It's the thought that counts!

The rains may be nowhere in sight for over a month at least. But the thought or rather the view that rains would be normal has brought some cheer. There is also hope (how often we keep using this word) that the heating inflation may cool with the onset of monsoon. With Friday being a public holiday, the inflation numbers would be released today.
The outlook is bright at start for this short and sweet week so far. If the sentiment is upbeat, inflation numbers may also be temporarily ignored. But market players would prefer to stay light ahead of the long weekend. The FM has been talking tough and accusing the steel and cement industry of forming a cartel. Tough action could also be expected soon.
The global cues will bring smiles to the local bulls. Major Asian indices like the Nikkei, the Hang Seng index have gained .
The FIIs turned net buyers of Rs2.11bn in Index Future and by Rs9.62bn in index options and turned to net buyers of Rs1.40bn in Single Stock Future. In the cash segment FIIs were net seller by Rs500mn and DIIs were net sellers of Rs900mn
Crude oil and gasoline rose to new highs after the Energy Department reported unexpected declines in U.S. crude inventories and refinery operating rates. Oil climbed to $115.21 a barrel in New York, the highest since futures began trading in 1983.
The Nikkei 225 Stock Average rose over 2%. US stocks gained with the Standard & Poor's 500 Index gaining 2.3 percent, the most in two weeks. JPMorgan Chase, and Wells Fargo & Co reported earnings that exceeded analyst forecasts. So did Intel, and Coca-Cola. JPMorgan Chase & Co. plans to raise $6 billion. JPMorgan today said net income dropped 50% to $2.37 billion, or 68 cents a share, from $4.79 billion, or $1.34 a share, a year earlier.
But The US housing market woes continue as new home construction fell more than expected to a 17-year low.
Mark Mobius, who oversees $47bn in emerging-market equities at Templeton Asset Management Ltd., said, “The writedowns are coming in fast and furious.”
IBM and eBay reported higher quarterly earnings that beat estimates.
Among other news from the media:
- Tata Tele to raise US$1bn by private equity placement.
- Holcim, AV Birla and Lafarge in race for L&T Concrete, L&T’s ready-mix concrete business.
- Reliance Petro announced 90% completion of its exports-oriented refinery in Jamnagar and expects to complete the project before the December 2008 deadline.
- REL, Tata-Changi, L&T, Lanco, Fraport, GMR, Maytas amongst the infrastructure developers shortlisted for modernization of Udaipur and Amritsar airports.
- NTPC to split new orders between BHEL and global bidding route.
- Bharti Retail opened its first retail store, Easy Day, in Ludhiana in Punjab.
- M&M has inked a 50:50 JV with South African international supply chain company, Capespan, through its agri-business initiative.
- E&Y to consult Reliance Power to upgrade its Sasan UMPP to conform to the norms for receiving carbon credits.
- UltraTech Cement to setup a greenfield project at Mahuva in Bhavnagar district of Gujarat at an investment of Rs30bn.
- Tech Mahindra to expand operations in Chennai by setting-up a new 1.2lac sqft development centre.
- Wipro Infotech has restructured its operations by transferring majority of its business to global IT division, Wipro Technologies.
- Nicholas Piramal India buys 14 drugs with higher margin potential.
- GIPCO plans to set-up a 500MW lignite-based power plant at Surat.
- Gujarat Alkalies & Chemicals (GACL) to form Rs6bn JV with Dow Chemicals.

