (0.55%) closed lower.
The IT index fell by 197.27 points to close at 4,343.42. Pulling it down are Rolta India (7.75%), Infosys (5.78%), Tech Mahindra (4.93%), Satyam (4.03%) and HCL (3.43%) closed in positive.
Market gives up early gains; IT, telecom stocks slide
Market gave away mid-afternoon gains and settled lower following sudden fall in European markets. Volatility was high today. IT and banking stocks slumped. Telecom stocks lost ground. Oil & gas, auto and capital goods stocks edged higher. Index heavyweight Reliance Industries rallied. Asian indices ended on a mixed note.
The 30-share BSE Sensex provisionally ended down 134.75 points or, 0.69% at 19265.92. It touched a high of 19,678.50 in early trade, which was a gain of 277.83 points for the day. Sensex touched a low of 19,249.47 in late trade, at which it had lost 151.20 points for the day.
The broader S&P CNX Nifty was down 13.2 points, or, 0.23% at 5773.30, as per provisional closing.
The market breadth was negative. On BSE, 1033 stocks advanced, while 1667 stocks declined and 77 stocks remained unchanged. 20 out of 30 stocks declined from the Sensex pack.
The BSE Mid-Cap index was down 31 points or 0.39% at 7,984.30, while the BSE Small-Cap was down 111.70 points or 1.14% at 9,691.33.
BSE clocked a turnover of Rs 6837 crore, lower than Tuesday (6 November 2007)’s Rs 9922 crore.
Reliance Industries gained 3.82% to Rs 2757.05. Bharat heavy Electrical (Bhel) rose 3.70% to Rs 2825. Maruti Suzuki India jumped 2.46% to Rs 997.10. Mahindra & Mahindra moved up 2.30% to Rs 758. State Bank of India rose 2.23% to Rs 2258.
Infosys Technologies slumped 6.20% to Rs 1736. HDFC Bank dropped 5.10% to Rs 1619. Satyam Computers fell 4.66% to Rs 432. ICICI Bank gave away 280% to Rs 1206.10. Wipro fell 3.25% to Rs 471.50.
The BSE IT index lost 216.67 points or 4.77% at 4,324.02. The BSE Auto index provisionally settled 9.28 points or, 0.18% higher at 5,286.52. The BSE Bankex fell 185.87 or, 1.72% at 10,600.64. The BSE Capital Goods gained 61.85 points or, 0.31% at 19,759.14. The BSE Oil & Gas index rose 272.61 points or, 2.39% at 11,661.82.
European equities dropped, wiping out gains registered earlier during the day as the euro hit a fresh record high above $1.47 stoking worries over the impact on corporate earnings. France’s CAC 40 was down 1.11% to 5,646.12, UK’s FTSE 100 was down 1.37% to 6,386.30 and Germany’s DAX was down 0.58% to Rs 7,782.02.
Asian markets were mixed. Hong Kong’s Hang Seng was up 0.92% at 29,708.93. Taiwan’s Taiwan Weighted was up 0.08% at 9,300.22. Singapore’s Straits Times was down 0.27% at 3,673.01. Japan’s Nikkei 225 was down 0.94% at 16,096.68. South Korea’s Seoul Composite was down 0.54% at 2,043.19.
On Wall Street, energy stocks such as Exxon Mobil gained ground on Tuesday, 6 November 2007, helping send the blue chip Dow up 0.9%. The tech-heavy Nasdaq Composite Index advanced 1.1%.
Yesterday, 6 November 2007, the Indian market had failed to participate in rally in Asian stocks on Tuesday, 6 November 2007, when Sensex lost 190.11 points or 0.97% to 19,400.67, in contrast to a 1% rise in MSCI's measure of Asia Pacific stocks ex-Japan.
PSU oil stocks rally in volatile market
Sustained selling pressure persisted for the third consecutive session and the Sensex fell over 111 points at close. Despite opening on a positive note, the Sensex could not hold on to its gains on profit bookings in most of the heavyweights and information technology stocks. The market took cue from the firm Asian markets and rallied sharply to touch the day's high of 19,679, up 278 points by afternoon. Thereafter, displaying some volatile moves the market slipped towards the close on unabated selling to touch its day's low of 19,249. The Sensex finally wrapped up the session by losing 111 points at 19,290, while the Nifty ended the session at 5,782, down five points.
