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Wednesday, December 12, 2007
Bulk Deal Watch
12-DEC-2007,EDELWEISS,Edelweiss Capital Limited,FID FUND MAURITIUS LTD,BUY,982000,1535.78,-
12-DEC-2007,EVERONN,Everonn Systems India Lim,JPMORGAN INDIA EQUITY FUND,BUY,105262,628.02,-
12-DEC-2007,RJL,Renaissance Jewellery Lim,DEUTSCHE INTL TRUST CORPN (C.I.) LTD A/C DBMGOF (MAU) LTD,BUY,201500,175.36,-
12-DEC-2007,RJL,Renaissance Jewellery Lim,J M FINANCIAL MUTUAL FUND,BUY,179417,173.06,-
12-DEC-2007,SRF,SRF Ltd.,SUNDARAM BNP PARIBAS SELECT MIDCAP,BUY,840000,185.67,-
12-DEC-2007,WANBURY,Wanbury Limited,RHODES DIVERSIFIED FCCB ACCOUNT,SELL,77815,140.00,-
12-DEC-2007,VISAKAIND,Visaka Industries Ltd.,DEUTSCHE SECURITIES MAURITIUS LIMITED,SELL,140000,98.23,-
Sensex ends up 85pts; Edelweiss zooms 83%
The Sensex opened with a negative gap of 94 points at 20,197 following the sharp drop in the overseas markets after the US Fed cut its key rate by a lower-than-expected 25 bps.
The index soon slipped to a low of 20,045 - down 246 points from the previous close - in early trades.
The index, thereafter, stabilised and began to recover as the day progressed. Aggressive buying in the last hour of trade saw the index rally to a fresh all-time intra-day high of 20,419 - up 374 points from the day's low.
The Sensex finally ended with a gain of 85 points at a new closing record of 20,376.
The Small-cap index rallied nearly 2% to 11,885, and the Mid-cap index surged 1.7% to 9,339.
The NSE Nifty recovered from a low of 6005, and zoomed to a fresh all-time intra-day high of 6176 before finally settling with a gain of 62 poins at 6159.
The market breadth on the BSE was fairly positive with advancing stocks outnumbering declining stocks nearly 3:1 - out of 2,924 stocks traded, 2,139 moved up, 750 were down and the rest were unchanged today.
INDEX MOVERS...
HDFC zoomed over 5% to Rs 3,104. Reliance Communications and Tata Steel soared 3.5% each to Rs 766 and Rs 864, respectively.
NTPC and Hindalco surged over 3% each to Rs 251 and Rs 206, respectively.
Cipla and Bharti Airtel rallied over 2% each to Rs 200 and Rs 1,054, respectively.
ONGC gained 1.4% at Rs 1,256. TCS and ITC were the other major gainers at Rs 1,049 and Rs 189, respectively.
...AND THE SHAKERS
Infosys plunged over 3% to Rs 1,685, and Satyam dropped 2.4% to Rs 431.
ICICI Bank slipped 2% to Rs 1,290.
EDELWEISS SHINES ON DAY 1
Edelweiss Capital listed at a premium of 75% on the BSE at Rs 1,444 as against the issue price of Rs 825. The stock zoomed to a high of Rs 1,609, and finally ended with a huge gain of 83% at Rs 1,510.
Renaissance Jewellery listed at Rs 190 on the BSE - a premium of 26.7% against its issue price of Rs 150. The stock soared to a high of Rs 200, and then corrected to a low of Rs 163 before closing at Rs 165 - a gain of 10%.
VALUE & VOLUME TOPPERS
Debutant Edelweiss Capital topped the value chart with a turnover of Rs 552.70 crore followed by Essar Oil (Rs 315.30 crore), Reliance Natural Resources (Rs 256.50 crore), Reliance Petroleum (Rs 178 crore) and Jindal Steel (Rs 173.25 crore).
IKF Technologies led the volume chart with trades of around four crore shares followd by G V Films (3.86 crore), Tata Teleservices (2.54 crore), Ispat Industries (1.55 crore) and Gujarat Petronet (1.52 crore).
Post Market Commentary
The market closed at all time high after struggling a lot at the initial stage. The cues from the global market are not in favor, which led the Indian markets to open on a weak note on the back of heavy selling across the counters. Though the market lost the ground at the initial stage but manages to recover all its losses as a result of heavy buying at lower levels. The metal, realty and Oil and Gas indices remained the centre of attraction as most buying is seen from these stocks. The BSE Sensex closed higher by 84.98 points at 20,375.87 and NSE Nifty closed up by 62.05 points at 6,159.30. Both the BSE Mid cap and Small cap outperformed the benchmark to close higher by 152.51 points and 217.15 points at 9,339.49 and 11,884.99 respectively. Overall, the market breadth was strong as 2,139 stocks are closed higher while 750 stocks are closed lower.
BSE Metal index surged 574.48 points to close at 19,629.07. Scrips that advanced are Jindal Saw (12.35%), Nalco (11.54%), Jindal Steel (5.52%), Tata Steel (3.42%) and Hindalco (3.06%)
BSE Realty index closed higher by 358 points at 12,540.32. Pushed up by Ansal Infra (22.38%), HDIL (14.01%), Phoenix mill (12.04%), Purvankara (6.12%) and Omaxe (5.62%).
BSE Health Care index closed up by 111.74 points at 4,173.98. Scrips that gained are Glenmark (10.61%), Bilcare (7.87%), Nicholas Piramal (7.73%), Sun pharma (4.48%) and Lupin (3.05%).
BSE Oil & Gas index grew by 186.59 points to closed at 13,152.02. Pulled up by IOCL (6.63%), RNRL (5.99%), Essar oil (5.43%), Gail (4.75%), Cairn (3.32%) and ONGC (1.40%).
