Tuesday, June 03, 2008
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Market falls, midcaps fall even more!
The Bombay Stock Exchange benchmark Sensex lost over 100 points to close the day below 16,000 points level on frantic selling in capital goods, IT and bank stocks.
The 30-share barometer, settled the day at 15,962.56, lower by 100.62 points after moving between 15,985.40 and 15,709.51 points. The key index even touched seven-week low during intra-day, but recovered partly. The Sensex had seen these low levels last on 10 April.
The wide-based National Stock Exchange index Nifty also fell by 23.70 points at 4,715.90, after touching the day’s high of 4,739.30 and a low of 4,634.00 points.
The selling pressure gathered momentum on weak global factors. Marketmen said a steep fall in global stock markets after rating agency Standard and Poor’s cut its rating on three of Wall Street’s firms reflected in domestic bourses as well. Renewing concerns over credit losses and a slow global economic growth also impacted the local markets, they added.
They said the downgrading of three biggest companies -- Morgan Stanley, Merrill Lynch and Lehman Brothers Holdings--pulled the financial markets across the globe.
Capital goods sector index suffered the most and lost 287.50 points at 12,521.25, followed by PSU index by 79.64 points at 6,728.19. IT index lost 68.26 points at 4,512.09, metal index by 53.18 points at 16,232.08 and bank index by 57.08 points at 7,397.25.
However, oil and gas index rose by 205.78 points at 10,412.49 and consumer durable index by 28.43 points at 4222.18.
Original Photo
Asian markets fall on global cues
Nikkei, Hang Seng Lead the fall while Straits Times, Shenzhen Composite Stand Aside
The Asian Markets remain volatile throughout the day trading mainly in negative arena.
The markets fall led by the banks and automakers on renewed concern on credit losses widening and slow global economic growth. The concern was raised after Standard & Poor's cut its debt ratings on three brokerages.
In U.S. the stocks notched their first decline in five sessions as on Monday reasoned by the Standard & Poor's cut its debt ratings on three large brokerages and after upheavals at Wachovia Corp. and Washington Mutual Inc. Yesterday on Wall Street, the Dow Jones Industrial Average lost 134.50 points to 12,503.82 and the Nasdaq Composite fell 31.13 points to 2,491.53, while the S&P 500 gave up 14.71 points to 1,385.67
In Hong Kong, the Hang Seng Index dropped 1.8% to 24,375.76 and the Hang Seng China Enterprises Index shed 2.9% to 13,621.98.
The Nikkei 225 Average lost 1.6% to 14,209.17, after advancing for three straight days, and the Topix index gave up 1.2% to 1,407.44.
Australia's S&P/ASX 200 declined 1.6% to 5,574.20 as the Reserve Bank of Australia (RBA) decided to leave its cash target rate at 7.25 percent during its monthly policy meeting today. In its statement the bank has reassured that it would continue to evaluate prospects for economic activity and inflation in the light of new information
First quarter headline and core consumer price index data showed inflation running at an annual pace of 4.2 %, well above the central bank's comfort zone of annual inflation being within a 2 to 3 % band.
In its statement the RBA said on balance, the board's current assessment is that demand growth will be moderate this year but in the short term inflation is likely to remain relatively high. It said a rise in Australia's terms of trade on the back of stronger commodity prices is currently adding substantially to national income and ability to spend, even with the slowing in global growth to below trend that the bank is assuming.
China's Shanghai Composite ended marginally lower by 0.7% to 3,436.40 while the Shenzhen Composite added 0.5% reaching 1,034.59 levels.
Elsewhere, New Zealand's NZX 50 index was down by 2.3% to 3,540.06 and South Korea's Kospi gave up early advances to drop 1.5% to 1,819.39.
Singapore's Straits Times Index inched up 1.1% to 3,153.94 and Taiwan's weighted index lost 1.7% to 8,579.43. Malaysia's KLSE Composite fell by 0.4% to 1,257.57 while the Thailand's SET tumbled by 0.7% to 576.12.
In the afternoon trading India's Sensitive Index, or Sensex, was down by 0.7% to 15,951.51and the broader S&P/CNX Nifty fell by 0.6% to 4,711.70.
In currency trading, the U.S. dollar changed hands for 104.37 yen versus 105.10 yen late Monday. The greenback bought 104.40 yen in late-Monday New York trading. This gain in the yen is eroding the value of overseas sales when converted into the local currency.
Oil prices eased in Asian trade on continuing concerns over global energy demand. New York's main oil futures contract, light sweet crude for July delivery, slipped 14 cents to $127.62 per barrel. The benchmark contract had closed at $127.76 on Monday at the New York Mercantile Exchange.
Crude oil has shed about $8 since striking record peaks of $135.14 in London and $135.09 in New York on 22 May 2008.
Losses from the banking sector and sports car maker Porsche kept European shares in check in the opening trade, offsetting an advance for French supermarket group Carrefour and deal-making moves for Corporate Express.
In the opening trade, the U.K. FTSE 100 index inched up 0.3% to 6,027.90, the German DAX 30 index fell 0.4% to 6,979.04 and the French CAC-40 index edged up 0.1% to 4,938.56.
However at 9.54 GMT the U.K. FTSE 100 index was stable with a gain of 0.3% to 6,025.50, the German DAX 30 index fell 0.2% to 6,993.04 and the French CAC-40 index edged up 0.3% to 4,950.27. The recovery was pioneered by the economic releases for the region.
On the economic front the producer prices for Euro-zone matched there biggest ever percentage gain on the year in April fueled by rising energy prices. Prices of goods leaving euro-zone factory gates rose 0.8% on the month and 6.1%% on the year in April, matching the record high annual increase seen in October 2000. Prices rose 0.7% on the month and a revised 5.8% on the year in March.
The data showed higher energy costs remained the key factor pushing up producer prices. Crude oil futures breached $135 a barrel for the first time last month.
Excluding construction and energy, prices rose 0.4% on the month, and 3.7% on the year. That follows gains of 0.4% on the month, and 3.8% on the year in March.
The energy component of the index rose 2.0% on the month and 14.3% on the year in April, the strongest gain on an annualized basis since it increased 14.9% in July 2006.
The data also showed the rise in producer prices of intermediate goods picked up on the month, prices for capital goods gained by the same amount, while the increase in the price for durable consumer goods and non-durable consumer goods slowed.
Meanwhile an unexpected boom in investment spending fueled a stronger than estimated rebound in the euro-zone economy during the first three months of the year.
According to the figures released by the Euro stat showed gross domestic product in the euro zone during the first quarter was 0.8% higher than in the fourth quarter, and 2.2% higher than in the first quarter of 2007. The quarter-on-quarter growth rate was revised up from Euro stat’s first estimate of 0.7%, while the year-on-year growth rate was unrevised. It was the strongest quarter-on-quarter performance since the final three months of 2006.
Euro stat also cut its estimate of GDP growth in the three months to December, to 0.3% on the quarter and 2.1% on the year from 0.4% on the quarter and 2.2% on the year previously.
Those revisions made the surprising rebound in the euro-zone economy even more dramatic than first thought, and increase the likelihood that the European Central Bank will raise its key interest rate to reduce an inflation rate that stood at 3.6% in May.
According to Euro stat, business investment increased 1.6% from the fourth quarter and accounted for half of the overall increase in economic activity during the first quarter. Consumer spending also rose, having contracted in the fourth quarter, but by a much more modest 0.2%. A build up in inventories and government spending also helped fuel growth, as did exports.
By sector, construction recorded the fastest rate of growth, increasing 1.9% from the fourth quarter, an unusually strong performance for the first three months of the year, when cold weather usually limits activity.
But activity in the financial and business services sector also picked up slightly, as did trade, transport and communications services.
Germany accounted for the bulk of the first-quarter pickup as the euro zone's largest economy grew 1.5%, up from 0.3% in the fourth quarter. But France and Italy also contributed to the pickup, with the latter's economy growing 0.4%, having contracted at the same rate in the fourth quarter. Of the euro zone's 15 members, only Portugal's economy failed to grow, contracting 0.2%.
