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Tuesday, April 08, 2008

Market drifts lower on weak global cues

The market lost ground today giving up yesterday's gains tracking weakness in Asian and European stocks. Larsen & Toubro and Wipro were major losers from the Sensex pack. Bharat Heavy Electricals and Bharti Airtel were major gainers from Sensex pack. Reliance Energy recovered from lower level.

The key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were down by between 0.65% to 1.79%. European markets were weak. France’s CAC, Germany’s DAX and UK’s FTSE 100 were down by between 0.95% to 1.3%.

The 30-share BSE Sensex provisionally ended down 194.04 points or 1.23% at 15,563.04. At the day’s low of 15,479.42, Sensex lost 277.66 points in mid-morning trade. Sensex rose 13.08 points at the day's high of 15,770.40 , at the onset of the trading session.

BSE clocked a turnover of Rs 5,127 crore compared to a turnover of Rs 4,969.92 crore on Monday, 7 April 2008.

The broader based S&P CNX Nifty was down 58.75 points or 1.23% at 4,702.45 as per the provisional figures.

Capital goods, IT, metal and oil & gas stocks declined. However BSE Mid-Cap and Small-Cap indices rose. The market breadth was positive

The market breadth was positive: on BSE 1384 shares advanced as compared to 1,217 that declined. 69 shares remained unchanged.

The BSE Mid-Cap index was up 0.51% to Rs 6,377.07 and BSE Small-Cap index rose 0.48% to 7,815.43.

Capital goods stocks declined. Larsen & Toubro lost 5.29% to Rs 2,576.10 even as company said it had bagged four orders worth Rs 1687 crore. The orders are for water supply projects, sinter plant and cold roll mill and a coal handling plant.

Suzlon Energy declined 1.31% to Rs 290.40. However, India’s largest power equipment maker by sales Bharat Heavy Electricals rose 4.67% to Rs 1,712.75.

Metal stocks declined. Steel Authority of India (down 6.14% to Rs 157.55), National Aluminium Company (down 3.55% to Rs 432.45), Tata Steel (down 3.39% to Rs 656.30), Hindalco Industries (down 1.53% to Rs 170.30) edged lower.

IT stocks declined. Wipro (down 4.6% to Rs 414), Tata Consultancy Services (down 1.64% to Rs 885.30), Infosys (down 2.07% to Rs 1,461.30) and Satyam Computer Sevices (down 0.71% to Rs 429.10) edged lower.

Oil & Gas stocks declined. ONGC (down 0.65% to Rs 1,011.25), Reliance Petroleum (down 1.57% to Rs 168.75), Cairn India (down 0.35% to Rs 227.25) edged lower.

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries declined 1.02% to Rs 2,381.25. It recovered from its lows of Rs 2,358.60. A consortium of Reliance Industries (RIL) has reportedly discovered oil in Yemen. The discovery in Block 9 in Qarn Qaymah 2 well is considered to be significant, and RIL is in process of evaluating the viability.

Jaiprakash Associates (down 4.48% to Rs 221.55), Ranbaxy Laboratories (down 2.71% to Rs 470.75), Grasim Industries (down 2.56% to Rs 2,560.40), Hindustan Unilever (down 2.02% to Rs 247.90), Maruti Suzuki India (down 1.91% to Rs 744.20), and NTPC (down 2.12% to Rs 186.55) edged lower from the Sensex pack.

ICICI Bank (up 0.49% to Rs 813.25), DLF (up 0.68% to Rs 621.25), Bharti Airtel (up 1.25% to Rs 828.60), HDFC (up 0.13% to Rs 2,309.50), State Bank of India (up 0.09% to Rs 1,674.80), HDFC Bank (up 0.09% to s 1,304.30) edged higher from Sensex pack.