BSE Bankex index closed lower by 66.59 points at 11,712.12. Scrips that fell are ICICI bank (1.96%), IOB (1.62%), Yes bank (1.15%), Oriental bank (0.42%) and SBI (0.22%).
BSE IT index slipped by 78.86 points at 4,353.59. Scrips that fell are Satyam (2.39%), I-Flex (1.97%), NIIT (1.81%), Educomp solution (1.13%), Rolta (1.62%).
Market Close: India...A different story
Market opened with a gap down following the global cues. Although there was a 25 bps cut in discount rate in US the investors were not happy resulting US indices to sink in red. Indian indices were with no exception and started off with weak note but later saw value buying. Markets managed to recover nearly 280 points from days low till the last hour of trading session to end in green. Recovery was seen on the back of better than expected industrial growth number at 11.8% Vs 4.5% YoY where markets expected was 11% which supported the market. Metal, Realty and Oil & Gas were the major gainers. IT and Banking stocks ended under pressure. Midcap and Smallcap outperformed ended up by 1.5%. Indian markets outperformed most of the Asian which all ended in red. European indices are trading in red.
Sensex ended up by 85 points at 20375.869.It was helped up by gains in HDFC (3103.95,+5 percent), RCVL (765.75,+4 percent), TISCO (864.45,+3 percent), NTPC (251,+3 percent) and Hindalco (205.65,+3 percent). Restricting the gains were Infosys (1684.8,-3 percent), Satyam (431.15,-2 percent), ICICI Bk (1290.3,-2 percent), BHEL (2648.3501,-1 percent) and Rel Energy (1931.7,-1 percent).
Karuturi Networks was on lime light for the day. Karuturi the largest rose player in the world. It has 2 segments of business, Horticulture and ISP. More than 90% of the revenue comes from the flower business. Karuturi has a total capacity of 650 mn stems. It has 10 hectares in India with 10 mn stems capability inhouse and another 25 mn stems which are managed through contract farming. 100 hectares are operational in Ethiopia with a capacity of over 100 mn stems. Karuturi Networks has been allotted additional 450 hectares of land by the Government of Ethiopia for its expansion and diversification projects. The Kenyan acquisition of Sher brought in abnout 525 mn stems. Globally 40,000 hectares of land is under rose cultivation. However, The field sizes globally are fragmented and are not over 200 acres. Karuturi is one of the big players here now. Do read our research note to know more about the story.
Garnet Construction which was recommened a few days back was on also on circuit today.Garnet is a Mumbai based real estate and construction company. The company develops properties on Residential, Commercial and Industrial land within Maharashtra (Mumbai, Navi Mumbai and Lonavla). Company has a total land bank of 490 acres. The Company has a project at Magic Hills which is located at Panvel. It will develop residential bungalows and IT park. The company has a marketing tie up with Sternon Group to target NRI's in UK, US West Asia. Another residential project Crystal Springs is located at Lonavala. This project is expected to have its own private boat club, mini theatre, gym, pool, special area for business center, etc. There is lots more to know about Garnet. Do read our view in research note. We have a call running here.
Technically Speaking: Market traded volatile but managed to have positive breadth. Sensex made a intraday low of 20045 and high of 20419. Advances outnumbered Declines in the ratio of 3:1. Market turnover was good of Rs 8922 Crs for the day. Markets have resumed the uptrend after a small sideways movement. Traders can trade long with Stoploss below 20000. Support lies at 20200, 20050.
Weak global cues fail to dampen market spirit
The market went into a correction mode at the opening bell, tracking the weakness in international markets. Yesterday, the US Federal Reserve cut the interest rate by quarter points disappointing investors looking for a bigger cut. The market remained choppy thereafter as investors continued to book profits on every rise. The Sensex managed to enter into positive territory by the afternoon but succumbed to heavy selling in frontline and information technology stocks and touched the day's low of 20,045. However, eruption of buying towards the close saw the Sensex pare the losses and end the session with a gain of 85 points at 20,376. The Nifty closed the session at 6,159, up 62 points.
The market breadth was extremely positive. Of the 2,924 stocks that traded on the Bombay Stock Exchange (BSE), 2,135 stocks advanced, 755 stocks declined and 34 stocks ended unchanged. Except the BSE Bankex index and the BSE IT index all the sectoral indices closed in the green. The BSE Metal index surged 3.01% at 19,629 followed by the BSE Realty index (up 2.94% at 12,540) and the BSE HC index (up 2.75% at 4,174).
Among the Sensex stocks, HDFC was the leading gainer and soared 5.33% at Rs3,104, Reliance Communication advanced 3.51% at Rs766, Tata Steel jumped 3.42% at Rs864, NTPC shot up by 3.21% at Rs251, Hindalco moved up 3.06% at Rs206 and Cipla gained 2.36% at Rs200. Among the laggards Infosys tumbled 3.34% at Rs1,685, Satyam Computer shed 2.39% at Rs431, ICICI Bank declined by 1.96% at Rs1,290 while BHEL, Reliance Energy, Bajaj Auto, Ambuja Cement and Maruti Suzuki closed with marginal losses.
Over 3.97 crore IKF Technologies shares changed hands on the BSE followed by GV Films (3.86 crore shares), Tata Teleservices (2.53 crore shares), Ispat Industries (1.54 crore shares) and Gujarat Petronet (1.52 crore shares).
Edelwess registered a turnover of Rs552 crore on the BSE followed by Essar Oil (Rs315 crore), Reliance Natural Resources (Rs256 crore), Reliance Petroleum (Rs178 crore) and Jindal Steel (Rs173 crore).
