Most human beings have an almost infinite capacity for taking things for granted.
Things we take for granted are no longer the same. Money, for example, is not only getting dearer, but is also hard to come by. Global credit markets are choked as banks are refusing to lend to each other amid fears of more pain going ahead. Liquidity has emerged as the key variable. Several closely watched measures of bank lending have hit all-time highs, as lenders continued to hoard funds. Only a substantial easing of the cash crunch can pull the global markets out of the current mess.
For that to happen, the US Congress must pass the Bush government's bailout plan in some form or the other. The Senate will take up a new bill on Wednesday for a vote. A positive outcome here will go a long way in reviving the credit markets and restore investor confidence in financial markets. Until that happens, one must remain careful and keep a close watch on developments underway globally, especially in the US.
At the same time don’t lose sight of local factors, like tight liquidity conditions, a weak currency, worsening deficits, persistent FII outflows, high inflation and hardening interest rates. The upcoming quarterly results will throw more light on how India Inc. is coping with the multiple headwinds so far.
Today, we expect a higher opening on the back of the rebound across global markets and hope of the bank rescue plan passing the litmus test in the US Congress. Given that the markets will be shut on Thursday and the level of uncertainty, we advise all to stay cautious and alert and refrain from taking undue risks. After all, you can’t take anything for granted!
US stocks staged a strong come back on Tuesday, a day after the Dow Jones Industrial Average posted its biggest ever point loss in the wake of the rejection of the bank bailout plan by the House of Representatives.
The blue chip index jumped by nearly 500 points on hope that the Congress will eventually pass a toned down version of the government's US$700bn rescue plan.
The Dow surged by 485.21 points, or 4.7%, to 10,850.66, a level that has the blue-chip index down 6% from the end of August, and 4.4% for the third quarter. Of the Dow's 30 components, all but one ended higher, with blue-chip financials pacing the advance.
The S&P 500 Index climbed 58.34 points, or 5.3%, to 1,164.73, with the broad-market index off 9.2% for the month, and 9% for the quarter. Financials led gains that stretched across all 10 of the index's industry groups.
The Nasdaq Composite index jumped 98.60 points, or 5%, to finish at 2,082.33, leaving the technology-laden index with a monthly loss of 12%, and a quarterly decline of 9.2%.
Trading volume was moderate following Monday's crash. On the New York Stock Exchange, advancers beat decliners 4 to 1 on volume of 1.62bn shares. On the Nasdaq, winners topped losers by more than 3 to 2 on volume of 2.43bn shares.
Meanwhile, a closely watched measure of the housing sector showed that home prices in July fell by the largest rate ever, although the pace of monthly declines slowed.
The Chicago PMI, a key manufacturing report, fell to 56.7 in September from 57.9 in the prior month. However, the decline was smaller than economists were expecting. Any reading over 50 suggests growth.
The September consumer confidence index topped forecasts, the Conference Board reported. It climbed to 59.8 from a revised 58.5 in August, surprising economists who thought it would fall to 55.
US light crude oil for November delivery rose US$4.27 to settle at US$100.64 per barrel on the New York Mercantile Exchange. On Monday, oil prices plunged US$10.52 a barrel in the second-biggest one-day plunge ever.
Gasoline prices fell for the 13th day in a row, according to a nationwide survey of credit card activity. COMEX gold for December delivery fell US$13.60 to settle at US$880.80 an ounce. In currency trading, the dollar fell against the euro and gained against the yen.
European shares closed higher on Tuesday after the previous session's bruising, but ended the third quarter down roughly 12% after a month of staggering events in the financial sector.
After a 5.5% drop on Monday, the pan-European Dow Jones Stoxx 600 index ended 1.8% higher at 256.01, with miners and drug makers advancing. European stocks shook off early losses on Tuesday on hopes a US government rescue plan could still be implemented.
The UK's FTSE 100 rose 1.7% to 4,902.45 and the French CAC-40 advanced 2% to 4,032.10. Germany's DAX 30 edged up 0.4% to 5,831.02.
In the emerging markets, the Bovespa in Brazil soared by 7.6% to 49,541 while the IPC index in Mexico climbed 3.9% to 24,888. The RTS index in Russia rose by nearly 1.5% to 1211 and the ISE National 30 index in Turkey gained 1.6% to 45,472.
Markets ended with healthy gains reversing early losses. The bounce back came after Finance Minister P Chidambaram and SEBI assured investors whose worries resurfaced after the rejection of much-awaited US$700bn package.
The rally was led by banking and realty stocks. ICICI Bank was the biggest gainer among the 30-components of Sensex. Finally, the BSE benchmark Sensex recovered over 700 points and the NSE Nifty index recouped nearly 210 points from their respective day’s low.
Sensex gained 264 points to close at 12,860 and the NSE Nifty index gained 71 points to close at 3,921.
Areva T&D gained by 1.6% to Rs1423 after reports stated that GE Consumer and Areva have jointly announced a strategic alliance. The scrip touched an intra-day high of Rs1438 and a low of Rs1322 and recorded volumes of over 28,000 shares on BSE.