The market breadth was negative, with the losers outpacing the gainers in the ratio of 1.6:1. Of the 2,779 stocks traded on the Bombay Stock Exchange (BSE), 1,670 stocks declined, 1,030 stocks advanced and 79 stocks ended unchanged. Among the sectoral indices, the BSE IT index tumbled by 4.34% followed by the BSE Teck index (down 3.20%), the BSE Bankex index (down 1.54%), the BSE Realty index (down 1.01%) while, the BSE Oil & Gas index flared up by 2.63% and the BSE PSU index gained 1.08%.
Except a few, the index stocks ended at lower levels. Infosys lost heavily and tumbled 5.78% at Rs1,744. Among the other losers, HDFC Bank slumped 5.16% at Rs1,618, Satyam Computer slipped 4.03% at Rs435, ICICI Bank fell 2.98% at Rs1,204, Reliance Communication dipped by 2.50% at Rs727, Wipro was down 2.05% at Rs477and Bharti Airtel lost 1.98% at Rs900. However, select PSU oil stocks bucked the trend and rallied sharply. Reliance surged 4.04% at Rs2,763, BHEL vaulted 3.55% at Rs2,821, SBI spurted 2.66% at Rs2,267 and M&M scaled up 2.54% at Rs760.
Over 5.56 crore Reliance Natural Resources Ltd shares changed hands on the BSE followed by Reliance Petroleum (3.60 crore shares), Ispat Industries (3.37 crore shares), IFCI (82.97 lakh shares) and Factor Alloys (81.85 lakh shares).
Valuewise, Reliance Industries registered a turnover of Rs222 crore on the BSE followed by L&T (Rs191 crore), Reliance Energy (Rs182 crore), SBI (Rs139 crore) and Infosys (Rs118 crore).
Grey Market Premiums
Reliance Power -- 53 to 54
Mundra Port & Sez 400 to 440 460 to 470
Empee Distilleries 350 to 400 65 to 70
Edelweiss 725 to 825 650 to 700
Varun Ind. 60 36 to 38
Religare Enterprises 185 295 to 300
Barak Valley Cement 37 to 42 15 to 16
Rathi Bars 35 1 to 1.50
Allied Computers 12 12 to 14
SVPCL 40 to 45 2 to 3
Morning Call
Market Grape Wine :
In House :
Nifty at a supp of 5740 and 5700 with resis at 5822 and 5870
Intra Day: Buy Abb above 1625 with a TGT of 1667 and a SL of 1605
Sell Bharti below 904 with a TGT of 880 and a SL of 913
F&O: Buy GMRINFRA above 201 with a TGT of 215 and a SL of 195
Buy Bajajauto above 2475 with a TGT of 2530 and a SL of 2453
Out House :
Markets at a support of 19119 & 19291 levels with resistance at 19786 & 19696 levels .
Maintain strict stop loss for your trades as markets to be very choppy and volatile .
Buy : RIL
Buy : REL & RPL
Buy : JpAsso
Buy : Centextile
Buy : IolBroadband
Buy : IBUlls bullet
Buy : MRPL & Neyvellie goli
Buy : Aban
Dark Horse : ABAN ,GMR , REL ,IBulls , RIL , Centextile , JPASSO & SBIN
Pre Market Watch
Indian market is likely to have positive opening due to positive global cues. On Tuesday, the BSE Sensex closed lower by 190.11 points at 19,400.67 and Nifty fell 60.8 points to close at 5,786.50. We expect the market trade higher during the trading session.
Tuesday, the US markets closed in green. The Dow Jones Industrial Average (DJIA) grew by 117.54 points to close at 13,660.94 along with NASDAQ Composite and S&P 500 closed higher by 30 points and 18.10 points at 2,825.18 and 1,520.27 respectively.
Indian ADRs ended in mixed. In banking sector, HDFC bank & ICICIC bank grew by (3.30%) and (2.22%) respectively. In technology sector, Infosys fell by (6.90%) along with Wipro by (6.29%), Satyam by (3.80%) and Patni computers by (1.28%). In telecommunication sector, VSNL advanced by (2.14%) while MTNL slipped by (0.47%).
