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Thursday, June 12, 2008
Sensex recovers in late rally
The Sensex opened with a huge negative gap of 228 points at 14,957 owing to weakness in the global markets.
The index touched a day's low of 14,748 - down 437 points from its previous close.
The index recovered smartly in late noon deals and touched a day's high of 15,271 - swung 523 points intraday.
Consumer durables and oil & gas stocks gained 1.7% and 1.4%, respectively, while IT stocks lost 0.3%.
The Sensex finally ended with a gain of 65 points at 15,250.
The market breadth was marginally positive - out of 2,674 stocks traded, 1,481 advanced, 1,109 declined, and 84 were unchanged.
The NSE Nifty moved up 16 points at 4,539.
INDEX MOVERS...
BHEL gained 2.5% to Rs 1,519, while Reliance Infrastructure has moved up 2.4% to Rs 1,046.
Tata Steel and SBI advanced 2.% each to Rs 857 and Rs 1,340, respectively.
Wipro added 2.1% to Rs 483. Larsen & Toubro was up 1.9% at Rs 2,703.
Jaiprakash Associates and Bharti Airtel inched around 1.6% each at Rs 186 and Rs 820, respectively.
Reliance gained nearly 1% to Rs 2,282.
Grasim, Mahindra & Mahindra and Hindalco were the other prominent gainers.
...AND THE SHAKERS
Ranbaxy plunged 3.1% at Rs 543. DLF declined 2.6% to Rs 498. Ambuja Cements slipped 2.6% at Rs 86.
HDFC Bank dropped 1.8% to Rs 1,164. NTPC shed 1.3% to Rs 163.
Infosys was down nearly 1% at Rs 1,877. HDFC lost 0.7% to Rs 2,172. Cipla, ACC and TCS were down 0.5% each to Rs 217, Rs 632 and Rs 888, respectively.
MOST ACTIVE COUNTERS
Reliance led the value chart with a turnover of Rs 417.14 crore followed by Reliance Petroleum (Rs 372.83 crore), Suzlon Energy (Rs 292.39 crore), Reliance Capital (Rs 245.83 crore) and DLF (Rs 218.02 crore).
IFCI topped the volume chart with trades of around 3.15 crore shares followed by Reliance Petroleum (2.13 crore), Reliance Natural Resources (1.85 crore), Spice Telecom (1.32 crore) and Suzlon Energy (1.16 crore)
SBI June 2008 futures at discount
Turnover in F&O segment surges
Nifty June 2008 futures were at 4500.55, at a discount of 38.80 points as compared to spot closing of 4539.35. NSE futures & options (F&O) segment turnover was Rs 52,333.46 crore, which was higher than Rs 45,775.86 crore on Wednesday, 11 June 2008.
State Bank of India (SBI) June 2008 futures were at discount at 1330.50 compared to the spot closing of 1339.55.
Ranbaxy Laboratories June 2008 futures were at premium at 545.20 compared to the spot closing of 544.05.
Reliance Natural Resources June 2008 futures were at premium at 93.30 compared to the spot closing of 92.95.
In the cash market, the S&P CNX Nifty gained 15.75 points or 0.35% at 4539.35.