The euro zone's performance was much stronger than that of the U.S., which grew just 0.2% quarter-on-quarter, but was matched by that of Japan.
BSE Bulk Deals to Watch - June 3 2008
Deal Date Scrip Code Scrip Name Client Name Deal Type * Quantity Price **
3/6/2008 532975 AISHWARYA TE TIRUPATI ONLINE B 231010 78.47
3/6/2008 532975 AISHWARYA TE S. M. NISSAR B 277484 83.36
3/6/2008 532975 AISHWARYA TE N D NISSAR B 229068 83.08
3/6/2008 532975 AISHWARYA TE DIPAK R RATHOD B 104557 78.96
3/6/2008 532975 AISHWARYA TE ASIAN FINANCIAL SERVICES LTD B 100000 84.22
3/6/2008 532975 AISHWARYA TE AMPOULES AND AUTO PVT LTD B 100500 83.99
3/6/2008 532975 AISHWARYA TE RINKU SANJAY JAIN B 80000 80.93
3/6/2008 532975 AISHWARYA TE KISHORE BALUBHAI CHAUH B 100000 84.97
3/6/2008 532975 AISHWARYA TE TIRUPATI ONLINE S 231010 86.11
3/6/2008 532975 AISHWARYA TE S. M. NISSAR S 277484 83.46
3/6/2008 532975 AISHWARYA TE N D NISSAR S 229068 83.06
3/6/2008 532975 AISHWARYA TE DIPAK R RATHOD S 104557 84.31
3/6/2008 532975 AISHWARYA TE RINKU SANJAY JAIN S 80000 82.66
3/6/2008 590061 BRUSHMAN IND PRAGYA MERCANTILE PVT LTD B 315000 111.16
3/6/2008 505923 CEEKAY DIAKI PRADEEP PASARI B 28000 67.47
3/6/2008 505923 CEEKAY DIAKI I S F SECURITIES LTD S 27995 67.47
3/6/2008 530713 CHOKSH INFO V B DESAI FIN SER LTD S 20000 30.01
3/6/2008 530985 JPTSECURITII ASTUTE COMMODITIES AND DERIVATIVES PVT LTD S 31763 69.14
3/6/2008 531746 PRAJAY ENG S DEUTSCHE SECURITIES MAURITIUS LIMITED B 500000 195.25
3/6/2008 531746 PRAJAY ENG S DEUTSCHE BANK AG LONDON GDR AC S 500000 195.25
3/6/2008 532884 REFEX REFRIG HIMAT PARSHOTTAMBHAI JATANIA B 270000 222.07
3/6/2008 531312 SANRA SOFTW AYODHYAPATI INVESTMENT PVT LTD B 211331 82.74
3/6/2008 531312 SANRA SOFTW AYODHPATI INVESTMENT PVT LTD S 212858 83.10
3/6/2008 532663 SASKEN COMM FIDELITY MANAGEMENT AND RESEARCH S 148163 128.62
3/6/2008 532498 SHRIRAM CITY INDIA ADVANTAGE FUND VI B 771483 389.25
3/6/2008 532498 SHRIRAM CITY VINAMRA UNIVERSAL TRADERS PVT. LTD S 771483 389.25
3/6/2008 532669 SOUTHBIOTEC MAVI INVESTMENT FUND LTD B 195000 29.15
3/6/2008 532669 SOUTHBIOTEC VINCENT COMMERCIAL CO LTD S 175000 29.17
3/6/2008 531088 TULIP STAR H ANAAN MERCANTILIES PVT. LTD. B 77618 312.66
NSE Bulk Deals to Watch - June 3 2008
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
03-JUN-2008,BRABOURNE,Brabourne Enterprises Ltd,THE SURAT SAFE DEPOSIT VAULT PVT LTD,BUY,102430,25.87,-
03-JUN-2008,GANESHHOUC,Ganesh Housing Corp Ltd,CITIGROUP GLOBAL MARKETS MAURITIUS PRIVATE LIMITED,BUY,520669,310.50,-
03-JUN-2008,GSSAMERICA,GSS America Infotech Limi,FIN BRAINS SECURITIES (INDIA) LTD.,BUY,99697,346.89,-
03-JUN-2008,MASTEK,Mastek Ltd,MASTEK LIMITED,BUY,232549,402.36,-
03-JUN-2008,MAXWELL,Maxwell Industries Ltd.,KAPIL JAYKUMAR PATHARE,BUY,1070185,17.00,-
03-JUN-2008,MAXWELL,Maxwell Industries Ltd.,SUNIL JAYKUMAR PATHARE,BUY,1498050,16.87,-
03-JUN-2008,ORIENTHOT,Oriental Hotels Ltd,RELIANCE CAPITAL TRUSTEE COMPANY LTD,BUY,199502,260.00,-
03-JUN-2008,STAR,Strides Arcolab Limited,AGNUS HOLDINGS Pvt. Ltd.,BUY,500000,154.00,-
03-JUN-2008,BALRAMCHIN,Balrampur Chini Mills,MORGAN STANLEY MAURITIUS COMPANY LTD,SELL,2179542,80.43,-
03-JUN-2008,BRABOURNE,Brabourne Enterprises Ltd,THE SURAT SAFE DEPOSIT VAULT PVT LTD,SELL,41341,25.54,-
03-JUN-2008,GANESHHOUC,Ganesh Housing Corp Ltd,KOTAK MAHINDRA UK LTD A/C MONSOON INDIA INFLECTION FUND LTD,SELL,520669,310.50,-
03-JUN-2008,GSSAMERICA,GSS America Infotech Limi,FIN BRAINS SECURITIES (INDIA) LTD.,SELL,99697,347.01,-
03-JUN-2008,MASTEK,Mastek Ltd,YASH JOSHI,SELL,182753,402.50,-
03-JUN-2008,MAXWELL,Maxwell Industries Ltd.,SHOBHA JAIPAL REDDY,SELL,994000,17.00,-
03-JUN-2008,MAXWELL,Maxwell Industries Ltd.,VINAY JAIPAL REDDY,SELL,1574235,16.87,-
03-JUN-2008,ORIENTHOT,Oriental Hotels Ltd,CITIGROUP GLOBAL MARKETS MAURITIUS PVT.LTD,SELL,200000,260.01,-
03-JUN-2008,SASKEN,Sasken Commu Techno Ltd,FIDELITY MANAGEMENT AND RESEARCH COMPANY A/C FIDELITY INVEST,SELL,290000,128.65,-
03-JUN-2008,STAR,Strides Arcolab Limited,GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD,SELL,500000,154.00,-
Post Session Commentary - June 3 2008
The Indian market staged a smart recovery towards the end of the session after a tumbling start on the back of weak cues from the global markets. The market came from the lower level to close with marginal losses. The market tumbled at the start due to the worries of political uncertainty that Left may withdraw its support from the UPA over the concern of hiking domestic fuel price. Also, the lowering of ratings on Lehman Brothers Inc., Merrill Lynch & Co. Inc. and Morgan Stanley by Standard & Poor''s Ratings Services also adds to the negative sentiment in the market. Further, the market recovered smartly to pare most of its losses on the back European markets, which opened in green. From the sectoral front, the cement shares gained some grounds on the back of reports that the government has restored benefits under the duty entitlement pass book (DEPB) scheme on export of cement, with immediate effect. The oil & gas stocks were in limelight and contributed in recovering the market marginally from its losses. However, the capital goods, power and IT stocks were not in favor as heavy selling was seen from these baskets. The market breadth was negative as 847 stocks closed in green while 1818 3stocks closed in red and 57 stocks remained unchanged.
The BSE Sensex closed lower by 100.62 points at 15,962.56 and NSE Nifty fell by 23.70 points to close at 4,715.9. The BSE Mid Cap and Small Cap closed down by 36.89 points and 77.22 points to 6,547.30 and 7,882.29 respectively.
