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Tuesday, November 13, 2007
Post Market Commentary
The market made a smart recovery after the mid session due to the softening of left parties over the nuclear deal. The left parties have agreed to allow the government for negotiation with US over the nuclear agreement. This act as trigger, which set the directions for the market. At the initial stage, volatility was high but later on managed to bag huge gains on the back of heavy buying across the sectoral indices scrips. The capital goods, Bankex, Metal and Power index reported heavy buying. Finally the BSE Sensex closed higher by 298.21 points at 19,035.48 and NSE Nifty inched up by 78.3 points to close at 5,695.40. The overall the market breadth was strong as 1,859 stocks closed in green while 898 stocks closed in red. The BSE Mid Cap and Small Cap closed higher by 168.56 points and 181.65 points at 8,113.72 and 9,801.29 respectively.
The Reality index inclined by 199.60 points to close at 9,998.66. Pulling it up are Anant Raj (6.48%), Ansal Infrastructure (4.76%), DLF (3.90%), Ansal infra (4.76%) and Parsavnath (2.41%) closed in green.
The IT index fell by 39.41 points to close at 4,095.73 as Wipro (3.59%), Patni Computer (2.65%), Mphasis (2.44%), TCS (1.53%) and Infosys (0.88%) closed lower.
BSE Metal index inclined by 280.67 points to close at 17,046.73 Pulling it up are Welspan (11.45%), Jindal Steel (3.86%), SAIL (2.23%), Tata Steel (2.18%), JSW Steel (2.09%) and Sterlite Industries (1.76%) closed in red.
BSE bankex index surged by 351.73 points to close at 10,538.05. From the gainers pack are HDFC Bank (6.98%), Axix Bank (6.15%), Bank Of India (5.05%), Andhra Bank (4.25%) and Kotak Bank (4.21%) closed higher.
The oil and gas index closed up by 39.69 points at 11,408.93. Pushing it higher are BPCL (2.54%), Essar Oil (1.03%), Reliance industries (0.71%) and ONGC (0.32%) closed in green.
The Auto index inched up by 26.30 points to close at 5,136.25 as Punjab tractors (5.23%), Bharat forge (4.02%), Tata Motors (1.14%) and TVS (1.55%) closed higher.
Market Close: LEFT! "Relieves"
Turn around for the day after a shaky start looking at Global Indices but the midcaps and small caps were very much in action from the start. Indices traded ranged till the mid session with selective Heavyweights trading in green. Left may give a nod for IAEA talks, when Left and UPA meet on November 18 regarding the Nuclear deal. This news just brought in the optimism across the board from Engineering, Power, Banking stocks all rallied for the day. Midcaps gained smartly by 2.12% followed by Small caps +1.89%. Techies continued to face the crises. Crude easy over 2$ as it traded below $95 per barrels which saw oil marketing companies to trade up. Global markets traded mixed with closing mixed while Europe are trading ranged and mixed too.
Sensex ended in green up by 298 points at 19,035 levels. Supporting the indices were gains in NTPC (+8.11%), HDFC Bank (+7.08%), L & T (+5.34%),SBI (+3.48%) and HDFC (+2.88%). Restricting the gains were the losses in Wipro (-3.40%), M&M (-2.51%), TCS (-1.91%), Infosys (-0.97%) and Satyam (-0.64%).
Mobile Number Portability which we mentioned in the morning could prove big threat to the to GSM players is here. This news was also came into picture few months back but government kept it aside but this time its going to tougher for GSM operators. The Government has decided to introduce this system in phases, starting with the four metros by fourth quarter of 2008. How much extra revenues it will generate is not clear. but it certainly means that the operators need to invest heavily to offer the services not to be left behind in a competitive environment.
Clearly Reliance Communication is on the winning side for now. 3G services for CDMA doesn't seem to require high spectrum and thus their costs will be lower. Relcom could also feel the pinch as its also entering into GSM it would be able to attract subscribers from competitors on the number portability platform. On the face of it Bharti and Idea are big losers and the unlisted Vodafone. Adding to this is the Government is set to open up 3G spectrum and Wimax for the operators. Indian Telecom companies are set to face stiff competition from Foreign players who waiting to Enter Indian Markets. Another negative is for Tulip IT which provides connectivity. The barrier to entry in its business is going as Wi-max spectrum will also be auctioned. Tulips focus on data has helped it to reach an enviable position with its IP/VPN connectivity in 800 cities. What is not sure to what extent does Wi-Max dilute the competitive advantage but what it does for sure is that it will force Tulip to invest in a big way to compete in this space. Technology is a great leveler in the new economy.
Technically Speaking: Sensex opened in red but gained momentum and ended strong in green. It made intraday high of 19,210 and days low of 18,636. Volume low for the day at Rs 7,943cr. The breath was in favor of Advances, where Advances stood at 1823 and Declines at 906. Sensex on a pullback rally, if it fails to cross above 19350, we might see a fall upto 17700.
Bulls strike back
The bulls were back in action after successive days of battering, as the market taking a cue from the buoyant international indices registered phenomenal gains on the back of an all-round buying support. Resuming 298 points above its previous close at 18,737, strong buying led by heavyweights, banking, power, and CG stocks triggered a major rally that propelled the index to an intra-day high of 19,210 in the afternoon trades. Though the Sensex held firm ground above 19,000 for the better part of the trading session, it finally ended at 19,035, up 298 points. The Nifty advanced 76 points to close at 5,695.
Among the gainers in heavyweights, NTPC soared 7.40% at Rs272, HDFC Bank flared up 6.98% at Rs1,579, L&T jumped 4.84% at Rs4,369, HDFC scaled up 2.98% at Rs2,587, SBI surged 2.62% at Rs2,296, ICICI Bank added 2.57% at Rs1,176, Tata Steel jumped 2.18% at Rs833 and Reliance Energy gained 1.92% at Rs1,853. However, Wipro, M&M, and Hindalco eased marginally.