Domestic bourses buck weak global equities on strong IIP data
The market surged to all-time high in late trade, in what was a choppy trading session today. The market had lost ground in afternoon trade after staging a rebound from lower level in early trade from an initial slump. IT, banking majors declined. Realty, healthcare and metal stocks gained. Reliance Industries was flat. HDFC and Reliance Communications were the major gainers while Infosys and Satyam Computer Services were major losers from the Sensex pack.
The market breadth was strong. BSE Mid-Cap and Small-Cap indices hit all-time highs today and both the indices outperformed Sensex. Edelweiss Capital surged on debut.
The Index of Industrial Production (IIP) jumped 11.8% in October 2007 from 4.5% in October 2006. IIP stood at 9.7% in April-October 2007 compared with 10.1% in April-October 2006. Industrial output data for September 2007 was revised upwards to 6.8% from 6.4%. The government released the IIP data early afternoon today, 12 December 2007.
European markets, which opened after Indian market, were weak in. Asian markets edged lower today, 12 December 2007, after the US Federal Reserve's small 25 basis points interest rate cut on Tuesday, 11 December 2007, raised worries about US economic growth.
Prime Minister Manmohan Singh brushed aside on Tuesday, 11 December 2007, a new threat from his communist allies to force early elections over a controversial nuclear deal with the United States. In the government's first reaction to a call by the leader of the largest left-wing party for talks on the deal to be stopped, Singh said he would stick to a plan conditionally approved by the communists earlier to push the landmark pact.
The 30-share BSE Sensex rose 84.98 points or 0.42% to 20,375.87. Sensex hit all-time high of 20,419.11 in late trade. At day's high, Sensex rose 128.22 points. Sensex had slipped to a low of 20,045.42 in early trade. At day’s low Sensex had lost 245.47 points.
The broader S&P CNX Nifty rose 62.05 points or 1.02% at 6,159.30. It hit all-time high of 6,175.65 today in late trade.
Market breadth was strong. On BSE, 2,108 stocks advanced, 749 stocks declined and 28 stocks remained unchanged. 18 out of 30 stocks from the Sensex pack were in green.
BSE clocked a turnover of Rs 8922 crore, compared to Tuesday, 11 December 2007's Rs 8,227.36 crore.
Nifty December 2007 futures were at 6177, at a premium of 17.70 points as compared to the spot closing of 6159.30.
The NSE's futures & options (F&O) segment turnover was Rs 71,385.36 crore, which was higher than Rs 59,421.97 crore on Tuesday, 11 December 2007.
The BSE Mid-Cap index rose 1.66% to 9,338.49. It hit a all time high of 9,345.16 today. BSE Small-Cap index rose 1.86% to 11,884.99. It hit a all-time high of 11,899.96 today. Both these indices outperformed Sensex.
BSE Auto index (up 0.15% to 5,770.02), BSE Power (up 0.36% to 4,539.86), BSE Capital Goods index (up 0.04% to 20,308.27), BSE Bankex (down 0.57% to 11,712.12) and BSE IT index (down 1.78% to 4,353.59) underperformed Sensex.
BSE FMCG index (up 0.92% to 2,189.52), BSE Oil & Gas index (up 1.44% to 13,152.02), BSE PSU index (up 1.58% to 10,245.58), BSE Health Care index (up 2.75% to 4,173.98), BSE Realty index (up 2.94% to 12,540.32) and BSE Metal index (up 3.01% to 19,629.07) outperformed Sensex.
India’s largest private sector firm by market capitalization & oil refiner Reliance Industries rose 0.28% to Rs 2,886.90. The company said on Tuesday, 11 December 2007, it has signed exploration and production contracts with Colombia's Agencia Nacional de Hydrocarburos for two offshore blocks, Borojo North and Borojo South.
Banking stocks declined. ICICI Bank (down 1.96% to Rs 1,290.30) and State Bank of India (down 0.22% to Rs 2,440.40) edged lower. Interest rates in India are unlikely to come down in the short to medium term, T.S. Bhattacharyya, managing director of State Bank of India said today. HDFC Bank rose 0.52% to Rs 1,784.
IT pivotals were mixed. Infosys (down 3.34% to Rs 1,684.80), Satyam Computer Services (down 2.39% to Rs 431.15) edged lower. Wipro (up 0.08% to Rs 505.55) and Tata Consultancy Services (up 0.94% to Rs 1,049) edged higher.
Healthcare stocks advanced in late trade. Cipla (up 2.36% to Rs 199.55), Ranbaxy Laboratories (up 0.63% to Rs 407.70) and Dr. Reddy’s Laboratories (up 1.75% to Rs 685.80) edged higher.
Realty stocks rose. Hosing Development & Infrastructure (up 14.01% to Rs 978.30), Ansal Properties & Infrastucture (up 22.38% to Rs 418.35), Indiabulls Real Estate (up 3.19% to Rs 746.55) Unitech (up 1.28% to Rs 485.95), and DLF (up 0.74% to Rs 1,021.10) edged higher.
Metal stocks surged in late trade. Tata Steel rose 3.42% to Rs 864.45. The company today said it has signed a joint venture agreement with state-run mineral development company SODEMI for the development of Mount Nimba iron ore deposits in Ivory Coast, West Africa.
Jindal Saw (up 12.35% to Rs 1,036.45), Shree Precoated Steel (up 3.67% to Rs 395.15), National aluminium Company (up 11.54% to Rs 451.45), Hindalco Industries (up 3.06% to Rs 205.65), Steel Authority of India (up 3.85% to Rs 287.55) edged higher.
HDFC (up 5.33% to Rs 3,103.95), Reliance Communications (up 3.51% to Rs 765.75), NTPC (up 3.21% to Rs 251) edged higher.
Bharat Heavy Electricals declined 0.82% to Rs 2,648.35.