Losers from the BSE are Bharti Airtel (4.14%), Reliance Infra (3.87%), Satyam Computers (3.64%), BHEL (2.95%), HDFC (2.84%), J P Asso (2.57%), L&T Ltd (2.30%), HDFC Bank Ltd (1.84%), Infosys Tech (1.45%) and NTPC Ltd (0.74%).
The Capital Goods index was down by 287.50 points to close at 12,521.25. Major losers are Kalpat Power (5.81%), Suzlon Energy (3.60%), Kirposkar Oil Eng (3.36%), BHEL (2.95%), ABB Ltd (2.65%) and Elecon Eng (2.65%).
The Power index closed lower by 74.54 points at 2,754.20, losers are Rel Power (4.29%), Reliance Infra (3.87%), Power Grid (3.65%), Suzlon Energy (3.60%), CESC Ltd (3.37%), BHEL (2.95%) and Tata Power (2.91%).
The IT index closed lower by 68.26 points at 4,512.09. Losers are MPHASIS Ltd (5.35%), Satyam Computers (3.64%), HCL Tech (3.44%), Moser Bayer (3.19%), Patni Computers (2.56%), and Finance Tech (1.74%).
The Metal Index closed lower by 63.18 points at 16,232.08. Losers are Bhushan Steel (4.24%), Gujarat NRE C (4.08%), Nat Alu C (3.95%), Sh Precoated 3.275%), Sterlite In (1.61%)%) and Maharashtra Sea (1.10%).
The Banking index fell by 57.08 points to close at 7,397.25 as Bank of Baroda (4.62%), Union Bank (4.37%), Yes Bank (3.91%), Federal Bank (3.13%), Canara Bank (3.10%), and CBOP (3.08%) closed in negative territory.
The Oil & Gas index increased by 205.78 points at 10,412.49. Gainers are Essar Oil Ltd (5.52%), Cairn India (3.41%), IOC (3.03%), HPCL (2.77%) and Reliance (2.17%).
Market hammered amid oil woes
Stocks across-the-board witnessed another round of correction as sentiment remained bearish for the second straight session on crude oil worries (over $127 a barrel in the US market), liquidity squeeze in the domestic market and fall in other Asian indices. The market had dropped over 350 points yesterday. Major Asian indices like the Hang Seng, the Kospi, the Jakarta and the Straits Times shed over 1% each, thereby adding pressure on the domestic indices.
After resuming 211 points lower at 15,852, the market remained under the grip of sustained selling pressure. Extensive correction in heavyweights, power and capital goods stocks in noon trades dragged the index below the 15,750 mark to the day's low of 15,710. Towards the day’s close, market witnessed buying in oil & gas stocks which helped it to recover from the day’s low. Finally the Sensex ended the session at 15,963, down 101 points, while the Nifty shed 24 points to close at 4,716.
Except oil & gas, consumer durables (CD), auto and health care (HC) indices, all other sectoral indices were hammered on the back of relentless selling pressure. The BSE Power index dropped 2.64% at 2,754, the BSE CG index lost 2.24% at 12,521, the BSE Teck index shed 1.69% at 3,501.40 and the BSE IT index fell 1.49% at 4,580.
The market breadth was extremely weak. Of the 2,722 stocks traded on the BSE 1,818 stocks declined, 847 stocks advanced and 57 stocks ended unchanged. Among the major losers Bharti Airtel shed 4.14% at Rs841.35, Reliance Infra declined 3.87% at Rs1,125.15, Satyam Computer Services fell by 3.64% at Rs499.75, BHEL slipped by 2.95% at Rs1,548.50, HDFC Bank dipped 2.95% at Rs2,458.90, Jaiprakash Associates lost 5.45% at Rs206.45 and L&T slumped 2.30% at Rs2,849.10. ACC, however, gained 3.74% at Rs649.50 followed by Ranbaxy Laboratories that scaled up 3.09% at Rs529.95 while DLF, Wipro and Reliance Industries ended with steady gains.
Power stocks slipped sharply. Reliance Power tumbled nearly 4.29% at Rs218.80, Power Grid slumped 3.65% at Rs1,125.15, Suzlon Energy dropped 3.60% at Rs258.40, CESC declined 3.37% at Rs463.35, BHEL dipped 2.95% at Rs1,548.50, Tata Power fell 2.91% at Rs1,254.40 and ABB was down 2.65% at Rs998.50.
On the volume front, IFCI witnessed over 2.14 crore shares changing hands followed by Ispat Industries (1.44 crore shares), Aishwarya Telecom (1.11 crore shares), Chambal Fertilisers (98.27 lakh shares) and Reliance Natural Resources (96.15 lakh shares).
Valuewise, Reliance Industries registered a turnover of Rs279 crore followed by India Reliance Capital (Rs211 crore), Essar Oil (Rs165 crore), Reliance Petroleum (Rs155 crore) and IFCI (Rs128 crore).
Sensex sheds 101 points in choppy trade
The market staged a smart intra-day rebound in second half of the day’s trading session led by recovery in Reliance Industries (RIL). Panic selling in early trade by wary investors kept market depressed in the first half. Fears in the market were that Left parties might withdraw support to the government, which may lead to early election. The market witnessed choppy swings throughout the day. Cement sector was the start sector of the day.
European markets, which opened before Indian market, were mixed. Asian markets which opened before Indian market recovered from early lows.
The Revolutionary Socialist Party (RSP), a part of the Left front, is reportedly pulling out of the United Progressive Alliance (UPA)-Left coordination committee. RSP has been seeking withdrawal of support to the UPA government since the last three years. The party is now planning to to step up pressure on the other Left parties to withdraw their support to the Manmohan Singh government, reports suggest
The 30-share BSE Sensex settled 100.62 points or 0.63% lower at 15,962.56, after opening 211.46 points lower at 15,851.72. Sensex shed 77.78 points at day’s high of 15,985.40 hit in mid-afternoon trade. The barometer index plunged 353.67 points at day’s low of 15,709.51 hit mid-afternoon trade.
The broader based S&P CNX Nifty fell 23.70 points or 0.5% at 4,715.90. Nifty swung wildly in a range of 4634 and 4739.30 during the day. Nifty June 2008 futures were at 4706, a discount of 9.9 points as compared to spot closing
The market breadth was weak on BSE with 1810 shares declining as compared to 860 that advanced. 55 remained unchanged.
The BSE Mid-Cap index declined 0.56% to 6,547.30 and the BSE Small-Cap index shed 0.97% to 7,882.29
The total turnover on BSE amounted to Rs 5229 crore as compared to Rs 4,809.14 crore yesterday, 2 June 2008. Turnover in NSE’s futures & options segment amounted to Rs 40448.71 crore as compared to Rs 35257.77 crore yesterday, 2 June 2008.
Sectoral indices on BSE displayed mixed trend. The BSE Oil & Gas index (up 2.02% to 10,412.49), BSE FMCG index (down 0.33% to 2,403.54), BSE Auto (up 0.27% at 4,370.05), BSE Health Care index (up 0.23% at 4,360.26), BSE Realty index (down 0.02% at 6,726.25), BSE Metal index (down 0.39% to 16,232.08), and BSE Consumer Durables index (up 0.68% to 4,222.18), outperformed the Sensex.
The BSE Power (down 2.64% to 2,754.20), BSE Bankex (down 0.77% at 7,397.25), BSE Capital Goods index (down 2.24% at 12,521.25), BSE TecK index (down 1.69% to 3,501.40), BSE PSU index (down 1.17% to 6,728.19), underperformed the Sensex.
Among the 30-member Sensex pack, 18 declined while the rest gained.
India’s largest cellular services provider Bharti Airtel slumped 4.23% to Rs 840.55 on 4.15 lakh shares. The stock had hit an intra-day high of Rs 868.65 in opening trade. It was the top loser from Sensex pack.
Select Sensex stocks staged a smart recovery from early lows. Reliance Infrastructure (down 3.72% to Rs 1126.90, off day’s low of Rs 1085), HDFC (down 2.87% to Rs 2458, off day’s low of Rs 2432), Bharat Heavy Electricals (down 2.86% to Rs 1550, off day’s low of Rs 1501.15) and Jaiprakash Associates (down 2.31% to Rs 207, off day’s low of Rs 200.20) recovered.
