Wednesday, September 17, 2008
Ends at 46.33/35
Rupee rose more than 1 percent in volatile trade on Wednesday, boosted by the central bank's move to keep selling dollars and lift deposit rates for non-resident Indians, but stock market losses remained a weight.
Rupee ended at 46.33/35 per dollar, off a high of 46.25, and 1.2 percent stronger than 46.89/90 at the close on Tuesday. It fell to a low of 46.99 on Tuesday, its weakest since July 2006, according to Reuters data.
Nifty September 2008 futures were near spot price at 4009 as compared to spot closing of 4008.25. NSE's futures & options (F&O) segment turnover was Rs 58,546.48 crore, which was higher than Rs 56,509.60 crore on Tuesday, 16 September 2008.
Reliance Industries (RIL) September 2008 futures were at premium at 1881 compared to the spot closing of 1876.65.
Tata Steel September 2008 futures were at premium at 475.55 compared to the spot closing of 473.75.
Shree Renuka Sugar (Renuka) September 2008 futures were at premium at 104.15 compared to the spot closing of 104.
In the cash market, the S&P CNX Nifty lost 66.65 points or 1.64% at 4008.25.
Kospi, Nikkei Lead The Advance In Mixed Regional Market
The stock markets across the Asian region closed mixed after a firm start following the Fed's move to provide $85 billion bridge loan to American International Group in exchange for an 80% stake in the insurance giant. On Wall Street, the markets finished sharply higher after the Federal Reserve left its key interest rates unchanged at 2%. The Dow closed up 141 points or 1.3% at 11,059, the broader S&P 500 rose 20.9 points or 1.8% to finish at 1,213, and the Nasdaq advanced 28 points or 1.3% to close at 2,207.
Crude oil futures were higher in late Asian trade, rebounding from the seven-month low hit on Tuesday. In late Asian deals, oil was quoted at $93.83 a barrel.
In the currency market, the U.S. dollar was quoted in the mid 105-yen levels, down from the mid 106-yen range in early trade, but up from Tuesday's late quotes in the upper 103-yen levels in Tokyo.
The Australian dollar recovered from recent lows against the U.S. dollar after the U.S. government bailed out the beleaguered American Insurance Group. In late local trade, the Aussie edged up to US$0.8005 from an intra-day low of US$0.7910, and off 13-month lows of US$0.7852 hit in the previous session. The Aussie finished Tuesday's session at US$0.7886-0.7890.
The New Zealand dollar rose against the U.S. dollar, but gave away some of the gains before finishing the local session at US$0.6599, down from US$0.6603 in early trade. However, it closed higher compared to Tuesday's late quotes of US$0.6490.
The South Korean won rallied against the U.S. dollar. The won finished Wednesday's session at 1,129.9 a dollar, up 30.1 won from Tuesday's 49-month-low finish of 1,160.0.
Coming back to Asian equities the relief rally fizzled out as lingering concerns about the banking sector weighed on the stock markets in Australia, China, Hong Kong and Singapore. Asian financial stocks fell, as a U.S. bailout of American International Group failed to ease concerns that credit-related losses will cause more financial failures. Macquarie Group slumped in Sydney, despite denying a newspaper report that it might face difficulty in refinancing debt.
The Japanese market rebounded on bargain hunting following Tuesday's sharp losses. The benchmark Nikkei 225 index closed up 140.07 points or 1.21% at 11,749.79 and the broader Topix index of all First Section issues on the Tokyo Stock Exchange gained 3.86 points or 0.35% to finish at 1,121.43.
Tokyo stocks traded in positive territory throughout the day but gave up some of their early sharp gains in the afternoon as investors became anxious about the outlook for the U.S. financial sector and falls in Shanghai and Hong Kong shares dampened investor sentiment to some extent.
In a widely expected move, the Bank of Japan left its overnight call rate target unchanged at 0.5% by a unanimous vote and maintained its assessment of the economy, which it said was still sluggish.
The Chinese market closed sharply lower for the second straight session after China Merchants Bank announced a large exposure to Lehman Brothers. The benchmark Shanghai Composite Index closed down 2.90% at a 22- month low of 1,929.05.
The Hong Kong market closed sharply lower, falling for the sixth straight session, as China banks fell on concerns about narrowed interest-rate spreads and worries about their exposure to the troubled U.S. financial institutions. The benchmark Hang Seng index closed down 663.42 points or 3.63% at the day's low of 17,637.19.
The Australian market closed lower Wednesday, extending its losses for the third consecutive trading session. The market started off higher, but pared gains in the afternoon session as Australia's biggest investment bank, Macquarie Group, fell to its lowest level in more than four years on speculation about a potential funding shortfall.
The benchmark S&P/ASX 200 index closed down 28.6 points or 0.6% at 4,722.2 after losing 1.4% on Tuesday. The broader All Ordinaries index dropped 30.1 points or 0.6% to finish at 4,847.
On the economic front, a private sector projection of Australia's economy is forecasted an annualized growth of 3.7%. The July Leading Index, published by Westpac Bank and the Melbourne Institute, rose 0.5% for the month. The full-year rate was down from the revised reading of 4.0% reported in June. The index, which projects economic activity three to nine months in the future, was well below the long-term trend of 4.2%.
Meanwhile, the Australian Bureau of Statistics said that the value of Australia's August imports totaled A$18.455 billion, down 6% or A$1.15 billion from July. The bureau's preliminary figures showed that imports of goods decreased 3% in seasonally adjusted terms for the month. Intermediate and other merchandise goods were down 7%, while fuels and lubricants imports fell 25%.
The New Zealand stock market closed higher, ending a two-day losing streak. The market opened weak, but soon moved into positive terrain following the U.S. Federal Reserve's plan to rescue beleaguered American International Group. The benchmark NZX 50 index closed up 1.30% at 3,269.93 after plunging 2.8% on Tuesday. The broader NZX All Capital Index advanced 45.79 points or 1.39% to finish at 3,301.69.
The South Korean market closed sharply higher on bargain hunting following Tuesday's 6% plunge. The benchmark Korea Composite Stock Price Index or KOSPI closed up 2.7%, at 1,425.26.
In India, intense-selling pressure in key index pivotal dragged the key benchmark indices lower in volatile trade. The BSE Sensex, extended losses for the seventh straight day, declining 255.90 points. The S&P CNX Nifty settled just above the psychological 4,000 level. The BSE 30-share Sensex lost 255.90 points or 1.89% at 13,262.90. The Sensex opened with a upward gap of 101.94 points at 13,620.74, which is also its day’s high so far, boosted by Fed's rescue plan for AIG. At the day’s low of 13,127.96 hit mid-afternoon trade, the Sensex lost 390.84 points. The S&P CNX Nifty lost 66.65 points or 1.64%, to settle at 4008.25. At the day’s low of 3,974.60,
Elsewhere, Taiwan's Taiex closed up 0.8% at 5,800; Singapore's STI fell 1.7% to 2,419; Malaysia's KLCI closed down 0.9% at 1,002 and Indonesia's Jakarta Composite index closed up 2.0% at 1,769.
In the other part of the world, European shares rose on Wednesday but were off the session's highs, with more uncertainty about the health of financials such as U.K. mortgage lender HBOS contributing to a volatile session.
Of national indexes, the U.K. FTSE 100 index rose 0.6% to 5,058.50, the German DAX 30 index edged up 0.1% to 5,972.64 and the French CAC-40 index inched down 0.1% at 4,082.25. At 11.38 GMT continued to gain further as U.K. FTSE 100 index increased by 1.1% to 5,082.20. The German DAX 30 index increased by 0.7% to 6, 007.18, while the French CAC-40 index was up by 0.4% to 4,103.07.
Looking ahead the day is scheduled to release the data on building permits from US for the month of August, which will be followed by second quarter current account detail. It will be also accompanied by housing starts for the month of August, which will be followed by the EIA’s weekly update on crude oil stock.
The two largest US investment banks, Goldman Sachs Group Inc and Morgan Stanley, reported lower quarterly profits, but beat expectations on Tuesday even as the worst market slump in decades rattled Wall Street.
Goldman Sachs, the largest securities firm, said third quarter earnings fell 70 percent on weaker-than-expected revenues, knocking its shares to nearly three-year lows.