BSE Bulk Deals to Watch - June 12 2008
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
12/6/2008 532981 ANU LABS GOPAL TRADERS B 100000 323.85
12/6/2008 532981 ANU LABS S. M. NISSAR B 116976 317.70
12/6/2008 532981 ANU LABS PRABHUDAS LILLADHER PVT. LTD. B 88797 318.91
12/6/2008 532981 ANU LABS CHIMANLAL MANEKLAL SEC.PVT.LTD B 213085 285.67
12/6/2008 532981 ANU LABS SUMMIT COMMUNICATIONS PVT LTD S 100000 319.95
12/6/2008 532981 ANU LABS S. M. NISSAR S 116976 318.00
12/6/2008 532981 ANU LABS PRABHUDAS LILLADHER PVT. LTD. S 88797 319.08
12/6/2008 532981 ANU LABS CHIMANLAL MANEKLAL SEC.PVT.LTD S 213085 285.49
12/6/2008 532946 BANG ASHOK KUMAR JAIN B 70000 274.62
12/6/2008 532946 BANG ANITA D DALAL B 75000 271.06
12/6/2008 532946 BANG KUNDAN LEASING AND FINVEST PVT.LTD S 122005 271.70
12/6/2008 522059 CHAMPAGN IND AMERICAN FUNDS INSURANCE SERIES GLOBAL SMALL CAPITALIZATION FUND B 247327 500.00
12/6/2008 522059 CHAMPAGN IND CAPITAL GROUP AC SMALL CAP WORLD FND INC B 226261 500.00
12/6/2008 522059 CHAMPAGN IND ARISAIG PARTNERS PTE LTD SUB AC ARISAIG INDIA FUND LIMITED S 473588 500.00
12/6/2008 505242 DYNAMATIC TE FID FUND MAURITIUS LTD B 120000 1233.00
12/6/2008 505242 DYNAMATIC TE UDAYANT MALHOUTRA S 120000 1233.00
12/6/2008 500151 GTC INDUSTRI L T FINANCE LIMITED S 90000 153.09
12/6/2008 504269 KHAITAN ELCT SANTOSH INDUSTRIES LIMITED B 270506 54.37
12/6/2008 519570 LAKSHMI OVER AMERICAN FUNDS INSURANCE SERIES GLOBAL SMALL CAPITALIZATION FUND B 775000 270.00
12/6/2008 519570 LAKSHMI OVER MACQUARIE BANK LIMITED S 393881 270.00
12/6/2008 519570 LAKSHMI OVER CITIGROUP GLOBAL MARKETS MAURITIUS PVT LTD S 381119 270.00
12/6/2008 509046 LEENA CONS. BLOOMINGDALE INVESTMENT AND FINANCE PVT LTD S 7500 11.34
12/6/2008 532469 MATHER PUMPS RUANE CUNNIFF AND GOLDFARB INC AC ACACIA PARTNERS L P B 124000 106.00
12/6/2008 532469 MATHER PUMPS DEUTSCHE INTERNATIONAL TRUST CORP MAURITIUS LTD AC MINIVET LTD S 211823 106.00
12/6/2008 524570 PODDAR PIGME KANIKA INVESTMENT LTD B 70000 28.00
12/6/2008 532884 REFEX REFRIG DEEPIKA SHARAD NANSI S 87500 229.00
NSE Bulk Deals to Watch - June 12 2008
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
12-JUN-2008,GHCL,GHCL Limited,SPARK ONLINE PVT. LTD,BUY,49351,62.50,-
12-JUN-2008,KHAITANELE,Khaitan Electricals Ltd,SANTOSH INDUSTRIES LIMITED,BUY,114249,54.17,-
12-JUN-2008,KHAITANELE,Khaitan Electricals Ltd,THE SURAT SAFE DEPOSIT VAULT PVT LTD,BUY,354,54.52,-
12-JUN-2008,KHAITANELE,Khaitan Electricals Ltd,YOGENDRAKUMAR GUPTA,BUY,774,54.52,-
12-JUN-2008,MAXWELL,Maxwell Industries Ltd.,SUNIL JAYKUMAR PATHARE,BUY,822500,15.65,-
12-JUN-2008,VALECHAENG,Valecha Engineering Limit,INDIA MAN FUND (MAURITIUS) LTD. DEUTSCHE BANK,BUY,81056,152.23,-
12-JUN-2008,GHCL,GHCL Limited,SPARK ONLINE PVT. LTD,SELL,749351,59.60,-
12-JUN-2008,GRABALALK,Grabal Alok Impex Limited,INDEX EQUITIES PVT. LTD.,SELL,200301,107.99,-
12-JUN-2008,GTCIND,GTC Industries Ltd,L&T FINANCE LIMITED,SELL,90000,153.50,-
12-JUN-2008,KHAITANELE,Khaitan Electricals Ltd,SANTOSH INDUSTRIES LIMITED,SELL,1115,55.52,-
12-JUN-2008,KHAITANELE,Khaitan Electricals Ltd,THE SURAT SAFE DEPOSIT VAULT PVT LTD,SELL,57000,54.02,-
12-JUN-2008,KHAITANELE,Khaitan Electricals Ltd,YOGENDRAKUMAR GUPTA,SELL,64501,54.03,-
12-JUN-2008,MAXWELL,Maxwell Industries Ltd.,TARUNA VINAY REDDY,SELL,822500,15.65,-
