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Monday, June 09, 2008
BSE Bulk Deals to Watch - June 9 2008
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
9/6/2008 524412 AAREY DRUGS HARDIK M MITHANI B 49760 59.25
9/6/2008 530431 ADOR FONTECH NARENDRA KISHORE MOONDRA B 20000 126.19
9/6/2008 530431 ADOR FONTECH TULSI DAS MOONDRA HUF S 20000 126.19
9/6/2008 523269 ADVANI HOT R FIRST INDIA SECURITIES PVT. LTD. B 300000 97.80
9/6/2008 523269 ADVANI HOT R USHA KABRA S 300000 97.80
9/6/2008 532981 ANU LABS MUKUL R. TIBREWALA B 69937 260.82
9/6/2008 532981 ANU LABS H K STOCK SERVICES PVT LTD B 91276 271.28
9/6/2008 532981 ANU LABS PRABHUDAS LILLADHER PVT. LTD. B 67566 266.31
9/6/2008 532981 ANU LABS MUKUL R. TIBREWALA S 61937 259.31
9/6/2008 532981 ANU LABS PRABHUDAS LILLADHER PVT. LTD. S 67566 266.37
9/6/2008 532946 BANG CHANDRA FINANCIAL SERVICES PVT. LTD. B 126950 243.99
9/6/2008 590059 BIHAR TUBES MANOJ GUPTA B 37000 165.65
9/6/2008 532823 EURO CERAMIC RAMESH UTTAMCHAND RAMCHANDANI B 125000 147.00
9/6/2008 531137 GEMSTONE INV PREM M PARIKH B 24000 21.25
9/6/2008 531137 GEMSTONE INV BHAVESH P PABARI B 24000 21.35
9/6/2008 531137 GEMSTONE INV MALA HEMANT SHETH S 47900 21.30
9/6/2008 531602 KOFF BR PICT LAXMI CAP BROKING PVT LTD S 50145 21.00
9/6/2008 507912 LKP MER FIN. PADMAKSHI FIN .SERV.P.LTD. B 89201 149.94
9/6/2008 522235 MINAL ENGINE C.MAHENDRA CAPITAL PVT.LTD. B 40000 15.21
9/6/2008 506618 PUNJAB CHEM JITERDRA MEHTA S 25000 196.36
9/6/2008 532884 REFEX REFRIG HIMAT PARSHOTTAMBHAI JATANIA S 346379 234.15
9/6/2008 531888 REXNOR ELE C RAKESHKUMAR HARIHARBHAI JARIWALA B 40000 8.52
9/6/2008 505141 SCOOTERS IND MONGHIBEN MAVJI CHHEDA S 15000 27.98
9/6/2008 511607 SHLOKA INFO PARESH CHANDRAKANT DOSHI B 22899 62.78
9/6/2008 511607 SHLOKA INFO SARAH FAISAL HAWA B 51195 64.60
9/6/2008 511607 SHLOKA INFO PARESH CHANDRAKANT DOSHI S 26525 64.69
9/6/2008 511607 SHLOKA INFO DISCOVERY FINANCIAL SER. PVT. LTD. S 30000 64.80
NSE Bulk Deals to Watch -June 9 2008
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
09-JUN-2008,MONNETISPA,Monnet Ispat Ltd,BEAR STEARNS & CO. INC.,BUY,700000,541.00,-
09-JUN-2008,MONNETISPA,Monnet Ispat Ltd,GRANTS INVESTMENT LIMITED FCCB,SELL,350000,541.00,-
09-JUN-2008,MONNETISPA,Monnet Ispat Ltd,GRANTS INVESTMENTS LTD. A/C GDR,SELL,350000,541.00,-
Oil to hit 150$
Oil prices are likely to hit USD 150 a barrel this summer season, the global head of commodities research at Goldman Sachs (GS.N) said on Monday, as tighter supplies outweigh weakening demand.
"I would suggest that the likelihood of that happening sooner has increased tremendously ... sometime in summer," Jeffrey Currie told an oil and gas conference in the Malaysian capital, referring to oil at USD 150 a barrel.
Goldman Sachs, the most active investment bank in energy markets and one of the first to point to triple-digit oil more than two years ago -- a once unthinkable level -- said last month oil could shoot up to USD 200 within the next two years as part of a "super spike."
Forecasts that oil could head towards USD 150 and above have multiplied over the past month as prices broke through several records, the latest being last Friday, when oil soared more than USD 11 a barrel on Friday, its biggest one-day gain ever.
Oil hit an all-time high of USD 139.12 on Friday on the back of a weak US dollar and mounting tensions between Israel and Iran.
Goldman Sachs forecast almost a month ago that U.S. crude would average USD 141 a barrel in the second half of 2008, up from a previous projection of USD 107, due to tight supplies.
"Demand for oil is weak but supplies are even weaker," Jeffrey Currie told the conference, citing supply disruptions in Nigeria and struggling output rise in Russia.
Investment bank Morgan Stanley, another big Wall Street energy player, said on Friday that crude may reach USD 150 by July 4 due to robust Asian demand and falling inventories.
Post Market Commentary - June 9 2008
Indian market completely shattered the hope of the investors today to close with deep losses due to heavy selling pressure led by the investor’s cautious behavior. Today market reacted very badly to the global cues like the surging crude oil price above $139 a barrel that led the BSE Sensex touched below 15000 mark and NSE Nifty below 4500, during early trading hours. The domestic market tumbled since initial bell and continued the same till end of the trading on the back of weak cues from global market. The BSE Sensex was hanging around the 15000 mark and the NSE Nifty around the 4500 mark. From the sectoral front, only Pharma index ended in positive territory while reality, capital goods, oil & gas and banking stocks were the major losers. The market breadth was extremely weak as 474 stocks closed in red while 2,170 stocks closed in green.
The BSE Sensex closed lower by 506.08 points at 15,066.10 and NSE Nifty fell by 126.85 points to close at 4,500.95. The BSE Mid Caps and Small Cap closed lower by 179.82 points and 279.51 points at 6,170.33 and 7,416.54 respectively. The BSE Sensex touched intraday high 15,202.74 and intraday low of 14,846.18.
Losers from the BSE are JP Associates (8.65%), DLF Ltd (7.39%), ONGC (7.02%), HDFC (5.99%), Reliance Infra (5.65%), Wipro Ltd (4.85%), TCS Ltd (4.58%), Infosys Tech (4.46%), HDFC Bank Ltd (4.34%) and Tata Motors (4.25%).