Later, No 2 Morgan Stanley, which reported a day ahead of schedule after US markets closed, trounced expectations paced by one-time gains, robust equity and commodities trading results and record prime brokerage fees.
Morgan's earnings fell 3 percent even as the year-old credit crunch slowed deal activity and created one of the toughest trading environments in decades. Its shares fell 11 percent on Tuesday in regular trading, though they pared most of those losses in electronic trading after New York markets closed.
Goldman shares also climbed after the bell, up 4 percent.
"Between Goldman Sachs and Morgan Stanley, we are getting some modest positive news in what has been an otherwise dark five-day period," said Keith Wirtz, president and chief investment officer of Fifth Third Asset Management.
The results come a day after No 4 investment bank Lehman Brothers Holdings Inc filed for bankruptcy, swamped by mortgage losses. No 3 broker Merrill Lynch & Co Inc meanwhile rushed into the arms of Bank of America Corp to avoid a similar fate.
These moves had prompted questions about the viability of investment banks. Several analysts predicted these firms would merge with commercial banks, which can tap pools of deposits.
Yet Morgan Stanley and Goldman dismissed those concerns.
"It's not the business model. It's performance that matters," said Goldman chief financial officer David Viniar. "We've been able to compete just fine."
Morgan Stanley CFO Colm Kelleher also played down the need to merge with a deposit-taking bank: "I'm very confident about the business model, said in a phone interview.
Goldman's quarter was marked by sharply lower banking, trading and investment results. It was the investment bank's biggest earnings decline since it went public in 1999.
Still it beat expectations, despite USD 1.1 billion in write-downs and losses from principal investments. Some investors said Goldman deserved credit for reporting any profit at all when rivals go bust or bleed red ink.
"For them to perform in this manner, in this environment, is nothing short of heroic," said Holland & Co Chairman Michael Holland.
Goldman's investment banking revenue dropped 40 percent amid a dearth of deals. Debt trading revenue fell by two-thirds, primarily on weak credit and mortgage markets, while equities trading revenue fell by one-half.
The latest quarter included USD 1.1 billion in losses on corporate loans, residential and commercial mortgages, and USD 453 million of principal investment losses, showing the downside of making aggressive bets with house money. Asset management revenue fell 6 percent as clients withdrew a net USD 7 billion.
"People were hoping for some good news in a sea of gloom and I don't think they got it," said Matt McCormick, portfolio manager at Bahl & Gaynor Investment Counsel.
Analysts said Goldman beat expectations because it paid unusually low taxes, an effective rate of 12 percent compared with 34 percent last year.
Morgan easily out-earned its archrival and generated a higher return on equity.
"This is great news for the whole financial sector," said Marshall Front, chairman at Front Barnett Associates. "I think the key to this whole thing was that they looked better than Goldman Sachs' earnings earlier in the day."
The results included a USD 745 million one-time gain from its sales of MSCI Inc stock and USD 1.4 billion of gains recorded because the credit spreads on its own debt widened.
And while the banking and trading division posted strong results, wealth management results and asset management results both fell. The ranks of brokers grew, rising 2 percent to 8,500.
Morgan also absorbed nearly USD 1.1 billion of losses and charges from mortgage trades, investments, leveraged buyout loans and repurchase of illiquid auction rate securities.
Over the past year banks and brokers have recorded more than USD 500 billion in write-downs as the mortgage crunch expanded into a sprawling crisis that continues to claim new and larger victims.
Goldman acknowledged its earnings follow the global economy and that conditions will remain challenging. The company said it is increasing capital and cash while shedding risky assets.
"We've become even more cautious in our approach," Viniar told reporters. "There's a lot of fear in the marketplace."
Domestic markets pared its opening gains to close the day in red territory due to rise in crude oil along with lower Asian markets though they ended mixed. Crude oil for October delivery raised $3.57, to $94.72 a barrel on the New York Mercantile Exchange. Indian markets today opened on positive note on the back of favorable cues from the global markets but was not able to sustain the momentum and quickly turned negative. Further, markets extended their losses in noon deals and continued nervousness for throughout of session, however struggled to recover after mid session but slipped again. Finally, markets closed with losses on sustained selling pressure. From the sectoral front, all indices ended in red and among those Reality shares were worst performer as closed with deep cut of more than 4%. Other than that, Bank, Metal, Oil & Gas, Capital Goods and Pharma stocks were major sufferers of negative sentiment as most of selling was visible from these baskets. The market breadth was negative as 1740 stocks closed in red while 886 stocks closed in green and 86 stocks remained unchanged.
RBI to ease pressure on markets has hiked the maximum interest that banks can pay on NRI deposits by 50 basis points for dollar as well as rupee deposits. The cap on NRE deposits has been raised to LIBOR plus 50 bps while that on FCNR (B) deposits is 25 bps minus LIBOR. Further, Central bank has also decided to allow banks to borrow additional 1% of NTDL or net demand and time liabilities from the repo window.
On the global front AIG rescued by Fed as US government is agreed to lend up to $85 billion emergency loan to AIG for two years in exchange for a 79.9% equity stake and Barclays buys Lehman U.S. unit. Further, US Federal Reserve on Tuesday held short-term interest rates steady at 2%, which was expected to cut to ease growing fears about the health of the US economy.
The BSE Sensex closed lower by 255.90 points at 13,262.90 and NSE Nifty ended down by 66.65 points at 4,074.90. The BSE Mid Caps and Small Caps closed with losses of 77.62 points at 5,139.63 and by 74.66 points at 6,214.75. The BSE Sensex touched intraday high of 13,620.74 and intraday low of 13,127.96.
Losers from the BSE are Sterlite In (8.04%), Ranbaxy Lab (6.60%), ICICI Bank Ltd (5.25%), ITC Ltd (5.07%), HDFC Bank Ltd (3.71%), SBI (3.59%), DLF Ltd (3.29%), Reliance (2.84%), TCS Ltd (2.77%), Tata Steel (2.57%) and JP Associates (2.29%).
The BSE Metal index lost 361.56 points to close at 9,814.93. Major losers are Sterlite In (8.04%), Jindal Steel (6.97%), Nalco (6.87%), Sesa Goa Ltd (6.30%), Gujarat NRE C (4.73%) and NMDC Ltd (3.77%).
The BSE Bank index closed lower by 259.45 points at 6,592.96. Losers are ICICI Bank Ltd (5.25%), Canara Bank (5.03%), Axis Bank (4.26%), IDBI Bank Ltd (4.11%), Bank of India (3.87%) and SBI (3.59%).
The BSE Reality index plunged 172.03 points to close at 3,991.93. As Unitech Ltd (8.78%), Orbit Co (8.27%), Housing Development (7.12%), Indiabull Real (6.00%), Penland Ltd (5.61%) and Sobha Dev (4.06%) closed in negative territory.
The BSE Oil & Gas index ended down by 161.89 points at 8,766.24 as BPCL (6.58%), HPCL (4.90%), Gail India (4.80%), IOC Ltd (4.36%), Reliance Nat Res (3.50%) and Reliance (2.84%) ended in negative territory.
The BSE Capital Goods index closed down by 139.08 points at 11,142.91 Major losers are Jyoti Struct (4.25%), ABB Ltd (3.32%), Reliance Indus Infra (3.12%), Walchand In (3.11%), Suzlon Energy (2.50%) and Kalpat Power T (2.47%).
The BSE Pharma index dropped by 75.97 points to close at 3,864.69. As Ranbaxy Lab (6.60%), Apollo Hos E (5.04%), IPCA Lab Ltd (4.13%), Glenmark Pharma (3.01%), Wockhardt Lt (2.85%) and Dr Reddy’s Lab (2.57%) closed in negative territory.
The market slipped further as selling backed by substantial intra-day volatility continued for the sixth straight session. The Sensex slid sharply in mid-morning trades witnessing a wild intra-day swing of 493 points in the first half of the trading session. It crashed sharply to the day’s low of 13,128 after touching an early high of 13,621. Although some of the losses were erased on stock-specific gains, the Sensex closed with losses of 1.89% or 256 points at 13,263. Nifty lost 67 points to close at 4,008.
The market breadth was expectedly negative. Of the 2,710 stocks traded on the BSE, 1,741 stocks declined, while 885 stocks advanced. 84 stocks ended unchanged.
