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Tuesday, November 11, 2008
Post Session Commentary - Nov 11 2008
Market crashed badly during the trading session to close in deep red on account sharp cut over the counters led by growing worries about a global recession. The Sensex sinked below 10,000 level and closed below 9,850 mark. Along with this, Nifty fell below 3000 level and closed below 2,950. Indian market opened on the back foot tracking the weak global cues and tumbled down further as the investors decided to book some profit after yesterday’s gains. The market kept on hovering in extremely territory without showing any sign of recovery on weak Asian markets as bankruptcy of two more banks and General Motors fueled the sentiments all over the world. Further, harsh selling during final trading hours forced market to extend its losses and knock down stridently. All indices closed in red. Out of which, Reality stocks underperformed the benchmark index as closed with deep cut of more than 10%. Followed by this, the Metal index also lost more than 8%. Heavy selling was also witnessed from the Power, Oil & Gas, Teck, IT and Bank stocks baskets.
Among the Sensex pack 29 stocks ended in red territory while only 1 stock ended in green territory. The market breadth was negative as 1766 stocks closed in green while 759 stocks closed in red and 77 stocks remained unchanged.
The BSE Sensex closed lower by 696.47 points at 9,839.69 and NSE Nifty ended down by 209.60 points at 2,938.65. The BSE Mid Caps closed with losses of 118.39 points at 3,356.70 and Small Cap ended down by 100.02 points 3,888.01. The BSE Sensex touched intraday high of 10,405.39 and intraday low of 9,799.45.
Losers from the BSE Sensex pack are JP Associates (12.71%), Sterlite Industries (11.03%), Tata Steel (10.98%), Hindalco (10.18%), DLF Ltd (10.15%), BHEL (9.65%), Satyam Computer (9.22%), ONGC Ltd (8.77%), Tata Motors (8.54%), Wipro Ltd (8.03%), M&M Ltd(7.92%) and ICICI Bank (7.94%).
Only gainer from the BSE Sensex pack is ITC Ltd (0.06%).
The Reality index ended down by (10.25%) or 252.14 points at 2,208.71 as Indiabull Real (15.00%), Mahindra Life (11.33%), Housing Dev (11.18%), Orbit Co (10.93%), DLF Ltd (10.15%) and Parsvnath (9.97%) in negative territory.
The BSE Metal index ended lower by (8.42%) or 481.06 points at 5,233.77. Major losers are SAIL (11.77%), Sterlite Industries (11.03%), Tata Steel (10.98%), Hindalco (10.18%), Welspan Gujarat Sr (8.99%) and Sesa Goa Ltd (8.68%).
The BSE Power index lost (7.70%) or 147.62 points to close at 1,769.37. Losers are Suzlon Energy (13.78%), GVK Power (13.41%), GMR Infra (10.10%), BHEL (9.65%), ABB Ltd (9.61%) and NEyveli LIG (8.41%).
The BSE Capital Goods index dropped by (7.24%) or 587.55 points to close at 7,530.88. Losers are Suzlon Energy (13.78%), BHEL (9.65%), ABB Ltd (9.61%), Lakshmi Machines (8.07%), Crompton Greaves (8.00%) and Punj Lloyd (7.71%).
The BSE Oil & Gas index lost (7.18%) or 458.47 points to close at 5,922.61. Major losers are Cairn Ind (9.40%), ONGC Ltd (8.77%), Essar Oil Ltd (8.57%), Reliance Natural Resources (7.39%), Reliance (7.37%) and Reliance Pet (7.01%).
The BSE Teck index ended lower by (6.47%) or 143.08 points to 2,067.45 as Zee Entertainment (9.80%), Satyam Computer (9.22%), HCL Tech (9.22%), Aptech Ltd (9.03%), Tel Eighteen (8.85%) and Tanla (8.43%) ended in negative territory.
Rupee falls
Ends at 48.1250/1400
Rupee closed at its lowest in a week on Tuesday as a sharp fall in the domestic equity market raised concerns of more foreigners repatriating funds, pressuring the currency lower.
Rupee closed at 48.1250/1400 per dollar, its weakest since Nov. 4, and 1.6 percent below 47.35/37 at close on Monday. On Oct. 27, the rupee had fallen to a record low 50.29.
Nifty November 2008 futures fall below 3000
Turnover surges
Nifty November 2008 futures were at 2922, at a discount of 16.65 points as compared to spot closing of 2938.65. Turnover in NSE's futures & options (F&O) segment surged to Rs 40,386.30 crore from Rs 30,290.49 crore on Monday, 10 November 2008.
Reliance Industries November 2008 futures were at discount at 1200.35 compared to the spot closing of 1207.70.
Reliance Communications November 2008 futures were at discount at 218.40 compared to the spot closing of 220.35.
State Bank of India November 2008 futures were near spot price at 1222 compared to the spot closing of 1222.40.
In the cash market, the S&P CNX Nifty lost 209.60 points or 6.66% at 2938.65.
Sensex plunges 6.6% as domestic bourses underperform global peers
Key benchmark indices underperformed its global peers today as fall in India's exports for the first time in five years and worries about the global economy eclipsed optimism over China's massive $600 billion economic stimulus package. The BSE 30-share Sensex slumped 696.47 points or 6.61%. Reduction in India's growth forecast by US bank Morgan Stanley also weighed on the sentiment.