The Realty index closed down by 458.08 points at 5,752.22. Losers are Unitech Ltd (9.30%), Housing Development (8.81%), Phoenix Mill (8.27%), Ansal Infra (8.10%), Penland Ltd (7.41%), and DLF Ltd (7.39%).
The Capital Goods index declined by 397.01 points to close at 11,635.63. Major losers are Alstom Proj (7.04%), Suzlon Energy (6.57%), Jyoti Struct (5.97%), Kirloskar Br (5.39%), Lakshmi Ma W (4.80%) and Punj Lloyd (4.71%).
The Oil & Gas index closed lower by 329.53 points at 9,676.55. Losers are HPCL (9.21%), BPCL (7.09%), ONGC (7.02%), Aban Offshore (4.94%), Reliance Nat Res (4.31%) and Essar Oil Ltd (4.08%).
The Banking index fell by 232.96 points to close at 7,033.32 as Axis Bank (7.38%), Yes Bank (5.73%), OBC (5.25%), Union Bank (4.78%), Allahabad Bank (4.54%), and HDFC Bank Ltd (4.34%) closed in negative territory.
The IT Index closed lower by 193.61 points at 4,404.98. Losers are Moser Bayer (6.20%) along with NIIT Tech (6.20%), I-Flex (5.48%), Aptech Ltd (5.09%), Wipro Ltd (4.85%), HCL Tech (4.58%) and TCS Ltd (4.58%).
Health Care index closed higher by 22.75 points at 4,318.75. Gainers are Lupin Ltd (8.05%), Ranbaxy Lab (3.87%), Nicholas Pira (2.89%) and Sun Pharma (2.72%).
Nifty June 2008 futures below 4500
Turnover in F&O segment surges
Nifty June 2008 futures were at 4486.90, at a discount of 14.05 points as compared to spot closing of 4500.95.
The NSE's futures & options (F&O) segment turnover was Rs 58,333.52 crore, which was higher than Rs 42,888.38 crore on Friday, 6 June 2008.
Cairn India June 2008 futures were at discount at 293.75 compared to the spot closing of 299.55.
Reliance Industries June 2008 futures were at premium at 2174 compared to the spot closing of 2162.70.
Tata Steel June 2008 futures were at premium at 829.80 compared to the spot closing of 823.20.
In the cash market, the S&P CNX Nifty lost 126.85 points or 2.74% at 4500.95.
Asian Markets Slips on Oily Ground
Sensex, Nikkei Lead the fall as Major Indices Close For Holiday
Asian markets could not carry their broad advance of previous week closing sharply lower today, with banking and automotive shares leading decliners as oil stayed near record highs and investors fretted the global economy could be headed into another round of credit market turmoil.
Light, sweet crude oil for July delivery fell as much as 76 cents to $137.78 a barrel in electronic trading, after climbing nearly $11 a barrel to close at $138.54 Friday on the New York Mercantile Exchange. Friday's surge in oil prices was driven by heightened concerns that Israel may attack Iran, one of the world's biggest oil producers, and that a conflict could result in a blockade of the Straits of Hormuz, through which 20% of the world's crude oil passes each day.
Japan's Nikkei 225 Average and the Topix index both closed 2.1% lower to 14,181.38 and 1,397.54 respectively. On the economic front, Japan's index of leading indicators came in at 30.0 in April continuing its run for below the boom-or-bust threshold of 50.0 in the ninth straight month. The coincident index, which measures the current state of the economy, stood at 22.2. In March it stood at 27.3.
After plummeting by about 550 points in the opening trade India’s Sensex down recovered a bit but continued to be the biggest loser of the region. In the afternoon trading the Sensex was down by 3.1% to 15,084.70.
South Korea's Kospi index shed 1.3% to 1,808.96. Singapore's Straits Times index was off 2.1% to 3,080.29 while Taiwan's Weighted Price Index fell 1.8% to 8,578.96.
Markets in Australia, China, Hong Kong and the Philippines were closed for public holidays.
The slump in Asia follows a punishing session for U.S. stocks Friday, as weak employment data and a surge in crude oil prices combined to lead the Dow Jones Industrial Average to its worst one-day decline in 15 months. At the end of Friday, the Dow Jones Industrial Average plunged 394.64 points, or 3.1%, to end 12,209.81, giving it a weekly loss of 3.5%. The S&P 500 Index fell 43.36 points, or 3.1%, to 1,360.69, leaving it down 2.9% for the week. The technology-heavy Nasdaq Composite Index shed 75.38 points i.e. 3%, to 2,474.56 for a weekly decline of 1.9%.
In currencies, the yen was exchanged at 105.19 yen against the U.S. dollar, compared to 104.85 in New York late Friday.
In other regional action, New Zealand's NZX-50 gave up 1.4% and Malaysia's KLSE Composite shed 1.6%. Indonesia's Jakarta Composite fell 0.9% and Thailand's SET Index fell 1.2%.
European markets followed Asian markets with negative opening as shares of banks and airlines again fall down following the soaring crude oil prices.
Of national indexes, the German DAX 30 index fell 0.5% to 6,773.61, the French CAC-40 index declined 0.3% to 4,782.51 and the U.K. FTSE 100 index lost 0.2% to 5,896.50.
On the economic release side, Germany's trade surplus rose in April on stronger exports, giving little sign that the country's exports are being squeezed by a global economic slowdown.
The German trade surplus totaled EUR18.7 billion - higher than a revised EUR16.6 billion surplus in March, which was originally reported at EUR16.7 billion.
Exports totaled EUR85.4 billion on a seasonally adjusted basis, showing a 1.2% rise from March, following two consecutive months of declines. April exports surged 13.9% from a year earlier.
German seasonally adjusted imports eased slightly in April, falling to EUR67.6 billion from EUR69.1 billion in March, a figure originally reported as EUR69.2 billion. But imports over the full year are holding up. Total imports so far this year were EUR272.9 billion, up from EUR253.1 billion in the year-earlier period.
The country's current account surplus fell to EUR14.5 billion, from EUR17.5 billion in March, which was previously reported as EUR17.2 billion.
U.K. factory gate prices soared in May, climbing at their fastest pace since records began in 1986, highlighting the policy dilemma faced by the Bank of England in the coming months as the corporate and consumer mood darkens.
The output price index for home sales and manufactured products rose 1.6% on the month in May - driven largely by recovered secondary raw materials and petroleum products. On the year, the output PPI rose 8.9%, much more than the upwardly revised 7.6% gain in April.
Excluding volatile food, beverages, tobacco and petroleum prices, output producer prices rose 1.3% on the month and 5.9% on the year in May - Sharpest annual gain since March 1991. In April, the core index rose 1.2% on the month and 4.6% on the year.