The major stock markets in Asia are trading strong. Japan''''s Nikkei is trading up by 69.17 points at 16,318.80. Hang Seng is trading higher by 370.54 points at 29,808.67. Taiwan weighted advanced by 92.78 points to trade at 9,385.58. Seoul Composite is trading higher by 19.24 points at 2,073.48.
Yesterday, FIIs stood as the net seller as the gross equity purchased by them was Rs.4,550.20 (in crores), and the gross debt purchased was Rs.0.00 (in crores) as against the gross equity sold was Rs.5,207.10 (in crores) and the gross debt sold was Rs.0.00 (in crores). The net investment of equity was -Rs.656.90 (in crores) and the net debt investment was Rs.0.00 (in crores).
Today, Nifty has support at 5,761 and resistance at 5,908 and BSE Sensex has support at 19,283 and resistance at 19,792.
Market may edge higher on steady-to-firm Asian equities
he market may edge higher tracking firm Asian markets. However, the upside may be capped due to due to recent FII sales/slowdown in FII inflow. There has been slowdown in FII inflow and also a bout of FII outflow since the past few days. As per provisional data, FIIs bought shares worth a net Rs 7.62 crore on Tuesday, 6 November 2007.
FIIs sold shares worth a net Rs Rs 656.90 crore on Monday, 5 November 2007, the day when Sensex had lost 385.45 points or 1.93% to 19,590.78 on renewed fears over the impact of US credit crisis after US financial giant Citigroup said it may suffer up to $11 billion in write-downs for subprime losses. FIIs had sold shares worth a net Rs 761.40 crore on Friday, 2 November 2007.
Recent FII sales/slowdown in inflow comes when Securities & Exchange Board of India (Sebi) put restrictions on issue of participatory notes (PNs) and it also directed unwinding of some exiting PNs within 18 months. The Sebi restrictions on use of PNs came into force from 25 October 2007.
Massive FII inflow had send the market surging in the last two months. FII inflow was a robust in the last two months - at Rs 16132.60 crore in September 2007 and Rs 20590.90 crore in October 2007. FII inflow had surged as huge liquidity infused by a steep 50 basis points cut in Fed funds rates in mid-September 2007 found its way into emerging markets.
The Q2 September 2007 results of India Inc.were decent to strong which means that strong fundamentals would support Indian equities at declines. At the macro level, the India’s economy is expected to post decent to strong growth for a long period of time, mainly due to favourable demographics. Mutual funds are said to be sitting on a strong cash pile of about Rs 14000 crore and they may step up buying if and when there is a steep correction on the bourses.
The Indian market had failed to participate in rally in Asian stocks on Tuesday, 6 November 2007, when Sensex lost 190.11 points or 0.97% to 19,400.67, in contrast to a 1% rise in MSCI's measure of Asia Pacific stocks ex-Japan.
Asian stocks extended gains on Wednesday, 7 November 2007. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were up by between 0.34% to 2%.
On Wall Street, energy stocks such as Exxon Mobil gained ground on Tuesday, 6 November 2007, helping send the blue chip Dow up 0.9%. The tech-heavy Nasdaq Composite Index advanced 1.1%.
US crude, trading at $97.07 a barrel in Asian trade, hit a life high of $97.10 after the US government predicted robust demand and tight output from OPEC would lead to a supply crunch in consumer nations this winter.
Trading Calls
Nifty (5787) Supp 5702 Ress 5852
Buy Unitech (387) SL 382 tgt 396, 399
Buy S Kumars (133) SL 130 Tgt 139, 141
Buy STER (990) SL 980 Tgt 1018, 1023
Sell Tata Tea (778) SL 784 tgt 768, 765
Sell IFCI (81) SL 84 tgt 75, 73
Volatility may persist
A perpetual holiday is a good working definition of hell: George Bernard Shaw
It should be the local players who should be on a holiday to celebrate Diwali. But, looks like the FIIs are on a holiday or planning to take one, if one goes by the recent trend in their investments. If the vacation gets extended, the bulls will find it tough to advance from the current levels. In a scenario of steady FII outflows or lack of fresh inflows, the market will remain choppy and rangebound. Chances of a long-overdue correction may also increase if FIIs remain net sellers over the next few days. On top of that, we have fresh concerns on the subprime mess in the US and its impact on global markets. Throw in the lack of any positive factors in the near term and what we have is a market which in cricketing terms is in 'no man's land'. And, the bulls certainly don't like to be stuck at one place. So, we expect the consolidation phase to continue for a while. The broad market direction will hinge on global markets and the mood of the FIIs.
