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Tuesday, March 04, 2008
FIIs remain net sellers in equities
Foreign institutional investors (FIIs) remained net sellers in equities worth Rs 6,835 million (USD 169.40 million) on March 3. They bought equities worth Rs 34,203 million and sold equities worth Rs 41,039 million. Till March 3, they have been net buyers in equities worth Rs 6,835 million.
FIIs were absent in debt segment on March 3.
According to the provisional data available on NSE, FIIs remained net sellers in the equity segment worth Rs 5,123.3 million on both BSE and NSE on March 4. They bought equities worth Rs 35,533.8 million and sold equities worth Rs 40,657.1 million. Total turnover in the cash segment of NSE stood at Rs 144,863 million on March 4.
FIIs were net sellers in derivatives worth Rs 3,045 million on March 3. They bought derivatives worth Rs 35,402.8 million and sold derivatives worth Rs 38,447.8 million.
Dull day at the markets, fall again
The market witnessed a dull day by closing on a weak note. It opened positive but soon slipped into the negative and remained weak most part of the day.
Bank and realty stocks have been adversely hit today. With a number of stocks from these sectors going down sharply on sustained selling pressure, the Bankex and Realty indices went down sharply by 4.29% and 5.2% respectively.
Mirroring the weakness exhibited by capital goods, FMCG, information technology, consumer durables, oil and pharma stocks, the respective sectoral indices have slipped by 1.5% - 3%. The Auto and Metal indices are up with marginal gains.
The market breadth was extremely negative.
Banking stocks were worst hit on the news that ICICI Bank lost USD 264 million till January 31 on subprime crisis but management clarified that they have made loss of USD 50 million in this quarter and subsidiaries to take hit of USD 25 million. Bank has made provision of USD 75 million in total.
BSE Bankex closed down at 4%. Amongst banking stocks, ICICI Bank, Yes Bank, Canara Bank, Kotak Mahindra Bank, Bank of India and PNB were major losers.
Losers at the BSE Sensex were, BPCL, ICICI Bank, ACC, Cipla, Suzlon Energy, Punjab National Bank, Tata Power, DLF, ITC, Tata Communications, Infosys Technologies, Larsen & Toubro, Bharti Airtel, HDFC Bank, Dr. Reddy``s Laboratories, State Bank of India, Nalco, ONGC, Bajaj Auto, Reliance Industries and HCL Technologies.
Gainers at the BSE Sensex were, Zee Entertainment (4.55%), Hindalco (4%), HDFC (3.85%), Maruti Suzuki (3.5%), Idea Cellular (1.25%), GlaxoSmithKline Pharma (1.1%), Tata Motors (1.1%) and Mahindra & Mahindra (1%), Tata Consultancy Services, NTPC, Grasim Industries, Ambuja Cements, Sterlite Industries, Reliance Energy and Tata Steel.
Nifty March 2008 futures continues to be at discount
Turnover in F&O segment rises
Nifty March 2008 futures were at 4852, at a discount of 12.25 points as compared to spot closing of 4864.25.
The NSE's futures & options (F&O) segment turnover was Rs 40,644.50 crore, which was higher than Rs 36,591.82 crore on Monday, 3 March 2008.
State Bank of India March 2008 futures were at premium at 1880 compared to the spot closing of 1875.70.
Essar Oil March 2008 futures were near spot price, at 237.75, compared to the spot closing of 237.15.
ICICI Bank March 2008 futures were at discount, at 966, compared to the spot closing of 971.10.
In the cash market, the S&P CNX Nifty lost 88.75 points or 1.79% at 4864.25.
US in Recession - Warren Buffet to CNBC
Q: Let us move on to David from Defiance, Ohio. He asks, 'How would you define a recession?' This is something we talk an awful lot about on the show, but he says, 'I have been listening to a lot of discussions on CNBC, some of which can be very annoying because they tend to be so outrageously vocal and the experts believe two quarters of negative growth qualifies as a recession.' Is that the surest definition of it? Or do you think it's broader than just that?
A: It is the standard definition, but if you think about it, population grows at 1% a year. So you could have growth of GDP at 0.5%, but GDP per capita would be going down. The very definition you might say is a little bit flawed if it doesn’t allow for the fact that GDP per capita can go down while gross GDP is going up. Beyond that, I would say by any common sense definition we are in a recession. We haven’t had two consecutive quarters of GDP growth. But on balance, most people's net worth is heading south now for a considerable period of time. And if you owned a house, and you had an 80 per cent mortgage on it, and so you had 20 per cent equity a year ago, you might not have any equity now. And millions of people are in positions somewhat similar to that, and people that own municipal bonds feel poorer today than they did a few months ago. So business is slowing down. We have retail stores in candy and home furnishings and jewelry; across the board I'm seeing a significant slowdown.
Q: That is the first time I have heard you say you think we are actually in a recession right now.
A: Yeah, I think, when we talked earlier, I said we might be. But when I say we are in a recession, it doesn't meet the technical definition. We are not in the second quarter because we do not know what the fourth quarter of last year was. But I think that, from a commonsense standpoint, we are in a recession now.
Q: You have made some negative comments about the dollar in the past. You see where it trades right now. What do you think?
A: For five years we have talked about it. We were following policies which were, in my view, five years ago, were certain to produce a weaker dollar over time. I never know what it is going to do in a month or a year, and maybe I do not know what it is going to do in five years, but I think I know what it is going to do in five years.
And as long as we force-feed a couple of billion dollars a day to the rest of the world, they take it whether they like it or not, because we buy goods, buy two billion a day more than we sell goods to the rest of the world. The dollar is going to get weaker over time. And the government can talk about how it is in our interest to have a strong dollar, but we are not following policies that lead to that, and it is just a consequence and it will just continue to be. If you do the same thing over and over again, you are going to get the same result and we are doing the same thing now that we were doing two, three, five years ago, and the dollar will weaken on an irregular basis, in my view, for some time to come.
Q: Obviously we are consumers to the rest of the world because we have a lot of prosperity here. And I am trying to figure out how we should reverse the policies that caused us to consume so much and send all this money abroad. Do you think that free trade is a hindrance to what we are doing? Is NAFTA, has that been a negative for us? It seems like we are going to consume no matter what, and that is good for the rest of the world, and we are not going to export as much. How should we change our policy? What would make sense?
A: Actually, in the last 30-plus years, we have increased our exports from 5% of GDP to about 11.5% of GDP. We exported a trillion, six hundred billion dollars worth of goods last year, but the problem is that over the last 35 years our imports have also gone from 5% of GDP up to about 16.5% of GDP. So we have been prosperous ever since World War II and the trade deficit only has become really significant with the current account deficit in the last six or seven years.
I wrote an article for Fortune about three years ago where I suggested one solution in terms of import certificates. I believe in free trade, in fact, I would have no barriers to countries or products or anything of the sort.
But I do think the only true trade we had last year was the USD 1.6 trillion, which we imported and exported and then on top of that we imported USD 700 billion more, and that was unreciprocated trade. So that creates problems over time because we do hand these little pieces of paper over to other countries, and we keep force-feeding those countries, and after a while they are not so enthusiastic about getting the money.
Q: Let us get to one from Don in Atlanta, Georgia. 'If Ben Bernanke is a company, would you be interested in owning it?'
A: I think that Bernanke is very able, and I am not sure I would want to own any company that an economist was running, though, so he gets disqualified by profession, but not personally at all.
