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Tuesday, April 01, 2008
US Markets soar in early trade
US stocks soared Tuesday as investors gained confidence that global banks were coming clean about the full extent of multibillion dollar losses tied to America's housing market downturn.
Wall Street shares gained after Swiss banking giant UBS divulged further hefty losses of 19 billion dollars on mortgage investments tied to subprime US home loans granted to Americans with poor credit.
The Dow Jones Industrial Average rallied 274.55 points (2.24 percent) at 12,537.44 at 1458 GMT after posting modest gains a day earlier.
The other major stock barometers also jumped higher as the tech-laden Nasdaq tech-heavy composite index surged 53.12 points (2.33 percent) to 2,332.22 while the Standard & Poor's 500 index gained 29.74 points (2.25 percent) to 1,352.44.
UBS' writedown of ailing mortgage investments comes after it wrote off 18.4 billion dollars last year, but the Swiss bank said it was moving to raise fresh capital as it ousted its embattled chairman, Marcel Ospel.
The US banking and finance industry is also reeling from the ongoing housing slump which has sparked a related credit crunch.
US investment bank Lehman Brothers said Tuesday it had raised fresh capital of four billion dollars in a special share offering to help bolster its finances which have been squeezed by the credit crunch sweeping Wall Street.
"The significant oversubscription for this deal demonstrates the confidence that investors have in Lehman Brothers," Lehman's chief financial officer, Erin Callan, said of the bank's special share offering.
Bank executives said they had increased the number of special shares offered to four million because of heightened demand from investors seeking to snap up the shares.
Lehman's shares rocketed 10.8 per cent to 41.64 dollars in the wake of its announcement about the special share offering.
"The equity markets continue to be hit almost daily with some new worry over the subprime fallout and its impact on the housing industry and the economy in general," said John Wilson, a co-director of equity strategy at Morgan Keegan.
"The market appears to be looking through the trough, though, if the behavior of the housing and transportation stocks is any indicator," the market analyst said.
Although the housing downtown is showing scant signs of stabilizing and many economists believe the economy has fallen into a recession, some investors are hopeful that the worst may soon be over particularly as the Federal Reserve has slashed interest rates in recent months.
Such rate cuts, under more settled economic times, would be expected to spur economic growth.
Other banking shares also surged as hopes mounted that the industry was beginning to put its mortgage losses behind it.
Post Market Commentary - Apr 1 2008
The Indian market closed on a mixed note on a volatile trading session. Though the market opened on a firm note but unable to sustained at higher levels as the profit booking across the counters prevails. The market gathered the momentum after the mid session on the back of selective buying across the sectoral indices. The volatility gripped the market since the initial bell as some arbitrageurs and jobbers stayed away to protest against the change in securities transaction tax, which came into effect from today. From the sectoral front, the Oil and Gas scrips remained in the limelight as most buying was seen from these baskets.
The BSE Sensex closed lower by 17.82 points at 15,626.62 while NSE Nifty closed marginally higher by 5.05 points at 4,739.55. The Sensex has touched an intra day high of 15,834.05 and low of 15,297.96. The BSE Mid Caps and Small Caps also closed lower by 32.72 points at 6,395.10 while BSE Small Cap closed higher by 20.14 points at 7,861.76.
The market breadth was strong as 1,728 stocks closed in green as against 920 stocks that closed in red.
The Oil and Gas index closed up by 336.90 points at 10,353.72. Major gainers are RPL (6.94%), Essar Oil (6.17%), Reliance industries (3.56%), BPCL (3.38%), Cairn India (1.83%), RNRL (1.65%) and IOCL (1.20%).
From the FMCG space, HUL (4.31%), ITC (2.33%), Marico (2.23%), Glaxosmith Cons (1.57%), Tata Tea (0.79%) and Rei Agro (0.73%) closed in green.
The Capital Goods index declined by 449.09 points to close at 13,559.93. Major losers are Bhel (8.01%), Crompton Greaves (7.72%), Kalpataru Power (4.49%), L&T (4.30%), Thermax (2.60%), Praj Inds (1.73%) and Siemens (1.12%).
The BSE Realty index fell by 88.32 points to close at 7,466.48 as DLF (3.02%), MahindraLife (1.62%), Purvankara (1.58%), Phoenix mill (0.97%), Unitech (0.38%) and HDIL (0.89%).
The Metal index closed lower by 208.80 points at 13,813.76. Losers are Sesa Goa (6.60%), SAIL (5.55%), Tata Steel (3.71%), Jindal Steel (2.89%), Welspun Gujarat (2.54%), Jindal saw (1.41%).
The Bankex index dropped by 74.06 points to close at 7,643.55 as Axis bank (7.69%), Canara bank (3.13%), IOB (3.14%), Yes bank (2.76%), PNB (1.93%), ICICI bank (1.76%) and Federal bank (1.43%) closed in negative.
The IT index closed marginally lower by 7.02 points at 3,540.59 as Educomp Solutions (5.28%), Aptech (3.42%), Wipro (3.83%) and Mphasis (2.55%) closed lower while Patni Comp (5.05%), Karut Net (4.92%), Niit Techno (4.31%) and TCS (2.95%) closed higher.
Market settles slightly lower in choppy trade; turnover drops
As some arbitrageurs and jobbers stayed away from the market to protest change in tax treatment of the Securities Transaction Tax (STT) that came into force from today, low volumes saw share prices swing wildly on the first day of the new financial year FY 2009 (year ending March 2009). After opening on a firm note, market lost ground by early afternoon trade only to recover in mid-afternoon, led by recovery in index heavyweights Reliance Industries (RIL) and ICICI Bank. The market breadth was strong. 16 shares from the 30-member Sensex pack advanced.
European markets, which opened after Indian market extended gains after Swiss bank UBS AG unveiled a fresh attempt to reverse its fortunes and its writedowns came in along expected lines. UBS posted $19 billion in additional writedowns and said it was hiving off ailing portions of the bank into a separate unit. Asian markets, which opened before Indian market were mixed. US markets ended higher yesterday, 31 March 2008.
