Monday, October 06, 2008
NSE Bulk Deals to Watch - Oct 6 2008
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
06-OCT-2008,20MICRONS,20 Microns Limited,ADROIT FINANCIAL SERVICES PVT LTD,BUY,298581,39.64,-
06-OCT-2008,20MICRONS,20 Microns Limited,AMBIT SECURITIES BROKING PVT. LTD.,BUY,435498,42.27,-
06-OCT-2008,20MICRONS,20 Microns Limited,B K SHAH CO KETAN BHAILAL SHAH,BUY,96713,46.43,-
06-OCT-2008,20MICRONS,20 Microns Limited,BHARAT SECURITIES PVT LTD,BUY,168323,38.84,-
06-OCT-2008,20MICRONS,20 Microns Limited,CPR CAPITAL SERVICES LTD.,BUY,323689,40.99,-
06-OCT-2008,20MICRONS,20 Microns Limited,DINDAYAL BIYANI STOCK BROKERS LTD,BUY,100643,39.45,-
06-OCT-2008,20MICRONS,20 Microns Limited,DINESH MUNJAL,BUY,198950,38.76,-
06-OCT-2008,20MICRONS,20 Microns Limited,G RAMAKRISHNA,BUY,105000,43.92,-
06-OCT-2008,20MICRONS,20 Microns Limited,KAKANI OMPRAKASH,BUY,106492,38.97,-
06-OCT-2008,20MICRONS,20 Microns Limited,LATIN MANHARLAL SECURITIES PVT. LTD.,BUY,91650,43.57,-
06-OCT-2008,20MICRONS,20 Microns Limited,MANIPUT INVESTMENTS PVT LTD,BUY,87583,44.54,-
06-OCT-2008,20MICRONS,20 Microns Limited,MARWADI SHARES AND FINANCE LIMITED,BUY,99613,40.68,-
06-OCT-2008,20MICRONS,20 Microns Limited,NISSAR BROTHERS,BUY,247043,36.97,-
06-OCT-2008,20MICRONS,20 Microns Limited,PASHUPATI CAPITAL SERVICES PVT. LTD.,BUY,114611,37.95,-
06-OCT-2008,20MICRONS,20 Microns Limited,PRAKASH & CO,BUY,74597,40.61,-
06-OCT-2008,20MICRONS,20 Microns Limited,R.M. SHARE TRADING PVT LTD,BUY,614596,42.12,-
06-OCT-2008,20MICRONS,20 Microns Limited,RAMESH V VAZE,BUY,110089,47.49,-
06-OCT-2008,20MICRONS,20 Microns Limited,SINDHU HOLDING LIMITED,BUY,71892,39.46,-
06-OCT-2008,20MICRONS,20 Microns Limited,SMC GLOBAL SECURITIES LTD.,BUY,73406,43.65,-
06-OCT-2008,20MICRONS,20 Microns Limited,TRANSGLOBAL SECURITIES LTD.,BUY,496206,40.64,-
06-OCT-2008,20MICRONS,20 Microns Limited,YUVAK SHARE TRADING PVT LTD,BUY,456676,42.78,-
06-OCT-2008,GOLDTECH,Goldstone Tech Ltd.,SANCHANIYA ANKIT RAJENDRA,BUY,150000,112.66,-
06-OCT-2008,NAGARFERT,Nagarjuna Fert & Chem,CLEAN FINANCE & INVESTMENT LTD,BUY,2205726,24.94,-
06-OCT-2008,STAR,Strides Arcolab Limited,ACROLAB INDIA PVT LTD,BUY,890820,179.93,-
06-OCT-2008,20MICRONS,20 Microns Limited,ADROIT FINANCIAL SERVICES PVT LTD,SELL,298581,39.63,-
06-OCT-2008,20MICRONS,20 Microns Limited,AMBIT SECURITIES BROKING PVT. LTD.,SELL,435498,42.38,-
06-OCT-2008,20MICRONS,20 Microns Limited,B K SHAH CO KETAN BHAILAL SHAH,SELL,96711,46.92,-
06-OCT-2008,20MICRONS,20 Microns Limited,BHARAT SECURITIES PVT LTD,SELL,168323,38.61,-
06-OCT-2008,20MICRONS,20 Microns Limited,CPR CAPITAL SERVICES LTD.,SELL,323689,41.04,-
06-OCT-2008,20MICRONS,20 Microns Limited,DEVELOPMENT CREDIT BANK LTD,SELL,100000,39.13,-
06-OCT-2008,20MICRONS,20 Microns Limited,DEVELOPMENT CREDIT BANK LTD ,SELL,100000,50.87,-
06-OCT-2008,20MICRONS,20 Microns Limited,DINDAYAL BIYANI STOCK BROKERS LTD,SELL,100643,39.50,-
06-OCT-2008,20MICRONS,20 Microns Limited,DINESH MUNJAL,SELL,198950,38.75,-
06-OCT-2008,20MICRONS,20 Microns Limited,G RAMAKRISHNA,SELL,105000,44.37,-
06-OCT-2008,20MICRONS,20 Microns Limited,KAKANI OMPRAKASH,SELL,106492,39.19,-
06-OCT-2008,20MICRONS,20 Microns Limited,LATIN MANHARLAL SECURITIES PVT. LTD.,SELL,91650,43.64,-
06-OCT-2008,20MICRONS,20 Microns Limited,MANIPUT INVESTMENTS PVT LTD,SELL,87583,44.83,-
06-OCT-2008,20MICRONS,20 Microns Limited,MARWADI SHARES AND FINANCE LIMITED,SELL,99613,40.54,-
06-OCT-2008,20MICRONS,20 Microns Limited,NISSAR BROTHERS,SELL,247043,36.89,-
06-OCT-2008,20MICRONS,20 Microns Limited,PASHUPATI CAPITAL SERVICES PVT. LTD.,SELL,114611,37.95,-
06-OCT-2008,20MICRONS,20 Microns Limited,PRAKASH & CO,SELL,74597,40.36,-
06-OCT-2008,20MICRONS,20 Microns Limited,PRIME INDIA INVESTMENT FUND LTD,SELL,246941,50.25,-
06-OCT-2008,20MICRONS,20 Microns Limited,R.M. SHARE TRADING PVT LTD,SELL,614596,42.02,-
06-OCT-2008,20MICRONS,20 Microns Limited,RAMESH V VAZE,SELL,110089,46.58,-
06-OCT-2008,20MICRONS,20 Microns Limited,SINDHU HOLDING LIMITED,SELL,71892,39.38,-
06-OCT-2008,20MICRONS,20 Microns Limited,SMC GLOBAL SECURITIES LTD.,SELL,73406,44.31,-
06-OCT-2008,20MICRONS,20 Microns Limited,TAIB SEC MAURITIUS LTD,SELL,110791,37.10,-
06-OCT-2008,20MICRONS,20 Microns Limited,TRANSGLOBAL SECURITIES LTD.,SELL,496212,40.60,-
06-OCT-2008,20MICRONS,20 Microns Limited,YUVAK SHARE TRADING PVT LTD,SELL,456676,42.95,-
06-OCT-2008,NAGARFERT,Nagarjuna Fert & Chem,CLEAN FINANCE & INVESTMENT LTD,SELL,2205726,24.94,-
06-OCT-2008,RAYMOND,Raymond Ltd.,CITIGROUP GLOBAL MKTS MAURITIUS PVT LTD- SELL CODE,SELL,313534,115.96,-
06-OCT-2008,STAR,Strides Arcolab Limited,DOBLISS HOLDINGS LIMITED,SELL,850000,180.00,-
RBI - our banks are ok !
- Public Sector Banks in robust condition
- Private banks risk management comparatively OK!
- How about ICICI ? - Nothing has changed since our last statement
Wall Street tumbles
Wall Street tumbled again Monday, joining a sell-off around the world as fears grew that the financial crisis will cascade through economies globally despite bailout efforts by the US and other governments. The Dow Jones industrials skidded nearly 500 points and fell below 10,000 for the first time in four years, while the credit markets remained under strain.
The markets have come to the sobering realization that the Bush administration's $700 billion rescue plan won't work quickly to unfreeze the credit markets, and that many banks are still having difficulty gaining access to cash. That's caused investors to exit stocks and move money into the relative safety of government debt.
Over the weekend, governments across Europe rushed to prop up failing banks. The German government and financial industry agreed on a $68 billion bailout for commercial-property lender Hypo Real Estate Holding AG, while France's BNP Paribas agreed to acquire a 75 percent stake in Fortis's Belgium bank after a government rescue failed.
The governments of Germany, Ireland and Greece also said they would guarantee bank deposits.
The Federal Reserve also took fresh steps to help ease seized-up credit markets. The central bank said Monday it will begin paying interest on commercial banks' reserves and will expand its loan program to squeezed banks.
Investors took a bleak view of the future, seeing no end to the crisis in the near term.
"This is a psychologically important moment that we passed below the 10,000 level," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "But, the issues are worldwide. The fact is people are scared and the only thing they're doing is selling."
In midmorning trading, the Dow Jones industrial average fell 443.08, or 4.29 percent, to 9,882.30, dropping below 10,000 for the first time since Oct. 29, 2004. At one point, the Dow was down nearly 600.
Broader indexes also tumbled. The Standard & Poor's 500 index shed 53.12, or 4.83 percent, to 1,046.11; and the Nasdaq composite index fell 101.07, or 5.19 percent, to 1,846.32. The Russell 2000 index of smaller companies dropped 29.31, or 4.73 percent, to 590.09.
There were only 78 advancing stocks on the New York Stock Exchange, compared to 3,080 decliners. Volume came to 512.4 million shares.