Via CNBC
NSE Bulk Deal Watch - March 4 2008
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
04-MAR-2008,EIDPARRY,EID Parry Ltd.,PARRY AGRO INDUSTRIES LTD,BUY,1664202,180.00,-
04-MAR-2008,GLORY,Glory Polyfilms Limited,YOKE SECURITIES LIMITED,BUY,101875,103.78,-
04-MAR-2008,IOB,Indian Overseas Bank,TCI CYPRUS HOLDING LIMITED,BUY,18962113,160.00,-
04-MAR-2008,M&MFIN,Mahindra & Mahindra Finan,COPTHALL MAURITIUS INTERNATIONAL LTD(CMIL),BUY,1473663,300.00,-
04-MAR-2008,NAGARFERT,Nagarjuna Fert & Chem,CLEAN FINANCE & INVESTMENT LTD,BUY,2512104,46.56,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,ADROIT FINANCIAL SERVICES PVT LTD,BUY,74949,107.70,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,AMBIT SECURITIES BROKING PVT. LTD.,BUY,119394,107.05,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,ASHU GUPTA,BUY,176947,106.44,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,MANISH VRAJLAL SARVAIYA,BUY,105880,106.91,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,MUKUL RAMVALLABH TIBREWALA,BUY,149485,105.86,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,PASHUPATI CAPITAL SERVICES PVT. LTD.,BUY,100671,106.92,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,R.M. SHARE TRADING PVT LTD,BUY,164827,107.35,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,RAJEEV GUPTA,BUY,131468,106.26,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,SEETARANI AGARWAL,BUY,89969,105.98,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,SUNIL PANDURANG MANTRI,BUY,80272,106.29,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,TRANSGLOBAL SECURITIES LTD.,BUY,263544,107.69,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,VAJSHAH SHARES & CONSULTANCY P,BUY,67416,107.08,-
04-MAR-2008,EIDPARRY,EID Parry Ltd.,GOLDMAN SACHS INVESTMENT (MAURITIUS) 1 LIMITED A/C SHORT TER,SELL,1663002,180.00,-
04-MAR-2008,GLORY,Glory Polyfilms Limited,KETAN RAMBHAI GORANIA,SELL,166255,103.59,-
04-MAR-2008,GLORY,Glory Polyfilms Limited,YOKE SECURITIES LIMITED,SELL,435,103.95,-
04-MAR-2008,IOB,Indian Overseas Bank,GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD,SELL,18962113,160.00,-
04-MAR-2008,M&MFIN,Mahindra & Mahindra Finan,HSBC INVESTMENTS LTD A/C HGIF INDIA EQUITY FUND,SELL,1092919,300.11,-
04-MAR-2008,NAGARFERT,Nagarjuna Fert & Chem,CLEAN FINANCE & INVESTMENT LTD,SELL,2512104,46.60,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,ADROIT FINANCIAL SERVICES PVT LTD,SELL,74949,107.80,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,AMBIT SECURITIES BROKING PVT. LTD.,SELL,118400,107.38,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,ASHU GUPTA,SELL,176947,106.53,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,MANISH VRAJLAL SARVAIYA,SELL,105880,107.16,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,MUKUL RAMVALLABH TIBREWALA,SELL,149485,105.98,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,PASHUPATI CAPITAL SERVICES PVT. LTD.,SELL,100671,105.78,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,R.M. SHARE TRADING PVT LTD,SELL,164827,107.29,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,RAJEEV GUPTA,SELL,131468,106.02,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,SEETARANI AGARWAL,SELL,89969,106.06,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,SUNIL PANDURANG MANTRI,SELL,80272,106.34,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,TRANSGLOBAL SECURITIES LTD.,SELL,263544,107.60,-
04-MAR-2008,TULSI,Tulsi Extrusions Limited,VAJSHAH SHARES & CONSULTANCY P,SELL,46569,105.08,-
Sensex tumbles on global cues
A steep fall in the US equities dealt a severe blow to domestic stocks on Monday, rattled as they already were by the Budget announcements of last week.
The 900.84-point fall of the Sensex on Monday ranked next only to its highest fall ever of 1,408.35 points less than a month ago, on January 21.
(The January fall too, was occasioned by a slide in the global markets in the middle of a huge liquidity crunch in the domestic market following the Reliance Power and Future Capital IPOs.)
The Sensex registered a sharp fall of 5.12 per cent on Monday, dipping below the 17,000-mark to close at 16,677. The Nifty closed below the 5,000-mark at 4,953, losing 5.18 per cent.
On Friday, the US markets had taken a big hit of more than 2.5 per cent; this weakness spread to the Asian markets, which tumbled on Monday. In Japan, the second biggest market in the world, the Nikkei fell 4.49 per cent.
“The Budget proposals have rattled many of the FIIs and arbitrageurs. The farmers’ loan waiver proposal for Rs 60,000 crore without making any provision in the Budget puts a question mark on where the funds will come from,” said Mr Amitabh Chakraborty, President-Equity, Religare Securities.
FIIs net sellers
On Monday, FIIs were net sellers of equities for Rs 711.31 crore as per the combined BSE and NSE data. The domestic institutional investors remained on the sidelines, and were net buyers for a mere Rs 80.47 crore.
Both public and private sector banking stocks were hit badly in Monday’s trade.
“Investors are not convinced how the money will come for the waiver. Once the Government clarifies this, the PSU banks’ scrips may recover,” said Mr S. Muhnot, Managing Director & CEO, IDBI Capital Market Services.
Among the sectoral indices, the BSE Bankex, predictably, lost the most, declining 6.72 per cent. [Punjab National Bank (9.65 per cent), SBI (8.83 per cent), Canara Bank (7.98)].
RUPEE FALL
The rupee fell by 36 paise against the greenback on Monday tracking the weakness in the domestic stock market and dollar demand from nationalised and foreign banks.
The home currency opened at 40.15/16 and ended the day at 40.38, down from the previous close of 40.02.
Foreign exchange dealers said there was a cash-dollar shortage in the spot market which pushed up the demand for dollars.
Post Session Commentary - March 4 2008
Indices closed lower on Tuesday as investors booked profits on account of weak global sentiments. Realty and banking stocks witnessed heavy selling pressure while auto stocks bucked the trend.
The Bombay Stock Exchange’s Sensex ended 315 points or 1.8 per cent down at 16,362.06, recovering from the low of 16,164.57.
The National Stock Exchange’s Nifty finished 82 points or 1.65 per cent lower at 4871.50. The index dropped to a low of 4812.95, intra day.
Tier II and III stocks were the worst hit. BSE Midcap Index ended 2.38 per cent lower at 7,189.87 and BSE Smallcap Index declined 3.07 per cent to 8,954.91.
ACC (down 5.49%), ITC (5.18%), DLF (5.16%), Reliance Communications (4.97%), Cipla (4.56%) and ICICI Bank (4.53%) kept the indices subdued.
On the other hand, Hindalco Industries (up 6.03%), Maruti Suzuki (2.63%), HDFC (2.48%), Grasim Industries (2.02%), Tata Consultancy Services (1.46%), Reliance Energy (1.24%) and Tata Motors (1.23%) posted smart gains.
Market breadth on BSE showed 2182 declines while 514 advances.
Post Market Commentary - March 4 2008
The Indian market closed on a disappointing note backed by heavy selling across the sectoral indices scrips. The market opened on firm note tracking the favoring cues from the global market but was unable to sustained at higher levels and fell few minutes after the start of the session. The market got a boost after the mid session to level its initial session but again fell in the final trading hours as the selling pressures prevailed. The market kept on hovering in the negative territory for most part of the trading session. From the sectoral front, the capital goods, realty, bankex and oil & gas indices remained in the lime light as most selling was from these baskets. The BSE Sensex closed lower by 337.99 at 16,339.89 and NSE Nifty fell by 88.75 points to close at 4,864.25. Following the benchmark indices, the BSE Mid Cap and Small Cap also closed lower by 182.62 points and 285.07 points at 7,182.23 and 8,953.28 respectively.
