Expect more than others think is possible.
Given the market rise on Friday, one would be forced to think that the market did have some wind of the the RBI move, which was officially announced on Saturday. RBI has more or less matched the expectations on the street and we could expect a strong opening. Remember, when the RBI maintained a status quo at the end of October the Sensex had crashed badly. Friday's rise has just managed to make up for some of the lost gains.
Given the RBI move we could expect Friday's gains to continue at least at the opening session. FIIs are also reported to have bought on Friday. We will have to wait for the official figures to see if there was indeed some large scale buying. For the time being, avoid some fresh buying in large quantities as we are yet to get clarity on the economy. The fall in inflation and drop in crude prices may augur well for the time being but we still have to get some confidence.
On Saturday, the Reserve Bank of India cut the benchmark repurchase rate from 8% to 7.5% , effective today, after reducing it by one percentage point in a surprise move on Oct. 20.The bank also further reduced the cash reserve ratio or CRR from 6.5% to 5.5%. This move unleashes an additional $8.1bn into the financial system.
The Reserve Bank of India says the additional liquidity is needed to fuel growth as "early signs of a global recession are becoming evident" and falling commodity prices have made inflation less of a concern.
Meanwhile, foreign investors have pulled $12.9bn from India's equity markets this year and the rupee has fallen more than 25% against the dollar.
Banks like ICICI Bank say they have no immediate plans to lower rates for consumers. However, IDBI Bank on Saturday reduced its home and educational loan rates by 0.5%with immediate effect.
KV Kamath of ICICI Bank, who also dons the cap of CII head, said that corporate defaults beginning with small and medium enterprises cannot be ruled out. Besides, infrastructure sector that needs a mammoth USD 750 billion of investment could be a casualty and affect India's competitiveness, warned Kamath, saying these issues were high on his agenda for Prime Minister Manmohan Singh's meeting with corporate leaders today. The prime minister is scheduled to meet corporate head honchos to discuss the impact of the slowdown.
Steel producers have cut prices of their products by up to Rs6,000 a tonne. SAIL, along with private producers Essar Steel and JSW Steel, announced lowering of prices while Tata Steel is yet to announce its plans.
Tata Motors reported 20% decline in total vehicle sales during October at 39,729 units as against 49, 354 in the same month last year. The domestic passenger vehicle sales during the month of October declined by 6 per cent at 17,014 vehicles as against 18,021 in the same period last year, said the company in a statement.
We expect better action in Hero Honda as it reported its highest-ever retail sales in a month, with more than six lakhs units of two-wheelers being sold in the festive month of October. This highest-ever retail sales in a month represents more than 12 per cent growth over its previous highest – 5.31 lakh units sold in October 2006. The despatch numbers for the month of October stood at 352,449 units, as compared to 365,022 two-wheelers sold in October 2007.
Asian stocks gained for fifth straight trading session extending last week's rally, on speculation economic fallout from the global credit crisis can be contained.
The Hang Seng index slipped 751 points or 5.4% at 14,726. Shanghai Index was marginally up by 9 points or 0.2% at 1,729. The Nikkei 225 Index was closed.
However, the Taiwan Taiex index gained 101 points or 2.8% at 4,972, Straits Times was up 85 points or 4.7% at 1,878. While, Australia's S&P/ASX gained 119 points or 3% at 4,137.
South Korea plans to pump about US$10.8bn into the economy next year via extra spending and tax benefits as it steps up efforts to prevent the nation's first recession in a decade.
The government announced that it would spend 3.4 trillion won to help smaller companies and farmers.
Australian manufacturing contracted at a record pace in October, the performance of manufacturing index fell 6.8 points from September to 40.4, the lowest level since the index was started in 1992.
The festival of light (Diwali) has indeed bought brightness to the Indian markets. Falling inflation, cooling crude and a host of measures by governments and central banks augur the market sentiment in particular. On Friday, Indian bourses ended with notable gains with the BSE benchmark Sensex and the NSE Nifty index surging over 7% each.
