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Monday, September 29, 2008
The Era of Leverage is over
A few years ago, senior officials at the Bank for International Settlements started ringing alarm bells about the scale of leverage that was quietly building up in the financial system. Back then, though, it was fantastically hard to get American policymakers – let alone bankers – to listen.
In the go-go days of the credit bubble, Washington policymakers blithely assumed that the Western financial system had plenty of capital to cope with any potential risks. Consequently, as one former BIS official admits: "Worrying about leverage wasn't fashionable at all – no one wanted to hear."
Fast-forward a couple of years and, my, how those Western financiers are having to eat humble pie (even to the point of accepting a helping hand from the once-ailing Japanese). After all, the events of the past year have now made it patently – horrifically – obvious that the Western banking system has become dangerously undercapitalized in recent years, to the point where even the Federal Reserve is having to shore up its defences.
Moreover, it is now also clear that Western policymakers are belatedly trying to correct this state of affairs. The days when high leverage, mega bonuses and wacky instruments were equated with financial virility have gone; instead a more humble, back-to-basics and slim-line approach is what investors are demanding. Thus, deleveraging is now all the rage – in whatever form it might take.
The news that Morgan Stanley and Goldman Sachs – which were the last surviving big investment banks on Wall Street – have become regulated banks is a particularly compelling sign of this trend. On a micro level, the move packs a powerful historical punch, since it essentially spells the end of the old broker-dealer business model, with its bold, buccaneering approach to life.
In a broader sense, it also provides further evidence that the era of high leverage is over. After all, one key factor that has marked the brokers out in recent years is that they did not face the type of strict leverage rules that were applied to US commercial banks. Thus, while the latter group was generally forced to keep tangible equity at 5 per cent of assets, or more, brokers operated with a lower equity ratio. That let them have leverage ratios of more than 30 times – which in turn turbocharged their profits.
The regulatory controls on the commercial banks have sometimes produced disagreeable side effects – most notably encouraging banks such as Citi to create a plethora of off-balance sheet vehicles, such as the now notorious structured investment vehicles.
However, these rules also meant that groups such as Citi, JPMorgan Chase and Bank of America started the crisis with more ammunition. And Sunday's news shows that Goldman Sachs and Morgan Stanley now recognise they must do the same, if they are to survive.
Moreover, they are not the only ones facing a slimmer life. Over in Switzerland, the central bank now wants to impose a comparably tough leverage ratio on groups such as UBS (which, remarkably, has been operating with even more leverage than some US brokers in recent years).
Separately, international regulators in Basel are now tweaking the so-called Basel Two capital rules to force banks to hold more capital against esoteric assets. And efforts are now under way to toughen the rules for a putative central clearing house for credit derivatives – which, in turn, would prompt lower leverage in that sector too.
In the long term, all this is utterly desirable. Indeed, it is also overdue. However, nobody should forget that the shift also presents policymakers with yet another headache. After all, even at the best of times, deleveraging is never an easy process; and right now, it threatens to produce a particularly unpleasant downward drag on asset prices and growth.
Some industry analysts estimate, for example, that if investment banks were to cut leverage ratios from 30 times (or recent levels) to 20 times, this would trigger $6,000bn worth of asset sales, excluding likely deleveraging by hedge funds too.
Of course, such deleveraging will not happen overnight, or necessarily in such a simplistic way. But what these rough calculations show, as George Magnus at UBS points out, is that the putative $700bn RTC fund cannot be considered an all-encompassing solution to the current woes. Deleveraging, in other words, still has a long way to run – at Morgan Stanley and Goldman Sachs, for starters.
By Gillian Tett for FT
Asian Markets Remain Cautious On Concerns Of Bailout Plan
Hong Kong, Sensex Lead the Regional Fall As Markets In China, Malaysia, and Taiwan Closed For Holiday
The stock markets across the Asian region closed lower, led by Hong Kong and India, ahead of a vote in both the Senate and the Congress on the revised $700 billion rescue package agreed by the U.S. lawmakers. On Friday, U.S. stocks ended mixed after gains in big financial companies lifted the Dow Jones Industrials Average more than 120 points, while worries about smaller banks and parts of the technology sector weighed on the market. The Dow closed up 121.07 points or 1.1 %at 11,143.13 and the S&P 500 closed up 4.09 points or 0.3 % at 1,213.27, while the Nasdaq closed down 3.23 points or 0.2 %at 2,183.34.
Oil extended its decline, pressured by a rise in the U.S. dollar, on optimism ahead of a vote on the U.S. financial sector bailout package. By 3:49 a.m. ET, oil was quoted at $103.86 a barrel, down $3.03 from Friday's close.
