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Wednesday, June 11, 2008
Nifty June 2008 futures above 4500
Turnover in F&O segment drops
Nifty June 2008 futures were at 4515.90, at a discount of 7.70 points as compared to spot closing of 4523.60.
The NSE's futures & options (F&O) segment turnover was Rs 45,775.86 crore, which was lower than Rs 53,893.30 crore on Tuesday, 10 June 2008.
Tata Steel June 2008 futures were at premium at 846.40 compared to the spot closing of 836.70.
DLF June 2008 futures were near spot price at 511.95 compared to the spot closing of 512.15.
IFCI June 2008 futures were near spot price at 63.30 compared to the spot closing of 62.80.
In the cash market, the S&P CNX Nifty gained 73.80 points or 1.66% at 4523.60.
Post Session Commentary - June 11 2008
Indian market closed with handsome gains on the back of continuous buying across the board. Both Nifty and Sensex recovered from three days losses and crossed 4,500 and 15,000 mark respectively. The domestic market started the day on a strong note tracking mixed global cues, which was also showing improvement. Further, it carried on to gather the buying force to close in green. The next trigger for the market is the industrial production numbers for April 2008, which the government will unveil on Thursday, 12 June 2008 will play a crucial role and the market may also be keeping a watch on this to take further direction. Also the corporate advance tax payments for the first installment which falls due on 15 June 2008 will be another near term trigger for the market. The income tax law requires a company to 15% the estimated tax liability for the year as advance tax in the first installment. From the sectoral front, all indices ended in green except FMCG index, which faced the selling pressure. Top gainer sectors were Capital Goods, Reality, Metal, Banking and Oil & Gas. The market breadth was strong as 1,830 stocks closed in green while 809 stocks closed in red.
The BSE Sensex closed higher by 296.07 points at 15,185.32 and NSE Nifty ended up by 73.80 points to close at 4,423.60. The BSE Mid Caps and Small Cap closed upbeat by 86.89 points and 126.14 points at 6,190.72 and 7,467.30 respectively. The BSE Sensex touched intraday high 15,225.81 and intraday low of 15,009.48.
Gainers from the BSE are BHEL (7.19%), Ambuja Cement (7.17%), DLF Ltd (6.53%), HDFC Bank Ltd (4.74%), HDFC (4.10%), Bharti Airtel (3.78%), Cipla Ltd (3.41%), JP Associates (3.39%), ACC Ltd (3.09%) and Reliance (2.76%).
The Capital Goods Index closed higher by 283.92 points at 11,901.49. Gainers are BHEL (7.19%) along with Jyoti Struct (5.87%), Crompton Greaves Ltd (5.69%), Punj Lloyd (3.44%), BEML Ltd (2.88%), Lakshmi Ma (2.75%) and L&T Ltd (2.45%).
The Realty index closed up by 173.05 points at 5,803.66. Gainers are Omaxe Ltd (6.97%), Akruti City (6.93%), Penland Ltd (6.60%), DLF Ltd (6.53%), Purvankara (6.28%) and Housing Development (4.45%).
The Banking index advanced by 156.09 points to close at 7,018.42 as BOI (5.73%), Union Bank (5.00%), HDFC Bank Ltd (4.74%), Bank of Baroda (4.53%), Axis Bank (3.30%), and SBI (2.38%) closed in positive territory.
The Oil & Gas index closed up by 141.02 points at 9,832.24. Gainers are Relaince (2.76%), Aban Offshore (2.61%), Essar Oil Ltd (0.85%), Reliance Nat Res(0.81%), IOC (0.67%), and Reliance Pet (0.15%).
The Metal index increased by 134.88 points to close at 15,400.80. Major gainers are Gujarat Nre C (4.42%), Hindustan Zinc (4.24%), Steel Authority (3.76%), Sh Precoated (3.18%), Jindal Steel (2.67%) and Jindal Saw (2.39%).
The FMCG index closed lower by 8.06 points at 2,268.53. Losers are United Spr (1.61%), Britania Industries (1.15%), ITC Ltd (1.09%), HUL (0.79%) and Glaxosmi Con (0.14%).
Sensex garners 296 points in Asian recovery
The Indian stock market which had hit its lowest level in 2008 yesterday, 10 June 2008, recovered today as investors resorted to bargain buying after recent steep fall in share prices, taking cue from firm Asian markets. Falling crude prices further boosted sentiments. Sensex had tumbled 880.47 points in the past three trading sessions. Realty, banking, capital goods and power stocks gained. FMCG stocks declined. The market breadth was strong.
European markets, which opened after Indian market, were mixed. Asian stocks rebounded from a two-month low on Wednesday, 11 June 2008, with the stronger US dollar helping shares of exporters.
The 30-share BSE Sensex rose 296.07 points or 1.99% at 15,185.32. At the day’s high of 15,225.81, Sensex gained 336.56 points at the fag end of the trading session. The barometer index rose 120.23 points at the day's low of 15,009.48 hit in early trade.
The broader based S&P CNX Nifty jumped 73.8 points or 1.66% at 4,523.60. Nifty June 2008 futures were at 4515.90, at a discount of 7.70 points as compared to spot closing of 4523.60.
The market breadth was strong on BSE with 1,830 shares advancing as compared to 809 that declined. 77 remained unchanged. Among the 30 stocks from Sensex pack, 22 were trading in green.
The BSE clocked a turnover Rs 5296 crore today as compared toa turnover of Rs 5321.84 crore yesterday, 10 June 2008. The NSE's futures & options (F&O) segment turnover was Rs 45,775.86 crore, which was lower than Rs 53,893.30 crore on Tuesday, 10 June 2008.
As per the providional figures on NSE, the foreign institutional investors (FII) sold shares worth Rs 217.27 crore today while domestic funds bought shares worth Rs 546.47 crore.
The BSE Mid-Cap index rose 1.42% to 6,190.72 and BSE Small-Cap index rose 1.72% to 7,467.30.
All the sectoral indices on BSE ended with gains except the BSE FMCG index. The BSE Realty index (up 3.07% at 5,803.66), BSE Capital Goods (up 2.44% at 11,901.49), BSE Bankex (up 2.27% at 7,018.42) outperformed Sensex.
