Ranbaxy - Jan 18 2008
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Friday, January 18, 2008
The economic outlook: Bernanke
Since late last summer, financial markets in the
As these problems multiplied, money center banks and other large financial institutions, which in many cases had served as sponsors of these financial products, came under increasing pressure to take the assets of the off-balance-sheet vehicles onto their own balance sheets. Bank balance sheets were swelled further by holdings of nonconforming mortgages, leveraged loans, and other credits that the banks had extended but for which well-functioning secondary markets no longer existed. Even as their balance sheets expanded, banks began to report large losses, reflecting marked declines in the market prices of mortgages and other assets. Thus, banks too became subject to valuation uncertainty, as could be seen in the sharp movements in their share prices and in other market indicators such as quotes on credit default swaps. The combination of larger balance sheets and unexpected losses prompted banks to become protective of their liquidity and balance sheet capacity and thus to become less willing to provide funding to other market participants, including other banks. Banks have also evidently become more restrictive in their lending to firms and households. More-expensive and less-available credit seems likely to impose a measure of restraint on economic growth.
The Outlook for the Real Economy
To date, the largest effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so. The virtual shutdown of the subprime mortgage market and a widening of spreads on jumbo mortgage loans have further reduced the demand for housing, while foreclosures are adding to the already-elevated inventory of unsold homes. New home sales and housing starts have both fallen by about half from their respective peaks. The number of homes in inventory has begun to edge down, but at the current sales pace the months’ supply of new homes has continued to climb, and home prices are falling in many parts of the country. The slowing in residential construction, which subtracted about 1 percentage point from the growth rate of real gross domestic product in the third quarter of 2007, likely curtailed growth even more in the fourth quarter, and it may continue to be a drag on growth for a good part of this year as well.
Recently, incoming information has suggested that the baseline outlook for real activity in 2008 has worsened and that the downside risks to growth have become more pronounced. In particular, a number of factors, including continuing increases in energy prices, lower equity prices, and softening home values, seem likely to weigh on consumer spending as we move into 2008. Consumer spending also depends importantly on the state of the labor market, as wages and salaries are the primary source of income for most households. Labor market conditions in December were disappointing; the unemployment rate increased 0.3 percentage point, to 5.0 percent from 4.7 percent in November, and private payroll employment declined. Employment in residential construction posted another substantial reduction, and employment in manufacturing and retail trade also decreased significantly. Employment in services continued to grow, but at a slower pace in December than in earlier months. It would be a mistake to read too much into one month’s data. However, developments in the labor market will bear close attention.
In the business sector, investment in equipment and software appears to have been sluggish in the fourth quarter, while nonresidential construction grew briskly. In light of the softening in economic activity and the adverse developments in credit markets, growth in both types of investment spending seems likely to slow in coming months. Outside the
Financial conditions continue to pose a downside risk to the outlook. Market participants still express considerable uncertainty about the appropriate valuation of complex financial assets and about the extent of additional losses that may be disclosed in the future. On the whole, despite improvements in some areas, the financial situation remains fragile, and many funding markets remain impaired. Adverse economic or financial news thus has the potential to increase financial strains and to lead to further constraints on the supply of credit to households and businesses.
Even as the outlook for real activity has weakened, some important developments have occurred on the inflation front. Most notably, the same increase in oil prices that may be a negative influence on growth is also lifting overall consumer prices. Last year, food prices also increased exceptionally rapidly by recent standards, further boosting overall consumer price inflation. The most recent reading on overall personal consumption expenditure inflation showed that prices in November were 3.6 percent higher than they were a year earlier. Core price inflation (which excludes prices of food and energy) has stepped up recently as well, with November prices up almost 2-1/4 percent from a year earlier. Part of this rise may reflect pass-through of energy costs to the prices of core consumer goods and services, as well as the effects of the depreciation of the dollar on import prices, although some other prices—such as those for some medical and financial services—have also accelerated lately.1
Thus far, the public’s expectations of future inflation appear to have remained reasonably well anchored, and pressures on resource utilization have diminished a bit. Further, futures markets suggest that food and energy prices will decelerate over the coming year. Given these factors, overall and core inflation should moderate this year and next, so long as the public’s confidence in the Federal Reserve’s commitment to price stability is unshaken. However, any tendency of inflation expectations to become unmoored or for the Fed’s inflation-fighting credibility to be eroded could greatly complicate the task of sustaining price stability and reduce the central bank’s policy flexibility to counter shortfalls in growth in the future. Accordingly, in the months ahead we will be closely monitoring the inflation situation, particularly inflation expectations.
Monetary Policy Response
The Federal Reserve has taken a number of steps to help markets return to more orderly functioning and to foster its economic objectives of maximum sustainable employment and price stability. Broadly, the Federal Reserve's response has followed two tracks: efforts to improve market liquidity and functioning and the pursuit of our macroeconomic objectives through monetary policy.
To help address the significant strains in short-term money markets, the Federal Reserve has taken a range of steps. Notably, on August 17, the Federal Reserve Board cut the discount rate--the rate at which it lends directly to banks--by 50 basis points, or 1/2 percentage point, and it has since maintained the spread between the federal funds rate and the discount rate at 50 basis points, rather than the customary 100 basis points. In addition, the Federal Reserve recently unveiled a term auction facility, or TAF, through which prespecified amounts of discount window credit can be auctioned to eligible borrowers. The goal of the TAF is to reduce the incentive for banks to hoard cash and increase their willingness to provide credit to households and firms. In December, the Fed successfully auctioned $40 billion through this facility. And, as part of a coordinated operation, the European Central Bank and the Swiss National Bank lent an additional $24 billion to banks in their respective jurisdictions. This month, the Federal Reserve is auctioning $60 billion in twenty-eight-day credit through the TAF, to be spread across two auctions. TAF auctions will continue as long as necessary to address elevated pressures in short-term funding markets, and we will continue to work closely and cooperatively with other central banks to address market strains that could hamper the achievement of our broader economic objectives.
Although the TAF and other liquidity-related actions appear to have had some positive effects, such measures alone cannot fully address fundamental concerns about credit quality and valuation, nor do these actions relax the balance sheet constraints on financial institutions. Hence, they alone cannot eliminate the financial restraints affecting the broader economy. Monetary policy (that is, the management of the short-term interest rate) is the Fed's best tool for pursuing our macroeconomic objectives, namely to promote maximum sustainable employment and price stability.
Monetary policy has responded proactively to evolving conditions. As you know, the Federal Open Market Committee (FOMC) cut its target for the federal funds rate by 50 basis points at its September meeting and by 25 basis points each at the October and December meetings. In total, therefore, we have brought the federal funds rate down by 1 percentage point from its level just before the financial strains emerged. The Federal Reserve took these actions to help offset the restraint imposed by the tightening of credit conditions and the weakening of the housing market. However, in light of recent changes in the outlook for and the risks to growth, additional policy easing may well be necessary. The FOMC will, of course, be carefully evaluating incoming information bearing on the economic outlook. Based on that evaluation, and consistent with our dual mandate, we stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks.
Financial and economic conditions can change quickly. Consequently, the FOMC must remain exceptionally alert and flexible, prepared to act in a decisive and timely manner and, in particular, to counter any adverse dynamics that might threaten economic or financial stability.