The 30-share BSE Sensex was down 17.82 points or 0.11% at 15,626.62. Sensex lost 342.59 points at day’s low of 15,301.85 touched in early afternoon trade. Sensex rose 189.61 points at day’s high of 15,834.05 hit in early trade. Sensex oscillated in a band of 532.20 points in volatile trade.
The broader based S&P CNX Nifty rose 5.05 points or 0.11% at 4,739.55. Nifty April 2008 futures were at 4775, a premium of 35.45 points as compared to spot closing
As per provisional data, foreign funds sold shares worth a net Rs 638.86 crore today. Domestic funds sold shares worth a net Rs 289.56 crore.
The market breadth was strong: On BSE 1,722 shares advanced as compared to 924 that declined. 51 shares remained unchanged.
The BSE Mid-Cap index was down 0.50% to 6,395.42 and the BSE Small-Cap index rose 0.31% to 7,865.90, as per provisional closing.
The total turnover slipped to Rs 4697 crore on BSE, as compared to Rs 5,941.63 crore yesterday, 31 March 2008, due to fall in arbitrage activity.
Total turnover in NSE’s futures & options segment amounted to Rs 47200.87 crore as compared to Rs 49087.03 crore yesterday, 31 March 2008.
The change in tax treatment of securities transaction tax (STT) is seen raising cost for arbitrageurs, which in turn may result in fall in arbitrage volumes. STT will now be treated like any other deductible expenditure against business income of the assesses. This is against the earlier practice of 100% rebate for STT paid against the tax liability for the year.
Most Sectoral indices on BSE slipped. The BSE Consumer Durables index (up 0.10% to 3,887.15), the BSE FMCG index (up 2.06% at 2,337.27), and the BSE Oil & Gas index (up 3.36% to 10,353.72), outperformed the Sensex
However, the BSE IT index (down 0.20% to 3,540.59), the BSE Auto (down 1.22% at 4,469.60), the BSE Bankex (down 0.96% at 7,643.55), the BSE Realty index (down 1.17% at 7,466.48), the BSE Health Care index (down 0.44% at 3,831.32), the BSE TecK index (down 0.24% to 3,016.77), the BSE Power (down 1.16% to 3,152.66), the BSE Capital Goods index (down 3.21% at 13,559.93), the BSE Metal index (down 1.49% to 13,813.76), and the BSE PSU index (down 0.42% to 7,395.52), slipped.
India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries advanced 2.97% to Rs 2331.80 on 10.48 lakh shares. The stock moved in a range of Rs 2245.50 and Rs 2375 during the day.
India’s largest FMCG company in terms of net sales. Hindustan Unilever jumped 4.39% to Rs 238.75 on 2.49 lakh shares. It was the top gainer from Sensex pack.
Reliance Energy, the country’s largest private sector power utility company in terms of net profit surged 3.11% to Rs 1290. The stock surged the most in Sensex pack, by 152%, in the financial year ended 31 March 2008. The company has bought back 9.51 lakh equity shares aggregating Rs 122.40 crore since the start of the buyback offer on Tuesday, 25 March 2008,
India’s largest software services exporter TCS advanced 3.16% to Rs 836.50 after it said on Monday, 31 March 2008, it had signed a five-year, multi-million dollar contract with auto components maker ArvinMeritor Inc. Financial details of the deal were not disclosed. The stock was the worst performer from Sensex pack, in the financial year ended 31 March 2008, declining 34%.
However other IT pivotals, Wirpo (down 3.60% to Rs 410), and Infosys (down 0.71% to Rs 1420), declined
North India’s largest cement maker by sales Ambuja Cements rose 0.29% to Rs 121.40 after it announced 16% rise in cement shipments to 1.72 million tonnes in March 2008 over March 2007.
ITC (up 2.25% to Rs 211), and Reliance Communications (up 2.90% to Rs 523.05), edged higher from Sensex pack.
Shares from capital goods witnessed a sell-off. Bharat Heavy Electricals, the country’s largest state run engineering company in terms of order book position, was down 8% to Rs 1892. It was the top loser from Sensex pack. On Monday, 31 March 2008, the company secured Rs 550-crore export order for supply of boilers from Koniambo Nickel SAS, an overseas joint venture of Switzerland-based mining group Xstrata PLC and a local company in New Caledonian.
Larsen & Toubro, the country’s largest private sector engineering company in terms of order book position, lost 4.80% to Rs 2880, after hitting low of Rs 2845. On Monday, 31 March 2008, the company bagged Rs 576 crore order from Hindustan Petroleum Corporation for 2 lakh tonne per annum lube oil base stock plant consisting of raffinate hydrotreating unit, mobil selective dewaxing unit and hydro finishing unit.
Tata Steel (down 3.77% to Rs 667), DLF (down 3.60% to Rs 623.20), and Mahindra & Mahindra (down 6.44% to Rs 650.85), slipped from Sensex pack.
Banking shares staged sharp recovery from lower levels. ICICI Bank (down 1.83% to Rs 756, after hitting a low of Rs 732) and HDFC Bank (down 1.13% to Rs 1305.10, after touching a low of Rs 1271), though down were well off their lower levels. India’s largest bank in terms of market capitalisation State Bank of India rose 1.45% to Rs 1622.
India’s largest car maker by sales Maruti Suzuki India declined 1.51% to Rs 817 after its sales declined 2% to 70,296 vehicles in March 2008 over March 2007. Maruti domestic sales remained flat at 64,421 units in March 2008 over March 2007. Its exports fell 19 %to 5,875 units in March 2008 over March 2007.
GSS America Systems was the top traded counter on BSE with turnover of Rs 468.38 crore. The stock saw high volatility today, swinging in a range of Rs 740.60 and Rs 865.
