Wednesday, November 26, 2008
Equities gained momentum at the fag end of the trading hour led by banking, oil & gas and metal stocks. Frontliners-RIL, Sterlite Industries and ICICI Bank also supported the market sentiment.
BSE Midcap rose 0.17%, while Smallcap index declined 0.56%.
Subsequent to oil ministry`s decision on rate cuts in oil prices as of now, shares of oil & gas companies surged. BSE Oil & Gas Index was up over 4%.
Besides, news about China cutting CRR by 108 basis points and interest rate to 5.58% from 6.66%, fuelled the market sentiments.
All sectors traded in positive. BSE Bankex gained the most. The counter surged over 5%, followed by Oil & gas which rose 4.41% and Metal moved up 3.66%.
Indian stock market started the day on a positive zone after a fall of 2.33% on the previous working day. The 30-share index, BSE Sensex opened with a gain of 72.67 points, at 8,768.20 on Wednesday.
The Sensex ended the day with a gain of 331.19 points, or 3.81% at 9,026.72 after touching a high of 9,061.72 and a low of 8,658.53. The broad-based NSE Nifty gained 98.25 points, or 3.70% at 2,752.25 after hitting a high of 2,762.60 and a low of 2,643.35.
Biggest gainers in the 30-share index were Sterlite Industries (India) (12.88%), ICICI Bank (9.55%), HDFC Bank (8.63%), NTPC (6.93%), Reliance Industries (6.11%), and DLF (5.53%).
On the other hand, Mahindra & Mahindra (2.55%), and Maruti Suzuki India (0.50%) were the major losers in the Sensex.
Overall market breadth was negative. Out of the total 2,228 stocks traded at BSE, 938 advanced, 1,222 declined while 68 remained unchanged.
Undeterred by global credit freeze, India maintains a bullish outlook on attracting Foreign Direct Investment which may be governed by easier rules, a top government official said on Wednesday.
"FDI inflows were robust till September and...my sense is that the October figures will be robust as companies like the General Motors, Volkswagen and Toyota are going to execute their ongoing projects," Department of Industrial Policy and Promotion (DIPP) Secretary Ajay Shankar said here.
He said the issue of "liberalisation and rationalisation" of FDI policy was under inter-ministerial consultation. "A decision is expected soon", he said at a FICCI function here.
An empowered Group of Ministers, headed by External Affairs Minister Pranab Mukherjee, is likely to meet soon to discuss a proposal to exclude foreign institutional investors' stake from the overall FDI ceiling.
Despite slowdown in the global economy, India received 17.21 billion dollar between April-September this financial year, showing an impressive increase of 137 per cent from 7.25 billion dollar in the first half of the previous fiscal.
While the DIPP is understood to have mooted the proposal for excluding the foreign institutional investors' stake in companies from the overall FDI ceiling, the plan is believed to have been opposed by the Finance Ministry and the Ministry of Corporate Affairs. The issue will be resolved by eGoM.
Between April-August, data for which has been officially released, manufacturing has attracted an FDI of five billion dollar, showing an increase of 41 per cent over inflows in the year-ago period.
Asked whether the government is mulling import restrictions to protect the domestic industry, Shankar said both fiscal and monetary measures would be used to stimulate demand and maintain growth.
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
26/11/2008 533029 ALKALI OPG SECURITIES P LTD B 69754 196.75
26/11/2008 533029 ALKALI MANSUKH STOCK BROKERS LTD B 72717 194.13
26/11/2008 533029 ALKALI OPG SECURITIES P LTD S 69754 196.60
26/11/2008 533029 ALKALI MANSUKH STOCK BROKERS LTD S 72717 194.73
26/11/2008 520077 AMTEK AUTO L MERRILL LYNCH CAPITAL MARKETS ESPANA SA SV B 4330757 46.10
26/11/2008 520077 AMTEK AUTO L GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD S 1071588 46.10
26/11/2008 520077 AMTEK AUTO L CREDIT SUISSE SINGAPORE LIMITED S 1596656 46.10
26/11/2008 520077 AMTEK AUTO L MORGAN STANLEY MAURITIUS COMPANY LIMITED S 1662513 46.10
26/11/2008 512093 CRANES SOFT COPTHALL MAURITIUS INVESTMENT LIMITED B 2327430 85.00
26/11/2008 512093 CRANES SOFT MORGAN STANLEY MAURITIUS COMPANY LIMITED S 914448 85.00
26/11/2008 512093 CRANES SOFT MACQUARIE BANK LIMITED S 1412982 85.00
26/11/2008 530945 GANGOTRI I&S GBK RESOURCES PVT LTD S 48200 8.06
26/11/2008 531524 I.C.S.A. IND RAIFFEISEN EURASIEN AKTIEN FONDS B 1963500 178.01
26/11/2008 531524 I.C.S.A. IND CLSA MAURITIUS LIMITED S 1963500 178.01