The selling was broad-based, with all BSE sectoral indices in the red and all the 30 Sensex stock in negative zone. For the first time in the last five years, in October 2008, there has been a decline of over 15% in India's exports in dollar terms, the Director General of Foreign Trade R S Gujral said on Monday, 10 November 2008.
Meanwhile, Morgan Stanley on Monday, 10 November 2008, cut its forecast for Indian economic growth in 2008/09 (April-March) to 5.7% from 6.5% due to high cost of capital, falling consumer loan growth and reduced demand.
Stocks fell in Asia and Europe as evidence of a weakening Chinese economy, feeble data from Australia and Britain and gloomy US corporate news, reinforced fears of a prolonged global recession. In Europe, the key benchmark indices in UK, Germany and France were down by between 1.72% and 2.51%. In Asia, the key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea, and Taiwan were down by between 2.06% and 4.77%.
Russian regulators halted trading on one of the country's two main stock indexes after it fell 6.5%, dragged down by commodity and banking shares. Trading in US index futures indicated the Dow will fall 82 points at the opening bell.
The BSE 30-share Sensex slumped 696.47 points or 6.61% to 9,839.69. At the day's low of 9,800.67 hit in late trade, the Sensex crashed 735.49 points. The Sensex lost 138.80 points at the day's high of 10,397.36 in early trade.
The S&P CNX Nifty tumbled 209.6 points or 6.665 at 2938.65. Nifty November 2008 futures were at 3922, at a discount of 16.65 points as compared to spot closing. Turnover in NSE's futures & options (F&O) segment surged to Rs 40,386.30 crore from Rs 30,290.49 crore on Monday, 10 November 2008.
The barometer index BSE Sensex is down 10,447.30 points or 51.49% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11,367.08 points or 53.60% below its all-time high of 21,206.77 struck on 10 January 2008.
The market breadth, indicating the overall health of the market, was poor on BSE with 1770 shares declining as compared with 773 that advanced. 68 shares remained unchanged.
The BSE Mid-Cap index lost 3.41% to 3,356.70 and the BSE Small-Cap index shed 2.51% to 3,888.01. Both these indices outperformed the Sensex.
The total turnover on the BSE amounted to Rs 3722 crore as compared to Rs 3703 crore on Monday, 10 November 2008.
India's largest dam builder Jaiprakash Associates tumbled 12.93% to Rs 84.15 on 25.28 lakh shares on profit booking. The stock gained 26.92% to Rs 96.65 in one month to 10 November 2008. It was the top loser from the Sensex pack.
Metal shares reversed Monday's (10 November 2008) sharp gains on renewed gloom over the global economy. The BSE Metal index fell 8.42% to 5,233.77, and was the second worst hit among the BSE sectoral indices.
India's top private sector aluminium producer by sales Hindalco Industries plunged 10.48% to Rs 59.80 after its Canada-based unit's net loss widened to $103 million in Q2 September 2008 as against a net loss of $19 million in Q2 September 2007. Sales rose 2.47% to $2.9 billion in Q2 September 2008 over Q2 September 2007. It was the top loser from the Sensex pack
Sterlite Industries (down 11.53% to Rs 247), and Tata Steel (down 11.17% to Rs 190.50), were the other losers from the metal pack.
Realty shares declined on concerns the global credit crunch and a rise in borrowing costs will lead to a shortage of funds and thereby impact profitability. Unitech (down 10% to Rs 50.75), and Indiabulls Real Estate (down 15.79% to Rs 129.45), dropped. The BSE Realty index plunged 10.25% to 2,208.71 and was the biggest loser from the BSE sectoral indices.
The country's largest real estate developer by market capitalisation, DLF, slumped 11.04% to Rs 265, on reports it has put on hold construction of one of the most high-profile mall project, at Gurgaon, as retail rentals fall and cash becomes precious. The proposed venture was set to be the country's largest mall, with around 4.5-million square feet space.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) lost 7.29% to Rs 1208 on reports it is unlikely to meet its previously-announced commissioning schedules for two key oil and gas projects. The stock swung in a band of Rs 1194 and Rs 1288.45 in choppy trade.
India's top oil exploration company by net profit ONGC slumped 9.53% to Rs 729, reversing strong gains in the previous day. The stock had surged 8.84% on Monday, 10 November 2008 after media reports quoted ONGC's chairman RS Sharma on Saturday, 8 November 2008, as saying that the company is not facing cash flow problems and is still looking for acquisition opportunities despite the global financial crisis. The BSE Oil & Gas index slipped 7.18%, to 5,922.61.
Auto shares declined as automobile sales in the festive month of October fell 14.42%. The BSE Auto index fell 4.3% to 2,609.83. Mahindra & Mahindra (down 8.01% to Rs 357), Tata Motors (down 8.89% to Rs 154.70), and Maruti Suzuki India (down 3.36% to Rs 576), edged lower
The total number of automobiles (which include cars, commercial vehicles, two-wheelers etc) sold in October 2008 slipped to 8.65 lakh compared with 10.11 lakh units sold in October 2007. The key reason for the sharp decline in sales was the credit squeeze as 70% of vehicle sales in the country (90% in case of commercial vehicles) are financed through loans.