The next major trigger for the market is Q4 March 2008 results of India Inc. Analysts will be closely watching what the company managements have to say about the outlook for the year ending March 2009 (FY 2009). Analysts will also scrutinize disclosures that companies may make regarding foreign exchange derivatives products that they have bought on the advice of their bankers. A steep decline in the value of the US dollar against the Japanese Yen and the Swiss Franc hit Indian corporates which have used these two currencies (Yen and Franc) extensively to swap their rupee denominated debt.

As regards Q4 March 2008 results, Morgan Stanley expects 23% growth in net earnings of 104 out of 108 firms in its Indian coverage universe in Q4 March 2008 over Q4 March 2007.

Good results are expected from the telecom sector on the back of strong growth in new subscribers additions. Infrastructure and engineering firms, too, are seen reporting decent numbers in Q4 March 2008 on the back of healthy order book positions. The performance of auto firms is likely to be sluggish due to muted volume growth and rise in input costs.

A depreciation of the rupee against the dollar is likely to drive good results from the IT sector on a sequential basis in Q4 March 2008 over Q3 December 2007, though the focus here is on guidance for the year ending March 2009 from IT bellwether Infosys Technologies. Infosys guidance will give investors a sense of the effect of the weakening US economy on technology spending by companies there.

Sensex jumped 413.96 points or 2.7% at 15,757.08 on Monday, 7 April 2008, on positive cues from the Asian markets.

Sensex rallies, closes below 15,800

Today, the market recovered from the last session’s losses and rose in tune with the global market indices. Trading in a positive territory throughout the trading session, the Sensex opened 47 points higher from its last close at 15,390 and registered steady upmove, before selective profit-taking capped the gains by early noon trades. While the market re-grouped thereafter, unabated buying towards the mid hours of the trading session triggered a massive rally, which propelled the index to an intra-day high of 15,852, up 509 points from the Friday’s close. The Sensex finally signed off the session with gains of 414 points at 15,757, while the Nifty moved up 114 points to close at 4,761.

The market breadth was positive. Of the 2,684 stocks traded on the BSE, 1,556 stocks advanced, 1,074 stocks declined and 54 stocks ended unchanged.

The BSE Bankex index (up 4.14%) led the sectoral indices followed by the BSE FMCG index (up 4%), the BSE Metal (up 2.76%), the BSE Oil & Gas index (up 2.60%), the BSE CD index (up 2.52%), the BSE HC index (up 2.47%) and the BSE Teck index (up 2.04%). Remaining indices gained 1% each.

Leading the uptrend, ICICI Bank surged 5.97% at Rs750, Ranbaxy Laboratories rose 5.59% at Rs483.85, Jaiprakash Associates jumped by 4.84% at Rs231.95, HUL soared 4.74% at Rs353, ITC added 4.73% at Rs210.30, Wipro moved up 4.42% at Rs433.95, Bharti Airtel scaled up 4.42% at Rs818.40 and SBI was up 4.24% at Rs1673. Other notable gainers include RIL, TCS, Grasim Industries, Tata Motors, Tata Steel, Hindalco Industries and DLF, while Ambuja Cement, Maruti Suzuki and Reliance Energy were the laggards.

Among the Bankex gainers, Union Bank, Bank of India, ICICI Bank, IOB, Axis Bank, Bank of Baroda, Punjab National Bank, State Bank of India and Canara Bank flared up 4-8% each.

Dalal Street Investment at Rs2091.80, Gujarat Foils at Rs109.75, Filatex Fashion at Rs35.20, Sel Manufacturing at Rs396.40 and Sita Shree at Rs46.65 touched their all-time highs on the BSE.

Over 3.79 crore Sita Shree shares changed hands on the BSE followed by IB Securities (1.51 crore shares), RNRL (1.24 crore shares), Ispat Industries (1.18 crore shares), RPL (1.07 crore shares) and Orchid Chemical (1.05 crore shares).

Gold and silver rise

Gold and silver prices rise as crude prices once again soars

Bullion metals rose substantially higher on Monday, 07 April, 2008 after other commodities also rose across the board. Higher inflation concerns from US economy’s overall health increase the precious metals’ demand as a hedge against inflation. Silver prices also rose for the day.