Today however, things do not appear that somber. Most global markets are in a chirpy mood today thanks to the overnight rally on Wall Street. As a result, we expect a firm opening. But, yesterday too the start was good and the close wasn't. Similar was the case on Monday too. Don't be surprised, if the same trend plays out on the bourses even today. The bulls somehow seem to be suffering from fatigue after a huge run-up from late August. Intra-day gyrations will continue amid no clarity on the direction. As much as possible be stock specific and avoid aggressive purchases at this stage as the upside looks capped. One may also lock in some gains on every rally.
Wall Street staged a late rebound to finish higher on Tuesday, as higher oil and gold prices buoyed a market still grappling with credit market jitters. Energy and metal producers paced the gains after oil climbed to a record and gold advanced to a 27-year high.
Exxon Mobil posted its steepest advance since August, while Newmont Mining rallied to the highest since July 2006. Bank of America, JPMorgan Chase and Wells Fargo led a rebound in financial shares after three days of declines pushed valuations to a 10-year low.
The S&P 500 Index added 18 points, or 1.2%, to 1,520.27. The Dow Jones Industrial Average rose 117 points, or 0.9%, to 13,660.94. The Nasdaq added 30 points, or 1.1%, to 2,825.18.
Market breadth was positive. Almost three stocks gained for every one that fell on the New York Stock Exchange.
Oil prices jumped more than $3 a barrel to a new record trading high of $97.07 a barrel on supply fears and a falling dollar. Light, sweet crude for December settled up $2.72 to $96.70 a barrel on the New York Mercantile Exchange. Crude oil surged past $98 a barrel in after hours.
Gold prices continued to trade at levels not seen since 1980, as COMEX gold for December added $13 to $823.80 an ounce.
Treasury prices fell, lifting the yield on the benchmark 10-year note to 4.37 percent, down from 4.31 percent late Monday. The dollar retreated to a new record low against the euro but gained against the yen.
European shares snapped a three-session losing streak. The pan-European Dow Jones Stoxx 600 index rose 0.4% to 378.64. The UK's FTSE 100 closed up 0.2% at 6,474.90, the German DAX 30 increased 0.3% to 7,827.19 and the French CAC-40 gained 0.5% at 5,710.09.
In the emerging markets, the Bovespa in Brazil jumped 2.5% to 64,503 while the IPC index in Mexico gained 0.9% at 30,430. The RTS index in Russia rose 1.8% at 2268 and the ISE National-30 index in Turkey was up 1.8% at 72,267.
Asian stocks advanced for a second day after commodities prices rallied and Softbank and Singapore Telecommunications reported higher earnings.
BHP Billiton gained after gold reached a 27-year high and crude oil rose to a record. Mitsui OSK Lines rose after the Nikkei newspaper said container rates charged by shipping lines between Asia and North America will increase 15% next year.
The Morgan Stanley Capital International Asia Pacific Index added 0.9% to 167.89 as of 11:02 a.m. in Tokyo, extending yesterday's 0.6% advance. Indices tracking energy, materials and telecom stocks posted the biggest gains among the regional benchmark's 10 industry groups.
Japan's Nikkei 225 Stock Average climbed 0.4% to 16,318.80 and the S&P/ASX 200 Index rose 0.8% in Australia, where the central bank raised its key interest rate to an 11-year high. Asian stock benchmarks climbed across the region.
Volatility to continue
A volatile session ended in red for second straight trading session as bulls yet again struggled to hold on to their early gains. Key indices erased all their gains as selling pressure in the Banking, Metal, Oil & Gas and Auto stocks dragged the benchmark Sensex to hit a low of 19,337. Finally, benchmark Sensex lost 190 points to close at 19,400. NSE Nifty closed 60 points lower at 5,786.
