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Friday, June 13, 2008
NSE Bulk Deals to Watch - June 13 2008
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
13-JUN-2008,CHAMBLFERT,Chambal Fertilizers Ltd.,LATIN MANHARLAL SECURITIES PVT. LTD.,BUY,2588374,89.29,-
13-JUN-2008,CHAMBLFERT,Chambal Fertilizers Ltd.,P R B SECURITIES PRIVATE LTD,BUY,4475771,89.25,-
13-JUN-2008,CHAMBLFERT,Chambal Fertilizers Ltd.,PRASHANT JAYANTILAL PATEL,BUY,2281184,88.89,-
13-JUN-2008,GRABALALK,Grabal Alok Impex Limited,VECTOR FINANCIAL & MANAGEMENT CONSULTANT,BUY,115000,113.80,-
13-JUN-2008,NAGARFERT,Nagarjuna Fert & Chem,CLEAN FINANCE & INVESTMENT LTD,BUY,3875201,46.38,-
13-JUN-2008,NAGARFERT,Nagarjuna Fert & Chem,PACE FINANCIAL SERVICES,BUY,2345965,45.12,-
13-JUN-2008,SADBHAV,Sadbhav Engineering Limit,MOGRA INVESTMENTS PVT. LTD.,BUY,120000,845.33,-
13-JUN-2008,TULSI,Tulsi Extrusions Limited,TRANSGLOBAL SECURITIES LTD.,BUY,72610,48.82,-
13-JUN-2008,CHAMBLFERT,Chambal Fertilizers Ltd.,LATIN MANHARLAL SECURITIES PVT. LTD.,SELL,2588374,89.25,-
13-JUN-2008,CHAMBLFERT,Chambal Fertilizers Ltd.,P R B SECURITIES PRIVATE LTD,SELL,4320721,89.32,-
13-JUN-2008,CHAMBLFERT,Chambal Fertilizers Ltd.,PRASHANT JAYANTILAL PATEL,SELL,2264084,89.03,-
13-JUN-2008,GRABALALK,Grabal Alok Impex Limited,INDEX EQUITIES PVT. LTD.,SELL,115120,113.79,-
13-JUN-2008,NAGARFERT,Nagarjuna Fert & Chem,CLEAN FINANCE & INVESTMENT LTD,SELL,3875201,46.43,-
13-JUN-2008,NAGARFERT,Nagarjuna Fert & Chem,PACE FINANCIAL SERVICES,SELL,2342465,45.14,-
13-JUN-2008,PIRLIFE,Piramal Life Sciences Lim,FIDELITY FUNDS (MAURITIUS) LIMITED,SELL,177020,277.22,-
13-JUN-2008,SADBHAV,Sadbhav Engineering Limit,GAMMON INDIA LIMITED,SELL,120000,845.33,-
13-JUN-2008,SPICEMOBIL,Spice Mobiles Limited,MODI RUBBER LTD,SELL,539391,19.67,-
13-JUN-2008,TULSI,Tulsi Extrusions Limited,TRANSGLOBAL SECURITIES LTD.,SELL,73584,48.86,-
BSE Bulk Deals to Watch - June 13 2008
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
13/6/2008 532981 ANU LABS SUMMIT COMMUNICATIONS PVT LTD B 100000 339.03
13/6/2008 532981 ANU LABS PRABHUDAS LILLADHER PVT. LTD. B 103142 333.47
13/6/2008 532981 ANU LABS BHANDARI RAKHI KALPESH B 90805 332.65
13/6/2008 532981 ANU LABS GOPAL TRADERS S 74000 331.36
13/6/2008 532981 ANU LABS PRABHUDAS LILLADHER PVT. LTD. S 103142 333.81
13/6/2008 532981 ANU LABS BHANDARI RAKHI KALPESH S 90805 332.87
13/6/2008 500085 CHAMBAL FERTILISERS AND CHEMIC LATIN MANHARLAL SEC PVT LTD B 2475488 88.75
13/6/2008 500085 CHAMBAL FERTILISERS AND CHEMIC LATIN MANHARLAL SEC PVT LTD S 2481488 88.59
13/6/2008 531358 CHOIC INTERN EXPLICIT FINANCE LTD B 23400 13.38
13/6/2008 517477 ELNET TECHNO RAJIV ARORA B 25074 58.93
13/6/2008 517477 ELNET TECHNO RAJIV ARORA S 29681 59.02
13/6/2008 532909 GRABAL ALOK INDEX EQUITIES P.LTD. S 124800 113.92
13/6/2008 504269 KHAITAN ELCT SANTOSH INDUSTRIES LIMITED S 201805 58.00
13/6/2008 531602 KOFF BR PICT FORTUNE GILTS PVT LTD. B 25000 23.00
13/6/2008 500257 LUPIN LTD MIRAE ASSET MGT INVST CO LTD AC INDIA EQ MASTER INVST TR B 541466 705.00
13/6/2008 500257 LUPIN LTD MIRAE ASSET INDIA DISCOVERY EQUITY INVESTMENT TRUST 1 B 440874 705.00
13/6/2008 500257 LUPIN LTD CITICORP BANKING CORPORATION FDI S 1521400 705.48
13/6/2008 505523 MAH IND LEAS AYODHAPATI INVESTMENT PVT LTD S 24075 20.65
13/6/2008 532979 PIRAM LIFE FIDELITY FUNDS MAURITIUS LIMITED S 178742 276.91
13/6/2008 530069 PRO DEV&TEC SAROJINI FIN AND INVESTMENT PVT LTD B 400000 2.97
13/6/2008 530069 PRO DEV&TEC S S H REHMAN S 400000 2.97
13/6/2008 532884 REFEX REFRIG DEEPIKA SHARAD NANSI B 99000 230.25
13/6/2008 500366 ROLTA IND GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD B 1513555 298.36
13/6/2008 500366 ROLTA IND LB INDIA HOLDINGS CAYMAN II LTD S 1500000 298.35
13/6/2008 511607 SHLOKA INFO SARAH FAISAL HAWA B 29507 78.65
13/6/2008 526365 SHYAM STAR MATHURBHAI GAGJIBHAI JIVANY S 38000 115.41
ENAM - more pain likely
Nandan Chakraborty, head of research, Enam Securities, said the call on interest rate right now is that it can get worse before it gets better.
"There is liquidiy in India and abroad but the liquidity has a huge risk premium and inflation element. That is why interest rates are going up. Whether it is inflation or currency depreciation, they are all going to get worse before they get any better for at least the next couple of months."
So, is this the time to invest in the markets? Nandan says: "Absolutely not.. there is still a lot of uncertainty. Once there is more clarity, an investor can enter the market even if it is at higher levels.."
He added that they like mid-cap pharma and FMCG, and "do not like stuff like energy..
via UTVi
Real estate to grow at 30% annually
The realty sector is projected to grow at the rate of 30 per cent annually over the next decade, attracting foreign investments worth USD 30 billion, with a number of IT parks and residential townships being constructed across India, industry body Assocham said.
Currently, the domestic real estate market is expected to be worth USD 15 billion in which FDI is estimated to about USD 6 billion, it said.
At present, the foreign developers can undertake construction activities on a minimum space of 50,000 sq ft, Assocham president Sajjan Jindal said in a statement.
The ceiling of 50,000 sq ft would be lifted by the government in want of more FDIs and would go to 2 lakh sq ft in next 10 years, as per Assocham's estimate.
The sector would grow more as expected requirement by the IT sector (like IT parks) will be about 200 million sq ft space across the major and large townships, it added.
It is also estimated that in the residential sector, the housing shortage is around 20 million units of which nearly 7 million units are estimated for urban India, it said.
Commenting on the problem faced by the sector, the Assocham said that the involvement of the center and a number of state agencies in setting up of townships is needed.
Prices of key vegetables soar more than 50%
Policy makers may blame soaring crude prices and global trends for unabated rise in inflation, but kitchen economics is being hit hard with prices of key vegetables like potato and tomato surging by up to 55 per cent in just one month.
Potato, whose wholesale price today spiralled to Rs 7 per kg from Rs 4.5 a month ago, and tomato, with price rising Rs one per kg to Rs five in the same period, are among the key ingredients to almost all vegetable dishes in Indian households.
Also, retail prices of these vegetables are much higher at close to Rs 10 per kg in national capital region.
Other than potato and tomato, prices of vegetables like onion, brinjal, carrot, cabbage, cauliflower, carrot, peas, cucumber, coriander, raddish and bottle gourd (ghiya) have gone up.
The rise is the highest for potato at 55 per cent among the key vegetables, as per figures gathered from country's largest wholesale market at Azadpur.
When asked about rising prices of vegetables, Agriculture Produce Marketing Committee (APMC) Delhi Chairman J K Bansal said the rates depend upon the demand-supply situation of the items on any given day.
He said there has been no unusual rise in the vegetables prices during last one month and arrival is also good.
According to government's data released today, inflation rose to 8.75 per cent in the week ended May 31, its highest level in about past seven years. Besides, the increase of 0.51 per cent from 8.24 per cent in the preceding week has been mainly due to rise in prices of fruits and vegetables.
During the week, prices of fruits and vegetables rose one per cent.