The market breadth was extremely positive, Of the 2,823 stocks traded on the Bombay Stock Exchange (BSE), 1,859 stocks advanced, 897 stocks declined and 67 stocks ended unchanged. On the sectoral front, the BSE Bankex index led the gainers pack and surged 3.40% at 10,538 followed by the BSE CG (up 3.40% at 20,292), the BSE Power index (up 3.04% at 4,527), the BSE PSU index (up 2.66% at 10,125), the BSE Reality index (up 2.04% at 9,998) and the BSE Metal index (up 1.67% at 17,046).
Over 3.67 Crore Ispat Industries shares changed hands on the BSE followed by RNRL (3.36 Crore shares), RPL (1.48 Crore shares), Sunflag (1.26 Crore shares) and Power Grid(93 lakh shares).
Value-wise RNRL registered a turnover of Rs535 crore followed by Reliance Industries (Rs360 crore), RPl (Rs323 crore), NTPC (Rs21 crore), and L&T (Rs200 crore).
Sensex garners 298 points
The market surged on value buying after a sustained slide over the past six days in a row. Reports that the Left front may allow the government to negotiate safeguards for a civilian nuclear agreement with the US, aided the surge. Volatility was high throughout the trading session. Infosys edged lower, in volatile trade. Banking, capital goods and power stocks edged higher. The market breadth was strong. European markets recovered from early lows. Asian markets were mixed.
As per reports, the Left front may allow the government to negotiate safeguards for a civilian nuclear agreement with the US, while retaining the right to veto the deal's further progress. A panel set up by the coalition and the left parties to discuss concerns over the accord may consider such a proposition, A.B. Bardhan, general secretary of the Communist Party of India, said in an interview yesterday, 12 November 2007, to a television channel.
Bardhan's remark indicates a softening of the stand by the communist parties, whose support is crucial to the coalition government's majority in parliament. The left parties, who oppose the agreement, had earlier turned down the government's plea to allow the start of negotiations with the International Atomic Energy Agency, the global nuclear watchdog.
Earlier, relations between the Congress party and the Left front were strained due to Left front's opposition to the nuclear deal which had raised possibility of mid-term polls. However, the fears of mid-term polls had eased when Congress president Sonia Gandhi said last month that Left parties were not unreasonable in opposing the deal, and the government was not looking for a confrontation with Left parties.
The 30-share BSE Sensex rose 298.21 points or 1.59% to 19,035.48. The broader S&P CNX Nifty gained 78.30 points or 1.39% to 5695.40.
The Sensex began the trading session 56.17 points lower at 18,681.10 and at one point of time shed 101.06 points for the day to reach a low of 18,636.21 in early trade. The market witnessed a dramatic turnaround in the afternoon as substantial buying at lower level helped the index scale 19,210.48. At day's high of 19,210.48, Sensex had risen 473.21 points.
The market breadth was strong. On BSE, 1859 stocks advanced, while 898 stocks declined and 66 remained unchanged. 19 out of 30 Sensex stocks edged higher.
BSE clocked a turnover of Rs 7943 crore compared to Monday (12 November 2007)'s Rs 6,431.83 crore.
The NSE futures & options (F&O) turnover was at Rs 67336.02 crore compared to Monday (12 November 2007)'s Rs 56771.23 crore.
The Nifty November 2007 futures were at 5736, a premium of 40.6 points over spot closing of 5695.40.
The BSE Mid-Cap was up 2.12% to 8,113.72 and the BSE Small-Cap was up 1.89% to 9,801.29. Both these indices outperformed Sensex.
India's biggest power generation firm by revenue National Thermal Power Corporation (NTPC) jumped 7.40% to Rs 272.25. As per reports, it is one of the bidders who have submitted bids for setting up the 4,000 mega watt Tilaiya ultra mega power project in Jharkhand.
Reliance Industries, India's biggest private sector firm in terms of market capitalisation and oil refiner, moved up 0.71% to Rs 2695.85, off session's low of Rs 2651.55. Its wholly owned subsidiary, Reliance Exploration and Production DMCC signed a production sharing agreement with the government of Oman for offshore block number 41 in Oman.
The BSE Bankex ended up 3.45% at 10,538.05. It outperformed the Sensex. HDFC Bank soared 6.98% to Rs 1578.50, Axis Bank jumped 6.15% to Rs 949.30, Bank of India spurted 5.05% to Rs 360.85, Bank of Baroda 4.93% to Rs 373.80 and ICICI Bank moved up 2.57% to Rs 1176.15.
India’s largest commercial bank by revenue State Bank of India edged higher by 2.62% to Rs 2295.70. The Union Cabinet is likely to take a call by 22 November 2007 on State Bank of India's proposed plan to raise about Rs 18,000 crore through a rights issue.
The BSE Capital Goods Index closed up 3.40% at 20,292.56. It outperformed the Sensex. Areva T&D surged 13.44% to Rs 2914.55, Larsen & Toubro moved up 4.84% to Rs 4369 and Bharat Heavy Electricals (Bhel) gained 1.74% to Rs 2776.90.
The BSE Auto Index ended 0.51% higher at 5,136.25. It underperformed the Sensex. Tata Motors gained 1.14% to Rs 692.75, Maruti Suzuki rose 1.07% to Rs 1003.95, and Bajaj Auto moved up 0.385 to Rs 2336.20.
The BSE Metal Index closed up 1.67% at 17,046.73. It outperformed the Sensex. Jindal Stainless soared 3.94% to Rs 164.80, Steel Authority of India (Sail) rose 2.23% to Rs 249.75, Tata Steel rose 2.18% to Rs 832.95 and Sterlite Industries ended 1.76% up at Rs 976.95.
