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Wednesday, March 12, 2008
Post Market Commentary - March 12 2008
The market closed with marginal gains after a strong start to the trading session. The market opened with handsome gains backed by the US Federal Reserve announcement to infuse $200bn into the global financial system to ease the credit crunch and to pump more liquidity into the economy. But the market was unable to sustained at higher levels gave up all its initial gains due to poor industrial production data. The industrial production (IIP) slipped to 5.3% in January 2008 as compared with 11.6% in January 2007, the lowest since October 2006, when it stood at 4.51%. Growth in the manufacturing sector declined to 5.9% in January 2008 as against 12.3% in January 2007.This fall led to the negative sentiments into the market, which in turn results in heavy profit booking across the counters. The market breadth which was strong earlier also turned weak in the final trading hours of the session. From the sectoral front, metal stocks faced heavy selling pressures while realty stocks seemed to attract the investors confidence. The BSE Sensex closed up by 4.83 points at 16,127.98 and NSE Nifty closed higher by 6.1 points at 4,872. The BSE Mid Cap and Small Cap also closed lower by 82.99 points and 27.18 points at 6,909.85 and 8,531.92 respectively.
The Capital Goods index closed up by 40.91 points at 14,101.56. Gainers are Bharat Electricals (3.53%), ABB (2.33%), Punj Lloyd (1.54%), BHEL (1.19%).
The Oil and Gas index advanced by 81.45 points to close at 10,642.09. Major gainers are Cairn India (7.24%), ONGC (2.02%), Reliance Inds (1.26%), RNRL (0.95%).
The Metal index declined by 383.83 points at 15,688.91. Major losers are SAIL (6.45%), Tata Steel (6.42%), Hindalco Inds (5.47%), Jindal Stainless (4.99%).
The Bankex index grew by 67.61 points to close at 8,554.85 as BOI (4.75%), Axis bank (3.56%), ICICI bank (2.98%), Kotak bank (2.81%), HDFC bank (2.69%) closed higher.
From the IT index, Aptech (5.44%), I-Flex (4.38%), Satyam (4.19%), Infosys (3.12%), Niit Techno (2.66%) closed lower.
Profit taking trims Sensex gains
Even as major Asian indices like Nikkei, Hang Seng, Straits Times and Kospi managed to clock 1-2% gains, the Sensex failed to hold on to its early rally and closed way off its highs amid profit taking towards the closing hours. Riding on the back of yesterday's buoyant close and optimism in several international markets, the Sensex resumed 414 points higher at 16,541 and advanced sharply on sustained buying support to scale above 16,600 and touch an intra-day high of 16,683. After remaining above 16,500 for the entire first half, the Sensex came under the grip of profit taking and slipped below 16,100 to touch the day's low of 16,064, 59 points down. The Sensex finally ended the session with marginal gains of 5 points at 16,128, while the Nifty gained 6 points to close at 4,872.
Among the frontliners, Cipla soared 4.26% at Rs204, Grasim Industries rose 3.69% at Rs2,892, Reliance Energy added 3.19% at Rs1,328, ICICI Bank jumped 3.19% at Rs2.98, Bharti Airtel advanced 2.73% at Rs810.65, HDFC Bank gained 2.69% at Rs1,367.80, Ranbaxy moved up 2.44% at Rs464.35 and ONGC soared 2.02% at Rs1,014. However, Tisco dropped 6.42% at Rs766.45 while Hindalco declined 5.47% at Rs191.80 and DLF, SBI, Satyam Computers, Infosys, Tata Motors and Reliance Communications lost 3-4%.
The breadth of the market turned negative. Of the 2,763 stocks traded on the BSE, 1,441 stocks declined, 1,265 stocks advanced and 57 stocks ended unchanged. The BSE Realty Index was the lead performer and rose 1.23% at 8,327.75, while the BSE HC index gained 1.12% at 3,876.52.
Over 6.75 crore RECLTD shares changed hands on the BSE followed by RNRL (2.21 crore shares), ISPAT Industries (1.85 crore shares), RPL (1.21 crore shares) and Nagarjuna Fertilisers (1.03 crore shares).
Valuewise, RECLTD recorded a turnover of Rs825 crore followed by RNRL (Rs268 crore), RPL (Rs207 crore), RIL (Rs198 crore) and GSS America (Rs194 crore).
Indian market underperforms global peers
The market erased almost entire gains in contrast to strong start after disappointing industrial production figures for January 2008 hit the market in early afternoon trade. The US Federal Reserve’s move to inject up to $200 billion of liquidity into strained credit markets triggered rally across Asian and European markets. Indian benchmarks underperformed all their global peers except China’s Shanghai Composite.
16 shares from the 30-member Sensex pack declined. The market breadth was negative. Shares from metal and software slipped while real estate stocks and select private sector banking stocks rose.
The 30-share BSE Sensex was up marginally by 4.83 points or 0.03% at 16,127.98. Sensex lost 59.06 points at day's low of 16,064.09 touched in late trade. Sensex hit a high of 16,683.37 in early trade. At the day’s high, the Sensex gained 560.22 points. The Sensex oscillated in a band of 619.28 points in the day in volatile trade
As per provisional data, FIIs bought shares worth a net Rs 127.94 crore today. Domestic funds sold shares worth a net Rs 528.06 crore.