Post Session Commentary - June 12 2008
Indian market made a smart recovery towards the final hours of the session to over come from the deep fall to close with modest gains due to better than expected industrial growth data. The IIP growth for the month of April 2008 stood at 7%, which was lower against 11.3% in the corresponding month of the previous year but better than 3.9% in the month of March 2008. The domestic market opened sharply lower and was trading downturn due to the repo rate hike by RBI and tracking weak global cues. Further it started making sharp recovery from the day lows after industrial production data released and bounced back smartly to close in green. Both Nifty and Sensex recovered from losses and maintained to close above 4,500 and 15,000 mark respectively. All crushed down stocks in the early session, recovered smartly during the late trade. From the sectoral front, Oil & Gas, Metal and Capital Goods stocks witnessed most of the buying interest. The market breadth was positive as 1,481 stocks closed in green while 1109 stocks closed in red.
The BSE Sensex closed higher by 64.88 points at 15,250.20 and NSE Nifty ended up by 15.75 points to close at 4,539.35. The BSE Mid Caps and Small Cap closed positive with increase of 32.78 points and 58.60 points at 6,223.50 and 7,525.90 respectively. The BSE Sensex touched intraday high 15,270.85 and intraday low of 14,747.99.
The Reserve Bank of India on Wednesday surprisingly raised repo rate by 25 basis points to 8% to curb inflation, and according to analysts more tightening is expected if inflation continued to head towards double digits. This hike is a signal of rise in interest rates, and corporates who were preparing to issue bonds to raise funds may hesitate to launch such offerings.
Gainers from the BSE are BHEL (2.52%), Reliance Infra (2.40%), Tata Steel (2.35%), SBI (2.31%), Wipro Ltd (2.11%), L&T Ltd (1.90%), JP Associates (1.67%), Bharti Airtel (1.61%), Reliance (0.96%) and Grasim Industries (0.83%).
Interest rate sensitive sectors like bank though faced the heavy selling across the counters but made a smart pull back towards the end as the investors showed some buying interest in selective scrips. The Bankex index closed up by 19.47 points at 7,037.89. Gainers are Bank Of Baroda (3.50%), Yes Bank (2.60%), Canara Bank (2.33%), SBI (2.31%) and Axis bank (1.72%).
The Auto index also made a smart come back ignoring the repo rate hike to close almost on a flat note. From this basket, TVS Motors (2.81%), Ashok Leyland (0.77%), M&M (0.64%) and Tata Motots (0.35%) closed in green.
The Oil & Gas index closed up by 142.70 points at 9,974.94. Gainers are Relaince Nat Res (7.02%), Aban Offshore (5.93%), Reliance Petroleum (4.89%), Essar Oil Ltd (4.17%), Gail India (1.10%), and Reliance (0.96%).
The Metal index increased by 107.84 points to close at 15,508.64. Major gainers are Ispat Industries (3.74%), Jindal Steel (3.74%), Jindal Steel (2.83%), Tata Steel (2.35%), Sesa Goa Ltd (1.99%) and Bhushan Steel (0.97%).
The Capital Goods Index closed higher by 88.22 points at 11,989.71. Gainers are Jyoti Struct (13.43%) along with Praj Industries (5.94%), Kir Oil Ltd (3.20%), BHEL (2.52%), Punj Lloyd (2.12%), Aiaengineer (2.07%) and Lakshmi Ma W (1.98%).