The Sensex shut shop at 9,788 surging 74 points and the Nifty closed at 2,885 gaining 188 points.
Shares of Bharti Airtel surged by over 5% to Rs649 after the company announced its consolidated results.
The group posted a net profit of Rs16681.3mn (up 1.5%) for the quarter ended September 30, 2008 as compared to Rs16437.60 million for the quarter ended September 30, 2007.
Total Income increased by 40% to Rs89527.3mn for the quarter ended September 30, 2008 from Rs63867.30 million for the quarter ended September 30, 2007. The scrip touched an intra-day high of Rs665 and a low of Rs596 and recorded volumes of over 13,00,000 shares on BSE.
Shares of Suzlon pared early gains and ended 3.5% lower at Rs44.4. The CMD Tulsi Tanti clarified that the company has excellent line of credit. He also adds that the future of wind energy is extremely strong.
The board of directors of the company also decided to drop plans to invest in new tower manufacturing facility and accordingly the total capex plan stood reduced by Rs6.69bn. The scrip touched an intra-day high of Rs49.4 and a low of Rs43 and recorded volumes of over 1,00,00,000 shares on BSE.
Eicher Motors was locked at 20% upper circuit to Rs199.65 after the board of directors of the company announced that it had approved stock buyback. The scrip touched an intra-day high of Rs199.65 and a low of Rs199 and recorded volumes of over 10,000 shares on BSE.
MIC Electronics surged by over 8% to Rs38 after the company announced that it entered into an MoU with Ceracchi Illuminazione Spa, a renowned lighting company in Italy for design, development and marketing of LED lighting solutions.
This relationship will enable MIC to have access to European Markets and others like Russia, Morocco & Eastern European Countries.
The scrip touched an intra-day high of Rs39.3 and a low of Rs36.3 and recorded volumes of over 1,00,000 shares on BSE.
SAIL is reportedly looking for new iron ore mines and renewal of its existing mines. The company is now charting expansion programmes of around Rs370bn.
SAIL has urged the Orissa government to accelerate the process of granting prospecting licence for two iron ore mines and renewal of the existing ones as the company requires raw material to meet demands from the expansion projects.
Shares of SAIL ended flat at Rs85.2 after hitting an intra-day high of Rs91.3 and a low of Rs82 and recorded volumes of over 19,00,000 shares on BSE.
India Cements announced its Q2 results with net profit declining 41% to Rs1.34bn in the three months ended Sept. 30 from Rs2.27bn a year earlier. However, sales rose 22% to Rs10.88bn.
The company also said that it reported a foreign-exchange loss of Rs295.5mn, compared with a gain of Rs47.4mn in the year earlier.
India Cements rallied by over 15% to Rs87 after hitting an intra-day high of Rs88 and a low of Rs75 and recorded volumes of over 3,00,000 shares on BSE.
With the RBI taking care of the liquidity problem in the system coupled with falling inflation and crude oil prices, Indian markets would continue its upsurge to the next week. The CRR of scheduled banks is reduced by 100bps from 6.5% to 5.5% of net demand and time liabilities (NDTL). This will be effected in two stages: by 50bps retrospectively with effect from the fortnight beginning October 25, and by a further 50bps prospectively with effect from the fortnight beginning November 8, 2008. This measure is expected to release around Rs400bn into the system.
However, a reversal in FII flows remains the big trigger for our markets. Till that happens, confidence levels may continue to remain lower. In uncertain times like this, we suggest you stick to blue chips rather than venturing in to the mid and the small caps. At every sharp rise, keep booking some profits.