BSE PSU index (up 1.77% to 6,503.21), BSE Power index (up 1.76% to 2,652.92), BSE IT index (up 1.72% to 4,357.43), BSE TecK index (up 1.5% to 3,372.97), BSE Oil & Gas index (up 1.46% to 9,832.24), BSE Metal index (up 0.88% to 15,400.80), BSE HealthCare index (up 0.8% at 4,447.24), The BSE Auto (up 0.79% at 4,152.31), BSE Consumer Durables index (up 0.15% to 3,846.77), BSE FMCG index (down 0.35% to 2,268.35), underperformed Sensex.
India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 2.76% to Rs 2,260.
Realty stocks galloped in late trade. DLF (up 6.53% to Rs 511.20), Housing Development & Infrastructure (up 4.45% to Rs 576.85) and Unitech (up 2.87% to Rs 184.35) edged higher. Indiabulls Real Estate declined 2.62% to Rs 380.90.
Capital goods stocks rose ahead of the release of the April 2009 industrial production data by the government tomorrow, 12 June 2008. Bharat Heavy Electricals (up 7.19% to Rs 1,481.45), Larsen & Toubro (up 2.45% to Rs 2,652.95) and Suzlon Energy (up 0.24% to Rs 270.05) edged higher.
Banking stocks rose after recent steep losses triggered by concerns the Reserve Bank of India may raise interest rates to rein in inflation. HDFC Bank (up 4.74% to Rs 1,184.55), State Bank of India (up 2.38% to Rs 1,309.50) edged higher.
India’s largest private sector bank by net profit ICICI Bank rose 1.37% to Rs 741.65. It is reportedly cutting about 1000 jobs at different levels. While the company insists that only the poor performers have been asked to leave, reports say the job cut is part of the company's attempt at cutting cost, mainly in segments such as retail, rural and agri-credit.
Power stocks gained. NTPC (up 2.38% to Rs 165.30), Tata Power Company (up 0.91% to Rs 1,302.80) and Reliance Power (up 0.05% to Rs 182.40) edged higher.
FMCG stocks declined. ITC (down 1.09% to Rs 199.35), Hindustan Unilever (down 0.79% to Rs 232.55) and United Spirits (down 1.61% to Rs 1,377.25) edged lower.
Ambuja Cements (up 7.19% to Rs 88.20), HDFC (up 4.1% to Rs 2,187.05), Bharti Airtel (up 3.78% to Rs 806.90), Cipla (up 3.41% to Rs 218.25), Jaiprakash Associates (up 3.39% to Rs 183.15), ACC (up 3.09% to Rs 635.45) edged higher from Sensex pack.
Reliance Communications (down 1.41% to Rs 543.05), ONGC (down 0.08% to Rs 830.55), Maruti Suzuki India (down 1.07% to Rs 733.60) edged lower from the Sensex pack.
India’s largest drugmaker by sales Ranbaxy Laboratories was flat at Rs 560.80. Ranbaxy founders Malvinder Singh and Shivinder Singh today inked a deal to sell their combined 34.8% stake to Japanese drug maker Daiichi Sankyo at Rs 737 a share, a 30% premium over Tuesday (10 June 2008)'s closing price. Daiichi also seeks to acquire majority of the voting capital of Ranbaxy. The total transaction value is expected at about Rs 14740 crore to Rs 19800 crore depending on the response to a mandatory 20% open offer which Daiichi will be making to Ranbaxy shareholders.
India’s largest commercial vehicle maker by sales Tata Motors declined 1.42% to Rs 505.60. As per reports, it plans to raise an additional $1 billion in the international market to fund its expansion plans, which include strategic alliances and acquisitions.
Grasim Industries declined 1.13% to Rs 2,192.05 after the company said on Tuesday, 10 June 2008, it has sold its sponge iron business Vikram Ispat to Welspun Power and Steel for Rs 1030 crore.
IFCI clocked the highest volume of 2.67 crore shares on BSE. Ranbaxy Laboratories (1.19 crore shares), Karuturi Global (1.08 crore shares), Ispat Industries (83.99 crore shares), Anu’s Laboratories (81.45 lakh shares) were the other volume toppers in that order.
Ranbaxy Laboratories clocked the highest turnover of Rs 684.05 crore on BSE. Reliance Industries (Rs 322.83 crore), Anu’s Laboratories (Rs 251.7 crore), Reliance Capital (Rs 186.62 crore) and IFCI (Rs 164.99 crore) were the other turnover toppers in that order.
European markets were mixed. Key benchmark indices in France and UK were down by between 0.12% to 0.2%. Germany’s DAX rose by 0.13%.
Asian markets were mixed. Key benchmark indices in Japan, South Korea and Singapore were up by between 0.41% to 1.16%. Key benchmark indices in Hong Kong, China and Taiwan were down by between 0.21% to 1.57%.
Oil fell sharply on Tuesday, 10 June 2008, after the US Federal Reserve signaled it was taking aim at inflation, triggering a rebound in the US dollar and a sell-off across commodities markets. Further pressure on prices came after two of the world's biggest energy forecasters lowered their outlook for global energy demand as high prices bite consumers, easing the effect of lackluster increases in world production. US crude dropped $3.04, or 2.26%, to settle at $131.31 a barrel, well below last Friday (6 June 2008)'s record near $140.
A surge in global commodity prices led by crude oil spooked stocks across the globe in the past few days. Crude price is up about 40% so far in calendar 2008. In India, foreign funds have pressed heavy sales. FIIs sold shares worth a net Rs 4326 crore in the first few days of this month, till 9 June 2008. They had dumped stocks worth a net Rs 5011.50 crore in May 2008. Their outflow in calendar 2008 reached Rs 19695.40 crore, till 9 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.
India’s fiscal deficit is slated to rise in the current financial year on account of the hefty fuel and fertilizer subsidies, a big sixth pay commission recommended wage hike, a debt-waiver package to farmers announced in the Union Budget 2008-09 and the recent sharp cut in duties by the government on petroleum products to mitigate the impact of oil price rise on consumers. A rise in fiscal deficit means negative savings for the government. This will result in higher government borrowings which in turn will keep interest rates high.
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.