Profit booking likely
A volatile trading session ended with modest gains thanks to the IT pack of stocks. It was the second straight day where leadership was seen from the IT stocks. Stocks like Infosys, Satyam and Wipro were among the major gainers. Further, even the Mid-Cap and the Small-Cap stocks were in demand as both indices ended adding over 1.5% each.
Finally, the BSE benchmark Sensex ended 90 points higher to close at 16,244 and the Nifty index ended 7 points higher to 4,887.
Overall about 1,866 stocks advanced; 813 stocks declined while 75 stocks remained unchanged. Among the 50-Nifty 25 stocks ended in red and 36 stocks ended in green.
Flawless Diamond slipped by 4% to Rs63. The company announced that it received two orders for its newly launched Designer Jewellery. First Order received from Diambel N.V., Belgium for its AUM Signature and AUM Star Series of Designer Jewellery worth Rs192mn. Second Order received from Malay Impex, Hong Kong for its AUM Ethereal and AUM Galaxy Series of Designer Jewellery worth Rs234mn. The scrip touched an intra-day high of Rs68 and a low of Rs63 and recorded volumes of over 1,00,000 shares on BSE.
BASF advanced by over 3% to Rs210. The company announced its Q4 net profit at Rs44.1mn and net sales were at Rs1.93mn. The company also said that they would pay 70% dividend. The scrip touched an intra-day high of Rs214 and a low of Rs201 and recorded volumes of over 73,000 shares on BSE.
Power Finance dropped by over 5% to Rs155 after the company announced its Q4 result with net profit at Rs2.97bn (down 19%). However, net sales were up 20.5% at Rs13.65bn. The scrip touched an intra-day high of Rs171 and a low of Rs153 and recorded volumes of over 13,00,000 shares on NSE.
Merck India gained by a percent to Rs336 after the company said that its Q1 profit rose 1.6% to Rs161.9mn and net sales were at Rs833.6mn (up 18.4%). The scrip touched an intra-day high of Rs348 and a low of Rs334 and recorded volumes of over 6,000 shares on NSE.
RPL slipped by over 2.6% Rs184. The company announced that the Board of Directors of the Company at its meeting approved the following disclosures, which were reviewed by the Audit Committee: the status of the Project as on March 31, 2008 is in accordance with the major milestones stated in the Prospectus dated April 28, 2006.
The Company had raised Rs81bn through Initial Public Offering. As on March 31, 2008, the Company has utilised Rs233.19bn for the Project against a projected utilisation of funds of Rs221.30bn. The variation is mainly due to payments in advance under project contracts for continued efficient and speedy implementation of the Project. Based on the progress made till date the Project is expected to be completed ahead of December 2008. The scrip touched an intra-day high of Rs195 and a low of Rs183 and recorded volumes of over 1,00,00,000 shares on NSE.
Indraprastha Gas was up by half a percent to Rs125. The company is reportedly planning to double spending on adding and upgrading outlets in March 2009, as per a news report. However, another report mentions that the oil regulator has asked Indraprastha Gas to stop all its expansion plans. IGL confirmed that the company had stopped all expansion plans in Delhi and the adjoining Noida. The scrip touched an intra-day high of Rs127 and a low of Rs125 and recorded volumes of over 27,000 shares on NSE.
AztecSoft surged by over 8% to Rs72 after the company announced its Q4 results with net income at Rs31.5mn (up 43.8%) and Q4 revenues at Rs687.1mn (up 8.5%). The scrip touched an intra-day high of Rs78 and a low of Rs67 and recorded volumes of over 2,00,000 shares on NSE.
Ceat rallied by over 20% to Rs124 after reports stated that the company would spend Rs10bn on expansion in the next two years. The scrip touched an intra-day high of Rs124 and a low of Rs105 and has recorded volumes of over 5,00,000 shares on NSE.