Export-driven software services companies, which are already under pressure because of a firmer rupee extended losses on concerns over a possible downturn in the United States, which accounts for more than half their revenue. The BSE IT Index ended 0.95% down at 4,095.73. It underperformed the Sensex. Wipro fell 3.59% to Rs 441.05, TCS declined 1.53% to Rs 949, Infosys fell 0.88% to Rs 1627.50 and Satyam Computers dropped 0.62% to Rs 410.55.
Telecom stocks were in demand after the telecom ministry said on Monday, 12 November 2007, it has decided to go in for open auction for 3G services and wireless broadband services through technologies like Wi-Max. Reliance Communications moved up 1.82% to Rs 707.45. Bharti Airtel fell 0.02% to Rs 833.10. The auction will give a chance to foreign players to bid for the spectrum space.
Pratibha Industries moved up 9.04% to Rs 279.15. The company bagged a Rs 41.35 crore contract for construction and expansion of the domestic arrival terminal at the Indira Gandhi International Airport in New Delhi.
Logistics service provider Gati surged 20% to Rs 132.30 on reports that the company will be officially announcing its entry into the air cargo segment with a fleet of five Boeing 737 aircrafts leased from Air India.
The most valuable PSU firm MMTC was locked at lower limit of 5% at Rs 52279.85 on reports that the company has floated tenders to import 3,50,000 metric tonne of wheat to help government boost stockpiles as demand is outstripping supply.
Satra Properties jumped 10.23% to Rs 282.75 after its board approved a 2-for-1 bonus issue and decided to diversify into retail, merchandising and power generation.
Panoramic Universal was up 5.05% at Rs 103 after the company bought 51% in Hi-Flyers Travel Services for an undisclosed sum.
Jindal Steel & Power jumped 3.86% to Rs 11161.75 after the company said its board will meet on 21 November 2007 to consider a 5-for-1 stock split.
Reliance Natural Resources (RNRL) soared 11.26% to Rs 164.50 on huge volumes of 3.36 crore shares on BSE.
Reliance Natural Resources clocked highest turnover of Rs 535.31 crore on BSE. Reliance Industries (Rs 360.62 crore), Reliance Petroleum (Rs 323.45 crore), NTPC (Rs 212.93 crore) and Larsen & Toubro (Rs 200.55 crore), were among the other turnover toppers in that order.
Ispat Industries registered highest volumes of 3.67 crore shares on BSE. Reliance Natural Resources (3.36 crore shares), Reliance Petroleum (1.48 crore shares), Sunflag Iron and Steel Company (1.26 crore shares) and Power Grid Corporation of India (93.41 lakh shares), were among the other volume toppers in that order.
Six core infrastructure industries grew by a disappointing 6% in September this year as against 10.6% a year ago, government data showed on Tuesday, 13 November 2007. The growth rate during the April-September period of 2007-08 also dropped to 6.6% from 8.7% in the same period last fiscal.
Among the six key infrastructure industries, which contribute 26.7% to the overall industrial growth, crude petroleum production put up the worst performance with a negative growth of 0.7% against 9.4% growth in the year-ago period.
In Europe, UK’s FTSE 100 gained 0.03% to 6,340.00. France’s CAC 40 dropped 0.08% to 5,531.03 and Germany’s DAX declined 0.32% to 7,782.07.
Asian markets were mixed. Taiwan Weighted rose 0.65% at 8,727.21, South Korea's Seoul Composite was up 0.49% at 1,932.89 and Hong Kong's Hang Seng rose 0.50% at 27,803.35. Singapore's Straits Times was down 1.02% at 3,475.47 and Japan's Nikkei was down 0.46% at 15,126.63.
US markets edged lower on Monday, 12 November 2007 on expectations of further fallout from the ongoing credit crisis. The Dow Jones industrial average fell 55.19 points, or 0.42%, to 12,987.55. The S&P 500 index slipped 14.52 points, or 1%, to 1,439.18, while the Nasdaq Composite index dropped 43.81 points, or 1.67%, to 2,584.13.
The foreign inflows have slowed in November 2007 after the market regulator curbed the use of participatory notes used by unregistered foreigners to buy Indian shares, while the lingering credit worries in the United States have also weighed. As per provisional data, FIIs sold shares worth a net Rs 1194.38 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 65.99 crore on Monday, 12 November 2007.
Grey Market Premium Update
Edelweiss 725 to 825 675 to 685
Mundra Port and SEZ 400 to 440 500 to 510
Empee Distilleries 350 to 400 80 to 90
Barak Valley Cement 37 to 42 17 to 18
Religare Enterprises 160 to 185 290 to 300
SVPCL 40 to 45 1 to 2
Varun Industries 60 40 to 41
Rathi Bars 35 1 to 2
Allied Computers 12 10 to 11
Reliance Power - 61 to 62
India Telecom Commentary
The existing GSM operators are enjoying spectrum of up to 2x10 MHz in excess of cumulative maximum limit of 4.5 MHz for metros and 4.4 MHz for circles set under their original contracts. It was increased to 6.2 MHz in 2004. Most of them have got licences and spectrum without any payment of ‘entry fees’.
In 1999, they secured substantial financial benefit from the government under ‘migration package’. They delayed MTNL’s GSM services by three years through litigation.
They even objected to the launch of WLL-Limited Mobile service of MTNL. They have not taken even a single initiative to reduce tariffs and instead cartelised and hiked tariffs. They never favoured bidding for spectrum allocation.
They had expected that whatever spectrum is vacated by defence ministry would be entirely allocated to its members for expansions. In fact, in their July 6 response to Trai they had advocated preferential treatment for themselves. Airtel and Vodafone had demanded spectrum as high as 2x22.5 MHz for expanding their existing 2G networks alone.
These propagandists, represented by the Cellular Operators Association of India (COAI), are now strategically engaged in maligning government policy so that the allocation of spectrum being vacated by ministry of defence is delayed. They have been spreading canards that the government will lose Rs 50,000 crore in case it does not invite fresh bidding for ‘entry fees’ for allocation of spectrum.