According to a latest monthly June 2008 strategy report by HSBC Global Research, a possibility of Left parties withdrawing support to the government at the centre over the fuel price hike issue, cannot be ruled out. In such an environment with prospects of mid-term polls, the stock market is likely to remain nervous, HSBC says. Parliamentary elections are due in India in May 2009. HSBC’s 2008 year-end (calendar year) target for Sensex is 17,500, compared to current Sensex level of 15,066.10.
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.
The market 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.
The BSE Sensex may fall to a 10-month low of around 13,000 points by end-2008, as the Reserve Bank of India may raise interest rates to check inflation due to record oil prices, Credit Suisse said on Monday, 9 June 2008. "The market is still not pricing in the much lower earnings growth being forecast by corporates and banks," Nilesh Jasani, head of research at the Indian unit of the Swiss bank told reporters at a briefing on Monday, 9 June 2008. Uncertainty ahead of national elections will also weigh on the minds of investors, Jasani said.
NSE Bulk Deals to Watch - June 11 2008
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
11-JUN-2008,BOMDYEING,Bombay Dyeing & Mfg Co.,MIRAE ASSET INDIA DISCOVERY EQUITY INVESTMENT TRUST 1,BUY,304580,701.46,-
11-JUN-2008,BRITANNIA,Britannia Ind Ltd.,RELIANCE CAPITAL TRUSTEE CO.L.,BUY,411000,1425.00,-
11-JUN-2008,IFCI,IFCI Ltd.,AMBIT SECURITIES BROKING PVT. LTD.,BUY,3995174,61.42,-
11-JUN-2008,MAXWELL,Maxwell Industries Ltd.,KAPIL JAYKUMAR PATHARE,BUY,1434065,14.20,-
11-JUN-2008,MAXWELL,Maxwell Industries Ltd.,SUNIL JAYKUMAR PATHARE,BUY,500350,14.15,-
11-JUN-2008,RALLIS,Rallis India Ltd.,FIDELITY TRUSTEE CO PVT LTD A/C FIDELITY TAX ADVANTAGE FUND,BUY,190593,420.00,-
11-JUN-2008,RANBAXY,Ranbaxy Laboratories Ltd,P R B SECURITIES PRIVATE LTD,BUY,2234581,571.70,-
11-JUN-2008,BRITANNIA,Britannia Ind Ltd.,FIDELITY INVESTMENTS MANAGEMENT (HONG KONG) LTD A/C FID INVT,SELL,411978,1425.00,-
11-JUN-2008,DCB,Development Credit Bank L,PICTET & CIE A/C PICTET COUNTRY FUND MAURITIUS LTD,SELL,1200000,57.15,-
11-JUN-2008,IFCI,IFCI Ltd.,AMBIT SECURITIES BROKING PVT. LTD.,SELL,3977444,61.48,-
11-JUN-2008,MAXWELL,Maxwell Industries Ltd.,PRASHANT JAIPAL REDDY,SELL,500350,14.15,-
11-JUN-2008,MAXWELL,Maxwell Industries Ltd.,VINAY JAIPAL REDDY,SELL,1434065,14.20,-
11-JUN-2008,NATCOPHARM,Natco Pharma Limited,GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD,SELL,202525,82.45,-
11-JUN-2008,RALLIS,Rallis India Ltd.,HDFC M F A/C INDIA TAX SAVER,SELL,150000,420.78,-
11-JUN-2008,RANBAXY,Ranbaxy Laboratories Ltd,P R B SECURITIES PRIVATE LTD,SELL,2279263,573.79,-
BSE Bulk Deals to Watch - June 11 2008
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
11/6/2008 530513 ACCURATE TR SECUROCROP SECURITIES INDIA P S 19655 121.69
11/6/2008 532981 ANU LABS SUMMIT COMMUNICATIONS PVT LTD B 100000 318.00
11/6/2008 532981 ANU LABS MUKUL R. TIBREWALA B 78949 311.81
11/6/2008 532981 ANU LABS S. M. NISSAR B 155837 312.10
11/6/2008 532981 ANU LABS PRABHUDAS LILLADHER PVT. LTD. B 112238 309.98
11/6/2008 532981 ANU LABS PINKEY POPATLAL JAIN B 78276 310.49
11/6/2008 532981 ANU LABS MUKUL R. TIBREWALA S 78949 310.83
11/6/2008 532981 ANU LABS GOPAL TRADERS S 99363 304.10
11/6/2008 532981 ANU LABS S. M. NISSAR S 156072 312.30
11/6/2008 532981 ANU LABS PRABHUDAS LILLADHER PVT. LTD. S 112238 310.00
11/6/2008 532981 ANU LABS PINKEY POPATLAL JAIN S 78276 309.35
11/6/2008 532385 AZTECSOFT L MINDTREE LIMITED B 242472 72.00
11/6/2008 532385 AZTECSOFT L V R GOVINDARAJAN S 242472 72.00
11/6/2008 532946 BANG CHANDRA FIN. SERV.PVT. LTD B 96522 264.39
11/6/2008 531358 CHOIC INTERN EXPLICIT FINANCE LTD B 21000 13.10
11/6/2008 531358 CHOIC INTERN DHANNALAL ARVINDKUMAR JAIN S 20900 13.10
11/6/2008 516078 JUMBO BAG LT SANDEEP MOHAN BONGANE S 54138 37.60
11/6/2008 516078 JUMBO BAG LT NILESH JOSEPH GONSALVES S 45544 37.60
11/6/2008 531687 KARUTURI GLO CITIGROUP GLOBAL MARKETS MAURITIUS PVT. LTD. B 7200000 21.25
11/6/2008 531687 KARUTURI GLO BSMA LIMITED S 7200000 21.25
11/6/2008 530047 RAI SH REK M NILU SANJAY PODDAR B 70963 113.91
11/6/2008 532884 REFEX REFRIG HIMAT PARSHOTTAMBHAI JATANIA B 87000 229.50
11/6/2008 526407 RIT PRO IND SANJEEV ARORA B 81000 120.86
11/6/2008 517214 SPICE MOBIL MODI RUBBER LTD S 389797 21.52
11/6/2008 532311 TUTIS TECH MILLENNIUM ENTERPRISE S 125010 13.88
11/6/2008 532765 USHER AGRO MAVI INVESTMENT FUND LTD S 128060 139.63
Today's Pick - GE shipping
We recommend a sell in Great Eastern Shipping Company from a short-term perspective. From the charts of the stock, we note that it was on a medium-term uptrend from its March 2008 low of Rs 311, till it recorded a peak at Rs 537 in late May.