Capital goods heavyweights slipped on fears the global credit crisis may lead to a slowdown in overseas orders. India's top engineering and construction firm by sales Larsen & Tourbo shed 7% to Rs 858. Bharat Heavy Electricals the country's largest power equipment maker by sales, fell 10.43% to Rs 1355 slipped on profit booking. The BSE Capital Goods index lost 7.24% at 7,530.88
Bank shares slipped on worries about bad loans in a slowing economy. India's largest private sector bank by net profit ICICI Bank lost 8.75% to Rs 429.90 despite 4.62% rally in its ADR on Monday, 10 November 2008. HDFC bank (down 7.06% to Rs 1018), and State Bank of India (down 5.80% to Rs 1226.05), were not spared either. The Bankex shed 6.17% to 5,425.50.
IT pivotals slipped following weak sentiment on technology stocks in Asia after the No. 2 U.S. electronics retailer Circuit City, on Monday, 10 November 2008, filed for bankruptcy. The BSE IT Index slumped 6.43% to 2,634.88. India's fourth largest IT exporter by sales Wipro fell 9.32% to Rs 244.35
India's second largest IT exporter by sales Infosys slipped 5.85% to Rs 1260. India's largest IT exporter by sales Tata Consultancy Services fell 4.18% to Rs 522.
India's third largest IT exporter by sales Satyam Computer Services lost 10.61% to Rs 265.10 despite acquiring US mobile phone-maker Motorola's software development centre in Malaysia for an undisclosed sum. Satyam will absorb the centre's 128 employees and take over the units assets as part of the deal. The acquisition is expected to create synergies and boost Satyam's competitiveness in Malaysia and Asia Pacific.
Telecom shares tumbled even as GSM-based mobile services providers added a record 7.7 million mobile users in October 2008. India's top mobile operator by market capitalisation, was down 8.15% to Rs 651.55. The company added 2.72 million mobile users in October 2008 taking its total subscribers to 80.2 million. India's second largest cellular services provider by market capitalisation Reliance Communications slipped 7.52% to Rs 217.70.
Tata Power (down 7.60% to Rs 747), NTPC (down 7.37% to Rs 150.25) and Reliance Infrastructure (down 8.44% to Rs 569.70), edged lower from the Sensex pack.
FMCG shares outperformed the BSE Sensex on defensive buying. The BSE FMCG index was down 1.27% to 1,949.41, and was the best performing BSE sectoral index. India's top cigarette maker by sales ITC rose 0.35% to Rs 173 and was the lone gainer from the Sensex pack. The stock rebounded from day's low of Rs 170
Though Hindustan Unilever (down 2.56% to Rs 245.35), Nestle (down 3.23% to Rs 1350), Colgate Palmolive India (down 1.99% to Rs 379.10), were in the red, all the three stocks outperformed the Sensex
Pharma shares, too, outperformed the BSE Sensex on hopes that increased presence of the Democrats in both US Houses is likely to benefit the Indian pharma industry through new legislations favouring use of low-cost generic drugs. The BSE Healthcare index was down 2.49% to 2,986.31.
Dr Reddy's Laboratories (up 1.11% to Rs 420), and Cipla (up 1.21% to Rs 201), rose. Though Sun Pharmaceuticals (down 3.96% to Rs 1200), and Ranbaxy Laboratories (down 6.76% to Rs 215.95), slipped, both the stocks outperformed the Sensex.
The move assumes significance as expenditures on healthcare in the world's largest market have surpassed $2 trillion in the past year and would prove to be a major target area for Indian pharma firms, one of the largest generic drug suppliers in the US.
Shares from the export-oriented textiles, apparel, gems and jewellery, diamonds, leather sectors declined after latest data showed a decline in exports in October 2008 for the first time in the last five years. Gokaldas Exports (down 3.25% to Rs 125), Alok Industries (down 9.45% to Rs 18.20), Welspun Industries (down 4.79% to Rs 23.90), Gitanjali Gems (down 9.12% to Rs 85.20), Bata India (down 6.66% to Rs 99.55), slipped.
Seven key export segments - textiles, apparel, gems and jewellery, diamonds, brassware, handicraft and leather - are reeling under recessionary trends, according to a recent appraisal by the Associated Chambers of Commerce and Industry of India (Assocham). Excluding the export of the petroleum products, there was still bigger drop of 20% in merchandise exports in October 2008.
Reliance Industries topped the turnover chart on BSE clocking a turnover of Rs 266.70 crore followed by Jaiprakash Associates (Rs 221.40 crore), Reliance Infrastructure (Rs 160 crore), Reliance Communications (Rs 154.40 crore) and Reliance Capital (Rs 130.50 crore), in that order.
GVK Power & Infrastructure led the volume chart with volumes of 2.63 crore shares followed by Jaiprakash Associates (2.53 crore shares), Suzlon Energy (1.88 crore shares), Pennar Steel (98 lakh shares) and Reliance Natural Resources (94 lakh shares), in that order.
NMDC rose 0.65% to Rs 185.05, off day's high of Rs 204.05 on reports of the company successfully negotiating a whopping 102% hike in export prices of iron ore from Japanese and South Korean steel mills.
Binani Industries soared 20% to Rs 37.20 after its board will meet on 18 November 2008 to consider buyback of equity shares. The company made this announcement after trading hours on Monday, 10 November 2008.
Everest Kanto Cylinder jumped 1.13% to Rs 192.80 after the company said it will consider share buyback and invest Rs 10 crore in a joint venture. The company made the announcement after market hours on 10 November 2008.
GEI Industrial Systems rose 0.26% to Rs 37.95 on bagging an export order worth Rs 24.50 crore. The company announced the order win before trading hours today, 11 November 2008.