Top 6 Indian IT firms outpace market growth
In a recently published report, Gartner said that the top six India-based offshore service providers, collectively referred to as the ‘SWITCH’ companies (Satyam, Wipro, Infosys, TCS, Cognizant and HCL Technologies), accounted for 2.4% of the total worldwide IT services market in 2007 as compared to 1.9% of the total worldwide IT services market in 2006. Collectively and individually, this group of companies have achieved growth rates that have outpaced the rest of the market. All indications are that the Western European market is the next target growth area for offshore services.
Each of these providers is pursuing growth in the broad-based IT services market. Although the roots of several of these providers were in the application services market, over time each has evolved its coverage of the services market, expanding into a broader base of services, such as infrastructure services.
Arup Roy, senior research analyst, Gartner, said, "With such strong growth rates that exceed the overall market, the India-based IT services providers are increasing in their competitiveness and taking market share away from the rest of the market. Increasingly they are competing in larger outsourcing deals, with deal values routinely exceeding $100 million and spanning multiple years."
"While application development and management services remain the bulk of their revenue stream, there is a gradual diversification in other service lines, such as consulting and remote infrastructure management services, where they have experienced high growth
Inflation hits a 7 year high
Inflation hits 7-year peak
The Government's worst fear of a double-digit inflation may soon come true, as inflation has climbed to its highest level in seven years and may jump to a double-digit mark on the back of the recent hike in fuel prices. Inflation, based on the wholesale price index (WPI), rose to 8.75% in the week ended May 31 from 7.24% in the previous week, the Commerce & Industry Ministry said. The reading is much higher than average forecast of 8.25-8.35%. Inflation is now at the highest level since February 10, 2001 when it was 8.77. The annual inflation rate was 5.09% during the corresponding week of the previous year. Inflation rate for the week through April 5 has been revised to 7.71% from a provisional figure of 7.14%.
The WPI for All Commodities in the last week of May rose by 0.6% to 231.1 from 229.8 in the previous week. The index for Primary Articles rose by 0.9% to 243.4 from 241.3. The index for Manufactured Products gained 0.7% to 201.0. The index for 'Non-Food Articles' group rose by 1.9% to 235.8 while that for 'Food Products' group rose by 1% to 206.8. The index for 'Textiles' rose by 3.9% to 134.4 while the index for 'Paper & Paper Products' rose by 1.2% to 199.4 and the index for 'Leather & Leather Products' rose by 1.3% to 166.5.
The index for Fuel & Power remained unchanged at its previous week's level of 347.2. However, in the next week's data this index is likely to witness a big jump as it will reflect the hike in fuel prices announced on June 4. While the fuel price hike will have a direct impact of 65 basis points, the indirect impact is expected to be much higher. What's more the indirect impact will also get factored in gradually over the next few weeks as companies pass on the higher energy costs to consumers. And, given the fact that inflation is getting revised every week, we will soon see a day when the figure touches double-digits.
FM wants direct tax estimates revised up
Finance Minister P. Chidambaram asked the Income Tax department to aim for higher direct tax collections in the current fiscal year than the Rs3.65 trillion estimated in the budget for 2008-09. "Given that the actual collection during 2007-08 stood at Rs3.14 trillion, I have asked the Central Board of Direct Taxes (CBDT) to quickly revise upwards the budget estimate," Chidambaram said after the annual conference of chief commissioners of income tax. "The estimate will no longer be Rs3.65 trillion. The CBDT will meet over the next couple of days and increase the estimate upwards," he said. The Finance Minister said that even if a 25% growth is estimated over last year's figure, the budget estimate must be revised upwards sharply. 25% growth over the last year's collection will push the estimate to over Rs3.92 trillion.
Global News - June 13 2008
Lehman Bros unveils recast of top deck
Troubled US investment bank cum securities firm, Lehman Brothers ousted CFO Erin Callan and COO Joseph Gregory, becoming the latest casualties of the credit crunch that has engulfed the Wall Street since late last year. Lehman said Bart McDade, head of the global equities business, would replace Gregory. Co-chief accounting officer Ian Lowitt will replace Callan. The latter, who had served as the firm's CFO since December, will be rejoining the investment-banking division in a senior capacity. The announcement came three days after Lehman Brothers raised US$6bn to help shore up its fragile capital position and reported the first quarterly loss since the company went public in 1994. On June 9, Lehman Brothers said it sold US$130bn in assets in recent months, reducing leverage, but analysts and others still question about the brokerage firm's illiquid holdings and how it has valued some of those exposures. The company also reported a preliminary net loss of US$2.8bn for the second quarter ended May 31, surprising analysts and investors, and announced plans to raise US$6bn by selling new shares and preferred securities.
Yahoo says deal talks with Microsoft fail
Yahoo shares slid on June 12 after the Internet giant said its negotiations with software major Microsoft on a merger fell through. The acknowledgement from Yahoo puts an end to a five-month ordeal over a proposed merger that would have been the largest deal ever for the technology sector. Microsoft later confirmed that the companies were not able to reach an agreement, though it reiterated that it remains open to a deal. According to analysts, the collapse of the talks meant that Microsoft is not willing to buy Yahoo for the US$33 a share it offered before talks broke up more than a month ago. The news deals a setback to billionaire investor Carl Icahn’s effort to force the two sides into a merger. Separately, Yahoo and Google struck an online advertising partnership. The Internet firm announced that it would begin using Google’s search advertising technology to help grow its profits.
InBev offers US$46bn for Anheuser-Busch
Belgium's InBev NV announced an unsolicited offer for US-based Anheuser-Busch Cos., to create the world's biggest brewer with half of the US market. InBev, whose prominent labels include Stella Artois, Becks & Bass, offered to pay US$65 per share in cash for the maker of Budweiser, an offer that values the company at US$46.3bn. The bid was 11% higher than Anheuser-Busch's share price at the end of New York Stock Exchange composite trading, on June 11. InBev plans to finance the transaction with at least US $40bn in debt arranged by banks including Banco Santander SA. InBev said that it sees significant opportunities to globalise Anheuser-Busch's key brands and would position Budweiser as the combined company's flagship brand, leveraging InBev's expansive international footprint. It also vowed to keep key members of the management team and all of its US breweries while offering to rename the company to evoke the heritage of Anheuser-Busch brands. In light of the limited overlap between the InBev and Anheuser-Busch businesses, the Belgian company said it believes the proposed combination should not face significant regulatory issues and that it expects the proposed transaction to be completed promptly.
Babcock & Brown shares slump on debt worries
Shares of Australian securities firm Babcock & Brown tumbled in Sydney after the company's market value fell below levels that could prompt banks to call for a review of its debt obligations. Babcock shares plunged as low as A$4.70 (down 32%) on the Australian stock exchange, dipping below its October 2004 IPO price of A$5 for the first time. It fell 28% on Thursday. The stock had reached a record high of A$34.78 on June 19, 2007. The huge sell-off this week shaved off nearly A$1bn from Babcock's market capitalisation, cutting it to A$2.3bn, well below the A$2.5bn trigger point that lets its banks call for a review of its A$2.8bn. However, Babcock said it's market value would have to remain below A$2.5bn for at least four months before banks can demand early repayment of debt. UBS, Citigroup, Merrill Lynch and Credit Suisse all cut their ratings on Babcock. Separately, Babcock, which said that the rout was caused by short-selling and that business was running as usual, signed a US$7bn deal to buy Angel Trains in the UK from the Royal Bank of Scotland (RBS).
Steve Jobs unveils 3G iPhone; cuts price
Apple unveiled a new 3G version of its iPhone, as it tries to take market share from smart phones made by Nokia and BlackBerry maker Research in Motion. The new handset is expected to come on the market next month at drastically reduced prices. The new iPhone will be sold at half the price of the current model. The new 8-gigabyte iPhone will cost US$199 and a 16-gigabyte version will cost US$299. Some analysts said the price reduction on the new iPhone lineup will make it a mass market product as opposed to the earlier niche positioning. The news was greeted with a mixed reaction by Wall Street investors, who drove Apple's shares down as much as 5% after the announcement. However, the stock managed to regain some lost ground by the closing bell. The new iPhone will be available worldwide starting July 11.
UK's FSA to restrict short selling
In a major clamp down on short selling, British regulator Financial Services Authority (FSA) said it would introduce a new disclosure norms next week for significant short positions in companies undertaking rights issues. The new restrictions, which will come into force from June 20, come hot on the heels of sharp falls in share prices of companies like Royal Bank of Scotland (RBS) and HBOS to raise capital by selling new shares to existing investors. "In current market conditions, there is increased potential for market abuse through short selling during rights issues," the FSA said. "As a result, there has been severe volatility in the shares of companies conducting rights issues." "This is potentially damaging not only to the issuers in question but also to confidence in the overall fairness and quality of the UK market. It can be particularly prejudicial to the interests of small investors," it added. The FSA said the practice of taking a short position in a company while it is undertaking a rights issue to shareholders was potentially an abuse of the market. From next week, short-sellers will have to disclose their positions to the wider market.
UBS completes rights issue
UBS said it has successfully completed its SFr15.97bn (US$15.4bn) rights offering, marking the Swiss bank's third attempt in the past few months to shore up its precarious finances. UBS issued 760,295,181 new shares at SFr21 per share. Subscription rights for 755,466,901 new shares were exercised, representing 99.4% of the rights offer. The remaining 4,828,280 new shares will be sold by UBS Investment Bank in open market. Investors were offered 7 new shares for every 20 held. UBS shares were up 1.7% at SFr24.74. Since the start of the rights offer, UBS shares have tumbled by about 13%. It has lost 63% of its market value in the past 12 months. The bank is scheduled to publish its second-quarter results on August 12. The rights offer is fully underwritten by a group of banks, led by JPMorgan Chase, Morgan Stanley, BNP Paribas and Goldman Sachs.