A number of analysts have raised the possibility that fiscal policy actions might usefully complement monetary policy in supporting economic growth over the next year or so. I agree that fiscal action could be helpful in principle, as fiscal and monetary stimulus together may provide broader support for the economy than monetary policy actions alone. But the design and implementation of the fiscal program are critically important. A fiscal initiative at this juncture could prove quite counterproductive, if (for example) it provided economic stimulus at the wrong time or compromised fiscal discipline in the longer term.
To be useful, a fiscal stimulus package should be implemented quickly and structured so that its effects on aggregate spending are felt as much as possible within the next twelve months or so. Stimulus that comes too late will not help support economic activity in the near term, and it could be actively destabilizing if it comes at a time when growth is already improving. Thus, fiscal measures that involve long lead times or result in additional economic activity only over a protracted period, whatever their intrinsic merits might be, will not provide stimulus when it is most needed. Any fiscal package should also be efficient, in the sense of maximizing the amount of near-term stimulus per dollar of increased federal expenditure or lost revenue. Finally, any program should be explicitly temporary, both to avoid unwanted stimulus beyond the near-term horizon and, importantly, to preclude an increase in the federal government's structural budget deficit. As I have discussed on other occasions, the nation faces daunting long-run budget challenges associated with an aging population, rising health-care costs, and other factors. A fiscal program that increased the structural budget deficit would only make confronting those challenges more difficult.
Footnotes
US housing and credit crisis worsens
Chances of a recession in the US escalated after Citigroup and Merrill Lynch reported massive losses and equally staggering writedowns related to the housing sector meltdown and stressed credit markets. The two Wall Street giant also received fresh cash infusion from global investors. Citigroup also slashed its dividend and announced plans to lay off employees. Both Citigroup and Merrill Lynch CEOs called the results clearly unacceptable, and vowed to lift the companies out of the current dire situation.
Quarterly net profit at JPMorgan Chase fell by 34% compared with a year ago, and it announced subprime-related write-downs totaling US$1.3bn. Washington Mutual reported its first quarterly loss since 1997 after writing down the value of its home mortgage unit and setting aside US$1.5bn to cover bad loans. Wells Fargo reported fourth-quarter net income fell 38%, and said it was bracing for a consumer slowdown in 2008. Ambac Financial and MBIA, the two biggest US bond insurers, slid on concern that their AAA credit ratings will be revoked.
Housing starts and building permits both fell to new multi-year lows in December. Construction on new homes fell 14% in December to a seasonally adjusted annual rate of 1.01mn, the slowest building pace in more than 16 years, the Commerce Department reported. Building permits, a sign of future construction, declined by the most in 12 years, suggesting that the housing slump will deepen as it enters a third year. There were a record 193,000 completed new homes on the market for sale at the end of November, and builders were typically facing a 6.2 month wait to sell homes after they are completed.
As the pall of gloom over Wall Street darkened, Federal Reserve Chairman Ben Bernanke, President George W. Bush and top congressional leaders called for an immediate fiscal stimulus package to prevent the world's biggest economy from slipping into a recession. Bush held a conference call with Democratic and Republican lawmakers and discussed the broad contours of what he would like to see in a stimulus plan. Bush said he favors personal income tax rebates, tax breaks for businesses and extensions of unemployment insurance. Meanwhile, Fed chief Bernanke told a congressional committee he supported the idea of a short-term fiscal stimulus measure. A proposal in the range of US$100-150bn would help, Bernanke said, adding it was critically important that any legislation be designed to kick in quickly.
Reliance Power IPO...gone in 60 seconds
As expected, investors of all hues and categories scrambled to submit bids for the Initial Public Offering (IPO) of Reliance Power, part of the Anil Dhirubhai Ambani Group (ADAG), as the US$3bn issue opened on Jan. 15. The issue was oversubscribed within seconds of opening on Jan. 15. According to the National Stock Exchange (NSE), the biggest ever public issue to hit the Indian markets was subscribed by 73 times as at 6 p.m. on Friday, with the QIBs and HNIs accounting for the big chunk of the bids. The ADAG company, promoted by Reliance Energy and Anil Dhirubhai Ambani, received bids for 16.55bn shares as against the issue size of 228mn shares. Reliance Power's promoters Anil Dhirubhai Ambani and Reliance Energy brought in their contribution of Rs14.4bn at Rs450 per share. The subscription price for these shares was determined at the upper end of the price band of Rs405-450 per share.
The Reliance Power IPO is expected to raise Rs107-117bn. The total issue size is of 260mn shares, including the promoters' contribution of 32mn shares. The issue has being rated 4/5 by rating agencies CRISIL and ICRA, indicating above average fundamentals. Retail investors were offered a discount of Rs20 per share, which implies their net cost of subscription will be Rs430 per share, if they choose to bid at Rs450 per share. They also had the option of making part payment, wherein they had to put in only Rs115 per share upon application. The balance will be called upon, post the allotment of partly paid shares.
With a combined planned installed capacity of 28,200 MW, Reliance Power has one of the largest portfolios of power generation assets under development in India. The issue proceeds are proposed to be utilised for funding subsidiaries to part-finance the construction and development costs of the various projects under development and for general corporate purposes. Meanwhile, the Securities Appellate Tribunal (SAT) adjourned its hearing till Jan. 21, on complaints against the Reliance Power IPO. Last week, the Supreme Court had said the IPO will go ahead even if there is any case against it.
Reliance Power - Issue Done, Ab kya kare ?
Now the strategy on what to do if you get allotment (Retail is oversubscribed about 13 times at 8 PM)
Here is what DP users will be doing
Are you planning to sell Reliance Power on Listing?
Yes 329 (68.1%)
No 154 (31.9%)
Votes so far: 483
If you haven't participated, do so now! Check the Right Top on this page
Market hammered again
Following yesterday's late selling, the Sensex opened with a negative gap of 121 points at 19,580. After exhibiting weakness in morning trades, the index touched a high of 19,716.... only to slip to lower levels.
Relentless selling in the last one hour of trades saw the index tumble to a low of 18,930 - down 786 points from the day's high. The Sensex finally ended with a hefty loss of 3.5% (687 points) at 19,014. The index thus shed 8.7% (1,813 points) during the week - the sharpest-ever continuous drop since inception.
The NSE Nifty plunged 3.5% (208 points) to 5,705 today.
Market capitalisation declined over Rs 500,000 crore over the last one week. The total market capitalisation of actively traded stocks on the BSE declined by Rs 530,444 crore from Rs 71,75,275 crore a week ago to Rs 66,44,831 crore today.
The BSE market breadth was extremely negative - out of 2,890 stocks traded, 2,505 declined, 362 advanced and 23 were unchanged today.
INDEX SHAKERS...
Reliance slumped 6.5% to Rs 2,800. DLF tumbled 7.4% to Rs 1,006.
NTPC plunged 6.3% to Rs 240. ICICI Bank shed 5.8% at Rs 1,245, and HDFC Bank dropped 4.3% to Rs 1,576.
Reliance Energy shed 4% at Rs 2,124. Reliance Communications and Larsen & Toubro slipped 3.7% each to Rs 702 and Rs 3,930, respectively.
Tata Steel, Tata Motors and ONGC declined around 3.5% each to Rs 782, Rs 712 and Rs 1,209, respectively.
Mahindra & Mahindra and Maruti slipped over 3% each to Rs 728 and Rs 840, respectively.
Cipla and Hindalco also shed 3% each at Rs 202 and Rs 185, respectively.
SBI and BHEL declined 2% each to Rs 2,368 and Rs 2,302, respectively.
TCS and ITC also dropped 2% each at Rs 904 and Rs 213, respectively.
