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Thursday, October 23, 2008

Easy be norms...Borrow and sorrow!


“It is far better to borrow experience than to buy it”.

The easing of ECB norms and the crash in crude prices should have brought cheer. Alas, we remain at the mercy of global markets which promise new lows for our indices today. Investors, who have been waiting with cash can look to make some deployment today. And don't forget to get back to cash during a bounce back in the coming days.

We are likely to witness an opening carnage today on the back of another round of vicious sell-off across global markets. Stock markets across the globe have taken a severe beating amid mounting fears of a world-wide recession. Even the commodities have not been spared, with oil prices plumbing to a 16-month low, gold slipping to one-year low and a key commodities index hitting a four-year nadir. The yen is gaining ground against the dollar and euro, suggesting a reversal in the so-called carry trades.

Asian markets have opened sharply lower this morning. We see a gap-down opening despite the RBI announcing further easing in the ECB norms to help Indian companies raise funds abroad amid the crippling credit crisis. FIIs continue to offload money from emerging markets like India as risk aversion is on the rise.

The macro-economic picture too remains grim, with the Prime Minister saying that FY09 GDP growth will be sharply lower from last year and the Finance Minister saying that the targets on fiscal deficit will be missed. A weakening rupee is only adding to the pressure on the domestic liquidity situation and worries for the policymakers.

Meanwhile, the RBI may further relax its monetary stance on Friday, when it undertakes a mid-year review of its annual policy. However, one needs to see what kind of impact it will have on the markets if global markets continue to bleed.

Amidst all this chaos, Reliance, the once upon a time microcosm of the Indian capital market will announce its results.

FIIs were net sellers of Rs5.4bn (provisional) in the cash segment on Wednesday while the local institutions poured in Rs4.04bn. In the F&O segment, the foreign funds were net sellers at Rs7.49bn. On Tuesday, FIIs were net buyers of Rs1.14bn in the cash segment, taking their total outflows this year to above $11.9bn.

US stocks another beating on Wednesday, with the Dow Jones Industrial Average slumping by more than 500 points, as mounting fears of a global recession sparked selloff of equities across the globe as well as commodities.

The S&P 500 index finished at its lowest level in more than five years.

Having sunk by nearly 700 points in the final 15 minutes of trade, the Dow finally tumbled by 514 points, or 5.7%, to end at 8,519.21. Wednesday's point loss was the blue chip American index's seventh worst daily performance ever.

The S &P 500 index nose-dived 58.27 points, or 6.1%, to 896.78, its lowest finish since April 21, 2003, when the S&P ended at 892.01. The Nasdaq Composite index slid 80.93 points, or 4.8%, to 1,615.75, closing at its lowest level since June 26, 2003.

Market breadth was negative. About 24 stocks fell for each that rose on the New York Stock Exchange.

On the positive side, lending rates continue to improve in inter-bank markets, as the efforts of governments to resolve the financial mess starts to kick in. But any relief about the improvement in the credit markets has been overshadowed by recession fears.

US light crude oil for November delivery settled down $5.43 to $66.75 a barrel on the New York Mercantile Exchange, a 16-month low. Oil prices have been dropping since crude peaked at an all-time high of $147.27 a barrel on July 11.

Gasoline prices fell another 3.1 cents overnight, to a national average of $2.858 a gallon. It was the 35th consecutive day that prices have decreased. During that time, prices have fallen by nearly $1 a gallon.

Treasury prices rose, lowering the yield on the 10-year note to 3.59% from 3.70% on Wednesday. COMEX gold for December delivery fell $24.10 to $743.90 an ounce. In currency trading, the dollar rose against the euro and fell against the yen.

Across the Atlantic, markets across European markets slumped for the second straight session amid fresh worries about how earnings will hold up in an environment of economic contraction.

The pan-European Dow Jones Stoxx 600 index dropped 5.1% to 209.57, giving back gains made earlier in the week. For the year, the Stoxx 600 is down over 40%. The UK's FTSE 100 closed down 4.5% at 4,040.89, while Germany's DAX 30 dropped 4.5% to 4,571.07 and the French CAC-40 slid 5.1% to 3,298.18.

Emerging markets too closed sharply down. The Bovespa in Brazil was down 10.2% at 35,069 while the IPC index in Mexico slid 7% to 18,787. The RTS index in Russia slipped 7.2% to 665 and the ISE National 30 index in Turkey was down 4.6% at 31,902.

Markets plunged on Wednesday, reversing previous day's gains. The fall could be attributed to weak global cues and heavy selling witnessed in the metal and realty stocks.

The Asian markets ended sharply lower, with the Hang Seng, Nikkei and the Kospi index dropping over 5%

All the BSE Sectoral indices ended in the red except for the FMCG index. The BSE metal index was the biggest loser down almost 8%. Among the major laggards were Tata Steel and Sterlite Industries, falling more than 10%.

The BSE benchmark Sensex lost 513 points or 4.8% to close 10,169 and the NSE Nifty index declined 169 points to close at 3,065.

Century Textile recovered sharply from day’s low and closed at Rs203 after the company registered a net profit for the period of Rs285.50mn for the quarter ended September 30, 2008 as compared to Rs663.70mn for the quarter ended September 30, 2007.

The total income increased from Rs7849.5mn for the quarter ended September 30, 2007 to Rs8721.1mn for the quarter ended September 30, 2008. The stock was down by 1.5% at Rs203 touching an intra-day high of Rs211 and a low of Rs186 and recorded volumes of over 8,00,000 shares on BSE.

Shares of UTV Software rallied by over 10% in October Futures to Rs330 as compared to flat in cash market. A huge gap of Rs285 was created between the spot and the current Futures prices.

In the cash market the scrip touched an intra-day high of Rs620 and a low of Rs599 and recorded volumes of over 93,000 shares on NSE. The stock had hit 52-week high of Rs1132 on December 13, 2007 and 52-week low of Rs592 on October 21, 2008.

Gemini Comm slipped by 1% to Rs18. The board of directors of the company approved Buy back up to 10% equity shares capital and reserve of the Company. The scrip touched an intra-day high of Rs19.3 and a low of Rs18.1 and recorded volumes of over 24,000 shares on BSE.

Educomp Solutions announced consolidated results for the Quarter ended September 30, 2008

The Group posted a profit after tax of Rs288mn (up 121%) for the quarter ended September 30, 2008 as compared to Rs131mn for the quarter ended September 30, 2007. Total Revenue increased by 150% to Rs1429.925 million for the quarter ended September 30, 2008 from Rs568.933 million for the quarter ended September 30, 2007.

The stock dropped by over 11% to Rs1829 hitting an intra-day high of Rs2040 and a low of Rs1811 and recorded volumes of over 3,00,000 shares on BSE.