All the 13 sectoral indices posted losses for the day with the BSE Realty, BSE Bankex, BSE Metal index and BSE FMCG index shedding over 3-4% each.
Among the Sensex stocks, Sterlite Industries tumbled 8.04% at Rs439.30, Ranbaxy Laboratories lost 6.60% at Rs379.10, and ICICI Bank declined by 5.25% at Rs560.30. ITC slumped 5.07% at Rs184.40, HDFC Bank slipped 3.71% at Rs1,184.40, SBI tanked 3.59% at Rs1,528.65 and DLF fell 3.29% at Rs408.70. Reliance Industries at Rs1,873.60, Tata Consultancy Services at Rs728.80, Tata Steel at Rs475, JP Associates at Rs136.60 and Reliance Communications at Rs358.35 dropped 2% each. However, Tata Motors gained 4.84% at Rs417.70, ONGC surged 2.80% at Rs975.35, Wipro moved up 2.04% at Rs399, and ACC, Infosys Technologies, Maruti Suzuki India and Mahindra & Mahindra ended with marginal gains.
Reality stocks fared badly on the bourses. Unitech dropped 8.78% at Rs127.75, Orbit Corporation declined 8.27% at Rs218.05, HDFC lost 7.12% at Rs213.90 and Indabulls Realestate slipped 6% at Rs210. Peninsula Land stocks also witnessed heavy selling pressure. Sobha Developers, Omaxe, Parsvnath Developers, Ansal Properties & Infrastructure and Phoenix Mill were down by 2-4% each.
Over 1.41 crore shares of Reliance Natural Resources changed hands on the BSE followed by IFCI (1.05 crore shares), ICICI Bank (0.72 crore shares), Chambal Fertilisers & Chemicals (0.60 crore shares) and GVK Power & Infrastructure (0.58 lakh shares).
Intense selling pressure in key index pivotals dragged the key benchmark indices lower in volatile trade. The BSE 30-share Sensex, extended losses for the seventh straight day today, 17 September 2008, declining 255.90 points. The S&P CNX Nifty settled just above the psychological 4,000 level.
ICICI Bank shed over 4.5% and Reliance Industries shed over 3%. Sterlite Industries tumbled a little under 9% and ITC lost over 5%. The market breadth was weak. All BSE sectoral indices ended in red.
The US Federal Reserve in a meeting on Tuesday, 16 September 2008 announced a $85 billion rescue plan to help American International Group in exchange for a 79.9% stake. The deal would avoid the biggest corporate bankruptcy ever and follows a government bailout of mortgage lenders Freddie Mac and Fannie Mae earlier this month
Meanwhile, the US Federal Reserve at its policy meet on Tuesday, 16 September 2008, kept its target for the federal funds rate at 2%. Fed said that the strains in financial markets have increased significantly and labour markets have weakened further. Economic growth appears to have slowed recently, partly reflecting a softening of household spending.
European markets, which opened after Indian market, were mixed. Key benchmark indices in Germany and France were up 0.32% and 0.63% respectively. However UK’s FTSE 100 lost 2.13%. Asian markets were trading mixed today, 17 September 2008. Key benchmark indices in China, Hong Kong and Singapore, were down by between 2.90% and 3.63%. However indices in Japan, Taiwan, and South Korea rose by between 0.77% and 2.70%.
In US, Dow futures were down 31 points and the Nasdaq futures were down 8 points, pointing to a lower start of the US markets on Wednesday, 17 September 2008.
The BSE 30-share Sensex lost 255.90 points or 1.89% at 13,262.90. The Sensex opened with a upward gap of 101.94 points at 13,620.74, which is also its day’s high so far, boosted by Fed's rescue plan for AIG. At the day’s low of 13,127.96 hit mid-afternoon trade, the Sensex lost 390.84 points.
The S&P CNX Nifty lost 66.65 points or 1.64%, to settle at 4008.25. At the day’s low of 3,974.60, the Nifty lost 100.30 points in afternoon trade. Nifty September 2008 futures were at a marginal 0.75 premium as compared to spot closing. NSE's futures & options (F&O) segment turnover was Rs 58,546.48 crore, which was higher than Rs 56,509.60 crore on Tuesday, 16 September 2008.
The BSE Sensex has lost 1682.07 points or 11.25% in seven consecutive trading sessions from a recent high of 14,944.97 on 8 September 2008. The barometer index is down 7024.09 points or 34.63% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 7943.87 points or 37.45% below its all-time high of 21,206.77 struck on 10 January 2008.
National Stock Exchange (NSE) on Tuesday, 16 September 2008, said there are no outstanding open positions/settlement obligations of Lehman Brothers Securities currently in the cash market segment and derivatives segment of NSE. Lehman Brothers Securities can operate only in the cash market segment on pre-funding of their trades, NSE said.
The Reserve Bank of India (RBI) on late Tuesday, 16 September 2008 stepped in with measures to support the rupee — which has been battered to almost 47 against the dollar — and supply cash in the money market. The move will increase dollar supply and lower banks’ borrowing cost in the overnight call money market. RBI has hiked the maximum interest that banks can pay on NRI deposits by 50 basis points for dollar as well as rupee deposits.
The market breadth was weak on BSE with 1760 shares declining as compared to 881 that advanced. 82 remained unchanged.
The total turnover on BSE amounted to Rs 5795 crore as compared to Rs 5,208.35 crore yesterday, 16 September 2008.
The BSE Mid-Cap index fell 1.49% to 5,139.63 and the BSE Small-Cap index slipped 1.19% to 6,214.75.
Among the 30-member Sensex pack, 24 slipped while the rest gained.
India’s top copper producer by sales Sterlite Industries plunged 8.89% to Rs 435.25 on 11.02 lakh shares. It was the top loser from Sensex pack.
India's largest private sector bank in terms of net profit ICICI Bank plunged 4.75% to Rs 563.25, off day’s low of Rs 530. The sell-off was on reports the bank will have to take a hit of $28 million on account of the additional provisioning that ICICI Bank's UK subsidiary will have to make after Lehman Brothers Holdings, the fourth-largest investment bank filing for bankruptcy.
Meanwhile, the bank denied rumours of top management selling shares over the last few days.
Other banking shares were also weak ahead of the release of the weekly inflation figures after trading hours on Thursday, 18 September 2008. HDFC Bank (down 3.83% to Rs 1183), and State Bank of India (down 4.12% to Rs 1520.25), edged lower. The Bankex fell 3.79% to 6,592.96.
Ranbaxy Laboratories, India’s top drug maker by sales slumped 4.41% to Rs 388. The stock tumbled on reports the US government has banned more than 30 generic drugs made by the company citing poor quality in two of its Indian factories. The stock was already on a sustained downtrend ever since the Japanese drug maker Daiichi Sankyo’s open offer to acquire an additional 20% stake at Rs 737 a share in the company ended on 4 September 2008.
India’s largest private sector firm in terms of market capitalization and oil refiner Reliance Industries fell 3.31% to Rs 1864.70 on 14.05 lakh shares. The stock had hit a 52-week low of Rs 1800 in intra-day trade on Tuesday, 16 September 2008. As per reports, the company is expected to start pumping gas from November 2008 from its deep-water field off the east coast.
Real estate shares slipped. DLF (down 4.12% to Rs 405.20), Unitech (down 9.32% to Rs 127), Indiabulls Real Estate (down 7.92% to Rs 205.70), and Ansal Infrastruture (down 2.10% to Rs 77), declined. The BSE Realty index lost 4.13%, to 3,991.93.
India’s largest private sector steel maker by sales, Tata Steel was down 3.48% to Rs 470.60. It had touched a 52-week low of Rs 467.95 in intra-day trade. As per reports, the company paid lower advance tax to Rs 300 crore in Q2 September 2008 as compared to Rs 350 crore in Q2 September 2007. The BSE metal index plunged 3.55%, to 9,814.93.
ITC (down 5.48% to Rs 183.60), and Jaiprakash Associates (down 3.58% to Rs 134.80), edged lower from the Sensex pack.
India’s top truck maker by sales Tata Motors advanced 4.46% to Rs 416.15 and was the top gainer from Sensex pack. The company reportedly paid lower advance tax to Rs 75 crore in Q2 September 2008 as compared to Rs 190 crore in Q2 September 2007.