Dollar spurts on rate hike talk
The US dollar and bond yields jumped after Federal Reserve Chairman Ben Bernanke fueled expectations of interest rates increases by warning that inflation risks were rising in the world's biggest economy. In a speech delivered in Massachusetts on June 9, Bernanke said the Fed will strongly resist a rise in inflation expectations, which have come under pressure from soaring energy prices. "The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so," Bernanke said in a speech at a Boston Fed conference. "The Federal Open Market Committee will strongly resist an erosion of longer-term inflation expectations." European and Asian stocks dropped and Asian bonds slumped on concern that the Fed will raise borrowing costs. Futures markets now expect American and euro-area interest rates to rise before the end of the year.
The dollar headed for its biggest weekly gain in more than three years against the euro on speculation officials from the Group of Eight nations meeting on the weekend will signal they favor a stronger US currency. The euro also fell on concern voters in Ireland will reject the EU's new governing treaty designed to boost the strength of the 27-nation bloc. The dollar was poised for the largest weekly advance versus the yen since 2004 before a government report that may show US inflation accelerated, giving the Fed more reason to raise rates. The dollar rose to US$1.5319 per euro at 7:04 a.m. in New York on Friday from US$1.5439 on Thursday. The dollar rose 3% this week, the most since the week ended Jan. 7, 2005. The currency traded at 108.33 yen, from 107.96 on Thursday. It is up 3.1% this week, the biggest advance since Feb. 2004.
IEA cuts global oil demand forecast
As expected, the International Energy Agency (IEA) cut its oil demand growth forecast for the year. But, in a surprise move, the energy watchdog announced a deep reduction in its non-OPEC supply growth forecast, leaving the world economy more dependent on OPEC. In its monthly oil market report, the IEA cut its demand growth forecast further by 80,000 barrels per day (bpd) to an annual increase of 800,000 bpd because of record high prices, US slowdown and the partial removal of fuel subsidies in some Asian countries. "This is a case of supply and demand pulling in opposite directions to push prices higher," the IEA said. "Global market fundamentals showed continued tightness, with constrained supplies and robust non-OECD demand growth." The agency said every day there were fresh signs of demand destruction, particularly in sectors such as airlines. But, it warned that so far there were very few signs of slowing demand in non-OECD countries.
Meanwhile, crude oil fell as the dollar headed for its biggest weekly gain in almost three years, reducing the appeal of commodities, and partly on a report that Saudi Arabia plans a sizeable increase in crude production. Oil is down 2.3% this week as the dollar has risen against the euro, making dollar-denominated commodities more expensive for buyers in other currencies. Saudi Arabia is likely to announce higher oil production at a June 22 meeting with consumers, the Middle East Economic Survey reported. Crude oil for July delivery fell as much as US$1.94, or 1.4%, to US$134.80 a barrel on the New York Mercantile Exchange. It traded at US$135 at 12:02 p.m. London time. Futures reached a record US$139.12 a barrel on June 6.
Weekly Stock Picks - June 13 2008
Buy Tata Chem
Buy Chambal Fertilizers
Buy Lupin
Buy Dr Reddy's Labs
Buy BHEL
Weekly Newsletter - June 13 2008
The bulls are fed up of suffering on account of global and local. After another weak week, the only positive trigger may be that large caps are significantly lower from their peaks. Should one rush in and buy? The answer depends on your time horizon. However, under any circumstance, there is no urgent need to rush in or buy. Depending on the global cues, some spurts could be seen. But the concerns continue to outweigh any positives. Moreover, the foreign moneybags seem to be still taking money away rather than bringing in greenbacks.
Until the greenbacks come in big packages, we’ll have more red over the market place. The coming week may see less damage or could close in the green but confidence is nowhere in sight. Remain light and book profits as quickly as you can, unless you are prepared for a really long haul.
Weekly Top Stories - June 13 2008
RBI strikes again to curb inflation expectations
The Reserve Bank of India (RBI) hiked the repo rate by 25 basis points in order to anchor inflation expectations, which are spiraling out of control in the wake of surging food and energy costs. The central bank raised the repo rate - rate at which banks borrow money from the RBI - to 8% from 7.75%. The RBI has left the reverse repo rate unchanged at 6% while the CRR and bank rate were left steady at 8.25% and 6%, respectively. "On a review of the current macroeconomic and overall monetary conditions and with a view to containing inflation expectations, it is essential to take appropriate action on an urgent basis," the RBI said.
The RBI move is seen largely as a measure to contain inflation, which has spiked to a seven-year high of 8.75% and is likely to shoot up further in the coming weeks (and perhaps even touch double-digits) following the recent increase in retail fuel prices. The markets were expecting the RBI to go for another monetary tightening to check inflation after the Government hiked retail prices of petrol, diesel and domestic LPG to help public sector oil companies curtail their losses. Recent hawkish comments by Fed chairman Ben Bernanke and ECB President Jean-Claude Trichet may have also prompted the RBI's hands. China's central bank last weekend increased the banks' reserve ratio by a whopping 100 basis points and others are either considering a hike or status quo.
The Prime Lending Rate (PLR) of most banks as well as home loan rates are likely to go up marginally, though there was no such announcement, barring J&K Bank, which lifted its PLR by 100 basis points. Given the pressure on margins, the deposit rates may not be increased. The stock market hardly reacted to the news. In the money market, bond prices fell to one-year low while the rupee gained marginally. With inflation-fighting becoming top priority across the world, don't be surprise if the usually conservative RBI decided to tighten up its stance a bit more over the next couple of months.
Daiichi Sankyo to acquire Ranbaxy
In a startling development, Ranbaxy Laboratories' promoters decided to give up control of the country's top pharma company to Japan's Daiichi Sankyo Co. for up to US$4.6bn (as much as 495 billion yen). Japan's third-largest pharma company will acquire 34.8% stake of the promoters at Rs737 per share, a 31% premium to Ranbaxy's closing price on June 10. Daiichi will also get preferential allotments of shares and share warrants, with a goal of garnering a minimum 50.1%. The final holding would depend on the response to the open offer. The deal would value Ranbaxy at US$8.5bn. The existing management will continue with Ranbaxy. Malvinder Singh will continue to lead the company as its CEO and MD while additionally assuming the position of Chairman of the Board, upon closure of the deal.
The closing of the transactions is subject to approval of shareholders of Ranbaxy and customary regulatory and statutory approvals. The acquisition is expected to be completed by the end of March 2009. Upon completion of the deal, Ranbaxy is expected to become a subsidiary of Daiichi. The deal will be financed through a mix of bank debt facilities and existing cash resources of Daiichi. Ranbaxy will get US$1bn in cash and will become debt-free post the deal. Ranbaxy's shares rose more than 5% on June 11, adding to gains of over 10% in the previous two days. But the stock ended little changed at Rs561. The stock fell 3% on Thursday, but rebounded again on Friday amid reports that Pfizer could announce a counter bid for the 65% non-promoter holding in Ranbaxy.
Sensex pares 60 pts in lackluster trade
The markets opened with a positive gap of 77 points, but were not able to latch on to the gains and traded lackluster during the day.
During the day, the Sensex declined over 110 points to touch a low of 15,135.81.
The 30-share BSE Sensex closed down 60.58 points, or 0.4%, at 15,189.62; while the broad-based NSE Nifty closed down 22.25 points, or 0.49%, at 4,517.10.
BSE Midcap and Smallcap Index gained 0.08% and 0.74% respectively.
Other Asian counterparts closed mixed today with Nikkei advancing 0.61%, while Hang Seng declining 1.87% and Shanghai Composite settling 1.30% lower.
Market Statistics
The overall market breadth was mixed. Out of the total 2,678 shares traded at the BSE, 1,445 advanced, 1,156 declined while 77 remained unchanged.
Equities declined on Friday, extending its weekly loss to the fourth straight week, after inflation rose to 8.75% for the week ended May 31, raising speculation that the RBI might take more action.
Jaiprakash Associates, DLF and HDFC Bank led the declines. Metal and realty stocks declined, while the fertilizer pack gained.
Among sectoral indices, BSE Metal and Realty index declined over 2% each, while BSE CD index gained 1.74%, BSE HC rose 1.19%, BSE Bankex added 0.26% and BSE CG was up 0.25%.
Gainers at the BSE Sensex were Ranbaxy (4.31%), ICICI Bank (3.03%) and BHEL (2.79%). TCS, Tata Motors, ONGC and RCom also gained.
Losers at the BSE Sensex include JP Associates (4.03%), DLF (3.61%) and HDFC Bank (3.45%). Cipla, HUL, Reliance Infra and Maruti Suzuki declined about 2% each.
Reliance Capital (Rs 2.69 billion) topped the value chart, followed by Anu`s Labs (Rs 2.61 billion) and Chambal Fertilisers (Rs 2.48 billion). RPL (Rs 2.46 billion) and RIL (Rs 2.20 billion) also witnessed good turnover.
Chambal Fertilisers (28.09 million) topped the volume chart, followed by Nagarjuna Fertilisers (17.81 million) and RPL (13.71 million). RNRL (12.96 million) and IFCI (12.60 million) also made it to the top volumes chart.