The Consumer Durables index closed up by 66.63 points at 3913.40. Gainers are Rajesh Exports (13.12%), Videocon India (2.68%), Titan India (0.81%), Lloyd Ele En (0.66%), and Gitanjali Ge (0.18%).
The IT index dropped by 11.61 points to close at 4,345.82 as Patni Computer (3.04%), HCL Tech (1.09%), Infosys Tech Ltd (0.89%), TCS Ltd (0.49%), and Rolta India (0.28%) closed in negative territory.
The Health Care index closed lower by 6.09 points at 4,441.15. Losers are Orchid Chem (3.14%), Ranbaxy Lab (3.08%), Nicholas Piramal (2.02%), Dr Reddy’s Lab (1.24%) and Glenmark Pharma (0.81%).
Sentiments remain edgy despite market recovery
The stock market today managed to extend yesterday’s gains as improved April 2008 industrial production data, firm European markets and higher US futures markets triggered rebound on domestic bourses after an earlier steep intra-day fall. Consumer durables stocks rose.
US futures markets were in green indicating positive start of US markets later in the day. Dow Jones Industrial Average futures were up 46 points and Nasdaq 100 futures were up 7.50 points.
The 30-share BSE Sensex gained 64.88 points or 0.43% at 15,250.20. Sensex gained 85.53 points at day's high of 15,270.85 hit in late trade. The market had slumped earlier in the day hit by Reserve Bank of India (RBI)'s announcement of a repo rate rise, the first hike in repo rate since March 2007, after trading hours on Wednesday, 11 June 2008. Weak Asian markets further marred the sentiment. At the day’s low of 14,748.07, Sensex lost 437.32 points in early trade.
The broader based S&P CNX Nifty rose 15.75 points or 0.35% at 4,539.35.
Nifty June 2008 futures were at 4500.55, at a discount of 38.80 points as compared to spot closing of 4539.35.
The BSE clocked a turnover of Rs 6209 crore today as compared to a turnover of Rs 5,317.70 crore on 11 June 2008. NSE futures & options (F&O) segment turnover was Rs 52,333.46 crore, which was higher than Rs 45,775.86 crore on Wednesday, 11 June 2008.
Industrial production rose 7% in April 2008 from a year earlier, rebounding strongly from the previous month's provisional 3% rise, data released by the government today, 12 June 2008, afternoon showed. Manufacturing production rose 7.5% in April 2008 from a year earlier, compared with a provisional 2.9% growth in March 2008.
The Reserve Bank of India (RBI) on Wednesday, 11 June 2008, raised short-term lending rate viz. the repo rate, by 25 basis points to 8% to contain inflation expectations. Banks are likely to raise interest following a strong signal from RBI that banks' cost of funds is headed north. Higher interest rates will raise borrowing costs and hit bottom line of corporates.
The market breadth turned positive compared to weak breadth earlier in the day. 1,481 shares advanced as compared to 1,109 that declined on BSE. 84 remained unchanged. Among the 30 stocks from Sensex pack, 18 were trading in green.
The Indian stock market which had hit its lowest level in 2008 on Tuesday 10 June 2008, had recovered on Wednesday, 11 June 2008 with Sensex rising 296.07 points or 1.99% at 15,185.32 as investors resorted to bargain buying after recent steep fall in share prices, taking cue from firm Asian markets.
Back to today's trade, the BSE Mid-Cap index rose 0.53% to 6,223.50 and BSE Small-Cap index climbed 0.78% to 7,525.90. Both these indices outperformed Sensex.
BSE Consumer Durables index (up 1.73% to 3,913.40), BSE Oil & Gas index (up 1.45% to 9,974.94), BSE Capital Goods (up 0.74% at 11,989.71), BSE Metal index (up 0.7% to 15,508.64), outperformed Sensex.