Reliance Capital (Rs 300.67 crore), Reliance Industries (Rs 243 crore), and Reliance Petroleum (Rs 211.09 crore), were the other turnover toppers on BSE in that order.
Unitech was the fifth top traded counter on BSE with turnover of Rs 157.32 crore boosted by a block deal of 40.09 lakh shares struck on the counter on BSE at Rs 277.90 per share at 10:16 IST. The stock fell 1% to Rs 273.40 on high volumes of 56.80 lakh shares.
Reliance Petroleum topped volumes charts on BSE clocking volumes of 1.30 crore shares followed by Reliance Natural Resources (1.22 crore shares), Ispat Industries (89.42 lakh shares), Bellary Steel (89.54 lakh shares), and Essar Oil (69.54 lakh shares), in that order
Among the side counters, Atul Auto (up 20% to Rs 62.45), Rajvir Industries (up 19.97% to Rs 137.90), Technocraft Industries (up 19.96% to Rs 62.50), and Indowind Energy (up 19.94% to Rs 81.80), surged.
However Bosch Chasiss Systems (down 10% to Rs 621.90), Setco Automotive (down 13.06% to Rs 169.10), and Panama Petrochemicals (down 9.92% to Rs 124), slipped
Reliance Petroleum surged 6.75% to Rs 166.80 after the company said it has executed a facility agreement to raise $500 million for the refinery project at Jamnagar, Gujarat.
Punj Lloyd slipped 0.53% to Rs 905.60 despite winning an order worth $68 million from Tecnimont S.p.A, Italy for borouge 2 polyolefins project of Abu Dhabi Polymers Company, UAE. The company made this announcement during trading hours on Monday, 31 March 2008.
Dr Reddy's Laboratories gained 1.02% to Rs 597 on entering into a definitive agreement with The Dow Chemical Company to acquire Dowpharma Small Molecules business associated with its United Kingdom sites in Mirfield & Cambridge.
Hero Honda Motors rose 1.59% to Rs 701.20 after the company said on Monday its sales rose 15% to 3.20 lakh units in March 2008 over March 2007. For the fiscal year to 31 March 2008, Hero Honda sold a total of 33.4 lakh motorcycles and scooters, almost the same as in the previous year. The sales, helped by new model launches, increased Hero Honda's marketshare in motorcycles to 52%, Managing Director Pawan Munjal said in a statement.
Power Grid Corporation of India gained 0.10% to Rs 98.05 after the company said on Monday, 31 March 2008 it has raised close to $1 billion via loans from Asian Development Bank and The World Bank.
Pratibha Industries declined 2.758% to Rs 320.05 despite bagging an order worth Rs 37.03 crore from Sunshine Housing Development for construction of a commercial building Sunshine Towers at Dadar in Mumbai.
The market sentiment remains edgy as Indian companies are sitting on huge losses on account of the forex derivative transactions they undertook last year. A steep decline in the value of the US dollar against the Japanese Yen and the Swiss Franc has hit Indian corporates which have used these two currencies (Yen and Franc) extensively to swap their rupee denominated debt.
The sharp rise in inflation has also been a cause of concern. Inflation has now risen above the Reserve Bank of India’s caution limit of 5%. India's wholesale price index surged to 13-month to 6.68% in the 12 months to 15 March 2008, surging from the previous week's rise of 5.92%, government data showed on Friday, 28 March 2008.
Finance minister P Chidambaram yesterday, 31 March 2008 announced a slew of measures, in an attempt to rein in commodity prices. The measures include a total ban on non-basmati rice exports, a reduction in import duty on edible oils, allowing states to impose stock limits with traders, and also warning the steel lobby to hold the priceline.
Meanwhile the Reserve Bank of India’s governor in a statement on the same day said that he was ready to tackle unacceptably high inflation, underscoring the seriousness across government quarters on tackling the issue.
European markets were trading higher. Key benchmark indices in United Kingdom (up 0.92% to 5,754.40), France (up 1.40% to 4,773.18) and Germany (up 1.45% to 4,766.24) rose.
Asian markets were trading mixed today, 1 April 2008. Hang Seng (up 1.26% at 23,137.36), Japan's Nikkei (up 1.04% at 12,656.62), and Singapore's Straits Times (up 1.30% at 3,046.54), rose. However, China’s Shanghai Composite index (down 4.13% to 3,329.12), South Korea's Seoul Composite (down 0.10% to 1,702.35) and Taiwan's Taiwan Weighted index (down 1.78% at 8,419.72), declined
US markets ended higher yesterday, 31 March 2008, after a plan for regulatory overhaul raised hopes for calmer financial markets. The Dow Jones industrial average added 46.49 points, or 0.38%, to 12,262.89. The S&P 500 index rose 7.48 points, or 0.57%, to 1,322.70, and the Nasdaq Composite index gained 17.92 points, or 0.79%, to 2,279.10.
Meanwhile, the current account deficit in India’s balance of payments (BoP) has widened despite higher growth in income from software services and a strong growth in remittances by the Indian diaspora. The current account deficit which is derived from cross-border transactions of goods and services, widened to $5.4 billion during the quarter ended December 2007 on account of a bloated import bill caused by higher oil prices and industrial offtake
Grey Market Premiums - April 1 2008
Gammon Infra 167 Discount
Sita Shree Food Products 30 3 to 5
Titagarh Wagons Ltd. 540 to 610 10 to 15
Kiri Dyes & Chemicals 125 to 150 8 to 10
Markets may open higher
Local market may open higher led by positive global cues. Marketmen are keenly awaiting Q4 and full year March 2008 results from Indian corporates. Robust corporate advance tax payments in Q4 March 2008 indicate that corporate profit growth will be strong in the quarter. Advance tax figures showed banks, hospitality and software firms are doing better than sectors like automobiles and cement.