Market trips on volatile moves
The market remained under the grip of strong volatile moves as key indices kept swinging between positive and negative zones all through the session. After resuming slightly above its last close at 15,327, the market snapped gains in the early trades before frenzied buying propelled the Sensex to an intra-day high of 15,337. While the market failed to make any further impact thereafter, the index drifted into red once again in noon trades to touch the day's low of 15,136. The Sensex, after witnessing an intra-day swing of 201 points, ended 61 points down at 15,190, while Nifty declined 22 points to close at 4,517.
However, the market breadth was positive. Of the 2,678 stocks traded on the BSE, 1,445 stocks advanced, 1,156 stocks declined and 77 stocks ended unchanged. In a volatile market, the BSE CD index rose 1.74% while the BSE HC index, the BSE Bankex index, the BSE CG index and the BSE PSU index ended with steady gains. Other sectoral indices however ended at lower levels.
Dragging the market Jaiprakash Associates shed 4.03% at Rs177.50, DLF dipped 3.61% at Rs476.95, HDFC Bank lost 3.45% at Rs1,118, Cipla slipped 2.63% at Rs210.50, Hindustan Unilever lost 2.54% at Rs225.10 and Reliance Infra was down 2.50% at Rs1,010. Maruti, Tata Steel, HDFC, Grasim, Hindalco, M&M, ITC and NTPC were down 1% each. Ranbaxy Laboratories however advanced 4.31% at Rs566.90 followed by ICICI Bank that gained 3.03% at Rs 764.80. BHEL scaled up 2.79% at Rs1,561.10 and TCS moved up 2.16% at Rs907.65. Tata Motors, ONGC, Reliance Communications, ACC and L&T ended with steady gains.
Over 2.80 crore Chambal Fertiliser shares changed hands on the BSE followed by Nagarjuna Fertilisers (1.78 crore shares), Reliance Petroleum (1.37 crore shares), Reliance Natural Resources (1.29 crore shares) and IFCI (1.26 crore shares
Turnover drops
Nifty June 2008 futures at discount
Nifty June 2008 futures were at 4482.10, at a discount of 35 points as compared to spot closing of 4517.10.
NSE's futures & options (F&O) segment turnover was Rs 41,003.40 crore, which was lower than Rs 52,333.46 crore on Thursday, 12 June 2008.
ICICI Bank June 2008 futures were at discount at 760 compared to the spot closing of 765.30.
Idea Cellular June 2008 futures were at discount at 107.85 compared to the spot closing of 108.15.
Suzlon Energy June 2008 futures were at premium at 245.75 compared to the spot closing of 244.90.
In the cash market, the S&P CNX Nifty lost 22.25 points or 0.49% at 4517.10.
Progress of monsoon, advance tax figures to dictate trend
The market is likely to move in sync with global markets in the coming week. Markets across the globe suffered severe setback in the past few days triggered by spiraling global commodity prices led by crude oil.
Fears of Reserve Bank of India (RBI) further hiking interest rates to check soaring mutli-year high inflation, which could choke overall growth of the economy, will continue to haunt investors.
Earnings downgrades by brokerages amid rising input and interest costs for India Inc and drying up of global liquidity due to credit crisis remain major concern for the Indian stock market. A further hike in rates would impact bottomline of Indian companies. Also high interest rates may delay expansion plans of corporates, which in turn may impact future earnings growth.
Foreign institutional investors (FIIs) have pressed heavy sales in the backdrop of a weakening rupee against the dollar. In June 2008, FIIs dumped shares worth Rs 6,463.20 crore (till 12 June 2008). FII outflow in calendar year 2008 totaled Rs 21,832.60 crore (till 12 June 2008). On the other hand, mutual funds were net buyers of shares to the tune of Rs 894.89 crore in the month of June 2008, till 11 June 2008
India’s economic growth has slowed down as a result of fall in consumer demand caused by rise in interest rates. Industrial output rose 8.1% in 2007/08 (April-March) compared with 11.6% growth in 2006/07.
The Indian Meteorological Department (IMD)’s second monsoon forecast for the crucial annual south-west monsoon (June-September) due this month 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.
Agricultural output in India depends on good rains. A well distributed monsoon, which will bolster food production, may help rein in inflation.
Market men will also watch corporate advance tax payments for the first installment that falls due on 15 June 2008, which will a give a cue on expected Q1 June 2008 numbers from top Indian corporates. 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 BSE Sensex declined 382.56 points or 2.45% to 15,189.62 in the week ended 13 June 2008. The S&P CNX Nifty fell 110.70 points or 2.39% to 4,517.10 in the week.
The Sensex is now down 6,017.15 points or 28.37% from its all-time high of 21,206.77 hit on 10 January 2008.
Market extends losses for fourth week in a row
The market tumbled to register its lowest level in calendar year 2008 as soaring crude oil prices, spiraling inflation and weak global cues dampened sentiment. Heavy offloading from foreign institutional investors (FIIs) caused the market to register its fourth straight weekly loss in the week ended Friday, 13 June 2008. The key benchmark indices settled lower in three out of five trading sessions. BSE Mid-Cap and BSE Small-Cap indices outperformed the Sensex.
The BSE Sensex declined 382.56 points or 2.45% to 15,189.62 in the week ended 13 June 2008. The S&P CNX Nifty fell 110.70 points or 2.39% to 4,517.10 in the week.
The BSE Mid-Cap index fell 121.98 points or 1.92% to 6,228.17 in the week. The BSE Small-Cap index shed 114.33 points or 1.48% to 7,581.72.
The Sensex is down 6,017.15 points or 28.37% from its all-time high of 21,206.77 hit on 10 January 2008.
Foreign institutional investors (FIIs) pressed heavy sales in the backdrop of a weakening rupee against the dollar, accentuating fall in share prices. In June 2008, FIIs dumped shares worth Rs 5,321.50 crore (till 11 June 2008). FII outflow in calendar year 2008 totaled Rs 20,690.90 crore (till 11 June 2008). On the other hand, domestic funds were net buyers to the tune of Rs 894.89 crore in the month of June 2008, during this period.
Trading for the week started on a bearish note as key indices slumped on Monday, 9 June 2008, as surging global crude oil prices along with setback in US stocks played the spoilsport. The 30-share BSE Sensex tumbled 506.08 points or 3.25% at 15,066.10 and the broader based S&P CNX Nifty shed 126.85 points or 2.74% at 4,500.95, on that day.
The market extended losses on Tuesday, 10 June 2008, as weakness in global markets once again weighed on the domestic bourses. The 30-share BSE Sensex lost 176.85 points or 1.17% at 14,889.25 and the broader based S&P CNX Nifty was down 41.25 points or 1.14% at 4,449.80, on that day.
On that day both the key indices Sensex and Nifty hit their lowest levels in 2008, with Sensex hitting a low 14,645.31 Nifty 4369.80.
The market recovered on Wednesday, 11 June 2008, as investors resorted to bargain buying after recent steep fall in share prices, taking cue from firm Asian markets. The 30-share BSE Sensex rose 296.07 points or 1.99% at 15,185.32 and the broader based S&P CNX Nifty jumped 73.8 points or 1.66% at 4,523.60, on that day.
Improved April 2008 industrial production data, firm European markets and higher US futures markets triggered gains on domestic bourses on Thursday, 12 June 2008, after an earlier steep intra-day fall caused by the Reserve Bank of India (RBI)'s decision to raise repo rate - a short term interest rate by 25 basis points to 8% after trading hours the previous day. The 30-share BSE Sensex gained 64.88 points or 0.43% at 15,250.20 and the broader based S&P CNX Nifty rose 15.75 points or 0.35% at 4,539.35, on that day.
The market drifted lower on Friday, 13 June 2008, as inflation surged to a seven-year high. The 30-share BSE Sensex declined 60.58 points or 0.40% at 15,189.62 and the broader based S&P CNX Nifty shed 22.25 points or 0.49% at 4,517.10
India’s largest drugmaker by sales Ranbaxy Laboratories surged 11.86% to Rs 566.90 in the week. Ranbaxy founders Malvinder Singh and Shivinder Singh inked a deal to sell their combined 34.8% stake to Japanese drug maker Daiichi Sankyo at Rs 737 a share. 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 private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 1.29% to Rs 2268.30. RIL's chairman Mukesh Ambani said that the company will pursue greenfield investment in polyester.
India’s second largest telecom services provider by sales Reliance Communication (RCom) slipped 0.63% to Rs 543.55. As per reports, RCom and the South African telcom company MTN will 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.
India’s third largest IT exporter by sales Wipro declined 5.38% to Rs 477.85. It is reportedly bidding for 12 contracts worth at least $100 million each as it seeks bigger clients.
India’ largest engineering and construction firm by sales Larsen & Toubro (L&T) was up 1.05% to Rs 2,710.15. L&T has reportedly decided to delay the listing of its software business unit L&T Infotech to 2009-10, due to unfavourable market condition. The firm had earlier decided to go for L&T Infotech's initial public offer in the second half of this fiscal.
India’s largest private sector bank by net profit ICICI Bank shed 0.78% to Rs 764.80. 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.
India’s largest dedicated housing finance firm by operating income HDFC slumped 9.11% to Rs 2133.30. HDFC’s chairman Deepak Parekh said the company 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.