BSE TecK index (up 0.42% to 3,387.15), The BSE Realty index (up 0.3% at 5,820.90), BSE PSU index (up 0.28% to 6,521.69), BSE Bankex (up 0.28% at 7,037.89), BSE Power index (up 0.13% to 2,656.46), BSE FMCG index (up 0.01% to 2,268.86), The BSE Auto (down 0.09% at 4,148.55), BSE HealthCare index (down 0.14% at 4,441.15), BSE IT index (down 0.27% to 4,345.82), underperformed Sensex.
India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 0.96% to Rs 2,281.75. The stock recovered from intraday low of Rs 2185. RIL Chairman Mukesh Ambani today said the company's annual general meeting that RIL will pursue greenfield investment in polyester.
Consumer durables stocks rose in late trade. Rajesh Exports (up 13.12% to Rs 79.30), Videocon Industries (up 2.66% to Rs 302.60), Titan Industries (up 0.81% to Rs 1,075) edged higher.
Power stocks edged higher. Reliance Power (up 2.06% to Rs 186.15), Reliance Infrastructure (up 2.4% to Rs 1,046.50), Tata Power Company (up 1.05% to Rs 1,316.50), Power Grid Corporation of India (up 1% to Rs 86.15) edged higher.
Interest rate sensitive auto stocks were mixed. Mahindra & Mahindra (up 0.24% to Rs 575.40), Tata Motors (up 0.35% to Rs 507.35), Maruti Suzuki India (up 0.37% to Rs 736.35) edged higher. India’s largest motorbike maker by sales Hero Honda Motor declined 0.29% to Rs 806.70.
Realty stocks were mixed. DLF (down 2.64% to Rs 497.70), Housing Development and Infrastructure (down 1.48% to Rs 568.30) edged lower. However Indiabulls Real Estate (up 3.69 % to Rs 394.95) and Unitch (up 2.6% to Rs 189.15) edged higher.
Banking stocks recovered after initial sharp fall caused by RBI's repo rate hike. India’s largest private sector bank by market capitalisation ICICI Bank rose 0.09% to Rs 742.30. The stock recovered from session's low of Rs 702.15. State Bank of India, India's biggest commercial bank, rose 2.31% to Rs 1,339.70. The stock came off session's low of Rs 1252.30.
Banks are set to raise interest rates following the repo rate hike by RBI. State Bank of India chairman O.P. Bhatt said on Thursday, the bank will review its interest rates on Friday, 13 June 2008.
India’s largest dedicated housing finance firm by operating income HDFC declined 0.69% to Rs 2,171.95. The stock recovered from session's low of Rs 2,001. HDFC chairman Deepak Parekh today said HDFC will take a decision on raising interest rates on home loans by end of this month. He said there was upward pressure on interest rates.
Tata Steel (up 2.35% to Rs 856.85), Wipro (up 2.11% to Rs 483.10), Jaiprakash Associates (up 1.67% to Rs 186.20), Bharti Airtel (up 1.61% to Rs 819.90), Grasim Industries (up 0.83% to Rs 2,210.35) edged higher from the Sensex pack.
Ranbaxy Laboratories (down 3.08% to Rs 543.50), Ambuja Cements (down 2.61% to Rs 85.90) Infosys (down 0.89% to Rs 1,877.55), Cipla (down 0.57% to Rs 217) edged lower from Sensex pack.
IFCI clocked the highest volume of 3.15 crore shares on BSE. Reliance Petroleum (2.12 crore shares), Reliance Natural Resources (1.84 crore shares), Spice Communications (1.31 crore shares) and Suzlon Energy (1.15 crore shares) were other volume toppers in that order.
Reliance Industries clocked the highest turnover of Rs 417.14 crore on BSE. Reliance Petroleum (Rs 372.83 crore), Suzlon Energy (Rs 292.39 crore) and DLF (Rs 218.02 crore) were other turnover toppers in that order.