The Capital Goods index declined 360.35 points to close at 14,822.28. Major losers are L&T (3.61%), Bharat Electrical (3.13%), Praj Industries (2.45%), Punj Lloyd (2.18%), Siemens (1.07%) and BEML (1.51%).
The Realty index closed lower by 486.55 points at 8,467.41 as HDIL (9.97%), Akruti City (9.51%), Penland (7.47%), Anant Raj (7.30%), Ansal infra (5.77%), DLF (5.11%) and Unitech (3.83%) closed lower.
The Bankex index slipped by 377.68 points to close at 9,056.76. Losers are Yes bank (9.97%), Canara bank (6.43%), BOI (5.88%), PNB (5.36%), Union bank (4.66%) and Axis bank (3.32%).
The FMCG index fell by 57.23 points to close at 2,169.41 as United Spr (4.34%), United Breweries (4.30%), ITC (4.22%), Tata Tea (2.22%) and HUL (1.21%) closed in negative.
From the IT index, Mosear Baer (8.99%), Finance Tech (5.23%), Karut Net (4.99%), NIIT (4.94%), Infosys (3.54%) and Satyam (1.31%) closed lower.
Market Close : Subprime crisis Now in India??
It was one more disappointing day for the Indian markets to close on a weak note though it opened in positive terrain. After flat start on back of mixed global cues selling surges into and drives market to trade in deep trade. Selling pressure was seen across the broader markets which led the indices to fall by more than 400 points. The markets remained weak for major parts of the day. Weak global cues and negative cues from banking major have given support to the weak sentiments. Banking stocks have got major hit on the news that ICICI Bank has lost $264 mn till January 31 on subprime crisis but management clarified that they have made loss of $50 mn in this quarter and subsidiaries to take hit of $25 mn. Bank has made provision of $75 mn in total.. Moreover, this news impacted the banking sector as it proved wrong that Indian banks were aloof from the sub prime crisis. Some reasons for caution here prevailed and markets continued to trade weak, though some value buying at the lower levels saw recovery but it didn?t come to rescue. Banking, Power, Realty, Oil & gas and IT took the hit while Metals and Auto gained marginal. Europe is trading in red.
Sensex closed down by 338 points at 16339.89. Weighing on the Sensex were losses in ICICI Bk (971.6,-5 percent), ACC (746,-5 percent), RCVL (514.55,-5 percent), Cipla (201.9,-5 percent) and ITC (184.85,-4 percent). Losses were restricted by gains in Hindalco (199.9,+5 percent), Maruti (905.7,+4 percent), HDFC (2636.6499,+3 percent), Rel Energy (1504.75,+1 percent) and Tata Motors (701.8,+1 percent).
National Aluminium Co. and Hindalco Industries Ltd., India's two biggest aluminum producers raised prices to match the global rates. Earlier Aluminum futures on the London Metal Exchange jumped 29 %t this year after China's worst snowstorms in 50 years caused power outages and forced output cuts at smelters. Indian companies sell products at prices linked to the exchange. On back of this National Aluminium increased its price by 10,000 rupees ($249) a metric ton, or 7.9 percent, to 137,000 rupees from March 1, while Hindalco Industries raised prices by 5,000 rupees a ton. Although, indices were down 2% Hindalco closed 5% up on the bourses.
DLF group is a leading real estate developer in India. DLF traditionally had a strong foothold in the National Capital Region of Delhi but has now increased its presence in other parts of the country. The group has over 224 million sq. ft. of existing development and 748 million sq. ft. of planned projects spread across 32 cities. DLF's core business has three prime divisions: Homes, Offices and Shopping Malls. To these DLF has added three more divisions: Hotels, Infrastructure and SEZs. DLF's land acquisition cost is approximately around Rs 300 per sq.ft. and DLF owns 93% of the land bank as sole owner. This gives DLF a major advantage as it has a robust land bank and that too at a very attractive rate. The value of land has appreciated manifolds in recent times. 80% of DLF's land bank is in Super Metros and Metros. This provides DLF an added advantage as the realization would be on higher side. The company faces a systematic risk but the residual risk is limited. There is a sensitivity to the profit margin of Selling price and development cost and that can have big variation. DLF has other JV partners to cater in development of AMC & Insurance , Power , Hospitals and Airports. Earlier, we had suggested to avoid the stock as the valuations of DLF seemed to be too expensive. DLF closed down by 5%. Do read our note to know more.
Technically Speaking: The technical picture for the market continues to remain weak. Both Sensex and Nifty remained below the 200DMA for the second consequtive day and the markets inability to come above level points to further downside. Reliance the market heavy weight has also closed below its 200DMA for the first time in 3 years. Hence one can expect further downsides for the broad indices. Any bounce back from here is likely to face selling pressure at the former support levels of 5050 on Nifty and 17100 on the Sensex.
Sensex drops 338 points
The slide in the market continued vigorously for the second straight session, with the index erasing nearly 76 points gains made in the early trades and finally tumbling over 2% at close for the second straight session. The related Bombay Stock Exchange (BSE) sectoral indices also bore the brunt and tanked over 2-5% each. However, the mood was extremely bullish in the first hour of the trading session. The Sensex taking a cue from the positive global indices resumed 64 points higher at 16,742 and added another 12 points to touch an intra-day high of 16,754. Exhibiting sharp volatility thereafter, the Sensex eased in late morning trades and continued moving southwards through the afternoon. Frantic selling towards the closing hours saw the index come close to slip below the 16,200 level and touch the day's low of 16,165. The Sensex finally ended with losses of 338 points at 16,339, whereas the Nifty dropped 87 points to close at 4,864.
The breadth of the market was weak with losers outpacing gainers. Of the 2,737 stocks traded on the BSE, 2,198 stocks declined, 497 stocks advanced and 42 stocks ended unchanged. All the sectoral indices were hammered. The BSE Realty index tanked by 5.43% followed by the BSE Bankex index (down 4.00%), the BSE FMCG index (down 2.57%), the BSE Oil & Gas index (down 2.46%) and the BSE Teck index (down 2.42%).
Among the major laggards, ICICI Bank tanked 5.16% at Rs971.60, ACC tumbled 5.11% at Rs746, DLF declined 5.11% at Rs678.15, Reliance Communications plunged 4.96% at Rs514.55, Cipla dropped 4.61% at Rs201.90, ITC crumbled 4.22% at Rs184.85, Larsen & Toubro slumped 3.61% at Rs3,223.15 and Infosys fell by 3.54% at Rs1,419.90. RIL, Bharti Airtel, SBI, Bajaj Auto, HDFC Bank, ONGC, Satyam Computer, Hind Utilities, Wipro, BHEL and Ranbaxy dropped over 0.2% each. While Hindalco gained 5.27% at Rs199.90, Maruti Suzuki moved up 3.59% at Rs905.70, M&M soared 3.08% at Rs705.35 and HDFC advanced 2.54% at Rs2,636.65. REL, Tata Motors, TCS, Ambuja Cement, Tisco, Grasim Industries and NTPC ended with modest gains.
Over 1.96 crore RNRL shares changed hands on the BSE followed by RPL (1.43 crore shares), Essar Oil (1.33 crore shares), IFCI (1.11 crore shares) and Ispat Industries (1.08 crore shares).
Sensex plunges 1485 points in three days on Budget blues
The key indices drifted lower for a third consecutive session hit by Budget blues. Banking and realty stocks were worst hit in today’s trade. Auto stocks bucked the bearish trend. 19 out of 30 stocks from the Sensex pack were in the red. The market breadth was extremely weak.
European markets, which were positive in early trades, turned negative as day proceeded. Asian markets, which opened before Indian market, ended on a mixed note.