India’s largest commercial vehicle maker by sales Tata Motors lost 4.42% to Rs 516.20. 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.
Diversified company Grasim Industries fell 3.56% to Rs 2182.30 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.
Among the side counters, GHCL (up 41.52% to Rs 71.75), Aurobindo Pharma (up 16.98% to Rs 329.95), Chambal Fertilisers & Chemicals (up 13.09% to Rs 91.15), Fortis Healthcare (up 16.03% to Rs 82.50), and Zenotech Laboratories (up 11.85% to Rs 109.45), surged.
Inflation based on wholesale price index rose 8.75% in the 12 months to 31 May 2008, above the previous week's annual rise of 8.24%, government data released on 13 June 2008, showed. The reading is highest since 10 February 2001, when it was 8.77%. Inflation for the week ended 5 April 2008 was revised to 7.71% as against 7.14% reported earlier.
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.
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 on 12 June 2008, showed. Manufacturing production rose 7.5% in April 2008 from a year earlier, compared with a provisional 2.9% growth in March 2008.
On 9 June 2008, Finance Minister P Chidambaram said the Indian economy is expected to grow 8.5% in the fiscal year ending March 2009. Chidambaram also said the government’s target for direct tax receipts for 2008/09 would be revised upwards from the current Rs 3.65 trillion.
Fears of further rise in interest rate continue to haunt bourses
The market today snapped last two days' winning streak as data showing a surge in inflation to a seven-year high and weak European markets kept bulls in check. Sensex had gained 360.95 points in last two trading sessions supported by strong global cues and robust April 2008 industrial production data announced by the Indian government during trading hours on 12 June 2008.
After holding in green for a better part of the day, banking declined in late trade. FMCG, power, realty and metal stocks fell. Investors took shelter in small-cap and mid-cap stocks causing sharply rally in some of the stocks in this segment.
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.
Inflation based on the the wholesale price index rose 8.75% in the 12 months to 31 May 2008, above the previous week's annual rise of 8.24%, government data released today, 13 June 2008, afternoon showed. The reading is highest since 10 February 2001, when it was 8.77%.
European stocks drifted lower, trimming some of the previous session's gains as inflation worries remained high on investors' minds ahead of US consumer price data. Key benchmark indices in France, Germany and UK were down by between 0.41% to 0.89%.
In a relatively range bound trade, the 30-share BSE Sensex lost 60.58 points or 0.4% at 15,189.62. At the day’s low of 15,135.81, Sensex lost 114.39 points in mid-afternoon trade. At the day’s high of 15,337.10 Sensex gained 86.9 points in early trade.
The broader based S&P CNX Nifty was down 22.25 points or 0.49% at 4,517.10. Nifty June 2008 futures were at 4482.10, at a discount of 35 points as compared to spot closing of 4517.10.
The BSE clocked a turnover of Rs 5,827 crore today as compared to a turnover of Rs 6,233.42 crore on 12 June 2008.
NSE's futures & options (F&O) segment turnover was Rs 41,003.40 crore, which was lower than Rs 52,333.46 crore on Thursday, 12 June 2008.
The market breadth was positive on BSE with 1,445 shares advancing as compared to 1156 that declined. 77 remained unchanged. Among the 30 stocks from Sensex pack, 21 were trading in red.
The BSE Mid-Cap index rose 0.08% to 6,228.17 and BSE Small-Cap index was up 0.74% to 7,581.72. Both these indices outperformed Sensex.
BSE Consumer Durables index (up 1.74% to 3,981.55), BSE HealthCare index (up 1.19% at 4,494.02), BSE Bankex (up 0.26% at 7,056.24), BSE Capital Goods (up 0.25% at 12,019.16), BSE PSU index (up 0.11% to 6,528.94), BSE TecK index (down 0.18% to 3,381.05), BSE IT index (down 0.22% to 4,336.06) outperformed Sensex.
The BSE Realty index (down 2.59% at 5,670.23), BSE Metal index (down 2.08% to 15,185.92), BSE FMCG index (down 1.2% to 2,241.53), BSE Power index (down 1.08% to 2,627.73), The BSE Auto (down 0.45% at 4,129.79), BSE Oil & Gas index (down 0.58% to 9,917.01) underperformed Sensex.
India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries declined 0.59% to Rs 2,268.30.
Healthcare stocks rose. India’s biggest drugmaker by sales Ranbaxy Laboratories rose 4.31% to Rs 566.90. The stock rose on heavy volume of 22.34 lakh shares on BSE. Drug maker Pfizer Inc may reportedly make a hostile bid for the 65% stake in Ranbaxy not held by its founders. Daiichi Sankyo Co., Japan's third-largest drug maker, had agreed on 11 June 2008 to buy a controlling stake in Ranbaxy for as much as $4.6 billion.
Pfizer's Indian arm surged 4.76% to Rs 620. Dr Reddy’s Laboratories (up 3.96% to Rs 728.55) and Biocon (up 1.34% to Rs 483.15) edged higher.
Rate sensitive realty stocks fell after last two days' gains. Indiabulls Real Estate (down 5.52% to Rs 373.15), DLF (down 3.61% to Rs 479.75) and Unitech (down 1% to Rs 187.25) edged lower.
Metal stocks declined. Steel Authority of India (down 1.81% to Rs 159.80), Sterlite Industries (down 4.27% to Rs 770.40), Hindalco Industries (down 1.27% to Rs 175.40) and Tata Steel (down 1.81% to Rs 841.35) edged lower. However India’s second largest aluminium producer by sales National Aluminium Company rose 1.89% to Rs 489.40.
Power stocks edged lower. Tata Power Company (down 4.87% to Rs 1,252.45), Reliance Infrastructure (down 2.5% to Rs 1,020.30), NTPC (down 1.23% to Rs 161.10) edged lower.
FMCG stocks declined. Hindustan Unilever (down 2.54% to Rs 226.55), ITC (down 1.25% to Rs 197.45) and Nestle India (down 1.12% to Rs 1,700) edged lower.
Bank stocks declined after data released today afternoon showed a surge in inflation to highest level in more than seven years. India’s largest commercial bank State Bank of India declined 0.38% to Rs 1,334.55. The asset-liability committee of State Bank of India (SBI), will be reviewing interest rates today following the latest RBI move to raise repo rate.
The Reserve Bank of India on Wednesday, 11 June 2008, hiked repo rate by 25 basis points to 8% with immediate effect in an effort to contain rising inflation.
India’s second largest private sector bank by net profit HDFC Bank declined 3.45% to Rs 1,123.35. India’s largest private sector bank by net profit ICICI Bank rose 3.03% to Rs 764.80.
India’s largest dedicated housing finance firm by operating income HDFC declined 1.78% to Rs 2,133.30. HDFC chairman Deepak Parekh said on Thursday, 12 June 2008, 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 Consultancy Services (up 2.16% to Rs 907.65), Tata Motors (up 1.74% to Rs 516.20), ONGC (up 1.21% to Rs 841.25), Bharat Heavy Electricals (up 2.79% to Rs 1,561.10), and ACC (up 0.31% to Rs 634.10), edged higher from Sensex pack.
Jaiprakash Associates (down 4.03% to Rs 178.70), Cipla (down 2.63% to Rs 211.30), Maruti Suzuki India (down 1.97% to Rs 721.85), Grasim Industries (down 1.27% to Rs 2,182.30), ITC (down 1.25% to Rs 197.45) edged lower from Sensex pack.
India’s third largest IT exporter by sales Wipro declined 1.09% to Rs 477.85. It is reportedly bidding for 12 contracts worth at least $100 million each as it seeks bigger clients.
India’ largest engineering and construction firm by sales Larsen & Toubro was up 0.25% to Rs 2,710.15. Due to unfavourable market condition, L&T has reportedly decided to delay the listing of its software business unit L&T Infotech to 2009-10. The firm had earlier decided to go for L&T Infotech's initial public offer in the second half of this fiscal.
Chambal Fertiliser and Chemicals clocked the highest volume of 2.8 crore shares on BSE. Nagarjuna Fertiliser and Chemicals (1.78 crore shares), Reliance Petroleum (1.37 crore shares), Reliance Natural Resources (1.29 crore shares) and IFCI (1.26 crore shares) were other volume toppers in that order.
Reliance Capital clocked the highest turnover of Rs 269.58 crore on BSE. Anu’s Laboratories (Rs 261.64 crore), Chambal Fertiliser and Chemicals (Rs 248.3 crore), Reliance Petroleum (Rs 246.7 crore) and Reliance Industries (Rs 220.7 crore) were the other turnover toppers in that order.
Asian markets were trading mixed. Key benchmark indices in Hong Kong, China, South Korea, were down by between 0.99% to 3%. Key benchmark indices in Japan, Singapore and Taiwan were up by between 0.46% to 0.54%.
US stocks rose on Thursday after a stronger-than-expected May 2008 retail sales report and a $46 billion takeover bid for Anheuser-Busch from an overseas rival helped the market recover from a string of deep losses. The Dow Jones Industrial Average gained 57.81 points or 0.48% at 12,141.58. The tech-laden Nasdaq Composite Index gained 10.34 points or 0.43% at 2,404.35.
Oil was trading below $137 a barrel, near record highs of $139.12 hit last Friday, 6 June 2008.