Mahindra & Mahindra, the country’s top tractor maker by sales gained 0.14% to Rs 534. The company reportedly paid higher advance tax of Rs 116 crore in Q2 September 2008 as compared to Rs 83 crore in Q2 September 2007.
India’s top oil exploration firm by market capitalisation Oil and Natural Gas Corporation (ONGC) gained 2.86% to Rs 979.90, after the company said it has agreed to give Rocksource ASA, a Norwegian company, 10% participating interest in deep water block in the eastern offshore. It was the top gainer from Sensex pack.
India’s second largest software services firm Infosys Technologies rose 1.01% to Rs 1580, off its day’s high of Rs 1647.90. Its American depositary receipt soared 4.60% in the US market yesterday, 16 September 2008.
Other IT pivotals showed mixed trend. Satyam Computer Services (down 1.87% to Rs 349.70), and TCS (down 2.88% to Rs 728), slipped. The BSE IT index lost 0.58% to 3,524.32.
However India’s third largest software services firm Wipro rose 1.15% to Rs 396.25 on reports the company’s software business arm Wipro Technologies and Copal Partners have expressed interest to bid for the Indian back-office unit of Lehman Brothers.
State-run oil refiners slipped after crude oil price rebounded from a 7-month low. Indian Oil Corporation (down 5.30% at Rs 396), BPCL (down 7.02% at Rs 336.20), and HPCL (down 5.45% at Rs 235.25), slipped. However Cairn India galloped 4.28% to Rs 207.
ICICI Bank was the top traded counter on BSE with a turnover of Rs 401.80 crore followed by United Spirits (Rs 341.76 crore), Reliance Capital (Rs 307.75 crore), Reliance Industries (Rs 265.54 crore) and Educomp Solutions(Rs 249.06 crore), in that order.
Reliance Natural Resources led the volumes chart on BSE clocking volumes of 1.41 crore shares followed by IFCI (1.05 crore shares), ICICI Bank (72.12 lakh shares), Austral Coke & Projects (62.27 lakh shares) and Chambal Fertilisers (60.31 lakh shares) in that order.
Jaipan Industries was locked at upper limit of 5% of Rs 168.10, a lifetime high, extending gains for the 24th trading session in a row. The Jaipan stock has surged 220.49% in past 24 trading session to Rs 168.10 today from Rs 52.45 on 12 August 2008.
US light crude for October 2008 delivery gained $3.15 to $94.30 a barrel today, 17 September 2008, following a $85 billion bailout of American International Group sparked a relief rally on Wall Street.
US markets rallied on Tuesday, 16 September 2008, on growing optimism that US authorities may finance a rescue of insurer American International Group (AIG). The Dow Jones Industrial Average surged 141.51 points, or 1.30%, to 11,059.02, the Standard & Poor's 500 Index rose 20.87 points, or 1.75%, to 1,213.57 and the Nasdaq Composite index climbed 22.45 points, or 1.03%, to 2,202.36. The US government announced rescue plan for AIG after trading hours.
Why is Morgan Stanley selling ? In trouble ? yes ?
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
17/9/2008 513335 AHMEDNAGAR F SUCON INDIA LTD B 210627 82.09
17/9/2008 513335 AHMEDNAGAR F SUCON INDIA LTD S 315800 80.66
17/9/2008 532981 ANU LABS SAMIRKUMARDIPAKBHAISHAH S 69044 311.23
17/9/2008 519532 ASIAN TEA EX ENCA FINLEASE LTD. B 135493 78.72
17/9/2008 519532 ASIAN TEA EX ENCA FINLEASE LTD. S 107493 79.05
17/9/2008 533016 AUSTRAL COKE OPG SECURITIES P LTD B 672161 259.46
17/9/2008 533016 AUSTRAL COKE OPG SECURITIES P LTD S 672161 259.47
17/9/2008 531367 DOLLEX INDUT EMERALD CORPORATE A PVT LTD B 65778 15.00
17/9/2008 531367 DOLLEX INDUT YUSUF KHAN S 65000 14.98
17/9/2008 532696 EDUCOMP SOLN DEUTSCHE SECURITIES MAURITIUS LIMITED B 638201 3357.45
17/9/2008 532696 EDUCOMP SOLN MORGAN STANLEY MAURITIUS COMPANY LIMITED S 393411 3355.00
17/9/2008 532696 EDUCOMP SOLN MORGAN STANLEY INVESTMENTS MAURITIUS LIMITED S 138708 3355.00
17/9/2008 513059 G.S. AUTO RAJU GHANSHYAMDAS SHAH B 32216 92.59
17/9/2008 531137 GEMSTONE INV ANKIT RAJENDRA SANCHANIYA B 17337 55.55
17/9/2008 531137 GEMSTONE INV BHAVESH PRAKASH PABARI B 16500 55.58
17/9/2008 531137 GEMSTONE INV PREM M PARIKH S 23700 56.01
17/9/2008 531137 GEMSTONE INV BHAVESH P PABARI S 26000 55.65
17/9/2008 531439 GOLDSTON TEC BHAVESH P PABARI S 95000 118.19
17/9/2008 512579 GUJARA NRE C MORGAN STANLEY MAURITIUS COMPANY LIMITED S 1830585 69.50
17/9/2008 505840 JAIPAN INDUS ENCA FINLEASE LTD. S 45458 164.38
17/9/2008 500378 JINDAL SAW DEUTSCHE SECURITIES MAURITIUS LIMITED B 1771849 590.00
17/9/2008 500378 JINDAL SAW MORGAN STANLEY MAURITIUS COMPANY LIMITED S 1771849 590.00
17/9/2008 531602 KOFF BR PICT PRAVIN D GALA B 59000 40.74
17/9/2008 531602 KOFF BR PICT LAXMI CAP BROKING PVT LTD B 51251 39.63
17/9/2008 531602 KOFF BR PICT PRAVIN D GALA S 59565 37.35
17/9/2008 531602 KOFF BR PICT LAXMI CAP BROKING PVT LTD S 51626 38.48
17/9/2008 523475 LOTUS CHOC C QVT FINANCIAL LP AC QVT MAURITIUS WEST FUND B 78294 25.55
17/9/2008 504823 MAHIN UGIN SWISS FINANCE CORPORATION MAURITIUS LIMITED B 492175 45.00
17/9/2008 504823 MAHIN UGIN MERRILL LYNCH CAPITAL MARKETS ESPANA S.A. S.V S 492727 45.00
17/9/2008 533015 NUTEK INDIA OPG SECURITIES P LTD B 141613 137.82
17/9/2008 533015 NUTEK INDIA OPG SECURITIES P LTD S 141613 137.75
17/9/2008 532391 OPTO CIRCUIT JF EASTERN SMALLER COMPANIES FUND B 690277 287.01
17/9/2008 532391 OPTO CIRCUIT MORGAN STANLEY MAURITIUS COMPANY LIMITED S 752227 287.00
17/9/2008 623574 PANTAL RETAI DEUTSCHE SECURITIES MAURITIUS LIMITED B 5746880 359.00
17/9/2008 623574 PANTAL RETAI MORGAN STANLEY MAURITIOUS COMPANY LTD S 5746880 359.00
17/9/2008 530695 PRIME PROPTY CHETAN KANTILAL MEHTA S 193000 59.02
17/9/2008 502587 RAMA PUL PAP KARAN MAHESHKUMAR HADVANI S 97697 12.35
17/9/2008 531215 RTS POWER CO MUKESH G KONDE B 73750 164.00
17/9/2008 531215 RTS POWER CO MUKESH G KONDE S 73750 186.50
17/9/2008 508954 SANJAY LEAS DILIP SHASHIKANT ZAVERI B 3000 23.75
17/9/2008 508954 SANJAY LEAS VAISHALI BAFNA S 7000 23.71
17/9/2008 500402 SUB PROJECTS DEUTSCHE SECURITIES MAURITIUS LIMITED B 805942 114.00
17/9/2008 500402 SUB PROJECTS MORGAN STANLEY MAURITIUS COMPANY LIMITED S 806082 114.00
17/9/2008 532432 UNITD SPR GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD B 2550734 1328.00
17/9/2008 532432 UNITD SPR MORGAN STANLEY MAURITIUS COMPANY LIMITED S 2550734 1328.00
17/9/2008 530595 VICTORY PROJ HEMANT KUMAR GUPTA B 39500 28.95
16/9/2008 531335 CARN NUT ANA SUDHA COMMERCIAL CO. LTD. S 40000 106.61
16/9/2008 513059 G.S. AUTO HARDIK M MITHANI B 25000 86.97
16/9/2008 513059 G.S. AUTO SPJSTOCK B 24464 86.55
16/9/2008 531439 GOLDSTON TEC ANKIT RAJENDRA SANCHANIYA B 115194 118.50
16/9/2008 531439 GOLDSTON TEC ANKIT RAJENDRA SANCHANIYA S 114893 118.28
16/9/2008 522207 RASAND ENG I SUDHA COMMERCIAL CO. LTD. B 50000 57.50
16/9/2008 532972 SANKHYA INFO RELIANCE CAPITAL ASSET MANAGEMENT LIMITED AC PMS B 488530 85.00
16/9/2008 532972 SANKHYA INFO SUMANT KAPUR S 76000 85.00
16/9/2008 532972 SANKHYA INFO VELLAYAN A S 79500 84.98
16/9/2008 532972 SANKHYA INFO VENKATACHALAM A S 79500 85.00
12/9/2008 530883 SUPER CROP S YOGESH MANU BHAI PATEL B 35815 12.98
9/9/2008 530883 SUPER CROP S YOGESH MANU BHAI PATEL S 39064 14.50
8/9/2008 530883 SUPER CROP S YOGESH MANU BHAI PATEL B 124302 14.74