India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries (RIL) advanced 2.31% to Rs 2410 on 11.65 lakh shares. As per reports, the Punjab Infrastructure Development Board (PIDB) has received proposals from Reliance Industries and Omaxe to set up an expressway from Pathankot to Ajmer and a ring road around Amritsar respectively.
India’s fourth largest software services exporter Satyam Computer Services shed 3.31% to Rs 501.50 after Upaid Systems said it has filed fresh claims as part of court proceedings against Satyam in a US court, which could raise possible damages beyond the earlier stated $1 billion.
In 2005, a patent infringement court case was initiated in Texas against third parties which revealed the use of forged signatures by Satyam employees on critical documents provided to Upaid by Satyam.
India’s largest private sector engineering company in terms of order book Larsen & Toubro declined 2.44% to Rs 2845. The company said on Monday, 2 June 2008, it is seeking shareholders' approval to transfer its medical equipment and systems business to a subsidiary or to sell it.
Private sector banking shares declined tracking fall in their American Depository Receipt (ADRs) on the New York Stock Exchange yesterday, 2 June 2008. ICICI Bank lost 0.90% to Rs 757.95 after its ADR slumped 6% and HDFC Bank shed 0.40% to Rs 1306 after its ADR fell 5.5%.
India’s largest bank in terms of market capitalisation State Bank of India (SBI) slipped 0.94% to Rs 1381
India’s second largest software services exporter Infosys Technologies was down 1.38% to Rs 1924, off day’s low of Rs 1882. The company received two patents from US Patent and Trademark Office in the areas of holography and mobile communications. The company made this announcement during trading hours today, 3 June 2008.
India’s largest pharma company in terms of sales Ranbaxy laboratories surged 3.67% to Rs 532.90 on 4.34 lakh shares. It was the top gainer from Sensex pack
Cement shares advanced on fresh buying. India's largest cement company in terms of sales ACC advanced 3.50% to Rs 648. The company has reportedly short listed some companies for acquisition. ACC has cash reserves of Rs 1000 crore which it would use for expansion and acquisition, reports suggest.
India’s second largest cement company in terms of sales Ambuja Cements rose 0.16% to Rs 92.40 even on company said its cement shipments fell 1% to 1.51 million tonnes in May 2008 over May 2007. Ambuja Cements' production fell 1% to 1.49 million tonnes in May 2008 over May 2007.
UltraTech Cement Company (up 1.28% to Rs 650), Prism Cement (up 2.44% to Rs 37.80), India Cements (up 4.38% to Rs 165.85), and Mysore Cements (up 6.42% to Rs 35.65) advanced.
As per reports, the government has done a flip flop on tax refunds for cement exports today, by withdrawing the benefit that was allowed only yesterday. The Directorate General of Foreign Trade revoked yesterday's notification which had restored the duty entitlement pass book scheme refund of local taxes on cement exports.
India's largest truck maker by sales Tata Motors rose 1.43% to Rs 571 after the company said on Monday it had completed the $2.3 billion acquisition of British luxury brands Jaguar and Land Rover.
Wipro (up 2.57% to Rs 508), ONGC (up 1.49% to Rs 845.55), DLF (up 2.53% to Rs 582), and Cipla (up 1.49% to Rs 210.85), edged higher from Sensex pack.
Reliance Industries was the top traded counter on BSE with turnover of Rs 278.70 crore followed by Reliance Capital (Rs 211.62 crore), Essar Oil (Rs 165.49 crore), Reliance Petroleum (Rs 155.16 crore), and IFCI (Rs 128.35 crore), in that order.
IFCI topped the volumes chart clocking volumes of 2.14 crore shares followed by Ispat Industries (1.45 crore shares), Aishwarya Telecom (1.12 crore shares), Chambal Fertilisers (98 lakh shares) and Reliance Natural Resources (96 lakh shares), in that order.
Shares of air carriers slipped after they raised fuel surcharge in line with rising jet fuel prices. Deccan Aviation (down 6.15% to Rs 104.50), SpiceJet (down 2.56% to Rs 30.50) and Jet Airways (down 0.33% to Rs 539.55) edged lower.
Punj Lloyd slipped 1.80% to Rs 281.95 after tumbling 10.53% yesterday, 2 June 2008. The sell-off was triggered after the company’s auditors commented that no provision has been made for expected losses of Rs 305 crore arising out of one of the contracts.
Kirloskar Brothers declined 1.77% to Rs 222.50 even as the company said it is reorganising its business into nine divisions to achieve a revenue target of $1 billion by 2011.
Adhunik Metaliks rose 2.85% to Rs 179.50 after its board approved initial public offer of the company's 100% subsidiary viz. Orissa Manganese & Minerals. The company announced this after market hours on Monday, 2 June 2008.
Mahanagar Telephone Nigam rose 2.50% to Rs 96.35 after its American Depository Receipt surged 13.8% to $4.61 on the New York Stock Exchange on Monday, 2 June 2008.
ABB declined 2.60% to Rs 999 despite winning an order worth Rs 295 crore to provide power solutions to JSW Energy for its upcoming 1200 megawatt thermal power plant in Ratnagiri, Maharashtra.
National Aluminium Company fell 4.26% to Rs 485 after the company reportedly lowered price of flat-rolled products by as much as Rs 3,500 a tonne to Rs 159,400 a tonne
Prime Minister Manmohan Singh yesterday, 2 June 2008, indicated that the government is left with no option but to hike the fuel prices in the wake of soaring global crude oil prices. However government's move to hike fuel price will face challenge from Left, and may propel inflation above 10%.
On the other hand, if government does not hike prices, oil marketing companies will go bankrupt, spoiling its report card.
European markets, which opened before Indian market, were mixed in opening session. Key benchmark indices in United Kingdom (up 0.03% to 6,009.40), and France (up 0.06% to 4,938.15), rose. However Germany’s DAX index slipped 0.46% to 6,976.87
Asian markets, which opened before Indian market, rebounded from early lows, but were still in the red. Shanghai Composite (down 0.65% at 3,436.80), Japan's Nikkei (down 1.60% at 14,209.17), Hong Kong's Hang Seng (down 1.83% at 24,375.76), Taiwan's Taiwan Weighted (down 1.64% at 8,581.35), Straits Times (down 1.13% at 3,151.98) and South Korea's Seoul Composite (down 1.44% at 1,821), edged lower.
US markets declined yesterday, 2 June 2008, on renewed fears that the credit crunch is yet to run its course after S&P downgraded debt ratings of three big securities companies. In the economic news, the May Institute of Supply Management (ISM) index, rose 2.1%, suggesting a slight contraction in United States manufacturing activity.
The Dow Jones industrial average plunged 134.50, or 1.06%, to 12,503.82. The S&P 500 index slipped 14.71 points, or 1.05%, to 1,385.67. The Nasdaq Composite index was down 31.13 points, or 1.23%, to 2,491.53.
US light crude for July delivery fell 50 cents a barrel to $127.26 today, 3 June 2008, as the start of the hurricane season stirred concerns that oil and natural gas output could be disrupted in the Gulf of Mexico. London Brent crude fell 80 cents to $127.22 a barrel today.
Morning Call - June 3 2008
Market Grape Wine :
Out House :
Markets at a support of 15786 & 15858 resistance at 16161 & 16261 levels .
Buy : INFY & Satyam at dips
Buy : LT at dips
Buy : HP & BPCL
Buy : Suzlon at dips
Buy : Bharti
Buy : Core & Emami at dips
Buy : ITC & HLL
Dark Horse : HLL , Suzlon , HDFC , ITC , Core , RIL & LT
Indian clout shown on world scene
Vedanta Resources' purchase of the bankrupt US copper miner Asarco for $2.6 billion in cash has highlighted the growing global clout of companies from emerging markets like India, the Wall Street Journal (WSJ) has said.