Trai’s recommendations of August 28 came as a shock to them. Trai not only corrected the anomaly in the existing spectrum allocation criteria but also recommended cross-technology spectrum allocation. Later, the Telecommunication Engineering Centre (TEC), an independent organisation under the department of telecommunications (DoT), further tightened the criteria. Both, TEC and Trai reports have shown that the existing operators have excess spectrum.
That being the case, the available spectrum can be given to all those existing licensees who are waiting for initial tranche of spectrum, including Reliance and Tata, who have applied for additional spectrum in GSM band.
Predictably, COAI is upset. Well strategised plans of spectrum hoarding by its members have gone awry. COAI has recently moved TDSAT challenging the new spectrum allocation criteria of the government.
Legally, COAI is on a weak footing to take on DoT’s decision on permitting cross-technology spectrum allocation for licences, which are already technology neutral. Advocacy of preferential treatment in terms of spectrum allocation for existing players places it in a precarious condition as this would mean inclusion of Reliance and Tatas as well, which it does not want.
COAI has now built-up an argument of spectrum allocation through fresh bidding which is aimed at thwarting competition. It has launched a campaign that allocation of spectrum without fresh bidding for ‘entry fees’ would mean loss of up to Rs 50,000 crore.
This is an absurd figure. In June 2001, the licence of Delhi was awarded for an entry fee of Rs 170.70 crore through bidding, but with teledensity in Delhi now touching 97%, the chances of getting better ‘entry fees’ is very remote.
Similarly, in June 2001, when pan-India licences were awarded for Rs 1,568.57 crore through bidding, at that time the teledensity was at about 3.5% and there was less of competition. With a teledensity of near 22% and more number of active operators, the chances of getting better ‘entry fees’ is unlikely.
In any case, the focus of the policymakers should be on faster rollouts, which will ensure much higher level of revenue in the form of licence fees and taxes. Teledensity will shoot up from the present level of about 22% to over 50% in three years. Of course, there will be efficient utilisation of spectrum in the shortest possible time.
Realty check on spectrum congestion
Is there congestion due to spectrum shortage throughout India? The answer is ‘No’. Only a small number of pockets in Delhi and Mumbai face congestion due to spectrum, e.g., in Delhi there may be only three such pockets — Nehru Place, Rajendra Place and CP. Trai and TEC have suggested technical solutions to deal with such congestion without earmarking additional spectrum for such pockets.
New spectrum allocation criteria
The old subscriber-linked spectrum allocation policy was flawed, as it allocated higher quantum of spectrum for areas which have lesser population density. For example, Orissa has a population density 283 times lower than Kolkata, but for both the places, the spectrum allocation criteria was the same.
Cross technology spectrum allocation
Can an operator be condemned with his initial choice of technology for all times to come? The answer is ‘No’. In any case DoT needs to give spectrum to the existing CDMA players, and under a technology neutral licence it should not matter to the government if further allocation is in the GSM or CDMA band, as long as the operator uses the allocated spectrum efficiently. COAI expects that CDMA players seeking further spectrum in GSM band should obtain a new licence, which is nothing but an absurd thinking.
Anti-competitive behaviour
Tariff reductions have always been initiated by either PSU operators (MTNL & BSNL) or CDMA operators (Reliance & Tata). Reliance’s ‘monsoon hungama’ on July 1, 2003, under which phones were provided for Rs 501, forced GSM operators to slash tariffs. Similarly, the lifetime scheme was triggered by Tata’s ‘Non-Stop Mobile’ scheme initiative in October 2005 under which free incoming calls were provided for two years without recharge. MTNL has made Delhi-Mumbai calls local and BSNL ushered in all-India calling at Rupee One.
We are yet to see any consumer-friendly initiatives from GSM operators. On the contrary, they have hiked tariff by 20% to 32.5% matching each others’ tariff. The cartelisation is evident from the fact that on the same date i.e., August 16, 2007, all the three private GSM operators of Delhi (Bharti Airtel, Vodafone and Idea) informed Trai about the hike which was effected by them from the same date i.e., August 13, 2007. This hike is making them richer by Rs 300 crore every month.
Via Economic times
Pre Market Watch
Indian market may have a flat opening due to mixed global cues. On Monday, the Indian market tumbles and lost directions backed by weak global cues, which led it to closed in a negative region. Finally, the BSE Sensex closed lower by 170.33 points at 18,737.27 and Nifty fell by 46.15 points to close at 5617.10. We expect the market may bag some gain but will remain range bound during the trading session.
Monday, the US markets closed in negative territory. The Dow Jones Industrial Average (DJIA) closed lower by 55.19 points at 12,987.55 followed by NASDAQ Composite and S&P 500 fell by 43.81 points and 14.52 points at 2,584.13 and 1,439.18 respectively.
Indian ADRs ended in negative. In banking sector, HDFC bank and ICICI bank dropped by (8.03%) and (4.55%) respectively. In technology sector, Infosys fell by 4.67% along with Patni computers by 3.18%, Satyam by 2.06% and Wipro by 0.15%. In telecommunication sector, MTNL and VSNL declined by (4.76%) and (1.78%) respectively.
The major stock markets in Asia are trading with a mixed bag. Hang Seng is trading higher by 140.50 points at 27,806.23 while Japan''''s Nikkei is trading lower by 26.53 points at 15,170.56. Taiwan weighted is trading up by 62.89 points at 8,733.50. Seoul Composite advanced by 3.20 points to trade at 1,926.62.
On Monday, the FIIs stood as the net seller as the gross equity purchased by them was Rs4,366.10. (in crores), and the gross debt purchased was Rs.0.00 (in crores) as against the gross equity sold was Rs.4,653 (in crores) and the gross debt sold was Rs.0.00 (in crores). The net investment of equity was -Rs.286.90 (in crores) and the net debt investment was Rs.0.00 (in crores).