In currency market, the U.S. dollar gained against the yen, but gave away some of the gains in late Tokyo deals. The U.S. dollar dipped to the lower 106-yen levels in late Tokyo deals from the upper 106-yen levels in early Tokyo deals. The dollar closed in the upper 105-yen zone late Friday in Tokyo. The U.S. dollar was quoted at 106.24-106.26 yen, up 0.90 yen from Friday's close of 105.95-106.05 yen
The Australian dollar closed weaker, finishing below US$0.83 for the first time in more than a week as U.S. lawmakers prepared to vote on a revised bailout package for Wall Street. The Aussie finished the local session at US$0.8218-0.8221, down from Friday's close of US$0.8318-0.8322.
The New Zealand dollar finished a mixed session weaker at US$0.6858, compared to US$0.6864 in early local deals and US$0.6876 late Friday.
The South Korean won fell more than 3% to near 5-year lows against the dollar. The won fell to as low as 1,199.8 a dollar, its weakest since December 29, 2003, before finishing the local session at 1,188.6-1,189.0 a dollar on talk of dollar-selling intervention, compared to Friday's domestic close of 1,160.5 a dollar.
The Philippines peso weakened further as it closed at 46.990 against the dollar compared to Friday's domestic close P46.745 a dollar.
Coming back to Asian equities, the investors turned cautious on concerns about the effectiveness of the plan and also on worries about the health of financial institutions in Europe. Meanwhile, the stock markets in China, Malaysia, and Taiwan remained closed on account of public holidays.
The Japanese stock market pared early gains to close lower on Monday, extending losses for a third day. The market started off higher, after the White House and congressional leaders struck a deal Sunday on a bill to resolve the ongoing financial crisis, but lost ground as investors turned cautious ahead of a vote in the U.S. House of Representatives as early as today. The benchmark Nikkei 225 index closed down 149.55 points or 1.26% at 11,743.61 and the broader Topix index of all First Section issues on the Tokyo Stock Exchange shed 20.02 points or 1.74% to finish at 1,127.87.
On the economic front, Japanese retail sales rose 0.7% in August from a year earlier, rising for the 13th straight month, the Ministry of Economy, Trade and Industry said. In July, retail sales rose by a revised 2.0% on year. Sales at department stores and supermarkets fell, for the fifth straight month, by 2.2% on year after adjustment for the change in the number of stores.
The Hong Kong stocks were battered today as property players tumbled after HSBC Holdings' local banking unit raised mortgage rates by a half-point because of rising funding costs. Ping An Insurance (Group) Co. slumped after three European countries were forced to rescue Fortis, in which the insurance major has a stake. The Hang Seng Index ended 4.3% down to 17,880.68 and the Hang Seng China Enterprises Index slumped 6.6% to 8,955.26.
The Australian stock market closed lower, extending its losses for the third consecutive trading session. After opening on a firm note following, the market lost ground as investors turned cautious ahead of a vote on the rescue package in both the Senate and the Congress. The benchmark S&P/ASX 200 index closed down 97.4 points, or 2.0%, at 4,807.4, while the broader All Ordinaries index lost 95.4 points, or 1.9%, to finish at 4,839.2.
The New Zealand stock market closed slightly higher on Monday, ending a two-day losing streak. The market started off higher, encouraged by news that U.S. lawmakers have tentatively agreed to a US$700 billion rescue plan for the ailing U.S. financial sector, but pared most of its early gains in the after noon session following weakness in other regional markets. The benchmark NZX 50 Index closed up 0.95 point or 0.03% at 3,188.51 and the broader NZX All Capital Index added 3.46 points or 0.11% to finish at 3,210.0.
On the economic front, New Zealand's annual trade deficit contracted in August, according to data released by Statistics New Zealand. For the month of August, the deficit was NZ$750 million, the smallest August deficit in dollar terms since 2004. The monthly deficit through July 2008 was a downwardly revised NZ$808.1 million. The nation's trade balance for the year through August was a deficit of NZ$4.3 billion.
Meanwhile, the value of New Zealand's M3 money supply rose 7.2% on year in August to NZ$205.23 billion, the Reserve Bank of New Zealand said.
The South Korean market closed lower as steep falls in the won weighed on banks. The Korea Composite Stock Price Index or Kospi closed down 19.97 points or 1.35% at 1,456.36 after rising to near 1,500 points in early trade.
The Philippines stock exchange went up for a fourth successive day though the quantum of the up move was rather limited as investors remained cautious while waiting for the final approval of a US government plan to buy bad debts from troubled financial institutions. The benchmark PSEi ended up 0.39% on 29 September 2008, as the weakness in the Service sector hovered over the market and the early gains were given away in the closing hours of the session.
The benchmark index PSEi closed up 10.35 points or 0.39% to 2,607.58.While the all-share index leaped 12.09 points or 0.73% to 1,648.30. Three of the eight indices, however, went down. Industrial stocks gained the most, advancing by 53.88 points or 1.75% to 3,119.1 while the service sector led today's losers, followed by property stocks and mining and oil indices.
