Inflation is bringing us true democracy. For the first time in history, luxuries and necessities are selling at the same price – (Robert Owen).
The Government has expectedly unleashed a slew of measures to reign in spiraling prices of key commodities. There could be more steps in the pipeline given the political compulsions and high global commodity prices. RBI Governor Y.V. Reddy too has expressed his willingness to join the fight against inflation. Most experts expect a CRR hike at the month-end annual policy meeting. But more on that later…
We expect a better opening and an improved finish compared to yesterday's sudden sell-off. Auto companies may be in focus as they report monthly sales numbers. IT shares may remain under pressure if the rupee appreciates further against the dollar. Banking shares may also fall amid expectations of further tightening in monetary policy.
Hero Honda has come out with good March sales figures, but its doubtful if the stock can sustain at higher levels. Cairn India is another stock that one could buy for the short-as well as long-term. Dabur Pharma could see some action amid news that a German firm is eyeing a majority stake in the company. Airline companies may also attract some attention amid expectations that they may announce higher surcharge on tickets with a 14% spike in ATF prices. A hike in STT comes into effect from today. That negative is already factored in though.
Back to the inflation containment measures, a tighter monetary policy is not good for India amid an ongoing economic slowdown and global turmoil. But, one reckons that the 'powers-that-be' have very little choice but to curb spiraling price pressures. It’s another matter that the steps already taken to contain inflation may prove counter-productive or even detrimental in some cases. Case in point is the ban on sugar exports in 2006.
The fiscal measures may also take time to work their way through and it’s anybody's guess how effective they will be in the face of a global rally across commodities. So, inflation will remain the bugbear for the markets for some time to come. One may have to settle with lower growth and high inflation.
Another negative for the bulls is that FIIs were once again net sellers yesterday, but the reported sale figure for Friday is much lower than the provisional one.
Cues from the global markets are not all that bad this morning, with US stocks closing modestly higher, though Wall Street has notched up its worst quarter in more than five years. Citigroup has announced an overhaul by spinning off its card business and carving out four regional structures outside of the US.
Treasury Secretary Henry Paulson has announced a proposal to restructure financial regulation, including increased powers for the Federal Reserve, to help avoid any future crisis. Here again, Wall Street is skeptical about the Bush Administration's plan. Meanwhile, European inflation has accelerated to the fastest pace in almost 16 years, and confidence among Japanese manufacturers is at a four-year low.
Asian markets were trading mostly higher this morning. The Nikkei in Tokyo was up 2% at 12,757 while the Hang Seng in Hong Kong gained 1.6% at 23,205. The Kospi in Seoul was up 0.7% at 1716 while the Straits Times in Singapore 0.9% to 3033. The Shanghai Composite in China was down nearly 3% to 3369 and the Taiex in Taiwan was flat at 8573.
The MSCI Asia Pacific Index jumped 0.9% to 140.60 as of 11:24 a.m. in Tokyo. The index lost 12% in the first quarter, the worst start to a year since 1992, as a US housing slump threatened to drag the largest market for Asian goods into a recession.
Investors in Tokyo shrugged off the Bank of Japan's quarterly Tankan survey, which showed that sentiment among the country's largest manufacturers slid to a four-year low last month.
US stocks closed marginally higher on Monday as falling commodity prices, coupled with an improved reading on regional manufacturing and a government plan to help avert future financial crises boosted the sentiment. Still, the key US equity indices chalked up their worst quarter in more than five years marred by fears of a recession amid the meltdown in the housing sector and the ensuing logjam in credit markets.
Citigroup, Wachovia and JPMorgan Chase helped the S &P 500 Index pare its biggest quarterly decline since 2002. GE and FedEx rallied after the National Association of Purchasing Management-Chicago's business index increased more than forecast. Merck fell the most since 2004, limiting the market's advance, after doctors recommended not using two of its cholesterol pills in favor of low-cost alternatives.
The S&P 500 climbed 7 points, or 0.6%, to 1,322.7, reducing its monthly loss to 0.6%. The Dow Jones Industrial Average rose 46 points, or 0.4%, to 12,262.89. The Nasdaq Composite Index added 18 points, or 0.8%, to 2,279.1.
Almost two stocks rose for every one that fell on the New York Stock Exchange. Volume on the NYSE neared 4.1bn shares, and advancing stocks outpaced those declining 5 to 3. On the Nasdaq, more than 1.7bn shares were exchanged, and advancers edged ahead of decliners, 4 to 3.
The blue-chip Dow closed March with a slight monthly gain of 0.2%, but down 7.6% for the quarter, its second consecutive quarterly decline. For the blue chips, the first quarter of 2008 marked their worst three-month period since the third quarter of 2002.
The S&P 500 was down about 10% in the January-March period, its worst showing since late 2002. The Nasdaq shed just over 14% in the quarter. Going forward, the second quarter could bring some improvement, although Wall Street is likely to see another leg down first and more daily volatility.
Citigroup shares gained 2.8% after the banking giant unveiled a restructuring of its global business into four regional units, and said it would break out its credit-card business from its broader consumer-banking segment.