European markets were in green. Key benchmark indices in France, Germany and UK were up by between 0.5% to 0.8 %.
US stocks sank on Wednesday, 11 June 2008, with all the three indices viz. the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite index - losing around 2%, after oil prices shot back near their record high, stoking fears about inflation and its toll on consumers. More signs of trouble in the financial sector further soured the mood on Wall Street. The Financial Times said on Wednesday that Lehman Brothers may look to raise more capital, hammering shares of the investment bank.
Asian stocks fell on Thursday, 12 June 2008, hit by the steep oil price rise. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were down by between 1.44% to 3.39%.
Oil futures jumped almost $7 to an intraday high above $138 a barrel on Wednesday, and settled at $136.38 a barrel on that day.
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 5170 crore in the first few days of this month, till 10 June 2008. They had dumped stocks worth a net Rs 5011.50 crore in May 2008. Their outflow in calendar 2008 reached Rs 20539.40 crore, till 10 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.
A 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.
Today's Pick - Crompton Greaves
We recommend a buy in Crompton Greaves from a short-term perspective. The stock was on a long-term downtrend from its November 2007 high of Rs 454, till it found support at around Rs 220 during May 2008. This (Rs 220) is a significant support level for the stock. Subsequently, the stock breached the long-term down trend-line and commenced its up move.
We believe that the long-term downtrend has come to an end. On June 11, the stock gained momentum by jumping up 5 per cent with above-average volume, penetrating the 50-day moving average. The daily Relative Strength Index is heading towards the bullish zone and the weekly RSI has recovered from the bearish zone. After displaying positive divergence, the moving average convergence and divergence is on the brink of entering the positive territory.
We are bullish on the stock in the short-term. We expect the stock to trend upwards until it hits our price target of Rs 280 in the approaching trading sessions. Traders with short-term perspective can buy the stock, while maintaining the stop-loss at Rs 238 level.
via BL
Pre Session Commentary - June 12 2008
The Indian Market is expected to have negative opening on the back of weak global cues as the US market closed in red while the Asian markets are going through negative sentiment. On Wednesday, the Indian market closed upbeat after recovering its three days loss due to heavy buying pressure in key indices. The market opened with the positive energy tracking the mixed global cues and extended the gain on the positive opening of European markets. It was hovering in positive territory throughout the trading session. The FMCG stock was not in favour on account of heavy selling force, while all other stocks closed in green and most of the buying was seen in capital goods, reality, banking and metal stocks. 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.
We expect that the market may remain cautious during the trading session due to surge in global crude oil price and hike in repo rate by RBI to tame inflation may also put some pressure. The Index of Industrial Production numbers for April 2008, due out today, will provide further evidence on the state of the economy and the market may also be keeping a watch on this to take further direction.
The Reserve Bank of India on Wednesday surprisingly raised repo rate by 25 basis points to 8% to curb inflation, and according to analysts more tightening is expected if inflation continued to head towards double digits. This hike is a signal of rise in interest rates, and corporates who were preparing to issue bonds to raise funds may hesitate to launch such offerings.
Ranbaxy is bringing in Daiichi Sankyo as Majority Partner. Daiichi will acquire 5% to 62% for $3.4 bn to $4.6 bn. Family of Malvinder Singh, the CEO of Ranbaxy Laboratories was selling its entire 34.8% stake in the company to Japan’s Daiichi Sankyo for Rs10,000 crore ($2.4 bn) at Rs737 per share.
On Wednesday, the US market closed in negative territory as the price of oil rose, financial shares plunged and the Federal Reserve notified that the economy has remained sluggish since more than two months. Crude oil surged more than $5 to $136.38 per barrel due to a US government report that showed stocks dropped more than expected on the week.
The Dow Jones Industrial Average (DJIA) closed lower by 205.99 points at 12,083.77 along with NASDAQ fell by 54.93 points to close at 2,394.01 and S&P 500 dropped by 22.95 points to close at 1,335.99.
