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Saturday, February 09, 2008
Weekly Technicals - Feb 11 2008
The markets extended losses for the fourth straight week, and both the major indices succumbed to unabated selling in the latter half of the week ended February 8.
The Sensex, which rallied to an intra-week high of 18,895, tumbled to a low of 17,203 - a swing of 1,692 points - and finally settled with a loss of 769 points (4.2%) at 17,645. The index is down almost 18.5% (3,363 points) in the last four weeks.
The high of 18,895 was exactly at the R3 (Resistance 3) level of 18,900, and the low of 17,203 was close to the important medium-term support level of 17,150.
One needs to watch 17,150 as the crucial support level for the Sensex next week. While the Sensex will find strength above the 18,500-mark, a breakout above the week's high (18,895) could see the index rally another 1,000 points.
While the Sensex is likely to face resistance around 18,110-18,310-18,515, the index is likely to find support around 16,820-16,620-16,415.
The NSE Nifty moved in a range of 431 points. From a high of 5,545, the index dropped to a low of 5,034 before settling with a loss of 197 points at 5,120. The index ended lower for the fifth straight week, and has declined 18% (1,154 points) during the period.
The Nifty, which is currently trading close to its 200-day moving average of 4,975, may find support around this level. The 20-day moving average is at 5,413, and the 50-day moving average is at 5,779.
The Nifty is likely to find support around 4,955-4,905-4,850, while the index is likely to face resistance around 5,285-5,335-5,390.
Market may remain volatile; RPower listing eyed
The market is expected to see volatile swings as has been the trend in the recent past. Of late markets across the globe were inflicted by high volatility due to fears of a recession in United States, the world's biggest economy.
The key event watch out for is the debut of Reliance Power (RPower) on Monday, 11 February 2008. Reliance Power had, last month, completed India's largest initial public offer (IPO) of over Rs 11000 crore.
The issue was heavily subscribed. The Anil Dhirubhai Ambani Group firm Reliance Power got an aggregate commitment of over Rs 7.50 lakh crore, as against the issue size of Rs 11,560 crore. It had offered shares at Rs 450 per share, valuing the firm at $30 billion.
The Reliance Power shares quoted a premium of as high as Rs 500 per share in the grey market when the issue was open for subscription due to buoyant equity market. However, as per latest reports, it is now attracting premium of Rs 100- 200 per share as equity markets across the globe have declined in volatile trade.
Forthcoming events including Railway Budget and Union Budget for 2008-09, to be presented at the fag end of February 2008, may dictate the trend on the bourses in the near term.
Third quarter December 2007 results season has come to end. Most of the results were in line with market expectations. A total of 3321 companies reported 26.80% rise in net profit on 19.20% rise in net sales for Q3 December 2007 over Q3 December 2006. The net profit was boosted by 72.5% jump in other income
The market suffered losses for the fourth straight week in the week ended Friday, 8 February 2008 as selling pressure continued for index pivotals. The BSE 30-shares Sensex lost 777.69 points or 4.26% to 17,464.89 in the week ended Friday, 8 February 2008. The S&P CNX Nifty lost 196.90 points or 3.70% to 5,120.35, in the week.
However, small-cap and mid-cap indices outperformed the Sensex. The BSE Mid-Cap index declined 128.27 points or 1.65% to 7,633.27, in the week ended Friday, 8 February 2008. The BSE Small-Cap index lost 151.97 points or 1.51% to 9,920.35, in the week.
Market extends losses
The market suffered losses for the fourth straight week in the week ended Friday, 8 February 2008 as selling pressure continued for index pivotals. The market slipped in three out of five trading sessions in the week. Volatility was high throughout the week. Small-cap and mid-cap indices outperformed the Sensex
Depressed secondary market hit IPOs in the week. Emaar MGF Land became second victim of the depressed secondary market conditions as the company withdrew its IPO on Friday, 8 February 2008 due to poor response to the issue, a day after Wockhardt Hospitals on Thursday, 7 February 2008, pulled out its IPO for the same reason.
The BSE 30-shares Sensex lost 777.69 points or 4.26% to 17,464.89 in the week ended Friday, 8 February 2008. The S&P CNX Nifty lost 196.90 points or 3.70% to 5,120.35, in the week.
The BSE Mid-Cap index declined 128.27 points or 1.65% to 7,633.27, in the week ended Friday, 8 February 2008. The BSE Small-Cap index lost 151.97 points or 1.51% to 9,920.35, in the week.