Short covering by traders following improved industrial production data for April 2008 triggered a strong intra-day rebound on the bourses yesterday, 12 June 2008. The barometer index BSE Sensex gained 64.88 points or 0.43% to settle at 15,250.20, bouncing back from an intra-day 437.33-points fall.
The market’s concerns are that higher interest rates will raise borrowing costs and hit bottom line of corporates. Banks are likely to raise interest following a strong signal from the Reserve Bank of India (RBI) that banks' cost of funds is headed north when the central bank raised repo rate, a short term rate, by 25 basis points on Wednesday, 11 June 2008. The repo rate is the rate at which RBI lends money to banks under its liquidity adjustment facility.
The stock market’s another concern is that high interest rates may delay expansion plans of corporates which in turn may impact future earnings growth. A latest research report released by Lehman Brothers pointed out that the cost of borrowing is likely to increase further. According to Lehman inflation is unlikely to tread below 8% in 2008. Lehman expects another 25 basis points hike in repo rate in third quarter and a 100 basis points hike in banks’ cash reserve ratio (CRR) later this year.
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 5321.50 crore in the first few days of this month, till 11 June 2008. They had dumped stocks worth a net Rs 5011.50 crore in May 2008. Their outflow in calendar 2008 reached Rs 20690.90 crore, till 11 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.
India’s economic growth has slowed down as fall in consumer demand caused by rise in interest rates. Industrial output rose 8.1% in 2007/08 (April-March) compared with 11.6% growth in 2006/07.
According to a report on the Indian economy made at the beginning of this month by Morgan Stanley, weak consumption growth and slowing business investment will slow India’s gross domestic growth (GDP) growth to 6.7% in the quarter ending March 2009 from 8.8% growth in the quarter ended March 2008. It, however, states that, on a long-term basis, an interplay of three key macro factors viz. favourable demographics, continuation of economic reform process by the government, and globalization, justify a gradual speeding up in India’s pace of growth.
According to a recent 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. The Union government on Wednesday, 4 June 2008, raised retail petrol and diesel prices by about 10%, more than expected, to help curb losses at its state-owned refiners arising from surging global crude oil prices.
Market may remain volatile
The market may witness a cautious trend as US indices ended marginally up yesterday and Asian indices are exhibiting a weak trend in the morning trades. Investors should maintain caution as profit taking at higher levels may pull down the market. Among the local indices, the Nifty could test 4500 and 4450 on the downside while on the upper side it may move up to 4580. The Sensex has a likely support at 15120 and may face resistance at 15450.
US indices ended positive on Thursday. The Dow Jones gained by 58 points to close at 12142 while the Nasdaq ended ten points higher at 2404.
Most of the Indian ADRs trading on the US bourses closed in the green. ICICI Bank led the pack with gains of over 8.12% followed by Tata Motors and Satyam both of which gained above 5%. Wipro, HDFC Bank, Infosys, Dr Reddy's and Rediff gained over 1-2% each. However, MTNL, VSNL and Patni Computer eased marginally.
Crude oil prices in the US markets moved up marginally, with the Nymex light crude oil for June delivery moving down by 36 cents to close at $136.74 a barrel. In the Commodity segment, the Comex gold for August series lost $872 to settle at $873 a troy ounce.
Market may be range bound
The market may remain range bound with negative bias tracking subdued trend in Asian stocks. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and China were down by between 0.02% to 1.28%.
Short covering by traders following improved industrial production data for April 2008 triggered a strong intra-day rebound on the bourses yesterday, 12 June 2008. The barometer index BSE Sensex gained 64.88 points or 0.43% to settle at 15,250.20, bouncing back from an intra-day 437.33-points fall.
The market’s concerns are that higher interest rates will raise borrowing costs and hit bottom line of corporates. Banks are likely to raise interest following a strong signal from the Reserve Bank of India (RBI) that banks' cost of funds is headed north when the central bank raised repo rate, a short term rate, by 25 basis points on Wednesday, 11 June 2008. The repo rate is the rate at which RBI lends money to banks under its liquidity adjustment facility.
The stock market’s another concern is that high interest rates may delay expansion plans of corporates which in turn may impact future earnings growth. The market will now be guessing RBI’s next move. The next quarterly monetary policy review of RBI is scheduled on 29 July 2008.
The asset-liability committee of State Bank of India (SBI), India’s largest commercial, will be reviewing interest rates today following the latest RBI move. HDFC chairman Deepak Parekh said on Thursday, 12 June 2008, 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
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 5321.50 crore in the first few days of this month, till 11 June 2008. They had dumped stocks worth a net Rs 5011.50 crore in May 2008. Their outflow in calendar 2008 reached Rs 20690.90 crore, till 11 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.
India’s economic growth has slowed down as fall in consumer demand caused by rise in interest rates. Industrial output rose 8.1% in 2007/08 (April-March) compared with 11.6% growth in 2006/07.
According to a report on the Indian economy made at the beginning of this month by Morgan Stanley, weak consumption growth and slowing business investment will slow India’s gross domestic growth (GDP) growth to 6.7% in the quarter ending March 2009 from 8.8% growth in the quarter ended March 2008. It, however, states that, on a long-term basis, an interplay of three key macro factors viz. favourable demographics, continuation of economic reform process by the government, and globalization, justify a gradual speeding up in India’s pace of growth.
According to a recent 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. The Union government on Wednesday, 4 June 2008, raised retail petrol and diesel prices by about 10%, more than expected, to help curb losses at its state-owned refiners arising from surging global crude oil prices.
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 government will today unveil inflation data for the year through 31 May 2008. Inflation based on the whole price index had climbed to 8.24% in year through 24 May 2008, the highest reading in nearly four years.
Pre Session Commentary - June 13 2008
The Indian Market is expected to have positive opening on the back of mixed global cues. On Thursday, the Indian market closed upbeat after recovering from earlier losses towards final trading hours. The market opened with bad temper on the back of weak global cues and was trading without any sign of recovery. It was hovering in negative territory but started recovering smartly after industrial production data released which was better than expected and bounced back to close in green. 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. From the sectoral front, Oil & Gas, Metal and Capital Goods stocks witnessed most of the buying interest. 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. We expect that market may remain volatile and inflation figure for the week ending 31st May 2008 due out today, will give further direction to the market.
The Reserve Bank of India on Wednesday 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 signal of rise in interest rates. Interest rate sensitive sectors like bank though faced the heavy selling across the counters but made a smart pull back towards the end. The Auto index also made a smart come back ignoring the repo rate hike to close almost on a flat note.
On Thursday, the US market closed in positive territory on M&A news of $46 billion takeover bid for Anheuser-Busch and better than expected retail sales. It opened higher with oil slipping and positive retail sales. It give back its earlier gains but still maintained to close in positive. New York''s main oil futures contract, light sweet crude for July delivery, eased 19 cents to $136.55 a barrel.
The Dow Jones Industrial Average (DJIA) closed higher by 57.81 points at 12,141.58 along with NASDAQ went up by 10.34 points to close at 2,404.35 and S&P 500 advanced by 4.38 points to close at 1,339.87.
Indian ADRS ended mixed. In technology sector, Satyam grew by (5.69%) along with Wipro by (4.41%), Infosys by (3.43%) while Patni Computers dropped by (0.17%). In banking sector, ICICI bank and HDFC bank increased by (8.12%) and (4.42%) respectively. In telecommunication sector, Tata Communication and MTNL dropped by (2.27%) and (1.36%). Sterlite industries inclined by (2.02%).
Today the major stock markets in Asia are trading in red on inflation fears. Hang Seng index is trading lower by 154.13 points at 22,869.73 along with Taiwan Weighted trading at 8,089.91 down by 27.60 points and Japan’s Nikkei index trading down by 22.31 points at 13,866.29.
The FIIs Thursday stood as net seller in equity. The gross equity purchased was Rs3,768.40 Crore and the gross debt purchased was Rs0.00 Crore while the gross equity sold stood at Rs3,919.90 Crore and gross debt sold stood at Rs0.00 Crore. Therefore, the net investment of equity reported was Rs(151.50) Crore and net debt was Rs0.00 Crore.
Today, Nifty has support at 4,455 and resistance at 4,642 and BSE Sensex has support at 15,030 and resistance at 15,529
Trading Calls - June 13 2008
Nifty (4539) Sup 4480 Res 4605
Buy L&T (2704) SL 2684
Target 2749, 2759
Buy RPL(180) SL 175
Target 190, 195
Buy Lupin (726) SL 718
Target 730, 735
Buy RIL (2277) SL 2255
Target 2312, 2322
Sell 3i Infotech (111) SL 115 Target 104, 101
Morning Call - June 13 2008
Market Grape Wine :
In House :
Nifty at a support 4514 and 4474 with a resis of 4570 and 4600.
CASH :
Buy: Sunpharma above 1500 with a Tgt of 1550 with a S/L of 1480
Buy :Idea above 105 with a Tgt of 112 with a S/L OF 102
Future:
Buy : lupin above 708 with a Tgt of 735 with a S/L OF 695
BUY : rel cap above 1150 with a Tgt of 1190 with a S/L OF 1125
Positional calls:
BUY : aban above 3575 with a Tgt of 3900 with a S/L OF 3480
Buy : praj abover 187 with TGT of 220 with a S/L of 180
Out House :
Markets at a support of 15051 & 15115 resistance at 15353 & 15463 levels .
