I hope our wisdom will grow with our power, and teach us, that the less we use our power the greater it will be. – Thomas Jefferson.
A week after its disappointing listing, there is some hope for Reliance Power investors. In a desperate attempt to boost investor confidence and shore up the Ambani brand, the Anil Dhirubhai Ambani Group is using all the power available. A board meeting on Feb 24 will consider issue of bonus shares to all investors, excluding the promotersWe see a positive opening today on the back of a firm trend across Asian markets. Wall Street emerged unscathed despite some negative news. However, other world markets actually closed in the red on bleak US economic reports. This week may be critical for the bulls. It remains to be seen if they can continue the momentum of last week or will cave in once again to any fresh onslaught from the bears.
Among other news, UTV will make a strategic announcement with a large media entity later today. Meanwhile, reports suggest that US media giant Disney is keen on raising its stake in the Indian entertainment and media company.
Ess Dee Aluminium will also be in action amid reports that it is likely to acquire India Foils from the Anil Agarwal promoted Madras Aluminium. Canara Bank is also expected to do well as the RBI has allowed fresh buying by overseas investors.
TVS Motor will be on the backfoot after the Madras High Court restrained the company from making and selling the 125 cc bike, Flame. The court passed the order on a suit filed by Bajaj Auto.
Sesa Goa is likely to gain amid reports that Japanese steelmakers, led by Nippon Steel Corp., have reportedly agreed to a 65% increase in annual iron ore prices. Shares of KNR Constructions Ltd. will get listed on the bourses today.
The bulls showed admirable resilience last week after a week start. The Sensex and the Nifty gained more than 3.5% each, buoyed by short-covering and a rebound in global equity markets. The recovery process may continue in the lead up to the budget.
Last week's rally was led mainly by short covering. The key indices have to sustain the positive momentum for a few more days to qualify the current rally as a fresh intermediate up-trend. Though the sell-off by the FIIs has tapered off, the same may resume on any fresh bad news on the US economy.
Remember the proverb 'one swallow doesn't make a summer'. Be careful in interpreting last week's rebound, lest one will have to repent later. Wait for some more positive signals before jumping to any conclusions regarding the market's direction. At the same time, long-term investors may consider picking up quality stocks at current levels, albeit at a gradual pace.
Next week will again be a big one, as the Government will announce the Railway Budget and Union Budget for FY09. Historically, our market witnesses a small pre-budget rally. This hasn't been the case so far due to global concerns. The tradition may resume as we still have a few days to go before the B-day. But, for that to happen, we should not get any further bad news from the US, which is a bit too much to ask for given the outlook for the world's biggest economy.
FIIs were net buyers of Rs2.61bn (provisional) in the cash segment on Friday. Local institutions were net buyers of Rs1.39bn. In the F&O segment, FIIs were net buyers of Rs1.74bn. On Thursday, foreign funds pulled out Rs11.83bn from the cash segment.
Most Asian markets are trading up this morning despite the fresh set of negative economic reports emanating from the US. The Nikkei in Tokyo was up 174 points at 13,797 while the Hang Seng in Hong Kong gained 248 points to 24,396. The Kospi in Seoul added 17 points to 1711 and the Straits Times in Singapore rose 30 points to 3118. The Shanghai Composite in China was up 50 points at 4548 and the Taiex in Taiwan gained 87 points at 7963.
US stocks ended lower on Friday but managed to register weekly gains after declines in US consumer confidence and factory activity in the New York region revived worries about the threat of a recession.
The Dow Jones Industrial Average dropped 28.8 points, or 0.2%, to 12,348.2, giving the blue-chip index a weekly jump of 1.4%. The S&P 500 reversed course in the final moments of trade, to finish mostly flat at 1,349.99, a gain of 1.4% from the prior week.
The Nasdaq Composite shed 10.74 points, or 0.5%, to 2,321.8, giving the technology-laden index a 0.7% rise on the week.
Trading was fairly quiet ahead of the long holiday weekend. All financial markets in the US will be shut on Monday for the Presidents' Day holiday. On Tuesday, reports are due on consumer prices, housing starts and building permits. Also, quarterly earnings are due from Wal-Mart and Hewlett-Packard.