...AND THE MOVERS
Ranbaxy soared 5% to Rs 387. Grasim gained 1% at Rs 3,341
VALUE & VOLUME TOPPERS
Reliance topped the value chart with a turnover of Rs 494 crore followed by HDFC (Rs 414 crore), Reliance Natural Resources (Rs 389 crore), Reliance Energy (Rs 320.50 crore) and ICICI Bank (Rs 221.40 crore).
Reliance Natural Resources led the volume chart with trades of around 1.83 crore shares followed by Himachal Futuristic (1.78 crore), Bellary Steel (1.28 crore), Ispat Industries (1.25 crore) and Reliance Petroleum (1 crore).
Post Session Commentary - Jan 18 2008
The Indian market closed in a deep red note for the fifth straight trading session. The market opened with a huge gap down on the back of negative cues from the global markets. The market traded in red through out the trading session and the investors took calculated steps to book their positions. The annual inflation that moved up 3.79% in the week ended 5 January 2008 compared with 3.5% in the week ended 29 December 2007 also added to the negative sentiments in the markets. The Small Caps and Mid Caps were also the most hit as they face heavy selling pressures across the counters. The BSE Sensex closed lower by 687.12 points at 19,013.70 and NSE Nifty fell by 207.9 points to close at 5,705.30. The BSE Mid Cap and Small Cap closed with heavy losses of 446.30 points and 579.84 points at 8,893.71 and 12,160.45 respectively.
BSE Metal index closed lower by 888.20 points at 17,258.80. Scrips that slipped are Jindal Steel (9.38%), Ispat Inds (7.21%), Jindal Stainless (6.71%), JSW Steel (5.36%) and Sterlite Inds (5.27%).
BSE Oil & Gas index slipped by 786.46 points to close at 12,594.91. Scrips that dropped are Essar Oil (8.09%), IOCL (7.58%), Reliance Inds (6.57%), Aban Offshore (5.89%), RPL (4.81%) and ONGC (3.33%).
BSE Realty index closed lower by 741.45 points at 12,021.74 as Ansal Infra (12.69%), Penland (11.49%), HDIL (10.57%), Omaxe (6.33%), Mahindra Life (6.10%) and Anant Raj (5.85%) closed lower.
BSE Capital Goods index fell by 598.19 points to close at 18,333.63. Scrips that dropped are Praj Inds (8.50%), Crompton Greaves (5.68%), SKF India (4.22%), L&T (3.62%) and Seimens (2.43%).
BSE Bankex index fell by 598.73 points to close at 11,372.41. Scrips that fell are Kotak bank (10.46%), Canara bank (9.61%), BOI (9.21%), BOB (6.49%), Oriental bank (5.77%) and ICICI bank (5.78%).
BSE IT index dropped by 62.90 points to close at 3,790.64 as Educomp Soln (12.24%), Aptech (9.51%), NIIT Tech (6.96%), Mosear Baer (6.42%), Tech Mahindra (5.27%) closed in red.
Another brutal day on Dalal Street
The market crashed by 3.50% in tune with other major global indices as concerns of recession in the US economy played on investor sentiment. After slipping by over 383 points in yesterday's trades, the Sensex resumed 121 points lower at 19,580 and tanked another 650 points to touch the day's low of 18,930 on relentless selling in oil, realty, metal, and banking stocks. The Sensex managed to recover 84 points in late trades, but still ended with losses of 687 points at 19,014. The Nifty shed 3.52% or 208 points to close at 5,705.
The market breadth was extremely negative, with the losers outnumbering the gainers in the ratio of 6.89:1. Of the 2,890 stocks traded on the Bombay Stock Exchange (BSE), 2,505 stocks declined, 362 stocks advanced and 23 stocks ended unchanged. All the sectoral indices were battered. Among the major losers the BSE Oil & Gas index lost 5.88%, the BSE Realty index dropped 5.81%, the BSE Bankex shed 5%, the BSE Metal index declined by 4.89% and the BSE PSU index fell 4.70%.
Excluding few, most of the Sensex stocks ended in the red. Among the major losers DLF plummeted by 7.37% at Rs1,006, Reliance Industries tanked by 6.57% at Rs2,800, NTPC dropped 6.30% at Rs240, ICICI Bank slumped 5.78% at Rs1,245, HDFC Bank crumbled by 4.33% at Rs1,576 and Reliance Energy shed 4.01% at Rs2,124. Reliance Communication at Rs702, L&T at Rs3,930, Tata Steel at Rs782, Tata Motors at Rs712, ONGC at Rs1,209, M&M at Rs728, Cipla at Rs202, Maruti Suzuki at Rs840 and Hindalco at Rs185 shed over 3% each. However, Ranbaxy surged 5.10% at Rs387, Grasim gained 1.03% at Rs3,341 and Ambuja Cement, ACC, Bharti Airtel and Satyam Computer closed with marginal gains.
Over 1.82 crore RNRL shares changed hands on the BSE followed by Himachal Futuristic Communication (1.78 crore shares), Bella Steel (1.28 crore shares), Ispat Industries (1.24 crore shares) and Reliance Petroleum (1 crore shares).
Reliance Industries was the most actively traded counter on the BSE and registered a turnover of Rs493 crore followed by HDFC (Rs414 crore), RNRL (Rs389 crore), Reliance Energy (Rs320 crore) and ICICI Bank (Rs221 crore).
Next batch of Q3 results will dictate trend
Market will be closely watching US markets at a time when US recession worries loom large on global markets. The Q3 December 2007 results announced by corporate India, so far, have been more or less in line with market expectations.
Market men would be closely looking at Q3 results of ONGC, Satyam Computer Services, Grasim Industries, HDFC Bank, Dr. Reddy’s Laboratories and Bharat Heavy Electricals which are expected next week.
There might be some liquidity drain from the secondary market as the mega initial public offer (IPO) of Reliance Power received an overwhelming response to its IPO which ended on 18 January 2008. Meanwhile as per reports, state-owned telecom services provider Bharat Sanchar Nigam (BSNL) reportedly plans to launch India’s biggest initial public offer to raise about Rs 40,000 crore (over $10 billion).
US recession fears may bog down the markets as seen last week after global markets followed US market slump. Recently, Citigroup posted first-ever quarterly loss and disappointing holiday shopping numbers fueled fears that the world’s largest economy was heading into a recession. Pessimism about the US economy further mounted after Intel Corp the world's largest chip maker, posted earnings and a profit forecast that disappointed investors. However, JP Morgan's results suggested some banks can still make a profit despite turmoil in the credit market.
Market could find some support from optimism that Federal Reserve Chairman Ben Bernanke will cut interest rates at its meeting later in the month. This in turn may results in higher FII inflow to emerging markets including India. FII inflow in January 2008 totaled Rs 780.20 crore (till 16 January 2008). FIIs had bought shares worth Rs 5,579.10 crore in December 2007.
India’s annual inflation, based on the wholesale price index (WPI), moved up 3.79% in the week ended 5 January 2008 compared with 3.5% in the week ended 29 December 2007.
Weekly Close - Sensex tumbles 1,814 points
US recession fears hit markets across the globe as US market slumped. Citigroup posted first-ever quarterly loss and disappointing US holiday shopping numbers fueled fears that the world’s largest economy was heading into a recession. Pessimism about the US economy further mounted after Intel Corp the world's largest chip maker, posted earnings and a profit forecast that disappointed investors. Sensex declines all the five trading sessions in the week.