At current 16,127.98, Sensex trades at a PE multiple of 15.35 to 16.12, based on projected FY 2009 EPS of Rs 1000-to-Rs 1050 for 30 Sensex companies.
The broader based S&P CNX Nifty rose 6.10 points or 0.13% at 4,872. The Nifty March 2008 futures were at 4866, a discount of 6 points over spot closing.
As per data released by the government today afternoon, growth in index of industrial production (IIP) slipped to 5.3% in January 2008 as compared with 11.6% in January 2007, the lowest since October 2006, when it stood at 4.51%. Growth in the manufacturing sector declined to 5.9% in January 2008 as against 12.3% in January 2007.
The next trigger for the market would come from the figures of advance tax payment by corporates for the fourth installment, which falls due on 15 March 2008.
The market breadth which was positive throughout the day, turned negative in late trade as small-cap and mid-cap shares succumbed to selling pressure: on BSE 1,448 shares declined as compared to 1220 that advanced. 59 shares remained unchanged.
The BSE Mid-Cap index was down 1.19% to 6,909.85 and the BSE Small-Cap index was down 0.32% to 8,531.92. Both these indices underperformed the Sensex
The total turnover amounted to Rs 6372 crore as compared to Rs 7,271.80 crore yesterday, 11 March 2008
Turnover in NSE’s futures & options segment amounted to Rs 44632.78 crore as compared to Rs 38176.25 crore yesterday, 11 March 2008
Sectoral indices on BSE displayed mixed trend. The BSE Consumer Durables index (down 1.36% to 4,201.54), the BSE Power (down 0.06% to 3,269.41), the BSE FMCG index (down 1.05% at 2,181.18), the BSE TecK index (down 1.03% to 3,024.31 and the BSE PSU index (down 0.16% to 7,855.28), the BSE IT index (down 2.15% to 3,472.41), the BSE Metal index (down 2.39% to 15,688.91), and the BSE Auto (down 0.42% at 4,649.51), underperformed the Sensex.
The BSE Capital Goods index (up 0.30% at 14,101.56), the BSE Realty index (up 1.23% at 8,327.75), the BSE Oil & Gas index (up 0.77% to 10,642.09), the BSE Health Care index (up 1.12% at 3,876.52), and the BSE Bankex (up 0.80% at 8,554.85), outperformed the Sensex.
Metal shares declined on profit booking. India’s largest private sector aluminium maker in terms of sales, Hindalco Industries lost 6.51% to Rs 189.70 on 15.86 lakh shares. It was the top loser from Sensex pack.
Tata Steel, the country’s largest private sector steel maker in terms of sales, slipped 6.48% to Rs 766. The stock slipped sharply from day’s high of Rs 838 in early trade. The company reported 34.22% rise in consolidated net profit to Rs 1,415.54 crore on 428.61% spurt in total income to Rs 32,096.03 crore in Q3 December 2007 over Q3 December 2006. The results were announced before trading hours today, 12 March 2008.
Jindal Stainless (down 4.99% to Rs 138), Steel Authority of India (down 7.40% to Rs 216), and Jindal Saw (down 1.37% to Rs 790), were the other losers from metal pack.
IT pivotals extended losses in late trade. Infosys (down 3.41% to Rs 1379.90), Satyam Computer Services (down 4.74% to Rs 377.10), Wipro (down 0.22% to Rs 391.50), slipped. However India’s largest software services exporter TCS rose 0.58% to Rs 828
DLF (down 5.49% to Rs 708), Reliance Communications (down 2.29% to Rs 538.80), and Tata Motors (down 2.06% to Rs 745), edged lower from the Sensex pack.
Cipla, the country’s third largest pharma company in terms of net sales, advanced 4.03% to Rs 203.70 on 8.21 lakh shares. It was the top gainer from Sensex pack.
India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries gained 0.58% to Rs 2360.25 on 8.25 lakh shares. The stock came off session's high of Rs 2428.95.
Private sector banks were firm. They had surged in early trade tracking rally in their ADRs on the New York Stock Exchange (NYSE) on Tuesday, 11 March 2008. India's second largest private sector bank in terms of net profit HDFC Bank rose 2.41% to Rs 1364.10 after its ADR surged 13% on the NYSE. ICICI Bank, the country's largest private sector bank in terms of net profit jumped 3.35% to Rs 883 after its ADR jumped 10% on the NYSE. Both these shares saw strong start with HDFC Bank hitting high of Rs 1430 and ICICI Bank striking high of Rs 915.
However India’s largest bank in terms of assets State Bank of India slipped 5.65% to Rs 1783.90.
Reliance Energy (up 2.94% to Rs 1325), Grasim (up 4% to Rs 2901), and Bharti Airtel (up 2.93% to Rs 812.20), rose from the Sensex pack.