Buy : Sail & Tisco
Buy : Glenmark & LUPIN
Buy : Infy & Satyam
Buy : Praj & Unitech
Buy : RPL & RIL
Buy : Cairn & NTPC
Buy : SKumar & IOL
Dark Horse : RPL , Tisco , Sail , Glenmark , NTPC , RIL & INFY
TGIF : Thank God Its Friday : Keep stop loss and buy at dips , markets to be range bound .
Grey Market - Avon Weighing
Niraj Cement 190 Discount
Bafna Pharmaceutical 40 6 to 8
Avon Weighing 10 6 to 8
Sejal Architectural Glass Ltd. 105 to 115 23 to 25
First Winners Ind. Ltd. 120 to 130 5 to 7
Archid Ply Ind. 70 to 80 14 to 16
Lotus Eye Care Hospital 38 to 42 Discount
Friday the 13th; nothing to fear
There cannot be a crisis today; my schedule is already full – Henry Kissinger
After a hell of a ride this week, days like Friday the 13th may have no relevance even for the very superstitious. Things have more or less gone by script as we mentioned in the beginning of the week. Except for some worsening inflation numbers nothing else may matter for the day. Today, the prospects are not looking that bad, as the US stock indices finished higher after a volatile day. Markets also advanced in Europe and key emerging markets. Oil fell by over $4 per barrel, but turned up later in the day to end virtually flat. Having said that, Asian markets are mostly in the red this morning, though not that much. We see a flat to positive opening and a choppy day ahead.
The bulls managed to bounce back yesterday after yet another gap-down opening and a steep fall. The Sensex rebounded by more than 500 points to end at 15,250. The Nifty too closed above 4500 after slipping under 4400. The market breadth too was positive and volume was also on the higher side.
Among the other worrying factor is that FIIs net sold Indian shares worth more than Rs12bn on a preliminary basis. The relentless selling by the foreign funds is a big impediment for the bulls. This has to turn positive on a sustainable basis for the market to rebound from recent lows.
The fallout from the repo rate hike and further spike in inflation on the economy and corporate earnings is not fully factored in. And though the IIP numbers for April turned out to be higher than most forecasts, there are still doubts whether this pace of growth can be sustained. A good monsoon can go a long way in helping the Indian economy and India Inc, bounce back from the slowdown.
Most Asian stocks fell, led by financial and shipping companies, on concern that credit-market turmoil and slowing global growth will erode profit.
Australian securities firm Babcock & Brown plunged to a record low in Sydney after UBS downgraded the stock. Mitsui OSK Lines dropped after rates for transporting commodities by sea had a record decline.
Samsung Electronics rose after Macquarie said the company may buy back shares.
The MSCI Asia Pacific Index was little changed at 140.26 as of 11:03 a.m. in Tokyo. The index is down 6.7% this week. Four stocks retreated for every three that rose.
Japan's Nikkei 225 Stock Average lost 0.5% to 13,823.17. Australia's S&P/ASX 200 Index declined 0.6%.
FIIs were net sellers of Rs12.11bn (provisional) in the cash segment on Thursday while the local institutions poured in Rs5bn. In the F&O segment, foreign funds were net sellers of Rs5.95bn.
On Wednesday, FIIs were net sellers of Rs1.51bn in the cash segment. With this, they have pulled out over $5.1bn from the Indian market this year so far. Mutual Funds were net buyers of Rs3.2bn on the same day.
Lok Housing's Board will today consider and explore various avenues to raise funds from foreign markets. The quantum of the funds to be raised shall be discussed and decided in the scheduled Board meeting.
Meanwhile, IFCI's Board meeting to discuss the revival of strategic stake sale ended inconclusive. The stock may come under some pressure.
US stocks struggled for direction on Thursday, managing modest gains after a choppy session, as better-than-expected retail sales and the $46bn takeover bid for Anheuser-Busch offset volatile oil prices.
Stocks rallied in the morning on InBev's unsolicited offer for Budweiser maker Anheuser-Busch and slumping oil prices, but the advance lost steam in the afternoon as oil prices erased losses and turned higher again.
News that the Microsoft-Yahoo marriage won't happen briefly sent stocks into negative territory, before investors managed to stage a recovery in the last minutes of the session.
The S&P 500 added 4.38 points, or 0.3%, to 1,339.87, its first advance in three days. The gauge briefly fell after bond yields surged and oil erased a $4 drop. The Dow Jones Industrial Average jumped 57.81 points, or 0.5%, to 12,141.58. The Nasdaq Composite climbed 10.34 points, or 0.4%, to 2,404.35.
Market breadth was positive. Seven stocks advanced for every five that fell on the New York Stock Exchange.
Yahoo shares plunged 10% in active Nasdaq trading on news that its talks with Microsoft ended without a deal. But, Yahoo’s shares climbed slightly in after-hours trading on news that the company and Google had struck an online advertising partnership.
Worries about inflation and the weakening economy remained in place, but were countered by some of the corporate news, like the multi-billion-dollar bid for Anheuser-Busch. This shows that US companies are still highly sought after globally and that business is holding up. Anheuser-Busch shares jumped 5.2%.
May retail sales report was positive, but was probably not a meaningful indicator of consumer activity, as it was mostly driven by the tax rebate checks. Sales jumped 1% in May, thanks to the government's economic stimulus plan, double what economists were expecting. Sales rose 0.4% in April.
Lehman Brothers said it was replacing two top executives, including its CFO, just days after announcing a massive $2.8bn quarterly loss. Lehman stock lost 4.4%.
However, other financial stocks rallied. Citigroup jumped on news that it's closing the Old Lane Partners hedge fun once run by its CEO Vikram Pandit. The sector as a whole benefited from a Morgan Stanley upgrade to "neutral" from "underweight".
US light crude oil for July delivery rose 36 cents to settle at $136.74 a barrel on the New York Mercantile Exchange, after having slumped more than $4 a barrel in morning trade. The national average price for a gallon of regular unleaded gas rose to a record $4.060 from the previous day's record of $4.052, AAA reported.
The dollar rose versus the euro and yen. Treasury prices tumbled, raising the yield on the benchmark 10-year note to 4.21% from 4.07% late on Wednesday. COMEX gold for August delivery fell $10.90 to settle at $872 an ounce.
European shares snapped a six-session losing streak. The pan-European Dow Jones Stoxx 600 index rose 0.9% to 304.09, with advancers outpacing decliners more than 2 to 1. The UK's FTSE 100 closed up 1.2% at 5,790.50, while the German DAX 30 added 1% to 6,714.52 and the French CAC-40 rose 0.2% to 4,672.30.
In the emerging markets, Brazil's benchmark Bovespa index rose 0.5% to 67,138. In Mexico, the IPC index added 0.1% to 30,475. The RTS index in Russia was up 0.7% at 2356 while the ISE National 30 index in Turkey rose 1% to 46,899.
Bulls look to carry forward momentum
It was a remarkable come back by the bulls as key indices extended their positive run to second straight trading session. After hitting an intra-day low of 14,748 the benchmark index managed to erase all their early losses as the index recovered nearly 500 points from days low. Also the Nifty index recouped over 120 points from days low.
Markets slightly started gaining ground post announcement of IIP numbers as the April industrial output was above a forecast of 5.5-6.5%. India's industrial production growth rebounded in April, the first month of the current fiscal year, from a six-year low hit in March, as strong performance of mining and manufacturing offset weakness in electricity.
However, the growth in industrial production declined to 7% in April from 11.3% in April 2007. Meanwhile, the Government revised the year-on-year industrial output growth in March to 3.9% from a preliminary estimate of 3%.
The bounce back was led by the interest rate sensitive stocks like Banking and Realty. The BSE Bankex and BSE Realty index regained almost over 4.5% each from days low. Even the Mid-Cap and the Small-Cap index recovered 3% and 2.5% respectively. Further, sentiments were lifted as even the European markets started off with a positive bias.
Among the 30-scrips of Sensex, 18 stocks ended in positive terrain and 12 stocks ended in red. Finally, the BSE benchmark Sensex gained 64 points to close at 15,250 and the Nifty index added 15 points to close at 4,539.
Everonn Systems gained by 3.3% to Rs589 after the company announced that it received Letter of Intent LOI from School Education Department, Government of Andhra Pradesh for implementation of Computer Aided Learning in 405 High Schools in Andhra Pradesh. The scrip touched an intra-day high of Rs598 and a low of Rs547 and recorded volumes of over 23,000 shares on NSE.
Thomas Cook gained 2% to Rs88 after India's largest integrated travel and travel related financial services company, will now offer life insurance solutions of Bajaj Allianz Life Insurance, through its distribution network of over 160 retail branches across the country. The scrip touched an intra-day high of Rs91 and a low of Rs85 and recorded volumes of over 4,000 shares on NSE.
Lupin surged by over 5% to Rs723 after the company announced that it received approval fro the US Food and Drug Administration to launch its generic version of hypertension drug Altace in the US. The scrip touched n intra-day high of Rs728 and a low of Rs675 and recorded volumes of over 2,00,000 shares on NSE.
Idea further surged by 11% to Rs107 following reports that, Telekom Malaysia would pay Rs150 per share for a less than 15% stake in Idea Cellular, valuing the AV Birla Group company at Rs400bn. The scrip touched an intra-day high of Rs109 and a low of Rs94 and recorded volumes of over 57,00,000 shares on NSE.