The initial batch of Q3 December 2007 results announced by corporate India was more or less in line with market expectations. Meanwhile, the mega initial public offer (IPO) of Reliance Power received an overwhelming response. The IPO ended on 18 January 2008.
BSE Sensex tumbled 1,813.75 points or 8.71% to 19,013.70 in the week ended 18 January 2008. S&P CNX Nifty declined 494.8 points or 7.98% to 5,705.30 in the week.
BSE Mid-Cap index declined 544.77 points or 5.77% to 9,893.71 in the week. BSE Small-Cap index slipped 533.57 points or 4.2% to 12,160.45.
The market ended a volatile session in the red with Sensex losing 99.40 points or 0.48% to 20728.05 on Monday, 14 January 2008. Index heavyweights ICICI Bank and Infosys Technologies drifted lower. The market breadth was positive.
Despite a strong response to the Rs 11000-crore IPO of Reliance Power (RPower), the market fell sharply with 30-share BSE Sensex shedding 476.96 points or 2.30% to 20,251.09 on Tuesday,15 January 2008 as heavyweights faced selling pressure. Bharti Airtel, Reliance Energy and ICICI Bank slumped. All the sectoral indices on BSE were in red. Banking, FMCG and power stocks were worst hit in the fall.
The Sensex lost 382.98 points or 1.89% to 19,868.11 on 16 January 2008 as the prospects of a recession in the United States triggered a sell-off in the global markets. The market remained subdued for the day although it made some recovery from its lows in the late trade. The market breadth was weak.
The market slipped for the fourth straight session with Sensex declining 167.29 points or 0.84% to 19,700.82 on Thursday, 17 January 2008, giving up early gains as index heavyweights Reliance Industries (RIL) and ICICI Bank declined. RIL dipped after it reported Q3 December 2007 results, which were boosted by one-off gains. The market breadth was strong.
Sensex plunged 687.12 points or 3.49% to 19,013.70 on Friday, 18 January 2008, in a broad-based decline.. Reliance Industries (RIL), ICICI Bank and DLF, plunged. All the sectoral indices on BSE were in the red. BSE oil & gas and realty indices were the worst hit in the fall. Small-caps and mid-cap stocks sank.
India's second largest power utility by revenue Reliance Energy declined 14.56% to Rs 2,124.05, in the week. The company’s net profit rose 50% to Rs 301.60 crore on 1.5% decline in sales to Rs 1,505.49 crore in Q3 December 2007 over Q3 December 2006. India's biggest ever share offer, from Reliance Power to raise about Rs nearly $3 billion, received an overwhelming response. The initial public offering (IPO) of Reliance Power owned by Indian tycoon Anil Ambani was fully subscribed within 60 seconds of its opening on Tuesday 15 January 2008.
India’s largest real estate player by market capitalisation DLF declined 15.91% to Rs 1,005.75. The company signed a memorandum of understanding with Gayatri Projects to form a joint venture company for constructing road projects on build-operate-transfer basis. Gayatri Projects and its associates will hold 50% stake and DLF and its associates will hold the balance 50% in the joint venture.
India’s largest IT exporter by sales Tata Consultancy Services slipped 8.56% to Rs 904.40. The company posted 2.77% rise in net profit to Rs 1,178.99 crore on sales rise of 5.62% to Rs 4,834.47 crore in Q3 December 2007 over Q2 September 2007.
India's largest private sector entity by market capitalisation and oil refiner Reliance Industries (RIL) tumbled 10.51% to Rs 2,799.50. The company’s net profit rose 162.2% to Rs 8,079 crore on 22.7% rise in sales to Rs 34,590 crore in Q3 December 2007 over Q3 December 2006. The net profit was boosted by one-off gains.
Meanwhile, RIL said it discovered gas in the Krishna Godavari offshore basin on the east coast of India. This is the company’s third gas discovery in the block. RIL holds 100% participating interest in this block and has christened the discovery as Dhirubhai-38.
India’s top cellular services provider in terms of market share Bharti Airtel slumped fell 9.51% to Rs 873.90 on sustained selling pressure after rival firm Reliance Communications was allocated Global System for Mobile communications spectrum in 14 circles in India on Friday, 11 January 2008. Bharti Airtel currently operating in 22 telecom circles and was granted additional spectrum in two circles.
India's largest drug maker by sales Ranbaxy Laboratories lost 2.2% to Rs 386.65. The company’s net profit declined 65.2% to Rs 48.40 crore on 1.2% decline in sales to Rs 993.32 crore in Q4 December 2007 over Q4 December 2006.
Tata Steel declined 8.36% to Rs 781.9. The company said it has entered into a joint venture agreement with Al Bahja Group for the development of Uyun limestone deposits at Salalah in the Sultanate of Oman. Tata Steel will be holding 70% stake in AL Rimal Mining LLC through its subsidiary, TS Global Minerals Holdings. Al Rimal Mining LLC will execute the project of developing and operating the Uyun Mine.
India’s largest dedicated housing financing firm by operating income HDFC declined 7.87% to Rs 2,819.80. HDFC’s net profit rose 82.5% to Rs 648.93 crore on 56% rise in total operating income to Rs 2,275.66 crore in Q3 December 2007 over Q3 December 2006. The net profit was boosted by one-off gains.
India's third-largest software services exporter Wipro declined 6.3% to Rs 455.35. The company reported 3.69% rise in net profit on a consolidated basis to Rs 854 crore on 11.04% rise in total income to Rs 5433.20 crore in Q3 December 2007 over Q2 September 2007.
ICICI Bank (down 13.5% to Rs 1,245.45), Infosys (down 7.33% to Rs 1.464.35) and Larsen & Toubro (down 5.87% to Rs 3,930.10) were other major losers from Sensex pack in the week.
The market regulator Securities and Exchange Board of India (Sebi) on Friday, 11 January 2008, gave its go-ahead for the launch of long duration options on the popular Sensex and Nifty indices with tenures up to three years. At present maximum duration for any futures & options contract is three months.
Sugar production in India is likely to fall to 26 million tonnes in the year to September 2008, nearly 12% less than earlier forecasts due to lower yield from sugarcane, Agriculture Minister Sharad Pawar said on Wednesday, 16 January 2008. Low price expectations discouraged farmers to use fertiliser and sugarcane yield is low this time, leading to lower output, Pawar said.
Indian Trade Minister Kamal Nath on Monday, 14 January 2008, urged China to relax its policy on coking coal exports, which he said was putting India's steel industry at an unfair disadvantage. Nath said India was exporting iron ore to China at an export duty realisation of just 1%, have lowered this duty at China’s request and it is now for the Chinese side to reciprocate in the area of coking coal.
Prime Minister Manmohan Singh met Chinese leaders in Beijing on 14 January 2007. The two nations sought to strengthen economic ties and put aside a lingering border dispute. The minister pressurised China to address their bilateral trade imbalances. Bilateral trade rose 56% to US$ 38.6 billion in 2007 over a year. Singh and his Chinese counterpart Wen Jiabao pledged to raise the figure to US$ 60 billion by 2010.
The market regulator Securities & Exchange Board of India (Sebi) has proposed a 25% first-day price band for IPOs up to Rs 250 crore, to enable steady and sustained price discovery over a period of time. Sebi has invited public comments on the imposition of circuit filters on the first day of listing of shares. At present, stock exchanges do not impose price bands on the day of listing of IPOs. And, after the day of listing, there is a regular price band of 20%.