Rural Electrification Corporation settled at Rs 121.30 on BSE, a premium of 15.52% compared to IPO price of Rs 105. The stock debuted at Rs 125, a premium of 19.04% over issue price of Rs 105. The stock hit a high of Rs 128.40 and low of Rs 118.85. The counter saw high volumes of 6.75 crore shares on BSE.
Shares of oil marketing companies declined on reports that Indian crude basket crossed $100 a barrel mark for the first time on Monday, 10 March 2008. Hindustan Petroleum Corporation (down 3.75% to Rs 276), Bharat Petroleum Corporation (down 3.46% to Rs 428.25), and Indian Oil Corporation (down 2.91% to Rs 500), slipped
Marico declined 3.22% to Rs 63.20. The company said it is exiting processed foods business by selling its Sil brand to Danish business house, Good Food Group, for an undisclosed sum. Sil us a small brand in Marico's portfolio, with annual revenue of about Rs 8 crore.
Tata Communications rose 4.74% to Rs 505 on reports it is looking to raise $1 billion to partly fund its expansion plans for the next three years. As per reports, the company is in talks with banks to raise $350 million within a month.
KEC International slipped 1.25% to Rs 715. The stock surged to high of Rs 750 after it said it has bagged two contracts worth Rs 46 crore from Madhya Pradesh Power Transmission Company for the supply and construction of a 220 kilovolt double circuit transmission.
Jaiprakash Associates declined 2.89% to Rs 243.700 As per reports, the company’s wholly owned subsidiary Jaiprakash Infratech may raise Rs 1000 crore through private placement to ICICI Venture.
Rural Electrification Corporation was the top traded counter on BSE with turnover of Rs 825 crore followed by Reliance Natural Resources (Rs 268 crore), Reliance Petroleum (Rs 207 crore), Reliance Industries (Rs 198 crore) and GSS America Systems (Rs 194 crore) in that order.
European markets extended early gains today, 12 March 2008. Key benchmark indices from United Kingdom (up 1.64% to 5,783.80), Germany (up 1.56% to 6,626.38) and France (up 2.08% to 4,723.70) advanced.
Asian markets were trading firm today, 12 March 2008. Hong Kong's Hang Seng (up 1.86% at 23,422.76), Japan's Nikkei (up 1.60% at 12,861.13), Taiwan's Taiwan Weighted (up 0.64% at 8,435.36), Singapore's Straits Times (up 2% at 2,917.94) and South Korea's Seoul Composite (up 1.06% at 1,658.83) advanced. However China’s Shanghai Composite index fell 2.30% to 4,070.11
US markets rallied the most in five years on Tuesday, 11 March 2008 after the US Federal Reserve decided to boost liquidity in order to shore up banks battered by mortgage- related losses. The US Federal Reserve announced that along with the European Central Bank and the central banks of Canada and Switzerland, it would loan investment banks money in exchange for debt, including mortgage-backed securities.
The Dow Jones industrial average jumped 416.66 points, or 3.6%, to 12,156.81. The Standard & Poor's 500 index advanced 47.28 points, or 3.7%, to 1,320.65, while the Nasdaq Composite index added 86.42 points, or about 4%, to 2,255.76.
Crude oil eased slightly today, 12 March 2008 after hitting a record of $109.72 yesterday, 11 March 2008 as investors grappled with a boost to the dollar after the US Federal Reserve and other central banks pumped fresh funds into the financial system. U.S. crude for April delivery fell 5 cents to $108.70 a barrel. London Brent crude fell 1% to $105.24.
Market to open higher on global cues
The market open with a spurt tracking strong global cues. US markets surged overnight, 11 March 2008 following surprise move by US Federal Reserve to lend up to $200 billion in treasury securities. Asian markets opened on a strong note today, 12 March 2008.
The Index of Industrial Production (IIP) figures is due today, 12 March 2008.
The next trigger for the market would come from the figures of advance tax payment by corporates for the fourth installment, which falls due on 15 March 2008.
All eyes will be the US Federal Reserve, which meets on 18 March 2008 to review interest rates. A cut in interest rate, as expected by street may provide some support to the markets. Fed Chairman Ben Bernanke had signaled a readiness to cut interest rates again to prevent further damage to the weak US economy, even as he took note of rising inflation risks.
Asian markets were strong today, 12 March 2008. Hong Kong's Hang Seng (up 2.84% at 23,648.71), Japan's Nikkei (up 2.70% at 12,999.84), Taiwan's Taiwan Weighted (up 1.83% at 8,535.10), Singapore's Straits Times (up 2.64% at 2,936.43) and South Korea's Seoul Composite (up 2.14% at 1,676.64) advanced.
US markets rallied the most in five years on Tuesday, 11 March 2008 after the US Federal Reserve decided to boost liquidity in order to shore up banks battered by mortgage- related losses. The US Federal Reserve announced that along with the European Central Bank and the central banks of Canada and Switzerland, it would loan investment banks money in exchange for debt, including mortgage-backed securities.
The Dow Jones industrial average jumped 416.66 points, or 3.6%, to 12,156.81. The Standard & Poor's 500 index advanced 47.28 points, or 3.7%, to 1,320.65, while the Nasdaq Composite index added 86.42 points, or about 4%, to 2,255.76.