Shares of Merck & Co. lost 14.7% and that of Schering-Plough 26% after data showed their drug Vytorin to be no more effective in treating heart disease than less-costly generic alternatives.
Gold futures finished down $15 to $921.50 an ounce, but gaining $86.60, or 10.3%, for the first quarter. Crude futures fell $4.04 to settle at $101.58 a barrel.
The dollar rose versus the euro and the yen. Treasury prices inched higher, lowering the yield on the benchmark 10-year note to 3.41% from 3.44% late Friday. Bond prices and yields move in opposite directions.
In economic news, the Chicago Purchasing Managers Index climbed to 48.2 in March from 44.5. The better than expected reading came ahead of the national Institute for Supply Management manufacturing survey scheduled for Tuesday.
Treasury Secretary Henry Paulson introduced the Bush Administration's proposed overhaul of the financial system, which includes expanding the Fed's power to manage the type of extreme credit crisis currently dragging on the economy. Paulson defended his regulatory blueprint, saying initial reviews that the plan amounted to less oversight of Wall Street are incorrect.
Across the Atlantic, stocks in Europe ended weaker. Winding up the worst quarter since 2002, the pan-European Dow Jones Stoxx 600 index slipped 0.4% to stand at 305.54, bringing year-to-date losses to about 16%. In dollar terms, the loss was a more modest 9%.
Germany's DAX 30 was down 0.4% at 6,534.97, while the French CAC-40 moved up 0.2% to 4,707.07 and the UK's FTSE 100 added 0.2% to 5,702.10.
Major Latin American stock markets rose. Mexico's IPC surged 2.7% to 30,912.99. The benchmark index finished the first quarter 4.7% higher and gained 6.9% in March. Brazil's Bovepsa rose 0.8% to 60,968.07. It fell 4.6% in the first quarter, and by 4% for the month.
Bulls may remain under pressure
On last trading session of India’s financial year the benchmark Sensex declined 4.4% on Monday on back of negative cues from the international equity markets and selling pressure in scrip’s across the sectors. The benchmark Sensex posted a record fiscal fourth quarter loss. It declined 23% in January-March quarter its biggest fall since 1992. Finally, the BSE benchmark Sensex declined 726 points to 15,644 and the Nifty index ended at 4,734 lost 207 points.
Overall about 1,356 stocks advanced; 1,300 stocks declined while 43 stocks remained unchanged. Among the 30 stocks of Sensex 26 stocks ended in negative territory and only 4 stocks ended in green.
All the Sectoral indices ended on a negative note. The BSE Bankex index (down 5.8%), BSE IT index (down 5.6%), BSE Realty index (down 5.3%) and BSE Metal index (down 4.3%). Even the Mid-Cap and the Small-Cap index slipped almost over 1% each.
Among the 30-scrips of Sensex, ICICI Bank, Reliance Industries, HDFC and Infosys were among the major laggards. On the other hand, Cipla, M&M, Bharti and ITC were the only gainers.
After slipping over 5% in early trades, Cairn India partially recovered and ended 2.5% lower finally to end at Rs224. The stock slipped after the company announced that it posted a net loss after minority interest of Rs245.442mn for the year ended December 31, 2007 where as the same was net loss at Rs211.742mn for the year ended December 31, 2006.
Total Income is Rs11446.716mn for the year ended December 31, 2007 where as the same was at Rs449.632mn for the year ended December 31, 2006. The scrip has touched an intra-day high of Rs230 and a low of Rs216 and has recorded volumes of over 12,00,000 shares on NSE.
IDFC slipped by over 5.5% to Rs151. The company announced that the Board of Directors approved the proposal to amend the Object Clause of its MoA by adding new activities in the areas of developing and maintaining infrastructure projects, financial assistance to manufacturers, engaging in asset management activities and engaging in all infrastructure related activities. The scrip touched an intra-day high of Rs161 and a low of Rs150 and recorded volumes of over 12,00,000 shares on BSE.
IOB slipped by 0.3% to Rs135. The company said that the Board of Directors of the Bank approved the proposed takeover of Shree Suvarna Sahakari Bank Ltd., Pune (under moratorium) subject to due diligence evaluation and approval from the Regulatory and Statutory authorities concerned. The scrip touched an intra-day high of Rs137 and a low of Rs120 and recorded volumes of over 47,000 shares on BSE.
L&T was down by over 4% to Rs3024. The company announced that it has been awarded Rs57mn order by Hindustan Petroleum Corporation Ltd (HPCL). HPCL has awarded L&T a large project order of 200,000 Tonnes per annum Lube Oil Base Stock (LOBS) Plant consisting of Raffinate Hydrotreating Unit (RHT), Mobil Selective Dewaxing Unit (MSDW) & Hydro Finishing Unit (HF). The scrip touched an intra-day high of Rs3148 and a low of Rs2988 and recorded volumes of over 2,00,000 shares on BSE.
BHEL declined 1.7% to Rs2056. The company announced that they won boiler order worth Rs5.5bn from New Caledonia. The scrip touched an intra-day high of Rs2092 and a low of Rs1983 and recorded volumes of over 2,00,000 shares on BSE.
