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Thursday, August 07, 2008

Rec-oil and Recall


If you want to test your memory, try to recall what you were worrying about one year ago today.

Guess what! Around a year ago, the indices were more or less at these levels with the major worry being the sub-prime crisis. A year later, we are at the same levels as far as the indices are concerned; not to forget the January highs though. The worries now include oil and rupee among others. Oil thankfully has been cooling a bit thanks to the weekly inventories report which showed crude supplies unexpectedly grew. The US markets, which opened weak recoiled following a slip in oil prices. The Indian government meanwhile has ruled out an immediate reduction in petrol and diesel prices following softening of global crude prices.

The outlook for today is a flat open with a quieter first half. Thereafter, indices could swing wildly depending on expectations of inflation and adjustments in large caps. Reports state that there is short covering in many large cap stocks. At the same time mutual fund units are being sold to book losses at lower NAVs. (Of course similar buying also seems to be happening the next day or so in mutual funds, reports state)

If investors are trying to mimic what the big players are doing then remember, these guys have a larger asset allocation across various asset classes. They are often hedging or adjusting one against another. It would be foolish to just follow selectively. In times like this, concentrate more on your own portfolio and your own asset allocation.

The Securities and Exchange Board of India and the Reserve Bank of India, on Wednesday issued final guidelines for launching exchange traded currency futures. Stock exchanges can now start currency futures after obtaining approval from both the regulators. Banks need to have a minimum net worth of Rs5bn to trade in currency derivatives, according to new directives issued.

The size of each contract will be $1,000 and the contract will be quoted and settled in Indian rupees. The settlement price shall be the Reserve Bank of India’s reference rate on the last trading day. The maturity of the contracts shall not exceed 12 months.

Some action could be expected in counters like RCom. But for heaven’s sake don’t buy on expectations that Amar Singh will become telecom minister or similar theories. Meanwhile, Cellular Operators’ Association of India has said that Trai’s directive to GSM operators to offer interconnection to CDMA player Reliance Communications is against
interconnect agreements.
Reliance Communication’s plans to launch its GSM services has a hit bump with the existing operators refusing to accept the telecom regulator’s orders to offer interconnection links to the new player.

i-flex would be closely watched with reports stating that Deepak Ghaisas, R Ravisankar and Rajesh Hukku, of i-flex are expected to leave the company in the next few weeks.

Bharat Forge could be in action in the coming days as it plans to step into the manufacture of ultra heavy forgings catering to the power sector, including nuclear plants. Expect some announcements tomorrow.

The Finance ministry is against issuance of oil bonds in advance to oil marketing companies, a report stated.

Sugar production in the country fell 6% in the 10 months to July 2008.

The Centre’s direct tax revenues continue to be buoyant, with net collections recording a 46.95 per cent growth in the first four months of the current fiscal. Net direct tax collections stood at Rs 71,648 crore during April-July 31 this year as compared with Rs 48,756 crore collected in the same period last year.

The country was expected to maintain the high growth trajectory in the Eleventh Plan period despite the current high rates of inflation. The Chief Economic Advisor to the Ministry of Finance, Dr Arvind Virmani, said, “The average growth in the 11th Plan period will remain at 9 per cent.” He dismissed fears of any “overheating” in the economy.

Prime Minister’s Economic Advisory Council (EAC) Chairman C. Rangarajan projected a moderation in India’s economic growth to 7.5-8 per cent this fiscal with no change in the Reserve Bank’s monetary stance until inflation cools down to reasonable levels. Dr. Rangarajan said: “There are certain factors, both domestic and external, which may add to the slowdown of growth rate, but we still think that the growth rate could be 7.5-8 per cent”.

Meanwhile, the monsoon has been active over Konkan-Goa and south madhya Maharashtra during the 24 hours ending Wednesday morning. Rainfall occurred at most places over Konkan-Goa, south madhya Maharashtra, Marathwada and south Gujarat region; at many places over north madhya Maharashtra and north Gujarat; and at isolated places over Saurashtra-Kutch.

Profit booking may continue

Bulls managed to extend gains to second straight trading session Sensex on Wednesday with the benchmark Sensex regaining the 15k mark. The rally was triggered after Fed decided to keep its key interest rates untouched. Sentiments were further improved as even the crude oil slipped for third day in a row. However, a bout of selling pressure in the last hour of the trading session dragged the Indian bourses from day’s high.

Finally, the benchmark Sensex gained 112 points to close at 15,073 and Nifty was up by 14 points to close at 4,517.

Among the 30-components of Sensex, 20 stocks were in green and 10 stocks were in red. Bharti Airtel, L&T, ICICI Bank and Reliance Industries were among the major gainers. On the other hand, HDFC, SBI and Tata Steel were among the major laggards.

Sugar stocks attracted heavy demand after sugar prices hit 52-week high of Rs19.02per kg on 06 August 2008 on back of improvement in sugar prices as forecast indicate lower sugar production in the ext season.

Triveni Engineering rallied by over 13%, Renuka Sugar surged by over 2%, Balrampur Chini advanced by over 2.5% and Sakhti Sugar rose over 1%.

Shares of Elecon Engineering rallied by over 5% to Rs107 after the company announced that it secured five major orders from their Material Handling Equipment (MHE) division totaling to Rs5.24bn. The scrip touched an intra-day high of Rs110 and a low of Rs101 and recorded volumes of over 14,00,000 shares on BSE.