In India, the BSE Sensex plunged to 52-week low. Sensex was down a massive 644.38 points in the afternoon. According to the provision closing the Sensex closed down by 506.43 points or 3.87% to 12595.75.
Elsewhere, Singapore's Straits Times index was trading down by 2.1% at 2,316.34 while the Indonesia's Jakarta composite index was down 0.74% at 1,832.51.
In other regional market, European shares headed back towards three-year lows, with banks falling sharply as news of bailouts for Fortis and Hypo Real Estate and the nationalization of Bradford & Bingley highlighted current turmoil in the sector, while details of a U.S. plan to shore up the financial sector received a cool reception.
In the opening trade, the U.K. FTSE 100 index dropped 2.5% to 4,962.97, the German DAX 30 index fell 2.8% to 5,896.35 and the French CAC-40 index dropped 2.7% to 4,051.29. At 10.53 GMT, the U.K. FTSE 100 index fell further 3.3% to 4,920.62, the German DAX 30 index lost 2.8% to 5,891.05 and the French CAC-40 index declined 3.1% to 4,036.34.
On the economic front, Euro zone economic sentiment weakened to 87.7 in September from 88.5 in August. The commission said the reading reached its lowest since 2001. However, the index stood above the expected reading of 87.2.
The overall decrease in sentiment was characterized by a fall in confidence in industry, services and construction. The industrial confidence index stood at -12, down from -9 in August. The indicator measuring services confidence fell to zero and that for the construction sector slid to -16.
At the same time, consumer confidence remained unchanged at -19 and retail trade confidence rose in September to -8 from -10. Separately, the Commission said the business confidence index slid to 0.79 in September from minus 0.28 in the prior month. The reading for August was revised from minus 0.33.
Looking ahead the day is scheduled to release core personal consumption expenditure index for month of August, which will be followed by the data on personal income and expenditure. In the late evening we have building permits details from New Zealand. Japan’s statistical house will release its monthly figures of unemployment and industrial production for the month of August.
BSE Bulk Deals to Watch - Sep 29 2008
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
29/9/2008 532840 ADVANTA RELIANCE CAPITAL TRUSTEE CO LTD B 99940 660.00
29/9/2008 532840 ADVANTA DEUTSCHE SECURITIES MAURITIUS LIMITED S 100306 659.99
29/9/2008 513335 AHMEDNAGAR F WARHOL LIMITED B 486269 80.00
29/9/2008 513335 AHMEDNAGAR F ABN AMRO BANK NV LONDON BRANCH S 486626 80.00
29/9/2008 531683 ANKU DR PH GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD B 652593 175.50
29/9/2008 531683 ANKU DR PH MORGAN STANLEY MAURITIUS COMPANY LIMITED S 652593 175.50
29/9/2008 532475 APTECH LTD MACQUARIE BANK LIMITED B 1357474 143.00
29/9/2008 532475 APTECH LTD MORGAN STANLEY MAURITIUS COMPANY LIMITED S 1357474 143.00
29/9/2008 505506 AXON INFOTEC SHEETAL KASHIRAM KADAM S 4097 18.91
29/9/2008 590059 BIHAR TUBES AJAY KUMAR BANSAL B 35000 197.42
29/9/2008 513059 G.S. AUTO SPJSTOCK B 192884 79.92
29/9/2008 513059 G.S. AUTO SPJSTOCK S 192884 80.37
29/9/2008 526727 GARNET CONST JAYSHREE JHAMATMAL PARIYANI B 44380 23.24
29/9/2008 531863 GEEKAY FINAN SHYAM SUNDER KESHWANI S 25000 45.25
29/9/2008 532764 GWALIOR CHEM MERRILL LYNCH CAPITAL MARKETS ESPANA S.A. S.V. B 1440977 68.70
29/9/2008 532764 GWALIOR CHEM MORGAN STANLEY MAURITIUS COMPANY LIMITED S 1440977 68.70
29/9/2008 532652 KARNATAKA BK SWISS FINANCE CORPORATION MAURITIUS LIMITED B 1700655 126.00
29/9/2008 532652 KARNATAKA BK MORGAN STANLEY MAURITIUS COMPANY LIMITED S 1700655 126.00
29/9/2008 500243 KIR OIL ENG NALANDA INDIA FUND LIMITED B 2806000 78.00
29/9/2008 500243 KIR OIL ENG SUNDARAM BNP PARIBAS SELECT MIDCAP S 2166873 78.00
29/9/2008 523475 LOTUS CHOC C V SHIVARAM KAMATH B 72000 20.82
29/9/2008 531213 MANAP GEN FI CITIGROUP GLOBAL MARKETS MAURITIUS PVT LTD B 225000 140.00