Meanwhile, the annual rate of gain in input prices also surged to a fresh record high in May, mainly due to the climbing price of crude oil, indicating yet more price pressures in the pipeline.
The input price index for materials and fuels purchased by the manufacturing industry gained 27.6% on the year in seasonally adjusted terms, following a 24.7% rise in April. In monthly terms, the index rose 3.8% on the month, following a 3.2% rise in April.
Looking ahead the day is scheduled to release housing starts from Canada followed by pending home sales from United States. In the late evening BRC will release its retail sales for the United Kingdom which will be accompanied by Bernanke’s Speech and Japan’s Core machinery orders.
Nifty hits its lowest level in calendar 2008 before recovering
The key benchmark indices slumped today due to a sharp surge in global crude oil price and setback in US stocks on Friday, 6 June 2008. BSE Sensex fell below 15,000 mark for the first time since 19 March 2008, in intra-day trade. The S&P CNX Nifty hit a fresh 2008 low.
Except the BSE HealthCare index, all the other sectoral indices on BSE were in red. The market breadth was extremely weak. IT, realty, banking and oil & gas stocks were worst hit in today's market fall.
Oil prices surged by their biggest one-day gain ever on Friday, 6 June 2008, rocketing over $10 to a new record high above $139 a barrel, taking this year's gains to 44%. Oil prices edged lower to $137.7 today, 9 June 2008.
The 30-share BSE Sensex lost 506.08 points or 3.25% at 15,066.10. At the day’s low of 14846.18 hit during mid-morning trade, the Sensex lost 726 points.
The broader based S&P CNX Nifty was down 126.85 points or 2.74% at 4,500.95. It hit a low of 4411.60 today in mid-morning trade, falling below 2008 low of 4448.50 hit on 22 January 2008.
From a all-time high of 21,206.77 hit on 10 January 2008 the Sensex has lost 6240.67 points or 28.95% to 15066.10. The Sensex has lost 5220.89 points or 25.73% to 15066.10.
BSE clocked a turnover of Rs 5039 crore today compared to a turnover of Rs 5245.26 crore on Friday 6 June 2008.
Nifty June 2008 futures were at 4486.90, at a discount of 14.05 points as compared to spot closing of 4500.95. NSE's futures & options (F&O) segment turnover was Rs 58,333.52 crore, which was higher than Rs 42,888.38 crore on Friday, 6 June 2008.
The foreign institutional investors (FII)s sold shares worth Rs 1,344.67 crore today,9 June 2007 however domestic funds bought shares worth Rs 1,030.26 crore.
The market breadth was extremely weak on BSE with 474 shares advancing as compared to 2170 that declined. 49 remained unchanged. From the 30-share Sensex pack, 27 fell.
The BSE Mid Cap index declined 2.83% to 6,170.33 and BSE Small-Cap index fell 3.63% to 7,416.54.
All the sectoral indices on BSE ended with losses except the BSE Health Care index. BSE Health Care index (up 0.53% at 4,318.75), BSE Metal index (down 0.81% to 15,389.61), BSE Consumer Durables index (down 1.69% to 3,934.04), BSE FMCG index (down 2.06% to 2,313.24), The BSE Auto (down 2.45% at 4,123.64), BSE PSU index (down 2.95% to 6,469.82), BSE Power (down 2.99% to 2,619.28), BSE Bankex (down 3.21% at 7,033.32), BSE TecK index (down 3.12% to 3,388.89), outperformed the Sensex.
The BSE Realty index (down 7.38% at 5,752.22), BSE IT index (down 4.21% to 4,404.98), BSE Capital Goods (down 3.3% at 11,635.63), BSE FMCG index (down 2.65% to 2,361.88), BSE Oil & Gas index (down 3.29% to 9,676.55) underperformed the Sensex.
Among pharma stocks, Lupin (up 8.05% to Rs 701.70), Ranbaxy Laboratories (up 3.87% to Rs 526.40), Sun Pharmaceuticals Industries (up 2.72% to Rs 1,457.35) and Piramal HealthCare (up 2.89% to Rs 375.55) edged higher. Cipla (down 0.36% to Rs 206.65) and Dr. Reddy’s Laboratories (down 0.07% to Rs 692.75) edged lower.
BSE Realty index was down 7.38% to 5,752.22. It was the top loser from the sectoral indices on BSE. Unitech (down 9.3% to Rs 184.80), Indiabulls Real Estate (down 6.06% to Rs 398.40) and DLF (down 7.39% to Rs 481.55) edged lower from the realty pack.
IT stocks declined. Wipro (down 4.85% to Rs 480.50), Infosys (down 4.46% to Rs 1,904.05), Tata Consultancy Services (down 4.56% to Rs 915.65) and Satyam Computer Services (down 3.42% to Rs 491.45) edged lower.
Banking stocks declined. HDFC Bank (down 4.34% to Rs 1,183.70), State Bank of India (down 3.17% to Rs 1292.80) and ICICI Bank (down 2.69%t o Rs 75.10) edged lower.
Oil & gas stocks fell after global crude oil prices hit the roof. PSU oil marketing companies which had found little solace after government had hiked domestic retail fuel prices were battered today. HPCL (down 9.21% to Rs 193.30), BPCL (down 7.09% to Rs 278.40), and Indian Oil Corporation (down 3.9% to Rs 363.25) edged lower. Reliance Industries (down 3.41% to Rs 2163.10) and ONGC (down 7.02% to Rs 872.60) also edged lower.
India’s second largest telecom services provider by sales Reliance Communication rose 1.34% to Rs 554.10. The stock recovered from session's low of Rs 507.90. Reliance Communication (RCom) and the South African telco MTN will reportedly decide the share swap ratio at which Anil Ambani will transfer his stake in RCom to get stake in MTN. Both the companies have reportedly agreed for the deal, which will result in RCom promoter viz. the Anil Dhirubhai Group (ADAG) emerging as the single-largest shareholder in MTN and the foreign company becoming the holding firm of RCom.
Jaiprakash Associates (down 8.65% to Rs 183.65), HDFC (down 5.99% to Rs 2206.65), Reliance Infrastructure (down 5.65% to Rs 1,038.85), Tata Motors (down 4.25% to Rs 517.10), Ambuja Cements (down 4.1% to Rs 81.95), Bharat Heavy Electricals (down 3.29% to Rs 1,374.65), edged lower from the Sensex pack.
IFCI clocked the highest volume of 1.92 crore shares on BSE. Reliance Petroleum (1.51 crore shares), Reliance Natural Resources (1.14 crore shares), Ispat Industries (1.05 crore shares) and Cairn India (74.54 lakh shares) were the other volume toppers in that order.
