A wise man thinks it more advantageous not to join the battle than to win.
Though the key indices registered yet another weekly loss, there is some hope for the bulls. For a change, the action would be more on the political front for the earlier part of this week. The battle-lines have been drawn and most key players have made their positions more or less clear. With the SP backing the N-deal, chances of early elections have reduced. Still, there may be some surprises - positive or negative. The deal itself may run out of time due to US elections. The problem with parties like the SP, the latest to offer support to a troubled government, is that they talk before the walk. The SP has reportedly started demanding that private oil companies like RIL, Essar and Cairn pay windfall profit tax. Most market participants may view this as a proxy war between the Ambani brothers as Anil Ambani is ‘close’ friends with the SP leadership.
Back to markets, we expect a cautious opening as Asian markets are mixed. The Hang Seng and Shanghai have posted strong gains. Other regional markets are either flat or marginally in the red. In the US on Thursday, the Dow Jones ended up while the Nasdaq and S&P 500 were almost unchanged. Wall Street was closed on Friday due to the Fourth of July holiday. European markets ended lower on Friday.
The gains in the Indian market on Wednesday and again on Friday suggest that the bulls still have some fight left in them. F&O data indicates that the market could rise slightly more before resuming the southward march. The Nifty July Futures shed some open interest on Friday while the discount on them fell by about 10 points. The open interest in stock futures too increased. At the same time, there was build-up in puts while calls saw some unwinding.
One still can't say with absolute certainty that the ‘bearish’ phase is over. There are still considerable headwinds facing global and Indian markets. Further negative news is not ruled out. Crude oil remains the biggest joker in the pack. Technically, the key levels to watch out for are 3848 on the way down and 4325 on the higher side (Ah, when will it come!).
For India, the near-term trigger may come from the latest quarterly results. In a short time we would know how India Inc. is coping with multiple headwinds like rising inflation, higher borrowing costs and slowing demand. With overall expectations low, there could be some positive surprises.
The FIIs were net buyers of Rs3.72bn (provisional) in the cash segment on Friday while local institutions pulled out Rs970mn. In the F&O segment, they were net buyers of Rs1.2bn.
On Thursday, the FIIs were net sellers of Rs7.02bn in the cash segment, bringing their year-to-date outflows to $6.5bn. Mutual Funds pumped in Rs2.42bn on the same day.
The MSCI Asia-Pacific Index lost 0.4% to 132.24 at 10:17 a.m. Tokyo time, with about three stocks retreating for every two that rose. The regional benchmark has declined for the sixth day out of seven, and has dropped 16% this year.
Japan's Nikkei 225 Stock Average fell 8 points to 13,229, a 13th consecutive decline and extending its longest losing streak since 1954.
The Hang Seng in Hong Kong was up 254 points at 21,667 while the Shanghai Composite index in China surged 110 points or 4.1% to 2780. The Straits Times in Singapore rose 7 points to 2900 and South Korea's Kospi Index slid 12 points to 1566.
The Taiex in Taiwan added 13 points at 7241 while Australia's ASX/S&P 200 Index retreated 106 points or 2.1% at 4975.
European shares ended lower on Friday, marking a fifth weekly decline amid persistent worries about the health of the financial sector even as UBS said it could avoid losses in the second quarter and that it did not need to raise any fresh capital.
The pan-European Dow Jones Stoxx 600 index dipped 1.3% to 279.53, extending this week's retreat to 2.7%. It's fifth straight weekly drop is the longest losing streak since a seven-week fall ending January 25.
The Dow Jones Stoxx 600 index had posted strong gains on Thursday, after European Central Bank (ECB) President Jean-Claude Trichet took a neutral stance on interest rates after hiking a key interest rate by 25 basis points to 4.25%.
National benchmark indexes fell in 17 of the 18 western European markets. UK's FTSE 100 closed down 1.2% at 5,412.80, while Germany's DAX 30 fell 1.3% to 6,272.21 and the French CAC-40 dropped 1.8% to 4,266.00.
Shares of regional financial firms fell after Goldman Sachs said European banks may need to raise as much as US$141bn to shore up their capital. Bradford & Bingley tumbled to the lowest since 2000 after TPG dropped plans to buy a stake in the UK mortgage lender.
British Airways slumped as crude traded above US$144 per barrel.