29/9/2008 531213 MANAP GEN FI GMO EMERGING ILLIQUID MAURITIUS.FUND S 224800 140.00
29/9/2008 512167 MATRA REALT K KRISHNAKUMAR B 299400 8.55
29/9/2008 590011 MOVING PICTU-PMS PINNACLE TRADES AND INVESTMENTS LTD. B 230000 13.50
29/9/2008 590011 MOVING PICTU-PMS MACKERTICH CONSULTANCY SERVICESPVTLTD S 226369 13.50
29/9/2008 532045 NEXXOFT INFO MANOJ H.MEHTA S 44546 37.50
29/9/2008 532606 PAREKH ALUM MANISH MARU B 70000 104.79
29/9/2008 532606 PAREKH ALUM PIONEER NIRMAN INDIA PRIVATE L S 70614 104.71
29/9/2008 531769 PFL INFOTECH BABULAL RANARAM GHANCHY B 35600 12.20
29/9/2008 531769 PFL INFOTECH VISHU ENTERPRISE S 79700 12.20
29/9/2008 531769 PFL INFOTECH BABULAL RANARAM GHANCHY S 35550 12.20
29/9/2008 514300 PIONER EMBRO YASHMAN VYAPAAR PVT LTD. S 110743 20.23
29/9/2008 532765 USHER AGRO LOTUS TIE UP PRIVATE LIMITED B 259487 142.34
29/9/2008 532765 USHER AGRO MUKESH G KONDE B 94286 143.12
29/9/2008 532765 USHER AGRO LOTUS TIE UP PRIVATE LIMITED S 259487 139.07
29/9/2008 532765 USHER AGRO IDBI CAPITAL MARKET SERVICES LTD S 300000 143.85
29/9/2008 500439 VARD HOLDING DILIP B DESAI HUF S 21850 108.95
NSE Bulk Deals to Watch - Sep 29 2008
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
29-SEP-2008,ADVANTA,Advanta India Limited,RELIANCE MUTUAL FUND,BUY,110060,660.00,-
29-SEP-2008,AUSTRAL,Austral Coke & Projects L,AMBIT SECURITIES BROKING PVT. LTD.,BUY,209067,231.53,-
29-SEP-2008,AUSTRAL,Austral Coke & Projects L,R.M. SHARE TRADING PVT LTD,BUY,159238,229.65,-
29-SEP-2008,KIRLOSOIL,Kirloskar Oil Eng Ltd.,NALANDA INDIA FUND LIMITED,BUY,2157000,77.98,-
29-SEP-2008,PRAENG,Prajay Engineers Syndicat,CREDIT SUISSE SINGAPORE LIMITED,BUY,223269,37.60,-
29-SEP-2008,ADVANTA,Advanta India Limited,DEUTSCHE SECURITIES MAURITIUS LIMITED,SELL,110209,660.00,-
29-SEP-2008,AUSTRAL,Austral Coke & Projects L,AMBIT SECURITIES BROKING PVT. LTD.,SELL,209067,231.66,-
29-SEP-2008,AUSTRAL,Austral Coke & Projects L,R.M. SHARE TRADING PVT LTD,SELL,159238,229.42,-
29-SEP-2008,PIONEEREMB,Pioneer Embroideries Limi,YASHMAN VYAPAAR PVT LTD.,SELL,124257,20.69,-
29-SEP-2008,PRAENG,Prajay Engineers Syndicat,GRANTS INVESTMENTS LTD. A/C GDR,SELL,223269,37.60,-
Post Session Commentary - Sep 29 2008
Domestic markets crashed today to trade deep into red and ended with sharp losses. Markets plunged to its lowest since April 2007 tracking the weak cues from the European markets. The ABN Amro takeover partner Fortis was rescued in a three-way Government bailout. The governments of Belgium, the Netherlands and Luxembourg launched an 11.2 billion euro ($16.4 billion) rescue for Fortis late Sunday. The three governments agreed to inject capital to buy 49% interests in Fortis-owned banking subsidiaries operating in each of their jurisdictions.
Along with this, Britain nationalized Bradford & Bingley on Monday, making the buy-to-let mortgage lender the second bank to be taken into public ownership this year as a deepening financial crisis. The Treasury would take over B&B''s mortgage portfolio 50 billion pounds ($92 billion) worth and sell its branches and deposits of 20 billion pound savings to Spanish bank Santander. The BSE Sensex had lost more than 3% and slipped below the 12500 mark. The NSE Nifty below the 3850 mark with loss of more than 3%. Markets opened on flat note and suddenly lost its ground due to the selling pressure across the board as weak Asian markets weighted on sentiment. Further, blood bath continued on the market and markets carried on its south journey after 45-minute stoppage on account of sun outage as the rescue bailout plan has not impressed the investors in the market. Finally markets ended with huge losses. From the sectoral front, all stocks ended in red and Bank index under performed the benchmark index as witnessed deep cut of more than 6%. Along with that, huge sell of was also witnessed in Capital Goods, Metal, IT, Oil & Gas, Consumer Durable and Reality stocks. The market breadth was extremely negative as 2287 stocks closed in red while 357 stocks closed in green and 41 stocks remained unchanged.