The New York Empire State index, a regional manufacturing report, showed a surprise reading of -11.7 versus forecasts for a positive reading of 7. A negative reading suggests contraction in the sector.
In addition, the University of Michigan's February consumer sentiment index showed a bigger-than-forecast drop to 69.6 from 78.4 in the previous month. Economists had forecast a fall to 76.5.
Industrial production almost stagnated, according to another government report that showed flat capacity utilization in January. And finally, January import and export prices jumped from the previous month, according to another report.
FGIC Corp., one of the largest bond insurers in the world, asked to be split in two, possibly separating its municipal bond business from more troubled exposures that have been hit hard by the mortgage crisis.
Leading US electronics retailer Best Buy cuts its full-year earnings forecast, citing weaker-than-expected revenue growth in January.
Market breadth was negative. On the NYSE, decliners beat advancers 9 to 7 on volume of 1.5bn shares. On the Nasdaq, losers beat winners 9 to 5 on volume of 2.03bn shares.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.78% from 3.8% late on Thursday. In currency trading, the dollar fell versus the yen and euro. US light crude oil for March delivery rose 4 cents to settle at $95.50 a barrel in New York.
Gold futures ended lower. Gold for April delivery dropped $4.70 to end at $906.10 an ounce.
Platinum futures extended their record-breaking run, spurred by persistent worries about supply disruptions in South Africa. Platinum for April delivery soared as high as $2,079.90 an ounce, beating the previous record set on Thursday. The contract finished up $57.80 at $2,063.70 an ounce. Platinum futures soared $179.70, or nearly 10%, this week from last Friday's closing level of $1,884.
Stocks in Europe closed sharply lower. The pan-European Dow Jones Stoxx 600 index dropped 1.9% to 317.46. The UK's FTSE 100 shed 1.5% to 5,791.20, the French CAC-40 fell 1.9% to 4,767.28 and the German DAX 30 slid 1.8% to 6,835.18.
Most emerging markets too ended in the red. The Bovespa in Brazil was down 0.9% to 61,271 while the IPC index in Mexico fell 1.35% to 28,744. The RTS index in Russia slipped 1.8% to 1989 while the ISE National-30 index in Turkey plunged nearly 3% to 55,322.
Not another manic Monday
On Friday bulls extended their gains to third straight trading session tracking firm cues from the Asian and European markets also buying momentum in the large cap stocks towards the end lifted the nifty index to close above the 5,300 mark. Finally, the 30-share Sensex closed at 18,115 surging 348 points. The NSE Nifty closed at 5,302 adding 100 points.
Overall about 1,988 stocks advanced, 759 stocks declined while 46 stocks remained unchanged. Among the BSE 30 index 25 stocks advanced while 5 stocks declined.
Igarashi Motors rallied by over 13% to Rs77 after the company announced that it agreed to venture with Robert Bosch. The scrip touched an intra-day high of Rs78 and a low of Rs68 and recorded volumes of over 86,000 shares on NSE.
Refinery stocks continue to be in demand as Government hiked petrol and diesel prices by Rs2 per litre and Re1 per litre respectively. IOC surged by 4.5% to Rs561, HPCL gained 3.5% to Rs309 and BPCL added 1% to Rs469.
Telecom stocks also ended with gains. Report stated that DOT planned to change spectrum usage charges levied on telecom companies, to a fix percentage of revenue for each category circles. Rcom gained 0.5% to Rs612, Bharti Airtel gained 0.6% to Rs882, Idea advanced 3.5% to Rs112 and Tata Communication added 1.1% to Rs508.
Hanung Toys gained 3% to Rs204 after the company announced that it opened their first Retail store for soft toys in Delhi on February 14, 2008. The scrip touched an intra-day high of Rs209 and a low of Rs191 and recorded volumes of over 12,000 shares on NSE.
Bhushan Steel was down 0.3% to Rs1035. The company announced that it proposed to execute MOU with wholly owned Undertaking / Govt. of Madhya Pradesh for setting up manufacturing facilities in the state of Madhya Pradesh for 1 MTPA Coke Oven Plant and 5 MTPA Cement Plant, with the total investment of approximately Rs40bn in phases. The scrip touched an intra-day high of Rs1055 and a low of Rs988 and recorded volumes of over 43,000 shares on NSE.