26/8/2008 530883 SUPER CROP S YOGESH MANU BHAI PATEL S 55552 13.02
20/8/2008 530883 SUPER CROP S YOGESH MANU BHAI PATEL B 55000 12.41
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
17-SEP-2008,AUSTRAL,Austral Coke & Projects L,AMBIT SECURITIES BROKING PVT. LTD.,BUY,235606,256.98,-
17-SEP-2008,AUSTRAL,Austral Coke & Projects L,DINESH MUNJAL,BUY,154193,262.15,-
17-SEP-2008,AUSTRAL,Austral Coke & Projects L,PRASHANT JAYANTILAL PATEL,BUY,176290,259.51,-
17-SEP-2008,NUTEK,Nu Tek India Limited,ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD,BUY,144722,138.57,-
17-SEP-2008,VINCARDS,Vintage Cards & Creations,CPR CAPITAL SERVICES LTD.,BUY,3069,69.89,-
17-SEP-2008,VINCARDS,Vintage Cards & Creations,YUVAK SHARE TRADING PVT LTD,BUY,7526,68.64,-
17-SEP-2008,AUSTRAL,Austral Coke & Projects L,AMBIT SECURITIES BROKING PVT. LTD.,SELL,235606,256.98,-
17-SEP-2008,AUSTRAL,Austral Coke & Projects L,DINESH MUNJAL,SELL,154193,261.57,-
17-SEP-2008,AUSTRAL,Austral Coke & Projects L,PRASHANT JAYANTILAL PATEL,SELL,176290,259.13,-
17-SEP-2008,NUTEK,Nu Tek India Limited,ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD,SELL,144722,137.67,-
17-SEP-2008,VINCARDS,Vintage Cards & Creations,CPR CAPITAL SERVICES LTD.,SELL,1068,70.83,-
17-SEP-2008,VINCARDS,Vintage Cards & Creations,YUVAK SHARE TRADING PVT LTD,SELL,5463,69.34,-
Fed Announced To Provide $85 Billion Loan To AIG
The stocks on Wall Street ended with substantial gains as Federal Reserve announced to leave its key interest rates unchanged at 2%. The major averages ended with notable gains, with the S&P 500 closing just off of its intraday high. The S&P 500 closed up 20.90 points or 1.8% at 1,213.60, the Dow closed up 141.51 points or 1.3% at 11,059.02 and the Nasdaq closed up 27.99 points or 1.3% at 2,207.90.
The strength in the markets came amid speculation that a bailout for AIG is imminent, prompting investors to look for bargains. The markets were bolstered late in the day amid speculation that the government may take part in an AIG bailout. Justifying the speculation the U.S. Federal Reserve announced yesterday night that it has approved an $85 billion loan to insurance giant AIG in the latest government intervention aimed at controlling the spread of the recent financial crisis. The Fed stated that it would provide up to $85 billion to AIG in a secured loan collateralized by all the assets of the company, and of its primary non-regulated subsidiaries. The central bank said the action comes with the full support of the Treasury Department.
As a result of the loan, the government will receive a 79.9% equity interest in AIG. The Fed reported that the government would have the right to veto the payment of dividends to common and preferred shareholders.
Prior to that the U.S. Federal Reserve announced that it has decided to hold short-term borrowing rates steady, ignoring calls for an interest rate cut that were prompted by the latest Wall Street turmoil. While recent signs of strain in the financial markets encouraged speculation that the Fed might lower interest rates to stimulate the economy, the central bank chose to stay the course for now. In the policy statement that accompanied the rate decision, the Fed acknowledged increased strains in the financial markets lately and predicted that growth will be weighed down in the next few quarters by tight conditions in the credit markets, the continued decline in the housing industry, and some slowing of export growth.
Among other economic news, Consumer inflation fell for the first time in nearly two years due to declines in energy, transportation and housing costs.Overall prices fell 0.1%, while core inflation, which strips out volatile food and energy prices, rose 0.2%.Overall inflation is up an unadjusted 5.4% in the 12 months ending in August, down from the 5.6% reported for July. Core inflation has risen an unadjusted 2.5% over the last 12 months. On a seasonally adjusted basis, overall inflation rose at a 7.2% annualized pace in the last three months. Core inflation has risen at a 3.4% annualized pace in the past three months, well above the Federal Reserve's "comfort zone".
On the housing front, the National Association of Home Builders released results of a monthly survey of builders' thoughts on market prospects. In September index for sales of new, single-family homes rose to 18 from 16 in August - the first increase in seven months.
In another economic relief U.S. overall consumer confidence rose last week. According to an ABC News/Washington Post poll the consumer comfort index rose six points to -41 in the week ended Sept. 15, from -47 a week earlier.
Adding to the buying interest in the stock markets, crude oil closed sharply lower for the second straight day and ended below the $92 a barrel mark. Light sweet crude fell to $91.15 per barrel, down $4.56 on the session. Oil has dropped nearly $10 on the week, as troubles in the U.S. financial sector could reduce energy demand.
Coming back to equities if we analyze the index in detail we can see that after earlier weakness, the majority of the Dow components ended the session with notable gains, sending the blue chip index firmly into positive territory. Of the 30 stocks that make up the Dow, only 12 ended the session lower.
Bank of America saw significant buying interest after showing weakness earlier in the day. Shares of the bank closed up 11.3%, bouncing off of the two-month closing low set in the previous session.
JP Morgan Chase and Citigroup were among the other financials within the Dow that saw notable buying interest. JP Morgan Chase closed up 10.11%, compared to a 3.4% gain by Citigroup.
Hewlett Packard also posted a substantial gain. The stock climbed 6.8%, reversing the loss posted in the previous session. With the gain, the stock set a three-month closing high. HP said Monday that it plans to cut about 24,600 jobs, or about 7.5% of its work force, over the next three years as part of a restructuring program the company is going to implement while integrating the business of newly acquired Electronic Data Systems.
After seeing earlier weakness, Exxon Mobil and Chevron closed sharply higher as well. Exxon Mobil saw a gain of 4.3 %, while Chevron rose 2.2 %.
Other Dow components that saw notable gains include DuPont, Caterpillar and General Electric. DuPont closed up 3.4 %, Caterpillar closed up 2.4 % and General Electric closed up 1.9 %.
On the other hand, AIG continued its plunge, although it moved well off of its intraday low amid speculation that a bailout might be eminent. Shares of the insurer closed down 21.2 % at a multi decade closing low.
General Motors, Home Depot and Microsoft also saw substantial declines. General Motors closed down 5.2 %, compared to a 3.2 % drop by Home Depot. Microsoft ended the session 3.1 % lower.
In other regional markets, most stock markets across the Asian region closed sharply lower, with the South Korea's KOSPI plunging 6 %, Hong Kong's Hang Seng plummeting 5.4 % and Japan's Nikkei 225 index tumbling 5 %. However, the stock market in Indonesia pared early losses and moved into positive terrain.