Today, Nifty has support at 5,563 and resistance at 5,698 and BSE Sensex has support at 18,519 and resistance at 19,079.
Weak trend may prevail
The sentiment remains bearish on weak global markets and select investors booking profits on the eve of the Diwali festival. The wait for the Sensex to breach the 18k level may happen soon, provided the sentiment turns bullish in the next few sessions and India inc provide some encouraging quarterly numbers. Due to weak Asian indices in morning the local market may open negative . On the technical front, the Nifty could test the 5750 level and has a support at the 5550 level in the short-term, while the Sensex has a likely support at 18000 and may face resistance at 19000.
US indices ended lower on Monday, with the Dow Jones closing below 13000 at 12987, 55 points down. The Nasdaq lost 44 points at 2584.
All the Indian ADRs on US bourses ended in the red. HDFC Bank was the biggest looser and dropped 8.03% while MTNL, Infosys & ICICI Bank was down by 4% each. Rediff, VSNL, MTNL, Satyam and Tata Motors lost over 1-2% each. However Wipro and Dr Reddy lost marginally.
Crude oil prices inched lower, with the Nymex light crude oil for December delivery slipping by $1.70 at $94.62 a barrel. In the commodity segment, the Comex gold for December series lost $27 to settle at $807.70 an ounce.
Market may see trend reversal in second half
The market may open lower mixed global cues. However they may see a trend reversal in second half of the day. Domestic bourses extended their losses for the sixth consecutive session on Monday, 12 November 2007 on sustained selling pressure. The 30-share BSE Sensex declined 170.33 points or 0.90% to 18,737.27 on worries that the fallout from the US subprime markets is spreading deeper into the credit markets and will eventually slow the growth of the US economy.
The concerns were rekindled on Friday, 9 November 2007, when Wachovia Corp, the fourth-largest US bank, reported a potential $1.7 billion loss on mortgage-related debt. The broader S&P CNX Nifty was down 46.15 points or 0.81% to 5617.10 on that day.
Asian markets were trading mixed today, 13 November 2007. Hong Kong's Hang Seng (up 0.51% or at 27,806.23), Taiwan Weighted (up 0.73% at 8,733.50), South Korea's Seoul Composite (up 0.17% at 1,926.62) advanced. However, Japan's Nikkei (down 0.17% at 15,170.56) and Singapore's Straits Times (down 0.55% at 3,491.76) slipped.
US markets edged lower on Monday, 12 November 2007 on expectations of further fallout from the ongoing credit crisis. The Dow Jones industrial average fell 55.19 points, or 0.42%, to 12,987.55. The S&P 500 index slipped 14.52 points, or 1%, to 1,439.18, while the Nasdaq Composite index dropped 43.81 points, or 1.67%, to 2,584.13.
India's industrial output in September 2007 rose 6.4% from a year earlier, sharply lower than annual growth of 10.7% in August 2007 due to sluggish manufacturing and electricity output, government data released during market hours on Monday 12 November 2007 showed. Manufacturing production rose 6.6% in September 2007 from a year earlier, compared with a provisional annual growth of 10.4% in August 2007.
Crude oil prices declined today, 13 November 2007, as the US dollar held on to its recent rebound against the euro and traders weighed up the prospect of another increase in Organization of the Petroleum Exporting Countries (OPEC) production. US light crude for December delivery fell 42 cents to $94.20 a barrel. London Brent crude lost 50 cents at $91.48.
As per provisional data, FIIs sold shares worth a net Rs 1194.38 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 65.99 crore on Monday, 12 November 2007.
Meanwhile from 22 February 2008, futures contracts on the 30-share Sensex, India’s widely tracked stock market index, will be available for trading on US Futures Exchange (USFE). The move is part of the Bombay Stock Exchange’s (BSE) efforts to facilitate participation of global investors in trading of Sensex futures.
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A late day sell-off sends US Market lower
Weakness in Financial and Technology sectors continue to weigh on market sentiments
The market which opened with a solid rally today, ended finally lower today, Monday, 12 November, 2007 as a sell-off in the final hour spurred from ongoing credit market concerns sent indices lower. Eight out of ten economic sectors posted losses today, headed by Financials and Technology sectors. Continued problems in the financial sector and credit-related concerns weighed on investor sentiment.
After being up by almost 105 points earlier in the day, The Dow Jones industrial Average ended with a loss today and closed lower by 55.19 points at 12987.55. The Nasdaq Composite Index, finished lower by 43.81 points at 2,584.13. S&P 500 finished lower by 14.52 points at 1,439.18.
Fourteen out of thirty Dow stocks ended in green headed mainly by Wal-Mart, Citigroup and Johnson & Johnson. Exxon Moil, Boeing, Alcoa, and Caterpillar remained the main Dow laggards.
Citigroup shares lent the financial sector some support today after reports that an agreement was reached last Friday, 9 November, among the nation's three largest banks on the structure of a $75 billion fund to support distressed securities.
Among major news in the Technology sector, IBM announced a $5 billion all-cash offer to acquire Canadian software company Cognos. Though IBM shares gained for the day, weakness in Apple and Google shares continued for the fourth consecutive day. Merrill Lynch downgrading Microsoft made the situation further worse.
E*Trade Financial shares shed almost 60%
Nasdaq remained the most affected today, mainly because of E*Trade Financial. There were reports in the market that company could face bankruptcy. E*Trade gave up almost 60% of its share price in today’s trading. Last week, the company announced it had observed continued declines in the fair value of its $3 billion asset-backed securities portfolio. The company stated that it expected the declines in fair value to result in further securities write-downs in the fourth quarter.
New York Stock Exchange volume topped 1.7 billion, with declining stocks ahead of those advancing more than 2 to 1. On the Nasdaq, more than 2.8 billion shares traded hands, with declining stocks pulling ahead of those advancing by about 3 to 2.
