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Friday, April 11, 2008
Today's Pick - United Phosphorus
We recommend a sell in United Phosphorus from a short-term perspective. From the charts of United Phosphorus, we note that the stock has been on a medium-term term down-trend from its January high of Rs 425. However, following a corrective pullback rally from the March low of Rs 228, the stock met with a resistance at around Rs 300 recently.
We see that the corrective pullback rally of the stock has retraced 38.2 per cent fibonacci retracement level of the medium-term downtrend.
The stock appears to have resumed the medium-term downtrend from the resistance level of Rs 300 by forming a bearish engulfing candlestick pattern.
The daily momentum indicator has started declining, after encountering resistance at around 60 levels. Considering that the medium-term trend continues to be down, we are bearish on the stock in the short-term.
We expect the medium-term down-trend in the stock to prolong to our target price level of Rs 250 in the upcoming trading sessions. Investors with short-term perspective can sell the stock, while keeping the stop loss at Rs 306.
Bullion metals end lower
Gold and silver prices fall as rising dollar weighs on them
Bullion metals fell today, Thursday, 10 April, 2008 after the dollar rose against its counterparts and weighed on the precious metals. Silver prices also fell for the day.
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 fell $5.7 (0.6%) to close at $931.8 ounce on the New York Mercantile Exchange. Last week, gold prices lost 2.5%. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. Prices are still 9% lower against that all-time high price.
This year, gold prices have gained 11.5% for the till date against a 8.3% drop for the dollar against the euro. 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 fell 15.7 cents (0.9%) to $18.043 an ounce. Silver has gained 21.8% 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 rose against its major rivals. The euro pulled back as investors took profits, reversing course after the single currency established a new high earlier against the dollar. The dollar index, which tracks the greenback against a basket of currencies, was at 72.170, up by 0.4%.
In the energy market today, crude-oil futures finished a little lower by 76 cents today at $110.11/barrel.
Earlier in the week, bullion metal prices had slipped after The International Monetary Fund's board yesterday approved a plan to sell 403.3 metric tons of gold to narrow the lender's financial shortfall. The proposal still needs the approval of the U.S. Congress. The IMF holds 103.4 million ounces or 3,217 metric tons, of gold.
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. 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
Crude falls for two straight days
Prices fall moderately as US imports fell last week
Crude prices fell lower for the second consecutive day today, Thursday, 10 April, 2008 as the dollar weakened strengthened against its rivals. Prices also fell as an after effect to yesterday’s inventory report by the Energy Department. EIA reported that USA’s oil imports fell last week.
Crude-oil futures for light sweet crude for May delivery closed at $110.11/barrel (lower by $0.76/barrel or 0.78%) on the New York Mercantile Exchange. Yesterday, prices touched a high of $112.21 during intra day trading. It was a new all-time record for crude prices. Crude prices are 77% higher on a yearly basis. For the year, crude is up by 13.4% till date.
Last week, crude ended marginally higher by 60 cents as against last week’s previous close at $105.62.
Yesterday, EIA reported today that crude inventory fell to 316 million barrels in the week ended 4 April. This was down 3.2 million barrels on the week. Market was anticipating a build up of inventories around 2.7 million barrels. The unexpected drop in crude inventories came from sliding imports. U.S. oil imports averaged 8.9 million barrels a day last week, down nearly 1.4 million barrels a day from the previous week.
The EIA also reported that U.S. gasoline supplies fell 3.4 million barrels in the latest week, while distillate supplies, which include heating oil and diesel, dropped 3.7 million barrels. U.S. refineries operated at 83% of their operable capacity last week, up from the previous week's 82.4%.
In the currency market today, the dollar rose against its major rivals. The euro pulled back as investors took profits, reversing course after the single currency established a new high earlier against the dollar. The dollar index, which tracks the greenback against a basket of currencies, was at 72.170, up by 0.4%.
Brent crude oil for May settlement today fell $0.27 (0.3%) to $108.2 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 supplies fell last week
Natural gas rose to the highest in more than two years after a government report showed U.S. inventories declined to the lowest since 2005. Gas for May delivery rose 4.2 cents (0.4%) to settle at $10.098 per million British thermal units. EIA reported today that natural gas supplies last week fell to 1.234 trillion cubic feet, 1.8% below the five-year average of 1.257 trillion.
Against this backdrop, May reformulated gasoline rose 1.79 cent to $2.7921 a gallon and May heating oil lost 4.05 cents to $3.194 a gallon.
The EIA reported earlier this week that crude oil this year is forecast to average $100.61 a barrel, up 7% from a March estimate. The monthly average gasoline price in the U.S. is projected to peak near $3.5 a gallon this spring. EIA also said that prices in some regions could surpass $4 a gallon.
EIA also reported that consumption of liquid fuels and other petroleum products is projected to grow by 40,000 barrels a day in 2008, a downward revision of 100,000 barrels a day from the previous monthly forecast. After accounting for increased ethanol use, U.S. petroleum consumption actually could fall by 90,000 barrels a day.
Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years
RIL, RCL April 2008 futures at discount
Turnover in F&O segment rises
Nifty April 2008 futures were at 4714, at a discount of 19 points as compared to spot closing of 4733.
The NSE's futures & options (F&O) segment turnover was Rs 33,689.60 crore, which was higher than Rs 31,113.78 crore on Wednesday, 9 April 2008.
Reliance Industries (RIL) April 2008 futures were at discount at 2463 compared to the spot closing of 2468.65.
Reliance Capital (RCL) April 2008 futures were at discount at 1230.05 compared to the spot closing of 1233.55.
In the cash market, the S&P CNX Nifty lost 14.05 points or 0.30% at 4733
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