The major European markets also extended their losses. The French CAC 40 Index and the German DAX Index fell 0.8 % and 1.1 %, respectively, while the U.K’s FTSE 100 Index ended the day down about 2.3 %.
Looking ahead the Department of Commerce will release its report on housing starts and building permits, which measures initial construction on residential units. EIA will release its weekly report on crude oil stocks for the week ended on 13 September 2008.
The Indian Market is expected to have positive opening as US markets closed in green on the back of AIG’s rescue by Fed and Barclays buys Lehman U.S. unit and Asian markets are trading higher along with drop in crude to $91.15 a barrel. On Tuesday, Indian markets staged a smart recovery from its earlier plunge, in the second half of the trading session to end with flat note. Markets wiped out most of its losses on short covering along with drop in black gold below $ 92 a barrel and expected cut in Fed rate in the meeting of Federal Reserve on 16th September 2008 to protect weak US financial sector. Domestic markets opened on weak note tracking extremely negative cues from the global markets as Lehman Brothers had filed for bankruptcy protection in US. Further, markets continued its northward journey without any sign of recovery. However, some bouts of buying during last trading hours in beaten down stocks lifted the markets towards dotted line and finally ended flat. From the sectoral front, Oil & Gas and Bank counters led the recovery towards end of session. However, Metal, Reality, Consumer Durables and Pharma stocks remained out of favor as witnesses most of the selling from these baskets. Mid cap and Small cap stocks also remained unfavorable as lost more than 1%. The BSE Sensex closed lower by 12.47 points at 13,518.80, while NSE Nifty ended up by 2.00 points at 4,074.90. The BSE Mid Caps and Small Caps closed with losses of 71.34 points at 5,217.25 and by 91.06 points at 6,289.41. We expect that market may break its losing trend to gain some ground during the trading session.
RBI to ease pressure on markets has hiked the maximum interest that banks can pay on NRI deposits by 50 basis points for dollar as well as rupee deposits. The cap on NRE deposits has been raised to LIBOR plus 50 bps while that on FCNR (B) deposits is 25 bps minus LIBOR. Further, Central bank has also decided to allow banks to borrow additional 1% of NTDL or net demand and time liabilities from the repo window.
US Federal Reserve on Tuesday held short-term interest rates steady at 2%, which was expected to cut to ease growing fears about the health of the US economy. The increased possibility of a Fed rate cut to strengthen the shaken financial system helped hold up stocks prior to the meeting.
On Tuesday, the US market closed in green as AIG rescued by Fed and Barclays buys Lehman U.S. unit. US government is agreed to lend up to $85 billion emergency loan to AIG for two years in exchange for a 79.9% equity stake. Crude Oil for October delivery fell $4.56 to settle at $91.15 a barrel on the New York Mercantile Exchange, after earlier touching to low of $90.51, its lowest level since February 8.
The Dow Jones Industrial Average (DJIA) closed higher by 141.51 points to close at 11,059.02 followed by the NASDAQ index ended up by 27.99 points at 2,207.90 and the S&P 500 (SPX) gained 20.90 points to close at 1,213.60.
Indian ADRs ended mixed. In technology sector, Infosys ended higher by (4.60%) followed by Wipro advanced by (1.71%) and Satyam gained (0.83%), while Patni Computers lost (3.23%). In banking sector ICICI Bank lost (3.49%), while HDFC Bank gained (3.73%). In telecommunication sector, Tata Communication gained (11.59%), while MTNL plunged (1.70%). However, Sterlite industries increased by (0.30%).
Today the major stock markets in Asia higher on Wall Street rebound. Hang Seng index is trading up by 282.87 points at 18,583.48 along with Japan’s Nikkei higher by 241.06 points at 11,850.78 and Taiwan Weighted gained 120.59 points at 5,877.18, while Singapore''s Straits is down by 22.88 points at 2,463.67.
The FIIs on Tuesday stood as net seller in equity and net buyer in debt. Gross equity purchased stood at Rs2,495.20 Crore and gross debt purchased stood at Rs607.30 Crore while the gross equity sold stood at Rs3,124.50 Crore and gross debt sold stood at Rs311.30Crore. Therefore, the net investment of equity reported was (Rs629.30) Crore and net debt was Rs296.00 Crore.
On Tuesday Indian rupee reported its biggest single day fall in a decade. The partially convertible rupee ended at 46.89/90 per dollar from its close of 46.04/05 on Monday, off a low of 46.99 which was its lowest since July 24, 2006.
Today, Nifty has support at 4,018 and resistance at 4,187 and BSE Sensex has support at 13,255 and resistance at 13,958.
Key benchmark indices are likely to open higher today, 17 September 2008 tracking positive global markets boosted by the US Federal Reserve’s bailout package for the beleaguered American International Group (AIG). The Federal Open Market Committee decided to keep its target for the federal funds rate at 2%.
The Fed said that the strains in financial markets have increased significantly and labour markets have weakened further. Economic growth appears to have slowed recently, partly reflecting a softening of household spending.
The US Federal Reserve in a meeting on Tuesday, 16 September 2008 announced an $85 billion rescue plan to help American International Group in exchange for a 79.9% stake. The deal would avoid the biggest corporate bankruptcy ever and follows a government bailout of mortgage lenders Freddie Mac and Fannie Mae earlier this month
Meanwhile, Barclays has agreed to acquire US fourth largest investment banking firm Lehman Brothers’ North American investment banking and capital markets businesses. Barclays said it would acquire trading assets with an estimated value of 40 billion pounds and trading liabilities worth 38 billion pounds. It will also acquire Lehman's New York headquarters.
US light crude for October 2008 delivery gained $3.15 to $94.30 a barrel today, 17 September 2008 as an $85 billion bailout of American International Group sparked a relief rally on Wall Street.
Asian markets were trading mixed today, 17 September 2008. Japan's Nikkei rose 2.08% or 241.06 points at 11,850.78, Hong Kong's Hang Seng was up 1.55% or 282.87 points at 18,583.48, Taiwan's Taiwan Weighted gained 2.09% or 120.59 points at 5,877.18, and South Korea's Seoul Composite surged 3.05% or 42.34 points at 1,430.09. However, China's Shanghai Composite declined 0.13% 2.50 points at 1,984.13 and Singapore's Straits Times was down 0.92% or 22.88 points at 2,463.67
US markets rallied on Tuesday, 16 September 2008 as markets digested the news of the Fed holding rates with the point that the Fed had hedged its options for the future. The Dow Jones Industrial Average surged 141.51 points, or 1.30%, to 11,059.02, the Standard & Poor's 500 Index rose 20.87 points, or 1.75%, to 1,213.57 and the Nasdaq Composite index climbed 22.45 points, or 1.03%, to 2,202.36.
Back home, buying in index pivotals coupled with short covering after five straight days of fall helped key benchmark indices erase sharp early losses on Tuesday, 16 September 2008 in highly choppy session. The BSE 30-share Sensex slipped 12.47 points or 0.09% at 13,518.80 and the S&P CNX Nifty rose 2 points or 0.05%, to 4074.90, on that day.
The BSE Sensex is down 6768.19 points or 33.36% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 7687.97 points or 36.25% below its all-time high of 21,206.77 struck on 10 January 2008.
Foreign institutional investors (FIIs) were net equity sellers worth Rs 1303.41 crore while mutual funds bought shares worth Rs 612.36 crore on Tuesday, 16 September 2008, according to provisional data on NSE. FIIs were net buyers of Rs 1053.14 crore in the futures & options segment on that day.
Meanwhile, the Reserve Bank of India (RBI) on late Tuesday, 16 September 2008 stepped in with measures to support the rupee — which has been battered to almost 47 against the dollar — and supply cash in the money market. The move will increase dollar supply and lower banks’ borrowing cost in the overnight call money market. RBI has hiked the maximum interest that banks can pay on NRI deposits by 50 basis points for dollar as well as rupee deposits.
Market Grape Wine :
Nifty at a support of 4010 and 3925 with resistance at 4167 and 4235 levels.
Cash: Buy ICICI BANK above 577 target 615 with S/L 564.
Cash: Buy REL CAPITAL above 1090 target 1160 with S/L 1074.