Shares of Dena Bank gained by over 4% to Rs41.1 after the company announced that it has raised Lower Tier II Bonds (Series X) Capital funds to augment long term resources of the Bank and to meet its future Capital Adequacy Ratio requirements in the nature of Debentures on Private Placement Basis for an amount of Rs3bn including Green shoe option.
The scrip touched an intra-day high of Rs41.9 and a low of Rs36.5 and recorded volumes of over 16,00,000 shares on BSE.
Shares of Panacea Biotech gained by 5% to Rs241 after 0.5mn shares changed hands in two block trades.
About 499,760 shares were sold on the BSE and 500,000 shares on the NSE at an average price of Rs222 per share. The scrip touched an intra-day high of Rs242 and a low of Rs214 and recorded volumes of over 5,00,000 shares on BSE.
Zee News advanced by over 2% to Rs40 after almost 1mn equity shares of the company changed hands at an average price of Rs39.3 on the NSE. The scrip touched an intra-day high of Rs40.9 and a low of Rs36.7 and recorded volumes of over 13,00,000 shares on NSE.
Compact Disc has announced that iMedia Ventures Ltd content developer offered to invest US$10mn the expansion projects of CDI. This debt has been offered at 2.5% per annum over LIBOR inclusive of withholding tax or other applicable taxes for a period upto 10 years.
iMedia Ventures have also shown keen interest in buying 15% equity in CDI. Both these offers will be considered in the next meeting of the board of directors of the company to be held during the third week of October, 2008.
Compact Disc dropped by over 11% to Rs43 touching an intra-day high of Rs45.8 and a low of Rs39 and recorded volumes of over 2,00,000 shares on BSE.
BHEL surged by over 5% to Rs1586 after the company announced that it won order worth Rs9.9bn to set up thermal sets of 259MW in Rajasthan. The scrip touched an intra-day high of Rs1621 and a low of Rs1430 and recorded volumes of over 6,00,000 shares on BSE.
M&M creates a trust that will hold 8.7% stake in the company post merger with Punjab Tractors and Mahindra Holding Finance (ET)
RIL to sell KG oil at US$5 discount to Brent (BS)
Cipla, GSK and FDC to be affected by NPPA’s move to cut prices of three bulk drugs (ET)
RCOM plans to spend Rs300bn on capacity expansion in FY09 (BS)
BHEL wins order worth Rs9.9bn for setting-up a 500MW thermal power plant in Rajasthan (BS)
SAIL and L&T ink JV for setting up captive power plants (ET)
JSW Steel may increase capacity of its Vijaynagar plant to 16mtpa in phases (DNA)
BEL plans Rs5.7bn capex over the next two years (BS)
NMDC may raise iron ore prices by 50-55% for long-term contracts (DNA)
Ambuja Cements plans to invest nearly Rs16bn in captive power generation (BL)
Ashok Leyland sets up a JV with US-based John Deere to make construction equipments (BL)
ONGC to invest Rs350mn on expansion of Desalter plant at Nawagam near Kheda (FE)
HUL has raised prices of ‘Lux’ soaps by 5-8% in Q2 FY09 (DNA)
IOC expects its oil import cost to increase by 70% to US$45bn in current fiscal (mint)
RCOM will participate in 3G and wireless auctions (ET)
IDEA Cellular rolls out operations in Bihar (ET)
Lanco Group gets LoI to build Vizhinjam International Transhipment Terminal Port (DNA)
Dabur India’s Gulf plant will start production of personal care products by December 2008 (BL)
BEL wins Rs1bn order for voting machines from the Election Commission (BL)
Shriram EPC looks to offload 40% stake in Singapore JV (mint)
Dishman Pharma to foray into global oncology market (DNA)
Systema to invest over US$1.5bn on expansion of Shyam Telelink’s network (ET)
Polaris to buy US Insurance firm SEEC Inc in an all-cash deal (ET)
PSTL to invest Rs2bn over next 18 months to modernize 250 theaters in South India (ET)
Economic Front Page
India and France sign agreement on civil nuclear cooperation (BL)
India’s fiscal deficit at US$25bn in the first five months already at 87.7% of the full-year target for FY09 (ET)
Oil companies cut ATF prices by 5.4% (BL)
Direct tax receipts in April-September 2008 rises by 29.3% yoy to Rs1,500bn (mint)
Government is considering a proposal to increase FDI to 100% in single-brand retail and allow 51% FDI in multi-brand retail for electronic goods, computers, sports goods and watches (BS)
Petroleum Minister wants Cairn and ONGC to lay oil pipeline to Gujarat (FE)
Forex reserves increases by just US$2.2bn in Q1 FY09 (ET)
Steel prices could soften further by US$150/tone (BS)
October-December sugar supply seen at over 5.1mn tone (ET)
India’s wheat and rice production likely to grow by 7% and 8% respectively by 2012 (ET)
The mines ministry wants the export duty on iron ore to be rolled back (ET)
India’s iron ore export may fall 33% on demand slowdown from China (mint)