BSE Bulk Deals to Watch - Oct 6 2008
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
6/10/2008 533022 20 MICRONS EUREKA STOCK AND SHARE BROKING SERVICES LTD B 294629 41.69
6/10/2008 533022 20 MICRONS SONI JIGNESH BALKRISHNA B 153182 38.47
6/10/2008 533022 20 MICRONS R M SHARES TRADING PVT LTD B 454918 41.24
6/10/2008 533022 20 MICRONS RAJESH MANILAL MAMANIA B 90000 36.28
6/10/2008 533022 20 MICRONS EUREKA STOCK AND SHARE BROKING SERVICES LTD S 294629 41.65
6/10/2008 533022 20 MICRONS SONI JIGNESH BALKRISHNA S 153182 35.63
6/10/2008 533022 20 MICRONS R M SHARES TRADING PVT LTD S 454918 41.54
6/10/2008 533022 20 MICRONS TAIB SEC MAURITIUS LTD S 71267 37.59
6/10/2008 533022 20 MICRONS PRIME INDIA INVESTMENT FUND LTD. S 226669 50.41
6/10/2008 526955 ABL BIOTECHN MEHUL PARIKH S 82000 52.30
6/10/2008 530355 ASIAN OILFIE KINSFOLK INDUSTRIES P LTD S 69435 70.09
6/10/2008 532845 BHAGWATI BAN RELIGARE FINVEST LTD S 203498 45.48
6/10/2008 526141 COMP DISC IN SURESH KUMAR SEENGAL B 95227 38.41
6/10/2008 526033 CRYSTAL SOFT NANAVATI PROPERTIES PVT LTD B 25015 8.45
6/10/2008 532760 DEEP INDS D.K.STOCK INVESTMENT S 140650 76.16
6/10/2008 531367 DOLLEX INDUT EMERALD CORPORATE A PVT LTD B 50000 10.50
6/10/2008 531367 DOLLEX INDUT YUSUF KHAN S 100000 10.36
6/10/2008 513059 G.S. AUTO SPJSTOCK B 52823 70.00
6/10/2008 513059 G.S. AUTO SPJSTOCK S 51810 70.64
6/10/2008 531439 GOLDSTON TEC ANKIT RAJENDRA SANCHANIYA B 150000 112.50
6/10/2008 532764 GWALIOR CHEM MORGAN STANLEY MAURITIUS COMPANY LIMITED B 1440977 59.00
6/10/2008 532764 GWALIOR CHEM MERRILL LYNCH CAPITAL MARKETS ESPANA S.A. S.V. S 1440977 59.00
6/10/2008 516007 MANGALA TIM NEW MILLENIUM TECHNOLOGY MANAGEMENT LTD B 99976 14.00
6/10/2008 516007 MANGALA TIM GUJARAT CREDIT CORPORATION LTD S 100000 14.00
6/10/2008 513446 MONNE ISPAT LIVE STAR MARKETING PVT LTD B 426000 429.96
6/10/2008 590011 MOVING PICTU-PMS GURBACHAN KAUR B 50000 9.60
6/10/2008 590011 MOVING PICTU-PMS HARDEEP SINGH S 50000 9.60
6/10/2008 517536 ONWARD TECHN ANIL SINGHVI B 122623 16.75
6/10/2008 517536 ONWARD TECHN ANAGHA INVESTMENT PVT LTD S 122623 16.75
6/10/2008 523574 PANTAL RETAI FID FUND MAURITIUS LIMITED B 1737704 306.70
6/10/2008 523574 PANTAL RETAI DEUTSCHE SECURITIES MAURITIUS LIMITED S 1827820 306.70
6/10/2008 508954 SANJAY LEAS KAVITA PARAS ZAVERI B 2900 23.70
6/10/2008 521161 SRI LAKS SAR BIMING ENTERPRISES B 23905 15.02
6/10/2008 532765 USHER AGRO DKG SECURITIES PVT LTD B 215000 130.25
6/10/2008 519602 VMF SOFT TEC YRAVIPRASAD S 50000 6.95
Term - credit default swap
A specific kind of counterparty agreement which allows the transfer of third party credit risk from one party to the other. One party in the swap is a lender and faces credit risk from a third party, and the counterparty in the credit default swap agrees to insure this risk in exchange of regular periodic payments (essentially an insurance premium). If the third party defaults, the party providing insurance will have to purchase from the insured party the defaulted asset. In turn, the insurer pays the insured the remaining interest on the debt, as well as the principal.
via investorwords
RBI cuts CRR by 50 basis points
It will release Rs 20000 crore into the banking system
The Reserve Bank of India (RBI) today, 6 October 2008, announced a 50 basis points cut in the cash reserve ratio (CRR) to 8.5%, with effective from 11 October 2008. The measure would release Rs 20000 crore into the banking system. CRR is the proportion of deposits banks need to keep with the central bank.
RBI said the CRR cut is an ad hoc, temporary measure and it will be reviewed on a continuous basis in the light of the evolving liquidity conditions.
RBI said it will give priority to liquidity management over the period ahead given the turbulence in international financial markets. RBI also said the overriding priority for monetary policy is to eschew any further intensification of inflationary pressures and to firmly anchor inflation expectations.
Sebi removes curbs on P-notes
Sebi to review the entire framework of FII investment in India
The market regulator Securities & Exchange Board of India (Sebi) today, 6 October 2008, removed some restrictions on indirect investments in Indian shares by foreign portfolio investors. Sebi chairman C.B. Bhave said restrictions on issuing participatory notes (P-notes) where the underlying asset is a derivative, have been removed.
Sebi has also scrapped a rule which said P-notes could only account for up to 40% of the value of assets held by a foreign fund. Bhave also said the entire framework for FII participation needs to be reviewed and that the curbs were no longer considered necessary.
P-notes are issued by foreign funds registered in India to unregistered overseas investors.
Rupee slides again
Ends at 47.80/81
Rupee slid to its lowest in more than 5-½ years on Monday as local shares dived nearly 6 percent, triggering fears of an accelerated outflow of foreign funds, while dollar demand from importers and oil firms weighed.
Rupee ended at 47.80/81 per dollar, 1.5 percent weaker than its 47.0750/0850 at close on Friday. It slumped to 47.85 during the session, its lowest since Feb. 14, 2003.
RIL, Reliance Capital, RPL October 2008 futures at premium
Turnover rises
Nifty October 2008 futures were at 3642, at a premium of 39.65 points as compared to spot closing of 3602.35. NSE's futures & options (F&O) segment turnover was Rs 46,853.23 crore, which was higher than Rs 44,983.07 crore on Friday, 3 October 2008.
Reliance Industries (RIL) October 2008 futures were at premium at 1653.20 compared to the spot closing of 1641.60.
Reliance Capital October 2008 futures were at premium at 985.55 compared to the spot closing of 977.20.
Reliance Petroleum (RPL) October 2008 futures were at premium at 125 compared to the spot closing of 124.25.
In the cash market, the S&P CNX Nifty lost 215.95 points or 5.66% at 3602.35.
Asian Markets Consolidate Losses As Financial Worries Spread Europe
Nikkei Touch Nearly 5 year low while Australian Indices Plunge to 3 Year Low
The stock markets across the Asian region tumbled on fears that the bailout plan approved by the House of Representatives might not avert a recession in the U.S. and after the U.S. Labor Department reported weaker-than-expected jobs data for September.
Oil prices fell by around $4 today on concerns that a global recession would reduce demand for oil. At 5:08 a.m. ET, oil was quoted at $89.90 a barrel, down $3.98, after the contract dropped 9 cents to close at $93.88 a barrel in New York trading on Friday.
In currency market, the yen strengthened against the dollar, as investors unwound risky assets. The U.S. dollar fell to the upper 103-yen levels in late Tokyo deals from the mid 104-yen levels in early trade and Friday's close in the lower 105-yen range in Tokyo.
The Australian dollar closed at a two-year low following one of its biggest one-day falls since floating almost 25 years ago. The Australian dollar fell 3.05 U.S. cents to finish the local session at US$0.7495-0.7498, down from Friday's close of US$0.7799-0.7805.
The New Zealand dollar finished lower against the U.S. dollar on the back of worse-than-expected forecasts reported by New Zealand's Treasury. The kiwi closed the session at US$0.6515, down from US$6595 in early trade and US$0.6622 late Friday.
The South Korean won fell to a six-year low against the greenback. The local unit closed at 1,269.0 a dollar, down from Thursday's close of 1,223.5 a dollar.
Philippine peso fell, trading near a 17-month low, after Asian stocks declined on speculation investors will avoid emerging-market assets as the credit crisis spreads to Europe and economic growth slows. The currency fell 0.60% to 47.44 per dollar. The peso dropped by the most in five weeks.
Coming back in equities, the Japanese stock market closed sharply lower, with the Nikkei and Topix indexes plunging to their lowest levels in nearly five years. The benchmark Nikkei 225 index closed down 465.05 points or 4.25% at 10,473.09, extending its losses for the third consecutive trading session. The broader Topix index of all First Section issues on Tokyo Stock Exchange lost 48.92 points or 4.67% to finish at 999.05, falling below the 1,000 mark for the first time since December 2003.
On the economic front, the Bank of Japan kicked off its two-day monetary policy meeting on Monday in Tokyo. The central bank will announce its interest rate decision tomorrow.
The BOJ Policy Board is expected to discuss the Japanese economy slowing on weaker exports while studying rising prices with the key consumer inflation rate at its highest in more than 16 years. Widening upheavals involving U.S. and European financial institutions due to the credit crisis are also expected to be high on the agenda.