The BSE Sensex closed lower by 506.43 points at 12,595.75 and NSE Nifty ended down by 135.20 points at 3,850.05. The BSE Mid Caps and Small Caps closed with losses of 211.43 points at 4,729.33 and by 308.75 points at 5,553.03. The BSE Sensex touched intraday high of 13,113.53 and intraday low of 12,402.84.
Losers from the BSE are ICICI Bank Ltd (12.11%), JP Associates (11.85%), Satyam Computer (9.13%, TCS Ltd (8.40%), Tata Power (6.95%), Reliance Infra (6.56%), Reliance Com Ltd (6.11%), Ranbaxy Lab (6.08%), M&M Ltd (5.36%), DLF Ltd (5.12%) and L&T Ltd (4.98%).
Only gainer from BSE is HUL ended higher by (0.79%).
The BSE Capital Goods index lost 524.59 points to close at 10,270.60. Major losers are Usha Martin (12.31%), Suzlon Energy (12.19%), Bharat Bijli (9.90%), Walchand In (8.99%), Jyoti Struct (8.27%) and Reliance Industrial Infra (7.83%).
The BSE Bank index dropped by 395.44 points to close at 6,175.10. As ICICI Bank Ltd (12.11%), Karnataka Bank (9.61%), OBC (8.11%), IOC (6.48%), Yes Bank (6.42%) and Kotak Bank (4.97%) closed in negative territory.
The BSE Metal index plunged 357.86 points to close at 9,144.23. Major losers are JSW SL (11.67%), Jindal Saw (10.08%), Welspan Gujarat Sr (6.97), Hindustan Zinc (5.94%), NMDC Ltd (4.76%) and Jindal Steel (4.63%).
The BSE Reality index closed lower by 189.11 points at 3,407.87. Losers are Housing Development (13.72%), Sobha Dev (9.59%), Orbit Co (9.51%), Anant Raj (8.47%), Akruti City (8.42%) and Indiabull Real (7.73%).
The IT index lost 177.02 points to close at 3,057.92. As Aptech Ltd (13.11%), NIIT Ltd (10.62%), Moser Bayer (10.60%), Rolta India (10.04%), Satyam Computer (9.13%) and TCS Ltd (8.40%) closed in negative territory.
The BSE Consumer Durable index ended down by 172.96 points at 2,872.39 as Rajesh Export (11.42%), Blue Star L (11.24%), Videocon Ind (9.16%), Gitanjali GE (3.03%) and Titan Ind (1.43%) ended in negative territory.
Market slumps on global financial instability; Sensex hits 18-month low
Stocks fell across the globe on persistent questions on the effectiveness of the US bailout package and on continued instability in the global banking sector. The domestic market fell for the third consecutive trading session with Sensex declining 1,096.77 points in last three sessions. The barometer index today ended 506.43 points down.
The market recovered after witnessing a sharp intra-day fall. The BSE Sensex recovered close to 200 points from the day's low. The barometer index hit 1-½ year low and the S&P CNX Nifty hit its lowest level in 17 months in mid-afternoon trade. The market breadth was extremely weak as selling was witnessed across the board. ICICI Bank fell more than 12%.
The US lawmakers agreeing on a $700 billion bank-rescue package and the House of Representatives approving the nuclear deal with India over the weekend failed to boost the investor sentiments.
European markets which opened after Indian markets were down. France’s CAC 40, Germany’s DAX and UK’s FTSE 100 were down between 2.77% to 3.04%. European markets fell as the Belgian, Dutch and Luxembourg governments were forced to rescue financial firm Fortis over the weekend. Stricken UK lender Bradford & Bingley was also nationalised after its branch network and deposit business was sold to Spain's Banco Santander.
Most Asian markets were trading lower today, 29 September 2008. Hong Kong's Hang Seng, Japan's Nikkei, Singapore's Straits Times, South Korea's Seoul Composite fell between 1.26% 4.07%.
In US, congressional leaders from both parties said they had a tentative agreement on Sunday, 28 September 2008 and lawmakers prepared to vote on Monday, 29 September 2008, on a $700 billion US government fund to buy bad debt. The bailout plan will be introduced in the House of Representatives today, 29 September 2008 and then head to the Senate.
Meanwhile, the Indo-US nuclear deal moved into the last lap clearing a major hurdle when the House of Representatives approved a legislation on it that will now go to the Senate before the two countries can implement the civil nuclear agreement.