Annual inflation, based on the wholesale price index (WPI), moved up 3.79% in the week ended 5 January 2008 compared with 3.5% in the week ended 29 December 2007. The market estimate stood at 3.55%.
Sensex sheds 687 points on sell-off in heavyweights
The market slumped for a fifth trading session in a row today in a broad-based decline. Reliance Industries (RIL), ICICI Bank and DLF plunged. All the sectoral indices on BSE were in the red. BSE oil & gas and realty indices were the worst hit in today's fall. Small-caps and mid-cap stocks sank. Ranbaxy Laboratories was the star performer in today’s trade. Cement pivotals, too, survived the fall.
The market breadth was weak. 25 out of 30 shares from the Sensex pack were in the red. Asian markets came off lower level during the course of the trading session, from early fall. Most of the European indices, which were bleak in early trade, turned green during the course of the day.
Annual inflation, based on the wholesale price index (WPI), moved up 3.79% in the week ended 5 January 2008 compared with 3.5% in the week ended 29 December 2007.
Oil Minister Murli Deora said on Friday, 18 January 2008 that any rise in retail prices of petrol and diesel would be minimal. The Group of Ministers (GoM) on fuel prices would meet again on Saturday, 19 January 2008 to discuss the fuel price hike. A meeting of Indian ministers, which was expected to recommend a rise in retail prices of petrol and diesel, ended on Thursday, 17 January 2008 without a decision.
The 30-share BSE Sensex fell 687.12 points or 3.49% to 19,013.70. The BSE Sensex lost 8.71% in the week ended on Friday, 18 January 2008.
Sensex opened with a negative gap of 121.21 points. Soon, by early afternoon the market managed to enter the positive territory and gain 14.96 points at the day's high of 19,715.78. But relentless selling pressure in the index heavyweights pulled the index down and the Sensex shed 770.40 points at day's low of 18,930.42 at the fag end of the trading session.
The broader CNX S&P Nifty fell 207.90 points or 3.52% to 5705.30. Nifty lost 7.98% in the week ended on Friday, 18 January 2008. Sensex lost 8.8% in the week.
The BSE Mid-Cap index dropped 4.78% to 8,893.71. The BSE Mid-Cap index lost 5.77% in the week ended on Friday, 18 January 2008. The BSE Small-Cap index lost 4.55% to 12,160.45. The BSE Small-Cap index 4.20% in the week ended on Friday, 18 January 2008. Both these indices underperformed the Sensex in today’s trade.
The market breadth was weak. On BSE, 2505 shares declined as compared to 362 that rose. 23 remained unchanged.
BSE clocked a turnover of Rs 8753 crore compared to Thursday (17 January 2007)'s Rs 8,471.87 crore.
Nifty January 2008 futures were at 5728.80, at premium of 23.50 points compared with spot closing of 5705.30.
The NSE futures & options (F&O) segment turnover was Rs 72852.64 crore, which was higher than Rs 67865.55 crore on Thursday, 17 January 2008.
India’a largest private sector firm by market capitalization and oil refiner Reliance Industries fell 6.57% to Rs 2799.50.
The BSE Bankex lost 5% to 11,372.41. It underperformed the Sensex. India’s largest private sector bank by assets ICICI Bank fell 5.78% to Rs 1245.45. The ICICI Bank stock shed 13.50% in the week ended Friday, 18 January 2008 after an earlier sharp surge on its plan to list four of its subsidiaries starting with its securities arm.
Kotak Mahindra Bank slumped 10.46% to Rs 1130.65, Canara Bank dropped 9.61% to Rs 317.80, Bank of India shed 9.21% to Rs 405.85, Bank of Baroda skid 6.49% to Rs 434m Axis Bank fell 4.04% to Rs 1112.75 and State Bank of India declined 2.08% to Rs 23.68.30.
The BSE Oil & Gas index fell 5.88% to 12,594.91. It underperformed the Sensex. ONGC fell 3.33% to Rs 1209.45, Essar Oil slumped 8.09% to Rs 271.35, Indian Oil Corporation slipped 7.58% to Rs 607, Aban Offshore skid 5.89% to Rs 4382.30, HPCL gave away 5.74% to Rs 310.95 and Reliance Natural Resources fell 5.23% to Rs 205.75.
The BSE Realty index slipped 5.81% to Rs 12,021.74. It underperformed the Sensex. DLF fell 7.37% to Rs 1,005.75, Ansal Properties & Infrastructure slumped 12.69% to Rs 311.75, Penland shed 11.49% to Rs 129.40, Housing Development & Infrastructure fell 10.57% to Rs 1246.65, Omaxe shed 6.33% to Rs 423.75 and Unitech fell 3.13% to Rs 474.85.
Among the Sensex losers, NTPC slipped 6.30% to Rs 239.55, HDFC Bank fell 4.33% to Rs 1575.85, Reliance Energy dropped 4.01% to Rs 2124.05, Reliance Communications fell 3.73% to Rs 702.15, Larsen & Toubro declined 3.62% to Rs 3930.10, Tata Steel slipped 3.49% to Rs 781.90, Tata Motors declined 3.35% to Rs 712.20, and Mahindra & Mahindra dropped 3.19% to Rs 728.40.
Among the Sensex gainers, Grasim Industries advanced 1.03% to Rs 3340.70, Ambuja Cements rose 0.88% to Rs 131.95, ACC gained 0.48% to Rs 864.60, Bharti Airtel moved up 0.24% to Rs 973.90, and Satyam Computers rose 0.04% to Rs 372.60.
India’s largest drug maker by sales Ranbaxy Laboratories soared 5.10% to Rs 386.65. The company reportedly said its profit might grow 25% this year driven by higher sales of treatments for infections, diabetes and AIDS in emerging markets. On Thursday, 18 January 2008 Ranbaxy reported an almost flat result in Q4 December 2007 with profits after tax at about Rs 188 crore, on a consolidated basis. Consolidated net sales for the quarter grew 5% to Rs 1,784 crore.
India's biggest cigarette maker by revenue ITC rose 2.07% to Rs 212.60. The company reported 15.79% rise in net profit to Rs 830.72 crore on 12.90% increase in sales to Rs 3595.39 crore. The company declared the results during market hours today.
India's biggest dedicated housing finance firm by revenue, Housing Development Finance Corporation (HDFC) fell 1.05% to Rs 2819. HDFC reported net profit of 82.54% rise in net profit to Rs 648.93 crore on 47.83% increase in sales to Rs 21,50.35 crore in Q3 December 2007 over Q3 December 2006. The sharp surge in net profit was due to one-off gains.
Lumax Industries slumped 11.03% to Rs 338.05 after the auto parts maker said its board would meet on 30 January 2008 to consider closing its Chennai unit and the sale of its assets.
Diversified firm Jaiprakash Associates rose 1.38% to Rs 418.95 on reports the company bagged the Rs 40,000 crore Ganga expressway project in Uttar Pradesh.
Engineering firm Artefact Projects fell 0.98% to Rs 174.90. The company said on Thursday, 17 January 2008 its board has approved raising upto Rs 30 crore through equity or debt.
Entertainment firm Pyramid Saimira Theatre rose 0.79% to Rs 454.80. The company said on Thursday, 17 January 2008 it will raise about $400 million (Rs 1,600 crore) from the global market by March 2008. The funds raised will be used to consolidate the company’s international businesses and pursue plans for global acquisitions and expansion.