Reliance Energy declined 0.72% to Rs 1,931.70. It has bagged an engineering, procurement and construction (EPC) contract from Damodar Valley Corporation (DVC) to set up a coal based power station at Raghunathpur in West Bengal. The contract is valued at over Rs 3,725 crore. The EPC Group of Reliance Energy currently has orders on hand for execution aggregating over Rs 10,000 crore.
IKF Technologies rose 20% to Rs 11.38. It clocked the highest volume of 3.97 crore shares on BSE. G V Films clocked the second highest volume of 3.86 crore shares. It rose 18.03% to Rs 9.10. Tata Teleservices (Maharashtra) rose 2.74% to Rs 60. It clocked the third highest volume of 2.53 crore shares. Ispat Industries rose 1.48% to Rs 71.80. It clocked the fourth highest volume of 1.54 crore shares. Gujarat State Petronet rose 14.13% to Rs 96.50. It clocked the fifth highest volume of 1.52 crore shares on BSE.
Essar Oil clocked the highest turnover of Rs 315.32 crore on BSE. Reliance Natural Resources (Rs 256.48 crore), Reliance Petroleum (Rs 178.07 crore), Jindal Steel (Rs 173.25 crore) and Lanco Infratech (Rs 156.73 crore) were other turnover toppers on BSE in that order.
Edelweiss Capital ended at Rs 1,509.95 on BSE, a premium of 83.02% compared to IPO price of Rs 825. On BSE, 36.16 lakh shares changed hands in the counter. The stock debuted at Rs 1443.75, a premium of 75% as compared to the issue price of Rs 825.
In an important event, after Indian market hours yesterday, 11 December 2007, the US Federal Reserve lowered its benchmark interest rate by a quarter point to 4.25%, while signaling that it is open to further cuts if the housing slump and credit squeeze worsens. The Fed also lowered its discount rate, the interest it charges on direct loans it makes to banks, by a quarter-point to 4.75%.
European markets slipped today. France’s CAC 40 (down 1.25% to 5,653.29), Germany’s DAX (down 0.6% to 7,961.18) and UK’s FTSE 100 (down 0.85% to 6,480.80) edged lower.
Asian markets were weak today, 12 December 2007. Hong Kong's Hang Seng (down 2.41% at 28,521.06), Japan's Nikkei (down 0.7% at 15,932.26), Taiwan's Taiwan Weighted (down 1.71% points at 8,490.84), Straits Times (down 1.11% at 3,549.25) and Shanghai Composite (down 1.54% to 5,096.59), all edged lower. South Korea's Seoul Composite (up 0.12% 1,927.45) edged higher.
US markets tumbled after the Fed cut rates by a quarter point disappointing traders expecting double that amount. The Fed's statement said that elevated energy and commodity prices may put upward pressure on inflation.
The Dow Jones Industrial Average slumped 294.26 points, or 2.14%, to 13,432.77. The Standard & Poor's 500 index plunged 38.31 points, or 2.53%, to 1,477.65, and the Nasdaq Composite index declined 66.60 points, or 2.45%, to 2,652.35.
US Market slammed as Fed disappoints
Dow drops the most in more than a month as Fed fails to deliver
Federal Reserve disappointed Wall Street today, Tuesday, 11 December, 2007 after interest rates were cut by just quarter of a percentage point. Investors thought that this reduction was already priced in the market and was too little. Half a percentage cut would have cheered them. Stocks just plunged once Fed’s decision hit the wires today at 2.15 pm E.T. Among other developments in the market, oil prices crawled up by more than $2/barrel and Citigroup named Vikram Pandit as its new CEO
Market was at its best highs just before Fed’s decision hit the wires. But stocks seemed to have unanimous response to Fed’s decision. Even the exciting technology stocks failed to excite investors. The Dow Jones industrial Average ended the day with a loss of 294 points at 13,432. The Nasdaq Composite Index, finished lower by 66 points at 2,652. S&P 500 finished lower by 38 points at 1,477.
Nine out of ten economic sectors posted losses today, led by the Financial sector. Twenty-eight out of thirty Dow stocks ended in red today. JP Morgan, Citigroup and American Express led the group of Dow laggards. AT&T and Mc Donalds were the only two Dow winners.
The central bank lowered the federal funds rate by a quarter-point to 4.25%. The Fed also lowered its discount rate, the interest it charges on direct loans it makes to banks, by a quarter-point to 4.75%. It was Fed’s third rate cut in the past three meetings
The Fed acknowledged an intensification of the housing correction, some softening in business and consumer spending, and strains in financial markets. It also said recent developments have increased the uncertainty surrounding the outlook for economic growth and inflation.
Citigroup sheds more than 4% after naming its new CEO
AT&T shares closed higher by 4% today after the company said that it will raise its dividend 12.7% and buy back 400 million shares.
Citigroup shares closed lower by more than 4% after the company named Indian born Vikram Pandit as its new CEO.
Barring MTNL, all Indian ADRs ended in red today. Wipro Technologies, Infosys and VSNL were the topmost losers, each shedding between 4%-5%. MTNL shares gained more than 2%.
Cut in interest rate by Federal Reserve took oil prices back above $90 today and crude closed more than $2 higher for the day. Lower borrowing costs are expected to spur fuel demand and investment in commodities. Crude-oil futures for light sweet crude for January delivery closed at $90.02/barrel (higher by $2.16/barrel or 2.5%) on the New York Mercantile Exchange. The contract touched $90.55 before the Fed announced its decision at 2:15 p.m. Prices are up 47% from a year ago.
On the New York Stock Exchange, nearly 1.6 billion shares traded hands, and declining stocks outran advancers more than 5 to 1. On the Nasdaq, more than 2.2 billion shares were exchanged, and decliners topped advancers nearly 4 to 1.