Reliance Industries clocked the highest turnover of Rs 372.06 crore on BSE. Reliance Petroleum (Rs 252.55 crore), Cairn India (Rs 222.75 crore), Reliance Communications (Rs 214.36 crore) and Reliance Capital (Rs 211.24 crore) were the other turnover toppers in that order.
US stocks plunged on Friday, 6 June 2008, marking the Dow's worst day in 15 months, after the US government said the May 2008 unemployment rate jumped the most in 22 years and oil prices shot to another record, renewing fears that the US economy faces 1970s-style stagflation. The Dow Jones industrial average tanked 394.64 points, or 3.13% to end at 12,209.81, its biggest drop since February 2007. The S&P 500 slid 43.37 points, or 3.09%, to finish the day at 1,360.68. The Nasdaq Composite Index lost 75.38 points, or 2.96 percent, to close at 2,474.56.
European markets were trading mixed today. Key benchmark indices in France and Germany were down by between 0.08% to 0.09%. The UK”S FTSE 100 however rose by 0.18%.
In Asia, key benchmark indices in Japan, South Korea, Singapore and Taiwan were down by between 1.27% to 2.13% today. Markets in China, Hong Kong and the Philippines were closed for public holidays.
Surging global crude oil prices, a hike in domestic fuel prices and rising inflation have spooked the domestic bourses in the past few days. Foreign institutional investors (FIIs) pressed heavy sales in the backdrop of a weakening rupee against the dollar, accentuating fall in share prices.
Brokerage earnings downgrades of Indian firms/stock prices amid rising input and interest costs for India Inc, high inflation and drying up of global liquidity due to credit crisis remain major concern for the Indian stock market. If inflation remains high, the Reserve Bank of India (RBI) would be forced to hike repo rate – a move that could choke overall growth of the economy. The Indian industry and consumer have already been reeling under high interest rates over the past few months. A further hike in rates would raise interest costs of corporate India and hit bottomline.
After 10 days of debate, the Union government on Wednesday, 4 June 2008 agreed to raise retail petrol and diesel prices by about 10%, more than expected, to help curb losses at its state-owned refiners. A sharp fall in the rupee against the dollar in the past few days has heightened concerns about inflation. This is because the fall in rupee will raise cost of imports which in turn will result in further rise in inflation.
According to rating agency CRISIL, headline inflation is expected to increase by 95 basis points on account of direct and indirect effects of the fuel price hike. The indirect impact which will be felt over the course of the next few months, it states in a note.
A well distributed monsoon will bolster food production, helping douse inflation. Agricultural output in India depends on good rains. The Indian Meteorological Department (IMD)’s second monsoon forecast for the crucial annual south-west monsoon (June-September) due this months which may indicate spatial rainfall distribution in the main sowing month of July 2008, will be keenly watched by market men. The IMD has forecast the 2008 monsoon rains would be near-normal and 99% of the average between 1941 and 1990.
A section of the market is of the view that the central bank may only use the reserve requirement route to tame inflation, fearing any hike in rates would further hurt growth already seen moderating to a still strong 8%-8.5% this fiscal year from 9% in 2007/08. To rein in inflation, in its monetary policy review for 2008-09 on 29 April 2008, the RBI raised cash reserve ratio (CRR) by 25 basis points to 8.25% to suck out excess liquidity in the banking system. RBI often says pass-through of high global oil prices is incomplete in India, complicating policy making.
Another near term trigger for the market will be corporate advance tax payments for the first installment which falls due on 15 June 2008. The income tax law requires a company to 15% the estimated tax liability for the year as advance tax in the first installment. The advance tax payment by the corporate sector will give a cue on Q1 June 2008 results.
Market may will also be keeping a watch on the industrial production numbers for April 2008, which the government will unveil on Thursday, 12 June 2008, which will give a cue on the extent of slowdown in the Indian economy caused by high interest rates.
Market hammered amid oil woes
Stocks across-the-board witnessed another round of heavy correction, as sentiment remained bearish for the second session on crude oil worries (over $138 a barrel in the USA market), liquidity squeeze in the domestic market and sharp downfall in other Asian indices. The market had dropped around 200 points in last sessions. Major Asian indices like the Nikkei, the Kospi, the Jakarta and the Straits Times shed over 1-2% each, thereby adding pressure on the domestic indices. After resuming 456 points lower at 15,117, the market remained under the grip of sustained selling pressure. Extensive correction in heavyweights, realty, IT, capital goods (CG) and oil & gas stocks in noon trades dragged the index below the 14,900 mark to the day's low of 14,846. The Sensex finally ended the session at 15,066, down 506 points, while the Nifty shed 127 points to close at 4,501.
All the sectoral indices except the BSE health care (HC) index were hammered on the back of a relentless selling pressure. The BSE Realty index dropped 7.38% at 5,752, the BSE IT index lost 4.21% at 4,404.98, the BSE CG index shed 3.30% at 11,635, the BSE Oil & Gas index shed 3.29% at 9,676.55 and the BSE Bankex index fell 3.21% at 7,033.
The broader market was weak. Of the 2,693stocks traded on the BSE 2,170 stocks declined, 474 stocks advanced and 49 stocks ended unchanged. Among the 30 stocks in the Sensex basket only three stocks ended in green. Among the major losers, JP Associates tanked 8.65% at Rs181.35, DLF tumbled 7.39% at Rs475, ONGC declined 7.02% at Rs864.90, HDFC slumped 5.99% at Rs2,115, Reliance Infra fell 5.65% at Rs1,003.30, Wipro plunged 4.85% at Rs475, TCS dropped 4.58% at Rs891, Infosys slipped by 4.46% at Rs1,889.90 and HDFC Bank was down 4.34% at Rs1,162. Other frontline stocks were down by 1-4% each. Ranbaxy Laboratories however ended in positive with a gain of 3.87%, while Reliance Communications and Hindalco ended with steady gains.
On the volume front, India Cement witnessed more than 66.92 lakh shares changing hands, followed by Aftek Info (47.88 lakh shares), Polaris Lab (31.77 lakh shares), Reliance Communications (24.24 lakh shares) and Gujarat Ambuja Cements (22.05 lakh shares).