For the latest policy-setting panel meeting, market participants generally forecast the central bank will keep its key short-term interest rate on hold at 0.5% for the 20th month running, given that the BOJ has said Japanese credit conditions are already "accommodative enough."
The stock market in the Mainland China closed sharply lower as investor resumed the trading after a weeklong national holiday, tried to catch up with global market losses last week as the credit crisis continued to unfold. The benchmark Shanghai Composite Index, which covers both A- and B-shares listed on the Shanghai Stock Exchange, closed down 120.05 points or 5.23% at 2,173.74 points The Shanghai B-share Index fell 7.03 points or 5.29% to 125.73, while the Shenzhen B-share Index was down 14.01 points or 4.50 pct at 297.29.
In market news, the China Securities Regulatory Commission said it has received approval from the State Council or cabinet to launch margin trading of securities on a trial basis. With the agreement of the cabinet, the CSRC will in the near future launch margin trading and short selling on a trial basis," the commission said in a statement on its website, without giving an exact start date. The move, which comes at a time of renewed jitters in the financial sector thanks to the banking crisis in the United States, seemed designed to boost confidence in China's stock markets.
On the economic front, the People's Bank of China views governor Zhou Xiaochuan published a comment saying a stable currency and job creation as priorities in its economic stewardship.
In a statement on the People's Bank of China website, Zhou outlined what the central bank would do to uphold the scientific development approach -- Chinese President Hu Jintao's political doctrine that highlights sustainable development. The priority is to address questions such as how to keep a stable currency value, how to effectively promote employment and support growth of consumption, Zhou said.
The benchmark Hang Seng Index closed down 878.64 points or 4.97% at 16,803.76 while the Hang Seng China Enterprise index plunged by 6.62% to 8,416.90.
The Australian stock market closed at its lowest level in almost three years, extending losses for a third straight trading session. The benchmark S&P/ASX 200 index closed down 155 points or 3.3% at 4,540.4 and the broader All Ordinaries index shed 158.1 points or 3.4% to finish at 4,544.7.
The New Zealand stock market closed sharply lower, extending Friday's steep losses. The benchmark NZX 50 index finished the day down 103.16 points or 3.38% at 3,048.38 and the broader NZX All Capital index fell 92.09 points or 2.97% to finish at 3,098.08.
The New Zealand Treasury's report on the state of the economy, ahead of the election, also added to the gloom. Treasury said that the economic outlook had deteriorated badly since the May budget and this meant reducing its revenue forecasts and increasing its predictions of costs. Speaking at the release of the Treasury update, Finance Minister Michael Cullen said that the scale of international turmoil was unprecedented.
The South Korean market plunged, extending its losses for the sixth consecutive trading session. Stocks lost ground as a U.S. rescue plan failed to restore investor confidence in markets around the globe. The benchmark Korea Composite Stock Price Index or KOSPI tumbled 60.9 points, or 4.29%, to finish the session at 1,358.75, its lowest level since January 2007.
The Philippines stock exchange bunged 2.6% lower on 6 October 2008 as investors took a wait-and-see attitude on the bailout package approved by the US Congress over the weekend after opening 1.6% lower tracking regional bourses across Asia on worries about the state of the global economy.
The benchmark index PSEi lost 66.68 points or 2.6% to close at 2,499.53. All six-sub indices tracked the composite index with holding firms shedding the most at 53.50 points or 4% to 1,281.64.
On the economic front, the Bangko Sentral ng Pilipinas (BSP), the country's central bank held its interest rates on hold at after a string of rises since June, signaling a shift of priorities towards protecting growth in the face of the global credit crisis. The BSP raised rates 1% point since June to combat inflation.
In Thailand, the benchmark SET index plunged by 38.25 points or 6.48% to close at 551.80. The decline was higher than the fall previous fall of 1.28%. The SET 100 recorded a decline of 7.28% or 64.66 points to close at 823.02. Likewise, the Set 50 fell by 7.28% or 30.07 points ending the session at 382.91.
In India, a sell-off in index pivotals pulled down Sensex close to 800 points at provisionally lost 679.26 points. As per the provisional figures, BSE 30-share Sensex lost 679.26 points or 5.42% to 11,847.06. The index shed 793.75 points at the day's low of 11,732.97, hit in late trade, its lowest level since 13 September 2006. The Sensex fell 241.83 points at day’s high of 12,284.49, in early trade. The S&P CNX Nifty was down 195.05 points or 5.11% to 3,623.25 as per the provisional figures. Nifty hit a low of 3,581.60, its lowest level since 16 March 2007.
Elsewhere, the Singapore's Straits Times index was down 5.6% at 2,168.32; Taiwan's weighted index is down 4.12% at 5,505.70 Indonesia's Jakarta Composite index slumped by 10.03% at 1,648.74; and Malaysia's KLCI is down 1.95% to close at 996.84.
In the other part of the world, the European shares staggered with banks slumping as governments in Europe didn't match a $700 billion bailout package from the U.S. and instead continued to shore up institutions on a piecemeal basis. In the opening trade the German DAX 30 index fell 5.1% to 5,502.63, and the French CAC-40 index dropped 5.5% to 3,856.44. The U.K. FTSE 100 index slumped 5.2% to 4,723.59. At 11.53 GMT, the German DAX 30 index fell further to 5.4% to 5,482.26, the French CAC-40 index slipped 5.9% to 3,841.57 and the U.K. FTSE 100 index slumped further 5.3% to 4,716.06.
Among the economic news, the new car registrations in Britain fell by an annual 21.2 percent in September, providing further evidence that the credit crunch is keeping buyers out of showrooms.
The Society of Motor Manufacturers and Traders said September's drop was the worst for that month since registration plate changes became twice yearly in 1999.
Car registrations numbered 330,295 last month, down from 419,290 in September 2007. New registrations fell an annual 18.6 percent in August to record their weakest showing since 1966.
RBI cuts CRR rates
The Reserve Bank on Monday slashed by 0.50 per cent the rate of mandatory deposits that banks need to keep with it to ease the tight liquidity position, a move that may induce banks to lower commercial lending rates.
The new Cash Reserve Ratio (CRR) of 8.5 per cent will be effective from October 11 and would unlock about Rs 20,000 crore into the banking system, RBI said.
This is the first time in almost three years that the bank has relaxed its tight monetary policy stance that it had adopted to contain inflation.
The move, which comes in the backdrop of inflation easing below 12 per cent and outflow of foreign capital, is aimed at infusing more funds in the financial system.
Post Session Commentary - Oct 6 2008
Domestic markets slipped over 5% to the two year low after going through a heavy blood bath during the trading session. BSE Sensex ended around 11,800 level and NSE Nifty around 3,600 mark on the concern of credit crises that may lead to global recession. Although U.S. lawmakers approved a $700 billion bank-rescue plan but the investors are still concerned on whether this bailout plan will bring the relief into the market. Markets opened on extremely negative note on weak global cues. Further markets continued to witness huge selling pressure with out any sign of recovery as bears took complete control on bulls. Markets extended its losses to close the day in deep red as heavyweights took huge beating on the bourses. European markets also fueled to the negative sentiments as credit crunch is now covering European companies. There is news that BNP Paribas will buy 75% stake in Fortis'' units for $11.3 billion along with that the finance ministry of Germany has decided to pump additional 15 billion euros expanding on an earlier 35 billion euros to save one of the biggest real estate giant ‘Hypo Real Estate AG’. From the sectoral front, all indices ended in deep red. Consumer Durables index hit the most as witnessed deep cut of more than 11% followed by Metal and Reality stocks that lost more than 9%. Apart from that, Capital Goods, Oil & Gas, Bank, Pharma and IT stocks pulled the market lower as witnessed most of the selling from these baskets. Midcap and Smallcap stocks had also crashed very badly. Among the Sensex pack all 30 stocks ended in negative terrain. The market breadth was extremely negative as 2369 stocks closed in red while 281 stocks closed in green and 27 stocks remained unchanged.
The BSE Sensex closed lower by 724.62 points at 11,801.60 and NSE Nifty ended down by 215.95 points at 3,602.35. The BSE Mid Caps and Small Caps closed with losses of 333.57 points at 4,344.23 and by 378.47 points at 5,086.93. The BSE Sensex touched intraday high of 12,284.49 and intraday low of 11,732.97.
Losers from the BSE are Sterlite Indus (15.26%), Reliance Infra (13.93%), JP Associates (13.57%), Tata Steel (11.06%), DLF Ltd (10.33%), Tata Power (10.15%), Reliance Com Ltd (9.95%), Grasim Indus (9.54%), BHEL (7.48%), Reliance (6.76%) and Ranbaxy Lab (6.59%).
The BSE Metal index plunged 780.46 points to close at 7,636.65. Major losers are Sterlite Indus (15.26%), JSW Steel (15.10%), Jindal Steel (14.27%), Welspan Guajrat sr (12.15%), Gujarat NRE C (11.30%) and Ispat Indus (11.11%).
The BSE Capital Goods index closed lower by 744.06 points at 9,494.03. Losers are Praj Indus (19.22%), Suzlon Energy (13.71%), Elecon ENG C (12.74%), Crompton Greaves (11.39%), Reliance Industrial Infra (11.15%) and Walchand In (11.11%).
The BSE Oil & Gas index tumbled 517.17 points to close at 7,909.50 as Gail India (35.76%), Aban Offshore (16.73%), Cairn Indi (10.89%), Reliance Pet (9.53%), Essar Oil Ltd (9.47%) and Reliance Natural Resources (7.96%) ended in negative territory.
The BSE Reality index ended down by 329.86 points at 2,999.99. Losers are Housing Dev (14.72%), Orbit Co (13.77%), Pheonic Mill (13.62%), Penland Ltd (12.25%), Ansal Infra (10.70%) and DLF Ltd (10.33%).