Chinese import growth slowed in October 2008 and inflation fell to a 17-month low in the month as domestic demand cooled. On the flip side, exports rose 19.2%, beating market forecasts of an 18.8% rise. South Korean exports declined 26% during the first part of November 2008 from a year earlier.
Japan's exports tumbled nearly 10% from a year earlier in the first 20 days of October 2008, evidence of how quickly the global economy deteriorated after the financial crisis struck in mid-September 2008. Other data showed Japan's current account surplus in September 2008 halved from a year earlier, corporate bankruptcies hit their highest level this year and sentiment in the services sector hit a record low.
A survey of business conditions from National Australia Bank showed confidence at a record low in Australia and British retail sales fell for a fifth month in October 2008.
The No. 2 U.S. electronics retailer Circuit City was forced into bankruptcy just weeks before the holiday shopping season. Shares of US auto major and Dow component General Motors fell to 62-year lows on Monday, 10 November 2008, after Deutsche Bank lowered its equity value on the automaker to zero and a number of brokerages warned that GM and its rivals are burning through cash fast. Barclays Capital analysts on Monday, 10 November 2008, said they expect US bank Goldman Sachs to post a quarterly loss for the first time in its history due to steep equity market declines.
US light, sweet crude for December 2008 delivery fell $1.91 or 3% to $60.50 a barrel today, 11 November 2008 on a firmer dollar and on renewed gloom over the global economy.
Back home, unabated buying in blue chips throughout the day triggered a solid rally on Monday, 10 November 2008 after China's massive economic stimulus plan raised expectations that authorities elsewhere would follow suit. The BSE Sensex surged 571.87 points or 5.74%, to 10,536.16 and the S&P CNX Nifty advanced 175.25 points or 5.89%, to settle at 3148.25, on that day.
SGX Nifty Live Update - 2 - Nov 11 2008
SGX Nifty still down around 53.0 points at 3,123.0
One can expect a gap down opening. However market may stabilize as the US markets are trading up 40 points in after hours trading
Pre Market Watch - Nov 11 2008
Today Markets are likely to open negative as the US markets nose-dived into deep red yesterday and other Asian markets today opened with heavy blood bath. The financial crisis in US is still haunting as AIG has posted a whopping loss of $24.5 billion in the third quarter. In the domestic arena one could witness some profit booking today after a heavy gain yesterday. Investors would be little cautious about their holdings amidst global economic turmoil. Due to global crisis and falling demand of energy, Reliance industries is likely to delay commissioning schedules for it’s two oil and gas projects.
On Monday, domestic Markets opened with a positive gap on the back of China’s bailout plan of $586 billion fiscal package. The bailout plan boosted the moral of Chinese as well as other Asian markets. Sensex and Nifty gained phenomenal 5.74% and 5.89% respectively. Metal, Power, CG and Oil & Gas witnessed exemplary gains of 10.92%, 7.84%, 6.33% and 6.11% respectively. In the metal index NMDC, Jindal Steel and Sterlite were the forerunners as they surged heavily by 17.93%, 14.93 and 13.43% respectively. During the trading session we expect the market to be trading volatile.
The BSE Sensex closed higher by 571.87 points at 10,536.16 and NSE Nifty ended high by 175.25 points at 3,148.25. The BSE Mid Caps and Small Caps closed with marginal gains of 119.71 points at 3,475.09 and by 87.93 points at 3,988.03. The BSE Sensex touched intraday high of 10,570.58 and intraday low of 10,095.90.
On Monday, US markets nose dived into red on the back of negative concerns regarding financial and automaker companies overshadowed the Chinese financial bail out. The financial crisis in US is still haunting as AIG has posted a whopping loss of $24.5 billion in the third quarter. On the other hand auto major General Motor’s stock tumbled to its lowest in six decades after it was downgraded from hold to sell at Deutsche. Crude oil futures for the December delivery fell $1.91 to $60.50 a barrel on New York Mercantile Exchange. It also touched 20 months low of $59.10 a barrel. The Crude oil stocks were expected to have risen to 800000 million barrels last week.
The Dow Jones Industrial Average (DJIA) closed lower by 73.27 points at 8,870.54 NASDAQ index lost 30.66 points at 1,616.74 and the S&P 500 (SPX) also fell by 11.78 points to close at 919.21 points.
Indian ADRs ended negative. In technology sector, Infosys gained (2.29%) and Wipro gained by (4.46%) followed by Satyam that ended high by (0.52%) and Patni Computers closing high by (9.97%). In banking sector ICICI Bank was up by (4.62%), while HDFC Bank gained (0.45%). In telecommunication sector, Tata Communication declined by (4.69%), while MTNL was low by (0.62%). Sterlite Industries was up by (7.14%).
Today the major stock markets in Asia opened negative. The Shanghai Composite is trading flat at 1,881.12. Hang Seng is low by 25.28 points at 14,719.35. Further Japan''s Nikkei is low by 146.68 points at 8,934.75. Straits Times is also trading low by 21.75 points at 1,863.27 and South Korea’s Seoul Composite is high by 2.89 points at 1,155.35.
The FIIs on Monday stood as net buyers in equity and debt. Gross equity purchased stood at Rs1282.40 Crore and gross debt purchased stood at Rs387.80 Crore, while the gross equity sold stood at Rs1222.00 Crore and gross debt sold stood at Rs369.10 Crore. Therefore, the net investment of equity and debt reported were Rs60.30 Crore and Rs18.70 Crore respectively.