Back home, the 30-share BSE Sensex gained 199.43 points or 1.25% at 16,123.15 on Tuesday, 11 March 2008. The broader based S&P CNX Nifty advanced 65.50 points or 1.36% at 4,865.90 on that day.
As per provisional data, foreign institutional investors (FIIs) sold shares worth Rs 539.24 crore on Tuesday, 11 March 2008. Domestic institutional investors (DIIs) were net buyers of shares worth Rs 303.36 crore on that day.
Crude oil eased slightly today, 12 March 2008 after hitting a record of $109.72 yesterday, 11 March 2008 as investors grappled with a boost to the dollar after the U.S. Federal Reserve and other central banks pumped fresh funds into the financial system. U.S. crude for April delivery fell 5 cents to $108.70 a barrel. London Brent crude fell 1 cent to $105.24.
Grey Market Premiums, Discounts
Rural Electrification 105 20 to 25 (LISTING Today)
V. Guard Ind. 82 10 to 15 (Listing Tomorrow)
Gammon Infra 167 to 200 10 to 15
Sita Shree Food Pro. 27 to 30 Discount
Pre Market Watch - March 12 2008
The Indian Market is likely to have a strong positive opening today as the cues from the global markets are in favor as well as due to announcement by US Federal Reserve to lend $200bn into the global financial system of US. On Tuesday, the Indian market closed with handsome gains led by heavy buying across the sectoral indices. Though the market opened on a disappointing note but managed to recover from the initial fall.The BSE Sensex closed higher by 199.43 points at 16,123.15 and NSE Nifty closed up by 65.5 points at 4,865.90. We expect that the market will extend its yesterday''s gains and will see the Bull Run during the trading session.
The U.S. Federal Reserve along with other central banks like European Central bank, Bank of Canada and Swiss National Bank on Tuesday announced that they will pump more liquidity into the global financial system to ease the credit crunch. For this it will lend up to 200 billion U.S. dollars of Treasury securities to cash-strapped financial institutions with term of 28 days instead of overnight under an existing program. The Fed''s latest move was seen as a direct lifeline to investment banks.
On Tuesday, the US market closed in green. The Dow Jones Industrial Average (DJIA) surged 416.66 points to close at 12,156.81 along with S&P closing higher by 47.28 points at 1,320.65 and NASDAQ closed up by 86.42 points at 2,255.76.
Today the major stock markets in Asia are trading firm. Hang Seng is trading higher by 653.36 points at 23,648.71 followed by Japan''s Nikkei trading up by 341.56 points at 12,999.84 and Taiwan Weighted trading at 8,535.10 up by 153.50 points.
The FIIs on Tuesday stood as net seller in equity. The gross equity purchased was Rs4,306.80 Crore while the gross equity sold stood at Rs5,444.40 Crore. Therefore, the net investment of equity reported was Rs1,137.60 Crore.
Today, Nifty has support at 4,840 and resistance at 5,087 and BSE Sensex has support at 16,028 and resistance at 16,989.
US Market goes frenzy in Fed fuelled rally
Dow registers largest percentage gain in almost five years
US Market was in its happiest moods in months today, Tuesday, 11 March, 2008 after Federal Reserve infused some good rally through its comments. The Fed announced its plans to increase liquidity by expanding its securities lending program. Crude oil almost kissed the $110 mark. Nine of the major economic sectors finished in positive territory. Financials posted a huge gain while Healthcare finished as the sole sector in negative territory.
The Dow Jones industrial Average ended the day with a huge gain of 417 points at 12,157. The Nasdaq Composite Index, finished higher by 86 points at 2,256. S&P 500 finished higher by 47 points at 1,320. Twenty-nine out of thirty Dow stocks ended in the green today led by Citigroup. The stock soared by almost 9% today on Federal Reserve’s plans. Other financial stocks like American Express, JP Morgan also posted handsome gains. Boeing was the sole decliner of the day.
The Federal Reserve announced today that it was taking coordinated steps with other central banks to boost liquidity in financial markets. Also, it announced that as per its Term Securities Lending Facility (TSFL), the Fed will lend up to $200 billion of Treasury Securities to primary dealers secured for a term of 28 days, rather than overnight. The borrowers will be able to pledge a variety of collateral ranging from federal agency debt to private AAA rated residential mortgage backed securities.
With this news, the strong rally started in the market since the very start of the day. Financials led the rally throughout the day with gained steam for the whole day. The thrifts and mortgages group saw the steepest rise, as traders bet the ability to use mortgage backed securities stands to benefit the group the most.
The technology sector also modestly outperformed the broader market. This came in the face of lowered earnings guidance from Texas Instruments.
Healthcare sector ended lower today after WellPoint said it expects its full year 2008 income to be much lower than consensus expectation.
All Indian ADRs ended in green today. ICICI Bank and HDFC Bank were the two topmost gainers going up by 12% and 10% respectively.