However, the sharp rise in inflation has been a cause of concern, which has now risen above the Reserve Bank of India’s caution limit of 5%. India's wholesale price index surged to 13-month to 6.68% in the 12 months to 15 March 2008, surging from the previous week's rise of 5.92%, government data showed on Friday, 28 March 2008.
Asian markets were trading mixed today, 1 April 2008. Hang Seng (up 1.21% at 23,124.70), Japan's Nikkei (up 1.75% at 12,744.87), Singapore's Straits Times (up 0.76% at 3,030.25) and South Korea's Seoul Composite (up 0.36% to 1,710.08) rose. Shanghai Composite (down 2.96% to 3,369.99), and Taiwan's Taiwan Weighted (down 0.47% at 8,532.01), declined
US markets ended higher yesterday, 31 March 2008, after a plan for regulatory overhaul raised hopes for calmer financial markets. The Dow Jones industrial average added 46.49 points, or 0.38%, to 12,262.89. The S&P 500 index rose 7.48 points, or 0.57%, to 1,322.70, and the Nasdaq Composite index gained 17.92 points, or 0.79%, to 2,279.10.
Back home, the 30-share BSE Sensex plunged 726.85 points or 4.44% at 15,644.44 on Monday, 31 March 2008, following reports of change in accounting norms, requiring Indian companies to disclose losses arising out of derivative contracts. The broader based S&P CNX Nifty plunged 207.50 points or 4.20% at 4,734.50 on that day. The Sensex gained 2572.34 points or 19.67% in the financial year 2008, from its close of 13072.10 on 30 March 2007 while Nifty rose 912.95 points or 23.88% from its close of 3821.55 on 30 March 2007, during the same period.
As per provisional data, foreign funds sold shares worth a net Rs 865.79 crore yesterday, 31 March 2008. Domestic funds bought shares worth a net Rs 566.03 crore on that day.
FIIs were net sellers of Rs 1,662.41 crore in the futures & options segment on Monday, 31 March 2008. They were net sellers of index futures to the tune of Rs 1,472.69 crore and sold index options worth Rs 13.70 crore. They were net sellers of stock futures to the tune of Rs 186.15 crore and bought stock options worth Rs 10.13 crore.
Meanwhile, the current account deficit in India’s balance of payments (BoP) has widened despite higher growth in income from software services and a strong growth in remittances by the Indian diaspora. The current account deficit which is derived from cross-border transactions of goods and services, widened to $5.4 billion during the quarter ended December 2007 on account of a bloated import bill caused by higher oil prices and industrial offtake.
Pre Market Watch - Apr 1 2008
The Indian Market is likely to have a positive opening today due to favoring cues from the global markets. On Monday, the domestic market closed on a deep red territory on the back of weak cues from the global markets as well as the announcement of a new accounting norm for companies. The market opened on a sad note and kept on hovering in the negative territory throughout the trading session. The report by the Institute of Chartered Accountants of India (ICAI) cited that the companies have to disclose lsosses on a mark-to-market basis incurred due to derivatives trades from the current financial year onwards (year ending March 2008) and this was as a precursor to making a new accounting standard mandatory from April 2011. This led to the negative sentiments among the investors in the market. From, the sectoral front, all the sectoral indices closed in red. The BSE Sensex closed lower by 726.85 points at 15,644.44 and NSE Nifty fell by 207.5 points at 4,734.50. We expect that the market may gain some ground during the trading session.
On Monday, the US market closed in green. The Dow Jones Industrial Average (DJIA) closed higher by 46.49 points at 12,262.89 along with S&P 500 (SPX) index closed up by 7.48 points at 1,322.70 and NASDAQ Composite (RIXF) grew by 17.92 points to close at 2,279.10.
The Indian ADRS closed mixed. In technology sector, Patni Computers grew by (1.60%) along with Wipro by (1.59%) while Infosys and Satyam fell by (1.46%) and (1.35%) respectively. In banking sector, ICICI bank and HDFC bank dropped by (3.51%) and (3.09%) respectively. In telecommunication sector, Tata Communication decreased by (6.37%). Tata Motors inched up by (1.08%).
Today the major stock markets in Asia are trading firm. Hang Seng is trading higher by 378.92 points at 23,228.12 along with Japan’s Nikkei trading up by 172.45 points at 12,697.99 and Singapore Strait Times trading at 3,032.46 up by 25.10 points.
The FIIs on Monday stood as net seller both in equity as well as in debt. The gross equity purchased was Rs3,235.90 Crore and the gross debt purchased was Rs0.00 Crore while the gross equity sold stood at Rs3,350.10 Crore and gross debt sold stood at Rs30.70 Crore. Therefore, the net investment of equity reported was (Rs114.30 Crore) and net debt was (Rs30.70 Crore).
Today, Nifty has support at 4,653 and resistance at 4,856 and BSE Sensex has support at 15,406 and resistance at 16,095.
Market likely to remain volatile
Uncertainty in the market is likely to prevail after the Sensex dropped over 700 points in the yesterday's trading session. Despite global crude and gold prices taking a sharp dip and FII inflows remaining firm, the Sensex came under the grip of relentless selling pressure and faltered on Monday. However, overnight rise in the US markets and positive opening in Asian indices in morning trades may help the local indices bounce back as the trading progresses.
US indices notched up significant gains on Wednesday with Dow Jones moving up by 46 points at 12263 and the Nasdaq gained 18 points to close at 2279.
Majority of the Indian floats ended in the red. VSNL was the biggest losses and lost over 6% followed by ICICI Bank & HDFC Bank were down 3%. Infosys, Satyam, Dr Reddy, Rediff and Tata Motors were down 1% each while MTNL, ended with steady losses. However, Patni Computer moved up over 1.60%. Wipro gained over 1.59%.
Crude oil prices dropped sharply in the US market with the Nymex light crude oil for May 08 delivery was down by $4.04 at $101.58 a barrel. In the commodity space, the Comex gold for june 08 series tanked $15 to settle at $921.50 a troy ounce.