The deal announced Saturday by Sterlite Industries, a unit of Vedanta, is the latest in a string of foreign deals by Indian companies, the business daily said in a story headlined "Copper deal in US shows Indian firms' growing reach".
Companies in developing economies, flush with cash, are striking deals, in many cases snapping up established Western companies that have fallen on hard times, the paper said.
Countries such as India and Brazil are taking a larger piece of the mergers-and-acquisitions (M&A) pie. Emerging-market M&A activity in 2008 so far is up 17 percent over last year at this time, to $218 billion, while for the rest of the world it is down 43 percent, to $991 billion.
The WSJ cited a few examples of M&A activity in India. Reliance Communications is in talks with South Africa's MTN Group for a possible merger, which will create one of the world's biggest cellphone companies.
Tata Motors, part of the Tata group of companies, earlier this year, purchased the Land Rover and Jaguar brands from Ford for $2.3 billion. Sister company Tata Steel bought the Anglo-Dutch steel company Corus Group last year for about $12 billion.
The Asarco deal, the WSJ said, would mark a turning point for the world's mining giants, creating a showdown between a powerful Latin American group - bidder Grupo Mexico which wants to challenge the sale and restore its ownership over the company - and an Asian rival for control over a US corporation.
Though Vedanta shares are listed on the London Stock Exchange, most of the company's assets are in India. Chairman Anil Agarwal and his family control the company, which saw its share price rise about 70 percent in the past year. The company had sales of $8.2 billion during the last financial year.
Vedanta produces aluminum, copper, zinc and lead, with copper operations in India and smelting and refining operations in Zambia. The company is not known for acquisitions, but the few it has made, including the 2004 purchase of a majority stake in Zambia's Konkola copper mines, have paid off quickly, the WSJ said.
Grupo Mexico contends the court-ordered auction for Asarco was flawed. The company insists it offered to pay Asarco creditors in full when initial bids were submitted in April.
Asarco's attorneys say Grupo Mexico can't know the value of what "paid in full" will be until all environmental litigation is settled, which could take years.
Litigation relates to disputes involving potential contamination at former Asarco sites in the western region of US. Earlier this year, New Mexico challenged the reopening of an Asarco smelter in El Paso, Texas, near the New Mexico border, which was closed in 1999.
Pre Market Watch - June 3 2008
The Indian Market is likely to open in negative zone on the back of weak cues from the global markets as US markets closed in red and Asian markets are trading in negative. On Monday, Indian market closed with heavy losses after giving up its initial gains due to the heavy selling pressures led by the weak opening of the European markets. The domestic market opened with positive sentiment but was unable to sustain the momentum after the mid session and slipped sharply to close in deep red on the back of fuel price worries. According to the prime minister, government is not getting any way other than increasing the price of fuel due to soaring price of crude oil in the global market. This statement is indicating imminent increase in fuel prices. From the sectoral front, the metal and capital goods stocks were not in favour. Realty, banking and oil & gas stocks also contributed in increasing the pressure. The BSE Sensex closed lower by 352.39 points at 16,063.18 and NSE Nifty fell by 130.90 points to close at 4,739.60. We expect that the market may remain cautious as it may decline further during the trading session.
The Indian rupee climbed to a two-week high of 42.40/41 a dollar on Monday on the back of a statement of the RBI that it would provide foreign exchange to oil refiners which in turn will reduce dollar demand in the currency market. It had closed at 42.46/47 a dollar on Friday.
On Monday, the US market was closed in red due to concerns of more write downs as Standard & Poor''s Ratings Services on Monday lowered its ratings on Lehman Brothers Inc., Merrill Lynch & Co. Inc. and Morgan Stanley. This was because of concerns about further write-downs in their holdings of U.S. mortgage and residential construction loans. The Dow Jones Industrial Average (DJIA) closed lower by 134.50 points at 12,503.82 along with NASDAQ went down by 31.13 points to close at 2,491.53 and S&P 500 dropped by 14.71 points to close at 1,385.67.
Major Indian ADRS closed on low note as in technology sector, Satyam dropped by (3.64%) along with Infosys by (2.73%), Wipro by (2.33%) and Patni Computers by (1.37%). In banking sector, ICICI bank and HDFC bank decreased by (6.20%) and (5.39%) respectively. In telecommunication sector, MTNL advanced by (13.83%) while Tata Communication decreased by (2.84%). Sterlite industries went down by (1.54%).
Today the major stock markets in Asia are trading negative. Hang Seng is trading down by 370.25 points at 24,461.11 along with Japan''s Nikkei dropped by 218.35 points at 14,221.79 and Taiwan Weighted Index is trading at 8,651.14 lower by 73.33 points.
The FIIs on Monday stood as net buyer in equity. The gross equity purchased was Rs4,215.20 Crore and the gross debt purchased was Rs0.00 Crore while the gross equity sold stood at Rs3,960.60 Crore and gross debt sold stood at Rs0.00 Crore. Therefore, the net investment of equity reported was Rs254.60 Crore and net debt was Rs0.00 Crore.
Today, Nifty has support at 4,541 and resistance at 4,756 and BSE Sensex has support at 15,422 and resistance at 16,154
Market geared for weak opening
Local equities are braced for lower start tracking weakness in global markets. However local factors like fears of early election would play a bigger role in influencing the near term market trend. Wary investors had pressed heavy sales yesterday, 2 June 2008 over uncertainty that Left parties may withdraw support to the government.
Prime Minister Manmohan Singh reportedly said that the government is left with no option but to hike the fuel prices in the wake of soaring global crude oil prices. However government's move to hike fuel price will face challenge from Left, and may propel inflation above 10%.
On the other hand, if government does not hike prices, oil marketing companies will go bankrupt, spoiling its report card.
In coming weeks, markemen would be eyeing two things. One would be progress of monsoon and second would be the advance tax figures.
Asian markets were trading weak today, 3 June 2008. Shanghai Composite (down 0.46% at 3,443.10), Japan's Nikkei (down 1.51% at 14,221.79), Hong Kong's Hang Seng (down 1.49% at 24,461.11), Taiwan's Taiwan Weighted (down 0.84% at 8,651.14), Straits Times (down 0.96% at 3,157.45) and South Korea's Seoul Composite (down 1.17% at 1,825.89), edged lower.
US markets declined yesterday, 2 June 2008, on renewed fears that the credit crunch is yet to run its course after S&P downgraded debt ratings of three big securities companies. In the economic news, the May ISM index, rose 2.1%, suggesting a slight contraction in United States manufacturing activity.
The Dow Jones industrial average plunged 134.50, or 1.06%, to 12,503.82. The S&P 500 index slipped 14.71 points, or 1.05%, to 1,385.67. The Nasdaq Composite index was down 31.13 points, or 1.23%, to 2,491.53.
Back home, mounting political concern rattled bourses since second half of day's trading session, wiping-off steady early gains, yesterday, 2 June 2008. The 30-share BSE Sensex eroded a sharp 352.39 points or 2.15% to 16,063.18 and the broader based S&P CNX Nifty declined 130.5 points or 2.68% to shut shop at 4,739.60, on that day.
As per provisional data, foreign funds sold shares worth a net Rs 349.84 crore yesterday, 2 June 2008. Domestic funds bought shares worth a net Rs 9.81 crore on that day.
Foreign institutional investors (FIIs) were net buyers of Rs 242.85 crore in the futures & options segment yesterday, 2 June 2008. They were net sellers of index futures to the tune of Rs 923.24 crore and bought index options worth Rs 759.95 crore. They were net buyers of stock futures to the tune of Rs 390.03 crore and bought stock options worth Rs 16.11 crore.
Financials weigh heavy at US Market
Two better than expected economic reports fail to excite buyers
US Market kicked off the month of June on a low note today, Monday, 02 June, 2008 after the indices posted sufficient losses on the very first day of the month. Buyers did not show much interest as the month of June got underway despite two better-than-expected economic reports. The financial sector was the main laggard today as renewed angst over the possibility of further writedowns in the sector. But the decline was not just limited to the financial sector as weakness was broad-based with nine of the ten economic sectors ending the day lower. Energy was the lone gainer as oil prices crawled up marginally.