Tomorrow, investors will focus on investors will look for fresh economic data to help set the tone of trading. At 8:30 ET, the Labor Dept.'s report on November Export/Import Prices will hit the wires, along with the October Trade Balance. They will be followed by the Treasury Budget in the post lunch hours.
Grey Market Premium Updates
eClerx Services 270 to 315 0 to 45
BGR Energy 425 to 480 340 to 350
Transformers & Rectifiers 425 to 465 360 to 370
Brigade Enterprises 351 to 390 50 to 60
Jyothy Lab. 690 230 to 240
Burnpur Cement Ltd. 12 6 to 7
Edelweiss 825 720 to 740
Renaissance Jewellery 150 40 to 45
Kolte Patil 145 80 to 85
Kaushalya Infra 60 11 to 12
SVPCL 42 - 5 to -7
Aries Agro 120 to 130 40 to 45
Manaksia Ltd. 140 to 160 50 to 55
Porwal Autocompotents 68 to 75 22 to 25
Precision Pipes & Profiles 140 to 150
40 to 50
Market may move in tune with global markets
US markets slumped after the Federal Reserve cut the interest rate to a quarter a points as investors felt that this rate cut is not enough for slowing economic growth. Tracking the same the Asian markets also slipped in morning trades and weakness in these global indices could make the investors jittery from taking any fresh position. Most of the leading Asian indices are down around 2% in current trades. Also fresh rally in global crude oil prices may weigh on the local indices in early trades and thereafter could exhibit volatility during intra-day trades. However, the prevailing north-bound journey and strong fund inflows in the past few sessions may add to the market advantage. Among the domestic indices, the Nifty could test 5740 and below this level may slip to 5594, while on the upside it could edge higher to 6200. The Sensex has a likely support at 19300 and may face resistance at 21000.
US indices slumped on Tuesday after the Federal Reserve cut the fed funds rate by a quarter-percentage point, as expected, but disappointed investors looking for a bigger cut. While the Dow Jones tumbled 294 points at 13,433, the Nasdaq ended 67 points lower at 2,652.
Except MTNL all the Indian ADRs ended weak on the US bourses. Satyam slumped over 7% while Wipro and VSNL slipped by over 5%. Infosys, Tata Motors, HDFC Bank, Patni Computers, ICICI Bank and Rediff ended in the red with losses around 1-4% each.
Crude oil prices in the international market edged higher, with the Nymex light crude oil for January delivery rising by $2.16 at $90.02 a barrel. In the commodity segment, the Comex gold for February series moved up by $3.60 to settle at $817.10 an ounce.
Market may come under pressure
The market may come under pressure tracking weak global cues. In an important event, after Indian market hours yesterday, 11 December 2007, the US Federal Reserve lowered its benchmark interest rate by a quarter point to 4.25%, while signaling that it is open to further cuts if the housing slump and credit squeeze worsens.
The Central Bank also cut the discount rate by a quarter point to 4.75%, counter to speculation among investors that the Fed would make a deeper reduction.
Policy makers are actively considering steps to ease credit in financial markets, and haven't ruled out moves to increase liquidity before their next scheduled meeting on 29 January 2007.
Bck home, the Index of Industrial Production (IIP) data for October 2007 is due today, 12 November 2007. IIP had slumped 6.4% in September 2007 over 12% in September 2006. Industrial output moved down 9.2% in April-September 2007 compared with 11.1% in April-September 2006.
Asian markets were trading weak today, 12 December 2007. Hong Kong's Hang Seng (down 2.64% at 28,454.28), Japan's Nikkei (down 1.84% at 15,749.87), Taiwan's Taiwan Weighted (down 2.09% points at 8,457.55), Straits Times (down 1.77% at 3,525.42), South Korea's Seoul Composite (down 1.46% 1,897.06) and Shanghai Composite (down 2.03% to 5,069.87), all edged lower.
US markets tumbled after the Fed cut rates by a quarter point disappointing traders expecting double that amount. The Fed's statement said that elevated energy and commodity prices may put upward pressure on inflation. The central bank lowered the federal funds rate by a quarter-point to 4.25%. The Fed also lowered its discount rate, the interest it charges on direct loans it makes to banks, by a quarter-point to 4.75%.
The Dow Jones Industrial Average slumped 294.26 points, or 2.14%, to 13,432.77. The Standard & Poor's 500 index plunged 38.31 points, or 2.53%, to 1,477.65, and the Nasdaq Composite index declined 66.60 points, or 2.45%, to 2,652.35
Back home, the 30-share BSE Sensex jumped 360.21 points or 1.81% to 20,290.89, a record closing high, on Tuesday, 11 December 2007. It hit an all-time high of 20,333.06 in late trade. The broader S&P CNX Nifty jumped 136.65 points or 2.29% at 6,097.25, a record closing high. Nifty hit all-time high of 6,111.20 during the day.
Crude oil fell in New York on concern a quarter-point interest rate cut by the U.S. Federal Reserve may not be enough to stem an economic slowdown in the world's largest energy consumer. Crude oil for January delivery fell as much as 72 cents, or 0.8%, to $89.30 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for January settlement fell 40 cents, or 0.4%, to $89.59 a barrel on the London-based ICE Futures Europe exchange.
As per provisional data, foreign institutional investors (FIIs) bought shares worth a net Rs 387.27 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 341.31 crore on Monday, 10 December 2007.
FIIs were net buyers to the tune of Rs 1,038.16 crore in the futures & options segment on Tuesday 11 December 2007. They were net buyers of index futures to the tune of Rs 1,037.42 crore and they bought index options worth Rs 190.62 crore. They were net sellers of stock futures to the tune of Rs 179.26 crore and sold stock options worth Rs 10.62 crore.