Shipping firm Essar Shipping was locked at upper limit of 5% at Rs 232.45 on reports that the company may merge a group company Essar Oilfield Services with itself, hoping to increase its stock market value through the addition of this high-potential and fast-growing business.
Reliance Industries clocked the highest turnover of Rs 493.87 crore on BSE. Housing Development Finance Corporation (Rs 414 crore), Reliance Natural Resources (Rs 389.07 crore), Reliance Energy (Rs 320.49 crore) and ICICI Bank (Rs 221.42 crore), were the other turnover toppers on BSE in that order.
Ispat Industries reported highest volume of 1.24 crore shares on BSE. Reliance Petroleum (1 crore shares), NTPC (73.34 lakh shares), Spice Communications (45.43 crore shares) and IDBI (38.08 crore shares), were the other volume toppers on BSE.
Major European markets recovered after trading in red earlier in the day. In Europe, key indices in UK, and France were up by 0.28% to 1.32%. However, Germany’s DAX was down 0.07%
Asian markets reversed early losses on growing hopes for measures to boost the US economy from President George W. Bush. Key benchmark indices in China, Hong Kong, Taiwan, Japan and South Korea were up 0.35% to 1.02%. Bush told lawmakers on Thursday, 17 January 2008, he wants tax rebates for families and breaks for businesses to boost the struggling US economy.
US stocks fell sharply on Thursday, 17 January 2008, as news of a plunge in regional factory activity and a hefty loss at Merrill Lynch further clouded an increasingly dire view of the US economy. The Dow Jones industrial average plunged 306.95 points, or 2.46%, to close at 12,159.21, on Thursday. The Standard & Poor's 500 Index lost 39.95 points, or 2.91%, at 1,333.25. The Nasdaq Composite Index shed 47.69 points, or 1.99%, at 2,346.90.
In one of the strongest signals yet that the economy is at high risk of contracting, the Philadelphia Federal Reserve Bank said mid-Atlantic factory activity has slowed much more than expected to levels that typically signal recession.
Securities and Exchange Board of India (Sebi) on Thursday, 17 January 2008 proposed a price band for stocks on their market debut to curb sharp swings. The Sebi suggested a 25% price band on the day of listing for initial public offerings of up to Rs 250 crore.
A unit of rating agency Moody's said on Thursday, 17 January 2008 suggested that India's economy should expand 8% in 2008, slower than 8.8% last year, as tight monetary conditions dampen loan demand and creaky infrastructure hobbles growth.
A deep recession in developed economies will have an adverse impact on the Indian economy, C. Rangarajan the chairman of the prime minister's Economic Advisory Council said in a news conference on Thursday, 18 January 2008.
Market opens on a weak note
The market edged lower in opening trade tracking weak global markets. Index heavyweights Reliance Industries and ICICI Bank fell. All the sectoral indices on BSE were in the red. Banking and realty shares were the worst hit.
The market breadth was weak. 23 out of 30 shares from the Sensex pack were in the red. Asian markets, which opened before Indian market, were mostly in the red.
A meeting of Indian ministers, which was expected to recommend a rise in retail prices of petrol and diesel, ended on Thursday, 17 January 2008 without a decision. The panel is likely to meet again on Friday, 18 January 2008 or Saturday, 19 January 2008.
The 30-share BSE Sensex was down 256.41 points or 1.30% to 19,444.41. Sensex hit a low of 19,425.19 at the onset of the trading session. At the day's low, Sensex declined 275.63 points.
The broader CNX S&P Nifty was down 75.65 points or 1.28% to 5837.55.
The BSE Small-Cap index was down 1.22% to 12,584.91. The BSE Mid-Cap index rose 1% to 9,246.36.
The market breadth was weak. On BSE, 1508 shares advanced as compared to 704 that declined. 38 remained unchanged.
India’a largest private sector firm by market capitalization and oil refiner Reliance Industries fell 1.48% to Rs 2951.90.
India’s largest private sector bank by assets ICICI Bank fell 2.10% to Rs 1294.10.
India’s largest engineering and construction firm by revenue Larsen & Toubro declined 2.08% to Rs 3993.
Among the other Sensex losers, HDFC Bank shed 2.63% to Rs 1603, DLF slipped 2.46% to Rs 1059, Satyam Computers fell 1.75% to Rs 365.55, Bharat Heavy Electricals skid 1.72% to Rs 2308 and ONGC fell 1.69% to Rs 1230.
Among the Sensex gainers, Ranbaxy Laboratories rose 1.63% to Rs 373.90, Ambuja Cements advanced 1.26% to Rs 132.05, Reliance Energy gained 0.78% to Rs 2230, Grasim Industries rose 0.70% to Rs 3330 and Bajaj Auto moved up 0.69% to Rs 2459.
In Asia, key benchmark indices in Hong Kong, China, Japan, South Korea, were down by 0.17% to 1.22%. However, Taiwan’s Taiwan Weighted index was up 0.40%.
US stocks fell sharply on Thursday, 17 January 2008, as news of a plunge in regional factory activity and a hefty loss at Merrill Lynch further clouded an increasingly dire view of the US economy. The Dow Jones industrial average plunged 306.95 points, or 2.46%, to close at 12,159.21, on Thursday. The Standard & Poor's 500 Index lost 39.95 points, or 2.91%, at 1,333.25. The Nasdaq Composite Index shed 47.69 points, or 1.99%, at 2,346.90.
In one of the strongest signals yet that the economy is at high risk of contracting, the Philadelphia Federal Reserve Bank said mid-Atlantic factory activity has slowed much more than expected to levels that typically signal recession.
FIIs sold shares worth a net Rs 2267.40 crore on Thursday, the day when Sensex lost 167 points. Domestic funds bought shares worth a net Rs 734.75 crore on that day.
FIIs were net buyers of index futures to the tune of Rs 611.60 crore on Thursday. They net bought index options worth Rs 279.71 crore. FIIs sold individual stock futures to the tune of Rs 1220.25 crore on that day.
Securities and Exchange Board of India (Sebi) on Thursday, 17 January 2008 proposed a price band for stocks on their market debut to curb sharp swings. The Sebi suggested a 25% price band on the day of listing for initial public offerings of up to Rs 250 crore.
A unit of rating agency Moody's said on Thursday, 17 January 2008 suggested that India's economy should expand 8% in 2008, slower than 8.8% last year, as tight monetary conditions dampen loan demand and creaky infrastructure hobbles growth.
A deep recession in developed economies will have an adverse impact on the Indian economy, C. Rangarajan the chairman of the prime minister's Economic Advisory Council said in a news conference on Thursday, 18 January 2008.
Pre Market Watch - Jan 18 2008
The Indian Market is likely to have a negative opening due to weak global cues. Yesterday, The Indian market closed in red consecutively for the fourth straight trading session. The market opened on a firm note taking cues from the Asian markets but volatility ruled the market through out the trading session. The market gained the momentum towards the mid session but unable to sustain all its gains as the profit booking across the counters prevailed towards the final trading hours of the session.The BSE Sensex closed lower by 167.29 points at 19,700.82 and NSE Nifty fell by 22.55 points to close at 5,913.20. We expect that the market may remain cautious during the trading session.
On Thursday, the US market closed in red. The Dow Jones Industrial Average (DJIA) closed lower by 306.95 points at 12,159.21. S&P 500 index slipped by 39.95 points to close at 1,333.25 and NASDAQ dropped by 47.69 points to close at 2,346.90
Indian ADRS closed in red. In technology sector, Patni Computers fell by 4.21% along with Wipro by 0.32% while Satyam and Infosys grew by 0.09% and 0.05% respectively. In banking sector, ICICI bank and HDFC bank slipped by (5.36%) and (5.27%) respectively. MTNL and VSNL dropped by (4.93%) and (3.16%) respectively.