Indian ADRS ended down. In technology sector, Patni Computers fell by 5.50% along with Wipro by 3.28%, Satyam by 2.99% and Infosys by 1.84%. In banking sector, ICICI bank and HDFC bank decreased by (4.51%) and (3.77%) respectively. In telecommunication sector, Tata Communication and MTNL dropped by (4.07%) and (1.12%). Sterlite industries declined by (3.23%).
Today the major stock markets in Asia are trading in red on concern of slow growth and faster inflation. Hang Seng index is trading lower by 491.26 points at 22,836.34 along with Japan’s Nikkei trading down by 321.78 points at 13,861.70 and Taiwan Weighted trading at 8,165.28 down by 180.31 points.
The FIIs Wednesday stood as net seller in equity. The gross equity purchased was Rs3,311.50 Crore and the gross debt purchased was Rs0.00 Crore while the gross equity sold stood at Rs4,155.50 Crore and gross debt sold stood at Rs0.00 Crore. Therefore, the net investment of equity reported was (Rs844.00) Crore and net debt was Rs0.00 Crore.
Today, Nifty has support at 4,226 and resistance at 4,453 and BSE Sensex has support at 14,563 and resistance at 15,262.
Weak global markets, RBI rate hike to weigh on domestic bourses
A hike in repo rate – a short term interest rates, by the Reserve Bank of India (RBI) after trading hours on Wednesday, 11 June 2008, and an overnight setback in US stocks are likely to take their toll on the bourses today. The market, however, had factored in a rise in interest rates with bank and realty stocks witnessing a sharp fall over the fast few days. Banks are likely to raise interest following a strong signal from RBI that interest rates in the economy are headed north. Higher interest rates will raise borrowing costs and hit bottom line of corporates.
US stocks sank on Wednesday, 11 June 2008, with all the three indices viz. the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite index - losing around 2%, after oil prices shot back near their record high, stoking fears about inflation and its toll on consumers. More signs of trouble in the financial sector further soured the mood on Wall Street. The Financial Times said on Wednesday that Lehman Brothers may look to raise more capital, hammering shares of the investment bank.
Oil futures jumped almost $7 to an intraday high above $138 a barrel on Wednesday, and settled at $136.38 a barrel on that day.
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 5170 crore in the first few days of this month, till 10 June 2008. They had dumped stocks worth a net Rs 5011.50 crore in May 2008. Their outflow in calendar 2008 reached Rs 20539.40 crore, till 10 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.
A 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 today, 12 June 2008, which will give a cue on the extent of slowdown in the Indian economy caused by high interest rates.
Morning Call - June 12 2008
Market Grape Wine :
In House :
Nifty at a support of 4200 and 4250 levels with resistnace at 4500 and 4530 levels .
Sell : LITL below 354target of 345 s/l of 365
Sell : BOB below 232 target 221 s/l of 245
Sell : in F&O RELCAP below 1127 target 1070 s/l of 1147
Sell : in F&O Sterlite below 794 target 770 s/l of 804
Out House :
Markets at a support of 14786 & 14747 resistance at 15115 & 15015 levels .
Market to test closing above 14786 crucial closing level if closes down then might crack till 13800 to 14000 levels .
Buy : Sail at dips
Buy : Glenmark at dips
Buy : Suzlon at dips
Buy : Praj
Buy : HLL at dips
Buy : Ranbaxy at dips
Buy : Tisco at dips
Dark Horse : RPL , Ranbaxy , ITC , NTPC , RIL & HLL
Bullion rebounds
Speculation that European Central Bank will raise rate next month push precious metals higher
With crude price going up and the dollar slipping against its major rivals, bullion metals made their way up today, Wednesday, 11 June, 2008. The same factors had also 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. But silver prices also gained today.
The weakening dollar and higher global demand for raw materials have led to records this year for commodities including gold. Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies.