Setback in US stocks, crude oil rally to weigh on domestic bourses
A sharp surge in oil price on Friday, 6 June 2008, and a setback in global equity markets, are set to send share prices on the domestic bourses reeling today. US stocks plunged on Friday, 6 June 2008, marking the Dow's worst day in 15 months, after the US government said the May 2008 unemployment rate jumped the most in 22 years and oil prices shot to another record, renewing fears that the US economy faces 1970s-style stagflation. Oil prices surged by their biggest real one-day gain ever on Friday, 6 June 2008, rocketing over $10 to a new record high above $139 a barrel, taking this year's gains to 44%. Oil prices edged lower to $137.7 today, 9 June 2008.
In Asia, key benchmark indices in Japan, South Korea, Singapore and Taiwan were down by between 1.6% to 2.12% today. Markets in China, Hong Kong and the Philippines were closed for public holidays.
Surging global crude oil prices, a hike in domestic fuel prices and rising inflation have spooked the domestic bourses in the past few days. Foreign institutional investors (FIIs) pressed heavy sales in the backdrop of a weakening rupee against the dollar, accentuating fall in share prices. From a recent high of 17,434.94 on 16 May 2008, the barometer index, BSE Sensex tanked 1,862.76 points or 10.68% in a short span to 15,572.18 on 6 June 2008.
FIIs sold shares worth a net Rs 3291.20 core in the first few days of this month, till 5 June 2008. They had dumped stocks worth a net Rs 5011.50 crore in May 2008. Their outflow in calendar 2008 reached Rs 18660.60 crore, till 5 June 2008. There has been heavy buying by domestic funds led by insurance firms in the past few days, but that has failed to stop the slide on the bourses.
Brokerage earnings downgrades of Indian firms/stock prices amid rising input and interest costs for India Inc, high inflation and drying up of global liquidity due to credit crisis remain major concern for the Indian stock market. If inflation remains high, the Reserve Bank of India (RBI) would be forced to hike repo rate – a move that could choke overall growth of the economy. The Indian industry and consumer have already been reeling under high interest rates over the past few months. A further hike in rates would raise interest costs of corporate India and hit bottomline.
After 10 days of debate, the Union government on Wednesday, 4 June 2008 agreed to raise retail petrol and diesel prices by about 10%, more than expected, to help curb losses at its state-owned refiners. A sharp fall in the rupee against the dollar in the past few days has heightened concerns about inflation. This is because the fall in rupee will raise cost of imports which in turn will result in further rise in inflation.
According to rating agency CRISIL, headline inflation is expected to increase by 95 basis points on account of direct and indirect effects of the fuel price hike. The indirect impact which will be felt over the course of the next few months, it states in a note.
A well distributed monsoon will bolster food production, helping douse inflation. Agricultural output in India depends on good rains. The Indian Meteorological Department (IMD)’s second monsoon forecast for the crucial annual south-west monsoon (June-September) due this months which may indicate spatial rainfall distribution in the main sowing month of July 2008, will be keenly watched by market men. The IMD has forecast the 2008 monsoon rains would be near-normal and 99% of the average between 1941 and 1990.
A section of the market is of the view that the central bank may only use the reserve requirement route to tame inflation, fearing any hike in rates would further hurt growth already seen moderating to a still strong 8%-8.5% this fiscal year from 9% in 2007/08. To rein in inflation, in its monetary policy review for 2008-09 on 29 April 2008, the RBI raised cash reserve ratio (CRR) by 25 basis points to 8.25% to suck out excess liquidity in the banking system. RBI often says pass-through of high global oil prices is incomplete in India, complicating policy making.
Another near term trigger for the market will be corporate advance tax payments for the first installment which falls due on 15 June 2008. The income tax law requires a company to 15% the estimated tax liability for the year as advance tax in the first installment. The advance tax payment by the corporate sector will give a cue on Q1 June 2008 results.
Morning Call - June 9 2008
Market Grape Wine :
Out House :
Markets at a support of 15335 & 15151 resistance at 15786 & 15656 levels .
Buy : INFY at dips
Buy : LT at dips
Buy : ONGC at dips
Buy : Suzlon at dips
Buy : Praj at dips
Buy : HLL
Buy : ITC
Dark Horse : HLL , HDFC , ITC , INFY , Wipro & LT
Grey Market Premiums - Avon Weighing and more...
Bafna Pharmaceutical 40 8 to 10
Avon Weighing 10 3 to 5
Sejal Architectural Glass Ltd. 105 to 115 26 to 28
First Winners Ind. Ltd. 120 to 130 16 to 18
Archid Ply Ind. 70 to 80 9 to 11
Lotus Eye Care Hospital 38 to 42 4 to 7
Trading Calls - June 9 2008
No trading calls today.
The above means, prepare for the worst - no clue what's going to be traded where - there will be june hem!
Maybe this is the dip one should buy at - however, since we cannot confirm whether this is a long term bear or short term bear market - one could just nibble selectively and not buy huge lots.
Avoid weak sectors (Real Estate, Banks)
Crossing the red sea
Sometimes a good exit is all you can ask for.
The markets will hope for some Moses who will help the bulls cross over the sea of red on the bourses. Friday the 13th may be later this week. But looks like most of the damage may be done today itself; especially at start. The outlook continues to be grim, with a combination of negative local as well as global factors weighing heavily on the sentiment. Add to that some negative market rumors, which we wouldn’t want to speculate on or discuss (since it is unconfirmed).
Today, we see a gap-down opening, but do not rule out a slight rebound later in the day if global indices reverse the weak trend. Short covering could be the only other factor which could lessen the damage. Some key markets in Asia are actually shut today for holidays, which may be of some help to the bulls. Get in with an investment view. Should you be able to pocket some gains in the brief reversals, no harm in booking some quick profits. The undertone remains precarious and fragile.
After slipping to a level of around $120 per barrel, crude oil soared by a whopping $16 in the last two days of last week, to touch a new all-time high of $139. This included a near $11 gain on Friday. Renewed weakness in the dollar and a top Israeli official's reported threat of an attack on Iran were the two main reasons for crude's spike. A series of bullish reports on crude oil, predicting levels of $150 to $200 has added fuel to the fire.
It’s even worse for India, as the recent hike in retail fuel prices and the issue of bonds was done at a price of $123 a barrel. So in a nutshell, the Government's measures may not be of much help to anybody after all, if crude continues to climb.
A weakening rupee, coupled with a deteriorating fiscal situation and high interest rates pose a big challenge on the macroeconomic front. Foreign funds don't seem to be too upbeat on India at the moment. And, after a while even the local institutions may run out of cash.
Technically also, the market is on a sticky wicket. On the Nifty, the next support is seen at 4500 and the upside is capped at around 5200. Global brokerages also see the Nifty slipping to 4000. Quite a scary scenario! It remains to be seen whether the market indeed goes down to such levels.