The 30-share BSE Sensex lost 337.99 points or 2.03% at 16,339.89. The Sensex lost 513.31 points at the day’s low of 16,164.57, hit in afternoon trade. The index gained 76.18 points at the day’s high of 16,754.06, hit in early trade.
The broader CNX S&P Nifty was down 88.75 points or 1.79% at 4864.25.
As per provisional data, foreign institutional investors (FIIs) sold shares worth a net Rs 512.33 crore today. Domestic funds bought shares worth Rs 170.23 crore.
The Sensex has lost 1484.59 points or 8.32% to current 16,339.89 from its close of 17824.48 on Thursday, 28 February 2008.
Traders, domestic funds and some foreign institutional investors (FIIs) are likely to be hit by a hike in short term capital gains tax on sale of shares to 15% from 10%, which amounts to a massive 50% hike in the tax rate, in Union Budget 2008-09 announced on Friday, 29 February 2008. A fallout of the hike may be that some of traders and funds may pre-pone their sales of equities before the higher short term capital gains tax becomes applicable from 1 April 2008.
The change in tax treatment of the Securities Transaction Tax (STT) in the budget, meanwhile, may impact arbitrage volumes on the bourses. STT will now be treated like any other deductible expenditure against business income for the assesse. This is against the current practice whereby an assesse gets 100% rebate for STT paid against the tax liability for the year. A fall in arbitrage will result in decline in liquidity on the bourses.
The Indian economy is currently witnessing a moderation in growth from a solid growth last year mainly due to sluggish consumption growth. Concerns also remain about possible spike in inflation. Analysts reckon that the finance minister (FM) has targeted these two areas in Union Budget 2008-09, which he unveiled on Friday, 29 February 2008.
FM seeks to revive consumption growth through higher disposable income in the hands of the middle class through remit in personal income tax slabs, which will result in substantial tax saving for individual tax payers. Analysts also reckon that the implementation of the Sixth Pay Commission, which will result in hike in salaries of government employees, will aid consumption growth. The Sixth Pay Commission was constituted in October 2006 to recommend comprehensive changes in salary structure of the government employees.
The measures aimed at inflation control include a major fillip to agricultural and irrigation sector to boost farm production, across the board cut in Cenvat to 14% from 16% and specific excise duty cuts.
BSE clocked a turnover of Rs 5804 crore today compared to Rs 5,106.59 on Monday, 3 March 2008.
Nifty March 2008 futures were at 4852, a discount of 12.25 points as compared to spot closing of 4852.
The NSE's futures & options (F&O) segment turnover was Rs 40644.50 crore, which was higher than Rs 36591.82 crore on Monday, 3 March 2008.
The BSE Mid-Cap index fell 2.48% at 7,182.23, while the BSE Small-Cap fell 3.09% at 8,953.28. Both these indices underperformed the Sensex.
The market breadth was weak: on BSE, 497 advanced as compared to 2198 that declined. 42 stocks remained unchanged.
India's largest private sector bank by assets ICICI Bank fell 5.16% to Rs 971.60, off day’s low of Rs 929.10. The stock dropped on reports that the bank lost $264 million on account of the subprime crisis. However, ICICI Bank's Joint Managing Director Chanda Kochhar clarified in a television interview that ICICI Bank may have to provide for another $50 million of investment losses in this quarter on top of $70 million already provided for in Q3 December 2007. The write off will be due to its investments being marked to market rather than provisioning for a subprime loss as many large international banks have done.
India’s largest private sector firm by market capitalization and oil refiner Reliance Industries (RIL) fell 2.74% to Rs 2241.50, off session's low of Rs 2210.
Top Sensex gainers were, Hindalco Industries (up 5.27% at Rs 199.90), Maruti Suzuki (up 3.59% at Rs 905.70), Mahindra & Mahindra (up 3.08% at Rs 705.35), Housing Development Finance Corporation (HDFC) (up 2.54% at Rs 2636.65), Tata Motors (up 1.25% at Rs 701.80) and Reliance Energy (up 1.29% at Rs 1504.75).
Top Sensex losers were, ACC (down 5.11% at Rs 746), DLF (down 5.11% at Rs 678.15), Reliance Communication (down 4.96% at Rs 514.55), Cipla (down 4.61% at Rs 201.90), ITC (down 4.22% at Rs 184.85) and Larsen & Toubro (down 3.61% at Rs 3223.15).
The BSE Bankex fell 4% at 9,056.76. It underperformed the Sensex. Yes Bank (down 9.97% at Rs 206.45), Canara Bank (down 6.43% at Rs 239.45), Kotak Mahindra Bank (down 5.89% at Rs 685.80), Bank of India (down 5.88% at Rs 309.70), Axis Bank (down 3.32% at Rs 909.10) and State Bank of India (down 2.57% at Rs 1,873.95), declined.
The BSE Realty index fell 5.43% at 8,467.41. It underperformed the Sensex. Housing Development & Infrastructure (down 10% at Rs 724.90), Akruti City (down 9.51% at Rs 990.15), Indiabulls Real Estate (down 7.60% at Rs 550.95), Parsvnath Developers (down 5.26% at Rs 238.60) and Unitech (down 3.83% at Rs 326.50), slipped.
The BSE Metal index rose 0.22% at 15,833.58. It outperformed the Sensex. Sesa Goa (down 3.52% at Rs 3449.80), Gujarat NRE Coke (down 1.94% at Rs 152.20), Tata Steel (down 0.92% at Rs 777.75) and Sterlite Industries (down 0.62% at Rs 788.25), rose.
Among side counters, Lanco Infratech (down 9.12% at Rs 409.15), Moser Baer (down 8.99% at Rs 153.95), India Infoline (down 8.10% at Rs 915.60), Gujarat Petronet (down 7.92% at Rs 62.75) and Jaiprakash Associates (down 7.90% at Rs 244.95), declined sharply.
India's biggest producer of wind-turbine generators by sales Suzlon Energy slumped 4.38% to Rs 241 after UBS Securities Asia cut its share price estimate on the Suzlon stock by 31% to Rs 305 and downgraded the rating to 'neutral' from 'buy', citing higher raw material costs, rising warranty provisions and overall lower volumes.
Software firm Parle Software jumped 4.46% to Rs 536.10 after the company said its board will meet on 10 March 2008 to consider allotment of bonus shares in the ratio of three shares every one existing share.
Essar Oil clocked the highest turnover of Rs 314.90 crore on BSE. Reliance Industries (Rs 280.26 crore), Reliance Natural Resources (Rs 238.13 crore), ICICI Bank (Rs 232.41 crore) and Reliance Petroleum (Rs 229.97 crore), were the other turnover toppers on BSE in that order.
Reliance Natural Resources recorded the highest volume of 1.96 crore shares on BSE. Reliance Petroleum (1.43 crore shares), Essar Oil (1.33 crore shares), IFCI (1.11 crore shares) and Ispat Industries (1.08 crore shares), were the other volume toppers on BSE in that order.
In Europe, key indices in UK, Germany and France were down between 1.01% to 1.53%.
Asian markets were mixed. Key indices in Taiwan, Japan, and South Korea were up between 0.27% to 2.51%. However, key indices in China, Hong Kong, and Singapore were down between 0.78% to 2.32%.
US markets recovered from earlier losses to finish flat in a volatile session on Monday, 3 March 2008. The main factors were weak economic data, big decline in auto sales and concerns about the fallout of housing slump. The Dow Jones industrial average fell 7.49 points, or 0.06%, to 12,258.90. The Standard & Poor's 500 index gained 0.71 points, or 0.05%, to 1,331.34, while the Nasdaq composite index was down 12.88 points, or 0.57%, to 2,258.60.