Future: Buy REL CAPITAL above 1085 target 1150 with S/L 1055.
Future: Buy BOB above 312 targets 340 with S/L 300.
Markets at a support of 13135 & 13452 and resistance at 13786 & 14041 levels .
Markets to be very volatile , maintain strict stop loss for your trades .
Financial , Infrastructure & Capital goods stocks to see constant buying at lower levels .
Buy : Bhel & LNT
Buy : Corerproject
Buy : PunjLLoyd
Buy : SBIN
Buy : NTPC & RelCap
Buy : Kohinoor
Dark Horse : ITC , INFY , Bhel , Sbin , ITC , LNT , Relcap
It is easier to restrain wild donkeys than to raise a dead elephant.
Leave the donkeys and the elephants aside. The bulls are all set to make a strong comeback after two days of extreme turbulence and a lot of pain. The reason: a slew of overnight developments by both US and Indian central banks to douse the financial wildfire on Wall Street and restore investor confidence. The RBI has announced a set of measures to ease the tension in the domestic financial markets in the wake of the latest turbulence in the US.
lthough the Federal Reserve has decided against cutting rates or now,it has, in an unprecedented step, lent $85bn to the struggling insurance giant AIG to keep its nose above water
In a related development, British bank Barclays has agreed to buy Lehman Brothers' core US businesses for $1.75bn.
In addition, equity markets across the world have rallied. This, along with Tuesday's smart pull-back from lows in the Indian market, shows that the bulls could have a much better day in office today. Remember, the strains across global financial system remain very much in place, and there could be some more pain in the offing. There is always a case for our market to buck the global trend and put up a strong resilience. But take advantage of whatever gains come your way before the pains are back.
US stocks rebounded on Tuesday despite the Fed policymakers holding interest rates steady, as the Bush government decided to come to the rescue of the troubled insurance major AIG.
The Dow Jones Industrial Average gained 1.3%. The Dow had fallen to a fresh bear market trading low of 10,742.70 in the morning before bouncing back. The Standard & Poor's 500 index gained 1.8% and the Nasdaq Composite index added 1.3%.
Stocks were highly volatile throughout the session as investors considered the prospects for AIG. Media reports that the US Treasury could step in helped the key indices pare morning losses and gave the market a much-needed fillip.
The FOMC decided to hold the fed funds rate, a key short-term interest rate, steady at 2% and hinted that it could cut borrowing costs in future as inflation pressures were starting to recede. Stocks initially took a knee-jerk negative reaction to the Fed's move, before bouncing back.
Ahead of the meeting, the New York Federal Reserve said it would inject an additional $50bn into the banking system to keep the liquidity flowing on top of the already scheduled $20bn. The New York Fed enacts the central bank's market operation.
After the close, AIG shares tumbled around 50% on a report that the US government was considering conservatorship as a means of rescuing the troubled insurer. The government put Fannie Mae and Freddie Mac in conservatorships earlier this month.
Following the reports, AIG issued a statement saying that its life insurance, general insurance and retirement services businesses are operating normally. The insurer reiterated that it continues to look for means of raising capital to address what it says are short-term liquidity issues.
Shares of AIG slipped 20% in regular trading, after falling nearly 70% at the open and having recovered to trade higher in the afternoon. AIG has been under pressure as it has struggled to raise as much as $75bn to avoid collapse. Its shares had plunged 61% on Monday.
Also after the close, reports said that Barclay's has agreed to buy some of the investment banking and trading operations of Lehman Brothers, which declared bankruptcy on Monday after failing to find a buyer. Lehman shares gained 43% during the regular session.
Additionally, Morgan Stanley reported better-than-expected third-quarter sales and earnings after the close on Tuesday, one day ahead of schedule.
Goldman Sachs reported a steep 70% decline in its earnings that nonetheless topped forecasts on weaker revenue that missed estimates. Goldman shares slipped 1.8%, erasing bigger morning losses.
The Consumer Price Index (CPI) fell 0.1% in August after rising 0.8% in July, meeting forecasts. So-called core CPI, which strips out volatile food and energy prices, rose 0.2% in August, meeting forecasts and following a gain of 0.3% in the previous month.
Oil prices plunged as investors continued to bet on a global economic slowdown amid Wall Street's meltdown. Oil prices settled at a seven-month low of $91.15, down $4.56 a barrel. Retail gasoline prices were higher overnight.
Treasury prices tumbled, erasing earlier gains as the stock market reversed course after the Fed announcement. Bond prices fell, boosting the yield on the benchmark 10-year note to 3.49% from 3.39% late on Monday. Earlier, the 10-year had fallen as low as 3.25%, a more than five-year low. In currency trading, the dollar fell versus the euro and the yen. COMEX gold for December delivery fell $6.50 to settle at $780.50 an ounce.
All eyes on the Fed
Indian markets followed global meltdown as the benchmark Sensex started off with a huge negative gap at open. However, markets were on recovery mode on the back of renewed buying witnessed in the index heavyweights like Reliance Industries, SBI and HDFC Bank. Further on, short covering saw key indices even break into positive terrain. Finally, the BSE benchmark Sensex ended flat at 13,518 and the NSE Nifty index ended flat at 4,075.
Among the 30 components of the Sensex 20 stocks ended in the red and only 10 stocks. Index heavyweights like Reliance Industries, SBI and ITC were among the major gainers.
On the other hand, ICICI Bank, Satyam and Tata Steel were among the major laggards.
Shares of Tata Comm surged by over 7.5% to Rs424 after the company announced that it has partnered with Bharti Telesoft to launch Intelligent CAMEL eXchange. The scrip touched an intra-day high of Rs430 and a low of Rs377 and recorded volumes of over 46,00,000 shares on NSE.
Shares of Glodyne Technoserve rallied by over 6% to Rs653 after the company, through its subsidiary - Smaarftech Technologies Pvt Ltd, signed an agreement with Bihar State Electronics Development Corporation (BSEDC) - Govt. of Bihar for executing a turnkey Technology Project worth Rs2.84bn for implementing National Rural Employment Guarantee Scheme (NREGS) in the state of Bihar.
Smaarftech, the Lead Member of the Consortium consisting of other members i.e. Face Technologies - a South African Govt. owned, leading technology Company in identity management solutions, and Anil Printers Ltd, has won this order. The scrip touched an intra-day high of Rs664 and a low of Rs582 and recorded volumes of over 34,000 shares on NSE.
Shares of Corporation Bank gained by 1% to Rs262 after the board of directors of the bank approved the proposal for raising Tier I Bond / perpetual Bonds to the extent of Rs6bn and Upper Tier-II Bond to the extent of Rs10bn. The scrip touched an intra-day high of Rs264 and a low of Rs254 and recorded volumes of over 41,000 shares on NSE.
A sharp recovery was witnessed in shares of KSK Energy after declining by over 8.5%, the stock rallied by over 17% to close at Rs202. Reports stated that Lehman Brothers hold 28.4% stake in the company for a lock in period till July 2009. The liquidator cannot sell shares; it can do only in July 09, stated reports. The scrip has touched an intra-day high of Rs212 and a low of Rs153 and recorded volumes of over 5,00,000 shares on NSE.
Refinery stocks also gained the most as crude oil prices declined as much as 4%, the most in seven months reducing the losses for refining companies.
Shares of ACC slipped by 2% to Rs582 after the company announced that it has proposed to delist the Global Depositary shares of the company, which are presently listed in the London Stock Exchange.
The Company vide its letter dated September 01, 2008, have directed the depository (Citibank N. A., Newyork) to terminate the Deposit Agreement with effect from October 15, 2008. The scrip touched an intra-day high of Rs592 and a low of Rs570 and recorded volumes of over 86,00,000 shares on BSE.