Tata Motors Rs41.47bn rights issue fully subscribed with promoters picking up significant amount of stake. (BL)
JSW Steel lays foundation for a Rs350bn, 10mn ton steel project in West Bengal.(BS)
JSW Steel cuts prices of HR Coils by Rs5,500 per ton. (BL)
Anil Ambani, looking to increase his stake in Reliance Infrastructure by 5%. (BS)
SBI to decide about an interest rate cut later this week. (BS)
ONGC Videsh and its consortium partners to invest close to US$3bn to develop gas field in Iran. (BL)
NTPC may exit Dabhol project if government hives off the adjacent LNG import terminal and sells it to a third party.(TOI)
Cabinet approves capital restructuring of UcoBank.(FE)
GAIL signs an agreement with IOC to explore possibility of setting up of a Rs100bn petrochemical plant in Bihar.(BL)
Adlabs Films envisaging demerger of radio business.(FE)
Adlabs Films, Big Cinemas in talks with Delhi international airport for setting up 6D screens. (BS)
India Cements to invest Rs1.6bn for captive power plant.(BL)
PNB cuts PLR, deposit rates by 50bps.(BL)
M&M plans to develop a range of petrol engines to fuel growth. (BS)
Air Deccan, now Kingfisher Red has the highest number of customer complaints registered against deficiency in services.(ET)
Triveni Retail Ventures, a 100% subsidiary of Triveni Engineering, is understood to have sounded out leading retailers for selling off its rural superstore chain Triveni Khushali Bazaar. (ET)
IDFC is in talks with GE Commercial Finance, to acquire about 35% stake in the latter’s construction equipment finance business in India.(ET)
The government turns down request of steel producers to persuade state-run miner NMDC to roll back last month’s price hike on iron ore, saying it cannot intervene in the commercial decision of the PSU.(ET)
BEL, plans to set up its third central research laboratory at Hyderabad, which will focus on research in emerging technologies in the fields of opto-electronics and electronic warfare.(BS)
Jyoti Ltd has entered into technology tie-ups with German and Dutch companies for its windmill project.(BS)
Tata Motors is gearing up to roll out its first Nano car from Pantnagar in Uttarakhand.(BS)
SBI intends to start a private equity fund of US$1bn to US$1.5bn for infrastructure financing with Australia’s Macquarie Group and World Bank’s private sector financing arm International Finance Corporation. (BS)
PTC India is looking at picking up stakes in power generation projects across the country.(DNA)
Shoppers Stop to cut rights issue size to Rs3bn due to adverse market conditions.(BL)
Essar Steel cuts retail prices of steel by Rs4,000-5,000 per ton. (BL)
Apollo Tyres to begin its operations in Europe by opening its first sales, marketing and technical office in Germany in January. (BL)
IDBI Bank decides to sell its housing loan subsidiary, IDBI Homefinance (IHFL) and may invite bids from potential buyers. (BL)
Reliance Retail (RRL) and the UK-based supply chain powerhouse Wincanton have called off their proposed joint venture. (ET)
Tata Motors strengthen its position in South Africa unveils two new passenger vehicles and a one-ton pickup vehicle. (DNA)
Zee News acquires 26% stake in Sky B, West Bengal. (BS)
Zylog Systems to spend US$17.5mn for acquiring three overseas companies. (BL)
V-Guard Industries in talks of acquiring UPS firm overseas. (BS)
Economic Front Page
Oil companies cut ATF prices by 17%; government abolishes 5% customs duty on jet fuel.(FE)
Government scraps 15% export duty on iron, steel products.(BL)
Cabinet approves Insurance Bill that will pave the way for increasing FDI limit in domestic insurance companies to 49%.(FE)
Government to allow foreign companies to invest Rs360bn for the revival of eight closed fertilizer units. (BL)
The PM, Manmohan Singh to meet leaders of India Inc on November 3, 2008 to seek more measures to tide over the liquidity crunch. (BL)
The FM, P Chidambaram to ask the PSU banks to consider lowering lending rates. (BL)
Forex reserves declined by US$15.5bn to US$258bn for week ended October 24. (FE)
Public-private partnership body gives approval to port projects worth Rs10bn.(FE)
NBFCs have been allowed to raise short term foreign currency loans to meet their short term liabilities.(BL)
India Inc’s Q2 FY09 profit growth has fallen to 5.7% compared to 25.8% growth in Q2 FY08 and 9.9% growth during Q1 FY09 (ET)
Prices of bulk drugs have increased by 25-30% over the past few months. (ET)