The BSE Sensex has lost 3,741.88 points or 17.64% from a record high of 21,206.77 hit on 10 January 2008
Trading for the week started on an upbeat note with Sensex surging 417.74 points or 2.29% at 18,660.32 on Monday, 4 February 2008. On the same day, the broader CNX S&P Nifty gained 146.25 points or 2.75% at 5,463.50. The sentiment was boosted by Microsoft Corp's bid for Yahoo Inc and following China's buy of a large stake in takeover target Rio Tinto.
On Tuesday, 5 February 2008, the 30-share BSE Sensex rose a meagre 2.84 points or 0.02% at 18,663.16, after a weak start. The broader based CNX S&P Nifty was up 20.4 points or 0.37% to 5,483.90 on the same day.
The 30-share BSE Sensex slumped 523.67 points or 2.81% at 18,139.49 on Wednesday, 6 February 2008. On the same day, the broader CNX S&P Nifty declined 161.35 points or 2.94% at 5,322.55. Weak Asian markets played the spoilsport.
The 30-share BSE Sensex plunged 612.56 points or 3.38% at 17,526.93 following late sell-off in index pivotals. The broader CNX S&P Nifty lost 189.30 points or 3.56% at 5,133.25
On Friday, 8 February 2008, the Sensex declined 62.04 points or 0.35% to 17,464.89, after seeing volatile swings throughout the day. The broader CNX S&P Nifty slipped 12.90 points or 0.25% at 5,120.35.
India’s largest private sector firm by market capitalization and oil refiner Reliance Industries fell 4.75% at Rs 2421.75 in the week. As per reports, Reliance Industries (RIL)’s two wells in D6 block in the Krishna Godvari (KG) basin have hit a technical snag. The loss to wells runs into about $175 million.
India’s second largest listed telecom firm by sales Reliance Communications (RCom) advanced 5.61% to Rs 646.10 in the week. Reliance Infratel, a subsidiary of RCom has filed its draft red herring prospectus for an initial public offer (IPO) with the Securities and Exchange Board of India (Sebi). The company will offer 8,91,64,100 shares of Rs 5 each for cash, constituting 10.05% of its post-issue paid-up equity capital.
DLF, the largest real estate developer in terms of market capitalisation gained 0.39% to Rs 816.70 in the week. The stock will replace Glaxosmithkline Pharmaceuticals, in S&P CNX Nifty index from 14 March 2008.
India’s third largest software services exporter Wipro declined 3.40% to Rs 422.45 in the week. As per reports the company plans to build electronic warfare systems, radars and flight simulators locally for US defence contractors.
Tata Motors, the country’s largest truck manufacturer in terms of sales, shed 5.72% to Rs 711.15 in the week. It reported 11.76% fall in its passenger car sales in the domestic market during January 2008 at 20,119 units compared with 22,801 units in the same month a year ago.
India’s largest oil exploration company in terms of market capitalisation Oil & Natural Gas Corporation (ONGC) lost 4.52% to Rs 997.25 in the week. As per reports, British oil major British Gas is all set to pick up a 30% stake in ONGC’s Krishna Godawari basin block and 25% in Mahanadi basin block.
India’s top small car maker in terms of sales Maruti Suzuki India slumped 11.15% to Rs 803.85 in the week. The company has raised prices of many of its models by Rs 1,000 to Rs 11,000 per unit.
Banking stocks were mixed during the week. ICICI Bank declined 10.94% to Rs 1066.70 and HDFC Bank lost 7.74% to Rs 1445.95. However, India's largest commercial bank in terms of net profit State Bank of India rose 0.27% to Rs 2,191.45.
Third quarter December 2007 results season has come to end. Most of the results were in line with market expectations. A total of 3321 companies reported 26.80% rise in net profit on 19.20% rise in net sales for Q3 December 2007 over Q3 December 2006. The net profit was boosted by 72.5% jump in other income
Annual inflation based on the wholesale price index rose 4.11% in the week ended 26 January 2008 from 3.93% in the week ended 19 January 2008, government data released on Friday, 8 February 2008 showed.
The Bank of England on Thursday, 7 February 2008, cut its key interest rate by a quarter percentage point to 5.25% to help shore up the economy but policymakers remained worries about inflation, dampening hopes of rapid-fire rate cuts. The European Central Bank kept euro-zone rates unchanged at 4% on the same day.
Meanwhile, Reliance Power, which raised a record $3 billion in its initial share sale in January 2008, will list on exchanges on Monday, 11 February 2008. The initial public offer had received bids for $190 billion.
The Bombay Stock Exchange (BSE) has decided to change the eligibility criteria for inclusion of scrips in ‘A’ group. The revised list will be announced on 18 February 2008 and will come into effect from 3 March 2008. A total of 200 companies will find place in A group. BSE has also discontinued the division of group ‘B’ into group ‘B1’ and ‘B2’. All companies not included in group ‘A’, ‘S’ or ‘Z’, will constitute group ‘B’, according to a BSE circular.