Pre Market Watch
The Market is likely to have negative opening, as the cues from global markets are not in favor. The market surged yesterday to hit new landmarks by creating a rally over the sectoral indices scrips on the back of heavy buying across the counters. Both the benchmark indices closed lifetime high with handsome gains. The investors showed more interest in buying rather than selling. On Tuesday, the BSE Sensex surged 360.21 points to close at 20,290.89 and NSE Nifty closed higher by 136.65 points to closed at 6,097.25. We expect the market to remain sideways during the trading session.
The much-awaited Federal Reserve decision on interest rate cut comes to an end as the US Federal Reserve cuts its benchmark interest rate by a quarter point to 4.25% but kept the doors opens for another rate cut if the credit squeeze and housing slump worsen. In line with this, the Central bank also cut the discount rate to 4.75% i.e by a quarter point.
On Tuesday, the US market closed in red. The DJIA closed lower by 294.26 points at 13,432.77. The S&P 500 index slipped by 38.31 points to close at 1,477.65 and NASDAQ fell 66.60 points to close at 2,652.35.
Indian ADRs ended in negative territory. In technology sector, Satyam fell (7.33%) along with Wipro by (5.18%), Infosys by (4.02%) and Patni computers by (3.77%). In banking sector, HDFC bank and ICICI bank slipped by (2.44%) and (1.99%) respectively. In telecommunication sector, VSNL dropped by (5.16%). Sterlite industries fell by (2.81%).
The major stock markets in Asia are trading weak. Hang Seng is trading lower by 772.56 points at 28,454.28. Japan''s Nikkei is trading down by 294.85 points at 15,749.87. Taiwan Weighted is trading at 8,457.55 fell by 180.78 points. Seoul Composite is trading down by 28.01 points at 1,897.06. Singapore Strait Times slipped by 63.61 points at 3,525.42.
Today, Nifty has support at 5,962 and resistance at 6,139 and BSE Sensex has support at 19,928 and resistance at 20,396.
Daily Trading Calls
Nifty (6097) Sup 6013 Res 6150
Buy MTNL (195) SL 190
Target 203, 205
Buy Bank of India (362) SL 357 Target 370, 373
Buy Nicholas Piramal (324) SL 319 Target 333, 335
Sell Titan (1506) SL 1520
Target 1478, 1473
Sell ITC (187) SL 191
Target 180, 178
Fed-up of small cuts!
Man is the only animal whose desires increase as they are fed…
Tuesday’s well-Fed bulls are now fed up with the small cut. Equity markets across the world are down after the Fed lowered its key interest rate by a quarter percentage point. The sharp fall was led by Wall Street, which was hoping for a wider 50 basis-point cut from Bernanke & Co. Is it the classic case of 'sell on news' or is there more in store? That's a million-dollar question.
It’s a no-brainer that the Indian market will also drop in tandem with its global counterparts. The bulls (mostly local) here will be disappointed after struggling to take the Sensex and the Nifty past 20k and 6k, respectively. This feat was achieved despite heavy selling by FIIs last month and modest buying so far this month. But, the market mood may improve if there is any rebound in Asian or European markets. While FIIs play will be closely watched, local operators appear adamant in taking charge for some time.
Some section of the market had already started feeling edgy following the recent spurt to all-time highs. A few foreign brokerages have already warned about overstretched valuations of the Indian stocks (which they have been doing from 10K onwards). Whether the bulls heed their calls remains to be seen. The small-cap and mid-cap stocks that have been on fire of late may cool down a little at the start, but may bounce back with the market.
Reliance Energy could rally after initial weakness as the company will announce issue of new FCCBs at a premium to the market price. Classic Diamonds will announce plans to raise funds. In a few days PSL will also announce plans to raise around US$1bn. We mentioned about Aptech a few days ago. The stock is roaring at a new high. Bharat Forge is another counter which could see action in the coming days along with other forging companies.
Attention will shift to Edelweiss Capital and Renaissance Jewellery which get listed today. Both the stocks are expected to do well given the strong response to their IPOs.
US stocks slumped and bonds rallied on Tuesday after the Fed cut its key short-term rate by a quarter-percentage point. Though the decision was in line with expectations, but it disappointed some investors who had been looking for a bigger cut.
Bank of America and Citigroup led all 93 companies in the S&P 500 Financials Index lower. Homebuilder shares fell the most ever, after the Fed said that the housing slump is getting worse. Washington Mutual posted its steepest drop in a month on plans to write down the value of its home-lending unit. Freddie Mac slid for a third day after forecasting a wider loss than analysts estimated.
The S&P 500 lost 38 points, or 2.5%, to 1,477.65. The Dow Jones Industrial Average dived 294 points, or 2.1%, to 13,432.77. The Nasdaq Composite Index slid 67 points or 2.5%, to 2,652.35.
Market breadth was negative. Almost 14 stocks declined for every one that rose on the New York Stock Exchange.
The Fed has cut the fed funds rate three times since Sept. 18, in an attempt to revive the tight credit market and protect the US economy from falling into a recession amid the current slump in the housing market.
In the accompanying statement, the FOMC altered the language to suggest that economic slowdown was more pronounced than it had been at the time of the last meeting at the end of October.
"Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending," the FOMC said.
US treasuries rallied the most in more than three years. Treasury prices surged, lowering the yield on the 10-year note to 3.97% from 4.15% late on Monday. The dollar gained versus the euro and the yen.
US light crude oil for January delivery rose $2.16 to $90.02 a barrel on the New York Mercantile Exchange. COMEX gold for February delivery added $3.60 to settle at $817.10 an ounce.
Citigroup announced that Vikram Pandit would take over the job of chief executive officer (CEO), over a month after former CEO Charles Prince stepped down.