On Monday, the partially convertible rupee ended at 47.35/37 per dollar, 0.6% stronger than Friday''s close of 47.65/66. The rupee gained as local equities gained and created hope for fresh capital but the dollar demand from importers and oil corporates restricted further gains.
On BSE, total number of shares traded was 32.05 Crore and total turnover stood at Rs. 3,703.23 Crore. On NSE, total volume of shares traded was 62.86 Crore and total turnover was Rs 9,272.99 Crore.
Top traded volumes on NSE Nifty – Larsen with 3435688 shares followed by Nalco, Power grid, Reliance with 4959086 shares and BHEL with 2470578 shares respectively.
On NSE Future and Options, total numbers of contracts traded in index futures were 660034 with a total turnover of Rs 9,518.4 Crore. Along with this total number of contracts traded in stock futures were 736367 with a total turnover of Rs 8,080.71 Crore. Total numbers of contracts for index options were 784413 and total turnover was Rs 12,204.93 Crore and total numbers of contracts for stock options were 42062 and notional turnover was Rs 486.45 Crore.
Today, Nifty would have a support at 2,895 and resistance at 3,125 and BSE Sensex has support at 9,785 and resistance at 10,425.
Weak global cues may trigger lower start
Key benchmark indices are likely to open lower tracking weak global cues. Moreover India's exports declined in October 2008, for the first time in five years, due to the global slowdown.
For the first time in the last five years, in October 2008, there has been a decline of over 15% in exports in dollar terms, the Director General of Foreign Trade R S Gujral said on Monday, 10 November 2008. Barring the export of the petroleum products, there has been a decline of over 20%. Growth in April-October 2008 has been 21.5%, down from 30.9% for the April-September 2008 period. The final export figures for October 2008 will be released in the first week of December 2008.
US light, sweet crude for December 2008 delivery fell $1.91 or 3% to $60.50 a barrel today, 11 November 2008 as a firmer dollar and renewed gloom over the global economy.
Asian markets were trading lower today, 11 November 2008. China's Shanghai Composite was down 0.53% or 10 points at 1,864.81, Hong Kong's Hang Seng declined 2.89% or 426.38 points at 14,318.25, Japan's Nikkei plunged 3.30% or 299.98 points at 8,781.45, Singapore's Straits Times fell 2.34% or 44.18 points at 1,840.84, South Korea's Seoul Composite lost 1.87% or 21.55 points at 1,130.91 and Taiwan's Taiwan Weighted tumbled 2.71% or 128.23 points at 4,612.04.
US markets dropped on Monday, 10 November 2008 as a worsening outlook for companies from Goldman Sachs to Google overshadowed China's $ 586 billion stimulus plan and pledges by the world's biggest nations to bolster economic growth.
The Dow Jones industrial average slipped 73.27 points, or 0.82%, to 8,870.54. The S&P 500 index declined 11.78 points, or 1.27%, to 919.21, and the Nasdaq Composite index dropped 30.66 points, or 1.86%, to 1,616.74.
Back home, unabated buying in blue chips throughout the day triggered a solid rally on Monday, 10 November 2008 after China's massive economic stimulus plan raised expectations that authorities elsewhere would follow suit. The BSE Sensex surged 571.87 points or 5.74%, to 10,536.16 and the S&P CNX Nifty advanced 175.25 points or 5.89%, to settle at 3148.25, on that day.
Foreign institutional investors (FIIs) were net buyers worth Rs 92.33 crore while mutual funds bought shares worth Rs 377.66 crore on Monday, 10 November 2008, according to provisional data on NSE.
Games people play!
Whatever games are played with us, we must play no games with ourselves.
The games played in the stock market seemed to have given way for the day Dhoni’s dazzlers beat the sizzling Sensex! Dhoni & Co.'s historic win over Ricky Ponting-led Aussies seemed to outperform the events of the day. And rightly so, as we cannot ignore the fact that the rally (in the market) came on the worst traded turnover in 15 months. For the scores, the main indices surged by nearly 6% each, propelling the Sensex and the Nifty above 10k and 3k, respectively.
We’re back to the stock market game, which remains unpredictable till the end. There are no clear winners here as volatility rules. Today, we expect some cooling after Monday's strong rally, and weakness across global equities. Most players won't like to take undue risks at this stage, with Thursday being a public holiday, IIP data scheduled for tomorrow, and non-stop bad news coming from the global markets. Like in recent sessions, the markets could bounce back too. Wait for lower levels before buying. Don’t try match winning techniques for the day. Instead, look at long term strategies to win the championship, which means enhancing your portfolio value.
The dismal volume in the F&O segment on Monday was particularly disheartening. This shows that the bulls still don't have enough confidence to sustain any meaningful advance. What is needed is a strong comeback by the FIIs, which is not likely till risk aversion subsides substantially. This in turn hinges on how fast the global economy rebounds from what is now being seen as a long and painful recession.
Back home too, things are not looking all that rosy, what with reports emerging of the first drop in exports in five years in October. Reports say India's merchandise exports are likely to have dipped by 15% last month. The official data will be out on Dec. 1. Talking of macroeconomics, auto sales slumped in September, led by commercial vehicles. The IIP data for September will be out and expectations are that it could jump to 5-7% from August's paltry 1.3%. Like we mentioned yesterday, there is no dearth of bad news, both locally and globally, and it is not possible to dwell upon each one of them. All one can say in short is that we are in one of the worst economic and financial environment in decades. And, the troubles may not be over soon and will keep rearing the ugly head every now and again.