All Indian ADRs ended in red today. HDFC Bank was the main loser shedding more than 8%. It was followed by ICICI Bank and Infosys Tech who gave up 4.6% each.
All eyes set on Wal-Mart and Home Depot earning reports
Crude oil prices fell today and closed almost $2/barrel lower as The Organization of Petroleum Exporting Countries (OPEC) spoke out and dollar rebounded against most of its rival currencies barring the yen. Prices fell after OPEC said that it might consider increasing output in its forthcoming meeting, either this month or the one in December.
Crude-oil futures for light sweet crude for December delivery closed at $94.62/barrel (lower by $1.7/barrel or 1.8%) on the New York Mercantile Exchange. Prices rose to $98.62/barrel during intra day trading on 7 November, 2007. Oil prices had rose 16% in October, 2007, the biggest one-month gain since September 2004.
As per reports, Saudi Arabia’s oil minister had commented that OPEC, will discuss increasing production at its next meeting later this year. OPEC heads of state are reported to gather in Riyadh for a summit this weekend. The next scheduled OPEC policy meeting is on 5 December in Abu Dhabi.
Tomorrow, investors will again look for corporate financials to help set the tone of trading. Dow components Wal-Mart and Home Depot are scheduled to report their results before the market open. On the economic front, Pending Home Sales for September will hit the wires at 10:00 ET followed by the Treasury Budget at 14:00 ET.
Fear will make you lose
Train yourself to let go of the things you fear to lose.
As gloom and even more gloom continues all around (phew, what was the mood a few weeks ago!), its time to stay firm on sound stocks. Stop taking a day’s or week’s view and losing sleep. Any change in sentiment and you can hope for a good bounce on your counters. The local bulls managed to survive the global carnage yesterday though it was on lower volume. The market breadth was also negative. Still, things are pretty okay this morning, with no great fall in any particular market. In fact, markets in Hong Kong and Taiwan are in the green while that in Tokyo is down slightly.
But, US shares ended down yet again, with the Dow Jones closing under 13,000 for the first time in nearly three months amid mounting worries over the credit market crisis. Most Indian ADRs ended in the red. What is also of some concern for the local bulls is that FII inflows have slowed down considerably. Monday’s provisional data shows net sales worth about Rs12bn in the cash segment and around Rs13bn in the F&O segment. The steep fall in industrial production growth in September is also a worry, though one will have to wait for more data to arrive at a firm conclusion about a slowdown in economic activity. It looks as though interest rates have peaked out in India but what the market and India Inc. are craving for is a reduction in borrowing costs. Whether the RBI will oblige in January only time will tell. Coming to today's session, we expect an improved start than yesterday, but trade will remain rangebound and choppy.
IL&FS Investsmart may be under some pressure after E*Trade shares plunged overnight in the US. The American online brokerage giant is apparently facing write-offs owing to the correction in the housing sector. Unitech is likely to be in action as the RBI has approved the plan to hike the investment ceiling for FIIs. Fortis Healthcare might rise as it is looking at expanding its footprint in South India through another acquisition in Chennai.
Satra Properties India has announced a 2:1 bonus share issue. The company's Board has decided to diversify the business of the company in Retail, Merchandising and Power Generation. Royal Orchid Hotels' subsidiary Icon Hospitality has acquired Bangalore-based Hotel Royal Orchid Central for Rs820mn. The acquired property has 130 deluxe category rooms with two fine dining restaurants includes bar and other facilities.
Nucleus Software Exports has won a contract from Bank M (Tanzania) Ltd. for implementing its Cash@will solution. HCL Technologies has been added as one of Artesia Digital Media Group's select consulting partners and will serve as a systems integrator for the latter's products.
Jindal Steel intends to split each equity share of Rs5 each into five shares of Re1 each. Gati could attract some attention as the Hyderabad-based logistics service provider has entered into air cargo segment. Jyoti Ltd. might gain amid reports that it could bag a large irrigation order and is also likely to sell Vadodara property for funding its expansion near Anand.
US stocks extended their losing streak on Monday with the Dow Jones Industrial Average finishing below 13,000 for the first time in about three minths despite some strength in the financial sector and lower crude oil prices.
After dropping at the start and then rebounding to a 100-point gain, the Dow closed down 55 points, or 0.4%, at 12,987.50, down 175 points from its high for the day. Aug. 16 was the last time the blue-chip index closed under 13,000.
The broader S&P 500 index slipped 15 points, or 1%, to 1,439.18, while the Nasdaq Composite index declined 44 points, or 1.7%, to 2,584.13.
Fresh concerns emerged over the sub-prime turmoil following reports by both The Wall Street Journal and The Times of London that warned of possible writedowns from British banking giant HSBC.
In addition, shares of the online brokerage E-Trade plunged 59% after the company warned last week that the deteriorating value of its mortgage-backed securities may force it to take significant writedowns in the fourth quarter.
Some battered financials, however, bucked the trend including Citigroup, whose shares gained 1.5% and Goldman Sachs which ended 1.6% higher.
Crude oil fell more than $2 per barrel on reports that OPEC would discuss increasing its output at an upcoming meeting. Light, sweet crude for December fell $1.70 to settle at $94.62 a barrel in afternoon trading on the New York Mercantile Exchange.
The Treasury market was closed for the Veterans Day holiday.
Private equity major Blackstone posted a net loss in the most recent quarter, hurt by compensation charges. Blackstone shares slipped over 8% on the news, even though it reported higher revenue in its core private equity business, helped by higher fees.
IBM announced that it would purchase the business software maker Cognos for about $5bn.
Gold prices tumbled after last week's big run-up, as COMEX gold for December fell $27 to $807.70 an ounce. The dollar rebounded against the euro but was lower versus the yen.