Financial sector helps US Market end higher
Indices post the worst first quarter loss in almost six years
Financial stocks helped US Market end higher today, Monday, 31 March, 2008, the last trading day of March and the first quarter of FY 2008. Some restructuring efforts on Citigroup’s front helped market get some fresh lease of air today. Eight out of ten sectors ended in the green today. Healthcare and Materials were the only two economic sectors to finish in negative territory.
But even with today’s gain, indices finished in the red for the fifth consecutive month, the longest streak for US Market in past eighteen years. The first quarter marked the worst quarter in almost six years.
For the day, The Dow Jones industrial Average ended with a gain of 46.5 points at 12,262.89. The Nasdaq Composite Index, finished higher by 17.9 points at 2,279. S&P 500 finished higher by 15 points at 1,325.
Twenty-five out of thirty Dow stocks ended in the green today. Citigroup along with other financial Dow components led the team of Dow winners. Merck was one of the major Dow laggard.
Market opened today in a positive mood and posted modest gains throughout the day. Financial sector was in most cheer today after Treasury Secretary Henry Paulson outlined his proposal to revamp financial regulation by streamlining current bureaucracy. As per reports, the Federal Reserve would have increased power, and several regulatory agencies would be combined.
Among other major economic report of the day, the Chicago Purchasing Managers Index, was reported to have climbed to 48.2 in March from 44.5, and was better than expected.
Healthcare was one of the two sectors that posted loss today after shares of Merck and Schering-Plough were down the most ever on news that their popular cholesterol fighting drugs may not be effective. According to reports, a panel of cardiologists said the two drugs - Vytorin and Zetia, should only be used as a last resort.
All Indian ADRs ended in red today. VSNL was the largest loser dropping 6.4%.
In the currency market today, the dollar traded mostly higher against other major currencies, with the dollar index gaining 0.2% at 71.74. Among major economic data today, business activity in the Chicago region continued to contract in March, but the contraction was less severe than in February.
Crude prices fell substantially today as tensions eased in Iraq and dollar rebounded against its rivals. Prices also softened on signs that a U.S. report will show inventories rose for the 11th time in 12 weeks as demand weakened.
Crude-oil futures for light sweet crude for May delivery closed at $101.48/barrel (lower by $4.04/barrel or 3.8%) on the New York Mercantile Exchange. Prices earlier rose by $1.16 during intraday trading. Crude prices are 54% higher on a yearly basis. For the year, crude is up by 5.8% till date. It touched a high of $111.8 on 17 March, 2008 but has slipped thereafter. For March, it closed almost stagnant, lower by a mere 26 cents on a m-o-m basis.
Volume on the New York Stock Exchange neared 4.1 billion shares, and advancing stocks outpaced those declining 5 to 3. On the Nasdaq, more than 1.7 billion shares were exchanged, and advancers edged ahead of decliners, 4 to 3.
For tomorrow, a number of economic reports are expected. March's ISM Manufacturing Index is due shortly after tomorrow's opening bell which offers a reading of production, new orders, and inventories, providing market participants with an advanced glimpse into manufacturing's contribution to first quarter growth. It will be followed by February's construction spending figures.
Trading Calls - Apr 1 2008
Nifty (4735) Supp 4600 Res 4900
Buy Voltas (179) SL 173
Target 189, 192
Buy Cairn (224) SL 218
Target 234, 238
Buy Lanco Infra (388) SL 383 Target 398, 403
Sell Essar Oil (204) SL 207
Target 194, 190
Sell RCOM (508) SL 513
Target 495, 490
Worries inflate, but a better day!
Inflation is bringing us true democracy. For the first time in history, luxuries and necessities are selling at the same price – (Robert Owen).
The Government has expectedly unleashed a slew of measures to reign in spiraling prices of key commodities. There could be more steps in the pipeline given the political compulsions and high global commodity prices. RBI Governor Y.V. Reddy too has expressed his willingness to join the fight against inflation. Most experts expect a CRR hike at the month-end annual policy meeting. But more on that later…
We expect a better opening and an improved finish compared to yesterday's sudden sell-off. Auto companies may be in focus as they report monthly sales numbers. IT shares may remain under pressure if the rupee appreciates further against the dollar. Banking shares may also fall amid expectations of further tightening in monetary policy.
Hero Honda has come out with good March sales figures, but its doubtful if the stock can sustain at higher levels. Cairn India is another stock that one could buy for the short-as well as long-term. Dabur Pharma could see some action amid news that a German firm is eyeing a majority stake in the company. Airline companies may also attract some attention amid expectations that they may announce higher surcharge on tickets with a 14% spike in ATF prices. A hike in STT comes into effect from today. That negative is already factored in though.
Back to the inflation containment measures, a tighter monetary policy is not good for India amid an ongoing economic slowdown and global turmoil. But, one reckons that the 'powers-that-be' have very little choice but to curb spiraling price pressures. It’s another matter that the steps already taken to contain inflation may prove counter-productive or even detrimental in some cases. Case in point is the ban on sugar exports in 2006.
The fiscal measures may also take time to work their way through and it’s anybody's guess how effective they will be in the face of a global rally across commodities. So, inflation will remain the bugbear for the markets for some time to come. One may have to settle with lower growth and high inflation.
Another negative for the bulls is that FIIs were once again net sellers yesterday, but the reported sale figure for Friday is much lower than the provisional one.
Cues from the global markets are not all that bad this morning, with US stocks closing modestly higher, though Wall Street has notched up its worst quarter in more than five years. Citigroup has announced an overhaul by spinning off its card business and carving out four regional structures outside of the US.
Treasury Secretary Henry Paulson has announced a proposal to restructure financial regulation, including increased powers for the Federal Reserve, to help avoid any future crisis. Here again, Wall Street is skeptical about the Bush Administration's plan. Meanwhile, European inflation has accelerated to the fastest pace in almost 16 years, and confidence among Japanese manufacturers is at a four-year low.