Back home, the BSE Sensex had tumbled 900.84 points or 5.12% to 16,677.88 registering its second biggest single day point loss on a closing basis on Monday, 3 March 2008. It was also Sensex’s second biggest single day fall in percentage terms. The broader CNX S&P Nifty fell 270.50 points or 5.18% at 4953 on that day.
National Stock Exchange (NSE) said trading in long term options on its main 50-share index, the S&P CNX Nifty began from Monday, 3 March 2008. The long term options contracts are now expected to deepen this market further, the NSE said in a statement issued late on Monday. Before the introduction of these contracts, options had a maximum tenure of 3 months.
The exchange said active trading was observed in the three quarterly expiries of June 2008, September 2008and December 2008. Total traded turnover for Monday in the long term options was Rs 150 crore at 5,223 contracts.
Daily Trading Calls - March 4 2008
Nifty (4953) Sup 4890 Res 5150
Buy Colgate (388) SL 383
Target 396, 399
Buy Punj Tractors (264) SL 259 Target 272, 275
Buy Sesa Goa (3333) SL 3310
Target 3380, 3390
Sell Gitanjali Gems (287) SL 292 Target 279, 276
Sell Hind Oil Exploration (106) SL 110 Target 99, 97
Grey Market - Gammon Infra, V Guard, Rural Electrification
Rural Electrification 105 17 to 20
GSS America InfoTech 400 Discount
V. Guard Ind. 82 7 to 10
Gammon Infra 167 to 200 20 to 22
Morning Call - March 4 2008
Market Grape Wine :
In House :
Nifty at a supp of 4912 and 4862 with resis at 5050 and 5123
Cash: Sell AXIS Bank below 950 with a TGT of 925 and a SL of 956
Sell DLF below 730 with a TGT of 700 and a SL of 735
F&O: Sell Hindoilexp. below 105 with a TGT of 97 and a SL of 108.50
Out House :
Markets at a support of 16556 & 16464 and resistance at 16961 & 17017 levels .
Buy : Tisco and Sail
Buy : RPL & Gail at dips
Buy : Sterlite & JSW
Buy : RIL
Buy : SKumar
Buy : Sbin
Buy : HLL & ITC
Dark Horse : ITC , Aban , SBIN , Sail , Centextile , RPL & PunjLLoyd
Market may remain volatile
The market may witness cautious trend as US indices ended on a flat note yesterday and Asian indices are exhibiting upward trends in morning trades. Although the bias remains positive, investors should maintain caution as profit-taking at higher levels may pull down the market. Among the local indices the Nifty could test 4900 on the downside while on the upper side it may move up to 5000. The Sensex has a likely support at 16457 and may face resistance at 16900.
US indices finished on a flate note on Tuesday. While the Dow Jones ended in negative at 12259 declined by 7 points, the Nasdaq down by 13 points at 2259.
Indian floats trading on the US bourses were traded mixed. Dr Reddy was the lead performer and soared 1.40% while VSNL rose over 0.81% and Tata Motors gained nearly 0.50% each. However, Infosys, Satyam, Patni Computers, ICICI Bank, MTNL and HDFC Bank ended with steady losses.
Crude oil prices inched higher in the US market, with the Nymex light crude oil for April 08 delivery adding 61 cents to close at $102.45 a barrel. In the commodity space, the Comex gold for April 08 series raised $9.20 to settle at $984.20.
Better opening, choppy day in store
Life is tough, and if you have the ability to laugh at it you have the ability to enjoy it.
The bulls surely are neither enjoying the current bearish phase nor are they laughing. In fact, many may be sulking at the prospect of a tough year ahead. We expect the market to witness an improved opening after yesterday's crash. Global cues are supportive in terms of firm Asian markets. However, oil and gold prices continue to make new all-time highs, posing inflationary risks amid clear signs of worldwide economic slowdown. The key indices may turn choppy after a good start owing to global uncertainties and also because of sun outage, which will last through March 18. Be stock specific and do proper homework before taking any buy call(s) and again remember, its time again to plan your time in the market rather than timing the market.
The credit bubble has deflated and the bull market in the US and other advanced equity markets is over. These are the words from the Marc Faber. However, he has some soothing comments for emerging markets such as India and China, saying that these may be less affected by the turmoil in the US and its global ramifications.
Another prominent investor, the legendary Warren Buffet says the US economy is essentially in a recession even if it hasn't met the technical definition of one yet. Buffett said in an interview to a US television network that the reports he gets from the retail businesses his holding company owns show a significant slowdown in purchases. He added that it's not clear how far the impending recession in the US will go.
These are indeed very, very bleak and gloomy predictions. Hence, remain cautious as things aren't going to be as rosy as they have been in the past 4-5 years. Making money will be extremely tough this year, for every category of investors. Adopt a guarded approach even though valuations and stock prices appear to be mouth-watering.
Nestle India and Esab India will declare their latest quarterly results today.
FIIs were net sellers of Rs7.11bn in the cash segment (provisional) on Monday. Local institutions were net buyers of Rs804.7mn on the same day. In the F&O segment, FIIs were net sellers of Rs3.04bn yesterday. On Friday, FIIs were net sellers of Rs2.44bn in the cash segment.
Asian markets are trading mixed, but have done better than yesterday. The Nikkei in Tokyo was up 94 points or 0.7% at 13,086 while the Hang Seng in Hong Kong gained 175 points or 0.75% at 23,760. The Kospi in Seoul added 6 points to 1678 while the Straits Times in Singapore was nearly flat, up 0.2% at 2932.
The Taiex in Taiwan jumped 170 points or 2% to close at 8433 while the Shanghai Composite index in China lost 0.2% at 4427.
Tokyo Electric Power Co. led declines among utilities on concern that rising fuel costs will erode earnings. Toyota dropped after its US sales slipped in February. Mitsui & Co. climbed after oil, gold and copper prices rose to records.
The MSCI Asia Pacific Index lost 0.3% to 142.23 as of 10:35 a.m. in Tokyo, adding to a three-day, 4.6% decline. The benchmark's four-day retreat will be its longest losing streak since a seven-day slide through Dec. 20.
Stock benchmarks also fell in Australia and New Zealand.
US stock indices ended marginally in the red, with the Nasdaq Composite index touching a 16-month low. Investors remained on the sidelines amid record high commodity prices, further weakness in the dollar and fresh bad news on the economy.
Down nearly 100 points earlier in the session, the Dow Jones Industrial Average recovered late in the session to close 7.49 points down, at 12, 258.90. The S&P 500 Index finished flat at 1,331.34, while the tech-heavy Nasdaq shed 13 points, or 0.6%, to 2,258.60, its lowest closing level since Oct. 3, 2006.
All the three major US stock indices were volatile throughout the session.
On the New York Stock Exchange, 949 stocks rose and 930 fell.
Bond insurers were among the worst hit after billionaire investor Warren Buffett said that he had withdrawn his offer to reinsure $800bn in municipal bonds.
Gold and crude oil futures surged to new highs, propelled by sharp weakness in the US dollar. Gold for April delivery hit a record of $992 an ounce. Crude oil for April delivery soared to a record of $103.95 a barrel. Oil gained 61 cents to settle at $102.45.
The euro climbed to a fresh high against the dollar at $1.5272. The dollar fell to 102.59 yen, its lowest level since February 2005, before recovering to 103.30 yen.
The day's economic news did little to soothe fears that the world's biggest economy is in a recession or is in danger of falling into one soon.
The Institute for Supply Management's index of manufacturing activity came in lower than expected. The index, which surveys purchasing managers, dropped to 48.3 from 50.7 in February. Economists were expecting a reading of 49. Any reading below 50 indicates contraction.