European shares edged lower. The pan-European Dow Jones Stoxx 600 index fell 0.4% to 373.55, led lower by losses for property firms. The UK's FTSE 100 closed down 0.4% at 6,536.90, the German DAX 30 fell 0.3% to 8,009.42 and the French CAC-40 slipped 0.5% to 5,724.76.
Equity markets in Latin America ended sharply down. Mexico's IPSA dropped 2.7% to 30,327.36 while Brazil's Bovespa index fell 1.4% to 64,512.26. Argentina's Merval ended down, by 0.5% to 2,230.43. Chile's IPSA extended earlier losses to close with a 2.7% loss to 3,165.71.
In other emerging markets, the RTS index in Russia gained 0.5% at 2342 and the ISE National-30 index was down 0.4% to 71,855.
Most Asian markets were down sharply this morning, falling by 1-3%. The Morgan Stanley Capital International Asia Pacific index registered its biggest loss in three weeks, after the Fed said that US economic growth was slowing and Morgan Stanley said Japan too may slip into a recession.
Mitsubishi UFJ Financial led regional banks lower on speculation that a quarter-point cut by the Fed won't be enough to halt credit-market losses. Samsung Electronics and BHP Billiton fell on concern that demand for electronics and raw materials will reduce in the US, Asia's largest export market.
The MSCI Asia Pacific Index fell 1.5% to 162.81 as of 11:17 a.m. in Tokyo, set for its largest drop since Nov. 21. Almost seven stocks fell for each that gained among the benchmark's 1,140 members.
All eyes on Fed
It was a day of pouring gains as both the key indices finished at an all time closing high. He benchmark Sensex closed above the 20k mark and the NSE Nifty closed at an all time closing high. Markets constantly gained momentum as the day progressed as players expected that Fed would cur interest rates.
Among the 30-scrips of Sensex, ICICI Bank, Reliance Industries, Bharti Airtel and HDFC Bank were among the major gainers. However, DLF, Infosys and BHEL were among the major laggards.
Finally, 30-share Sensex ended 360 points higher to close at 20,290 and Nifty closed at 6,097 adding 136 points.
Maruti advanced 3% to Rs1077 after the company announced that it would increase capacity to 9.6 lakh cars per year by March 2010. Suzuki would invest 200bn Yen in Indian plants 2007-09. The scrip touched an intra-day high of Rs1085 and a low of Rs1040 and recorded volumes of over 7,00,000 shares on NSE.
Eicher Motors fell 1.6% to Rs469. Reports stated that AB Volvo is acquiring a 50% economic interest in the company’s commercial vehicles business, which is spun off into a Joint Venture company. The scrip touched an intra-day high of Rs504 and a low of Rs463 and recorded volumes of over 10,00,000 shares on NSE.
Essar Oil slipped 1.8% to Rs294. According to reports the company is close to sealing a deal to acquire a majority stake in Kenya Petroleum Refinery, one of the country’s oldest refinery complexes. The scrip touched an intra-day high of Rs304 and a low of Rs291 and recorded volumes of over 64,00,000 shares on NSE.
Pfizer rallied by over 8% to Rs776 following reports that the company is the first MNC to receive HIV drug patent in India. The scrip touched an intra-day high of Rs824 and a low of Rs740 and recorded volumes of over 92,000 shares on NSE.
Voltas advanced 2% to Rs249 after reports stated that the company would acquire stake in two companies, Universal Comfort Products and Saudi Ensas Company from its JV partners. The scrip touched an intra-day high of Rs255 and a low of Rs245 and recorded volumes of over 26,00,000 shares on NSE.
GAIL gained 4% to Rs519 after the company announced that it signed co-operation pact with Puducherry government. The scrip touched an intra-day high of Rs524 and a low of Rs505 and recorded volumes of over 30,00,000 shares on NSE.
Nicco Corp locked at 5% upper circuit to Rs41.45 after The company along with Prysmian to set up Joint Venture Nicco cables in which Prysmian would hold 60% and Nicco 40% in Joint venture. The scrip touched an intra-day high of Rs41.45 and a low of Rs40.50 and recorded volumes of over 5,00,000 shares on NSE.
Oil marketing stocks were in limelight following reports that the Government may consider a marginal hike in petrol and diesel prices with a simultaneous reduction in excise duty. BPCL rose over 3% to Rs439, IOC was up 2% to Rs630 and HPCL surged by over 6.5% to Rs329.
Sugar stocks turned sweeter after reports stated that sugar mills would get interest free loans to help them pay the dues of the farmers. Balrampur Chini was up by over 2.5% to Rs106, Renuka Sugar gained 2.2% to Rs841 and Bajaj Hindusthan added 0.3% to Rs238.
What the FIIs are doing
FIIs were net buyers Rs3.87bn (provisional) in the cash segment on Tuesday while the local institutions pumped in Rs3.4bn. In the F&O segment, foreign funds were net buyers of Rs10.38bn on the same day.
On Monday, FIIs pumped in Rs3bn in the cash segment.
Stocks in News:
Wipro is looking to earn one-sixth of its global revenues by March 2009 from system integration business.
Pfizer's patent for new HIV follow up treatment drug Celzentry in India may face opposition from patient groups and NGOs.
Marico is currently test marketing hair oil, gel and shampoo for children.
ITC to provide supply solutions to help small stores place orders over mobile phones.
TV18 Group to buy a majority 53% stake in Infomedia India.
Ansal API receives UP government’s approval for two SEZs.
Jindal Drilling plans to divest 10% stake to fund expansion plans.
Nalco is investing Rs300bn over the next five years for setting up smelter and power plant in Indonesia.
SBI expects slowdown in personal loans by 5-10% in second half of FY08.