FIIs were net buyers of Rs766.5mn (provisional) in the cash segment on Friday while the local institutions poured in Rs4bn. In the F&O segment, foreign funds were net buyers at Rs3.05bn. On Thursday, FIIs were net sellers of Rs14.19bn in the cash segment. With this, they have pulled out a net of US$4.6bn (Rs186.6bn) from the Indian market this year so far. Mutual Funds were net buyers of Rs5.47bn.
Gokaldas Exports and Inox will announce their results today.
Asian stocks are mostly down this morning, led by automakers and technology companies, after US unemployment rose the most in 22 years and oil gained more than $10 a barrel. Toyota and Samsung led declines on concern that demand for their exports in the US will slow. China Airlines, Taiwan's largest carrier, dropped the most in more than two months after saying it will cut flights because of surging jet-fuel costs.
The MSCI Asia Pacific Index lost 1.5% to 148.08 as of 10:33 a.m. in Tokyo, with about 20 stocks falling for each that climbed. All 10 industry groups dropped, with technology companies and consumer-goods makers posting the biggest losses.
Japan's Nikkei 225 Stock Average lost 2.3% to 14,162.58, on course for its largest decline since May 26. Benchmarks elsewhere in the region retreated. Markets in Australia, Hong Kong, China and the Philippines are closed for holidays today.
US stocks plummeted on Friday, with the Dow Jones Industrial Average tumbling by nearly 400 points, after a government report showed surprising weakness in the jobs market and oil prices soared to a new record.
The Dow plunged 394.64 points, or 3.1%, to 12,209.81, giving it a weekly loss of 3.5%. The decline, which left all the 30 Dow components in the red, is the largest in terms of points lost, since Feb. 27, 2007, when it fell 416.02 points.
The S&P 500 index slumped 43.36 points, or 3.1%, to 1,360.69, leaving it down 2.9% for the week. Financials and consumer discretionary were among the hardest hit sectors, down 4.8% and 4.3%, respectively.
The technology-dominated Nasdaq shed 75.38 points, or 3%, to 2,474.56 for a weekly decline of 1.9%.
The Dow had its eighth-biggest point drop in the blue-chip index's history. On the other hand, the S&P 500 and the Nasdaq saw their biggest one-day declines on both points and percentage terms in more than four months.
Market breadth was highly negative. On the New York Stock Exchange, losers beat winners by over 4 to 1 on 1.48bn shares. On the Nasdaq, decliners topped advancers by nearly 4 to 1 on volume of 2.2bn shares.
The dollar lost 0.9% against a basket of six currencies including the euro, against which it weakened 1.1% to US$1.5775, as investors pared bets the Fed will raise interest rates this year.
Yields on 10-year US Treasury securities and European government bonds declined as the price of fixed-rate investments climbed.
The jobless rate in the US increased to 5.5% in May, the highest since October 2004. It was 5% in April. The average estimate of economists was 5.1%, and no forecast was higher than 5.2%.
It was the biggest one-month surge in the jobless rate over 20 years. Meanwhile, non-farm payrolls shrank for a fifth month. The loss of 49,000 jobs versus forecasts for a decline of 60,000.
The report revived worries that the world's biggest economy could slip into a recession. At least from Wall Street's and the labor market's point of view, the US is already in a recession, regardless of what the economists say.
Sentiment got another jolt from surging oil prices. July crude futures climbed US$10.75, or 8.4%, to close at US$138.54 a barrel on the New York Mercantile Exchange. The rally was the largest in percentage terms since June 1996.
Oil prices rose US$11.33 to an all-time high US$139.12 during intra-day trading, breaking the previous trading record of US$135.09. Crude has jumped more than US$16 in two sessions and has more than doubled in the past one year.
Meanwhile, the world's top industrialized nations (G8) and leading oil consumers have pledged to fight skyrocketing energy prices by increasing efficiency and accelerating investment in new technologies, while urging producers to expand production.
Energy ministers from G8 countries, along with China, India and South Korea, voiced concerns over record oil prices and said both producers and consumers would benefit from greater market stability.
Gasoline rose to a new milestone in the US, as the national average compiled by motorist group AAA reached $4 a gallon for the first time. The national average for regular unleaded rose 1.7 cents to $4.005 a gallon. The milestone was expected after a surge in crude oil prices.
Goldman Sachs MD & Chief Economist
He added that the underlining reason for the high oil prices is a shortage of supply and strong demand from emerging economies. However, O'Neill said that the recent sharp rise in oil prices can't be explained by fundamentals.
European shares posted their biggest one-day drop in more than two months on Friday. The pan-European Stoxx 600 index fell 2% to 310.29, after trading as high as 319.32 earlier in the session. It was the index's biggest one-day drop since March 17.
Germany's DAX 30 closed down 2% at 6,803.81, while the French CAC-40 slid 2.3% to 4,795.32 and the UK's FTSE 100 lost 1.5% to 5,906.80.
In the emerging markets, the Bovespa in Brazil was down 2% at 69,785 while the IPC index in Mexico rose 1.8% to 31,149. The RTS index in Russia dropped 1.5% to 2342 while the ISE National 30 index in Turkey climbed 1.9% to 48,122.
Market to slide further
Markets ended the week with a negative bias, as bears made a come back in the second half of the session. Inflation figures which were released at noon barely had any impact on the sentiments as market players seemed to have already factored in inflation figures.
India's inflation, based on the wholesale price index (WPI), rose further in the penultimate week of May even as the country braced for even higher prices following the much-anticipated hike in retail fuel prices.
The annual point-to-point inflation increased to 8.24% in the week ended May 24 from 8.1% in the previous week, the Commerce & Industry Ministry said today. The rate is slightly below the average expectations of 8.29%.
Further moving on key indices witnessed a sudden bout of selling pressure in the last hour if the trading session, it was the FMCG, Realty and Metal stocks which were under immense selling pressure. Even the Mid-Cap and the Small-Cap stocks were unable to hold on to early gains. Only the BSE Auto index ended with a slight positive bias.
The benchmark Sensex tried to move closer to the 16,000 mark at open but was unable and closed just above 15,500 level. Like wise the Nifty also surges past the 4,700mark but faced stiff resistance as selling pressure dragged it below 4,650mark.
Among the 50-Nifty 40 stocks ended in red and 10 stock ended in green. Finally, the BSE benchmark Sensex ended 203 points lower to close at 15,566 and the Nifty index lost 49 points to close at 4,627.
Era Infra is trading flat at Rs601. The company announced that it bagged a contract worth Rs852mn from Mumbai Railway Vikas Corporation Ltd. for the construction of EMU Maintenance Car Shed between Nallasopara & Virar stations of Western Railway through International Competitive Bidding (ICB).