The major stock markets in Asia are trading weak. Hang Seng is trading lower by 826.33 points at 24,288.65 along with Japan''s Nikkei trading down by 387.67 points at 13,395.78 and Taiwan Weighted is trading at 7,979.74 down by 121.89 points.
On Thursday, the FIIs stood as net seller both in equity and debt. The gross equity purchased was Rs4,662.30 Crore and the gross debt purchased was Rs81.80 Crore while the gross equity sold stood at Rs6,941.90 Crore and gross debt sold stood at Rs182.50 Crore. Therefore, the net investment of equity reported was (Rs2,279.60 Crore) and net debt was (Rs100.80 Crore).
Today, Nifty has support at 5,771 and resistance at 5,967 and BSE Sensex has support at 19,169 and resistance at 19,936.
Emaar MGF, Reliance Power, Future Capital Holdings
Future Capital Holdings 700 to 765 540 to 550
Reliance Power 405 to 450 340 to 350
J. Kumar Infraprojects 110 to 120 25 to 30
Cords Cable Ind. 125 to 135 30 to 35
Emaar MGF 725 to 850 370 to 375
US recession fears may hover on local indices
The market is likely to continue its downtrend as major Asian gauges like the Nikkei, the Hang Seng index, the Kospi index and the Jakarta index have tumbled in current trades and US market slipped over 2% in yesterday's trades on U.S. Federal Reserve Chairman Ben Bernanke's comments about worsening economic outlook. The domestic indices also received a heavy pounding for the last four sessions on the back of lack of clarity in the market. The Sensex erased over 1,000 points on intense selling backed by strong volatility during intra-day trades to finally closed at 19,700 marks on Thursday. Among the indices, the Nifty could test higher levels at 6,100 and has a supports at 5,840 and 5,675. The Sensex has a likely support at 19,500 and may face resistance at 20,500.
Key announcements like Anant Raj Industries, BASF, Guj Alkalies, ITC, IFCI, Kirloskar Oil Engineens, NIIT Tech, Power Fincial Corporation, Wipro are expected to announce their figures.
US indices tumbled on Thursday on recession worries following comments from Federal Reserve Chairman Ben Bernanke, a big quarterly loss by Merrill Lynch and weak readings on the housing and manufacturing sectors. While the Dow Jones fell 307 points at 12159, the Nasdaq slipped by 48 points to close at 2347.
Indian floats also tumbled on the US bourses. Wipro, VSNL, Dr Reddy's, Tata Motors, ICICI Bank, HDFC Bank, MTNL and Rediff dropped over 1-5% each. However, Infosys and satyam gained marginally.
Stock-specific activity may rule the roost
The market may edge lower tracking weak global markets. US stocks fell sharply on Thursday, 17 January 2008, as news of a plunge in regional factory activity and a hefty loss at Merrill Lynch further clouded an increasingly dire view of the US economy. In one of the strongest signals yet that the economy is at high risk of contracting, the Philadelphia Federal Reserve Bank said mid-Atlantic factory activity has slowed much more than expected to levels that typically signal recession.
The Q3 December 2007 results announced by India Inc. so far have been more or less in line with market expectations. Stock-specific activity may rule the roost in the near term based on expectations of results of individual firms. Some of the top brokerages expect a slowdown in earnings growth of 30-Sensex firms in Q3 December 2007.
Just a while ago, Wipro reported 11% growth in net profit as per US accounting standards to Rs 826 crore in Q3 December 2007 over Q3 December 2006. The other key results scheduled today are ITC and HDFC.
The government will release the inflation figure for the year through 5 January 2008 today. Annual inflation, based on the wholesale price index (WPI), stood at 3.5% in the year through 29 December 2007, same as the year through 22 December 2007.
Meanwhile, no decision was taken yesterday, 17 January 2008, at a meeting of the group of ministers (GoM) on fuel prices. GoM meet again later. A hike retail fuel prices will result in increase in inflation.
In Asia, key benchmark indices in Hong Kong, China, Japan, South Korea, and Taiwan were down by between 0.1% to 2.32%.
The Dow Jones industrial average plunged 306.95 points, or 2.46%, to close at 12,159.21, on Thursday. The Standard & Poor's 500 Index lost 39.95 points, or 2.91%, at 1,333.25. The Nasdaq Composite Index shed 47.69 points, or 1.99%, at 2,346.90.
FIIs sold shares worth a net Rs 2267.40 crore on Thursday, the day when Sensex lost 167 points. Domestic funds bought shares worth a net Rs 734.75 crore on that day.
FIIs were net buyers of index futures to the tune of Rs 611.60 crore on Thursday. They net bought index options worth Rs 279.71 crore. FIIs sold individual stock futures to the tune of Rs 1220.25 crore on that day.
US Market plunges on economic concerns
Loss from Merrill Lynch and discouraging statement from Fed Chairman take Dow to ten month low
It was disastrous day for the US Market today, Thursday, 17 January, 2008. Worries about further financial market turmoil and a slowing economy were the main reasons for today’s sell-off. A disappointing quarterly report from Merrill Lynch and discouraging comments from Federal Reserve Chairman, Ben Bernanke regarding the economy just spurred the sell-off further. The indices posted large losses ending at their session’s lows for the day. All ten economic sectors ended in the red.
The Dow Jones industrial Average ended the day with a loss of 307 points at 12,159. The Nasdaq Composite Index, finished lower by 47.7 points at 2,347. S&P 500 finished lower by 39.9 points at 1,333. All thirty Dow stocks ended in the red today led by AIg and Merck.
Before the opening bell, Merrill Lynch reported its earnings and the company posted a net loss from continuing operations of $10.3 billion, mainly due to nearly $15 billion worth of write-downs from poor subprime mortgage investments. That was well below analysts' expectations.
Also today, Federal Reserve Chairman, Ben Bernanke reiterated that the outlook for growth in 2008 "has worsened" and "the downside risks to growth have become more pronounced." But he also said that the Fed is not forecasting a recession this year. Last week he had hinted that more interest rate cuts are on the way to help the situation from worsening further.
Initial claims data gives the day a good start but fails to hold on
Stocks opened higher earlier in the day on a lower than expected jobless claim number. Initial jobless claims for the week ended 12 January unexpectedly fell to 301,000, its lowest reading in eight months. Market expected claims to rise to 335K. Dow was up by as much as 100 points at one point.
On the negative side, the Commerce Department reported today that construction on new homes fell 14% in December to a seasonally adjusted annual rate of 1.01 million, the slowest building pace in more than 16 years.
Also on the economic front, the Philadelphia Fed Index, a regional manufacturing survey, was sharply lower at -20.9, its lowest number since Oct. 2001. The consensus estimate predicted a reading of -1.5. Since the number is below zero, it reflects a contraction in manufacturing.
Crude prices once again fell today. Price slipped after traders once again got gripped by fears of recession. The “r” word once again came into focus after fresh comments from Federal Reserve chairman, Ben Bernanke. Yesterday, Energy Department had reported that crude stockpiles rose more than expected for the first time in nine weeks. This also led to softening of crude price. Crude-oil futures for light sweet crude for February delivery today closed at $90.13/barrel (lower by $0.71/barrel or 0.8%) on the New York Mercantile Exchange.