On June 4, the stock conclusively penetrated the medium-term up trendline as well as the 21-day moving average line. The stock continued to head Southward and penetrated the key support level Rs 450 by tumbling 6 per cent with above-average volume on June 10.
With this decline, the daily momentum indicator has entered the bearish zone form the neutral region. The moving-average convergence and divergence is in line with the stock and is likely to enter the negative territory. We are bearish on the stock in the short-term horizon.
We expect the stock’s decline to continue until it hits our price target of Rs 380 in the upcoming trading sessions. Traders with short-term perspective can sell the stock, while maintaining the stop-loss at Rs 452 level.
via BL
Trading Calls - June 11 2008
Nifty (4450) Sup 4380 Res 4495
Buy Cairn (295)
SL 290 Target 305, 310
Buy Sun Pharma (1469)
SL 1454 Target 1499, 1510
Buy Dr Reddy (697)
SL 690 Target 710, 715
Sell Praj Ind (178)
SL 193 Target 168, 165
Sell Tata Motors (509)
SL 514 Target 499, 496
Market may recover as oil drops
The market may edged higher as investors may resort to bargain hunting after steep losses in the past few days caused by concerns over high inflation and fears of a further rise in domestic interest rates. Asian markets were mostly in the green today. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were up by between 0.14% to 1%.
Oil fell sharply on Tuesday, 10 June 2008, after the US Federal Reserve signaled it was taking aim at inflation, triggering a rebound in the US dollar and a sell-off across commodities markets. Further pressure on prices came after two of the world's biggest energy forecasters lowered their outlook for global energy demand as high prices bite consumers, easing the effect of lackluster increases in world production. US crude dropped $3.04, or 2.26%, to settle at $131.31 a barrel, well below last Friday (6 June 2008)'s record near $140.
A surge in global commodity prices led by crude oil spooked stocks across the globe in the past few days. In India, foreign funds have pressed heavy sales. FIIs sold shares worth a net Rs 4326 crore in the first few days of this month, till 9 June 2008. They had dumped stocks worth a net Rs 5011.50 crore in May 2008. Their outflow in calendar 2008 reached Rs 19695.40 crore, till 9 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.
India’s fiscal deficit is slated to rise in the current financial year on account of the hefty fuel and fertilizer subsidies, a big sixth pay commission recommended wage hike, a debt-waiver package to farmers announced in the Union Budget 2008-09 and the recent sharp cut in duties by the government on petroleum products to mitigate the impact of oil price rise on consumers. A rise in fiscal deficit means negative savings for the government. This will result in higher government borrowings which in turn will keep interest rates high.
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.
According to a latest monthly June 2008 strategy report by HSBC Global Research, a possibility of Left parties withdrawing support to the government at the centre over the fuel price hike issue, cannot be ruled out. In such an environment with prospects of mid-term polls, the stock market is likely to remain nervous, HSBC says. Parliamentary elections are due in India in May 2009. HSBC’s 2008 year-end (calendar year) target for Sensex is 17,500, compared to current Sensex level of 15,066.10.
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.
The market 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.
The BSE Sensex may fall to a 10-month low of around 13,000 points by end-2008, as the Reserve Bank of India may raise interest rates to check inflation due to record oil prices, Credit Suisse said on Monday, 9 June 2008. "The market is still not pricing in the much lower earnings growth being forecast by corporates and banks," Nilesh Jasani, head of research at the Indian unit of the Swiss bank told reporters at a briefing on Monday, 9 June 2008. Uncertainty ahead of national elections will also weigh on the minds of investors, Jasani said.
All Grey Market Premiums
Niraj Cement 190 Discount
Bafna Pharmaceutical 40 5 to 7
Avon Weighing 10 4 to 4.50
Sejal Architectural Glass Ltd. 105 to 115 20 to 22
First Winners Ind. Ltd. 120 to 130 7 to 9
Archid Ply Ind. 70 to 80 6 to 8
Lotus Eye Care Hospital 38 to 42 3 to 5
Morning Call - June 11 2008
Market Grape Wine :
In House :
Nifty at a support of 4470 and 4345 with a resist oif 4525 and 4600
Cash:
Buy: Rel above 2198 with atgt of 2260 with aSL of 2160
Buy: Relcap above 1125 tgt of 1170 with a SL of 1105
F&O:
Buy: kotak bank above 650 tgt of 670 with a sL of 640
Buy: Suzlon above 274 tgt of 290 with aSL of 265
.
Out House :
Markets at a support of 14800 & 14653 resistance at 15251 & 15453 levels .
Buy : Bhel & NTPC
Buy : LT
Buy : ONGC
Buy : Suzlon
Buy : Praj
Buy : HLL & ITC
Buy : Ranbaxy , Sunpharma & Glenmark
Dark Horse : RPL , Suzlon , Ranbaxy , ITC , NTPC , RIL & LT
Market slide may continue
Market may slide further on account of weak Asian markets in morning trades, mixed close in the US markets and continued selling pressure may also drag the domestic indices further down. The FIIs remained net sellers in equities for last couple of sessions may also weigh on the investors' sentiment. Key indices, the Nifty may get support at 4410 level and on the upside it could test higher levels at 4500. The Sensex has a likely support at 14,800 and may face resistance at 15,050.
US indices ended mixed on Monday. While the Dow Jones gained by 9 points to close at 12290, the Nasdaq ended 11 point lower at 2449.
Indian floats, however, bucked in US market and ended lower. Infosys, Wipro, Satyam, HDFC Bank, VSNL & Rediff where the heaver loser dropped over 2%, while Tata Motors, ICICI Bank & MTNL dropped nearly 1%. Dr Reddy & Patni Computers were the only gainers amongst the ADRs and gained by 0.31% & 0.65% respectively.
Crude oil prices declined sharply, with the Nymex light crude oil for July 08 delivery moved down by $3.04 to close at $131.31 a barrel. In the commodity space, the Comex gold for August series lost $26.90 to settle at $871.70 a troy ounce.
Forget the world, help yourself!
It's easier to put on slippers than to carpet the whole world.