Corporate News
- SBI and Macquarie Capital Group to raise US$2bn fund that would invest in direct infrastructure investment opportunities in India. (BS)
- - Kesoram Cements will invest nearly Rs8.5bn to raise its capacity to 9.5mtpa. (BL)
- Vishal Retail to setup of a logistics company VRL Movers to address the issue of supply chain management. (BL)
- Pyramid Saimira is in talks to pick-up a stake in Delhi-based cinema chain, Satyam Multiplexes. (ET)
- TIMCO, a subsidiary of JSW Steel, hopes to start work on the Rs6.5bn iron-ore mining and beneficiation project next year. (BL)
- Shree Precoated plans to raise Rs10bn from PE firms. (ET)
- Zensar plans to acquire companies in Europe. (FE)
- Karuturi Global is set to buy a Dutch firm, Florinex. (ET)
- Mahindra Lifespace Developers to invest US$4.5bn in residential projects. (ET)
- Warburg Pincus buys 4.4% in Firstsource Solutions. (ET)
Economy News
- The initial forecast of the Indian Meteorological Department (IMD) for the South-West monsoon is near normal. (ET)
- Passenger car prices are likely to increase by 2-3% as auto companies have decided to pass on rising input cost. (ET)
- I&B Ministry will reduce license fee from 10% to 6% for DTH players. (ET)
- An inter-ministerial group has proposed a reduction in the excise on steel from 14% to 8%, import duty from 5% to zero and a reduction in the countervailing duty on steel imports from 14% to zero. (BS)
- The DoT to allocate start-up spectrum in seven more circles, in addition to Tamil Nadu. (BS)
- Government warns of stern steps to break cement and steel cartels. (BL)
- Government is considering a proposal to levy export duty on basmati rice. (ET)
- The Finance Minister has given assurance about restoring tax benefits for oil and gas E&P activities. (FE)
- The Indian crude basket touched a fresh high of US$106.4 a barrel on Tuesday. (BL)
- IMF has reduced India’s contribution to world GDP in purchasing power parity terms to 4.6% in 2007 from the earlier estimate of 6.4%.(BS

Precious metals glittering all along

Gold and silver prices rise as crude oil touches a new record high and dollar slumps


Bullion metals rose for the third straight day today, Wednesday, 16 April, 2008 after energy cost rose to a new all time high and dollar fell to extreme lows against the counterparts. Rising energy cost affects prices of bullion metals as a hedge against inflation. Silver prices also rose 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 rose $16.3 (1.7%) to close at $948.3 ounce on the New York Mercantile Exchange. Prices reached a high of $952.7 during intra day trading today. Last week, gold prices gained 1.4% ($13.8) to end at $927. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. Prices are 8.3% lower since that high.

This year, gold prices have gained 13.2% for the till date against a 8.5% 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 rose 47.5 cents (2.7%) to $18.325 an ounce. Silver has gained 22% 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 remained under pressure against most major counterparts, notching a fresh low against the euro after mixed U.S. economic data. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, fell 1% to 71.30.

Among major economic news, the Commerce Department reported that U.S. home builders started the fewest homes in 17 years, as housing starts plunged 11.9% to a seasonally adjusted annual rate of 947,000 in March. March's rate was the lowest for housing starts since March 1991. Starts were down 36.5% compared with March 2007.

In the energy market today, crude-oil futures rose more than $1 to surpass $115 a barrel after weekly inventory data showed a surprising drop in U.S. crude inventories and as the dollar dipped anew, raising oil's attraction as an investment alternative. Crude oil closed at $114.93 today, a new all time high.

The Fed has reduced its benchmark interest rate by 3 percentage points to 2.25 percent since last September as a housing slump and credit squeeze threatened to push the economy into a recession. Since last September, Fed has axed interest rates six times. The ECB has kept rates unchanged at 4% since June.

Gold, as a dollar-denominated commodity, suffers from dollar strength. On the contrary, gold prices rise with falling dollar as inflationary concerns boosts the metal's appeal as an inflation hedge.

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.

At the MCX, gold prices for June delivery closed higher by Rs 184 (1.5%) at Rs 12,175 per 10 grams. Prices rose to a high of Rs 12,247 per 10 grams and fell to a low of Rs 11,940 per 10 grams during the day’s trading.

At the MCX, silver prices for May delivery closed Rs 578 (2.5%) higher at Rs 23,736/Kg. Prices opened at Rs 23,120/kg and rose to a high of Rs 23,995/Kg during the day’s trading.

Orchid Chemicals April 2008 futures at steep discount

Turnover in F&O segment declines


Nifty April 2008 futures were at 4888.15, at a premium of 0.85 points as compared to spot closing of 4887.30.

The NSE's futures & options (F&O) segment turnover was Rs 39,646.97 crore, which was lower than Rs 46,369.75 crore on Tuesday, 15 April 2008.