Asian markets were trading mostly higher this morning. The Nikkei in Tokyo was up 2% at 12,757 while the Hang Seng in Hong Kong gained 1.6% at 23,205. The Kospi in Seoul was up 0.7% at 1716 while the Straits Times in Singapore 0.9% to 3033. The Shanghai Composite in China was down nearly 3% to 3369 and the Taiex in Taiwan was flat at 8573.
The MSCI Asia Pacific Index jumped 0.9% to 140.60 as of 11:24 a.m. in Tokyo. The index lost 12% in the first quarter, the worst start to a year since 1992, as a US housing slump threatened to drag the largest market for Asian goods into a recession.
Investors in Tokyo shrugged off the Bank of Japan's quarterly Tankan survey, which showed that sentiment among the country's largest manufacturers slid to a four-year low last month.
US stocks closed marginally higher on Monday as falling commodity prices, coupled with an improved reading on regional manufacturing and a government plan to help avert future financial crises boosted the sentiment. Still, the key US equity indices chalked up their worst quarter in more than five years marred by fears of a recession amid the meltdown in the housing sector and the ensuing logjam in credit markets.
Citigroup, Wachovia and JPMorgan Chase helped the S &P 500 Index pare its biggest quarterly decline since 2002. GE and FedEx rallied after the National Association of Purchasing Management-Chicago's business index increased more than forecast. Merck fell the most since 2004, limiting the market's advance, after doctors recommended not using two of its cholesterol pills in favor of low-cost alternatives.
The S&P 500 climbed 7 points, or 0.6%, to 1,322.7, reducing its monthly loss to 0.6%. The Dow Jones Industrial Average rose 46 points, or 0.4%, to 12,262.89. The Nasdaq Composite Index added 18 points, or 0.8%, to 2,279.1.
Almost two stocks rose for every one that fell on the New York Stock Exchange. Volume on the NYSE neared 4.1bn shares, and advancing stocks outpaced those declining 5 to 3. On the Nasdaq, more than 1.7bn shares were exchanged, and advancers edged ahead of decliners, 4 to 3.
The blue-chip Dow closed March with a slight monthly gain of 0.2%, but down 7.6% for the quarter, its second consecutive quarterly decline. For the blue chips, the first quarter of 2008 marked their worst three-month period since the third quarter of 2002.
The S&P 500 was down about 10% in the January-March period, its worst showing since late 2002. The Nasdaq shed just over 14% in the quarter. Going forward, the second quarter could bring some improvement, although Wall Street is likely to see another leg down first and more daily volatility.
Citigroup shares gained 2.8% after the banking giant unveiled a restructuring of its global business into four regional units, and said it would break out its credit-card business from its broader consumer-banking segment.
Shares of Merck & Co. lost 14.7% and that of Schering-Plough 26% after data showed their drug Vytorin to be no more effective in treating heart disease than less-costly generic alternatives.
Gold futures finished down $15 to $921.50 an ounce, but gaining $86.60, or 10.3%, for the first quarter. Crude futures fell $4.04 to settle at $101.58 a barrel.
The dollar rose versus the euro and the yen. Treasury prices inched higher, lowering the yield on the benchmark 10-year note to 3.41% from 3.44% late Friday. Bond prices and yields move in opposite directions.
In economic news, the Chicago Purchasing Managers Index climbed to 48.2 in March from 44.5. The better than expected reading came ahead of the national Institute for Supply Management manufacturing survey scheduled for Tuesday.
Treasury Secretary Henry Paulson introduced the Bush Administration's proposed overhaul of the financial system, which includes expanding the Fed's power to manage the type of extreme credit crisis currently dragging on the economy. Paulson defended his regulatory blueprint, saying initial reviews that the plan amounted to less oversight of Wall Street are incorrect.
Across the Atlantic, stocks in Europe ended weaker. Winding up the worst quarter since 2002, the pan-European Dow Jones Stoxx 600 index slipped 0.4% to stand at 305.54, bringing year-to-date losses to about 16%. In dollar terms, the loss was a more modest 9%.
Germany's DAX 30 was down 0.4% at 6,534.97, while the French CAC-40 moved up 0.2% to 4,707.07 and the UK's FTSE 100 added 0.2% to 5,702.10.
Major Latin American stock markets rose. Mexico's IPC surged 2.7% to 30,912.99. The benchmark index finished the first quarter 4.7% higher and gained 6.9% in March. Brazil's Bovepsa rose 0.8% to 60,968.07. It fell 4.6% in the first quarter, and by 4% for the month.
Bulls may remain under pressure
On last trading session of India’s financial year the benchmark Sensex declined 4.4% on Monday on back of negative cues from the international equity markets and selling pressure in scrip’s across the sectors. The benchmark Sensex posted a record fiscal fourth quarter loss. It declined 23% in January-March quarter its biggest fall since 1992. Finally, the BSE benchmark Sensex declined 726 points to 15,644 and the Nifty index ended at 4,734 lost 207 points.
Overall about 1,356 stocks advanced; 1,300 stocks declined while 43 stocks remained unchanged. Among the 30 stocks of Sensex 26 stocks ended in negative territory and only 4 stocks ended in green.
All the Sectoral indices ended on a negative note. The BSE Bankex index (down 5.8%), BSE IT index (down 5.6%), BSE Realty index (down 5.3%) and BSE Metal index (down 4.3%). Even the Mid-Cap and the Small-Cap index slipped almost over 1% each.
Among the 30-scrips of Sensex, ICICI Bank, Reliance Industries, HDFC and Infosys were among the major laggards. On the other hand, Cipla, M&M, Bharti and ITC were the only gainers.
After slipping over 5% in early trades, Cairn India partially recovered and ended 2.5% lower finally to end at Rs224. The stock slipped after the company announced that it posted a net loss after minority interest of Rs245.442mn for the year ended December 31, 2007 where as the same was net loss at Rs211.742mn for the year ended December 31, 2006.