The project being funded by International Bank for Reconstruction Development (IBRD) is part of Mumbai Urban Transport Project. The scrip has touched an intra-day high of Rs607 and a low of Rs596 and has recorded volumes of over 11,000 shares on BSE.
Tata Comm gained by a 2 percent to Rs478. The company announced that that it has successfully attained the International Organization for Standardization (ISO) 20000-1:2005 and 27001:2005 certifications for its Global Managed Services Operations in the areas of Managed Hosting, Managed Storage Services and Hosted Messaging Services. The scrip touched an intra-day high of Rs508 and a low of Rs477 and recorded volumes of over 29,000 shares on BSE.
Indiabulls Real Estate rallied by over 5% to Rs424 ahead of Singapore unit share sale. The scrip touched an intra-day high of Rs477 and a low of Rs412 and recorded volumes of over 21,00,000 shares on BSE.
Videocon Industries slipped by 1% to Rs306. The company is reportedly planning to reduce workforce by 50%, because the company thinks, they are overstaffed. Videocon has 6,000 employees in its consumer durables business alone, including manufacturing and marketing.
The company is planning to set one corporate head office in Mumbai where the offices of only the strong sub-brands will be based. This is to no difficulty in communications and phase out unwanted and weak sub-brands. The scrip touched an intra-day high of Rs324 and a low of Rs304 and recorded volumes of over 4,00,000 shares on BSE.
Sahara India Financial has frozen at 5% lower circuit to Rs169.15. According to reports, the Lucknow bench of the Allahabad High Court has stayed the RBI order of banning Sahara India Financial Corporation Ltd (SIFCL) from accepting fresh deposits. The stay will be in place till the next hearing scheduled for the last week of July. The court has also issued a notice to the Centre in the matter. The scrip touched an intra-day high of Rs174 and a low of Rs169.15 and recorded volumes of over 22,000 shares on BSE.
Punj Lloyd ended 2% lower at Rs272 after the company announced that it secured Rs6.49bn contract from IOC for its Barauni Refinery. The scrip touched an intra-day high of Rs286 and a low of Rs271 and recorded volumes of over 10,00,000 shares on BSE.
GMR Infrastructure ended 2% lower to close at Rs120. The company announced that GMR Energy Ltd, the 100% subsidiary company having 220 MW power plant at Mangalore, entered into a power purchase agreement (PPA) with Karnataka Power Transmission Corporation Ltd for sale of power, for a period of 7 years.
GMR Energy Ltd Board has approved relocation of the 220 MW barge mounted power plant to Kakinada, State of Andhra Pradesh. The relocation of plant would take maximum of 9 months and the plant is expected to be re-commissioned at new location latest by April 2009 and would operate on gas. The scrip touched an intra-day high of Rs125 and a low of Rs120 and recorded volumes of over 9,00,000 shares on BSE.
The outlook for the Monday will again continue to hinge on global cues at start. Its been the same old story in recent past. But then, the bulls are just not getting enough thrust to move ahead. And so are left with less sunshine and more of dark clouds for time being.
Corporate News
Axis Bank plans to raise Rs65bn through upper and lower tier II bonds.(BS)
SpiceJet is looking to raise Rs4bn in equity capital to part finance aircraft acquisitions plans.(BL)
Punj Lloyd lines up a capex of US$100mn for 2008-09.(BS)
NTPC and its JV subsidiary, Nabinagar power plant, awards BTG contracts to BHEL for Rs35bn.(ET)
RCOM and MTN close to signing a deal to merge the two entities; swap formula of 35:100 likely.(BL)
Personal care product maker Emami forces Zandu Pharma to withdraw its preferential issue.(BS)
Nalco announces expansion plans worth Rs400bn for the next five years.(BL)
Essar Steel Holdings says it might raise its takeover bid for US based Esmark.(BS)
Punj Lloyd secures Rs6.5bn order from IOC for the latter’s Barauni refinery.(FE)
Reliance Petroleum's export oriented 29mn tons refinery to start generating revenues from current year.(BS)
Indian Oil and Oil India to acquire Reliance Industries’ offshore oil block in East Timor.(BL)
JK Lakshmi Cement is adding five more ready-mix concrete units as part of its expansion plans.(ET)
UAE based Etisalat pulls out of negotiations to acquire stake in Spice Communications; cites high valuations.(BS)
Cargill Ventures has cut by half the US$9mn investment it had announced into KPIT Cummins a year ago.(DNA)
GMR Infrastructure to relocate its 220MW power plant to Kakinada in AP from Mangalore in Karnataka.(DNA)
Sobha Developers to foray into the Mysore realty market with three projects in current fiscal.(BS)
Corporation Bank may waive Rs2.8bn under the debt relief scheme for farmers.(BL)
Coal India may come out with an IPO before getting ‘Navratna’ status.(BS)
UK based Vincent Tchenguiz is holding talks with Tata, to invite investment from the latter in a new US$10bn environment fund.(ET)
CavinKare and Henkel have announced a 5% hike across product categories.(TOI)
Axis PE, the PE arm of Axis Bank, is investing Rs1.4bn in two Ahmedabad companies.(ET)
Delhi government owned Indraprastha Power Generation to set up a 2,000MW coal fired power station in MP.(FE)
Gail India is looking at setting up a CNG corridor comprising Nagapattinam, Karaikal and Puducherry.(ET)
Adani Logistics is all set to develop 14 inland container depots across the country by 2010.(ET)
NHPC is likely to sign an agreement with J&K Power Development Corp. to harness 2,100MW at a cost of Rs150bn.(FE)
Six NBFCs, including Shriram Transport Finance, Ashok Leyland and Reliance Capital are believed to be in the race for buying a US$1bn loan portfolio of Citicorp Finance.(ET)
Renault-Nissan combine has started construction work on its passenger vehicle plant in Chennai.(ET)
Alok Industries has resumed talks with PE players to dilute 20% equity it owns in its unlisted unit, Alok Infrastructure.(ET)
Mercator Lines has chartered out a new offshore rig to a Singapore-based firm for US$93,000 per day for three years.(ET)
Economic News
The Government may increase export cess on long steel products from 10% to 15%.(ET)
Global telecom companies approach TRAI to open mobile market for entry of MVNO.(BL)
Seven bidders are vying for Mumbai International Airport’s Rs7bn annual ground handling contract.(Mint)
SEBI increases cumulative debt investment limits for FIIs to US$5bn and US$3bn in government securities and corporate debt, respectively.(FE)
NPPA, the pharma pricing authority, revises prices of 440 medicines.(BS)
PM’s Advisory Council scales down FY09 economic growth to 8% from 8.5%.(FE)
FMCG companies plan to increase prices again after the hike of 3-4% a few months ago.(BL)
Personal computer market in India grew by 10% yoy in January-March 2008 period.(Mint)
Today's Pick - JSW Steel
We recommend a sell in JSW Steel from a short-term perspective. The stock has been on a medium-term uptrend from its April low of Rs 490 levels.