Another volatile day
Weak cues from the International markets, selling pressure in the index heavyweights and yen-carry trade unwinding again coming in the limelight dragged the benchmark Sensex to slip over 3% and NSE Nifty dropped over 2.5% in early trades on Monday.
However, buying momentum in the late afternoon trades in the FMCG and select PSU stocks lifted the benchmark Sensex from its low of 18,333 to finally close at 18,737 losing merely 170 points and Nifty closed 46 points lower to close at 5,617.
Among the 30-scrips of Sensex 18 stocks ended lower and only 11 scrips finished in positive terrain.
Among BSE sectoral indices, BSE Realty index was the top loser, (down 3.08%), followed by BSE Oil & gas index (2.28%) and BSE IT index (down 2.78%)
Aurionpro Solutions ended flat at Rs399. The company announced that it has entered into an all cash deal to acquire 100% control in Integro Technologies Pte. Ltd. (Integro) a leading Banking products company headquartered in
Integro's product portfolio includes products in the areas of Loan origination, Collateral Management for Basel II Compliance and Internet banking. The scrip has touched an intra-day high of Rs399 and a low of Rs388.
Sterlite optical edged higher by 0.3% to Rs282. The company announced that they expanded Optical fiber capacity to 12m km. The scrip touched an intra-day high of Rs285 and a low of Rs269 and recorded volumes of over 1,00,000 shares on NSE.
Suryachakra Power was locked at 20% upper circuit to Rs33.4 after the company announced that they would set up 1200MW Coal-Based power project. The scrip touched an intra-day high of Rs33.4 and a low of Rs26.5 and recorded volumes of over 68,00,000 shares on NSE.
United Spirits fell 1.6% to Rs1816. According to reports, Diageo Plc is in talks to buy as much as 13% of the company. Diageo may buy the stake in the company for as much as $600mn. The scrip touched an intra-day high of Rs1878 and a low of Rs1800 and recorded volumes of over 38,000 shares on NSE.
Bihar Tubes declined 1% to Rs138. The company announced that they have entered into Contract with BHEL. The scrip touched an intra-day high of Rs138 and a low of Rs129 and recorded volumes of over 54,000 shares on NSE.
After plunging over 7% Jindal Steel recovered over 2% to close at Rs10,714 after reports stated that the Indian steel and power producer's planned iron-ore mine in
Reliance Industries has slipped 3.6% to Rs2633. According to reports India's most valuable company may partner Jet Airways (India) to develop airports in the western state of Maharashtra The scrip has touched an intra-day high of Rs2675 and a low of Rs2602 and has recorded volumes of over 7,00,000 shares on NSE.
SBI surged over 3.7% to Rs2245 after reports stated
Stocks in News:
Reliance Industries has signed a production sharing agreement for a second block in Oman.
Shortage of rigs is likely to delay development of ONGC’s KG basin block by a year.
RCom is in race for acquiring 51% stake in Telkcom Kenya.
Tata Power, Reliance Power and Lanco Infratech among the 13 bidders for the fourth UMPP project at Tilaiya, Jharkhand.
GAIL has appealed to the Government to exempt it from the subsidy sharing mechanism.
IOC is planning to set up its third petrochemical unit at Haldia.
Reliance Energy has planned a capex of Rs40.6bn in Orissa.
Aditya Birla Group’s retail arm is in talks with Parsvnath Developers to setup a hyper market and a super market in Delhi.
Fortis is looking to buy 450-bed Lifeline Hospital chain in Chennai.
Dr Reddy's is planning to launch 200 generic products in US over the next five years.
JSPL’s project to develop iron ore reserves and set up a steel plant in Bolivia is expected to be delayed.
JSPL is considering to split its equity shares from Rs5 to Re1.
IVRCL has acquired Hyderabad based Alkor Petroo which has 5 exploration blocks in Yemen and Egypt along with GSPC.
Lanco Infratech has bagged Rs730mn contract to build a hospital in Andhra Pradesh.
UB Group owned Bouvet-Ladubay to invest €10mn to more than double its capacity.
East India Hotels is planning to buy a 30% stake in a soon to be formed hotel subsidiary of Puravankara Projects.
NHPC plans to add 25,000MW capacity in next 20 years.
Gulf Oil International has bought Petromin, a Saudi Arabia based lubricant maker.
Havells India has forayed into healthcare business with an acquisition of a 140 bed hospital in Faridabad.
Apollo Group of hospitals plans to double the number of clinics and pharmacy chain in next two years.
Ashok Leyland is eyeing JV’s in Europe and US for manufacturing of buses.
Yes Bank has signed a foreign currency loan of US$35mn agreement with Wachovia Bank.
IIP for September grew at 6.4% compared to 12% in September 2006.
Government has announced to introduce number portability in phases from 2008.
Government is likely to change excise duty structure on diesel and petrol from a mix of advalorem and specific to only specific.
Government has announced that all radio frequencies offering 3G services would be offered via an auction.
TDSAT has directed the Government not to allocate any spectrum till December 12.
The Government may not allow one bidder to operate more than two UMPPs.
RBI has given in an in-principle nod to invest US$5bn of forex reserves annually to fund infrastructure projects.
Rajasthan, Andhra Pradesh and Karnataka are set to directly or indirectly guarantee property titles in urban areas.
FII Investment Trend:
FIIs were net sellers of Rs11.94bn (provisional) in the cash segment on Monday while the local institutions were net buyers of Rs659.9mn.
In the F&O segment, FIIs were net sellers of Rs12.72bn. Foreign funds net sold Indian equities worth Rs2.87bn on Thursday.Daily Technical Analysis
Nifty — The index opened on a negative note and tested lows around 5477 in morning trade, after which it recovered through the trading session. It ended the day with a loss of 46 points.
Resistance & Support — The index faces resistance around 5737 (was a support level earlier; now on role reversal will act as resistance). Pullback should face resistance around the 5737 level. Intra-day resistance is around 5661. On the downside, support levels are 5537 and 5476.