The Consumer Durables index lost 318.06 points to close at 2,569.60. As Gitanjali GE (16.75%), Titan Ind (11.48%), Videocon Ind (9.99%), Rajesh Export (8.32%) and Blue Star L (7.91%) closed in negative territory.
The BSE Bank index dropped by 256.95 points to close at 6,172.00. Major losers are Yes Bank (12.07%), Kotak Bank (11.06%), Indian Overseas Bank (7.17%), HDFC Bank Ltd (5.61%), Bank of India (5.38%) and Indus Ind Bank (5.14%).
Bail-out approval fails to raise spirits
The market crashed by 5.78% or 725 points in tune with other major global indices, as concerns of recession in the US economy played on investor sentiment despite the passing of the $700 billion bail-out bill by the US House of Representatives. After losing more than 529 points on Friday, Sensex resumed 242 points lower at 12,284 and tanked by another 550 points to touch the day's low of 11,732, due to relentless selling in consumer durable (CD), realty, and metal stocks. Though Sensex managed to recover 69 points in late trades, it still ended with losses of 725 points at 11,802. The 50-stock Nifty of the NSE shed 5.65% or 216 points to close at 3,602.
The market breadth was extremely negative. Of the 2,677 stocks traded on the BSE, 2,368 stocks declined whereas only 282 stocks advanced. Twenty seven stocks ended unchanged. All the 13 sectoral indices were battered. Among the major losers, the BSE CD lost 11.01%, BSE Realty dropped 9.91%, BSE Metal shed 9.27%, BSE CG index declined by 7.27% and the BSE Power fell 7.24%.
All the 30 stocks that make the Sensex ended in the red. Among the major losers, Sterlite Industries plummeted by 15.26% at Rs335.35, Reliance Infrastructure tanked by 13.93% at Rs638, JP Associates dropped 13.57% at Rs100.35, Tata Steel slumped 11.06% at Rs350.25, DLF crumbled by 10.33% at Rs301.65 and Reliance Communications shed 9.95% at Rs300.05. Grasim Industries at Rs1,590.80, BHEL at Rs1,433, Reliance Industries at Rs1,632.10, Ranbaxy Laboratories at Rs246.45, Larsen & Toubro at Rs1,069, Wipro at Rs319.60, Satyam Computer Services at Rs294.30, Tata Consultancy Services (TCS) at Rs619.25 and HDFC Bank at Rs1,192.50 shed over 5-9% each.
Over 1.29 crore shares of 20 Microns changed hands on the BSE followed by IFCI (1.05 crore shares), Reliance Natural Resources (1.04 crore shares), Reliance Petroleum (0.71 crore shares) and Ispat Industries (0.59 crore shares).
Reliance Industries was the most actively traded counter on the BSE and registered a turnover of Rs380 crore followed by Reliance Capital (Rs244 crore), Axis Bank (Rs141 crore), ICICI Bank (Rs119 crore) and Tata Steel (Rs117 crore).
Market tumbles as global financial crisis spreads
A sell-off in index pivotals pulled down Sensex close to 800 points at provisionally lost 679.26 points. Stock markets across Asia and Europe plunged. US futures were down indicating of lower opening of US markets. The Sensex hits its lowest level in more than two years and the S&P CNX Nifty hit 1-½ year low.
Consumer durables and realty stocks plummeted. Reliance Infrastrucutre and Sterlite Industries fell more than 14%. Jaiprakash Associates fell more than 13.5%. Tata Steel fell more than 10%. Reliance Industries (RIL) fell more than 6.5% while Infosys fell more than 5%. The market breadth was weak as selling was witnessed across the board.
US futures were trading lower. Nasdaq futures were down 30 points and Dow futures were down 194 points.
The global financial crisis spread further to Europe and doubts persisted about the effectiveness of the US administration's $700 billion US financial sector bailout plan. Despite weeks of huge liquidity injection by central banks, money markets remained tight, reflecting deep-rooted reluctance by banks to lend to each other.
The uncertainty over the nuclear deal with the United States persisted as Condoleezza Rice, US secretary of state, left New Delhi at the weekend without signing the US-India nuclear deal. The domestic bourses also ignored reports that the market regulator Securities & Exchange Board of India (Sebi) may relax norms of participatory notes. The market also ignored fall in inflation and further fall in oil & commodity prices.
As per the provisional figures, BSE 30-share Sensex lost 679.26 points or 5.42% to 11,847.06. The index shed 793.75 points at the day's low of 11,732.97, hit in late trade, its lowest level since 13 September 2006. The Sensex fell 241.83 points at day’s high of 12,284.49, in early trade.
The S&P CNX Nifty was down 195.05 points or 5.11% to 3,623.25 as per the provisional figures. Nifty hit a low of 3,581.60, its lowest level since 16 March 2007.
BSE clocked a turnover Rs 3921 crore today, 6 October 2008 as compared to a turnover of Rs 4801.25 crore on Friday, 3 October 2008.
The BSE Mid-Cap index was down 7.02% at 4,349.19 and the BSE Small-Cap index was down 6.78% at 5,094.67.
The market breadth was weak on BSE with 271 shares advancing as compared to 2,375 that declined. 29 shares remained unchanged.
India’s largest private sector company by market capitalization and oil refiner Reliance Industries fell 6.64% to Rs 1,644.05. The stock hit a 52-week low of Rs 1,632.10 today. The promoters of Reliance Industries converted their 12 crore warrants into an equal number of shares. Post-transaction, the promoter group holds 49% stake in the company, with 52% voting rights. This involves an infusion of around Rs 15,142 crore into the company. The shares have a lock-in period of three years.
Reliance Industries is also reportedly mulling the merger of its different formats -- Reliance Hypermart, Reliance Super and Reliance Fresh -- to make its retail arm more efficient.
India’s second largest IT exporter by sales Infosys declined 5.03% to Rs 1,321. It recovered from the session’s low of Rs 1,275.15.
Reliance Infrastructure (down 14.6% to Rs 633), Sterlite Industries (down 14.09% to Rs 340), Jaiprakash Associates (down 13.87% to Rs 100), Tata Power Company (down 10.3% to Rs 797), Grasim Industries (down 9.4% to Rs 1,593.25), Tata Steel (down 11.06% to Rs 350.25), declined sharply from the Sensex pack.
Realty stocks declined. Indiabulls Real Estate (down 9.89% to Rs 144.85), Unitech (down 9.85% to Rs 101.10) and DLF (down 10.33% to Rs 301.65) edged lower.
Consumer durables stocks plummeted. Gitanjali Gems (down 16.75% to Rs 155.85), Blue Star (down 12.3% to Rs 245.70), Titan Industries (down 11.45% to Rs 953.85) and Videocon Industries (down 9.99% to Rs 185.60) edged lower.
India’s largest electric equipment maker by sales Bharat Heavy Electricals declined 7.48% to Rs 1,449.40. Bharat Heavy Electricals and Nuclear Power Corporation of India are reportedly in talks with foreign firms Siemens, Alstom and GE for a third partner in their planned joint venture to set up nuclear power projects in India.
Asian stocks fell today, 6 October 2008, led by shares of exporters, after a hectic weekend in Europe as the financial crisis gathered steam there, knocking the euro to the lowest in a year. Fears that damage from dysfunctional financial systems in developed economies would almost certainly push them closer to recessions, weighed on Asian stocks. Key benchmark indices in Hong Kong, China, Japan, South Korea, Singapore and Taiwan were down by between 4.12% to 5.23%.
In Europe, France’s CAC 40, Germany’s DAX and UK’s FTSE 100 were down between 3.11% to 5.85%.
US light crude fell 3.8% to $90.34 a barrel as concerns grew the slowing economy would choke off energy demand.
BNP Paribas France's biggest listed bank, today, 6 October 2008, said it was paying 14.5 billion euros ($20.1 billion) to take control of European financial group Fortis. Germany gave blanket bank deposit guarantee on Sunday, 5 October 2008, to prevent panic as officials clinched deals to rescue Germany's Hypo Real Estate -- after an initial bailout failed -- and recapitalize two other European banks.
In South Korea, banks were having trouble raising foreign currency funds and the government pledged to give banks access to the country's foreign exchange reserves, the world's sixth largest at nearly $240 billion.
US stocks declined in volatile trade on Friday, 3 October 2008, on concerns whether the $700 billion rescue plan, which was approved by the US Congress would be quickly implemented and whether it would be enough to shore up the economy. The Dow Jones Industrial Average slid 157.47 points or 1.5% at 10,325.38. The tech laden Nasdaq Composite index shed 29.33 points or 1.48% at 1,947.39.
The market regulator ---Securities & Exchange Board of India (Sebi)----- is expected to review restrictions on issue of participatory notes (P-Notes) at a board meeting today, 6 October 2008. Reports suggest that--- Sebi---- may ease restrictions on P-Notes. However, the Reserve ---bank--- of India has always been against allowing investments through P- Notes. P-Notes are derivative instruments issued by foreign institutional investors (FIIs) to other overseas investors seeking to invest in Indian securities, but are not registered with the stock market regulator---- Securities & Exchange Board of India (Sebi)----- either out of choice or regulatory issues.
With the end of third quarter of the calendar year 2008 on Tuesday, 30 September 2008, hedge fund are bracing for heavy redemption amid US financial sector crisis which has already spread to Europe. Investors in hedge funds are usually allowed to exit funds only on the final day of the financial quarter. Large-scale investor redemption in hedge funds may trigger further selling by foreign funds in India. Hedge funds mainly operate through the participatory notes route in India. However, there is no data available on the quantum of hedge funds’ investment in India.