ONGC is likely to strike oil in its Cauvery basin deepwater block. (ET)
Reliance Capital plans to set up a separate housing finance subsidiary and a non-banking finance company for the consumer finance business. (ET)
Wipro Technologies and Copal Partners have bid for the Indian back office business of Lehman Brothers Holdings. (BS)
The ADAG foray into steel, cement and shipping businesses is likely to be through Reliance Natural Resources. (BS)
ONGC to enter solar energy business. (BS)
Reliance Capital to invest Rs20bn in insurance businesses in the next three years. (BS)
NHPC and Oil India may rethink IPO timeline. (BS)
ICICI Bank to make an additional provision of US$28mn on its exposure to bonds issued by Lehman Brothers. (BS)
Tata Steel and Nippon Steel Hardfacing Company have signed an agreement, which entails the Indian steel major to use the Nippon’s welding technology. (BS)
Reliance Industries plans to set up a trading arm in the United States to sell fuel from its refineries at Jamnagar in Gujarat. (BS)
Liberia disqualifies Tata Steel from mining rebid. (BS)
Norway’s Rocksource to partner ONGC in Cauvery block. (BL)
Reliance Infrastructure has proposed investing Rs400bn to build a steel plant with a capacity of 12mn tons in the eastern state of Jharkhand. (ET)
NHPC plans to set up two hydro-power projects in Myanmar. (ET)
Emami revised upwards the price for the mandatory open offer for Zandu, from Rs7,315 a share to Rs15,000 a share. (BL)
Pan Atlantic LLC has invested an additional US$10mn to increase its stake by 30% to 70% in the SPV floated by Sobha Developers for its residential project in Bangalore. (BL)
TCS has won a contract to provide technology for Europe’s largest clearing house LCH.Clearnet’s derivatives clearing platform. (BL)
ACC has proposed to delist its GDRs from the London Stock Exchange. (ET)
BSNL has short listed Chinese firm, Haier Mobile to offer handsets with its CDMA services in the country’s east zone. (ET)
BSNL employees’ union has protested over the company’s decision to share its network with private operators. (ET)
A JVC formed by BHEL and NPCIL has invited bids for technology transfer for nuclear power projects with generation capacities of 700mw and 1600mw. (FE)
NMDC Ltd has proposed to acquire Hyderabad-based Sponge Iron India for ~Rs810mn and plans to invest ~Rs4-5bn to make SIIL an integrated steel producing unit. (ET)
Jindal Drilling is in talks with Norwegian offshore services group, Sevan Marine to form a US$700mn JV to construct a deepwater rig capable of operating in water depths of 1,000 feet and drilling down to 50,000 feet. (ET)
A consortium of investors, led by private equity player 3i, is in talks to pick up a 4-4.5% equity stake in Adani Power for Rs18bn. (ET)
Welspun India to de-merge its distribution & marketing and investment divisions into two separate companies. (ET)
Future Ventures India, the venture capital arm of Future Group is close to acquiring a substantial stake in Kolkata-based apparel maker Turtle. (ET)
Air India has submitted a proposal to the civil aviation ministry seeking financial assistance of Rs23.5bn to meet its working capital requirements. (ET)
Economy Front page
Reserve Bank of India has announced a series of measures aimed at increasing liquidity and attracting foreign currency. (BL)
Oil Minister Murli Deora said petrol and diesel prices would not be cut till crude oil prices fell to US$67 a barrel.(BS)
Rupee crashed by 90 paise to 46.90 against the US Dollar. (BL)
Mamata Banerjee softened her stand on ancillary units in Singur. (BL)
OPEC has cut its forecast for global growth in oil demand in 2008 for the sixth time this year. (ET)
The Government has asked oil companies to clear waitlist for domestic LPG connections by the month-end. (ET)
The State Government is considering a proposal to raise the FSI for the city from existing 1.33 to at least 2.2 across the real estate sector. (ET)
The Asian Development Bank has lowered India’s GDP forecast for FY09 to 7.4% from earlier projection of 8%. (ET)
State Governments have asked the 13th Finance Commission to increase their share in the divisible pool of central taxes to 50% from the existing 30.5%. (FE)
India’s tea exports are likely to surge by over 17% to 210mn kg in 2008 led by revival of Iraq trade. (FE)
Jewellery exports from India increased by 17% in the five months ended August. (FE)
The Federal Reserve stared down pressure from markets and held its base lending rate at two percent Tuesday, suggesting the economy can muddle through the current turmoil without an immediate rate cut.
The unanimous decision by the Federal Open Market Committee defied expectations of traders in the futures market of a quarter-point reduction in the federal funds rate.
The FOMC cited "strains" in financial markets but said that the world's biggest economy is likely to muddle through with the current low rates and other measures to increase liquidity.
The move came as a major surprise to traders, since the futures market had been pricing in a 92 percent chance of a quarter-point cut in the rate hours earlier in view of the rout in markets due to the collapse of Lehman Brothers and possible death spiral at American International Group.
"To read their statement, you would never know the sky has fallen in on Wall Street," said Ian Shepherdson, chief US economist at High Frequency Economics.
"In our view this statement is either very brave or very reckless. Not to acknowledge the catastrophes of the past few days runs the very serious risk that the Fed will be seen as Nero, fiddling while Wall Street burns."
Scott Brown, chief economist at Raymond James & Associates, said the decision signified "a lot of uncertainty" about the economic outlook and "allows the Fed to buy some time”.
"Fed policy has an effect on the economy with a lag and the rate cuts earlier this year should be having an effect later this year," Brown said.
"There is always some second guessing. People will say 'What does the Fed know that the rest of us don't?' Now people are saying that maybe things aren't that bad."
The FOMC statement noted that "strains in financial markets have increased significantly and labor markets have weakened further" since the last meeting in August but added that "the downside risks to growth and the upside risks to inflation are both of significant concern."
But it added that "over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth."
The central bank earlier Tuesday injected USD 70 billion of liquidity through repurchase agreements, a move coming on the heels of similar actions by other central banks and another USD 70 billion move Monday amid turmoil following the bankruptcy of Wall Street giant Lehman Brothers.
John Ryding, economist with RDQ Economics, said the Fed nonetheless blundered in allowing market expectations to run so high in favour of a rate cut.
"In one way, I'm happy that the Fed did not cut rates," Ryding said while adding that the Fed's "communication skills have ben far from perfect."
Ryding said the Fed was trying to demonstrate that the economy can get by with the current rate policy and that it will fight the credit crisis with alternative means of getting liquidity to institutions that need it.
"It strikes us as something of a strange time to put this principle into practice," Ryding said.
"Had the Fed taken decisive actions on liquidity facilities in the fall of last year and kept the funds rate on hold, inflation pressures would have been less than they currently are, the dollar would likely have been stronger, and the credit crisis might have been more contained."
Joel Naroff of Naroff Economic Advisors said the Fed decision appeared "reasonable" under the circumstances.
"The problem is not the level of rates but liquidity and the willingness to lend," Naroff said. "If the Fed had cut the funds rate, it would have lowered costs to financial institutions but not caused them to lend a whole lot more."
Asian stocks rose, helping the regional benchmark index rebound from the steepest plunge in eight months, after the Federal Reserve invoked emergency powers to save American International Group from collapse.
Mitsubishi UFJ Financial Group added almost 3% as concern eased the failure of AIG, the no. 1 US insurer, would cause more financial losses globally. The Federal Reserve agreed to lend as much as USD 85 billion to AIG, the largest US insurer. Woodside Petroleum rose almost 2% as oil rebounded.
Japanese benchmark index Nikkei gained 241.06 points, or 2.08%, to trade at 11,850.78.
Hong Kong`s Hang Seng index rose 293.86 points, or 1.61%, to trade at 18,594.47.
China`s Shanghai Composite advanced 8.77 points, or 0.44%, to trade at 1,995.40.
Taiwan`s Taiex index gained 121.41 points, or 2.11%, to trade at 5,878.
South Korea`s Kospi index rose 46.8 points, or 3.38%, to trade at 1,434.63.
Singapore`s Straits Times gained 11.34 points, or 0.46%, to trade at 2,472.77. (8.18 a.m., IST)
We recommend a buy in Entertainment Network India from a short-term horizon. It is evident form the charts of Entertainment Network that it has been on a long-term down trend from a high of Rs 700, its 52-week high recorded in early December 2007. However, the stock found support at Rs 224 on September 16 (its 52 week low) and bounced up. On the same day, stock gained 24 per cent from its intra-day low of Rs 224, signalling a key reversal day. We notice a hammer candlestick pattern in weekly chart, a bullish reversal pattern. The daily and weekly relative strength indexes are in oversold territories. We are bullish on the stock in the short-term. We anticipate the stock to trend upward until it hits our price target of Rs 305 in the approaching trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 261.