Cadila gained 1.7% to Rs251 after the company announced that it introduced an NDDS product 'Nudoxa' for the treatment of various cancers. One of the critical drugs used in chemotherapy, Nudoxa heralds a new approach in cancer therapy. With chemotherapy being a common mode of treatment in cancers, there has been a long standing need for a drug that is stable and long lasting with reduced toxicity and side effects. The scrip touched an intra-day high of Rs254 and a low of Rs245 and recorded volumes of over 6,000 shares on NSE.
News Snippets:
Coal India would have to spend Rs18bn for import of 200mn tons of coal in the 11th plan.(BS)
Jindal Power, a subsidiary of the BC Jindal group, plans 4,500MW generation capacity in four years.(BS)
Gammon India sets up a logistics company and plans to invest Rs3bn in the first year.(Mint)
Ambuja Cements to invest Rs35bn on capacity expansions; total production capacity seen at 25mn tons pa in two years.(TOI)
Reliance Industries has completed 94% of drilling for production of natural gas from its KG-D6 block.(ET)
Jindal Saw would invest Rs3.5bn to expand its seamless tube business.(DNA)
NTPC to expand generation capacity to 55,000MW by end of 11th plan; aims to produce 75,000MW by 2017.(BL)
Rural Electrification Corp seeks a partner an infrastructure firm to enter electricity distribution.(ET)
The Government withdraws the facility to SBI to use its rights issue bonds for meeting the mandatory SLR requirements.(FE)
Canada has asked a Ranbaxy subsidiary to withdraw its generic painkiller from the market due to safety concerns.(BS)
Tech Reliance, the IT arm of Reliance Communications is likely to have an alliance with Accenture.(DNA)
Tata Advance Systems forms an alliance with EADS to bid for Indian Army’s US$1bn advanced tactical communications systems.(FE)
Emami may acquire an overseas firm in the hair care segment for Rs6bn.(DNA)
Tata group has tied-up with US helicopter firm Sikorsky to manufacture chopper cabins in India.(TOI)
L&T Infotech, the IT arm of L&T, says would acquire a US firm in the manufacturing vertical for US$300mn within a year.(BL)
GAIL India studying the possibility of floating a subsidiary to set up CNG outlets along the highways where it has its pipelines.(BS)
Maharashtra Seamless will set up billet plant.(DNA)
Shell to expand capacity of its LNG import terminal at Hazira to 3.5mn tons over the next few months.(FE)
Hindustan Construction Company and Dabur plan to foray into wine business.(TOI)
Canara Bank plans to foray into broking business.(ET)
Binani Cement acquires a plant in Dubai.(BL)
Economic Front Page
Government says the issue of granting of SLR status to oil bonds under consideration.(FE)
CMIE revises down GDP growth estimate to 8.9% for FY08 from 9.1%.(BL)
Drug price regulator to focus on pricing trends of 74 bulk drugs that come under government notified price controlled list.(BS)
Auction of telecom spectrum legally possible, says Finance Ministry.(BL)
Income Tax department suggests differential dividend distribution tax on companies in its pre budget suggestions to CBDT.(BS)
Finance Ministry is planning to withdraw the Rs300 per ton export duty on iron pellets.(ET)
The Government is considering a sovereign investment fund with an initial corpus of US$5bn to acquire companies abroad.(ET)
Textiles and apparel exports grew marginally by 1.5% in CY07 as against 9% last year.(BS)
Iron ore exports drop by 2.6% in the eight months to November to 53mn tons.(BL)
The Government is preparing the largest agricultural debt relief package, worth Rs320bn; proposals may be unveiled in forthcoming budget.(Mint)
Sugar production is estimated to have decline by 0.9mn tons in the first quarter of 2007-08.(ET)
The Government will allow companies to raise funds abroad against the value of their investments in shares of listed group companies.(FE)
The Government is likely to review the banking cash transaction tax.(ET)
Commerce Ministry is not in favour of an across-the-board cut in the basic customs duty and has called for selective cuts on certain imported products.(BS)