Shares of ICSA India was locked at 5% to Rs377.40 after the company announced that it has entered into a MoA with ECE Industries Ltd, New Delhi to purchase all of the machineries and equipments along with available drawings, designs and data belonging to the Energy Meter Plant of ECE Industries Ltd situated at Hyderabad.

This MoA also permits ICSA to use the brand name of ECE for a period of six months from the date of MoA, after which the said energy meters shall be marketed under the own brand name of ICSA. The scrip touched an intra-day high of Rs377.40 and a low of Rs362 and recorded volumes of over 1,00,000 shares on BSE.

Shares of Geometric Ltd gained by 2% to Rs55.3 after the company announced that it signed a contract with Ford Motor Company, to provide Production Support and Software Maintenance Work.

Geometric will provide application management services (AMS) to Ford for production support of its engineering applications suite, which comprises of over 140 integrated applications. The management services will cover issue analysis, investigation, resolution, code fix, software vendor coordination, testing, packaging, validation and global release at various Ford Consumer Business Groups. The scrip touched an intra-day high of Rs58 and a low of Rs54 and recorded volumes of over 5,00,000 shares on BSE.

Shares of Sasken Communication slipped 1.8% to Rs147. The company announced that Sasken Test Lab capabilities have been formally assessed and accredited by National Accreditation Board for Testing and Calibration Laboratories. The scrip touched an intra-day high of Rs156 and a low of Rs146 and recorded volumes of over 7,00,000 shares on BSE.

Shares of Subhash Projects declined 1.6% to Rs182. The company announced that it won Rs3.18bn order from Public Health Engineering Dept. (PHED), Basni, Jodhpur, Government of Rajasthan. The scrip touched an intra-day high of Rs195 and a low of Rs176 and recorded volumes of over 55,000 shares on BSE.

Looking at the last hour of trading session on Wednesday it is likely to that profit booking will prolong on the Indian bourses. Nervousness would also remain before inflation data to be announced after the market hours. The sentiments in the US would also be a tad low as the Fannie and Freddie announced a loss of US$816mn.

- Domestic steelmakers including Tata Steel, Essar Steel, Ispat and JSW Steel have decided to hold prices of their products for another month. (ET)

- Boots Company has signed an agreement with Reliance Retail to enter India’s health and wellness market. (ET)

- 55 of ACC top managers have started receiving Holcim stock this year in lieu of bonuses. (ET)

- A technical snag at Petronet LNG’s Dahej terminal has severely impacted gas supplies to Ratnagiri Gas and Power Dabhol plant. (ET)

- Bharti Airtel and Vodafone Essar will launch 3G i-phone in India on August 22. (ET)

- Bharat Forge has incorporated its 51:49 joint venture with NTPC. (ET)

- JSW Energy will soon foray into the power distribution business. (BS)

- Elecon Engineering Company expects to bag orders worth Rs11bn in the next quarter of the current fiscal. (BS)

- The finance ministry has given its approval to Daiichi Sankyo’s proposed acquisition stake in Ranbaxy. (FE)

- Hindustan Construction Company led consortium has bagged a contract worth Rs14bn from Andhra Pradesh Government for irrigation project. (FE)

- Gujarat State Petroleum Corp will buy LNG for a record US$20/mmbtu the highest rate quoted by an Indian firm in the spot market—from Shell group unit Hazira LNG Ltd. (Mint)

- Power Grid Corporation of India has formed a joint venture company with Teesta Urja Ltd for developing transmission system to evacuate power from the upcoming 1,200 MW Teesta-III Hydro Electric Project in Sikkim. (BL)

- Bharat Forge Ltd plans to step into the manufacture of ultra heavy forgings catering to the power sector, including nuclear plants. (BL)

- Elecon Engineering Company’s material handling equipment division has bagged five major orders worth Rs5.2bn. (BL)

- Union Bank of India and IndusInd Bank have hiked their prime lending rates by 75 basis points. (BL)

- Rio Tinto has decided to set up a greenfield alumina facility in Gujarat. (ET)

- Captain GR Gopinath may sell 2% stake in Air Deccan. (ET)

- HSBC will not sell its 5% stake in Axis Bank

- IDEA Cellular has informed DoT about its willingness to demerge its licences in the Punjab and Karnataka circles into a separate entity. (ET)

- UTV Global Broadcasting Ltd, the broadcasting arm of UTV Software Communications Ltd, is taking two of its channels to Sri Lanka. (BL)

- Epic Energy has acquired Tamil Nadu-based Sathian Sun Power Systems for an undisclosed sum. (ET)

- Eaton Corporation, a US-based automotive company, has struck a distribution agreement with Redington India to distribute its Powerware brand of single phase UPS to IT and ITes customers in the country. (ET)


Economy Front page

- Net direct tax collections grew by 46.95% in April-July 2008 to Rs716.5bn against Rs487.7bn in corresponding period of the previous fiscal. (ET)

- Trai has asked the government to allow Mobile Virtual Network Operators (MVNOs) in the country. (ET)

- Flow of foreign direct investment into sensitive infrastructure sectors such as airports and ports may be taken off from the automatic route once the proposed umbrella law for scrutinizing FDI from the national security angle is put in place. (ET)

- Private players would hike the price of hot-rolled products by Rs 10,000 a ton for the export market. (FE)

- The government has paid about Rs280bn towards subsidy to fertilizer producers till July-end and plans to pay Rs80bn per month till February. (DNA)