Conclusion — Expect an intra-day bounce above 5661.
Ketan Parekh, associates banned for 10 more years
The Securities and Exchange Board of India (Sebi) today barred rogue trader Ketan V Parekh and 10 of his associates, who were instrumental in the stock scam of 1999-2001, from accessing the stock market – directly and indirectly – for another 10 years.
Sebi, in an order today, said it was banning Ketan Parekh and associates for a total of 14 years, effective from December 12, 2003.
This means the the ban is for another 10 years as Sebi's order states that its order of December 12, 2003 (debarring them from securities market), will run concurrently, and shall be deemed to be effective from that date.
The 10 associates are his brother Kartik K Parekh and firms Classic Credit, Panther Fincap and Management Services, Luminant Investment, Chitrakut Computers, Saimangal Investrade, Classic Infin, Panther Investrade, Goldfish Computers, and Nakashtra Software.
Ketan Parekh and his associates were found manipulating the share prices of Himachal Futuristic Communications, Zee Telefilms, Adani Exports, Global Tele-Systems, Ranbaxy Laboratories, Shri Adhikari Brothers Television Network, Shonkh Technologies International, Padmini Technologies and Aftek Infosys during the period October 1999 to March 2001.
“Ketan Parekh was found to be the master mind behind all acts of omission or commission by these entities, the order by TC Nair, whole time member," SEBI, said.
India IIP Numbers
India`s capital goods sector has retained its vibrant character, although growth of industrial production slipped in September due to muffled demand for consumer durables, Finance Minister P Chidambaram said on Monday.
The index of industrial production for September grew at nearly half the rate (6.4%) than it did a year ago, as manufacturing sector growth sagged due to a 7.6% decline in consumer durables output during the month.
The recent slowdown in the economy is on account of slackening of consumer durables sector. But the capital goods industry retains its vibrancy, Chidambaram said while inaugurating the annual Economic Editors` Conference here.
Capital goods sector - that covers factories, machinery and tools used to produce finished goods - grew by a healthy 18.6% in September as compared to 9.5% in the year-ago period, as per official data released earlier today.
The output of the capital goods sector during the first half of the current fiscal improved to 19.6% from 17.5% a year ago.
"Industry has been the driver of our economic growth... And external sector has remained robust," he said, indicating economic growth will continue to be investment-driven, with the rate of investment growing to over 35% this year from 22.9% in 2001-02.
Nifty November futures at premium
RNRL, L&T, Neyveli Lignite futures at premium
Nifty November 2007 futures were at Rs 5641.70, at a premium of 24.60 points as compared to spot closing of Rs 5617.10.
NSE’s futures & options (F&O) segment turnover was Rs 56,771.23 crore, which was higher than Rs 14,383.37 crore on Friday, 9 November 2007.
Reliance Natural Resources (RNRL) November 2007 futures were at premium, at Rs 149.85, compared to the spot closing of Rs 147.80.
Larsen & Toubro November 2007 futures were at premium, at Rs 4245, compared to the spot closing of Rs 4168.95.
Neyveli Lignite Corporation November 2007 futures were at premium, at Rs 204.40, compared to the spot closing of Rs 195.
In the cash market, the S&P CNX Nifty lost 46.15 points or 0.81% at Rs 5617.10.
FIIs in selling mode
Outflow of Rs 286.90 crore on 9 November 2007
Foreign institutional investors (FIIs) sold shares worth net Rs 286.90 crore on Friday, 9 November 2007, compared to their buying of Rs 37.70 crore on Wednesday, 7 November 2007.
FIIs outflow of Rs 286.90 crore on 9 November 2007 was a result of gross purchases of Rs 4366.10 crore and gross sales Rs 4653 crore. The 30-shares BSE Sensex provisionally ended down 287.80 points or 1.51% to 18,771.13 on that day.
FII inflow in calendar year 2007 totaled Rs 70,503.30 crore (till 9 November 2007).
There are a total of 1,147 FIIs registered with the Securities & Exchange Board of India (Sebi).
Crude prices come down
Crude prices slip as OPEC speaks out
Crude oil prices fell today and closed almost $2/barrel lower as The Organization of Petroleum Exporting Countries (OPEC) spoke out and dollar rebounded against most of its rival currencies barring the yen. Prices fell after OPEC said that it might consider increasing output in its forthcoming meeting, either this month or the one in December.
For the day ending Monday, 12 November, 2007, crude-oil futures for light sweet crude for December delivery closed at $94.62/barrel (lower by $1.7/barrel or 1.8%) on the New York Mercantile Exchange. Prices rose to $98.62/barrel during intra day trading on 7 November, 2007. Oil prices had rose 16% in October, 2007, the biggest one-month gain since September 2004.
Brent crude oil for December settlement fell $1.2 (1.3%) to $91.98 on the London-based ICE Futures Europe exchange.
As per reports, Saudi Arabia’s oil minister had commented that OPEC, will discuss increasing production at its next meeting later this year. OPEC heads of state are reported to gather in Riyadh for a summit this weekend. The next scheduled OPEC policy meeting is on 5 December in Abu Dhabi.
In the currency market today, the dollar rebounded against most of its major foreign-exchange counterparts, but slipped against the yen. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, rose 0.8% at 76.02. The yen gained against 16 of the most-traded currencies, climbing to an 18-month high against the dollar, as investors retreated from carry trades.
Only natural gas gains in the energy market
Natural gas in New York rose on an outlook that lower temperatures are moving into key consuming regions, boosting demand for heating. Gas for December delivery rose 6.4 cents (0.8%) to settle at $7.691 per million British thermal units
Against this backdrop, December reformulated gasoline fell 2% to $2.4075 a gallon, and December heating oil dropped 1.7% at $2.5750 a gallon.
At the MCX, crude oil for November delivery closed at Rs 3715/barrel, lower by Rs 56 (1.5%) 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.
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