The BSE 30-share Sensex plunged 506.43 points or 3.87% to 12,595.75. The index shed 699.34 points at the day's low of 12,402.82 hit in mid-afternoon trade. The Sensex edged up 11.35 points at day’s high of 13,113.53, hit at the onset of the trading session.
The S&P CNX Nifty was down 135.20 points or 3.39% to 3,850.05.
The BSE Sensex is down 7,691.24 points or 37.91% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 8,611.02 points or 40.6% below its all-time high of 21,206.77 struck on 10 January 2008. The index is down 1,096.77 points from a recent high of 13,692.52 hit on 24 September 2008.
BSE clocked a turnover of Rs 4,579 crore today 29 September 2008 as compared to a turnover of Rs 4,850.22 crore on Friday 26 September 2008.
Nifty October 2008 futures were at 3880.40, at a premium of 30.35 points as compared to spot closing of 3850.05. NSE's futures & options (F&O) segment turnover was Rs 59,905.71 crore, which was higher than Rs 44,297.14 crore on Friday, 26 September 2008.
As per the provisional figures on BSE, the foreign institutional investors (FII)s sold shares worth Rs 476.94 crore while domestic funds bought shares worth Rs 554.82 crore today,29 September 2008.
The BSE Mid-Cap index was down 4.13% at 4,736.55 and the BSE Small-Cap index was down 5.12% at 5,561.42.
BSE Bankex (down 6.02% to 6,175.10), BSE Consumer Durables index (down 5.68% to 2,872.39), BSE IT index (down 5.47% to 3,057.92), BSE Realty index (down 5.26% to 3407.87), BSE Power index (down 5.22% to 2225.08), BSE TEck index (down 5.13% to 2,490.01), BSE Capital Goods index (down 4.86% to 10,270.60) underperformed Sensex.
BSE Metal index (down 3.77% to 9,144.23), BSE HealthCare index (down 3.06% to 3,651.18), BSE Auto index (down 2.95% to 3,624.24), BSE PSU index (down 2.88% to 6,146.61), BSE Oil & Gas index (down 1.72% to 8,925.01) and BSE FMCG index (down 0.44% to 2,179.50) outperformed Sensex.
The market breadth was weak on BSE with 357 shares advancing as compared to 2,287 that declined. 41 shares remained unchanged.
India’s largest private firm by market capitalization and oil refiner Reliance Industries fell 1.53% to Rs 1,930.95. The stock recovered from the session’s low of Rs 1,881.
India’s largest FMCG firm by sales Hindustan Unilever rose 0.79% to Rs 254.50.
India’s largest oil exploration firm by revenue ONGC was down 1.14% at Rs 1,023.30. It recovered from the session’s low of Rs 994.
India’s fourth largest IT exporter by sales Wipro fell 0.19% to Rs 343.10. It recovered from the session’s low of Rs 330.10.
India’s largest private sector bank in terms of net profit ICICI Bank slumped 12.11% to Rs 493.30. The bank clarified today during the market hours that 98% of ICICI Bank UK PLC's non-India investment book is rated investment grade and above. ICICI Bank UK PLC has zero exposure to US subprime-credit, it said.
India’s largest real estate player by market capitalization DLF fell 5.12% to Rs 350.60. It recovered from the session’s low of Rs 329.
India’s largest electric equipment maker by sales Bharat Heavy Electricals declined 2.65% to Rs 1,509.50. It recovered from the session’s low of Rs 1,441.
India’s largest home loan lender HDFC fell 2.68% to Rs 2,032.75. It recovered from the session’s low of Rs 2000.
Jaiprakash Associates (down 11.85% to Rs 106.70), Satyam Computer Services (down 9.13% to Rs 292.55), Tata Consultancy Services (down 8.4% to Rs 619.65), edged lower from the Sensex pack.
Reliance Natural Resources clocked the highest volume of 1.42 crore shares on BSE. IFCI (89.91 lakh shares), Chambal Fertilisers and Chemicals (71.69 lakh shares), Jaiprakash Associates (63.84 lakh shares) and ICICI Bank (58.37 lakh shares) were the other volume toppers in that order.
Reliance Capital clocked the highest turnover of Rs 309.01 crore on BSE. Reliance Industries (Rs 299.81 crore), ICICI Bank (Rs 295.37 crore), Axis Bank (Rs 157.21 crore) and Larsen & Toubro (Rs 134.79 crore) were the other turnover toppers in that order.
US light crude for November delivery fell $1.09 to $105.85 a barrel today, 29 September 2008 pressured by gains in the US dollar.
US stocks rose on Friday, 26 September 2008. The Dow Jones gained 121.07 points, or 1.10%, to 11,143.13. The S&P 500 index was up 3.83 points, or 0.32%, to 1,213.01, and the Nasdaq composite index was down 3.23 points, or 0.15%, to 2,183.34.