Orchid Chemicals & Pharmaceuticals April 2008 futures were at discount, at 276.75 compared to the spot closing of 319.70.

Essar Oil April 2008 futures were near spot closing at 263.50 compared to the spot closing of 263.45.

Infosys Technologies April 2008 futures were at discount at 1590.75 compared to the spot closing of 1600.20.

In the cash market, the S&P CNX Nifty gained 7.65 points or 0.16% at 4887.30.

Crude on a rolling spree

Prices hit another new all time high as weekly report counters expectation for second straight time


Crude prices rose to record highs today, Wednesday, 16 April, 2008 as the weekly inventory report by the Energy Department countered expectation and also as the dollar fell to new lows against the euro due to mixed economic reports. The Energy Department reported that crude inventories fell unexpectedly last week while market was expecting a build up.

Crude-oil futures for light sweet crude for May delivery closed at $114.93/barrel (higher by $1.14/barrel or 1%) on the New York Mercantile Exchange. Prices touched $115.07/barrel during intra day trading. Yesterday also crude rose by more than $2 due to supply disruptions at Mexico and Nigeria. Last week, prices touched a high of $112.21 during intra day trading. Today’s closing price was a new all-time record for crude prices. Crude prices are 85% higher on a yearly basis. For the year, crude is up by 18% till date.

EIA reported today that crude inventories fell unexpectedly, down 2.3 million barrels to 313.7 million barrels in the week ended 11 April 11. Traders expected an increase of 1.5 million barrels. This is the second week crude-inventories data countered expectations.

EIA also reported gasoline supplies fell by 5.5 million barrels in the latest week, while distillate stocks rose by 100,000 barrels.

In the currency market today, the dollar remained under pressure against most major counterparts, notching a fresh low against the euro after mixed U.S. economic data. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, fell 1% to 71.30.

Crude prices, denominated in dollars, tend to rise when the greenback falls, as a weaker U.S. currency makes crude less expensive to buyers holding other currencies. It also eats into oil producers' dollar-denominated revenue and forces them to raise prices.

Brent crude oil for May settlement today rose $1.2 (1.2%) to $112.5 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 futures 39% higher this year

Natural gas in New York gained and natural gas for May delivery rose 22.8 cents (2.2%) to settle at $10.433 per million Btu. Futures are 39% higher so far this year.

Against this backdrop, May reformulated gasoline rose 5.8 cents to $2.939 a gallon and May heating oil fell slightly to $3.283 a gallon.

In its monthly report yesterday, The Organization of Petroleum Exporting Countries left its forecast for 2008 oil demand at 86.97 million barrels a day, a 1.2 million barrel-a-day gain over 2007.

At the pump, the average U.S. retail gasoline prices rose to a new high of $3.386 a gallon, up 1.3 cent from the day before and well ahead of the month-ago price of $3.285 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 4,547/barrel, higher by Rs 16 (0.35%) against previous day’s close. Natural gas for April delivery closed at Rs 417.2/mmbtu, higher by Rs 10.4/mmbtu (2.4%).

Today's Pick - Neyveli Lignite

We recommend a buy in Neyveli Lignite Corporation from a short-term perspective. From the charts of Neyveli Lignite Corporation, we see that the stock was on a medium-term downtrend for almost a quarter (from its early January 2008 high of Rs 273 to its late March low of Rs 101). However, during late March the stock found support at around key psychological level of Rs 100 and began to move up slowly. Thereafter, the stock breached the medium-term down trendline and 21-day moving average. On April 16, the stock surged 4 per cent breaching 50-day moving average. We note that there is an increase in volume over the past five trading sessions. The daily Relative Strength Index (RSI) is on the brink of entering the bullish zone from the neutral region. The weekly RSI took support at 40 levels and it is rising in neutral region. The moving average convergence and divergence is likely to enter the positive territory. Our short-term outlook for the stock is bullish. We expect the stock’s current up-move to prolong to our price target of Rs 159 in the short term. Investor with short-term perspective can buy the stock while keeping the stop-loss at Rs 130.

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NTPC

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