Crude oil traded near $144 a barrel in New York as Iran signaled that it will maintain its nuclear program policy a day after responding to an incentives package by world powers to halt uranium enrichment.
Crude oil for August delivery traded at $143.75 a barrel on the New York Mercantile Exchange at 11:03 a.m. in Singapore. It fell as much as $1.66 to $143.63 a barrel earlier today.
In the emerging markets, the IPC index in Mexico was down 0.45% at 28,338 while the RTS index in Russia dropped 1.1% to 2187. The ISE National-30 index in Turkey was up 1.1% at 41,428.
Climate change will be among the top topics at this week's summit of the Group of Eight (G8) leading industrial nations, according to Japanese Prime Minister Yasuo Fukuda.
The summit, to be held in Japan, formally begins Monday among the heads of state of the eight industrialized countries in the group: The US, Japan, Germany, the U.K., France, Italy, Canada, and Russia
The G8 discussions could extend further on Wednesday when the group opens its doors to leaders of some of the major developing nations: China, India, Brazil, Indonesia, Mexico, South Korea and South Africa.
Last trading session of the week ended with smart gains. The see-saw trend continued over the Indian bourses as bulls again made a come back after getting hammered on Thursday.
After starting off the day on a flat note, key indices gained momentum led by gains in the index heavyweights like L&T, RCom, ICICI Bank and HDFC. Barring the Metal index, all the other BSE Sectoral indices ended with smart gains with BSE Realty index drooping over 7.5%. Even the Mid-Cap and the Small-Cap indices ended over 1.5% each.
Finally, the BSE benchmark Sensex gained 359 points to close at 13,454 and the Nifty index added 90 points to close at 4,016.
Archidply Industries Ltd. started trading at Rs74.55 on BSE against its issue price of Rs74. The scrip ended at Rs50.45 translating into a discount of 47% hitting an intra-day high of Rs74.55 and a low of Rs48.80 recording volumes of over 1,00,00,000 shares.
India Cement surged by over 4.5% to Rs130 after HSBC raised its stake in the company to 8.43%. The scrip touched an intra-day high of Rs131 and a low of Rs122 and recorded volumes of over 1,00,000 shares on BSE.
Panacea Biotec rallied by over 9% to Rs303 after the company announced that it has forayed into healthcare delivery by way of entering into collaboration to set-up 220 bed multi specialty hospital in national capital region of Delhi at Gurgaon, India. The scrip touched an intra-day high of Rs307 and a low of Rs281 and recorded volumes of over 20,000 shares on BSE.
Steel Strips ended at Rs115 down 3.3%. The company announced that the board of directors would meet on July 04, 2008 to consider and allot optionally convertible bonds to Tata Capital Ltd up to an amount of Rs200mn on preferential basis. The scrip touched an intra-day high of Rs119.95 and a low of Rs111.
L&T advanced by 6.5% to Rs2379 after reports stated that the company is in talks with a consortium of banks to raise ~Rs170bn as debt to fund its plans of entering the power generation segment. The company is in discussion with a consortium of international banks, including ICICI Bank and SBI to fund four power projects, each with a capacity of over 1000 mega watt, reports stated.
Reliance Power advanced by over 4% to Rs136 following reports that the company is planning to buy a stake in an Australian firm that owns coal mines and has an enterprise value of US$3bn. The scrip touched an intra-day high of Rs142 and a low of Rs127 and recorded volumes of over 82,00,000 shares on BSE.
Flawless Diamond advanced by 2% to Rs48 after the company announced that it is opening up its 21st retail outlet at in Andheri. The scrip touched an intra-day high of Rs52.8 and a low of Rs44 and recorded volumes of over 20,000 shares on BSE.
Educomp Solutions edged higher by half a percent to Rs2784 after the company announced that it has entered into a strategic alliance with Designmate to market its product, Eureka.in. Educomp has bought 5,000 liceBSEs of Eureka. in an exclusive rights for all private schools in India.
Educomp has bought 5,000 license of the international award-winning 3D animated product used for learning science and mathematics and available in more than 1,400 schools. The scrip touched an intra-day high of Rs2869 and a low of Rs2685 and recorded volumes of over 79,000 shares on BSE.