FIIs were net buyers of Rs923.3mn (provisional) in the cash segment on Monday while local institutions pumped in Rs3.77bn. In the F&O segment, they were net buyers at Rs2.09bn. On Friday, foreign funds were net buyers of Rs603mn in the cash segment. Mutual funds were net sellers at Rs817mn on the same day.
US stocks sank on Monday, as a raft of bad news hinting at a worsening economic situation offset China's big-bang stimulus package, and the Bush government's revamped bailout deal for insurance giant AIG.
The Dow Jones Industrial Average lost 73 points or 0.8% to end at 8,870.54 while the Standard & Poor's 500 index lost 12 points or 1.3% to close at 919. The Nasdaq Composite index shed 31 points or 1.9% to 1,616.
All three major US indices had risen in the early trading, before abandoning gains and turning lower.
Market breadth was negative. Almost three stocks dropped for each that advanced on the New York Stock Exchange.
The government said it was restructuring AIG's bailout plan, buying US$40bn in preferred stock, reducing its original US$85bn bridge loan to US$60bn, and cutting the interest rate by 5.5%. The total reworked deal is worth about US$152.5bn. The reworking acknowledges that the initial plan was insufficient to reverse AIG's slide.
Additionally, AIG reported a steep quarterly loss of US$24.5bn in the third quarter. Shares gained 8%.
Fannie Mae reported a steep quarterly loss of US$29bn. A large portion of the loss was due to a change in the way it accounted for tax credits. But even excluding that, results were far worse than a year ago, due to bad mortgage bets. Its shares fell 2.7%.
Citigroup is reportedly in talks to buy an unnamed regional bank, in the aftermath of its failure to buy Wachovia last month, according to The Wall Street Journal. Citi's shares fell 5%.
A number of financial stocks fell, including American Express, Goldman Sachs, Bank of America and Merrill Lynch.
Shares of leading automakers continued to plunge amid worries about their ability to stay afloat without government intervention. General Motors (GM) plummeted 23% and Ford lost 4.5%.
Both companies, along with Chrysler, are seeking help from the US government. On Friday, GM posted a steep loss and said it is running out of cash.
Deutsche Bank said shares of GM were likely worthless and that the company might not be able to fund its US business past December without the government's help.
Package-delivery firm DHL became the latest corporation to announce massive layoffs. DHL said it will cut 9,500 jobs as it ends air and ground operations within the US, focusing only on deliveries between the US and other nations.
Circuit City said last week that it would cut 17% of its domestic workforce and close 150 stores amid the sluggish economy and consumer spending slowdown. On Monday, the company filed for bankruptcy protection.
On the upside, McDonald's said worldwide sales at stores open a year or more jumped 8.2% in October, thanks to overseas consumers and demand for cheap food amid the recession. Shares gained 1.8%.
Telecom major Nortel Networks reported a quarterly loss versus a profit a year ago, and also said it was cutting 1,300 jobs. Shares fell 18.8%.
After the close, Starbucks reported weaker earnings and higher revenue, both of which missed estimates. Shares declined about 3% in extended-hours trading.
In global news, China announced a US$586bn stimulus package, aimed at tempering the impact of the global financial crisis.
The dollar gained against the euro and fell versus the yen. COMEX gold for December delivery rallied US$11.40 to settle at US$745.60 an ounce.
US light crude oil for December delivery gained US$1.37 to settle at US$62.41 a barrel on the New York Mercantile Exchange.
Gasoline prices fell another 1.9 cents to a national average of US$2.24 a gallon. The decline marks the 54th consecutive day that prices have decreased. During that same time period, prices dropped by US$1.61 a gallon, or 41.9%.
The credit market continued to improve. The 3-month Libor fell to 2.24% from 2.29% on Friday, a nearly four-year low. Overnight Libor inched higher to 0.35% from 0.33% Friday, after hitting an all-time low of 0.32% last week. Libor is a key inter-bank lending rate.
The yield on the 3-month Treasury bill, seen as the safest place to put money in the short term, inched lower to 0.21% from 0.26% on Friday, with investors preferring to take a small return on their money rather than risk the stock market.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.75% from 3.78% on Friday.
Mining companies led European shares higher on Monday. The pan-European Dow Jones Stoxx 600 index rose 0.8% to 220.96, amid strong gains from basic resources companies. The UK's FTSE 100 closed up 0.9% at 4,403.92, while Germany's DAX 30 climbed 1.8% to 5,025.53 and the French CAC-40 advanced 1.1% to 3,505.75.
The BSE benchmark Sensex ended above 10,500 levels following gains in the equities markets across US, Asian and Europe after China unveiled a US$586bn stimulus plan. Also the NSE Nifty index surged 175 points to close above the 3,100 mark.
The rally was led by the metal, Power and capital goods stocks. Finally, the BSE benchmark Sensex surged 571 points or 5.7% to close 10,536 and the NSE Nifty index was up 175 points to close at 3,148.
Among the 30-components of Sensex, 28 stocks were in the positive terrain and 2 stocks ended in the red. Reliance Industries, ICICI Bank, Bharti, Infosys and ONGC were among the major gainers. On the other hand, ITC and Maruti were among the major laggards.
Market breath was weak, 1,611 stocks declined against 892 advances, while, 81 stocks remained unchanged.
Gujarat NRE Coke surged by over 3% to Rs31.6 after reports stated that it the company is in the process of setting up a one-million-tonne coke making plant near Krishnapatnam in Andhra Pradesh. The scrip touched an intra-day high of Rs32 and a low of Rs31.2 and recorded volumes of over 7,00,000 shares on BSE.