The next major trigger for the market is Q2 September 2008 results. IT bellwether Infosys kickstarts the reporting season on 10 October 2008.
Last-minute administrative hitches forced Condoleezza Rice, US secretary of state, to leave New Delhi at the weekend without signing the US-India nuclear deal to end more than three decades of isolation for India's nuclear programme. The deal is now expected to be signed by US president George Bush on Wednesday, 8 October 2008. Cautious Indian negotiators have been keen for Bush to sign the deal into US law and to publish a presidential statement before signing the agreement themselves.
The agreement allows US companies to provide India with technology for its civilian nuclear programme, ending an embargo in place since India tested a nuclear weapon in 1974. It also gives India international status as an acceptable nuclear power, even though it is not a signatory to the Nuclear Non-proliferation Treaty.
Inflation based on the wholesale price index rose 11.99% in 12 months to 20 September 2008, below the previous week's annual rise of 12.14%, government data released after trading hours on Friday, 3 October 2008, showed. Inflation for the week ended 26 July 2008 was revised upwards to 12.53% from 12.01%.
Nervousness may continue
After witnessing a sharp slump of 529 points in Friday's trades, the market is likely to remain shaky as global markets fell further and the FIIs remaining net sellers of equities in the local market. Although fall in Crude oil price provide cushion, the sentiment is likely to remain bearish on weak global indices. Among the key domestic indices, the Nifty may get support at 3750 and a break below this level could see the index slip further to 3700. The Sensex has a likely support at 12400 and may test higher levels at 12650.
US indices slumped on Friday with Dow ended lower at 10325 down 157 points, while the Nasdaq declined to close 29 points lower at 1947.
Indian floats had a weak outing on the US bourses. Except Wipro all fell sharply. VSNL tumbled 7.85%, ICICI Bank slipped 6.98%, Patni Computer down 3.87%, Rediff moved down 3.75%, Infosys slipped 3.27%, Satyam drop 3.59% and Dr Reddy, Tata Motors, HDFC Bank and MTNL dropped over 0.50-1% each.
Crude oil prices in the international market edged lower, with the Nymex light crude oil for October delivery decline by 9 cents to close at $93.88 per barrel. In the commodity space, the Comex gold for December series declined $11.10 to settle at $833.20 a troy ounce.
Stock Technical Levels
RIL: (1961) Expect 1739, 1724 & 1670 initially. Consider 1670 a crucial support.
REL INFRA: (741) Looks weak. Expect 732-725 & 703 initially. Break below 703 expect 667 & 612.
REL CAP: (1067) Expect 1038 & 996 initially. Break below 996 further panic will be seen.
ICICI Bank: (504) Expect 494 & 477 initially. Consider 477 a crucial support closing below which expect 458-450 & there after real panic will be seen.
PUNJ LLOYD: (268) Break below 262 huge panic will be seen.
DLF: (336) Break below 330 expect 310 & 278.
TISCO: (394) 382 a crucial support break below which expect 324.
SAIL: (115) Looks weak, expect 108 & 97.
JINDAL STEEL: (1151) Looks weak, expect 1058 & 995 in panic.
Daily Technicals - Oct 6 2008
Nifty: (3818) for this week...Expect it to fall down to 3775 & there after to 3722-3715. Consider 3722-3715 a most crucial support area from where buying support not ruled out.
Break below 3715 it'll turn further weak & fall down to 3685, 3575 & there after to 3475.
Upward side 3862 a nearest & 3931 a crucial resistance, keep stop loss of 3931 to your sales.
A close above 3931 it'll turn positive & surge up to 4052.
A close above 4052 it'll turn total positive & spurt up to 4177 & 4286.
Nifty Future: (3839) For this week...Expect it to fall down to 3766 & there after to 3707 initially. Consider 3707 a most crucial support area from where buying support not ruled out, if it remains intact then expect bounce back.
In total worst scenario break below 3707 it'll turn further weak & fall
Pre Session Commentary - Oct 6 2008
Today the Market would open negative as the major Asian markets have today opened with heavy blood bath. The sentiments across the Europe and Asia are weakening as investors are very concerned about the Credit crisis in Europe and US. Despite the House of Representatives accepting the bail out bill of $700 billion, investors are still apprehensive about the current financial crisis across the world. There seems to be a very chaotic state amongst the leading and emerging markets in the world which is likely to deteriorate the sentiments of the investors further.
On Friday, the market took a massive blood bath after the post mid session. The negative sentiment got transmitted from the Asian markets which were trading lower since opening. However after the poor opening of the European market the selling pressure became more intensive on the heavy stocks amidst concerns over the global meltdown. There are also apprehensions about the no effect of the bail out plan on the Indian market. But the bail out plan once accepted by the House of Representatives may bring a little charm across the other world markets and bring some positive sentiments. However in the domestic arena, sectors like Metal, Oil & Gas and Bankex were brutally shattered by 7.01%, 5.74% and 3.88% respectively. During the trading session we expect the market to trade in red.
The BSE Sensex closed at 12,526.32 registering a drastic fall of 529.35 points and NSE Nifty ended up by a fall of 132.45 points at 3,950.75. The BSE Mid Caps and Small Caps closed with loss of 146.36 points and 141.40 points at 4,677.80 and 5,465.40. The BSE Sensex touched intraday high of 13,001.19 and intraday low of 12,472.61.
On Friday, the US market closed as amended version of the bail out plan of $700 billion gave a negative outlook of the financial crisis in US. Many market participants are hoping that the Fed would reduce its interest rates in the next meeting. Further the Department of Labor announced that non-farm payrolls were down for the ninth consecutive month. They fell 159,000 in September, exceeding the drop of 105,000 that was widely anticipated. The investors are very concerned about the economic slowdown in US and therefore any negative cue from the government would crash the market in deep red. However in the banking arena the Wells Fargo and Wachovia Bank have agreed to merge through a stock-for-stock transaction valuing the latter’s shares at $7 a premium of nearly 80% on the prio closing price. And therefore the overall transaction is valued at $15.1 billion. Crude oil for November delivery fell by $1.90 to $91.98 per barrel on the New York Mercantile Exchange. The demand of crude oil is feared to fall down amidst the credit crisis. The Dollar is also gaining strength against Euro and other Asian markets thus making the other commodities weaker.
The Dow Jones Industrial Average (DJIA) was low by 157.15 points at 10,325.70 along with NASDAQ index which was low by 29.33 points at 1,947.39 and the S&P 500 (SPX) also declined by 15.04 points to close at 1,099.24 points.
Indian ADRs ended down. In technology sector, Wipro closed lower by (3.59%) followed by Satyam that ended down by (3.75%) and Patni Computers by (1.79%). In banking sector ICICI Bank gained (1.79%), while HDFC Bank lost (6.98%). In telecommunication sector, Tata Communication closed lower by (0.76%), while MTNL plunged (0.58%). Sterlite Industries decreased by (6.94%).
Today the major stock markets in Asia opened with a blood bath amidst concerns of credit crisis in Europe. The Hang Seng index is trading low by 498.16 points at 17,184.24 followed by Shanghai Composite which is low by 74.659 points and trading at 2,219.125. Further Japan''s Nikkei is low by 393.81 points at 10,544.33, Straits Times is also low by 58.86 points at 2,238.26.
The FIIs on Friday stood as net sellers in equity and net buyers in Debt. Gross equity purchased stood at Rs1969.80 Crore and gross debt purchased stood at Rs34.10 Crore, while the gross equity sold stood at Rs2254.00 Crore and gross debt sold stood at Rs0.00 Crore. Therefore, the net investment of equity and debt reported were (Rs284.20 Crore) and Rs34.10 Crore respectively.
The Wholesale Price Index (WPI) for the week ended September 20 recorded at 11.99% as against 12.14% in the previous week. This inflation figure has slowed more than expected to a 13-week low.
On Friday, the partially convertible rupee ended at 47.075/0850 per dollar, weakest since June 2, 2006. The sharp selling in the Capital markets has just added fuel to the depreciating Rupee by increasing the demand of the Dollar. The critical condition of the depreciating Rupee is also being dragged by the demand of Dollar from Oil companies, which pay nearly $8 billion per month for Crude oil imports.
On BSE, total number of shares traded were 24.31 crores and total turnover stood at Rs4,801.25 Crore. On NSE, total volumes of shares traded were 44.66 crores and total turnover was Rs11,891.76 Crore.
Top traded volumes on NSE Nifty – ICICI Bank with total volume of 13851673 shares followed by SAIL 12960180 shares, ITC 12116740 shares, Reliance 10688459 shares and Reliance Petro 9510548 shares.
On NSE Future and Options, total number of contracts traded in index futures was 783618 with a total turnover of Rs14096.21 Crore. Along with this total number of contracts traded in stock futures were 811517 with a total turnover of Rs12169.59 Crore. Total number of contracts for index options was 855589 and total turnover was Rs12169.59 Crore and total number of contracts for stock options was 74841 and notional turnover was Rs1157.88 Crore.
Today, Nifty would have a support at 3,695 and resistance at 3,875 and BSE Sensex has support at 12,150 and resistance at 12,650.
Market may track weak Asian stocks
The market is likely to extend Monday’s (6 October 2008) steep fall on weak Asian stocks. Asian stocks fell today, 6 October 2008, led by shares of exporters, after a hectic weekend in Europe as the financial crisis gathered steam there, knocking the euro to the lowest in a year. Fears that damage from dysfunctional financial systems in developed economies would almost certainly push them closer to recessions, weighed on Asian stocks. Key benchmark indices in Hong Kong, China, Japan, South Korea, Singapore and Taiwan were down by between 3% to 4%.