Comex Gold for August delivery rose $11.7 (1.3%) to close at $882.9 ounce on the New York Mercantile Exchange. The metal had shredded more than 3% in the past two sessions. 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 5.5% till date against a 5% 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 22 cents (1.3%) to $16.855 an ounce. Silver has gained 12.3% in 2008 till date. It finished 3.5% higher last week. But this week, before today, it had dropped by more than 3%.
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 Wednesday, the dollar fell against the euro on speculation the European Central Bank will raise interest rates in the next month, widening the gap in borrowing costs with the U.S. The dollar has gained 2% against the euro in the previous two sessions. The dollar index, which tracks the greenback against a basket of six major currencies, fell 0.6% to 73.19.
Since last September, Fed has axed interest rates seven times and brought it down to 2%. The ECB has kept rates unchanged at 4% since June, 2007.
A rebound in crude-oil prices today also helped gold rally as investors purchased the metal as a hedge against inflation. Crude-oil futures climbed as much as 5.3% today to $138.30 a barrel after dropping 2.3% yesterday. As oil prices continue to rise, gold becomes more appealing as a hedge against oil-generated inflation.
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 higher by Rs 123 (1%) at Rs 12,241 per 10 grams. Prices rose to a high of Rs 12,256 per 10 grams and fell to a low of Rs 12,093 per 10 grams during the day’s trading.
At the MCX, silver prices for July delivery closed Rs 394 (1.7%) higher at Rs 23,831/Kg. Prices opened at Rs 23,430/kg and rose to a high of Rs 23,890/Kg during the day’s trading.
Crude prices shoot up by more than $5
Inventory report shows that crude supplies fell for fourth week in a row
The weekly inventory report by the Energy Department took crude prices higher today, Wednesday, 11 June, 2008. prices rose by more than $5 today after Energy Department’s report showed that crude inventories slipped for the fourth week in a row. A lower dollar also helped in pushing crude prices higher.
Crude-oil futures for light sweet crude for July delivery today closed at $136.38/barrel (higher by $5.07/barrel or 3.9%) on the New York Mercantile Exchange. Earlier it rose to a high of $138.3/barrel during the day.
Last week, crude prices closed higher by 8.8%. For the year, crude is up by 40% till date. Prices are 103% higher on a yearly basis.
The EIA reported today that the nation's crude supplies dropped to 302.2 million barrels, down 4.6 million barrels, for the week ended 6 June. Thus, crude supplies have fallen a total of 23.6 million in four weeks. Refinery utilization was at 88.6% compared with 89.7% of capacity a week earlier.
EIA also reported that supplies of petroleum products climbed as declines in demand offset an unexpected decrease in refinery activity last week. Motor gasoline supplies rose 1 million barrels to stand at 210.1 million barrels and distillate stocks were up 2.3 million barrels at 114 million barrels.
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 Wednesday, the dollar fell against the euro on speculation the European Central Bank will raise interest rates in the next month, widening the gap in borrowing costs with the U.S. The dollar has gained 2% against the euro in the previous two sessions. The dollar index, which tracks the greenback against a basket of six major currencies, fell 0.6% to 73.19.
Brent crude oil for June settlement today rose $4 (3.1%) to $135.02 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 consumption to rise 2.2% in 2008
Natural gas in New York advanced amid speculation supply gains will be below average for the week because a heat wave spurred demand and as crude oil surged. Natural gas for July delivery rose 22.5 cents (1.8%) to settle at $12.66 per million British thermal units. Futures earlier touched $12.779 and have gained 70% since beginning of this year.
Against this backdrop, July reformulated gasoline rose 15 cents to close at $3.47 a gallon on Nymex, with July heating oil ahead 16 cents to finish at $3.97 a gallon. Both closed more than 4% higher for the session.
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.
Earlier this week, 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%.
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 July delivery closed at Rs 5,894/barrel, higher by Rs 234 (4.1%) against previous day’s close. Natural gas for June delivery closed at Rs 543/mmbtu, higher by Rs 9.3/mmbtu (1.7%).
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