Ahead of the ISM report, Philadelphia Federal Reserve President Charles I. Plosser signaled that the central bank is still in favor of lowering interest rates despite concerns about inflation.
Separately, the Commerce Department reported that construction spending fell 1.7% in January, marking its largest drop in 14 years.
Northrop Grumman shares advanced after it was awarded a $35bn contract from the US Air Force over the weekend, dealing a severe blow to rival plane maker Boeing. Shares of Boeing fell nearly 3%.
United Technologies said it has made an offer to buy ATM maker Diebold for $2.63bn. Diebold shares surged 59%. HSBC said that profit rose 21% last year despite significant impairment charges due to the subprime mortgage crisis in the US.
Ford and GM reported February sales that were slightly better than expected, though both said sales declined. Toyota said sales fell 6.3% over last year, much steeper than the 3.5% increase that analysts had predicted.
London shares fell sharply as worries over prospects for a US recession continued to weigh on the banking sector. The FTSE 100 closed down 1.1%, or 65.70 points, to 5,818.60. HSBC managed to outperform on the strength of its full-year financial results.
The pan-European Dow Jones Stoxx 600 index fell 1.4% to 314.46, moving towards a low of 310.96 last seen on Feb. 11. The German DAX 30 lost 0.9% to 6,689.95 and the French CAC-40 fell 1% to 4,742.66.
In the emerging markets, the Bovespa in Brazil climbed 1.6% to 64,490 while the IPC index in Mexico surged 2.1% to 29,526. The RTS index in Russia dropped 1.5% to 2032 and the ISE National-30 index in Turkey shaved off 3.2% to end at 53,693.
Nervousness to continue
Friday’s budget blues continued to haunt the markets as benchmark Sensex posted a deeper cut on the first day of the week. The benchmark Sensex closed below the 17k and the Nifty index closed below the 5k mark on back of weak cues from the international equity markets coupled with the announcement of a hike in short-term capital gains and the withdrawal of the tax rebate on STT. Finally, the 30-share Sensex closed at 16,677 losing 900 points. The NSE Nifty closed at 4,953 slipping 270 points.
Overall about 393 stocks advanced, 2,333 stocks declined while 40 stocks remained unchanged. Among the BSE 30 index only 4 stocks advanced while 26 stocks declined.
Among the 30-scrips of Sensex, RIL, ICICI Bank, HDFC and SBI were among the major laggards. However, Hindustan Unilever, Cipla, Ranbaxy and Maruti were among the major gainers.
ITC India's biggest tobacco company, dropped by over 5% to Rs192 after Finance Minister Palaniappan Chidambaram on Feb. 29 raised the excise tax on non-filter cigarettes to the same level as the filter-tipped variety. The scrip touched an intra-day high of Rs198 and a low of Rs189 and recorded volumes of over 2,00,00,000 shares on NSE.
Jain Irrigation gained by 3% to Rs739 after the company announced that it acquired controlling stake in Swiss based Thomas Machines S.A. The scrip touched an intra-day high of Rs770 and a low of Rs681 and recorded volumes of over 1,00,000 shares on NSE.
TTML edged lower by 0.5% to Rs35. Reports stated that Virgin Group launched its Virgin Mobile brand in India in association with Tata Teleservices. The scrip touched an intra-day high of Rs36 and a low of Rs34 and recorded volumes of over 1,00,00,000 shares on NSE.
Astra Microwave declined by over 5.5% to Rs113. The company announced that it secured order worth Rs216mn. The scrip touched an intra-day high of Rs113 and a low of Rs102 and recorded volumes of over 1,00,000 shares on NSE.
IVRCL Infrastructure dropped by over 7% to Rs436. The company announced that it secured contracts worth Rs4.78bn. The scrip touched an intra-day high of Rs464 and a low of Rs431 and recorded volumes of over 3,0,000 shares on NSE.
Subhash Projects declined by over 9% to Rs371. The company said that it secured orders worth Rs805.4mn for execution of water supply projects from Chennai Metropolitan Water Supply and Sewerage Board. The scrip touched an intra-day high of Rs402 and a low of Rs365 and recorded volumes of over 4,000 shares on NSE.
Aurionpro solutions fell by 3.8% to Rs396. The company said that it entered into an agreement to acquire SENA Systems Inc (SENA). The board unveiled plans to raise up to Rs1.5bn through preferential allotment to Promoters including Promoter Group and strategic investors. The scrip touched an intra-day high of Rs430 and a low of Rs395 and recorded volumes of over 9,000 shares on NSE.
Tata Communications slipped by 4% to Rs491. According to reports, the company would consider to sell a stake in its retail and broadband business to Singapore state investment firm Temasek Holdings. Tata Communications may hold a majority stake in the retail business venture and Temasek could be a financial investor for the said project, the report stated. The scrip touched an intra-day high of Rs511 and a low of Rs488 and recorded volumes of over 2,00,000 shares on NSE.
Venus Remedies dropped by over 5.5% to Rs430. The company announced that it secured India approval to sell Cystis Fibrosis Drug. The scrip touched an intra-day high of Rs448 and a low of Rs430.
TVS Motor shifted to reverse gear, the scrip was down by 2% to Rs42 after the company’s February sales was at 95,235 unit down 21% while, motorcycle sales slipped 33% to 46,565 unit However, the company’s February exports grew 56%. The scrip touched an intra-day high of Rs45 and a low of Rs42 and recorded volumes of over 27,00,000 shares on NSE.
National Aluminum advanced by a percent to Rs467 after media reports stated that the company hiked aluminum prices by Rs10,000 per ton. The scrip touched an intra-day high of Rs475 and a low of Rs430 and recorded volumes of over 5,00,000 shares on NSE.