Shares of Lanco advanced by 7.5% to Rs182 after reports stated that the company has emerged as the sole bidder for the Punjab government's 1,200 MW thermal plant at Rajpura. The scrip touched an intra-day high of Rs187 and a low of Rs171 and recorded volumes of over 88,000 shares on BSE.
Elder Pharmaceuticals gained by 1.6% to Rs256 after reports stated that the company has entered into a manufacturing and marketing agreement with Japanese pharma company, Daiwa Pharmaceuticals. The scrip touched an intra-day high of Rs263 and a low of Rs254.
Markets may look to extend gains atleast in the morning trades. However, having said that good times may not last too long, as the overall trend still remains negative due to the global economic gloom. Global cues would play an important role in providing direction to Indian bourses.
SGX Nifty Live Update - Nov 11 2008
SGX Nifty currently trading weak - down 54.0 points at 3,122.0 points
HCC - BUY
Investors can buy Hindustan Construction Company at current levels with a short-term perspective. The stock bottomed at Rs 30.1 on October 27 after a protracted down trend. It had rebounded from this support in January 2005 too. Weekly candlestick chart patterns imply that a medium-term trough could have been formed at the recent trough at Rs 30.
Ten-day rate of change oscillator has moved firmly into the positive zone and the moving average convergence divergence oscillator too is signalling a buy. The implication is that the current up trend can sustain to take the stock higher. Our short-term target for the stock is Rs 68. Investors with a short-term horizon can purchase the stock with a stop at Rs 55.
via BL
Trading Calls - Nov 11 2008
Nifty (3148) Sup 3060 Res 3200
Sell Maruti (595)
SL 601 Target
Sell Mahindra Life (188)
SL 192 Target 180, 178
Buy BPCL (320)
SL 315 Target 330, 332
Buy Dr Reddy (415)
SL 410 Target 425, 427
Daily News Roundup - Nov 11 2008
Reliance Industries’ gas and new refinery projects may miss deadline; likely to be commissioned in January 2009. (ET)
ONGC plans to enter into a JV with the Uranium Corporation. (FE)
Gujarat Government has offered a loan of Rs95.7bn at 0.1% simple rate of interest to Tatas’ Nano project. (ET)
A consortium between L&T and Malaysian firm Scomi International has bagged the Rs24.6bn monorail project. (ET)
SBI is demanding a higher monthly fee (Rs5 per Rs1,000 deposited against current Rs1.5) for collecting provident fund deposits.. (ET)
The Petroleum Ministry may reconsider the US$2.6bn acquisition deal of the Russia-focused British oil company Imperial Energy Plc by ONGC. (FE)
DLF has put on hold construction of one of the most high-profile mall projects, ‘Mall of India’ at Gurgaon. (ET)
The Andhra Pradesh government to restructure the equity pattern of the Krishna-Godavari Gas Network to include Reliance Gas Corporation, a subsidiary of Reliance Industries, as a majority partner of the consortium. (BS)
Satyam Computer Services has acquired US mobile phone-maker Motorola's software development centre in Malaysia for an undisclosed sum. (BS)
Bharat Forge defers rights offer, buts plans debenture issue. (BS)
Karnataka will have a right over usage of 1,000MW of power from the 2,000MW thermal power project it is setting up as a JV with NTPC. (BS)
Reliance Infrastructure has bought back 1,600,000 equity shares in less than two weeks. (FE)
McNally board approves restructuring plans. (BS)
SBI Life Insurance has targeted a total business volume of Rs110bn during the current year. (BS)
Delhi based low cost airline IndiGo beats headwinds, plans to hire more staff. (BL)
Arcapita, ICICI Ventures and Bain Capital have expressed interest in Manipal Hospital’s renewed fund-raising plans, but at a heavily discounted valuation (~40% lower than the initial valuation). (ET)
Quantum Fund has picked up ~2% stake in GVK Power & Infrastructure for ~Rs350mn. (ET)
PowerGrid Corporation is not yet prepared to vacate spectrum for WiMax services ahead of the auction in January. (ET)
Quippo Telecom plans to raise ~Rs28bn through a combination of debt and equity to fund expansion. (ET)
Bharat Forge Ltd and Alstom Ltd will form two JV companies for manufacturing equipment for power sector. (BL)
CESC Ltd plans to invest Rs20bn over the next five years in rejuvenating its power distribution infrastructure. (BL)
FIPB rejects Keppel proposal to sell 1.5 acres unused land back to Puravankara Projects. (BL)
Elder Pharma has entered into an in-licensing tie-up with DaiwaPharmaceutical Co Ltd, Japan. (FE)
PFC plans to raise upto Rs4bn through issue of bonds this week. (FE)
RBI is examining the possibility of cutting the standard asset provisioning by banks for loans advanced to NBFCs from 2% to 0.4%. (BS)
The government on Monday issued Rs220bn worth of oil bonds to the three oil marketing companies to partly compensate them for selling fuels at below production costs. (BS)
RBI has allowed ready forward (or repo) transactions in oil bonds, a move that could enable oil companies to raise money at a cheaper rate. (ET)
RBI set to finalise special line of credit worth Rs100bn for Sidbi. (FE)
New 3G telcos have to pay 3% of their aggregate revenues to the Government for use of these airwaves. (ET)
Director General of Foreign Trade (DGFT) indicated that India’s exports have shrunk 15% in October. (BS)
Taxes & costing methods make Indian ATF prices highest in Asia-Pacific. (BS)
The Reserve Bank of India has allowed banks to issue guarantees or standby letters of credit in support of payment obligations for commodity derivative deals overseas. (BS)
Automobile sales in the festive month of October fell by 14.42%, dragging the overall sales growth of the industry in the first seven months of the current financial year to a mere 5.64%. (BS)
The government replaced the specific duty of Rs200 per ton on iron ore fines, imposed 10 days back, with an ad-valorem duty of 8%.(BS)
SMEs and services account for three-fourths of credit offtake in the last one year. (BL)
Indian Railways recorded 15.76% yoy increase in revenues during Apr-Oct’08. (FE)
The Maharashtra Government is considering waiving off VAT in housing projects. (FE)
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Bullion metals end higher
China's stimulus package increase the appeal of precious metals
Bullion metals ended higher on Monday, 10 November, 2008. Gold and silver prices rose following the stimulus package announced by China over the weekend to boost its economy. The same increased the appeal of the metals.