Reliance Industries in talks to acquire downstream assets of Chevron. (ET)
Central Electricity Authority has submitted an alternative gas distribution plan to the Government for 18mmscmd of Reliance Industries’ D-6 gas.(FE)
BPCL has entered into an equal JV with the Kenya Pipeline Co for setting up LPG bottling plant in Kenya.(BL)
Tata Motors has increased its stake in Automobile Corporation of Goa by 3% to 40.6%. (ET)
L&T plans to acquire a research company to expand its technological skills in deep sea drilling.(BS)
Tata group firm Trent plans to invest Rs20bn in setting up 50 ‘Star Bazzar’ hypermarkets in India.(FE)
MTN Group may issue 20% fresh equity to RCOM as part of multi-stage merger deal.(BS)
ONGC Videsh has been short-listed to bid as operator for deepwater blocks in Angola.(BL)
Cadila Healthcare to restructure its consumer business and create a single listed entity by early 2009.(BL)
Coal India plans to invest ~15bn for setting up 28 washeries with total capacity of 98mn tons. (ET)
Ranbaxy has successfully completed the phase II clinical trials for the first malaria drugs.(BL)
Idea Cellular plans to invest Rs6.47bn for the rollout of operations in Mumbai circle.(BS)
BSNL has asked for allocation of 10 MHz broadband wireless spectrum on an urgent basis.(BL)
M&M plans to start selling a diesel pick-up truck in the US.(BS)
GM to invest Rs12bn at its Talegaon unit near Pune.(BS)
ChrysCapital has acquired 7-8% stake in Amtek Group for Rs3.5bn.(BL)
GMR is planning a scheduled commercial airline by the end of 2010.(BS)
Areva T&D successfully type-tested its first 1,200 KV capacitor voltage transformer.(BL)
GoAir has reduced the number flights to 800 from 1,000 earlier.(BL)
Binani Cements to invest US$100mn on expansion for its plant in China and US$125mn to buy plants in Mauritius and West Asia.(BL)
Greenply Industries to set up laminate plant in Himachal Pradesh with an investment of Rs1.2bn.(BS)
Havells India plans a capex of Rs2bn on Greenfield and brownfield projects in the current fiscal.(BL)
Marks & Spencer proposal for 51% FDI in single brand retail business has been cleared by the Government.(BL)
FMCG companies may hike prices in their respective brands this month.(FE)
GNFC shut several manufacturing units due to technical problems. (DNA)
US-based Regal Entertainment and other PE Funds in talks with promoters of Pyramid Saimira Theater for ~14% stake. (ET)
Dabur India plans to focus on over-the counter products for lifestyle problems. (ET)
Biocon plans to hive off its research & development activity to a separate entity. (ET)
Reliance Power may be allowed to use excess coal from captive coal blocks of Sasan Ultra Mega Power Project. (ET)
IDFC set to build a pan-India logistics chain for creating industry specific and tailor-made facilities. (ET)
Binani Cement to consider long term bulk cement supply contract with real estate developers. (ET)
Essar Oil in race to acquire 50% stake in Kenya Petroleum Refineries. (ET)
Daimler-Hero JV to start in 2010, to make 70,000 trucks. (ET)
DoT to float draft cabinet note for auctioning 773 acres of land owned by VSNL. (ET)
UB Group to invest Rs10bn in three years to hike its brewing capacity.(BS)
Gammon Infrastructure plans to foray into waste water management.(BS)
US based distress fund Wilbur Ross may invest in SpiceJet.(BS)
Ranbaxy, Cipla, Wockhardt, Nicholas Piramal and Cadila, to soon withdraw 60 drugs combinations from the market.(BS)
L&T to restructure the engineering construction and contract divisions into four entities in 2-3 years.(BS)
Hindustan Unilever has implemented ploughshare mixing technology in its soap manufacturing plants to cut costs by 30%.(BS)
Whyte & Mackay may takeover Glen Moray, the Elgin-based distillery.(TOI)
Economic Front Page
Private Oil companies may have to pay windfall profit tax. (ET)
Direct tax collections grew 38.6% in the first quarter to Rs573.7bn.(BL)
Kenya government has invited Indian companies for participation in exploring activities.(BS)
The Government plans to allow proposal of existing GSM operators keep extra spectrum with them. (FE)
Andhra Pradesh to account for 40% of cement production in three years. (BS)
The Central Electricity Authority to look into quality issue of plant supplied by Chinese companies. (BS)