Crude prices shot up once again today. Prices rose after the dollar remained under pressure after Federal Reserve Chairman said that Fed is making efforts to alleviate increasing strains in financial markets that are curtailing credit available to homeowners and companies. Crude-oil futures for light sweet crude for April delivery today closed at $108.75/barrel (higher by $0.85/barrel or 0.8%) on the New York Mercantile Exchange. They earlier surged to $109.72 a barrel, the highest since trading began in 1983.
Volume on the New York Stock Exchange neared 1.9 billion, and advancing stocks outran those declining 5 to 1. On the Nasdaq, 1.1 billion shares were exchanged, and advancers overtook decliners 3 to 1.
For tomorrow, The weekly inventory report on crude and crude products by EIA is the only economic report due for the day.
Market to open higher
The sharp gains in overnight US indices and strong ongoing asian indices helps domestic market to witness further uptrend on the back of a bullish sentiment. The Nifty could rise further to 4900-4950 level on the upside while it has a crucial support at 4800 on the downside. The Sensex has a likely support at 15960 and resistance at 16230.
US indices registered gains, with the Dow Jones closing above the level at 12157, up 417 points, while the Nasdaq moving up by 86 points to close at 2256.
Indian floats, too, were upbeat on strong domestic and US markets. Except Patni Computers, Dr Reddy and Rediff other Indian ADRs ended at higher levels. HDFC Bank led the upmove and surged 12.64%, VSNL with gain of 11.96% and ICICI Bank moved up 10.19% while Infosys gained 5.32%, Wipro, Satyam, MTNL and Tata Motors gained over 1% each.
Crude oil prices in the international market gained further, with the Nymex crude oil for April delivery advanced by 85 cents to close at $108.75 a barrel and in the commodity segment, the Comex gold gained $4.20 to settle at $976 respectively.
Trading Calls - March 12 2008
Nifty (4866) Supp 4800 Res 5100
Buy RIL (2347) SL 2327
Target 2387, 2400
Buy Rel Cap (1421) SL 1400 Target 1450, 1460
Buy Tata Steel (819) SL 812 Target 831, 835
Buy ACC (810) SL 803
Target 825, 830
Sell Dr Reddy’s (560) SL 565 Target 550, 545
One fine day, thank you Fed!
No one will go to the rescue of a drowning man if his cries are feeble.
The shriek cries of the bulls have been heard by the Fed. So what if some people say the quality of paper the Fed is accepting is ‘garbage.’ The much-talked about emergency Federal Reserve meeting hasn't materialised yet, but the US central bank has managed to bring the bulls back in hordes. The Fed, along with its peers in other developed countries, have decided to lend $200bn to the tense banking system in a bid to bolster liquidity. It's a big psychological boost for the struggling global equity markets and may ease the strain in the grim credit markets. Having said that, one needs to guard against any needless euphoria and be cautious.
Surely, there will be a big rally today in our markets, but one should sell into the advance rather than buy aggressively. Remain careful and follow the global market trend closely. Wait for some more time before you resume the shopping spree. What we need is big bucks from the foreign funds on a sustained basis to restore confidence among investors, especially the small ones. Of late, FII fund flows have been rather erratic, making it tough for anybody to accurately predict their direction. The bulls will be safe only when FII flows turn positive on a regular basis.
Shares of Rural Electrification Corp. (REC) will get listed today. The public sector term lender for rural power projects had fixed the issue price at Rs105 per share. The issue was subscribed by nearly 28 times amid dire times for the primary market. The stock may benefit from the general feel-good and good prospect for the power sector.
FIIs were net sellers of Rs5.39bn (provisional) in the cash segment yesterday while local funds pumped in Rs3.03bn. In the F&O segment, foreign funds were net buyers of Rs6.22bn yesterday. On Monday, FIIs were net sellers to the tune of Rs11.38bn in the cash segment. Mutual funds were net buyers of Rs3.36bn on the same day.
Most Asian markets rallied this morning following the big gains made by their US peers overnight in reaction to the Fed move to unshackle the credit markets. A regional benchmark rose the most in a month, spurred by a global advance.
Commonwealth Bank of Australia climbed by the most in more than six weeks. Toyota and BHP Billiton gained on speculation that the Fed's plan will revive demand in the world's biggest economy.
The MSCI Asia Pacific Index surged 2.7% to 141.55 as of 11:56 a.m. in Tokyo, its biggest gain since Feb. 14. All 10 of the index's industry groups advanced, with more than 10 stocks climbing for each one that declined. Financial stocks, the worst performing group on the index this year, provided the biggest lift today.
The Nikkei in Tokyo was up 2.7% at 12,999 while the Hang Seng surged 2.7% to 23,633. The Kospi in Seoul gained 2.1% to 1677 while the Straits Times in Singapore was up 2.7% at 2939. Shanghai Composite added 0.4% to 4182 and the Taiex in Taiwan rose 1.5% to 8511.
Australia's S&P/ASX 200 Index climbed 3.1%, set for the biggest jump since Feb. 1. All markets open for trading in the region rose.
US stocks bounced back on Tuesday, and how? The Federal Reserve's move, in tandem with other leading central banks, to pump $200bn into the strained banking system lifted the sagging spirits on Wall Street.