Gammon India slipped by 3% to Rs371. The company’s overseas units have acquired stakes in two Italian firms, stated reports. The scrip touched an intra-day high of Rs388 and a low of Rs368 and recorded volumes of over 2,000 shares on NSE.
ABG Shipyard propelled towards the end, the stock was up y over 6.5% to Rs443. The company announced that it secured two orders worth Rs30.5mn from Marnavi Spa, Italy for the construction of 1 vessel of 130 Tonne Bollard Pull AHTS for Anchor Handling, Towing, rescue, offshore supply and other related duties.The scrip touched an intra-day high of Rs445 and a low of Rs395 and recorded volumes of over 47,000 shares on NSE.
Wipro ended higher by 2% to Rs483 after the company announced that it is bidding for 12 contracts worth ~US$100mn each. The scrip touched an intra-day high of Rs487 and a low of Rs463 and recorded volumes of over 1,00,000 shares on NSE.
Educomp Solutions edged higher by 0.3% to Rs3459 after the company announced that it has received Letter of Intent from School Education Department, Government of Andhra Pradesh for implementation of Computer Aided Learning in 890 High Schools in Andhra Pradesh under BOOT model. The scrip touched an intra-day high of Rs3500 and a low of Rs3348 and recorded volumes of over 29,000 shares on NSE.
Steel Strips Wheels slipped by over 4% to Rs129. The company announced that the Company has achieved sales of 500,905 wheel rims during the month of May, 2008 as against 405,588 wheel rims during the month of May, 2007, recording a growth of 23.50%.
The Company also achieved production of 500,565 wheel rims during May 2008 as against 401,200 during May, 2007 recording a growth of 24.76%. The scrip touched an intra-day high of Rs133 and a low of Rs127.
Corporate News
Pfizer may counter bid for 65% non-promoter stake in Ranbaxy. (BS)
Reliance Industries to sell natural gas this year at US$25.20/barrel of crude oil equivalent. (FE)
L&T has postponed listing of its infotech business to the second half of 2009-10. (ET)
Wipro is bidding for 12 contracts worth US$1.2bn. (BL)
NMDC may increase iron ore prices by 65% for lumps and 88% for fines. (BL)
West Bengal government to offer 25 acres of land near Kolkata Airport to ICICI Bank. (ET)
L&T will invest US$6bn in the power generation business over the next five years. (DNA)
Sanofi-Aventis sues Sun Pharma for infringement of a US patent for Uroxatral. (DNA)
Videocon Group to set-up a solar power plant in West Bengal. (DNA)
IOC plans to set-up mini liquefaction plants to source gas from the marginal fields. (BL)
Oil India plans to launch IPO by September 2008. (DNA)
ADAG Group pulls out of Mumbai sea-link project citing state government’s indecisiveness over awarding the contract. (BS)
PNB receives not from RBI for 51% stake in Bhutan venture. (BL)
IFCI allows LIC to pare its stake to 8.39%. (BL)
Jet Airways has pulled out of negotiations to buy a strategic stake in SpiceJet. (BS)
Moody’s assign Baa3 rating to Tata Chemicals. (FE)
GMR Group forays into security services training academy in Andhra Pradesh. (BS)
Mercator Lines is planning to acquire a jack-up rig with an investment of Rs15bn. (ET)
Central Bank plans to raise Rs15bn from the market by December. (ET)
PSL wins an order from GAIL for supply of coated line pipes valued at Rs19.28bn. (BL)
Educomp to implement computer-aided learning in select schools in Andhra Pradesh. (BL)
SpiceJet expects to report a loss of Rs0.8-1bn in the current year. (BL)
Welspun Group plans to start an e-commerce portal in US to expand its customer base. (BS)
ABG Shipyard bags two orders worth Rs3.05bn. (ET)
Spentex Industries to further reduce workforce over the next six months to cut cost. (DNA)
Economic News
Industrial output in April 2008 grows by 7% yoy. (ET)
Price of complex fertilizers may decline by an average of 17.5% as the Government clears nutrient-based subsidy-cum-pricing policy. (BL)
Railways register a 26% growth in freight earnings in May 2008. (BL)
Sugar mills in Uttar Pradesh are facing shortage of cane during the 2008-09 crushing season. (BS)
Coffee production may increase 12% next year. (FE)
Today's Pick - Himatsingka Seide
We recommend a buy in Himatsingka Seide from a short-term perspective. From the charts of the stock we note that it has been on an intermediate-term down trend from its January 2008 high at Rs 135. The stock has moved lower from this peak in a series of lower peaks and troughs. This down trend found support at Rs 45 recently, which is also the52-week low. Triggered by the prolonged positive divergence in the daily moving average convergence and divergence, the stock began to move up. On June 12, the stock gained momentum and surged 9 per cent penetrating the 21-day moving average. This up move was accompanied by good volume. We believe that the stock will continue to move higher in the short-term. The daily relative strength index, which was in the bearish zone in the recent times, has entered the neutral region. We are bullish on the stock in the short-term. We expect the stock to move upwards until it hits our price target of Rs 60 in the coming trading sessions. Traders with short-term perspective can buy the stock, while maintaining the stop-loss at Rs 48.
via BL
Bullion metals fall again
Higher demand for dollar plays the spoilsport for precious metals
After rising for the first time in this week yesterday, precious metals fell for the third time in this week today, Thursday, 12 June, 2008. The dollar strengthening against its rivals was the main reason as to why bullion metals once again slipped today. Crude prices too were trading lower earlier during the day before reversing their course of action while going into close. Since the start of this week, the dollar had strengthened and also following on and off comments from Federal Reserve Chairman, Ben Bernanke, precious metals had lost ground. The same have reduced the appeal of the precious metals as an inflation hedge. Silver prices also lost 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. 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 fell $10.9 (1.2%) to close at $872 ounce on the New York Mercantile Exchange. 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 4.3% till date against a 4.8% drop for the dollar against the euro. Before May, for April, prices closed lower by 6.3%. For first quarter prices gained 10.7%. In January, prices gained 11%, the highest monthly gain since April 2006. For February, it gained 6%. But in March, prices succumbed and fell by 5.5%.
On Thursday, Comex silver futures for July delivery fell 37 cents (2.2%) to $16.485 an ounce. Silver has gained 10.1% 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 Thursday, the dollar gained strength in the belief that a rebound in retail sales would back the case for the Federal Reserve to hike U.S. interest rates. The dollar index which tracks the greenback against major currency rivals, gained nearly 0.9% to 73.88.
The Commerce Department reported today an unexpected 1% rise in retail sales last month, marking the fastest increase in six months.
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.
Since last September, Fed has axed interest rates seven times and brought it down to 2%. On the other hand, the ECB has kept rates unchanged at 4% since June, 2007.
Crude-oil futures also reversed course late in today’s trading session, fighting off pressure from strength in the U.S. dollar to finish modestly higher as traders continued to fret about the overall picture of tightening crude supplies. Crude for July delivery climbed 36 cents to close at $136.74 a barrel on the New York Mercantile Exchange, near the day's peak of $137.05.
Gold had 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 133 (1.1%) at Rs 12,108 per 10 grams. Prices rose to a high of Rs 12,211 per 10 grams and fell to a low of Rs 11,923 per 10 grams during the day’s trading.
At the MCX, silver prices for July delivery closed Rs 406 (1.7%) lower at Rs 23,425/Kg. Prices opened at Rs 23,770/kg and fell to a low of Rs 23,005/Kg during the day’s trading.
Crude price reverses course in late hours
Price ends moderately higher on supply concerns
Crude prices traded lower in the early session today, Thursday, 12 June, 2008 but at the end they reversed their course and ended marginally higher for the day. Prices rebounded on supply concerns and also after Nigeria's president said the country's state-owned oil company will take over operations in the Ogoni district of southern Nigeria from a Royal Dutch Shell joint venture. Yesterday’s weekly inventory report by the Energy Department had taken crude prices higher by more than $5 at one shot.
Crude-oil futures for light sweet crude for July delivery today closed at $136.74/barrel (higher by $0.36/barrel or 0.3%) on the New York Mercantile Exchange. Earlier it fell by almost $4.8/barrel. A key focus in today’s oil movement was also the dollar.
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.
At the currency markets on Thursday, the dollar gained strength in the belief that a rebound in retail sales would back the case for the Federal Reserve to hike U.S. interest rates. The dollar index which tracks the greenback against major currency rivals, gained nearly 0.9% to 73.88.
The Commerce Department reported today an unexpected 1% rise in retail sales last month, marking the fastest increase in six months.
Yesterday, EIA reported 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.
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.
Brent crude oil for June settlement today rose $1.07 (0.8 %) to $136.09 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.
Retail gasoline at record high
Natural gas in New York advanced after a government report showed inventories gained less than analysts expected. Natural gas for July delivery rose 13.8 cents (1.1%) to settle at $12.798 per million British thermal units.
Against this backdrop, July reformulated gasoline tacked on 5.6 cents to close at $3.526 a gallon while July heating oil fell 2.73 cents to end at $3.9427 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.
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%.
AAA reported today that the average retail price for a gallon of regular gasoline stood at a fresh record of $4.06, up 32.9% from a year ago.
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 5,803/barrel, lower by Rs 86 (1.5%) against previous day’s close. Natural gas for June delivery closed at Rs 548.7/mmbtu, higher by Rs 5.7/mmbtu (1.04%).
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