BHEL surged by over 3.5% to Rs2743 after reports stated that the company emerged the sole bidder for 1600MW power plant in Andhra Pradesh. The scrip has touched an intra-day high of Rs2785 and a low of Rs2674 and has recorded volumes of over 11,00,000 shares on NSE.
Century Textile rose over 4.5% to Rs1050 following reports that the company would develop 3 m Sq Ft land in first phase. The scrip has touched an intra-day high of Rs1095 and a low of Rs976 and has recorded volumes of over 10,00,000 shares on NSE.
Sun TV closed on a flat note at Rs310. The company announced that they are launching two FM radio stations in
Biocon was up 2% to Rs573 after reports stated that the company is close to acquire a drug marketing and distribution firm in US by the year end. The scrip touched an intra-day high of Rs585 and a low of Rs562 and recorded volumes of over 3,00,000 shares on NSE.
Punj Lloyd dropped 5.4% to Rs502. Reports stated that the company’s subsidiary won a contract of Rs17bn in
Gitanjali Gems dropped 3% to Rs366. The company announced that they have formed a Joint Venture Company in the name of "Modali Distributors Pvt Ltd". The JV Company is engaged in the business of distributionship, primarily of jewellery and jewellery related products.
Further the Company informed that, the name of the joint Venture Company "Modali Distributors Pvt Ltd" has been changed to "Modali Gems Pvt Ltd". The scrip touched an intra-day high of Rs383 and a low of Rs340 and recorded volumes of over 13,00,000 shares on NSE.
Diamond Cables locked at 10% upper circuit to Rs374 after reports stated that Clear Water Capital would invest Rs160cr and GE Capital would invest Rs68cr in the company. The scrip touched an intra-day high of Rs374 and a low of Rs341 and recorded volumes of over 2,00,000 shares on NSE.
Sterlite Optical advanced 1.4% to Rs304 after the company announced that it has won Rs1.43bn contract from BSNL. The scrip touched an intra-day high of Rs317 and a low of Rs300 and recorded volumes of over 5,00,000 shares on NSE.
Aztecsoft slipped 2.3% to Rs48. The company announced that they have would build SEZ campus in
Jindal Drilling lost 0.3% to Rs1098. The company on Monday announced that it is now increasing its presence in this emerging segment of oil & gas. The Company is engaged in the Business of Offshore Oil & Gas Drilling Activities. JDIL is also present in the Horizontal and Directional Drilling Business Activity.
The company’s total order book stands at Rs26.30bn & the financial impact of this contract would start accruing from the fourth quarter of current years itself. The scrip touched an intra-day high of Rs1200 and a low of Rs1082 and recorded volumes of over 10,000 shares on NSE.
Stocks in News:
Reliance Industries has struck gas in its KG-OSN-2001/1 block, in the Krishna offshore basin.
ONGC has decided to pick up sizeable stake in two more blocks in Sudan.
Wipro Tech has filed a patent for e-Enabler, a solution kit based on Service Oriented Architechture.
Lupin plans to acquire a specialty pharmaceutical company in US.
Wockhardt is set to foray in the niche anti-cancer drug segment in the domestic retail market.
Ballarpur Industries is looking for acquisitions to take its total capacity to 1 mn tons.
PTC India plans to source 15mn tons of coal from Australia,
Indonesia and Africa.
Amtek is close to acquiring a UK based automotive machinery company Triplex
Ketlon Group plans to merge Amtek Auto and Amtek India.
Maharashtra Government has stayed the land acquisition process for a Videocon SEZ near Pune.
GAIL plans to source LNG from Nigeria besides acquiring equity stake in LNG projects there.
PSL has achieved financial closure for its integrated pipe manufacturing and coating facility in Mississippi.
GlaxoSmithKline’s breast cancer drug Tykerb is set to enter the Indian market next year.
NTPC and Railways will set up a 1,000MW power plant in Bihar.
The RBI has recommended tightening ECB norms further to check unbridled foreign capital inflows.