The S&P 500 index and the Nasdaq Composite climbed the most in more than five years, and the Dow Jones Industrial Average scored its fourth-biggest point jump ever.
The Dow jumped almost 417 points, or 3.55%, to close at 12,156.81. This was also the biggest one-day point gain for the bluechip benchmark since July 2002. In percentage terms, the gain was the best since March 2003.
The Dow had ended the previous session at a 17-month low.
The broader S&P 500 climbed 47.28 points or 3.7% to shut shop at 1,320.65 after ending the previous session at a 19-month low. It was the biggest one-day percentage gain since May 2002.
The Nasdaq surged 86.42 points, or almost 4% to close at 2,255.76 after ending the previous session at its lowest level in 18 months. It was the biggest one-day percentage gain since March 2003.
The rally, which lost a little bit of steam in the late morning regained momentum in the afternoon, with investors fired up after the Fed said it would loan as much as $200bn in securities in a bid to boost liquidity in the financial system.
The Fed's move prompted a sharp drop in odds of a more than three-quarter point cut to short-term interest rates, according to futures trade on the Chicago Board of Trade.
US light crude oil for April delivery rose 85 cents to settle at $108.75 a barrel in New York. The front-month contract ended the previous session at a record closing high of $107.90.
COMEX gold for April delivery soared $4.20 to $976 an ounce. The dollar touched a fresh record low against the euro and fell versus the yen. Treasury prices slumped, raising the yield on the benchmark 10-year note to 3.59% from 3.45% late on Monday as investors took profits.
Stocks in Europe too rallied on the Fed announcement. The pan-European Dow Jones Stoxx 600 index advanced 1.2% to 307.82, snapping a three-session losing streak. The banking sector rose more than 3%. The UK's FTSE 100 closed up 1.1% at 5,690.40, while the French CAC-40 advanced 1.3% to 4,627.69 and the German DAX 30 rose 1.2% to 6,524.57.
All the emerging markets ended sharply higher. The Bovespa in Brazil surged 3.95% to 62,367 while the IPC index in Mexico jumped 4.5% to 29,466. The RTS index in Russia was up 2.3% at 2058 while the ISE National-30 index in Turkey soared 5% to 53,884.
Bulls hope to build on gains
After being on the receiving end for several trading sessions, markets staged a recovery on Tuesday with the 30-share benchmark Sensex gaining 1.2% ending above the 16k mark. Major laggards were the telecom companies, Bharti Airtel and Tata Communications, Maruti Suzuki and Satyam. The IT sector as a whole was under pressure. The NSE Nifty closed at 4,865 gaining 65 points. Among the 50-stocks of Nifty index, Tata Power, GAIL and Siemens were the top gainers, spurting over 6% each.
Overall about 2,101 stocks advanced, 611 stocks declined while 35 stocks remained unchanged. Among the BSE 30 index 20 stocks advanced while 10 stocks declined. RIL, L&T and DLF were among the major gainers, while; ICICI Bank, HDFC and Bharti were among the major laggards.
BEML rallied by over 5% to Rs1178 as reports stated that it would finalise its German JV to make wagons and other railway components by end-March. The scrip touched an intra-day high of Rs1194 and a low of Rs1097 and recorded volumes of over 18,000 shares on NSE.
GAIL surged by over 7% to Rs421 after the company said that it would spend Rs23bn this financial year. The scrip touched an intra-day high of Rs437 and a low of Rs391 and recorded volumes of over 28,00,000shares on NSE.
L&T surged by over 7% to Rs2916 after the company said that it secured Scada Systems contract from ONGC. The scrip touched an intra-day high of Rs2950 and a low of Rs2650 and recorded volumes of over 14,00,000 shares on NSE.
JSW Steel slipped by a percent to Rs910. According to reports, the company would issue one equity share for every 22 held in Southern Iron and Steel Company for merger of the two companies. The scrip touched an intra-day high of Rs948 and a low of Rs909 and recorded volumes of over 5,00,000 shares on NSE.
Lanco Infratech surged by over 4% to Rs390. The company on Monday announced that it awarded Rs500mn contract to a unit of Punj Lloyd Ltd to build a facility in the southern city of Hyderabad. The scrip touched an intra-day high of Rs404 and a low of Rs352 and recorded volumes of over 19,00,000 shares on NSE.
REL gained by 2% ton Rs1287 after reports stated that 35 lakh shares of REL change hands on BSE at Rs1247. The scrip touched an intra-day high of Rs1308 and a low of Rs1211 and recorded volumes of over 47,00,000 shares on BSE.
After staging a gradual come back on Tuesday, bulls would hope to hang on to their gains. Global scenario also looks a bit supportive with the Asian markets closing on a positive note and the European markets also hanging on to their gains. For tomorrow, markets may carry on the momentum. However, one should not over leverage their positions and be cautious as you never know what can hit you from which part of the world while you are sleeping.