Among major economic news of the day in US, the May Institute of Supply Management (ISM) Index, a national manufacturing survey, rose 2.1% to 49.6, topping the consensus estimate of 48.5. The index suggests a slight contraction in manufacturing activity, as the number falls short of 50. Separately in another report, April construction spending fell 0.4% month-over-month, which was modestly better than the expected decline of 0.6%.
After lingering in the red for the entire day, the Dow Jones was down by more than 175 points at one point of time. But at the end, the Dow Jones industrial Average ended the day with a loss of 134 points at 12,506.82. The Nasdaq Composite Index, finished lower by 31.13 points at 2,491. S&P 500 finished lower by 14.71 points at 1,385.67.
Within the Nasdaq 100, 88% of stocks posted a loss. Apple, Qualcomm and Microsoft were the main laggards.
Concerns surrounding the weak U.S. economy and the earnings environment once again became today’s headliner. Standard & Poor's announced that it cut its debt ratings on investment banks Merrill Lynch, Lehman Brothers and Morgan Stanley. Separately, the outlook for JPMorgan Chase and Bank of America was lowered to negative from stable.
Financials were facing the most selling pressure today also after Wachovia’s board of directors ousted its CEO. On a similar note, Washington Mutual's CEO relinquished his Chairman position to an independent director.
Crude prices ended marginally higher for the second consecutive day today. Prices rose after concerns regarding demand for oil were eased. Prices also climbed because of a rally in the natural gas market, which advanced on signs that competition for the fuel will increase as the weather warms. The hurricane season in the Atlantic, which has the potential to disrupt oil and natural gas production in the Gulf of Mexico, officially began on 1 June. Crude-oil futures for light sweet crude for July delivery today closed at $127.76/barrel (higher by $0.41/barrel or 0.3%) on the New York Mercantile Exchange. Prices rose to a high of $129.35 earlier during the session.
At the currency markets on Monday, the dollar got a lift after U.S. manufacturing data were better than expected. The Institute for Supply Management's index for May improved to 49.6% from 48.6% in April, and came in above the 48.7% consensus expectation. But the dollar weakened on the heels of a decline in the broader U.S. stock market and stronger oil prices. Against this backdrop, the dollar index, which tracks the greenback against a basket of six major currencies, was at 72.910 as against previous closing of 73.107.
For tomorrow, the economic calendar features the release of factory orders data for April and the May figures for auto and truck sales. But the item of most interest will be Fed Chairman Bernanke's speech on the economic outlook at the International Monetary Conference that will be given at 9:00 AM ET. Other than that, home builder Toll Brothers is the most notable and will report its results before the start f trading.
Today's Pick - Moser Baer
We recommend a sell in Moser Baer India from a short-term perspective. The stock has been on an intermediate-term down trend from its January 2008 peak at Rs 344.
However, the corrective up move from March low of Rs 119 to May high of Rs 201 in the stock has retraced almost 38.2 per cent fibonacci retracement of its prior down move. After encountering resistance at around Rs 200, the stock resumed the downtrend. It tumbled 5 per cent, penetrating the 21-day moving average on June 2, 2008.
The daily momentum indicator is declining in the neutral region. The moving average convergence and divergence has displayed negative divergence and is indicating a sell. Our short-term outlook for the stock is bearish. We expect the stock to decline further until it hits our price target of Rs 150 in the short-term. Traders with short-term perspective can sell the stock while keeping the stop-loss at Rs 182 leve
via BL
Fall may extend
After coming under a sharp hammering in the last hour of the yesterday's trades, the market may correct further amid sharp fall in global indices. All the Asian indices have eased in morning trades, with Nikkei and Kospi index bearing the brunt with a fall over 1% each. However, the market may find some solace in the form of a FIIs buying equities worth Rs254.60 crore on Friday. On the technical front, the Nifty should find support at 4700 and a break below this level could see it slip further to 4660, while it may test higher levels around 4800. The Sensex has a likely support at 15950 and may face resistance at 16250.
US indices fell on Monday with the Dow Jones dropped 135 points at 12504 and the Nasdaq ended 31 points lower at 2492.
Execept MTNL and Dr Reddy, rest of the Indian floats had a weak outing on the US bourses. ICICI Bank led the slump and dropped over 6.20% followed by HDFC Bank moved down 5.39% while Satyam, Tata Motors, Rediff, Infosys, Wipro, VSNL and Patni Computer tumbled over 1-3% each. However, MTNL shrugged off the weak trend and rose nearly 13.83% and Dr Reddy was up over 2.64%.
Crude oil prices raised marginally on Monday. The Nymex light crude oil for July delivery gained by 41 cents to close at $127.76. In the commodity space, the Comex gold for August series advance by $5.40 to settle at $896.90 a troy ounce.
Trading Calls - June 3 2008
Nifty (4740) Supp 4630 Res 4820
Sell Educomp (3870) 3895
Target 3825, 3815
Sell Tata Power (1295) SL 1310 Target 1260, 1250
Sell Cairn (272) SL 277
Target 262, 259
Sell Adlabs (597) SL 603
Target 585, 580
Buy Dr Reddy's (720) SL 714
Target 732, 736
Float around, don’t fall
When you stand at the edge of the cliff, jump to fly, not to fall.
Our request not to get alarmed didn’t seem to go well as the Prime Minister’s signal of a fuel price hike increased worries about inflation. As a result, after a positive start, the key indices suddenly fell from the cliff. Sentiment also dipped (for lack of other reasons) after the RSP - member of the Left Front - decided to pull out from the UPA-Left coordination committee. Such political developments need not cause much worry but the bulls seem to take it as an indication of further trouble for the fragile Congress-led coalition in the run up to next year's general elections. Then there were fresh worries over the global financial turmoil after UK lender Bradford & Bingley revised its rights issue at a 33% discount and warned that conditions were getting worse. Later in the evening, US shares slipped after S&P slashed its ratings and outlook on top Wall Street firms. Management shakeup at Wachovia and Washington Mutual also stoked renewed worries about the health of the global financial sector.
We expect our market to extend yesterday's selloff, given the plethora of negative factors, both local and global. Also, technical and F&O indicators are far from positive, and signal more pain in the immediate future. Select buying may always take place at lower levels. Review your financial comfort before adding stocks. Remain cautious at this juncture as the undertone has suddenly taken a reverse swing. FIIs continue to be net sellers. Supporting the market at this juncture is not on anyone’s agenda. 4800 was seen as a big support for the Nifty. But, that level was breached quite easily yesterday. The put-call ratio of option contracts expiring in June is also indicating further slide. Nifty futures continues to trade at a discount to the spot index and saw addition in its open interest, suggesting fresh build up in short positions. It remains to be seen if these shorts will get covered over the next few days or will there be further increase. Given this backdrop, one has no choice but to stay on the sidelines before there is more clarity on the market's direction.
DLF and Engineers India will declare their results today.
Asian stocks declined for the first time in four days, led by banks, on concern that credit-market losses will widen as the US housing market deteriorates and global growth slows.
Macquarie, Australia's No. 1 investment bank, and Nomura Holdings, Japan's biggest, dropped after S &P lowered its debt ratings on three of Wall Street's biggest securities firms. Babcock & Brown declined in Sydney after Wachovia ousted its CEO and Washington Mutuals' CEO relinquished his role as chairman.
The MSCI Asia Pacific Index lost 1% to 150.35 as of 10:54 a.m. in Tokyo, ending a three-day, 3.4% rally. An index of financial companies was the biggest drag among the benchmark index's 10 industry groups.
Japan's Nikkei 225 Stock Average fell 1.9% to 14,172.13. Kajima Corp., Japan's largest general contractor, led declines after Credit Suisse downgraded its shares. Asian equity markets open for trading retreated apart from Malaysia and China, which were little changed.
US stocks fell for the first time in five days amid renewed worries about the financial sector after S&P cut its debt rating on a number of banks, and Wachovia and Washington Mutual announced management shakeups.