Nervousness would prolong on D-Street with the Nifty and Sensex index shutting shop below the 200 DMA. However, a dead cat bounce back cannot be ruled out. Cues from the overseas markets would be closely watchedNews Snippets:
Developers of gas fields like RIL, ONGC and Cairn India may not get the seven-year tax holiday under Section 80-IB of the Income Tax Act, 1961. (BS)
The pipeline to evacuate gas from RIL block in the KG basin is set to be commissioned in the next three months. (BS)
Tata Steel has outlined its “vision” for 2012, which entails, among other things, doubling of ROI from around 16% at present to 32%. (BL)
The Government is understood to have granted ONGC’s request for status change for its oil and gas block in Mahanadi basin from a shallow water block to a deepwater block. (BL)
The Government has approved plans by ONGC Videsh (OVL), to invest up to US$458.21mn in oil and gas projects in Venezuela and Qatar. (BL)
A consortium of Adani group, GSPC and Essar Oil, plans to spend Rs100bn to build a LNG regassification terminal at Mundra in Gujarat. (BS)
The user development fee for domestic air travelers will not be collected for now by GMR Hyderabad International Airport Ltd. (BL)
Eicher Motors announced a reduction in the prices of its trucks and buses between Rs5,000 and Rs19,000. (BL)
MRTPC has found Cement Manufacturers Association and nine others including ACC and Grasim Cement, guilty of cartelization in Jabalpur (Madhya Pradesh) during 2000 and 2001. (BL)
JSW Steel will be setting up a 3mn ton cement plant at Salboni in West Bengal. (ET)
Parsvnath Developers is looking to invest between Rs20-25bn for the development of 40 more hotels. (BL)
Sintex Industries is scouting for companies in the composites space and has earmarked US$150mn for the same. (BS)
Bank of India is looking to sell aggregate stressed assets of around Rs2.5bn to an asset recovery company. (BL)
The US subsidiary of TCS has received incentives worth more than US$19mn for setting up base in Cincinnati in the US. (BL)
Power Grid Corporation of India's Chairman and Managing Director, Mr R.P. Singh, has resigned after a ten-year stint at the helm of the power transmission utility. (BL)
Economic Front Page
Commercial banks’ NPAs in the farm sector were just Rs110bn at the end of December 2007. (BS)
Oil companies have begun selling some of their holdings of oil bonds to meet their respective liquidity requirements. (BL)
Exports for January 2008 clocked a growth of 20.47% and cumulative export growth during the first 10 months of the fiscal at 21.62% in dollar terms. (BL)
Sugar output is likely to decline by 15 lakh ton in 2007-08. (ET)
The tea industry is exploring various ways and means to expand its market share abroad with specific focus on Egypt, Pakistan and Iran. (BL)
India’s coffee exports rose by 5.4% yoy to 35,877 tons during Jan-Feb’08. (Mint)
The TRAI has sought comments on raising the foreign investment limit in the broadcasting sector to 100% to permit the Indian subsidiaries of foreign companies to provide broadcasting services. (BS)
Standards for 17 products in steel are to be made mandatory from May 2008. (BL)
Cooking oil prices have surged by ~Rs8 and are expected to rise by another Rs10 per kg on par with global rates. (ET)
Insurance companies will soon be allowed to invest up to 5% of their total investible corpus in venture capital funds investing in infrastructure projects. (BS)
Indian companies with subsidiaries abroad and those planning overseas mergers & acquisitions would not benefit from the dividend distribution tax offset announced in Budget 2008-09. (FE)
Budget 2008-09 has proposed that the service tax rate on the composite works contract scheme be doubled from 2% of the total value of the contract to 4%. (FE)
India and Pakistan on Monday agreed to expedite the process of allowing banks of both countries to open branches in either country. (FE)
The ailing fertiliser industry has expressed serious disappointment over allocation of Rs309.85bn in the annual Budget against the subsidy requirement of a whopping Rs750bn for 2008-09. (FE)
Pre Market Watch - March 4 2008
The Indian Market is likely to have a positive opening, as the cues from the Asian markets are in favor. On Monday, the Indian market closed with heavy losses on the back of heavy selling pressures across the sectoral indices. The market tumbled as the insurer American International Group Inc posted a record loss that led to the worries of more write-downs in the pipeline. The market opened on a sad note tracking the weak cues from the global markets and kept on hovering in the negative territory throughout the trading session. From the sectoral front, all the indices closed in red. The BSE Sensex closed lower by 900.84 at 16,677.88 and NSE Nifty fell by 270.5 points to close at 4,953. We expect that the market may remain range bound during the trading session.
On Monday, the US market was closed marginally lower. The Dow Jones Industrial Average (DJIA) closed lower by 7.49 points at 12,258.90 along with NASDAQ closed down by 12.88 points at 2,258.60 and S&P 500 index closed flat at 1,331.34.
The major stock markets in Asia are trading firm. Hang Seng is trading higher by 198.38 points at 23,783.35 along with Taiwan Weighted trading up by 166.79 points at 8,429.66 and Japan''s Nikkei trading at 13,086.66 up by 94.48 points. Singapore Strait Times trading marginally higher by 4.52 points at 2,931.07.
Indian ADRs ended in negative. Patni Computers fell by (5.28%) along with Infosys (1.82%), Satyam (1.64%). HDFC bank and ICICI Bank dropped by (4.97%) and (3.01%) respectively.
The FIIs on Monday stood as net seller in equity. The gross equity purchased was Rs3,800.90 Crore and the gross debt purchased was Rs0.00 Crore while the gross equity sold stood at Rs4,045 Crore and gross debt sold stood at Rs0.00 Crore.
Therefore, the net investment of equity reported was (Rs244.10) Crore and net debt was (Rs0.00 Crore).Today, Nifty has support at 4,881 and resistance at 5,048 and BSE Sensex has support at 16,432 and resistance at 17,118.
Gold on a roll
Gold touches a record high price of $992 as dollar continues to sink
It was once again a record day for bullion metals today, Monday, 3 March, 2008. Bullion metal prices rose sharply higher today after the dollar slumped sharply against its rival currencies. The dollar has been dampened since last year, more since stat of FY 2008 after interest rates were cut twice in January, 2008. Silver prices also gained substantially today, reaching the highest level in twenty eight years.
Since the past few days, the bullion metal prices have been on a roll after the Federal Reserve Chairman, Ben Bernanke hinted that Fed in all possibility will go for another soft landing in its next meeting thereby reducing interest rates by another 50 bps to avoid the US economy in all ways from slipping into a recession.
This fact has been weakening dollar further. Gold, as a dollar-denominated commodity, suffers from dollar strength. On the contrary, gold prices rise with falling dollar as inflationary concerns boosts the metal's appeal as an inflation hedge.
Comex Gold for April delivery rose $9.2 (0.9%) to close at $984.2 an ounce on the New York Mercantile Exchange. Prices touched a record $992/ounce during intra day trading. This year, gold prices have gained 18% till date. In January, prices gained 11%, the highest monthly gain since April 2006. For February, it gained 6%.
Last week, gold gained $27 (2.8%). Prices increased due to the slumping dollar and overall rise in other commodity prices.
Comex Silver futures for May delivery rose by 26.5 cents (1.3%) to $20.18 an ounce. Silver has gained 30% in 2008. The metal had climbed 16% in FY 2007. The metal also has gained for seven straight years. In January this year itself, prices climbed 14%. In February, it gained another 15%.
The Fed has cut the federal funds rate to 3% this year from 5.25% in mid-September, 2007. January 2008 itself saw two rate cuts in a gap of ten days.
In the energy market today, crude-oil futures rose by 65 cents and closed at more than $102.45/barrel due to the dwindling dollar.
In the currency market today, the dollar bumped to a new record low against the euro and three-year lows against the yen, but the greenback pared its losses after U.S. economic data that came out weren't as bad as expected. The dollar index, which measures the greenback against a basket of six major currencies, was at 73.730, compared with 73.754 in late U.S. trading on last Friday.
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. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.
Gold witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. The Fed reduced federal funds rate three times in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
At the MCX, gold prices for April delivery closed higher by Rs 214 (1.7%) at Rs 12,646 per 10 grams. Prices rose to a high of Rs 12,683 per 10 grams and fell to a low of Rs 12,440 per 10 grams during the day’s trading.
At the MCX, silver prices for March delivery closed Rs 664 (2.7%) higher at Rs 25,575/Kg. Prices opened at Rs 25,389/kg and went to a high of Rs 25,900/Kg during the day’s trading.
US Market ends flat but mixed
Late in the session, Dow recovers most of its early day losses
Taking cues from global equity markets across the world, US Market ended mixed today, Monday, 03 March, 2008 with S&P 500 being the only index to register some gains. But the US Market managed to shelter itself from any huge loss. Economic reports dominated the entire day. They were mixed in nature. But the dollar sunk to a new all time low against the euro today and to a three year low against the yen. Commodities touched an all time high today with both crude oil and goad touching new highs. Eight of the ten economic sectors posted gains today. Financials and technology were the only two sectors to post losses.
After being down by more than 100 points at one time, The Dow Jones industrial Average ended the day with a loss of 7.5 points at 12,258.8. The Nasdaq Composite Index, finished lower by 12.8 points at 2,258.7. S&P 500 finished higher by 0.71 points at 1,331. Fifteen out of thirty Dow stocks ended in the red today led by Boeing and GM.
In economic news, The February Institute of Supply Management Index (ISM), a national manufacturing survey, fell to 48.3, compared to the expected reading of 48. Because the reading is below 50, it reflects a contraction in manufacturing in the United States.