On Monday, Comex Gold for December delivery rose $12.3 (1.7%) to close at $746.5 an ounce on the New York Mercantile Exchange. Prices earlier rose to a high of $768.9. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (27.7%) since then. Last week, gold prices ended higher by 2.2%. For the month of October, gold ended lower by 18%. It was the biggest percentage loss for gold since February, 1983.
This year, gold prices have lost 11% till date. The dollar index has gained 10% this year. For the third quarter ended September, 2008, gold prices ended lower by 5.1%. It was the first quarterly loss for the yellow metal since the second quarter in FY 2007. Prior to that, the yellow metal ended second quarter with a marginal gain of 0.7%. For first quarter prices gained 10.7%.
On Monday, Comex silver futures for December delivery rose 25.7 cents (2.6%) to $10.22 an ounce. Last week, silver gained 2.3%. For the month of October, silver slipped by 20%. Till date, silver has lost 30.4% this year. Silver had ended month and quarter of September 2008 with a loss of 10%. For the second quarter, it had gained a paltry 1.4%. Silver had gained 16% in Q1. The metal also had gained for seven straight years.
Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. Losses in equity markets had also forced traders to sell gold. Since past couple of weeks, precious metals, mainly gold, had dropped as traders tried to gain back some of the money that had lost in other markets.
At the currency market on Monday, the dollar pared its losses against most major rivals as stocks and commodities investors curbed their initial enthusiasm about China's stimulus package. The dollar index, a measure of the greenback against a trade-weighted basket of six major currencies, fell to 85.931 from 86.280 but it was above its session low of 85.064.
Earlier this year, the weakening dollar and higher global demand for raw materials had led to records this year for commodities including gold. Gold reached a record in March as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the latest move, the Federal Reserve has cuts its target bank lending rate to 1% from 5.25% in September, 2007. The Fed did it in eight steps.
Gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
At the MCX, gold prices for December delivery closed higher by Rs 41 (0.35%) at Rs 11,587 per 10 grams. Prices rose to a high of Rs 11,825 per 10 grams and fell to a low of Rs 11,554 per 10 grams during the day's trading.
At the MCX, silver prices for December delivery closed Rs 22 (0.129%) higher at Rs 16,960/Kg. Prices opened at Rs 16,974/kg and rose to a high of Rs 17,285/Kg during the day's trading.
Volatile crude ends higher
Prices gain on Chinese stimulus news
Crude prices ended higher on Monday, 10 November, 2008. Crude prices rose following the stimulus package announced by China over the weekend to boost its economy. The same increased the appeal of crude oil as traders mulled over the potential energy demand in the coming months. But crude remained immensely volatile today and traded within a band of $6.
On Monday, crude-oil futures for light sweet crude for December delivery closed at $62.41/barrel (higher by $1.27 or 2.2%) on the New York Mercantile Exchange. Prices reached a low of $59.1 during intra day trading. Prices reached a high of $147 on 11 July but have dropped almost 61.3% since then. Last week, prices fell by 10%. On a yearly basis, crude price is lower by 35.5%. For this year in 2008, crude prices have dropped 36.5%.
Another big factor for oil's price gains on Monday was the Organization of the Petroleum Exporting Countries' pledge to cut production even deeper if prices are not in the $70-$90 range.
For the month of October, 2008, crude prices ended lower by 32.6%, the biggest monthly drop since 1983.
OPEC officials decided last month at its meeting at Vienna that OPEC will pare production by 1.5 million barrels a day w.e.f 1 November, 2008. The official production quota is currently 28.8 million barrels, and it cut by 1.5 million in November.
Last month, the Centre for Global Energy Studies said that global oil demand may fall for the first time in 15 years in 2008 and stagnate next year.
For the third quarter of the year crude prices ended lower by 28%. This was the biggest quarterly drop since 1991. Before that, crude prices had gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. For the month of September, prices registered drop of 13%.
Against this background, December reformulated gasoline rose by 1.4% to finish at $1.3679 a gallon and December heating oil closed up 1.4% at $2.0056 a gallon.
December natural gas climbed 7.3% to close at $7.248 per million British thermal units on Nymex on Monday.
At the MCX, crude oil for November delivery closed at Rs 2,898/barrel, lower by Rs 83 (2.8%) against previous day's close. Natural gas for November delivery closed at Rs 342/mmbtu, higher by Rs 14/mmbtu (4.3%).
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