Shriram Transport Finance is looking at the replacement market to sustain its loan growth at 50% in H2 FY08.
Idea Cellular offers Rs16.5bn for additional 4.4MHz spectrum.
Reliance Industries to spend US$12bn to develop three gas basins.
IOC says it would stop fuel supply to the railways if the latter continues to insist on discounts.
United Phosphorus is set to bid for Australia's largest agriculture chemical company, Nufarm.
Tata Steel has entered into a joint venture with SODEMI for the developing Mount Nimba iron ore deposits in Ivory Coast in West Africa.
Suzuki announces that Maruti Suzuki India will make its next global car, the A-Star.
Mercator Lines raises about US$142.5mn from its listing at the Singapore stock exchange.
Reliance Industries sings contracts for exploration in two oil and gas blocks in Colombia.
Reliance Energy led consortium will contest Sea King while bidding for the Mumbai Trans-Harbour link.
Reliance Energy’s 4,000MW Shahapur project gets environment clearance.
L&T acquires 26% stake in New Delhi based consulting and engineering firm Feedback Ventures for Rs400mn.
JSW Energy invites bids for BoP package for its proposed 3x400MW coal fired power plant in Ratnagiri.
Commerce Minister Kamal Nath rules out any possibility of relaxation of land rules for SEZs.
The RBI may soon tighten norms for foreign exchange derivatives.
The Government is likely to extend Software Technology Parks of India scheme only to Indian ITES/BPO firms beyond 2009.
The Petroleum & Natural Gas Regulatory Board has urged the petroleum ministry to offer targeted subsidy on petrol, diesel, LPG and kerosene.
Fed cuts interest rates
The US Federal Reserve has decided to cut its benchmark interest rate by a 25 basis points to 4.25% to prevent the housing slump and credit squeeze from undoing the six-year expansion.
This was the third time in a row that policy makers decided to cut its federal funds rate.
The Fed's Board of Governors also voted to cut the discount rate, the cost of direct loans from the central bank, by a 25 basis points to 4.75%.
The gap with the federal funds rate remains half a point. Some economists had predicted the Fed would reduce the spread between the two.
The change "should help promote moderate growth over time,'' the Federal Open Market Committee (FOMC) said in a statement after meeting on Tuesday in Washington.
Following is the press release issued by US Federal Reserve
The Federal Open Market Committee decided to lower its target for the federal funds rate 25 basis points to 4.25%.
Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks. Today’s action, combined with the policy actions taken earlier, should help promote moderate growth over time.
Readings on core inflation have improved modestly this year, but elevated energy and commodity prices, among other factors, may put upward pressure on inflation. In this context, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.
Recent developments, including the deterioration in financial market conditions, have increased the uncertainty surrounding the outlook for economic growth and inflation. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; and Kevin M. Warsh. Voting against was Eric S. Rosengren, who preferred to lower the target for the federal funds rate by 50 basis points at this meeting.
In a related action, the Board of Governors unanimously approved a 25 basis point decrease in the discount rate to 4.75%. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and St. Louis.
Reliance Energy, Jindal Steel & Power December futures at premium
Turnover in F&O segment rises
Nifty December 2007 futures were at 6096.35, at a slight discount of 0.90 points as compared to the spot closing of 6097.25.
The NSE's futures & options (F&O) segment turnover was Rs 59,421.97 crore, which was higher than Rs 47,277.77 crore on Monday, 10 December 2007.
Reliance Energy December 2007 futures were at premium, at 1952, compared to the spot closing of 1948.25.
Jindal Steel & Power December 2007 futures were at premium, at 15,452, compared to the spot closing of 15429.05.
Mahanagar Telephone Nigam December 2007 futures were at discount, at 193.75, compared to the spot closing of 194.55.
In the cash market, the S&P CNX Nifty gained 136.65 points or 2.29% at 6097.25.
Crude gains more than $2
Lower borrowing costs is expected to spur fuel demand
Cut in interest rate by Federal Reserve took oil prices back above $90 today and crude closed more than $2 higher for the day. Lower borrowing costs is expected to spur fuel demand and investment in commodities.
For the day ending Tuesday, 11 December, 2007, crude-oil futures for light sweet crude for January delivery closed at $90.02/barrel (higher by $2.16/barrel or 2.5%) on the New York Mercantile Exchange. The contract touched $90.55 before the Fed announced its decision at 2:15 p.m. Prices reached a high of $99.2 on 21 November. Prices are up 47% from a year ago.
The central bank lowered the federal funds rate by a quarter-point to 4.25%. The Fed also lowered its discount rate, the interest it charges on direct loans it makes to banks, by a quarter-point to 4.75%.
In the currency market today, the dollar slipped against the yen but gained against most other major rivals. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, rose 0.2% at 76.230.
Brent crude oil for January settlement rose $1.95 (2.2%) to $89.99 on the London-based ICE Futures Europe exchange.
EIA expects global oil markets to remain tight through 2008
Natural gas futures in New York rose on speculation higher demand spurred by colder weather pulled above-average quantities of gas from stockpiles. Natural gas for January delivery rose 5.3 cents (0.8%) to settle at $7.085 per million British thermal units. Futures have gained 12% this year till date.
Against this backdrop, January reformulated gasoline rose 4.13 cents to $2.2914 a gallon and January heating oil gained 4.54 cents to $2.5230 a gallon.
Members of the Organization of Petroleum Exporting Countries left production targets unchanged at the 5 December meeting in Abu Dhabi. The group, which produces 40% of the world's oil, will review output at a Feb. 1 meeting in Vienna.
As per EIA, global oil markets will likely remain tight through 2008 and monthly average oil prices are expected to near $85 per barrel over the next year. World oil consumption in 2008 is projected to rise by 1.4 million barrels.
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