Germany gave blanket bank deposit guarantee on Sunday, 5 October 2008, to prevent panic as officials clinched deals to rescue Germany's Hypo Real Estate -- after an initial bailout failed -- and recapitalize two other European banks.
US stocks declined in volatile trade on Friday, 3 October 2008, on concerns whether the $700 billion rescue plan, which was approved by the US Congress would be quickly implemented and whether it would be enough to shore up the economy. The Dow Jones Industrial Average slid 157.47 points or 1.5% at 10,325.38. The tech laden Nasdaq Composite index shed 29.33 points or 1.48% at 1,947.39.
Back home, inflation based on the wholesale price index rose 11.99% in 12 months to 20 September 2008, below the previous week's annual rise of 12.14%, government data released after trading hours on Friday, 3 October 2008, showed. Inflation for the week ended 26 July 2008 was revised upwards to 12.53% from 12.01%.
The market regulator Securities & Exchange Board of India (Sebi) is expected to review restrictions on issue of participatory notes (P-Notes) at a board meeting today, 6 October 2008. Reports suggest that Sebi may ease restrictions on P-Notes. However, the Reserve bank of India has always been against allowing investments through P- Notes. P-Notes are derivative instruments issued by foreign institutional investors (FIIs) to other overseas investors seeking to invest in Indian securities, but are not registered with the stock market regulator Securities & Exchange Board of India (Sebi) either out of choice or regulatory issues.
As per provisional data released by the stock exchanges, foreign funds sold shares worth a net Rs 1,662.26 crore on Friday, 3 October 2008. Domestic funds bought shares worth a net Rs 56.75 crore.
Foreign institutional investors (FIIs) have been pulling out their investments from India and other emerging markets to shore up resources to beat the global liquidity crunch. In India, FIIs sold shares worth a net Rs 8278.10 crore last month. The outflow has reached Rs 36991.70 crore in calendar year 2008 (till 1 October 2008).
With the end of third quarter of the calendar year 2008 on Tuesday, 30 September 2008, hedge fund are bracing for heavy redemption amid US financial sector crisis which has already spread to Europe. Investors in hedge funds are usually allowed to exit funds only on the final day of the financial quarter. Large-scale investor redemption in hedge funds may trigger further selling by foreign funds in India. Hedge funds mainly operate through the participatory notes route in India. However, there is no data available on the quantum of hedge funds’ investment in India.
The next major trigger for the market is Q2 September 2008 results. IT bellwether Infosys kickstarts the reporting season on 10 October 2008.
Oil prices fell around $2 to just below $92 a barrel dragging down prices of metals and grains.
Last-minute administrative hitches forced Condoleezza Rice, US secretary of state, to leave New Delhi at the weekend without signing the US-India nuclear deal to end more than three decades of isolation for India's nuclear programme. The deal is now expected to be signed by US president George Bush on Wednesday, 8 October 2008. Cautious Indian negotiators have been keen for Bush to sign the deal into US law and to publish a presidential statement before signing the agreement themselves.
The agreement allows US companies to provide India with technology for its civilian nuclear programme, ending an embargo in place since India tested a nuclear weapon in 1974. It also gives India international status as an acceptable nuclear power, even though it is not a signatory to the Nuclear Non-proliferation Treaty.
The BSE 30-share Sensex plunged 529.35 points or 4.05% to 12,526.32, on Friday, 3 October 2008, its lowest closing in 18 months.
Losses pile up at US Market
Dow coughs up more than 800 points during the week
US Market registered huge losses during the week that that ended on Friday, 04 October, 2008. The week kicked off with the House of Representatives to voting against the Emergency Economic Stabilization Act of 2008. This shook market sentiments during the beginning of the week. As the week progressed, a number of crucial events happened, namely the Senate's passing of a plan that was revised after the House vote but a batch of notably weak economic data continued to rattle market sentiments.
The Dow Jones Industrial Average lost 817.75 points for the week to end at 11,143.13. Tech - heavy Nasdaq lost 235.95 points at 2,183.34. S&P 500 lost 114 points to end at 1,213.74. The S&P suffered its worst, single day percent drop on Monday, 29 September since the crash of 1987. Specifically, it plummeted 8.8%.
Losses during the first part of the week were compounded by reports of government-led bailouts of financial institutions in Europe and an FDIC-brokered sale of Wachovia's banking operations to Citigroup for just $2.2 billion.
Among economic news during the week at Wall Street, the ISM survey showed that that hit its lowest level since October 2001, an initial jobless claims reading showed that it was at its highest level since September 2001. In addition there was a 4% decline in August factory orders, and a 159K decline in nonfarm payrolls that was the largest since March 2003.
GE announced late in the afternoon on Wednesday, 01 October, that it will raise at least $12 billion in a public common stock offering and is selling $3 billion in preferred stock yielding 10% to Warren Buffett's Berkshire Hathaway. Berkshire will also get $3 billion in warrants, granting the option to purchase GE at $22.25 per share within the next five years. GE's move to shore up investor confidence came after its stock fell as much as 10% earlier in the session.
After a relatively flattish session Wednesday, 1 October, the market suffered another sharp sell-off on Thursday, 02 October as the economic concerns took precedence over news the Senate passed the relief plan by an overwhelming majority, as expected.
On Friday, the Department of Labor announced that nonfarm payrolls were down for the ninth consecutive month. They fell 159,000 in September, exceeding the drop of 105,000 that was widely anticipated. The unemployment rate remained at an elevated 6.1%.
Also, the ISM nonmanufacturing index for September came in at a relatively neutral reading of 50.2. Though it is down a bit from the prior reading of 50.6 and slightly above the consensus reading of 50.0, it indicated steady activity.
The Dow Jones industrial Average ended Friday with a loss of 157 points at 10,325. The Nasdaq Composite Index, finished lower by 29 points at 1,947. S&P 500 finished lower by 15 points at 1,099.
In the currency market on Friday, the dollar clawed back gains it surrendered against major counterparts in the wake of a revised financial-sector bailout plan, but the greenback's upside was capped by U.S. economic fears and expectations of lower U.S. interest rates ahead. The dollar index, which measures the U.S. unit against a basket of six major currencies, was at 80.606. The index was on track to rise 4.6% this week, and was up about 5.0% for the year so far.
Crude-oil futures closed slightly lower on Friday at Nymex, tallying a loss of more than 12% for the week, as traders remained wary about global oil demand. Crude for November delivery closed down 9 cents to close at $93.88 a barrel on the New York Mercantile Exchange. The contract had closed at $106.89 on Nymex a week ago.
Daily News Roundup - Oct 6 2008
Tatas pull out of Singur; to look at ‘Nano’ relocation.(BL)
ACC announces cement production for September 2008 up by 7.7% YoY.(FE)
Ambuja Cements says September output increased by 8.4% YoY.(BL)
Reliance Industries to start test runs of its new 29mn tonne refinery soon.(BL)
Larsen & Toubro has picked up a 4.2% stake in Kalindee Rail Nirman Engineers.(ET)
MRPL says its capacity expansion to 15mn tonnes by opening a new refinery unit would be delayed by a year to October 2011.(FE)
Hindustan Motors to launch new commercial vehicle.(BL)
McLeod Russel India to buy 100% equity in Phu Ben Tea of Vietnam.(TOI)
Eli Lilly forms JV with Jubilant Organosys for drug development.(FE)
Aban Offshore secures a contract worth US$241mn in Malaysia for deployment of rig deep driller.(BL)
Emami revises the open offer price by further 10% for acquisition of a share of Zandu Pharmaceuticals Works.(FE)
Daiichi Sankyo-Ranbaxy Laboratories deal gets government approval.(TOI)
Xchanging, the UK based BPO, announces its intention to acquire 75% stake in the Bangalore-based ITES firm Cambridge Solutions in a cash-cum-share deal valued at UK£83mn.(ET)
Indian Oil Corp. import bill may go up by 17.6% in current fiscal.(BL)
Food Corporation of India announced it has procured a record 2.4mn tons of rice this year.(ET)
Powergrid Corp. to set up 70,000km transmission system in 5 years.(FE)
Indian Oil Corp-Oil India arm to scout for oil assets in CIS, African countries.(BL)
Reliance Industries demands oil bonds and upstream assistance to restart its petrol pumps.(ET)
SCI to purchase four capesize ships with an investment of Rs16bn.(BL)
BSNL in talks with Apple and BlackBerry to launch the service in India on its own network. (ET)
Exim Bank of India has cleared a Rs2bn concessional loan for the Rs10bn Zambia power project, for which Tata Africa Holdings has been selected as the private sector partner.(ET)
Sun Pharmaceuticals has extended its tender offer for all shares of Taro Pharmaceuticals till November 7th.(ET)
Eicher Motors truck and bus sales fall 34% YoY in September.(BL)
Bharti Airtel, Reliance Communications and BSNL to save significant amounts as government cuts license fees by 20-33% for players whose services cover over 95% of the residential areas in a state.(ET)
BSNL has opposed the merger of loss-making ITI with itself.(BS)
Reliance Industries is mulling the merger of its different formats to make its retail arm more efficient. (ET)
Consolidated Constructions receives orders worth Rs15bn.(BL)
Sesa Goa plans to explore business opportunities in ports and infrastructure sector. (ET)
Cairn India asks Centre to assure Rajasthan the point of sale for the crude from its Barmer oil field would remain in the state and warned any uncertainty in this regard could affect production schedule.(ET)
Tata Motors working on a smaller version of ‘Ace’, its offering in the light commercial vehicle segment.(Mint)
Reliance Globalcom is restructuring its business under four vertical to further penetrate the global communications market. (BS)
Dr Reddy’s diabetes drug may be delayed.(Mint)
Allahabad Bank defers its rights issue.(BL)
Tata Motors might look at Gujarat as the location for setting up the mother plant for the Nano car project.(BL)
Karnataka government offers Tata Motors immediate possession of 500acres of land to set up a factory to build the ‘Nano’ car.(ET)
ITC sets up wind energy project in Tamil Nadu.(BL)
2G spectrum allotment to GSM operators like Bharti Airtel, Vodafone Essar and Idea Cellular may require payment of a one-time fee for the radio frequencies with a retrospective effect. (ET)
Cotton procurement is likely to hit a record this year with Cotton Corporation of India likely to purchase 5-10bn bales due to a hike in minimum support price.(BS)
Economic Front Page
Banks to get interest for delayed return of farm debt waiver sums.(BL)
Forex reserves dropped by US$153mn to touch US$292bn.(BL)
Import of sensitive items monitored by the government increased by 11.2% in April-July 2008.(ET)
WPI rose 11.99% for the week ended September 20.(BL)
Assets Under Management for MFs declined by 2.8% in September.(FE)
Ministry of finance may extend sovereign guarantee to Japan’s US$125mn soft loan for preparing project report for Delhi Mumbai Industrial Corridor.(ET)
The Limited Liability Partnership Bill may be passed in the forthcoming parliamentary session.(BS)
Government and SEBI may ease some of the restrictions imposed on foreign portfolio investors last year regarding PN curbs at a board meeting today.(ET)
Maharashtra cuts ATF sales tax.(BL)
Steel imports increase 50% in first six months of current fiscal.(BL)
Government asks sugar mills to now sell sugar from the second buffer stocks according to a quarter-wise schedule.(ET)
Government is likely to widen the service tax net to increase indirect tax collections.(DNA)
Insurance bill, which seeks to raise foreign direct investment cap in the sector to 49% from 26%, is likely to be introduced in the forthcoming session of Parliament.(ET)
Telecom operators set to approach the DoT demanding that the 20-33% cut in license fee be applicable to all players and not just to those operators whose services extend to over 95% residential areas in a state.(ET)
Government mulls dual pricing for diesel.(TOI)
Concerned over the rising fertilizer subsidies, Chemicals and fertilizer minister seek early gas connectivity for fertilizer units to augment domestic output and reduce import dependence.(ET)
Government mulls pricing coal-liquid blocks.(DNA)
Government looking at building a third airport at Navi Mumbai.(BS)
Health Ministry moves a cabinet note seeking a complete ban on foreign investments in the tobacco sector.(ET)
Mountains of worry!