Also, The Commerce Department reported that January construction spending fell 1.7% month over month. This was a larger slide than the expected decline of 0.7%.
The Nasdaq continued to remain under pressure today due to weakness in large cap tech names like Apple, Google, RIMM and Microsoft.
Boeing loses Air Force deal to Northrop Grumman
On the other side, the financial sector was among those hit, with bond insurers lapsing after billionaire Warren Buffett said that he had withdrawn his offer to reinsure $800 billion in municipal bonds guaranteed by MBIA, Ambac etc.
Shares of Boeing were badly hammered today after there were reports that the company lost out to Europe based Northrop Grumman to provide special aerial refueling tankers for the Air Force.
All Indian ADRs ended in the red today. HDFC Bank and MTNL topped the list of the decliners, each shedding more than 5.2%.
Crude prices rose by almost $2 today, during intraday trading and almost kissed the $104/barrel mark but then gave up mart of its gains and closed modestly higher at the end. Prices increased after the dollar fell to new lows against most of its counterparts, and bumped into a new low against euro and a three year low against the yen. Crude-oil futures for light sweet crude for April delivery today closed at $102.45/barrel (higher by $0.61/barrel or 0.6%) on the New York Mercantile Exchange. Prices are 66% higher than a year ago. It touched an intra day high price of $103.9/barrel today.
Volume on the New York Stock Exchange topped 1.5 billion shares, and declining issues outran advancers 8 to 7. On the Nasdaq, 1 billion shares were exchanged, and declining stocks outpaced those advancing by about 9 to 5.
Tomorrow there are economic reports on the dock. But Fed Chairman Ben Bernanke speaking about reducing mortgage foreclosures will garner much added attention.
Market looks weak
The market had a gap-down opening, as expected, following weak US cues. The decline was the second largest in a single session as buying was conspicuous by it’s absence. The traded volumes were marginally lower than the previous session as the retail segment sat on the fence and day traders led the turnover.
The market breadth was negative as the combined exchange figures were 488:3451. The capitalisation of breadth was also negative as the commensurate figures were Rs 1555 crore:Rs 22,225 crore. The indices have closed at the lower end of the intraday range and with absolutely weak market internals.
That the turnover was lower cannot be deemed as a positive sign as the declines can prolong on thinner volumes. The 5220 bullish pivot necessary for the markets to remain firm was not even tested as the bears were in command from the opening bell.
The coming session is likely to witness a range of 5130 on advances and 4775 on declines. As per advanced elliot studies. the phase of declines has kicked off again and the bulls are likely to be at a disadvantage, barring some short covering.
The outlook for the markets on Tuesday is that of abundant caution as the bulls lack the buying conviction and advances are likely to encounter overhead supply from trapped short term longs. Avoid bargain hunting.
Via Business Standard
Today's Pick - Century Textiles
We recommend a sell in Century Textiles & Industries from a short-term perspective. From the charts of this company, we note that it has been on a medium-term downtrend from its 52-week high of Rs 1,275 (marked on January 7). We also see that the price action from late January appears to be a descending triangle pattern that has negative implications since it means that sellers are getting impatient and entering at lower levels.
More recently, the stock penetrated the 200-day moving average and continued to decline. On March 3, the stock tumbled more then 5 per cent breaching the key support at around Rs 770, accompanied with good volume. Moreover, the medium-term down trendline is still in place. The daily as well as the weekly momentum indicators are featuring in the bearish zone. Our short-term outlook for the stock is bearish. We expect the stock to decline further to our target price level of Rs 650 in the impending days. Investors with a short-term perspective can sell (or book profits) the stock while keeping the stop-loss at Rs 832.
FIIs continue selling
Outflow of Rs 244.10 crore on 29 February 2008
Foreign institutional investors (FIIs) sold shares worth net Rs 244.10 crore on Friday, 29 February 2008, compared to their selling of Rs 529.30 crore on Thursday, 28 February 2008.
FII outflow of Rs 244.10 crore on 29 February 2008 was a result of gross purchases Rs 3800.90 crore and gross sales Rs 4045 crore. The 30-share BSE Sensex declined 245.76 points or 1.38% at 17,578.72 on that day.
FII outflow in calendar year 2008 totaled Rs 11,546.60 crore (till 29 February 2008).
There are a total of 1,302 FIIs registered with the Securities & Exchange Board of India (Sebi)Crude settles above $102
Price settles above $102 as dollar slips to a three year low against the yen
Crude prices rose by almost $2 today, Monday, 3 March, 2008 during intraday trading and almost kissed the $104/barrel mark but then gave up mart of its gains and closed modestly higher at the end. Prices increased after the dollar fell to new lows against most of its counterparts, and bumped into a new low against euro and a three year low against the yen.
Crude-oil futures for light sweet crude for April delivery today closed at $102.45/barrel (higher by $0.61/barrel or 0.6%) on the New York Mercantile Exchange. Prices are 66% higher than a year ago. It touched an intra day high price of $103.9/barrel today.
In the currency market today, the dollar bumped to a new record low against the euro and three-year lows against the yen, but the greenback pared its losses after U.S. economic data that came out weren't as bad as expected. The dollar index, which measures the greenback against a basket of six major currencies, was at 73.730, compared with 73.754 in late U.S. trading on last Friday.
The Commerce Department reported today that there was a 1.7% drop in building spending during January. Manufacturing in the U.S. shrank at the fastest pace in almost five years and construction spending fell the most since 1994. Also, the Institute for Supply Management's factory index dropped to 48.3 in February from 50.7 the previous month.
Brent crude oil for April settlement today rose $0.38 (0.4%) to $100.48 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 advances 25% this year
Natural gas declined as some speculators trimmed positions after the fuel surged as much as 3% to more than a two-year high. Gas for April delivery fell 2 cents (0.2%) to settle at $9.346 per million British thermal units. Gas has advanced 25% so far this year.
Against this backdrop, April reformulated gasoline gained slightly to $2.672 a gallon, with April heating oil ahead 3.39 cents at $2.8408 a gallon.
In a monthly report released earlier this month, EIA said the world oil market is poised to ease over the next two years with production increases offsetting moderate growth in oil demand.
Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.
At the MCX, crude oil for March delivery closed at Rs 4,166/barrel, higher by Rs 115 (2.8%) against previous day’s close. Natural gas for March delivery closed at Rs 385.4/mmtbu, higher by Rs 12.6/mmtbu (3.4%).
ITC, Automobiles
TC
Cluster: Apple Green
Recommendation: Buy
Price target: Rs247
Current market price: Rs193
Proposed excise hike to dent cigarette volumes
Key points
- The steep hike in the excise duty on non-filter cigarettes will have a negative impact on non-filter cigarette volumes of the cigarette industry.
- The impact of the excise duty hike will be marginal on ITC, as only 20% of the company's cigarette sales are generated from non-filter cigarettes. The decline in the non-filter cigarette volume will be partially offset by a rise in the filter cigarette volume. We have revised the FY2009 cigarette volume estimates downward from 5% to 2.8%.
- Consequently, we are downgrading the FY2009 earnings per share (EPS) estimate by 0.9% to Rs9.80.
SECTOR UPDATE
Automobiles
Two-wheeler sales continue to decline
Sales of two-wheelers continue to decline due to the prevailing tight financing situation. On the other hand, sales of four-wheelers, mainly cars, saw a marginal growth last month. February is generally a slow month for the automobile sector because sales get postponed in anticipation of a price reduction in the Union Budget. Consequently, sales of Maruti Udyog grew by only 0.4% in the domestic market. With the reduction in the excise duty on two-wheelers and small cars announced in the budget for FY2009 and the reduction in prices announced by the automobile companies, sales of automobiles are expected to revive from March onwards.
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