Inflation remains and will continue to be the bugbear for the global economy for quite a while. Only a steep fall in commodity prices, especially that of crude oil will improve the sentiment. Right now, one can just wait and watch the emerging situation, both locally and globally. But waiting for the world and its people will do no good to your portfolio. Narrow down your thinking to the select stocks you would like to own.
The slight bounce we expected was slight and short. Weakness in Asian markets coupled with nagging concerns over high oil prices, inflation and interest rates put paid to the bulls' hopes of a turnaround. The massacre was quite furious with the Sensex tumbling below its previous 2008 lows. Thankfully, a late spurt brought some relief; as in it pared the losses for the bulls.
The outlook for today is a tad better with no major carnage seen in global markets. What could also prop up sentiment a bit is that oil prices have softened after last Friday's record spike. Fed chairman Ben Bernanke's comments over inflation has sparked speculation that the central bank may be preparing the ground for higher borrowing costs later this year. This has boosted the dollar while bonds and commodities have taken some beating.
Last week, it was the European Central Bank (ECB) President Jean-Claude Trichet who hinted at a rate hike due to spiraling inflation worries. Over the last weekend, the Chinese central bank jacked up the banks 'reserve ratio by a whopping 100 bps to reign in inflation and suck out excess liquidity.
Given that most governments around the world are pre-occupied with inflation-controlling measures, it wouldn't be a surprise if the RBI too decides to tighten its monetary stance a wee bit further. It may even resort to increasing policy rates, though given the economic slowdown that may not be an appropriate policy instrument to contain inflation.
Today, we expect a cautious to positive start for our market. Its a no brainer that the bulls will struggle later to keep the early momentum going with too many negative factors floating around. The bravehearts may pick up battered quality stocks for long-term purpose. Having said that, one has to be vary careful while picking the scrips for investments.
NIIT could see some action as it will announce a strategic JV with Genpact for the BPO industry. Avoid the real estate pack for now unless you are trading on them with strict stop losses. Be content with small gains and book profits as you go along.
FIIs were net sellers of Rs9.1bn (provisional) in the cash segment on Tuesday while the local institutions poured in Rs2.96bn. In the F&O segment, foreign funds were net sellers at Rs5.37bn.
On Monday, FIIs were net sellers of Rs13.42bn in the cash segment. With this, they have pulled out a net of $4.88bn from the Indian market this year so far.
GMDC, KPIT Cummins, NIIT, NIIT Technologies and SCI will declare their results today.
Asian stocks are mostly down this morning, led by energy and mining shares, as the higher dollar reduced the appeal of oil and metals.
Woodside Petroleum dropped in Sydney and Inpex Holdings fell in Tokyo after crude declined more than $7 a barrel this week. Newcrest Mining, owner of Australia's largest gold mine, fell after gold tumbled the most in two months.
The MSCI Asia Pacific Index dropped 0.5% to 142.87 at 10:47 a.m. in Tokyo, extending a two-day, 4.6% decline. Almost two stocks fell for every one that rose. Japan's Nikkei 225 Stock Average lost 0.1% to 14,005.72.
All Asian equity markets open for trading fell, apart from Singapore and Malaysia. China's CSI 300 Index slumped 2.2%.
US stocks finished mixed on Wednesday as a fall in oil prices offset renewed jitters over inflation following remarks by Fed chairman Ben Bernanke that indicated that the central bank could hike interest rates later this year.
The dollar gained versus other major currencies. Bond prices slumped, raising the corresponding yields. Gold and other commodity prices slumped.
The S&P 500 slipped 3.32 points, or 0.2%, to 1,358.44. The Nasdaq Composite Index retreated 10.52 points, or 0.4%, to 2,448.94. The Dow Jones Industrial Average added 9.44 points, or 0.1%, to 12,289.76.
Market breadth was negative. More than four stocks decreased for every three that gained on the New York Stock Exchange.
In a speech made in Boston late on Monday, Bernanke emphasized the central bank's determination to anchor rising inflation expectations, which the markets viewed as a sign that the Fed may be ready to tighten monetary policy later this year.
Futures trading showed an 18% chance of an increase in the Fed funds target rate to 2.25% at the central bank's next meeting, up from 6% odds in the previous session and no chance a week earlier. Yields on two-year Treasury notes posted their biggest two-day increase since 1985.
Wall Street earlier received a boost from a sharp fall in crude oil prices after the US Energy Department and the International Energy Agency (IEA) slashed their forecast for global oil consumption for the year.
US stocks were mixed in the morning, but turned higher at midday as oil prices slipped. A rally in financial stocks helped the broader market after Monday's decline on Lehman Brothers' big quarterly loss.
But, the threat of rising pricing pressure and the possibility of higher interest rates to combat this pressure hung over markets for a second session in a row.
The US trade gap grew more than expected in April, due largely to high oil prices. The trade gap swelled to US$60.9bn in April, a 13-month high, from a revised US$56.5bn in March. Economists expected US$60bn.
US light crude oil for July delivery fell US$3.04 to settle at US$131.31 on the New York Mercantile Exchange, erasing early gains. The national average price for a gallon of regular unleaded gas rose to a record US$4.043 from the previous day's record of US$4.023, AAA reported.
The dollar gained versus the euro and yen. Treasury prices slumped, raising the yield on the 10-year note to 4.10% from 3.99% late on Monday. COMEX gold for August delivery fell US$26.90 to settle at US$871.20 an ounce.
Wednesday brings the release of the weekly oil inventories report and the Fed's Beige book.
Weakness in resources shares pulled European shares lower. The Fed's renewed call for a fight against inflation also kept investors on tenterhooks. The pan-European Dow Jones Stoxx 600 index declined 0.7% to 306.61. Decliners outpaced advancing stocks nearly 3 to 1.
Germany's DAX 30 lost 0.7% to 6,771.10, while the French CAC-40 fell 0.8% to 4,761.08 and the UK's FTSE 100 closed down 0.9% at 5,827.30.
Brazilian stocks dropped. In Sao Paulo, the benchmark Bovespa index fell 2.1% to 67,774.94, marking its third consecutive loss. In Mexico City, the IPC index slipped 0.1% to 30,898.87. Argentina's Merval fell 2.5% to 2,113.90 and Chile's IPSA closed fractionally lower at 3,018.08.