Suven Life Sciences slipped by 2.5% to Rs32. The company announced that two product patents were granted in Mexico and Korea for two of their new chemical entities (NCEs) for the treatment of disorders associated with neurodegenerative diseases and these patents are valid until 2023. These granted patents are exclusive intellectual property of Suven and are achieved through the exclusive internal discovery research efforts. The scrip touched an intra-day high of Rs34 and a low of Rs31 and recorded volumes of over 1,00,000 shares on BSE.
Thomas Cook ended flat at Rs96 as Thomas Cook UK Ltd acquired 100% of the shareholding of TCIM Ltd. TCIM Ltd currently holds 54.42% of the paid up equity share capital of the Company and Thomas Cook UK Ltd shall, therefore, indirectly control 54.42% of the total paid up capital of the Company. The scrip touched an intra-day high of Rs97 and a low of Rs95 and recorded volumes of over 54,000 shares on BSE.
Tata Motors came off its days low after media reports stated that they would invest Rs60bn in Pune facilities over four to five years. The scrip ended at Rs623 down 3% and touched an intra-day high of Rs645 and a low of Rs620 and recorded volumes of over 19,00,000 shares on BSE.
ERA Infrastructure edged lower by 0.5% to Rs593. The company announced that it secured order worth Rs200mn. The scrip touched an intra-day high of Rs605 and a low of Rs590 and recorded volumes of over 14,000 shares on BSE.
For Tuesday markets may continue to feel the pressure. Having said that, global cues would again play an important role to direct the Indian bourses in early trades.
Corporate Front Page
To fund its Jaguar Land Rover buyout, Tata Motors, is preparing to divest stake in two of its 100% owned business units HV Axel and HV Transmission. (BS)
RPL and Chevron Corp have mandated a consortium of six international banks to raise US$500mn. (ET)
Cairn India is still in talks with the Government about the financing of a pipeline to transport crude from its key Mangala field in Rajasthan. (ET)
ICICI Bank may sell 12% in broking arm for Rs36bn. Goldman, Morgan, JP Morgan, Credit Suisse and Nomura among others are in the race. (BS)
Power Finance Corporation has floated a wholly-owned consultancy arm to provide services in the power sector. (ET)
RIL believes a 38.1mn cubic feet a day gas find in one of its east coast blocks is commercially viable and will submit an appraisal plan soon. (ET)
RIL has invited EoI for the development of its gas discoveries in the KG-DWN-98/3 deepwater block. (FE)
Sabare International, a Karur-based home furnishings company, has taken ICICI Bank to court over a foreign exchange derivative contract. (BS)
Gammon India has clinched the Rs3.4bn re-densification project to build a Central Business District in a prime business locality of Bhopal. (BS)
Ranbaxy Laboratories is selling the oral liquid manufacturing unit to its Romanian subsidiary, Terapia. (ET)
Sun Pharma’s US arm Caraco has been asked to withdraw batches of generic Metformin, used to treat diabetes, on grounds of efficacy. (BL)
Cipla is set to sell its generic version of Deferasirox, a once-a-day oral iron chelator used to treat iron overload. (BL)
Wipro is setting up an 80-acre facility in Chennai by investing Rs7bn. (ET)
The GMR group is in the race for a 50% stake in InterGen, a US-based power company with plants in five countries. (BL)
Four Soft expects the merger of the company with Take Solutions to be completed within two months. (BL)
ICSA will soon acquire two T&D sector companies with front-end marketing capabilities in the US and Europe. (BS)
Dabur is banking on the country’s rural and semi-urban areas for growth in the baby care segment. (BS)
Havells India plans to enter electric motors business. (DNA)
Country Club India is all set to expand its horizon through acquisition of properties in Dubai and Bangkok. (BL)
Nitco Tiles is planning to open 12 Le Studio showrooms and 120 Le Express in next 18 months and is targeting revenue of Rs20bn by FY10. (BS)
Vijaya Bank has exceeded its business target for 2007-08 with a growth of more than 25%. (ET)
Alembic is all set to bag a US$25-30mn manufacturing contract from a multinational company. (BS)
Gujarat Ambuja Exports is set to invest around Rs850mn in two different ventures, a soybean processing plant and its mandi venture. (BS)
Kanoria Chemicals will spend Rs1.25bn on an alcohol-based chemicals plant in Visakhapatnam over 21 months. (ET)
PSA Corp., owned by Temasek Holdings plans to acquire 49% in ABG Kandla Container Terminal from ABG Infralogistics for Rs2.4bn. (Mint)
ArcelorMittal South Africa has announced another hike in the alloy's price that will come into effect from May 1. (ET)
An ICICI Venture Funds Management Co., RFCL has acquired Bremer Pharma GmbH, a German veterinary care company. (Mint)
France’s Pernod Ricard has won the auction to buy the maker of Sweden’s Absolut vodka for US$8.9bn. (ET)
Dubai-based Arab Digital Distribution has won a 10-year contract for exclusive coverage rights for the IPL T20 tournament. (ET)