However, the stock encountered resistance at Rs 1,200 recently and began to decline forming a bearish engulfing candlestick pattern in the daily chart. This reversal has been supported by the negative divergence in the daily Relative Strength Index (RSI). The RSI has entered the neutral region from the bullish zone.
A crossover in the daily moving average convergence and divergence indicates a sell signal. The stock is currently testing the medium-term up trendline around Rs 1,085 level.
Considering the above factors, we are bearish on the stock in the short-term. We expect the stock to penetrate the uptrendline and decline until it hits our price target of Rs 980 in the approaching trading sessions. Traders with short-term perspective can sell the stock while keeping the stop-loss at Rs 1,138 level.
Gold shines on rising crude oil and falling dollar
Gold prices witness the largest one day gain in almost four months
Rallying crude oil prices and the lower dollar sent yellow metal higher on Friday, 06 June, 2008. Previously during the week, strength in the dollar as well as recent weakness in oil had combined to dull investment demand for gold, which is often used as a hedge against inflation.
Comex Gold for August delivery rose $23.5 (2.7%) to close at $899 ounce on the New York Mercantile Exchange. It was gold’s highest one day gain in almost four months. For the week, gold prices ended higher by 0.8%. Last month, in 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.
This year, gold prices have gained 7.3% till date against a 7% 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 Friday, Comex silver futures for July delivery rose 26 cents (1.5%) to $17.46 an ounce. Silver has gained 17% in 2008 till date. It finished 3.5% higher for the 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.
At the currency markets on Friday, the dollar index, which tracks the greenback against a basket of six major currencies, stood at 72.368 compared with 73.120 ahead of the employment data. Against the dollar, the euro jumped to $1.5772 from $1.5584 before the report.
On Friday, 06 June, the U.S. government reported the unemployment rate in May jumped to 5.5%, the highest since October 2004 and the biggest increase in seasonally adjusted unemployment in 33 years. The same pressured the dollar immensely.
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 on Friday, oil prices shot higher by almost $11 a barrel on Friday, scoring their biggest one-day gain in dollar terms as talk about a potential Israeli attack on Iran combined with a slide in the U.S. dollar to send prices to their highest levels on record. July crude climbed $10.75 (8.4%) to close at $138.54 a barrel on the New York Mercantile Exchange on Friday. That was an all-time closing high. It climbed as high as $138.80 during the regular trading session. The contract climbed 8.8% for the week on Nymex.
US Markets jump off the cliff on oil woes
Crude prices shooting up more than ten dollars in a day makes stocks plummet
US Market ended the week on Friday, 06 June with very strong losses. Stocks remained extremely volatile together with the volatile dollar and volatile commodity prices, mainly the crude. Economic reports that checked in were better than expected for majority of the cases except for the main May employment report. Stocks mainly reacted to the jittery financial market which was again full with credit related problems. But it was the spiraling crude price that took the maximum toll on the market’s health for the week.
The Dow Jones Industrial Average lost 428 points for the week. Tech - heavy Nasdaq lost 48 points. S&P 500 lost 39 points. In percentage terms the three indices lost 3.4%, 1.9% and 2.8% respectively.
With this week’s losses, market wiped out all of last week’s gains. Oil prices shot higher by almost $11 a barrel on Friday, scoring their biggest one-day gain in dollar terms as talk about a potential Israeli attack on Iran combined with a slide in the U.S. dollar to send prices to their highest levels on record. July crude climbed $10.75 (8.4%) to close at $138.54 a barrel on the New York Mercantile Exchange on Friday. That was an all-time closing high. It climbed as high as $138.80 during the regular trading session. The contract climbed 8.8% for the week on Nymex.
Thursday, 05 June was the only day when the indices made decent gains during the course of the week. Other than that, indices ended in the red on all the other days.
In the financial sector, Standard & Poor's cut its financial strength ratings for bond insurers Ambac Financial and MBIA to 'AA' from 'AAA'. Though market seemed to have discounted the news as stocks immediately soared but then gave up their gains. Also, in the financial sector, Lehman Brothers shares was under tremendous pressure after there were news in the market that the company is about to raise capital and has also borrowed from the Fed.
On Friday, 06 June, the U.S. government reported the unemployment rate in May jumped to 5.5%, the highest since October 2004 and the biggest increase in seasonally adjusted unemployment in 33 years. The same pressured the dollar immensely.
But there were quite a few economic reports during the week that came in better than expected. Starting with the ISM manufacturing survey and construction spending reports on Monday, 02 June, and carrying on with the factory orders, weekly initial claims, first quarter productivity, and wholesale inventories reports during the remainder of the week, did not surprise market by any means.
Retailers, led by Wal-Mart reported better-than-expected same-store sales for May. Wal-Mart was the headline leader in that respect, posting a 3.9% increase, excluding fuel. The company had forecast same-store sales to be flat to up 2%. For June Wal-Mart is expecting same-store sales to be up 2% to 4% due in part to an expected benefit from the spending of stimulus checks.
Next, the weekly initial claims data was better than expected and certainly not recession-like, as claims fell 18,000 to 357,000.
Also, May (Institute of Supply Management) ISM services - a survey of nonmanufacturing purchasing managers - was nearly unchanged at 51.7 compared to 52 in April. Market had forecast a reading of 51. Because the reading is above 50, it indicates the services sector is expanding.
In the M&A arena, Verizon is reportedly going to buy privately-held Alltel for $28.1 billion. In the process, it will supplant AT&T as the biggest mobile phone operator in the country.
Executive Summary
For the week, indices registered substantial losses. DJIx and S&P 500, each closed down by 3.4% and 2.8% respectively. Nasdaq closed down by 1.9%. With this week’s losses, market gave up all of prior week’s gains.
The week was mainly dominated by the crude oil and economic reports. Oil prices shot higher by almost $11 a barrel on Friday, scoring their biggest one-day gain in dollar terms. The contract climbed 8.8% for the week on Nymex. Economic reports were in most part better than expected.
For the year, Dow, Nasdaq and S&P 500 are down by 8%, 6.7% and 7.3% respectively.
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