Among the other emerging markets, the RTS index in Russia was down 0.8% at 2339 while the ISE National 30 index in Turkey fell 1.2% to 46,973.
Dark clouds remain over D-Street
Markets continued to bleed for third straight trading session on back of global weakness, rising crude oil prices and unabated selling in scrips across the sectors.
After hitting the 2008 lows and breaches the previous low of 14,677 in the afternoon trades, the benchmark index managed to recover over 250 points and the Nifty recouped about 70 points from day’s low. Among the 30-scrips of Sensex, 11 stocks are in positive terrain and 19 stocks are in red.
Among the BSE Sectoral indices, barring the BSE Pharma index was the major gainer adding 2.1%. The major losers were, BSE IT (down 2.7%), BSE Bankex (down 2.4%) and BSE Realty index (down 2.1%). Even the Mid-Cap and the Small-Cap indices ended losing 1% each.
Among the 30-scrips of Sensex, 21 stocks ended in red and only 9 stocks ended in green. Finally, the BSE benchmark Sensex lost 176 points to close at 14,889 and the Nifty index lost 51 points to close at 4,449.
Zydus Cadila rallied by over 8% to Rs311 after reports stated that the company acquired majority stake in South Africa based Simalaya Pharmaceuticals. The scrip touched an intra-day high of Rs311 and a low of Rs291 and recorded volumes of over 30,000 shares on BSE.
Apollo Sindhoori was frozen at 5% upper circuit to Rs435.85 after reports stated that Aditya Birla Group may acquire 51% stake in Apollo Sindhoori Capital, a broking firm promoted by Apollo Hospital Group.
The Reddy family as promoters entered into an agreement to allow the Birla Group to acquire a 51% stake in the company. Reports also stated that the company was holding talks with other entities like Reliance and JP Morgan Group to come in as strategic investors. The scrip touched an intra-day high of Rs435.85 and a low of Rs435.85 and has recorded volumes of over 1,000 shares on BSE.
Sahara India Financial was again locked at 5% lower circuit to Rs152.70 after media reports on Monday stated that the Supreme Court directed Sahara the company to approach RBI on Thursday to convince it that its financial activities are in order. The scrip touched an intra-day high of Rs161 and a low of Rs152.70 and recorded volumes of over 9,000 shares on BSE.
SpiceJet surged by over 4% to Rs34 after reports again stated that Paramount Airways is likely to pick up stake in the company. The scrip touched an intra-day high of Rs34 and a low of Rs32 and recorded volumes of over 22,00,000 shares on BSE.
Spice Communication rallied by over 4% to Rs55 following reports that Idea cellular would buy out 40.8% BK Modi’s stake in Spice Communication for Rs22bn. The scrip touched an intra-day high of Rs59 and a low of Rs54 and recorded volumes of over 10,00,000 shares on BSE.
Bosch Chassis India was locked at 20% upper circuit to Rs538.85 after the company announced that they would consider delisting at a price not exceeding Rs600 per share. The scrip touched an intra-day high of Rs538.85 and a low of Rs432 and recorded volumes of over 94,000 shares on BSE.
Federal-Mogul Goetze gained by 1.6% to Rs67 after the Board of Directors of the company approved the "Issue of Shares on Right Basis" upto Rs 1300mn. The scrip touched an intra-day high of Rs67 and a low of Rs62 and recorded volumes of over 15,000 shares on BSE.
Aurobindo Pharma surged by over 3.5% to Rs281 after the company announced that it has secured final approval for Zaleplon Capsules. The scrip touched an intra-day high of Rs288 and a low of Rs268 and recorded volumes of over 43,000 shares on BSE
HDFC dropped by over 5% to Rs2101. The company posted a net profit attributable to the Corporation of Rs27.130bn for the year ended March 31, 2008 as compared to Rs17.42bn for the year ended March 31, 2007.The total Income has increased from Rs63.93bn for the year ended March 31, 2007 to Rs88.10bn for the year ended March 31, 2008. The scrip touched an intra-day high of Rs2200 and a low of Rs2064 and recorded volumes of over 25,00,000 shares on BSE.
Corporate News
Hindustan Motors to launch new passenger car in October 2008. (Mint)
Reliance Industries to produce oil from KG basin by August 2008. (Mint)
BPCL to invest $200mn in overseas exploration. (Mint)
IDFC to list $1.25bn India Infra Fund. (Mint)
JSW Steel plans to borrow from export credit agencies to fund its $3.3bn expansion plan. (Mint)
Grasim sells sponge iron unit from Rs10.3bn. (Mint)
Vedanta plans to invest $20bn in India in next four years. (Mint)
Idea Cellular to invest in Spice Communications network and technology upgrade. (BS)
Bosch makes considering increasing offer price for delisting its Indian arm, Bosch Chassis Systems. (BL)
TVS Motors plans power bikes to take on competition. (BS)
Scooters India to make E-bikes. (BS)
RCom-MTN combine may seek London listing. (BS)
Omaxe forays into Dubai market. (BL)
IDFC picks up 22% stake in Seaways Shipping. (BL)
Tata Elxsi has planned a capex of Rs450mn and addition of 1,000 employees in 2008-09. (BL)
Bharti Airtel to bring Apple’s 3G iPhone to India. (BL)
Spice Telecom to unveil Braille mobile phone. (BL)
UB Group says their IPL team, Royal Challengers have achieved breakeven in the first year of operations. (BL)
Gati may hike freight rates by 7-10%. (BL)
Tata Tea to develop new range of products, fortified water, functional water and enhanced water. (FE)
Indiabulls Real Estate arm enters in MoU with government of Jharkhand for setting up 1,320MW power project. (FE)
Tata Steel JV with Riversdale Mining in Mozambique to yield premium hard coking coal and thermal. (FE)
Jet Airways enters into code-share agreement with Etihad Airways effective July 1, 2008. (FE)
Gitanjali Gems raises stake in Fantasy Diamond Cuts Pvt Ltd to make its wholly owned unit. (FE)
Gitanjali Gems merged two founder group companies Decent Securities & Finance and Eureka Finstock with itself. (FE)
Aurobindo Pharma receives USFDA approval to manufacture and market Zaleplon Capsules. (FE)
Bosch Chassis makes an offer of acquiring the public holding at a price not exceeding Rs600 per share. (FE)
Godrej Appliance to foray into colour television market by August. (FE)
Tata Motors seeking to raise US$1bn in debt or equity from the overseas market. (FE)
Tata Motors looking to raise its borrowing limit to Rs200bn from the current Rs120bn. (FE)
Idea willing to pay a premium of 10-15% over the current market price of Spice Communication. (FE)
PNB to bid for stake in IFCI through a consortium. (FE)