On 7 February 2008, the Central Statistical Organisation released the advance estimates of national income for 2007-08. Gross domestic product (GDP) growth is estimated at 8.7% compared with 9.6% in 2006-07. Agriculture is expected to advance 2.6% in 2007-08 as against 3.8% in 2006-07. Manufacturing is expected to gain 9.4% in 2007-08.
On 4 February 2008, the International Monetary Fund (IMF), in a report summarising its annual consultation on India's economic policy, estimated India's growth at 8.75% for 2007-08 as a result of rising productivity and investment.
Small-cap, mid-cap stocks slide
Volatility was the hallmark for the day as the market swung like pendulum in negative and positive terrain throughout the day. The market recovered from lower level in mid-afternoon trade on positive cues from European markets. The market had swung between positive and negative zone in mid-morning trade after undergoing high initial volatility. Sensex fell below 17,500 mark. Most of the Asian markets were closed today.
Emaar MGF Land became another victim of the depressed secondary market conditions as the company today withdrew its IPO due to poor response to the issue, a day after Wockhardt Hospitals on Thursday, 7 February 2008, pulled out its IPO for the same reason. Recently, volatility in the secondary market conditions had forced Emaar MGF Land to extend its initial public offer until 11 February 2008 and lower its indicated price for a second time.
The 30-share BSE Sensex declined 62.04 points or 0.35% to 17,464.89. Sensex shed 323.87 points at the day's low of 17,203.06, hit in afternoon trade. Sensex touched a high of 17,688.73 at the onset of the trading session. At day's high, Sensex surged 161.80 points.
The broader CNX S&P Nifty was down 12.9 points or 0.25% at 5,120.35.
IT stocks surged. Reliance Industries and State Bank of India came off lower level. Realty, metal and consumer durable stocks dropped. Hindustan Unilver and ITC rose. Even as the Sensex recovered, the market breadth remained quite weak.
Annual inflation based on the wholesale price index rose 4.11% in the week ended 26 January 2008 from 3.93% in the week ended 19 january 2008, government data released today showed.
The BSE Mid-Cap index was down 1.9% at 7,633.27, while the BSE Small-Cap was down 2.77% at 9,920.35.
The market breadth was quite weak: on BSE 506 advanced as compared to 2,259 that declined. 37 stocks remained unchanged. 16 out of 30 Sensex stocks were in red.
BSE clocked a turnover of Rs 6334 crore compared to Thursday (7 February 2008)'s Rs 6570 crore.
Nifty February 2008 futures were at 5,070, at a discount of 50.35 points as compared to spot closing of 5,120.35.
The NSE's futures & options (F&O) segment turnover was Rs 39,421.27 crore, which was lower than Rs 40,921.83 crore on Thursday, 7 February 2008.
BSE Auto index (down 0.88% to 4,741.49), BSE Bankex (down 2.17% to 10,159.42), BSE Consumer Durables index (down 3.2% to 4,737.15), BSE Capital Goods index (down 1.62% to 15,859.11), BSE Metal index (down 2.67% to 15,114.84), BSE Power index (down 1.23% to 3,736.31), BSE PSU index (down 0.9% to 8,275.98) and BSE Realty index (down 2.46% to 9,783.85) underperformed Sensex.
BSE FMCG index (up 2.34% to 2,175.09), BSE IT index (up 3.73% to 3,843.34), BSE Oil & Gas index (down 0.28% to 10,638.44) outperformed Sensex.
Among Sensex stocks, Hindustan Unilever rose 6.09% to Rs 211.75, ONGC rose 0.89% to Rs 997.25, ITC rose 2.47% to Rs 196.95 and Ranbaxy Laboratories rose 2.32% to Rs 382.30.
HDFC, India's biggest dedicated housing finance firm by revenue, fell 4.47% to Rs 2,796.20.
IT stocks strengthened on bargain hunting after they fell for the last three consecutive trading sessions. Infosys (up 4.76% to Rs 1,551.35), Satyam Computer Services (up 4.9% to Rs 410), Tata Consultancy Services (up 1.93% to Rs 899.95) and Wipro (up 3.07% to Rs 422.45) edged higher.
Metal stocks declined. Steel Authority of India (down 4.61% to Rs 200.60), Sterlite Industries (down 2.76% to Rs 737.55), Tata Steel (down 2.72% to Rs 750.40) and Hindalco Industries (down 1.71% to Rs 160.50) edged lower.
Banking stocks declined after the latest data showed rise in inflation. ICICI Bank (declined 3.49% to Rs 1,066.70), HDFC Bank (down 3.06% to Rs 1,445.95) edged lower. State Bank of India rose 1.68% to Rs 2,191.45. It recovered from a low of 2,150.97.