Corporate Front Page
Reliance Entertainment plans to launch 20 television channels. (Mint)
NTPC expected to sign agreement with NHPC, PFC and TCS to form a second electricity exchange in India. (Mint)
GMR Infrastructure has confirmed closure of commercial operations of the Begumpet airport in Hyderabad from March 16. (Mint)
Marico has sold its processed food division, SIL, to Denmark’s Good Food group. (Mint)
Tata Steel’s third quarter profit including that of Corus group stood at Rs14bn. (Mint)
ING Vysya bank seeks to double deposit base and raise customer base over five times in two years. (Mint)
Government says the proposed JV of BHEL and NTPC to be called NTPC-BHEL Power Projects. (BS)
Bajaj Hindustan plans foray into molasses based chemical business. (BS)
Gail plans new arm for city gas supply, to be set up in 2-3 months. (BS)
TCS targets US$2bn revenues from emerging markets by 2011-12. (BS)
Essar group may not pitch for stake in Prize Petroleum. (BL)
Exide Industries to double capacity in two years. (BL)
Nicholas Piramal rechristened Piramal Healthcare. (BL)
ONGC to seek further extension for Bengal offshore drilling. (BL)
Celebrity Fashions enters pact with Jeans Knit for plant sale. (BL)
Bongaigaon Refinery gets shareholders' approval for merger with IOC. (BL)
BSNL repays Rs30bn government loan. (BL)
Satyam in pursuit of Oracle based deals in area of government, civil aviation and financial services. (BL)
United Spirits to increase focus on premium brands; aims at 100mn cases in two years. (BL)
Apollo Tyres’ diversification plans in Kerala hits roadblock. (BL)
Allied Digital to acquire 51% stake in Bangalore-based Digicom for Rs200mn. (ET)
Nicholas Piramal looking for acquisition opportunities in US and Europe to expand its contract manufacturing biz. (ET)
Nicholas Piramal may sell small stake in its research company to private equity funds. (ET)
Rodere Holdings, the Cyprus-based private equity investor, to invest Rs2bn in Orbit Corp. (ET)
Ratnagiri Gas & Power plans to raise funds via IPO. (ET)
Delhi-based realty firm BPTP outbids DLF to bag largest land deal worth Rs50.06bn in Noida. (ET)
PNB plans to sell nearly 26% stake in its subsidiary PNB Housing Finance. (ET)
SBI may raise US$200-500mn in bonds denominated in Malaysia ringgits for international operations. (ET)
Bajaj Auto to change name to Bajaj Holdings and Investments and will exit from benchmark Sensex and Nifty from March 14. (FE)
Centrum, Future Holdings enters in a strategic partnership. (FE)
Tata Chemicals to invest Rs7.5bn in the next three to four years to foray into Ethanol sector. (FE)
Economic Front Page
Banks operating in India had US$3.16tn of derivatives on their books as on December 2007. (Mint)
Unions resort to non-cooperation to protest grounding of old airports. (Mint)
Government mulls lower user fees at new private airports. (BS)
DoT to keep landline, internet services revenue out; while calculating spectrum fee. (ET)
RBI may ban hiring of loan recovery agents by banks. (ET)
Government to act on a proposal to attach securities lying in frozen Demat accounts of investors if PAN not submitted. (ET)
Commerce and Industry minister would provide some relief to sectors hit by rupee appreciation in the forthcoming Foreign Trade Policy (FTP). (FE)
Government may opt for public private partnership model in housing sector. (FE)
Morning Call - March 12 2008
Market Grape Wine :
In House :
Nifty at a resistance at 5050 and 5370 levels.
Cash : Buy REL above 1288 TGT 1390 with S/L 1265
Cash : Buy Infosys above 1429 TGT 1474 with S/L 1406.
Future : Buy Tata communication above 484 TGT 500 with S/L 478
Future : Buy REL above 1290 TGT 1350 with S/L 1270
Reliance , Rel capital TISCO and L & T looks good.
Out House :
Markets at a support of 15786 & 15858 and resistance at 16543 & 16661 levels .
Buy : Tisco and Sail
Buy : RPL & MRPL
Buy : Hindalco & Nalco
Buy : RIL & RelCap
Buy : Sterlite & ITC
Buy : LT & Titan
Buy : IBulls & JPAsso
Dark Horse : RIL , ITC , SBIN , LT , Aban , Sail , Sterlite , Noida & HLL
BSE Bullet : LKPMerc & Coreproject
Today's Pick -Bajaj Hindusthan
We recommend a buy in Bajaj Hindusthan from a short-term perspective. It is evident from the charts of Bajaj Hindusthan, that following a steep fall from Rs 399 to Rs 117 in short period of nine trading sessions (from January 9 to 22), the stock found support and began to move up.
The up-move that followed retraced more than 50 per cent (fibonacci retracement number) of the steep decline recorded in January. The stock’s 13 per cent jump on March 11, from the 200-day moving average adds strength to the uptrend.