PNB to foray into credit card business within six months. (FE)
BHEL, L&T, Crompton Greaves among major bidders for Rs180bn transmission strengthening and upgradation project. (FE)
Financial Technologies promoted Power Exchange to launch its operation within a fortnight. (FE)
Duncans Tea in talks with IOC to tap rural market. (FE)
Bombay Dyeing to open its first retail store in Dubai. (ET)
Bombay Dyeing tied up with Dubai-based luxury lifestyle retailer Revoli Group. (ET)
Karuturi Global looks to acquisition in Europe and to foray into Horticulture. (ET)
Dabur Pharma subsidy, to get accreditation from college of America next year. (ET)
GTL promoters to hike their equity stake in the group’s telecom tower arm GTL Infrastructure to 68.29% from 43.29%. (ET)
Middle East‘s Al Rostamani may buy 25% stake in GHCL for ~US$200mn. (ET)
ONGC to tie-up with SCI to manufacture rigs. (ET)
Bata India eyes franchise model to launch its upcoming retail stores. (ET)
Economic News
Fertilizer industry wants a pricing policy in place. (BS)
New 3G aspirants unlikely to get 2G spectrum. (FE)
Civil Aviation minister Praful Patel, to meet Prime Minister today for a reduction in landing and parking charges. (ET)
The NPPA made it mandatory for companies to inform it of their plans to change the composition of their drugs. (ET)
Karnataka Government planning to come out with semiconductor policy. (ET)
Sugar production declines 6% in May 2008. (ET)
Largest drop for bullion metals in two months
Gold and silver prices witness large fall as the dollar strengthens on no more interest rate cut hopes
With dropping crude price and the strong dollar, bullion metal prices dropped the most in two months. Rallying crude oil prices and the lower dollar sent yellow metal higher last week on Friday, 06 June, 2008. But since the start of this week, the dollar has strengthened following on and off comments from Federal Reserve Chairman, Ben Bernanke. The same has reduced the appeal of the precious metals as an inflation hedge. Silver prices also dropped today.
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.
Comex Gold for August delivery fell $26.9 (3%) to close at $871.2 ounce on the New York Mercantile Exchange. It was gold’s largest one day drop in almost two months time. Last 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 4.2% till date against a 6.3% 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 fell by 57.5 cents (3.3%) to $16.635 an ounce. Silver has gained 11% in 2008 till date. It finished 3.5% higher 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.
At the currency markets on Tuesday, the dollar index, a weighted measure against the euro, yen, pound and three other major currencies, jumped 1.1%. Federal Reserve Chairman Ben S. Bernanke said risks to the economy have faded, spurring speculation that interest rates will rise.
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 Tuesday, crude-oil futures closed with a loss of more than 2% retreating from a high above $137 a barrel after monthly reports implied that recent record prices as well as weak economies may be causing declines in global and domestic demand growth. Prices closed around $131, dropping by more than $3/barrel.
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%.
At the MCX, gold prices for August delivery closed lower by Rs 312 (2.5%) at Rs 12,118 per 10 grams. Prices rose to a high of Rs 12,399 per 10 grams and fell to a low of Rs 12,060 per 10 grams during the day’s trading.
At the MCX, silver prices for July delivery closed Rs 740 (3.1%) lower at Rs 23,437/Kg. Prices opened at Rs 24,080/kg and fell to a low of Rs 23,311/Kg during the day’s trading.
Ranbaxy, Infosys, L&T June 2008 futures at premium
Turnover in F&O segment declines
Nifty June 2008 futures were at 4453, at a premium of 3.20 points as compared to spot closing of 4449.80.
The NSE's futures & options (F&O) segment turnover was Rs 53,893.30 crore, which was lower than Rs 58,333.52 crore on Monday, 9 June 2008.
Ranbaxy Laboratories June 2008 futures were at premium at 565 compared to the spot closing of 560.75.
Infosys Technologies June 2008 futures were at premium at 1870.25 compared to the spot closing of 1854.05.
Larsen & Toubro (L&T) June 2008 futures were at premium at 2602 compared to the spot closing of 2585.35.
In the cash market, the S&P CNX Nifty lost 51.15 points or 1.14% at 4449.80.
Crude prices drop by more than $3
Prices give up earlier gains as the dollar strongly firms up
Strong dollar took crude prices lower today, Tuesday, 10 June, 2008 and prices closed lower by more than $3 after rising higher earlier in the day. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies.
Crude-oil futures for light sweet crude for July delivery today closed at $131.31/barrel (lower by $3.04/barrel or 2.3%) on the New York Mercantile Exchange. Earlier it rose to a high of $137.98/barrel during the day.
Last week, crude prices closed higher by 8.8%. For the year, crude is up by 36% till date. Prices are 98% higher on a yearly basis.
Oil prices had shot higher by almost $11 a barrel on Friday, 06 June, 2008 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. Prices had touched an all time high of $139/barrel but closed at $138.5. That was an all-time closing high.
At the currency markets on Tuesday, the dollar index, a weighted measure against the euro, yen, pound and three other major currencies, jumped 1.1%. Federal Reserve Chairman Ben S. Bernanke said risks to the economy have faded, spurring speculation that interest rates will rise.
Also, The International Energy Agency (IEA) cut its forecast for global oil demand for a fifth month today as record prices dented consumption. The IEA reduced its 2008 outlook by about 70,000 barrels a day to 86.77 million barrels a day from 86.84 million last month. That leaves demand growth for this year at 0.9%.
Saudi Arabia reportedly said yesterday that it had increased production this month and has told all the oil companies it deals with that it's ready to provide them with additional supplies, if needed.
Natural gas consumption to rise 2.2% in 2008
Brent crude oil for June settlement today fell $2.89 (2.2%) to $131.02 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 in New York declined after crude oil fell and lower temperatures were forecast to reduce demand. Natural gas for July delivery fell 16.9 cents (1.3%) to settle at $12.435 per million British thermal units. Gas earlier rose as high as $12.743 per million Btu. Futures are 66% higher this year.