The planning commission has floated a new proposal for allowing up to 49% equity by
foreign airlines in domestic carriers.
FII Investment Trend:
FIIs were net buyers of just Rs76.2mn (provisional) in the cash segment on Tuesday while the local institutions pumped in Rs2.07bn.
In the F&O segment, FIIs were net sellers of Rs3.3bn.
On Monday, FIIs were net sellers of Rs6.57bn in the cash segment.
Major Bulk Deals:
Morgan Stanley has bought Garware Wall Ropes while Merrill Lynch has sold it; Morgan Stanley has sold Gitanjali Gems; Bennett Coleman & Co. has purchased GTL Infra; Lotus Global has sold Kashyap Tech; Clearwater Capital has picked up Lyka Labs; LIC has purchased Mastek while Morgan Stanley has sold it; Reliance MF has bought Nicholas Piramal; Templeton MF has picked up PTC India; Lehman Brothers has purchased S. Kumars Nationwide.
Market expected to open positive
Positive close in US markets and firm Asian indices in morning trades may help the market open in the green. However, worries about FIIs remaining net sellers of equities in the domestic market and recent spike in crude oil prices could force the players to remain on the sidelines. The Nifty on the downside may dip to 5694 while on the upside it may test 5850. The Sensex has a likely support at 19000 and may face resistance at 20500.
US indices bounced back in a late session rally on Tuesday helped by the energy sector gains. While the Dow Jones advanced by 118 points at 13661, the Nasdaq added 30 points to close at 2825.
Most of the Indian floats trading on the US bourses buckled under selling pressure. Infosys was the major loser and slumped over 6.90% while Wipro, Satyam and Rediff crumbled more than 4-6%. Tata Motors, MTNL, Satyam Computer declined around 0.5-1% each. HDFC Bank, however, rose 3.30% while Dr Reddy's, VSNL and ICICI Bank ended with decent gains.
Crude oil prices surged further due to thinning oil stocks and a North Sea storm. The Nymex light crude oil for December delivery gained $2.72 to close at $96.70 a barrel. In the commodity space, the Comex gold for December series rose by $13 to settle at $810.80 a troy ounce.
Crude at new high
Crude on the verge of touching the $100 mark
Supply concerns, tumbling dollar and storm forecasts sent crude prices to a new all time high today, 6 November, 2007 as crude crossed the $97/barrel mark.
For the day ending Tuesday, 06 November, 2007, crude-oil futures for light sweet crude for December delivery closed at $96.67/barrel (higher by $2.69/barrel or 2.9%) on the New York Mercantile Exchange. Prices rose to $97.1/barrel during intra day trading. Oil prices rose 16% in October, 2007, the biggest one-month gain since September 2004.
Brent crude oil for December settlement rose $2.69 (3%) to $93.18 on the London-based ICE Futures Europe exchange.
As per reports, a storm forecast forced BP and ConocoPhillips to evacuate workers and cut production. Conoco and BP said they have started evacuating workers from some facilities before the weather worsens.
It was also reported today that an oil pipeline in north-central Yemen was blown up by tribesmen.
Regarding tomorrow’s weekly inventory report by the Energy Department, crude inventories are expected to show a third weekly consecutive drop.
In the currency market today, the dollar traded down against the euro after sinking to new record lows, as investors weighed ongoing credit woes and surging crude-oil futures. The dollar index, which tracks the greenback against a basket of six major currencies, dropped 0.5% at 76.05.
Natural gas bears drops though crude continues to rise
Natural gas in New York fell on an outlook for inventories to expand to a record and as weather forecasters called for mild weather. Gas for December delivery declined 13.6 cents (1.7%) to settle at $7.863 per million British thermal units.
Against this backdrop, Heating oil for December delivery rose 6.46 cents, or 2.5 percent, to $2.6085 a gallon in New York. Futures touched $2.6198, the highest since trading began in 1978. Gasoline for December delivery rose 5.29 cents, or 2.2 percent, to $2.434 a gallon in New York.
At the MCX, crude oil for November delivery closed at Rs 3790/barrel, higher by Rs 45 (1.2%) against previous day’s close. Natural gas closed at Rs 309.7/mmtbu as against previous close of Rs 319.4/mmtbu, lower by Rs 10/ mmtbu.