Back home, indices tumbled on Friday, 26 September 2008 on uncertainty about the future of the US financial system. The BSE 30-share Sensex fell 445 points or 3.28% to 13,102.18 and the S&P CNX Nifty lost 137.10 points or 3.34% to 3985.25, on that day.
Key benchmark indices suffered a severe setback in the week ended Friday, 26 September 2008, mirroring weak global market and amid impasse over the proposed $700 billion bailout deal for the US financial sector. The barometer index BSE Sensex lost 940.14 points or 6.69% to 13,102.18 in and the S&P CNX Nifty shed 260 points or 6.12% at 3985.25, in the week.
Pre Session Commentary - Sep 29 2008
The Market is expected to open positive as the N-Deal has been accepted by the US government with 2/3 majority and further the bilateral trade between US and India is expected to be positive in future. The Asian markets also opened positive on the back of the positive out look of the bail out to be finalized today. However later the Asian markets are trading moving mixed. The US Congress will today vote on a revised $700 billion rescue deal for Wall Street, after a weekend of negotiations produced a plan that Congressional leaders said has more stringent protections for the American taxpayer. The Treasury wouldn''t get all the $700 billion upfront. $350 billion would be immediately available. But the other $350 billion would be available unless Congress specifically holds.
On Friday, the market fell drastically amidst confusion on issues like N-Deal and US bail out. The stress between the Republican and the Democratic Party over the issue of bail out worth US$ 700 billion to bridge the financial crunch of Investment Banks kept the sentiments of market low across Asia. Further sentiments also dented by the failure of Washington Mutual Fund, which was acquired by JPMorgan Chase on Thursday. JPMorgan Chase & Co. Inc. acquired the assets of Washington Mutual Inc.''s banking operations after federal regulators seized the ailing thrift. Under the terms of the deal, J.P. Morgan acquired all of the deposits and assets of Washington Mutual and its subsidiary Washington Mutual FSB, valued at $307 billion in assets and $188 billion in deposits. All throughout the day the market kept diving into the red territory without any sign of recovery. The sectors that felt the extreme heat were realty, metal, bankex and CG. We expect that the market remain volatile during the trading session.
The BSE Sensex closed lower by 445 points at 13,102.18 and NSE Nifty ended down by 125.3 points at 3,985.25. The BSE Mid Caps and Small Caps closed with losses of 152.23 points and by 188.25 points at 4,940.82 and 5,861.78. The BSE Sensex touched intraday high of 13,486.20 and intraday low of 13,054.42.
On Friday, the US market remained mixed on the back of doubts about the bail out plan and the negative sentiments of Washington Mutual Fund. Crude oil futures for the month of November delivery closed lower by $1.13 at $106.89 per barrel on New York Mercantile Exchange. The crude prices ended lower due to ongoing supply concerns in the Gulf of Mexico region due to storm disruptions to energy production and refining.
The Dow Jones Industrial Average (DJIA) closed up by 121.07 points at 11,143.13 along with NASDAQ index closed lower by 3.23 points at 2,183.34 and the S&P 500 (SPX) gained 4.09 points to close at 1,213.27 points.
Indian ADRs ended down. In technology sector, Patni Computers closed down by (11.02%) followed by Wipro by (2.84%), Infosys closed lower by (1.84%) and Satyam by (1.22%). In banking sector ICICI Bank and HDFC Bank lost (9.11%) and (4.04%). In telecommunication sector, Tata Communication and MTNL plunged (10.11%) and (1.80%). Sterlite Industries decreased by (7.24%).
Today the major stock markets in Asia opended positive on the back of positive cues from the US government about the $700 billion bail out plant but however the bill would authorize $250 billion immediately, with another $100 billion upon presidential certification. A further $350 billion would also be available subject to congressional approval. Hang Seng index is trading down by 245.50 points at 18,436.59. Followed by, Japan''s Nikkei up by 54.49 points at 11,947.65 and Singapore''s Straits trading at 2,406.92 down by 54.49 points.
The FIIs on Friday stood as net seller in equity however in debt there was no trading. Gross equity purchased stood at Rs4214.50 Crore and gross debt purchased stood at Rs0 Crore while the gross equity sold stood at Rs4918.30 Crore and gross debt sold stood at Rs0 Crore. Therefore, the net investment of equity reported was (Rs703.80) Crore and net debt was Rs0Crore.
On Friday, The rupee decreased by 33 paise on Sept 26 against the greenback due to large-scale dollar demand from big corporate houses and oil importers. The currency opened at 46.15/16 and weakened to reach an intra-day low of 46.57/58. It ended at 46.54/55 against the previous close of 46.21/22. In the forward market, the 6-month premium closed lower at 1.19 per cent and the 12-month ended at 1.06 per cent.