Against this backdrop, prices for petroleum products closed lower along with crude Tuesday. July reformulated gasoline fell 7.07 cents to close at $3.3193 a gallon and July heating oil shed 6.76 cents to end at $3.8124 a gallon.
As per EIA, total natural-gas consumption is expected to rise by 2.2% in 2008, with year-over-year increases in residential, commercial and electric power sectors largely weather driven.
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 5,658/barrel, lower by Rs 165 (2.8%) against previous day’s close. Natural gas for June delivery closed at Rs 533.7/mmbtu, lower by Rs 7.2/mmbtu (1.3%).
US Market in search of direction
Hawkish comments from Federal Reserve Chairman regarding inflation worry stocks
US stocks were in search of direction for the entire day today, Tuesday, 10 June, 2008. Stocks mostly ended lower cautioned by Federal Reserve Chairman, Ben Bernanke’s statement on inflation. Earlier in the day, market received a good boost from the sharp drop in oil prices. But at the end, indices ended mixed with only Dow registering moderate gains, backed by its financial heavyweights. Four of the ten economic sectors posted a gain. The financial sector led the way.
The Dow Jones industrial Average ended the day with a gain of 9 points at 12,289. The Nasdaq Composite Index, finished lower by 10.5 points at 2,448.9. S&P 500 finished lower by 3.3 points at 1,358.
In a speech late Monday, 9 June, Bernanke emphasized the central bank's determination to hold down inflation expectations. The Fed has hinted that it is most likely done cutting rates, and its next move is likely an increase in rates. Market viewed as a signal the Fed will move to tighten monetary policy later this year.
Seventeen out of thirty Dow stocks ended in the green. All the major financial Dow components – Citigroup, AIG, JP Morgan and Bank of America advanced roughly 2% to 3%, providing support for the Dow.
In economic news, the Commerce Department reported that U.S. trade deficit widened to $60.9 billion in April on higher prices for crude oil and other commodities. Imports rose 4.5% to $216.4 billion, while exports increased 3.3% to $155.5 billion. Excluding the impact of inflation, the trade deficit slipped by 0.1% to the lowest level in nearly five years.
Market stated the day in the red. But a recovery in the financials around mid day helped the market gain back momentum and Dow climbed in the positive territory for first time during lunch hours.
The dollar received a boost against major global currencies as Bernanke's remarks stoked expectations that a rate hike could be in store sooner rather than later.
At the currency markets on Tuesday, the dollar index, a weighted measure against the euro, yen, pound and three other major currencies, jumped 1.1%. Federal Reserve Chairman Ben S. Bernanke said risks to the economy have faded, spurring speculation that interest rates will rise.
Strong dollar took crude prices lower today and prices closed lower by more than $3 after rising higher earlier in the day. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. Crude-oil futures for light sweet crude for July delivery today closed at $131.31/barrel (lower by $3.04/barrel or 2.3%) on the New York Mercantile Exchange. Earlier it rose to a high of $137.98/barrel during the day.
Tomorrow, the market will digest the latest inventory report from the Department of Energy, the Fed's Beige Book, which is a report on economic conditions, and the Treasury Budget for May
Archidply Industries IPO Analysis
Promoted by Deen Dayal Daga, Shyam D. Daga, Rajiv D. Daga and Assam Timber Products, Archidply Industries was incorporated in 1995. It has modern manufacturing facilities for wood panel products and decorative surfacing products in Rudrapur (Uttarakhand) and Mysore (Karnataka).
The combined production capacity of plywood and block boards (4mm) is 1,28,00,000 square meters (sq mt), plain particleboards (4mm) 1,12,50,000 sq mt, pre-laminated particleboard (4mm), 99,00,000 sq mt, decorative veneers (4mm) 37,50,000 sq. mt, and decorative laminates of 12,00,000 sheets.
The range of comprehensive engineered interior products include plywoods such as marine plywood; fire retardant plywood; shuttering plywood; densified film faced plywood; BWR and MR plywood; lamyply and lamyboard; block boards and flush doors of BWR and MR grade; particle boards such as plain, veneered and pre-laminated both in interior and exterior grades; decorative laminates; and decorative veneers such as teak, natural exotic veneers, reconstituted veneers and dyed veneers.
The brand, Archidply, has been positioned in the premium segment of the wood panel and decorative surfacing products. Brands for the middle segment (Sec B) are Silvi and premium plywood products Pureply.
The marketing network includes 16 marketing offices, 61 distributors and stockiest and 586 authorised dealers.
A new manufacturing facility of plain particle boards, pre laminated board and decorative plywood, to be set up at a cost of Rs 37.67 crore at Chintamani in Karnataka, is to be commissioned by October 2008. A new manufacturing capacity for medium density fibreboard (MDF), to be set up at a cost of Rs 26.18 crore at Rudrapur, will be commissioned by August 2009. The total capital requirement is Rs 83.04 crore inclusive of future operating and working capital requirement. As such, Rs 46.31 crore to Rs 52.92 crore is to be raised in the price band of Rs 70 to Rs 80 per share through an initial public offering (IPO). Term loan will constitute Rs 28 crore.
Strengths
Enjoys various tax benefits. The Rudrapur unit has received approval for thermal energy generation from renewable biomass, making eligible for 24,659 certified emission reductions (CER) annually.
Weaknesses
Faces intense competition from unbranded products from the unorganised sector of the wood-based industry. There are many strong local brands,too. Moreover some organised players are much larger than Archidply.
Yet to receive licence to manufacture MDF at Rudrapur.
Valuation
Archidply has set a price band of Rs 70 to Rs 80 per equity share of Rs 10 face value. At the lower price band, the P/E would be 10.3 times and at the upper price band, the P/E would be 11.8 times the EPS for financial year ended March 2008 (FY 2008) on post-issue equity of Rs 22 crore. In the decorative wood-based/ laminates segment, comparable companies such as Greenply industries, Uniply Industries and Novopan Industries have TTM P/E of around 8, 6.6 and 8.1, respectively.
Final Poll Results - Bull vs Bear
Bull 163 (44.x%)
Bear 205 (55.x%)
Any comments ? More downside or right time to buy ?
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