OPEC has 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 Middle East 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.
The Energy Department will come out with the weekly inventory report on crude oil and fuel products for week ended Friday, 05 November tomorrow morning at Washington at 10.30 E.T
Gold and silver rise to new highs
Tumbling dollar and spiraling crude impart all the shine to precious metal prices
Dollar stumbling to a new fresh low against its rival currencies sent precious metals to new highs today, Tuesday, 6 November, 2007. Crude prices spiraling above $97/barrel also lent a hand in this rising price of bullion metals. Gold prices touched highest level I 28 years. Silver price too was at highest level in 26 years.
Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices. Rising crude increases inflationary pressures. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.
Comex Gold for December rose $12.6 (1.6%) to close at $823.4 an ounce on the New York Mercantile Exchange today. Earlier in the day, prices touched $827.2/ounce. It was the highest price after a record $873 on 21 January, 1980.
Comex Silver futures for December delivery rose 59.5 cents (4%) to $15.38 an ounce. The metal has climbed 19% this year. For the month of October, prices gained 3.7%.
Gold had climbed 18% in the past two months (Sept-Oct) as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. In October itself, gold prices gained 6%. The metal's October rally was the fourth straight monthly gain.
In 2006, silver had jumped 46% while gold gained 23%.
In the currency market today, the dollar traded down against the euro after sinking to new record lows, as investors weighed ongoing credit woes and surging crude-oil futures. The dollar index, which tracks the greenback against a basket of six major currencies, dropped 0.5% at 76.05.
Crude oil price today climbed as high as $97.1 a barrel today.
On 31 October, 2007, Federal Reserve cut the fed funds rate by a quarter-point to 4.50% and said that the recent spike in commodity prices may put renewed upward pressure on inflation. Prior to that, Federal Reserve had cut interest rates by half percentage point on 19 September, 2007.
In recent times, the weakening of dollar have continued to affect the price of the metal. Dollar had been witnessing a free fall since Federal Reserve cut interest rates in September. The U.S. currency has lost almost 9.5% against the euro this year and has fallen 4% since the September rate cut.
Gold prices have jumped 15% during the third quarter and it is the most since 1999. The yellow metal has climbed 29% this year. Since the rate cut in September, prices have gone up by almost 12%.
At the MCX, gold prices for December delivery closed at Rs 10,398 per 10 grams. The closing price is Rs 132 (1.3%) higher as against previous closing price. Prices rose to a high of Rs 10,429 per 10 grams and fell to a low of Rs 10,250 per 10 grams during the day’s trading.
At the MCX, silver prices for December delivery closed Rs 527 (2.7%) higher at Rs 19,854/Kg. Prices opened at Rs 19,300/kg and rose to a high of Rs 19,970/Kg during the day’s trading.
FIIs continue to exit the market
Outflow of Rs 656.90 crore on 5 November 2007
Foreign institutional investors (FIIs) sold shares worth net Rs 656.90 crore on Monday, 5 November 2007, compared to their selling of Rs 761.40 crore on Friday, 2 November 2007.
FIIs outflow of Rs 656.90 crore on 5 November 2007 was a result of gross purchases of Rs 4550.20 crore and gross sales Rs 5207.10 crore. The 30-shares BSE Sensex lost 385.45 points or 1.93% to 19,590.78 on that day.
FII inflow in calendar year 2007 totaled Rs 70,747.40 crore (till 5 November 2007).
There are a total of 1,134 FIIs registered with the Securities & Exchange Board of India (Sebi).
Daily Technical Analysis
Nifty — The index opened on a flat note and tested intra-day high of 5957 in the morning trades, after which it declined throughout the day’s trading session. It ended the day with loss of 58 points.
Range-bound — The index has been stuck in a trading band of 5709-6011 for the last seven trading sessions. A breakout from the trading band should see a directional move.
Support & Resistance — The index has support around 5737 (high of 18 october 07), while lower support is around 5709. The resistance level for the day’s trading is around 5840, with higher resistance around 5948.
Conclusion — Index could decline towards the 5737 support level.
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