Today precious metals gained despite dollar closing higher for the day against its rivals. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies.

Comex Gold for June delivery today rose $13.6 (1.5%) to close at $926.8 ounce on the New York Mercantile Exchange. Last week, gold prices lost 2.5%. Earlier last week, prices had dropped below $900 for the first time in six weeks. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce.

This year, gold prices have gained 11% for the till date. For first quarter prices gained 10.7%. In January, prices gained 11%, the highest monthly gain since April 2006. For February, it gained 6%. But in March, prices succumbed and fell by 5.5%.

Comex Silver futures for May delivery rose 36.5 cents (2.1%) to $18.12 an ounce. Silver has gained 20.7% in 2008 till date. Silver gained 16% in Q1. In January this year itself, prices climbed 14%. In February, it gained another 15%. For March, it ended lower by 13%. The metal had climbed 16% in FY 2007. The metal also has gained for seven straight years.

In the currency market today, the dollar held overnight gains against most major counterparts as the U.S. stock market extended an overseas rally. The dollar index, which tracks the performance of the greenback against other currencies, gained 0.4% to 72.21.

In the energy market today, crude oil rose $2.86 (2.7%) a barrel in New York to settle at $109.09/barrel.

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 higher by Rs 105 (0.9%) at Rs 11,951 per 10 grams. Prices rose to a high of Rs 12,015 per 10 grams and fell to a low of Rs 11,790 per 10 grams during the day’s trading.

At the MCX, silver prices for May delivery closed Rs 312 (1.3%) higher at Rs 23,473/Kg. Prices opened at Rs 23,237/kg and rose to a high Rs 23,599/Kg during the day’s trading.

Crude gains

Prices gain more than $5 in just last two sessions

Crude prices rallied strongly on Monday, 07 April, 2008 as members of Organization of Petroleum Exporting Countries (OPEC) hinted that the cartel will not raise production in the coming months. Prices ended at highest level today since it had touched $112 on 17 March, 2008. Last Friday also, crude had gained more than $2. With today, crude gained more than $5 in just two sessions.

Crude-oil futures for light sweet crude for May delivery closed at $109.09/barrel (higher by $2.86/barrel or 2.7%) on the New York Mercantile Exchange. Crude prices are 77% higher on a yearly basis. For the year, crude is up by 14.7% till date. It touched a high of $111.8 on 17 March, 2008 but had slipped thereafter.

Last week, crude ended marginally higher by 60 cents as against last week’s previous close at $105.62.

As per Qatar's minister of state for energy and industry affairs, The Organization of Petroleum Exporting Countries is trying to stabilize oil prices that are being led higher by speculation and political events in producing and consuming nations.

In the currency market today, the dollar held overnight gains against most major counterparts as the U.S. stock market extended an overseas rally. The dollar index, which tracks the performance of the greenback against other currencies, gained 0.4% to 72.21.

Brent crude oil for May settlement today rose $2.24 (2.1%) to $107.14 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 rises 5% due to forecasts for cool weather in April

Natural gas futures advanced on forecasts for cool weather in April that would slow rebuilding of stockpiles. Rising crude-oil prices also pushed gas higher. Natural gas for May delivery rose 46.9 cents (5%) to $9.791 per million British thermal units.

Against this backdrop, Gasoline for May delivery settled at a record $2.7835 a gallon in New York, an increase of 2.68 cents, or 1%. Heating oil for May delivery rose 9.22 cents (3.1%) to settle at $3.0843 a gallon.

U.S. pump prices are following futures higher. As per AAA, the nation's largest motorist organization, gasoline prices, averaged nationwide, rose 1.5 cents to a record $3.339 a gallon.

Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.

At the MCX, crude oil for April delivery closed at Rs 4,350/barrel, higher by Rs 123 (2.9%) against previous day’s close. Natural gas for April delivery closed at Rs 391.1/mmbtu, higher by Rs 17.1/mmbtu (4.6%

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