Total Income is Rs11446.716mn for the year ended December 31, 2007 where as the same was at Rs449.632mn for the year ended December 31, 2006. The scrip has touched an intra-day high of Rs230 and a low of Rs216 and has recorded volumes of over 12,00,000 shares on NSE.
IDFC slipped by over 5.5% to Rs151. The company announced that the Board of Directors approved the proposal to amend the Object Clause of its MoA by adding new activities in the areas of developing and maintaining infrastructure projects, financial assistance to manufacturers, engaging in asset management activities and engaging in all infrastructure related activities. The scrip touched an intra-day high of Rs161 and a low of Rs150 and recorded volumes of over 12,00,000 shares on BSE.
IOB slipped by 0.3% to Rs135. The company said that the Board of Directors of the Bank approved the proposed takeover of Shree Suvarna Sahakari Bank Ltd., Pune (under moratorium) subject to due diligence evaluation and approval from the Regulatory and Statutory authorities concerned. The scrip touched an intra-day high of Rs137 and a low of Rs120 and recorded volumes of over 47,000 shares on BSE.
L&T was down by over 4% to Rs3024. The company announced that it has been awarded Rs57mn order by Hindustan Petroleum Corporation Ltd (HPCL). HPCL has awarded L&T a large project order of 200,000 Tonnes per annum Lube Oil Base Stock (LOBS) Plant consisting of Raffinate Hydrotreating Unit (RHT), Mobil Selective Dewaxing Unit (MSDW) & Hydro Finishing Unit (HF). The scrip touched an intra-day high of Rs3148 and a low of Rs2988 and recorded volumes of over 2,00,000 shares on BSE.
BHEL declined 1.7% to Rs2056. The company announced that they won boiler order worth Rs5.5bn from New Caledonia. The scrip touched an intra-day high of Rs2092 and a low of Rs1983 and recorded volumes of over 2,00,000 shares on BSE.
Suven Life Sciences slipped by 2.5% to Rs32. The company announced that two product patents were granted in Mexico and Korea for two of their new chemical entities (NCEs) for the treatment of disorders associated with neurodegenerative diseases and these patents are valid until 2023. These granted patents are exclusive intellectual property of Suven and are achieved through the exclusive internal discovery research efforts. The scrip touched an intra-day high of Rs34 and a low of Rs31 and recorded volumes of over 1,00,000 shares on BSE.
Thomas Cook ended flat at Rs96 as Thomas Cook UK Ltd acquired 100% of the shareholding of TCIM Ltd. TCIM Ltd currently holds 54.42% of the paid up equity share capital of the Company and Thomas Cook UK Ltd shall, therefore, indirectly control 54.42% of the total paid up capital of the Company. The scrip touched an intra-day high of Rs97 and a low of Rs95 and recorded volumes of over 54,000 shares on BSE.
Tata Motors came off its days low after media reports stated that they would invest Rs60bn in Pune facilities over four to five years. The scrip ended at Rs623 down 3% and touched an intra-day high of Rs645 and a low of Rs620 and recorded volumes of over 19,00,000 shares on BSE.
ERA Infrastructure edged lower by 0.5% to Rs593. The company announced that it secured order worth Rs200mn. The scrip touched an intra-day high of Rs605 and a low of Rs590 and recorded volumes of over 14,000 shares on BSE.
For Tuesday markets may continue to feel the pressure. Having said that, global cues would again play an important role to direct the Indian bourses in early trades.
Corporate Front Page
To fund its Jaguar Land Rover buyout, Tata Motors, is preparing to divest stake in two of its 100% owned business units HV Axel and HV Transmission. (BS)
RPL and Chevron Corp have mandated a consortium of six international banks to raise US$500mn. (ET)
Cairn India is still in talks with the Government about the financing of a pipeline to transport crude from its key Mangala field in Rajasthan. (ET)
ICICI Bank may sell 12% in broking arm for Rs36bn. Goldman, Morgan, JP Morgan, Credit Suisse and Nomura among others are in the race. (BS)
Power Finance Corporation has floated a wholly-owned consultancy arm to provide services in the power sector. (ET)
RIL believes a 38.1mn cubic feet a day gas find in one of its east coast blocks is commercially viable and will submit an appraisal plan soon. (ET)
RIL has invited EoI for the development of its gas discoveries in the KG-DWN-98/3 deepwater block. (FE)
Sabare International, a Karur-based home furnishings company, has taken ICICI Bank to court over a foreign exchange derivative contract. (BS)
Gammon India has clinched the Rs3.4bn re-densification project to build a Central Business District in a prime business locality of Bhopal. (BS)
Ranbaxy Laboratories is selling the oral liquid manufacturing unit to its Romanian subsidiary, Terapia. (ET)
Sun Pharma’s US arm Caraco has been asked to withdraw batches of generic Metformin, used to treat diabetes, on grounds of efficacy. (BL)
Cipla is set to sell its generic version of Deferasirox, a once-a-day oral iron chelator used to treat iron overload. (BL)
Wipro is setting up an 80-acre facility in Chennai by investing Rs7bn. (ET)
The GMR group is in the race for a 50% stake in InterGen, a US-based power company with plants in five countries. (BL)
Four Soft expects the merger of the company with Take Solutions to be completed within two months. (BL)
ICSA will soon acquire two T&D sector companies with front-end marketing capabilities in the US and Europe. (BS)
Dabur is banking on the country’s rural and semi-urban areas for growth in the baby care segment. (BS)
Havells India plans to enter electric motors business. (DNA)
Country Club India is all set to expand its horizon through acquisition of properties in Dubai and Bangkok. (BL)
Nitco Tiles is planning to open 12 Le Studio showrooms and 120 Le Express in next 18 months and is targeting revenue of Rs20bn by FY10. (BS)
Vijaya Bank has exceeded its business target for 2007-08 with a growth of more than 25%. (ET)
Alembic is all set to bag a US$25-30mn manufacturing contract from a multinational company. (BS)
Gujarat Ambuja Exports is set to invest around Rs850mn in two different ventures, a soybean processing plant and its mandi venture. (BS)
Kanoria Chemicals will spend Rs1.25bn on an alcohol-based chemicals plant in Visakhapatnam over 21 months. (ET)
PSA Corp., owned by Temasek Holdings plans to acquire 49% in ABG Kandla Container Terminal from ABG Infralogistics for Rs2.4bn. (Mint)
ArcelorMittal South Africa has announced another hike in the alloy's price that will come into effect from May 1. (ET)
An ICICI Venture Funds Management Co., RFCL has acquired Bremer Pharma GmbH, a German veterinary care company. (Mint)
France’s Pernod Ricard has won the auction to buy the maker of Sweden’s Absolut vodka for US$8.9bn. (ET)
Dubai-based Arab Digital Distribution has won a 10-year contract for exclusive coverage rights for the IPL T20 tournament. (ET)
Precious metals end up for the quarter but down for the month
Gold and silver prices end lower on the last day of the month as dollar rebounds again
The last day of the month and the first quarter of FY 2008 was not a very bright day for the precious metals as both silver and gold prices dropped sharply on Monday, 31 March, 2008 as the dollar rebounded. Bullion metals ended lower as other commodities too declined across the board. A lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies and vice versa. Silver prices also fell for the day.