The higher you climb on the mountain, the harder the wind blows.
Earlier, we used to think about a wall of worry. The issues plaguing the financial markets seem to be gaining mountainous propositions. Many would have expected global financial markets to be back on their feet as the US government's $700bn bank bailout plan became law. Much to the dismay of the bulls, things still remain quite fragile and precarious. There is a growing feeling that the rescue plan unleashed by Washington will not be enough. That perhaps could explain Friday's fall in US shares despite the House of Representatives clearing the bailout bill. US economic data continues to be grim. If the troubles in the US were not enough, we now have most of Europe struggling badly. Government after government is announcing plans to rescue their respective financial institutions. And, though European nations have pledged to keep doing whatever they can to support their banking systems, the rhetoric doesn't seem to be working. The blood-letting continues.
Back home too, the Government and regulators are having sleepless nights and nightmares. In an effort to stem the tide, capital market regulator SEBI is likely to ease some of the curbs imposed on Participatory Notes (PNs) a year ago. That again is a hope. The market regulator is holding a board meeting today to discuss ways to reverse the foreign capital outflows. FIIs have already pulled out more than $9bn from the Indian markets till date. More outflows are not ruled out given the dire liquidity crunch faced by hedge funds and others. So, it remains to be seen what measures SEBI, RBI and the Government will take to prevent further bloodbath in the local markets. Also, any positive impact on the markets will be only temporary.
We expect the market to open on a weak note yet again given the sharp losses in Asian markets, which are down 3-4%. For the day, the key indices movement will hinge on the outcome of today's SEBI meeting. It is not clear whether the announcement from the market watchdog will be during or after market hours. We would continue to advise caution at this juncture, though valuations are quite compelling. Look at some shopping at lower levels. Remember, that beyond the mountains, there are mountains again. So, keep some cash handy, as there is no guarantee that we have hit a bottom.
The outlook in the near-term will be driven by global news and of course the upcoming quarterly results. Indiabulls Real Estate, Infosys, Mastek and Sintex Industries are some of the prominent companies that will announce their earnings this week. We will also have the mid-term review of the monetary policy from the RBI and the Federal Reserve later this month. Some easing in monetary policy by central banks could be the next step in salvaging the markets from the ongoing financial contagion. Shares of 20 Microns will be listed on the bourses today.
Asian stocks fell for a third day, led by financial companies, as the global credit crisis deepened in Europe and the US lost the most jobs in five years. The MSCI Asia Pacific Index fell 1.9% to 102.68 as of 9:50 a.m. in Tokyo. Last week, the regional stock benchmark posted the biggest weekly drop since August 2007 on concern that the US bank bailout will fail to stimulate demand for the region's exports.
National Australia Bank, the nation's largest lender, dropped 3.8% after Germany's Hypo Real Estate Holding became the latest casualty of the financial turmoil. Newcrest Mining, Australia's biggest gold producer, and Inpex Holdings, Japan's largest oil explorer, retreated at least 2% after prices of the two commodities sank.
Japan's Nikkei 225 Stock Average fell 2.8% to 10,636.18 while the Hang Seng in Hong Kong was down 2.5% at 17,236. The Kospi in Seoul was down 4.3% at 1359 while the Straits Times in Singapore dropped 2.7% to 2234. The Shanghai Composite in China - resuming trade after a week-long holiday - fell 3.1% to 2222. The Taiex in Taiwan shed 3.4% at 5549 and the S&P/ASX 200 index in Sydney was down 3.4% at 4536.
US stocks slumped on Friday, capping another trouble-torn week on a grim note despite the House of Representatives passing the much-hyped bank bailout bill. The S&P 500 index had its worst week since the Sept. 2001 terrorist attacks, amid mounting worries that the US$700bn rescue package may not revive the stressed money markets and avert a recession.
The Dow Jones Industrial Average hit session highs as House members began to vote, rising more than 300 points, only to scale back as the measure passed. The bluechip barometer closed at 10,325.38, down 157.47 points or 1.5%. It lost 7.4% on the week. On a point basis, the Dow lost 818 points this week, its biggest weekly point loss in seven years and the third biggest weekly loss ever.
The Standard & Poor's 500 index lost 15 points or 1.4% to close at 1,099.23. The broader market indicator closed down 9.4% on the week, its worst in seven years and fifth worst ever. But the weekly point drop of 236 points fell outside the ten worst on record.
The Nasdaq Composite index fell by 29 points, or 1.5% to shut shop at 1,947.39. The tech-laden index slid 10.8% during the week. It was the worst weekly decline for the Nasdaq in seven years and fifth worst ever. But the weekly point drop of 236 points fell outside the ten worst in history.
Wall Street rallied ahead of the early afternoon vote - with the Dow up as much as 313 points - as investors bet the House would pass the modified version of the bill after defeating a similar measure on Monday. But once the House voted 263-171 to pass the bill, stocks gave up gains. News that President Bush had signed it into a law failed to stop the downtrend.
Market may have concurred that even with the new bailout law, the world's biggest economy remains under stress. Some Wall Street economists reckon that the US economy is already in a recession now and will remain in one until at least this time next year. Banks are still wary of lending to each other or consumers. The absence of ready capital has stalled the financial system, hurt companies as well as consumers.
Market breadth was negative. More than three stocks decreased for each that rose on the New York Stock Exchange. Trading volume topped 1.4bn shares on NYSE. More than 1bn shares traded on the Nasdaq, where decliners passed advancers 5 to 2.
Before the opening bell, the government said the US economy lost 159,000 jobs in September, the worst decline in five years. The number far exceeded economists' forecasts for 105,000 job losses.
It was the ninth-straight month the economy has lost jobs, bringing the 2008 tally up to 760,000 jobs lost. The unemployment rate, generated by a separate survey, stayed at 6.1%, unchanged from August and in-line with Wall Street forecasts.
In other economic news, the Institute for Supply Management's reading on the services sector of the economy fell to 50.2 in September from 50.6 in August. That topped forecasts for a drop to 50, which is the measure for expansion in the index.
Shares of American International Group (AIG) fell 3.5% after the insurance giant announced that it would refocus on property and casualty insurance, and would sell some of its business to pay back the USUS$85bn in federal government loans.
Oil prices were lower, with US light crude oil for November delivery settling down 9 cents to US$93.88 a barrel on the New York Mercantile Exchange. Gasoline prices fell for the 16th day in a row, according to a nationwide survey of credit card activity.
COMEX gold for December delivery fell US$11.10 to US$833.20 an ounce. In currency trading, the dollar gained against the euro and fell versus the yen. The benchmark 10-year Treasury note rose, sending the corresponding yield down to 3.6% from 3.62% late on Thursday.
Indicators on the credit market showed some signs of improvement, although conditions remained extremely strained. The lack of improvement in the credit markets is making it difficult for equity investors to regain confidence.
European shares registered solid gains on Friday, with a grim U.S. jobs report largely ignored by the market as optimism grew that the House of Representatives would approve a revamped $700bn bailout package. The pan-European Dow Jones Stoxx 600 index gained 2.8% to 261.43. Germany's DAX 30 rose 2.4% to 5,797.03, while the French CAC-40 added 3% to 4,080.75 and the UK's FTSE 100 closed up 2.3% at 4,980.25.