Wachovia slid to the lowest level since 1995 after saying Kennedy Thompson will step down. Morgan Stanley, Merrill Lynch and Lehman Brothers tumbled after S&P said the firms will be forced to report more writedowns.
Marriott International spurred declines in consumer shares as the largest hotel chain said lower US demand is hurting revenue growth.
The S&P 500 Index lost 14.71 points, or 1.1%, to 1,385.67. The Dow Jones Industrial Average dropped 134.50 points, or 1.1%, at 12,503.82. The Nasdaq Composite Index slid 31.13 points, or 1.2%, to 2,491.53.
Market breadth was negative. Three stocks dropped for each that rose on the New York Stock Exchange.
Tuesday brings the April reading on factory orders, while reports are due later in the week on employment, productivity and the services sector of the economy.
Tuesday morning also brings a speech from Federal Reserve Chairman Ben Bernanke on the economic outlook. Bernanke is speaking at the International Monetary Conference in Madrid.
The CEO of Wachovia has been asked to step down by its board, following what the company termed as a series of setbacks that have weighed on performance. Shares fell 1.7%. Washington Mutual said its CEO will no longer be its chairman, as the company struggles to return to profitability. Shares were flat.
The Institute for Supply Management said manufacturing activity contracted in May for the fourth straight month. However, the index still showed more strength than what economists had expected. The ISM index rose to 49.6 in May versus forecasts for a decline to 48.5.
Construction spending fell 0.4% in April, the government reported, after dropping 0.6% in March. Economists had forecast a decline of 0.6%.
US light crude oil for July delivery rose 41 cents to settle at $127.76 a barrel on the New York Mercantile Exchange.
The national average price for a gallon of regular unleaded gas held at $3.975, AAA said, matching Sunday's record. That breaks a streak of 26 days of gains and 25 days of record highs.
The US dollar rose versus the euro, continuing its recent recovery. Against the yen, the dollar slipped. Treasury prices rose, lowering the yield on the 10-year note to 3.96% from 4.06% late on Friday. COMEX gold for August delivery rose $5.50 to settle at $897 an ounce.
European shares dropped, retreating for the first time in five sessions after British lender Bradford & Bingley cut the amount of money it will raise via a share issue and issued a profit warning.
The pan-European Dow Jones Stoxx 600 index fell 1.1% to 318.44 in Monday dealings, dragged lower by banking-sector losses as well as drops for automakers. The French CAC-40 dropped 1.6% to 4,935.21, while Germany's DAX 30 declined 1.2% to 7,008.77 and the UK's FTSE 100 lost 0.8% to 6,007.60.
Brazilian and Mexican stocks ended lower as well. Brazil's Bovespa fell 0.7% to 72,051.49 while Mexico's IPC fell 1.1% to 31,636.21. Among the other emerging markets, Russia's RTS index was down 0.3% at 2452 while the ISE National-30 index in Turkey was up 0.6% at 48,788.
More pain likely
Key indices fell sharply in the late afternoon trading session, dragging the BSE 30-share Sensex below 16k levels during intra-day trade. Concerns over the rising inflation and uncertainty over the interest rate scenario continued to keep bulls under pressure. Further, reports that Left constituents RSP has threatened to withdraw from UPA Left Coordination Panel created doubts in the minds of traders and investors.After a positive opening, markets eventually closed near day’s low on back of selling across-the-board. All the major sectoral indices closed in red. However, auto stocks survived the carnage on back of impressive monthly auto sales numbers.
Among the index heavyweights, RIL, HDFC, Hindalco and Tata steel were among the major losers. With European markets opening lower in the range of 1-2%, markets fell in a heap from day’s high. Finally, the Sensex closed at 16063 down 2% and Nifty fell by 2.68% to close at 4739.6
Punj Lloyd stock closed at Rs287.05 down by 10.5%. The company posted quarterly revenues of Rs23467, up by 38% yoy and PAT up 32% to Rs1177 yoy. The scrip touched an intra-day high of Rs325.05 and a low of Rs280 and recorded volumes of over 25,61,499 shares on BSE.
Sterlite Industries was up by 2.8% to Rs934.9 after the company announced to buy operating assets of Asarco, a US based mining, smelting and refining firm for US$2.6bn. The scrip closed at Rs916.7 around 1.95% down before touching an intra-day high of Rs955 and a low of Rs910 and recorded volumes of over 2,39,105 shares on BSE.
Essar Oil surged 6% to close at Rs236 as the company reportedly bids for an offshore block in Australia and is in talks with foreign companies to explore oil in Egypt and Yemen. Essar Oil also announced that it would raise fresh debt of up to US$5bn through ECB. The scrip touched an intra-day high of Rs243 and a low of Rs225 and recorded volumes of over 77,69,633 shares on BSE.
Among the auto stocks, Hero Honda and Bajaj Auto were the major gainers after the auto companies announced their monthly sales figures. Bajaj Auto posted 7.6% growth in motorcycles sales in May and Hero Honda motorcycles sales growth rose 9.5%
Corporate News
Tata Motors has acquired the Jaguar Land Rover business from Ford Motor for a net consideration of US$2.3bn. (ET)
Bharti Airtel and US based VeriSign enter into 3 year arrangement for developing security solutions for Indian corporates. (ET)
Infosys has bagged patents for mobile tech, holography from the US Patent and Trademark Office. (ET)
Axis Bank and Yes Bank are securitizing loans worth over Rs10bn that were extended to HPCL and BPCL. (BS)
Ambuja Cement is set to buy a stake in ACC’s ready-mix concrete subsidiary – ACC Concrete. (ET)
ICICI Bank has raised interest rates on credit cards. (BL)
The financial closure of the Krishnapatnam UMPP of Reliance Power would be achieved in the coming three months. (BL)
SBI has launched its Agriculture Debt Waiver and Debt Relief Scheme-2008 in Jamli village near Indore. (BS)
GAIL India says its 100% subsidiary GAIL Gas will take up city gas distribution projects in 17 cities in the first phase. (BL)
IOC is in initial phase of discussions with ITC for merchandise supplies from the latter’s Choupal Sagar stores for its 2,050 kisan seva kendra (KSK) outlets across the country. (FE)
Videocon-promoted Datacom will invite bids for rolling out 70mn GSM mobile lines envisaging an investment of over Rs120bn in the next four years. (ET)
Jet Airways, SpiceJet, Kingfisher and other airlines have told the government they would curtail services frequency and air routes to cut losses after oil companies raised ATF prices by 18.5%. (BS)
The Kingfisher-Deccan combine has decided to increase fuel surcharge by Rs300-550. (BL)
Jindal Steel & Power is planning to build a Rs50bn, 1,080-mw, coal-fired captive power plant in Orissa. (BS)
Hexaware has appointed Mr P.R. Chandrasekar as the CEO and Vice-Chairman and Prateek Aggarwal as the CFO of the company. (BL)
HCL Info, HP, LG and Zenith are raising prices of personal computers (laptops and desktops), LCDs and plasma TVs, and IT peripherals by up to 13%. (BS)
The Allahabad Bank board has approved the proposal to raise about Rs1.5bn from selling rights shares to stakeholders. (BS)
Emami and a string of entities acting in concert purchased 23.6% stake from one of the promoter groups of Zandu Pharma at Rs6,900 per share for Rs1.3bn. (BL)
The Parikh family, co-promoters of Zandu Pharma is not in favour of selling its stake to Emami. (ET)
Dabur Group and the US-based Liberty Mutual Group have announced their plan to form a non-life insurance company. (BL)
The department of fertilizers has asked RCF to go ahead with the pre-project and pre-investment activities for the revival of Hindustan Fertiliser Corporation’s (HFC) Durgapur plant and Fertiliser Corporation of India’s (FCI) Talcher unit. (FE)
As part of its diversification plans, Omaxe is eyeing the power sector through its new subsidiary Omaxe Power. (BS)
Indus Fila is planning to invest Rs2bn in retail and set up 30-40 retail outlets within a year. (BS)
Sobha Developers is foraying into Mysore realty market with three projects. (BS)
Logix Microsystems will soon open an advanced photography studio in Brussels as part of its plans to enter the European market. (BS)
TDSAT has restrained BSNL from disconnecting Tata Tele over non-payment of access deficit charge. (BS)
Tamil Nadu Newsprint and Papers plans to tie up with other paper mills to get the surplus pulp converted to paper. (BL)
Bharat Gears has wiped out all its accumulated losses and has drawn up capex plans to cater to higher demand as well as technological upgradation. (BL)
The Burmans (Dabur group) plans to foray into clinical services segment through OncQuest, a privately held company. (ET)
Spanco BPO, the hived-off BPO unit of Spanco Telesystems is on the lookout for a Rs1bn KPO buy. (DNA)
Phoenix Mills is in the process of forming a separate company to manage all its real estate assets. (ET)
Vodafone has offered SouthAfrica’s Telkom to buy a further 12.5% stake in mobile operator Vodacom for US$2.47bn. (ET)
Tata Sky has cut its subscription rates. (ET)
Latest Grey Market Premiums
Gokul Refoils 195 8 to 10
Anus Laboratories 210 40 to 45
Niraj Cement 175 to 190 5 to 7
Bafna Pharmaceutical 40 10 to 12
Marginal gain for precious metals
Gold prices still remain below $900 level
Precious metals ended little higher on Monday, 02 June, 2008. A sell-off in the US stock market prompted the rise in the bullion metal prices. But nevertheless, gold prices ended below $900/ounce.