Volume on the New York Stock Exchange surpassed 2.1 billion, and declining stocks beat those rising 5 to 1. On the Nasdaq, 2.8 billion shares traded, and decliners outdid advancing issues, 3 to 1.
As fourth quarter earnings continues to pick up, investors will be looking for corporate financials to help set the tone of trading. Tomorrow, a number of widely-held companies are expected to report their results, including Dow component General Electric.
Morning Call - Jan 18 2008
Market Grape Wine :
In House :
Nifty at a supp of 5825 and 5740 levels with resistance at 5980 and 6020 levels .
Weak Opening Expected .
Sell : Intraday : Aptech below 350 target 338 s/l of 356
Sell : Intraday CanBk below 351 target 340 s/l of 355
Buy : in F&O : HDIL above 1414 target 1465 s/l of 1395
Buy : in F&O BajajHind : above 348 target 369 s/l of 340
Out House :
Markets at a support of 19515 & 19339 levels with resistance at 19786 & 19991 levels .
Buy : RIL at dips
Buy : SBIN at dips
Buy : NTPC
Buy : Balrampur & BajajHind
Buy : Primesecurity
Buy : IBUllsreal
Buy : Adhunik
Buy : JSW at dips
Buy : ITC & HLL
Dark Horse : Adlab , PrimeSec , Adhunik , GujNRE , JpAsso , RIL & SBIN
Bullion metals end mixed
Silver prices rise but gold drops for the third consecutive day
Bullion metals ended mixed today, Thursday, January 17, 2008. While silver rose, gold continued to drop for the third consecutive day. Gold Prices eased today further after crude prices also slipped.
Gold generally moves in the opposite direction of the U.S. currency. Gold, as a dollar-denominated commodity, suffers from dollar strength.
Comex Gold for February delivery today fell $1.5 (0.2%) to close at $880.5 an ounce on the New York Mercantile Exchange. They rose to an intraday high of $891.5 an ounce earlier and also fell to an intraday low of $875.2. On Tuesday, 15 January, during intraday trading prices rose as high as $916.1/ounce, but the slipped. This year, prices have gained 5% till date.
Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices. Rising crude increases inflationary pressures and vice versa. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.
Before these three days, gold had struck consecutive record highs for six consecutive sessions. Prices closed above the $900 mark for the first time on Monday, 14 January, 2008. Since then it has dropped by more than $20.
Comex Silver futures for March delivery rose 11.5cents (0.7%) to $16.01 an ounce. Silver has gained 7.2% in 2008. The metal had climbed 15.5% in FY 2007. The metal also has gained for seven straight years.
Gold witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
In the currency market today, the dollar index, which tracks the value of the greenback against a basket of other major currencies, fell 0.2% to 76.1.
In the energy market today, crude oil fell to a four-week low on recession concerns and oil closed lower by 71 cents today at $90.13 barrel.
Today, Federal Reserve Chairman, Ben Bernanke reiterated that the outlook for growth in 2008 "has worsened" and "the downside risks to growth have become more pronounced." Last week he had hinted that more interest rate cuts are on the way to help the situation from worsening further.
Gold had climbed 31% in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record.
At the MCX, gold prices for February delivery closed lower by Rs 20 (0.17%) at Rs 11,162 per 10 grams. Prices rose to a high of Rs 11,263 per 10 grams and fell to a low of Rs 11,119 per 10 grams during the day’s trading.
At the MCX, silver prices for March delivery closed Rs 82 (0.4%) higher at Rs 20,636/Kg. Prices opened at Rs 20,551/kg and rose to a high of Rs 20,824/Kg during the day’s trading.
Crude ends lower
Prices continue to slip as Federal Reserve chairman predicts slowdown in economy
Crude prices once again fell today, Thursday, 17 January, 2008. Price slipped after traders once again got gripped by fears of recession. The “r” word once again came into focus after fresh comments from Federal Reserve chairman, Ben Bernanke. Yesterday, Energy Department had reported that crude stockpiles rose more than expected for the first time in nine weeks. This also led to softening of crude price.
Crude-oil futures for light sweet crude for February delivery today closed at $90.13/barrel (lower by $0.71/barrel or 0.8%) on the New York Mercantile Exchange. Prices are 73% higher than a year ago. Last week, crude prices gained $5.3 (5.4%).
Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.
Today, Federal Reserve Chairman, Ben Bernanke reiterated that the outlook for growth in 2008 "has worsened" and "the downside risks to growth have become more pronounced." But he also said that the Fed is not forecasting a recession this year. Last week he had hinted that more interest rate cuts are on the way to help the situation from worsening further.
In Addition, the Commerce Department reported today that construction on new homes fell 14% in December to a seasonally adjusted annual rate of 1.01 million, the slowest building pace in more than 16 years.
As per yesterday’s weekly inventory report by the EIA, U.S. crude inventories rose for the first time in nine weeks, up by 4.3 million barrels to 287.1 million barrels in the week ending 11 January. U.S. crude-oil imports averaged 10.4 million barrels a day last week, up 583,000 barrels a day from the previous week. U.S. refineries operated at 87.1% of their operable capacity last week, down from the previous week's 91.3%.
Brent crude oil for March settlement today fell $0.75 (0.8%) to $88.75 on the London-based ICE Futures Europe exchange. The London benchmark rose 54% in FY 2007, the most since 1999 when prices more than doubled.
Natural gas, gasoline and heating oil – all register drop
Natural gas fell after a government report showed that U.S. inventories are probably ample for cold- weather heating needs. As per EIA, stockpiles slipped 59 billion cubic feet to 2.691 trillion cubic feet in the week ended 11 January. Gas for February delivery fell 5.2 cents (0.6%) to settle at $8.081 per million British thermal units. Gas had surged in the first two weeks of January after forecasts were revised and called for colder weather.
Against this backdrop, February reformulated gasoline lost 1.54 cents to $2.2629 a gallon, and February heating oil fell 1.49 cents to $2.5035 a gallon.
Members of the OPEC left production targets unchanged at the 5 December meeting in Abu Dhabi. The group, which produces 40% of the world's oil, will review output at a 1 February, 2008 meeting in Vienna.
At the MCX, crude oil for February delivery closed at Rs 3,529/barrel, higher by Rs 2 (0.06%) against previous day’s close. Natural gas for January delivery closed at Rs 319.4/mmtbu, higher by Rs 0.2/mmtbu (0.06%).
Reliance Power - a day before
| Sr.No. | Category | No.of shares offered/reserved | No. of shares bid for | No. of times of total meant for the category |
| 1 | Qualified Institutional Buyers (QIBs) | 136800000 | 4198353915 | 30.6897 |
| 1(a) | Foreign Institutional Investors (FIIs) | 3721311435 | ||
| 1(b) | Domestic Financial Institutions(Banks/ Financial Institutions(FIs)/ Insurance Companies) | 476389770 | ||
| 1(c) | Mutual Funds | 0 | ||
| 1(d) | Others | 652710 | ||
| 2 | Non Institutional Investors | 22800000 | 738880485 | 32.4070 |
| 2(a) | Corporates | 333823320 | ||
| 2(b) | Individuals (Other than RIIs) | 395876535 | ||
| 2(c) | Others | 9180630 | ||
| 3 | Retail Individual Investors (RIIs) | 68400000 | 617185230 | 9.0232 |
| 3(a) | Cut Off | 589292670 | ||
| 3(b) | Price Bids | 27892560 |
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