The daily momentum indicator of the stock also bounced off from the 40 level and is rising in the neutral region towards the bullish zone. Moving average convergence divergence indicator is likely to enter the positive territory. We are bullish on the stock in the short-term. We expect the stock’s current uptrend to continue further to our target price level of Rs 270 in the short-term. Investors with a short-term perspective can buy the stock while keeping the stop-loss at Rs 214
Via Business Line
Crude on record highs again
Price almost kisses the $110 mark as dollar remains under pressure on Fed comments
Crude prices shot up once again today, Tuesday, 11 March, 2008. Prices rose after the dollar remained under pressure after Federal Reserve Chairman said that Fed is making efforts to alleviate increasing strains in financial markets that are curtailing credit available to homeowners and companies. Energy prices have surged over the past year as the dollar plunged, prompting investors to seek a hedge against inflation.
Crude-oil futures for light sweet crude for April delivery today closed at $108.75/barrel (higher by $0.85/barrel or 0.8%) on the New York Mercantile Exchange. They earlier surged to $109.72 a barrel, the highest since trading began in 1983. Last week, crude prices ended higher by $3.31 (3.3%).
In the currency market today, the dollar gained against the other major currencies, after the Federal Reserve announced it was taking coordinated steps with other central banks to boost liquidity in financial markets. The dollar index, which measures the U.S. currency against a basket of major currencies, gained 0.4%.
Brent crude oil for April settlement today rose $1.09 (1.1%) to $105.25 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.
IEA cuts 2008 global oil demand for a second month
Natural gas declined after touching the highest level in more than two years on speculation crude oil's gains may be finished for now. Gas for April delivery fell 2.4 cents (0.2%) to settle at $10 per million British thermal units.
Against this backdrop, April reformulated gasoline gained 1.12 cents to $2.7261 a gallon, and April heating oil lost 2.23 cents to $2.9957 a gallon.
Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.
The International Energy Agency, cut its forecast for 2008 global oil demand for a second month as record prices curbed consumption in some parts of the world. The agency reduced its forecast by 80,000 barrels a day to 87.54 million barrels a day, leaving annual demand growth at 2%.
OPEC left production targets unchanged on its 5 March meeting at Vienna, giving 12 of its 13 members a combined quota of 29.67 million barrels a day.
At the MCX, crude oil for March delivery closed at Rs 4,350/barrel, higher by Rs 4(0.09%) against previous day’s close. Natural gas for March delivery closed at Rs 401.5/mmtbu, lower by Rs 1.8/mmtbu (0.4%).
Fed offers liquidity support
The US Federal Reserve said today that it was expanding a securities lending programme and will accept a broader range of securities as collateral.
"Under this new Term Securities Lending Facility (TSLF), the Federal Reserve will lend up to $200 billion of treasury securities to primary dealers secured for a term of 28 days...by a pledge of other securities, including federal agency debt, federal agency residential-mortgage-backed securities (MBS), and non-agency AAA/Aaa-rated private-label residential MBS," the Fed said in a statement.
The US central bank said the purpose of its latest action was to "promote liquidity in the financing markets for treasury and other collateral and thus to foster the function of financial markets more generally."
The new lending facility will operate through weekly auctions that will start on March 27, the Fed said.
Following is the release issued by US Federal Reserve
Since the coordinated actions taken in December 2007, the G-10 central banks have continued to work together closely and to consult regularly on liquidity pressures in funding markets. Pressures in some of these markets have recently increased again. We all continue to work together and will take appropriate steps to address those liquidity pressures.
To that end, today the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank are announcing specific measures.
Federal Reserve Actions
The Federal Reserve announced today an expansion of its securities lending program. Under this new Term Securities Lending Facility (TSLF), the Federal Reserve will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days (rather than overnight, as in the existing program) by a pledge of other securities, including federal agency debt, federal agency residential-mortgage-backed securities (MBS), and non-agency AAA/Aaa-rated private-label residential MBS. The TSLF is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally. As is the case with the current securities lending program, securities will be made available through an auction process. Auctions will be held on a weekly basis, beginning on March 27, 2008. The Federal Reserve will consult with primary dealers on technical design features of the TSLF.
In addition, the Federal Open Market Committee has authorized increases in its existing temporary reciprocal currency arrangements (swap lines) with the European Central Bank (ECB) and the Swiss National Bank (SNB). These arrangements will now provide dollars in amounts of up to $30 billion and $6 billion to the ECB and the SNB, respectively, representing increases of $10 billion and $2 billion. The FOMC extended the term of these swap lines through September 30, 2008.
The actions announced today supplement the measures announced by the Federal Reserve on Friday to boost the size of the Term Auction Facility to $100 billion and to undertake a series of term repurchase transactions that will cumulate to $100 billion.
Via Business Standard
Fed boosts the markets
The Dow Jones industrials shot up more than 416 points, the biggest single-day point gain since July 2002, after the Federal Reserve announced the move as part of a worldwide effort to help struggling banks and mortgage providers.
Citigroup Inc. rose $1.42, or 7.2 percent, to $21.11, Washington Mutual Inc. rose $1.72, or 17 percent, to $11.76, and Bank of America Corp. rose $1.33, or 3.8 percent, to $36.64.
Morgan Stanley rose $4.19, or 10.9 percent, to $42.49, Lehman Brothers rose $3.33, or 7.8 percent, to $46.31, and Merrill Lynch rose $2.76, or 6.4 percent, to $45.60.
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