In the emerging markets, the Bovespa in Brazil slid 3.5% to 44,517 while the IPC index in Mexico slumped 4.3% to 22,989. The RTS index in Russia plummeted 7% to 1070 and the ISE National-30 index in Turkey tumbled 4.5% to 43,425.
US vote, SEBI meet to decide direction
Markets ended with sharp losses on Friday on the back of overnight crash on Wall Street and weakness in other Asian markets. Equity markets not only in India but across the globe continued to be under pressure on concerns as to whether the Bush government's much-hyped measure will be able to avert a recession.
Heavy offloading was seen in the frontline stocks like Reliance industries, ICICI Bank and IT bellwether Infosys. The metal stocks were under pressure following reports that major steel companies are considering a cut in their output to counter slowing demand and falling international prices.
Finally, The BSE benchmark Sensex plunged 529 points to close at 13,526 and the NSE Nifty index declined 132 points to close at 3,818.
Index heavyweight Reliance Industries plunged by over 7% to Rs1760. The stock was the top laggard among the 30-components of Sensex. The scrip touched an intra-day high of Rs1897 and a low of Rs1745 and recorded volumes of over 36,00,000 shares on BSE.
Shares of Gremach Infra were locked at 10% at upper circuit at 60.25 after reports stated that the company is in talks to sell 5-10% of its equity stake in a Mozambique coal JV, where it owns about 75% stake. The scrip touched an intra-day high of Rs60.25 and a low of Rs55 and recorded volumes of over 39,000 shares on BSE.
Shares of HCL Tech gained by 0.3% to Rs206 after reports stated that Axon Group Plc, announced that it would recommend US$779.2mn takeover bid by the company. HCL’s offer surpasses an earlier offer by Infosys. The scrip touched an intra-day high of Rs212 and a low of Rs202 and recorded volumes of over 1,00,000 shares on BSE.
Shares of Ranbaxy Labs surged by over 5% to Rs263 after reports stated that the U.S. Justice Department might withdraw a motion against the company next week in a local court in the US. The scrip touched an intra-day high of Rs274 and a low of Rs254 and recorded volumes of over 32,00,000 shares on BSE.
Shares of Zandu Pharma surged by over 4.5% at Rs14,960 after Emami announced that it has revised the offer price in respect of the Public Offer made by it for acquisition of equity shares of Zandu Pharma from Rs15,000/- per equity shares to Rs16,500/- per equity share. The scrip touched an intra-day high of Rs16,016 and a low of Rs15,421 and recorded volumes of over 1,000 shares on BSE.
Shares of Hindustan Zinc dropped by 7% to Rs404 after the company announced that it cut zinc prices by 3% to Rs88,500 per ton and also cut lead prices by 3.8% to Rs99,300 per ton. The scrip touched an intra-day high of Rs434 and a low of Rs401 and recorded volumes of over 71,000 shares on BSE.
One factor could swing the pendulum in favour of the bulls is the dip in inflation, which has fallen below 12% after a long time. Whether the same prompts the RBI to ease the monetary policy remains to be seen though. Market regulator SEBI will hold its board meeting on Monday to take a review of investment regime for the FIIs. Market players will also take a cue from the US where the house of representatives is schedule to vote on the US$700bn bailout package. Next week will also be a truncated one as Thursday will be a holiday on account of Dasera. Infosys will come out with its earnings on Friday.
Mahindra Holidays & Resorts files DRHP
Mahindra Holidays & Resorts India Ltd., a leisure hospitality provider offering quality family holidays and part of the Mahindra Group of companies, has filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for an Initial Public Offering (IPO) of 92,65,275 equity shares of Rs10 each for cash at a price to be decided through a 100% book-building process. The issue would constitute 11% of the fully diluted post-issue paid-up capital of the company. The equity shares offered through this draft red herring prospectus of the company are proposed to be listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
Is India insulated ?
The collapse of the mighty global financial system has triggered a series of chain reactions in India, but the impact is not going to be as widespread as earlier imagined. The reasons are numerous.
First, the subsidiaries of collapsed investment banks like Lehman are being bailed out by entities like Nomura of Japan. This includes the 2,500-strong back office operations in Mumbai, apart from the smaller securities set up. Similarly, American Insurance Group (AIG) in India has a tie-up with the ever reliable Tatas who have given thumbs up to all consumers who were worried about their insurance carried out through this vehicle.
Second, and even more significant, is the fact that the conservative approach to reforms in the financial services sector has ensured that the tremors of earthquakes in the US are being felt minimally in India.
A meeting a few days ago of the regulators for the pension, insurance and other similar sectors concluded with a sigh of relief and pronouncement that slow and steady opening up of the economy has helped in the long run. This is not to say that capital account convertibility - or making the rupee freely tradable - will not take place. But probably as the regulators have pointed out, this can happen when the economy is at a more mature stage.
Ultimately, therefore, the big losers in the global financial crisis in this country are likely to be the iconic software firms like Infosys, Wipro and Tata Consultancy Services (TCS). Much of their business comes from the erstwhile giant investment banks and that could affect their profitability in the short term. In the medium-to-long term, however, these companies are likely to have greater resilience given their innovative approach in the past to hunting out new markets and customers.
The other area where worries still remain is the pullout of funds by foreign institutional investors from the country's equities and debt markets. The bourses have been showing considerable volatility ever since the news came in about the failure of Lehman and the domino-like effect on other investment banks.
While the Indian stock markets became volatile, they have not crashed as might have been expected initially. They now seem to be stabilizing as safety nets are being created for collapsed banks, like converting Goldman Sachs and JP Morgan into commercial banks while other banks are picking up some entities cheap like the takeover of Wachovia by Wells Fargo.
As far as the US and even Europe are concerned, the ramifications appear to be unending as the scenario is unfolding into the biggest banking crisis in 100 years. Financial institutions considered to have a rock-like stability including Merrill Lynch, Morgan Stanley, JP Morgan and the Lehman Brothers collapsed within days of each.
Some were rescued through various manoeuvres and only Lehman actually declared bankruptcy. Reports reaching here also indicate that many smaller banks are declaring insolvency in the US - a development not being taken note of by the international media which is focusing on the big fish. Thus average people in the US are facing severe hardship. No wonder then the battle is being described as one of Main Street vs Wall Street.
The complex set of circumstances that created the crisis are a fascinating story of greed and over-reach at the highest level of the financial system in the US. The solutions being found are even more fascinating - at least in India.
The US administration actually bailed out mortgage giants like Freddie Mac, Fannie Mae and the world's biggest insurance company, AIG. The bailout has resulted in the government taking a majority stake in these institutions including an 80 percent equity share in AIG. In other words, the US is doing what we in India call nationalisation.
The irony has not been lost on those in the banking industry in this country. Former Prime Minister Indira Gandhi was roundly condemned by the US and other Western powers when she nationalised banks in this country in order to ensure that credit reached the poor and powerless. Deemed to be a socialist - or communist-like measure -, it has now been adopted without any qualms by the avowed world leader of free market economies. It seems the US government had little choice, as otherwise widespread mayhem may have resulted for the average citizen both within America and abroad.
In the case of AIG especially, it was recognized that the sudden collapse of the largest insurer in the world would wreak havoc globally. Besides the timing of these events could not have been worse for the Bush administration as the presidential elections are just weeks away. It thus had little option but to carry out damage control as rapidly as possible.
Clearly the rules of the game change for Western economies during crisis. Nationalisation can be resorted to when the American people need to be protected but the same measure can be decried when a developing economy needs to do so to similarly protect its far more impoverished citizenry.
The nationalization of banks in India opened the way for ordinary people to use the financial system for small and tiny deposits. It paved the way for what is known as compulsory priority sector lending. In other words, banks had to provide a certain amount of credit for agriculture and rural areas. In the normal course, commercial banks only lend to sectors providing assured and fairly high returns. But Indian nationalised banks have a social obligation to fulfill and the directive to do so was made possible only by the drastic takeovers effected by Indira Gandhi in 1969.
Apart from banks, many other industries had to be nationalized to prevent millions of workers from becoming jobless. The perennially loss-making National Textile Corp is one such case when the government had to step in as private mill owners were closing shop and leaving their workers in the lurch.
Though the corporation and its regional subsidiaries have rarely made profits, the mills under its charge have also performed a social obligation by producing cheap cloth meant for weaker sections of society. No doubt the nationalization process was carried too far, but at the time it seemed the only way out to save jobs in a country without any social safety nets for the jobless.
So there can be few tears shed in India for the plight of the US economy. Our focus should only be on how to deal with the fallout of the financial disaster that has overtaken the global bastion of free markets.
Pfizer - BUY
We recommend a buy in Pfizer from a short-term perspective. It is clearly evident from the charts of Pfizer that it was on a long-term downtrend from its 52-week high of Rs 850 (recorded on December 31, 2007) to late September low of Rs 513. However, the stock found support around Rs 525 and it reversed direction. This stock’s reversal has been supported by a positive divergence in the daily relative strength index. The stock gained six per cent accompanied by high v olume on September 30, forming a bullish engulfing candlestick pattern.
Subsequently, on October 1, the stock breached the long-term down trendline as well as its 50-day moving average, with above average volume. The daily relative strength index is on the brink of entering in to the bullish zone from the neutral region.
The moving average convergence and divergence is signalling a buy. We are bullish on the counter from a short-term perspective. We expect the stock to move up until it hits our price target of Rs 637 in the approaching trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 548.
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