Comex Gold for June delivery fell $15 (1.6%) to close at $921.5 ounce on the New York Mercantile Exchange. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. Last week, gold prices gained 1.1%.
This year, gold prices have gained 10.5% for the till date, ie for first quarter. In January, prices gained 11%, the highest monthly gain since April 2006. For February, it gained 6%. But in March, prices have succumbed and fell by 5.5%.
Comex Silver futures for May delivery fell 63 cents (3.5%) to $17.31 an ounce. Silver has gained 16% in 2008 till date. 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%. For March, it ended lower by 13%. Last week, silver gained 6%.
In the currency market today, the dollar traded mostly higher against other major currencies, with the dollar index gaining 0.2% at 71.74. Among major economic data today, business activity in the Chicago region continued to contract in March, but the contraction was less severe than in February.
In the energy market today, crude oil fell more than $4 a barrel in New York on signs that a U.S. report will show inventories rose for the 11th time in 12 weeks as demand weakened. Crude oil for May delivery fell $4.04 (3.8%) to settle at $101.58 a barrel.
After weakening in the early part of the year, dollar tried to strengthen after Federal Reserve went through a slew of interest rate cuts. In the last of the series, Fed decided to cut overnight lending rate by 75 bps to 2.25% during third week of March, 2008. Since last September, Fed has axed interest rates six times. A stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. Hence, bullion metals along with other metals witnessed intense sell off together as traders parted away with commodities.
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%. Gold has tripled in five years as investment demand has soared and mine supplies have remained low.
At the MCX, gold prices for June delivery closed lower by Rs 136 (1.1%) at Rs 11,891 per 10 grams. Prices rose to a high of Rs 12,174 per 10 grams and fell to a low of Rs 11,875 per 10 grams during the day’s trading.
At the MCX, silver prices for May delivery closed Rs 711 (3.1%) lower at Rs 22,274/Kg. Prices opened at Rs 22,989/kg and fell to a low of Rs 22,070/Kg during the day’s trading.
Eased Iraq tension and strong dollar pull down crude
Prices drop drastically and fall by more than $4 as dollar rebounds
Crude prices fell substantially lower on Monday, 31 March, 2008 as tensions eased in Iraq and dollar rebounded against its rivals. Prices also softened on signs that a U.S. report will show inventories rose for the 11th time in 12 weeks as demand weakened.
Crude-oil futures for light sweet crude for May delivery closed at $101.48/barrel (lower by $4.04/barrel or 3.8%) on the New York Mercantile Exchange. Prices earlier rose by $1.16 during intraday trading. Crude prices are 54% higher on a yearly basis. For the year, crude is up by 5.8% till date. It touched a high of $111.8 on 17 March, 2008 but has slipped thereafter. For March, it closed almost stagnant, lower by a mere 26 cents on a m-o-m basis. Last week, crude ended the week lower by more 3%.
In the currency market today, the dollar traded mostly higher against other major currencies, with the dollar index gaining 0.2% at 71.74. Among major economic data today, business activity in the Chicago region continued to contract in March, but the contraction was less severe than in February.
In Iraq, violence eased and the pipelines where explosion took place in the last week were reportedly repaired. An Iraqi oil pipeline that carries about 100,000 barrels a day to the Basra oil terminal was damaged by a fire started by an explosive device on 27 March.
Also traders anticipated that crude-oil supplies increased by more than 2 million barrels for the week ended on 28 March.
Brent crude oil for May settlement today fell $3.47 (3.3%) to $100.3 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 gains 35% in the first quarter outpacing crude
Natural gas climbed above $10 per million British thermal units as utilities and industrial companies compete to rebuild inventories. Natural gas for May delivery rose 30.1 cents (3.1%) to settle at $10.101 per million British thermal units. Natural gas rose by 35% in the first quarter.
Against this backdrop, reformulated gasoline for May delivery fell 8.64 cents to $2.6271 a gallon and May heating oil lost 8.15 cents to $2.9061 a gallon.
Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.
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. Also over the weekend, it was reported that OPEC President Chakib Khelil said oil prices would range between $80 and $110 a barrel for the rest of 2008.
At the MCX, crude oil for May delivery closed at Rs 4,027/barrel, lower by Rs 142 (3.4%) against previous day’s close. Natural gas for April delivery closed at Rs 399.6/mmtbu, lower by Rs 11.5/mmtbu (2.9%).
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