Capital goods stocks fell. India’s largest engineering & construction firm by revenue Larsen & Toubro fell 2.84% to Rs 3,527.30. It recovered from low of Rs 3,465. India's biggest power equipment maker by sales Bharat Heavy Electricals declined 0.31% to Rs 2,013.70 despite winning a contract worth Rs 3,390 crore.
India’s largest wind turbine maker by sales Suzlon Energy rose 0.88% to Rs 310.10. Suzlon Energy, through its step-down wholly owned subsidiary company, SE Drive Technik, Germany in joint venture with REpower Systems AG, Germany has established a new company Renewable Energy Technology Centre. Both the firms hold 50% stake each in the new company.
Realty stocks fell. Indiabulls Real Estate (down 4.73% to Rs 630), Housing Development Infrastructure (down 2.79% to Rs 908.25), DLF (down 3.33% to Rs 816.70) and Unitech (down 2.76% to Rs 351.05) edged lower.
Consumer durables stocks fell. Titan Industries (down 5.69% to Rs 1,061.65), Videocon Industries (down 4.71% to Rs 411.45), Rajesh Exports (down 3.39% to Rs 128.25) and Blue Star (down 3.95% to Rs 460) edged lower.
India’s largest private sector firm by market capitalization and oil refiner Reliance Industries declined 0.13% at Rs 2,421.75. It recovered from its lows of Rs 2,391.50.
India’s largest telecom services provider by sales Bharti Airtel rose 2.12% to Rs 880.80.
India’s second largest listed telecom firm by sales Reliance Communications declined 1.61% to Rs 633.70. Reliance Infratel, the tower subsidiary of Reliance Communications (RCom), will reportedly build 56,596 telecom towers by financial year 2010, increasing the total number of towers to 1 lakh.
Reliance Natural Resources clocked highest volume of 3.79 crore shares on BSE. Ispat Industries (1.54 crore shares),Reliance Petroleum (1.29 crore shares), Nagarjuna Fertilisers and Chemicals (1.24 crore shares) and IFCI (1.09 crore shares) were the other volume toppers on BSE in that order.
Reliance Natural Resources clocked the highest turnover of Rs 573.83 crore on BSE. Reliance Energy (Rs 408.07 crore), Reliance Industries (Rs 267.90 crore), Reliance Petroleum (Rs 211.76 crore) and Reliance Communications (Rs 181.71 crore) were other turnover toppers on BSE in that order.
A poor response to the IPO due to depressed secondary market conditions caused Wockhardt Hospitals to withdraw its IPO on Thursday, 7 February 2008. The IPO was subscribed just 20% by Thursday, the last day of the issue.
The Bank of England on Thursday, 7 February 2008, cut its key interest rate by a quarter percentage point to 5.25% to help shore up the economy but policymakers remained worries about inflation, dampening hopes of rapid-fire rate cuts. The European Central Bank kept euro-zone rates unchanged at 4% on the same day.
European markets were firm. Stock markets in France, Germany and UK were higher between 0.54-1.14%.
Markets in China, Hong Kong, South Korea, Singapore, and Taiwan were closed today for the Lunar New Year holiday. Japan’s Nikkei 225 average was down 1.44%.
US stocks rose on Thursday, as relatively cheap valuations tempted investors back to Wall Street after a three-day losing streak. The Dow Jones industrial average was up 46.90 points, or 0.38%, at 12,247.00. The Standard & Poor's 500 Index was up 10.46 points, or 0.79%, at 1,336.91. The Nasdaq Composite Index rose 14.28 points, or 0.63%, at 2,293.03.
Even if the US goes into the recession, it may not impact India’s economic growth in a big way given that domestic demand is a key driver of the Indian economy. India’s economy is expected to post strong growth for a long period due to favourable demographics. Moreover a healthy investment cycle will continue to support India’s growth through a self-perpetuating cycle of income creation, savings and investment.
India's economy is expected to expand at 8.7% in fiscal 2007/08, slower than 9.6% growth in 2006/07, which was its strongest pace in 18 years, government's central statistics office (CSO) said on Thursday, 7 February 2008. CSO has pegged manufacturing output growth at an annual 9.4% this fiscal compared with 12% growth in the previous year. Farm output growth is estimated at 2.6% for the full year 2007/08 compared with 3.8% growth in 2006/07. Services sector growth is estimated at 10.7% for the year against 11.1% growth in 2006/07.
Corporate earnings growth remains decent. Deutsche Bank expects 20% compounded annual growth rate in earnings of 30-Sensex firms during the period from FY 2007 (year ended 31 March 2007) to FY 2009 (year ending 31 March 2009).
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