Comex Gold for August delivery rose $5.5 (0.5%) to close at $897 ounce on the New York Mercantile Exchange. It fell to an intra day low of $890. Lst week, gold prices ended lower by 4.2%. But for the month of May, it ended with a gain of higher by $22.5 (2.5%). On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped since then.
During May, overall strength in the U.S. dollar and recent declines in oil prices in last week helped to dull investment appeal for the precious metal, which is often used as a hedge against inflation.
This year, gold prices have gained 7% for the till date against a 6.8% drop for the dollar against the euro. Before May, for April, prices closed lower by 6.3%. 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%.
On Monday, Comex silver futures for July delivery rose 4 cents (0.04%) to $16.91 an ounce. Silver has gained 13.6% in 2008 till date. It finished 7.5% lower last week.
Silver prices ended the month of May 2008 with a gain of 2.7%. For April, it closed lower by 5.5%. Silver had 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.
The weakening dollar and higher global demand for raw materials have led to records this year for commodities including gold. 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. 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.
At the currency markets on Monday, the dollar got a lift after U.S. manufacturing data were better than expected. The Institute for Supply Management's index for May improved to 49.6% from 48.6% in April, and came in above the 48.7% consensus expectation. But the dollar weakened on the heels of a decline in the broader U.S. stock market and stronger oil prices. Against this backdrop, the dollar index, which tracks the greenback against a basket of six major currencies, was at 72.910 as against previous closing of 73.107.
Dollar weakness typically benefits dollar-denominated commodities, such as gold and crude oil, because it makes them cheaper for holders of other currencies. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.
In the energy market today, crude price ended little higher as demand concerns eased partly after the manufacturing report.
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. In 2006, silver had jumped 46% while gold gained 23%.
Since last September, Fed has axed interest rates seven times and brought it down to 2%. The ECB has kept rates unchanged at 4% since June, 2007.
At the MCX, gold prices for June delivery closed higher by Rs 91 (0.75%) at Rs 12,290 per 10 grams. Prices rose to a high of Rs 12,358 per 10 grams and fell to a low of Rs 12,040 per 10 grams during the day’s trading.
At the MCX, silver prices for July delivery closed Rs 89 (0.4%) higher at Rs 23,465/Kg. Prices opened at Rs 23,245/kg and rose to a high of Rs 23,530/Kg during the day’s trading.
Another day of gains for Crude oil
Crude oil and natural gas end month 12% and 8% higher respectively
Crude prices ended marginally higher for the second consecutive day on Monday, 02 June, 2008. Prices rose after concerns regarding demand for oil were eased. Prices also climbed because of a rally in the natural gas market, which advanced on signs that competition for the fuel will increase as the weather warms. The hurricane season in the Atlantic, which has the potential to disrupt oil and natural gas production in the Gulf of Mexico, officially began on 1 June.
Crude-oil futures for light sweet crude for July delivery today closed at $127.76/barrel (higher by $0.41/barrel or 0.3%) on the New York Mercantile Exchange. Prices rose to a high of $129.35 earlier during the session.
Last week, crude prices closed lower by 3.7%. Previous during the month of May, 2008 prices had touched an all time high of $135.09. For the year, crude is up by 32.3% till date. Prices have more than doubled on a yearly basis.
At the currency markets on Monday, the dollar got a lift after U.S. manufacturing data were better than expected. The Institute for Supply Management's index for May improved to 49.6% from 48.6% in April, and came in above the 48.7% consensus expectation. But the dollar weakened on the heels of a decline in the broader U.S. stock market and stronger oil prices. Against this backdrop, the dollar index, which tracks the greenback against a basket of six major currencies, was at 72.910 as against previous closing of 73.107.
But on a positive note, the ISM report eased the demand concerns in the crude market in the coming months.
Dollar weakness typically benefits dollar-denominated commodities, such as gold and crude oil, because it makes them cheaper for holders of other currencies. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.
Natural gas rises to the highest since December 2005
Brent crude oil for June settlement today fell $0.28 (0.2%) to $128.02 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 rose to the highest since December 2005 amid speculation competition for gas to put into storage will increase as the weather warms. Natural gas for July delivery rose 26.6 cents (2.3%) to settle at $11.969 per million British thermal units.
Against this backdrop, reformulated gasoline for July delivery closed up 4 cents at $3.39 a gallon in New York, while July heating oil finished at $3.72 a gallon, up 5 cents.
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 June delivery closed at Rs 5,443/barrel, higher by Rs 40 (0.7%) against previous day’s close. Natural gas for July delivery closed at Rs 512.6/mmbtu, higher by Rs 15.3/mmbtu (3.1%).
Real problems for realty stocks
The uncertainty in the capital market has hit realty stocks the hardest.
The BSE realty index is the worst performer this year, having shed 51% of its 52-week peak reached in January.
With increasing evidence of a slowdown in the realty sector, rising input costs and little chances of interest rate softening, experts feel realty stocks may see further dip in valuations.
The BSE benchmark index Sensex has shed 24% since January while power stocks, which had a fantastic rally before the January crash, have lost 42% of their 52-week peak. Other major losers include bank (41%), consumer durables (41%), capital goods (39%), PSU (39%) and oil and gas index (28%).
"Realty and power stocks had run quite high in 2007, and that’s why when they started coming down, the fall was more pronounced," says Centrum Capital research head Harendra Kumar.
Investors were factoring in higher profits, but now with the sector in the throes of a slowdown, they are scaling down their expectations leading to fall in prices, he added.
The country’s largest property firm DLF’s scrip lost 54% while Unitech shed 64% from its peak. The scrips of Delhi-based Parsvnath and Omaxe have lost 68% each since January.
Real estate sector is seeing a major slowdown in the sales volume in most markets of the country. The speculators have exited the market and Mumbai and NCR, the biggest real estate markets in the country, are seeing subdued sales.
In Gurgaon and Noida, which had seen prices almost treble in four years, sales are down 70%, leading to a price correction of 10-20%. Centrum’s Harendra Kumar says if the negative newsflow continues for the realty sector, the scrips may see a further dip.
"The scenario has changed since end-2007 when the consumers expected interest rates to soften. We are faced with such a high inflation rate that interest rates are unlikely to come down for 6-9 months," says Angel Broking research head Hitesh Agrawal, adding the demand for real estate will remain subdued at such a high interest rate.
"Rising steel and cement prices have increased the input cost for developers while credit has been tightening with banks becoming selective in lending," says Mr Agrawal.
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