On BSE, total number of shares traded were 25.19 crores and total turnover stood at Rs4850.22 crores. On NSE, total volumes of shares traded were 43.29 crores and total turnover was Rs10500.36 crores.
Top traded volumes on NSE Nifty – ICICI Bank with total volume of 11841157 shares followed by Suzlon Energy with 10981619 shares, SAIL 7735590 shares, Reliance Power 7377585 shares and Unitech 7136700 shares.
On NSE Future and Options, total number of contracts traded in index futures was 761453 with a total turnover of Rs14312.55 crores. Along with this total number of contracts traded in stock futures were 727640 with a total turnover of Rs11629.34 crores. Total number of contract for index options was 815607 and total turnover was Rs 17435.69 crores and total number of contracts for stock options was 50434 and notional turnover was Rs 919.56 crores.
Today, Nifty has support at 3,935 and resistance at 4,080 and BSE Sensex has support at 12,867 and resistance at 13,376.
The market may remain volatile
The market may witness cautious trend as US indices ended flat on Friday and Asian indices are exhibiting weak trends 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 3950 and 3900 on the downside while on the upper side it may move up to 4050. The Sensex has a likely support at 13000 and may face resistance at 3900.
US indices ended flat on Friday with the Dow Jones ended in a positive at 11143 advanced by 121 points, the Nasdaq down by 3 points at 2183. While all the Indian floats ended lower with the loss of 1-11% each.
U.S. crude declined further on Friday with the Nymex light crude oil for October delivery slipped $1.13 to close at $106.89 a barrel. In the commodity space, the Comex gold for December series gained $6.50 to settle at $888.50.
Morning Call - Sep 29 2008
Out House:
Markets at a support of 13031 12786 resistance at 13452 & 13591 levels .
Buy : RIL
Buy : LNT & Bhel
Buy : SBIN
Buy : Aftek at dips
Buy : RelCap at dips
Buy : HLL
Buy : Tisco at dips
Buy : Coreproject at dips
Buy : IBullReal
Dark Horse : Bhel , Titan ,RIL , BPCL , Tisco , ITC & Core
Market seen opening firm
Key benchmark indices are likely to see firm start with the US lawmakers agreeing on a $700 billion bank-rescue package and the House of Representatives approving the nuclear deal with India, over the weekend.
Democratic congressional leaders supported on Sunday, 28 September 2008, a massive financial rescue plan proposed by the Bush administration, releasing a draft text trumpeting taxpayer guarantees and caps on executive compensation. The bill will be introduced in the House of Representatives today, 29 September 2008 and then head to the Senate.
The draft legislation would authorize $250 billion immediately, with another $100 billion upon presidential certification. A further $350 billion would also be available subject to congressional approval.
The Indo-US nuclear deal moved into the last lap clearing a major hurdle when the House of Representatives approved a legislation on it that will now go to the Senate before the two countries can implement the civil nuclear agreement. The deal on non-proliferation grounds was adopted with 298 voting for and 117 against.
Fall in oil prices may also lift the sentiment. US light crude for November delivery fell $1.09 to $105.85 a barrel today, 29 September 2008 pressured by gains in the US dollar.
Most Asian markets were trading lower today, 29 September 2008. Hong Kong's Hang Seng plunged 1.31% or 245.50 points at 18,436.59, Singapore's Straits Times was down 0.19% or 4.54 points at 2,406.92, South Korea's Seoul Composite fell 1.13% or 16.7 points at 1,459.63. However, Japan's Nikkei gained 0.46% or 54.49 points at 11,947.65.
The Dow Jones gained 121.07 points, or 1.10%, to 11,143.13. The S&P 500 index was up 3.83 points, or 0.32%, to 1,213.01, and the Nasdaq composite index was down 3.23 points, or 0.15%, to 2,183.34.
Back home, indices tumbled on Friday, 26 September 2008 on uncertainty about the future of the US financial system. The BSE 30-share Sensex fell 445 points or 3.28% to 13,102.18 and the S&P CNX Nifty lost 137.10 points or 3.34% to 3985.25, on that day.
Key benchmark indices suffered a severe setback in the week ended Friday, 26 September 2008, mirroring weak global market and amid impasse over the proposed $700 billion bailout deal for the US financial sector. The barometer index BSE Sensex lost 940.14 points or 6.69% to 13,102.18 in and the S&P CNX Nifty shed 260 points or 6.12% at 3985.25, in the week.
Foreign institutional investors (FIIs) were net equity sellers worth Rs 643.04 crore while mutual funds bought shares worth Rs 543.27 crore on Friday, 26 September 2008, according to provisional data on NSE. They were net buyers of Rs 173.23 crore in the futures & options segment on that day.
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