26/11/2008 530955 KAILASH FICO PARACHIT SALES MKT SERVICES B 100000 22.63
26/11/2008 530955 KAILASH FICO S L TRADES AND FINANCE I PVT S 60000 22.60
26/11/2008 512047 NATRAJ FIN MAXILLA FINANCIAL SERVICES PVT B 30000 30.25
26/11/2008 512047 NATRAJ FIN NILESH RASIKLAL PANDYA S 34000 30.25
26/11/2008 590057 NORTHGATE TE CITIGROUP GLOBAL MARKETS MAURITIUS PVT LTD B 1378837 54.76
26/11/2008 590057 NORTHGATE TE MACQUARIE BANK LIMITED S 1235499 54.50
26/11/2008 531746 PRAJAY ENG S CITIGROUP GLOBAL MARKETS MAURITIUS PVT LTD B 1193060 18.25
26/11/2008 531746 PRAJAY ENG S ABN AMRO BANK N.V. LONDON S 1193060 18.25
26/11/2008 531500 RAJESH EXPOT DHIRAJLAL JERAMBHAI DHAKAN B 5525000 20.52
26/11/2008 531500 RAJESH EXPOT BENNETT COLEMAN AND CO LTD S 5844000 20.51
26/11/2008 500368 RUCHI SOYA DHANAJJAYA MONEY MANAGEMENT SER P LTD B 975497 22.49
26/11/2008 500368 RUCHI SOYA DEUTSCHE SECURITIES MAURITIUS LIMITED S 1050000 22.48
26/11/2008 530943 SHRI ADHIKAR UPTURN SECURITIES PVT LTD B 50000 9.06
26/11/2008 532691 TULIP TELE MERRILL LYNCH CAPITAL MARKETS ESPANA S.A. S.V. B 158914 427.00
26/11/2008 532691 TULIP TELE ABN AMRO BANK N.V. LONDON S 158914 427.00
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
26-NOV-2008,ALKALI,Alkali Metals Limited,JOHNSON AFRAHIMBHAI TAILOR,BUY,40000,199.39,-
26-NOV-2008,ALKALI,Alkali Metals Limited,MANSUKH SECURITIES & FINANCE LTD,BUY,51230,194.64,-
26-NOV-2008,LAXMIMACH,Lakshmi Mach Works,TRUPTI PETROLEUMS PVT. LTD.,BUY,69400,548.28,-
26-NOV-2008,NORTHGATE,Northgate Technologies Li,CITIGROUP GLOBAL MARKETS MAURITIUS PRIVATE LIMITED,BUY,201648,53.50,-
26-NOV-2008,RUCHISOYA,Ruchi Soya Inds Ltd.,DHANANJAYA MONEY MANAGEMENT SERVICES PVT LTD,BUY,1804185,22.55,-
26-NOV-2008,RUCHISOYA,Ruchi Soya Inds Ltd.,SHIVA FOUNDATION,BUY,2750000,22.95,-
26-NOV-2008,ALKALI,Alkali Metals Limited,JOHNSON AFRAHIMBHAI TAILOR,SELL,50975,196.08,-
26-NOV-2008,ALKALI,Alkali Metals Limited,MANSUKH SECURITIES & FINANCE LTD,SELL,51230,194.12,-
26-NOV-2008,KTKBANK,Karnataka Bank Limited,CITIGROUP GLOBAL MKTS (MAURITIUS) PVT LTD,SELL,902687,75.00,-
26-NOV-2008,NORTHGATE,Northgate Technologies Li,CREDIT SUISSE (SINGAPORE) LIMITED A/C CREDIT SUISSE (SINGAPO,SELL,201648,53.50,-
26-NOV-2008,PIONEEREMB,Pioneer Embroideries Limi,ANAND YOGESH SHARES AND CONSULTANCY PVT LTD,SELL,109572,9.10,-
26-NOV-2008,RUCHISOYA,Ruchi Soya Inds Ltd.,DEUTSCHE SECURITIES MAURITIUS LIMITED,SELL,1529757,22.55,-
26-NOV-2008,RUCHISOYA,Ruchi Soya Inds Ltd.,DHANANJAYA MONEY MANAGEMENT SERVICES PVT LTD,SELL,1604185,23.00,-
The domestic market ended with handsome gains on account of buying activity in index heavyweights, after reporting a fall on previous session. Market opened on firm note along with other Asian markets backed by latest US Federal Reserve measures to boost the flagging US financial system. Further benchmark indices were not able to hold the momentum and pared its gains to trade with instability. Volatility rose ahead of the derivatives expiry for November 2008 series on 27 November 2008. Finally market turned upward as renewed buying interest during final trading hours led rally in the bourses. Stocks surged on the hopes of rate cuts by other central banks after a surprise steep rate cut announced by China''s central bank. China''s central bank cut banks'' benchmark lending and deposit rates by 1.08% for the fourth time since mid-September 2008. NSE Nifty ended above 2,700 mark and BSE Sensex around 9,000 level. From the sectoral front, all indices ended in green and Bank stocks outperformed the benchmark indices as ended with gain of around 6%. Apart from that, most of the buying was seen in Oil & Gas, Metal, Teck, Pharma, Reality, Power and IT stocks. Midcap stocks also joined the rally while Small cap stocks remained out of favour.
Among the Sensex pack 28 stocks ended in green territory and 2 in red. The market breadth was negative as 1222 stocks closed in red while 938 stocks closed in green and 68 stocks remained unchanged.
The BSE Sensex closed higher by 331.19 points at 9,026.72 and NSE Nifty ended up by 98.25 points at 2,752.25. The BSE Mid Caps ended with gain of 4.79 points at 2,877.38 while and BSE Small Caps closed with loss 18.53 points at 3,314.89. The BSE Sensex touched intraday high of 9,061.72 and intraday low of 8,658.53.
Gainers from the BSE Sensex pack are Sterlite Industries (12.88%), ICICI Bank (9.55%), HDFC Bank (8.63%), NTPC Ltd (6.93%), Reliance (6.11%), DLF Ltd (5.53%), Wipro Ltd (5.33%), HDFC (4.92%), Ranbaxy Lab (4.72%), TCS Ltd (4.72%), Bharti Airtel (4.51%) and Reliance Infra (4.41%).
Losers from the BSE Sensex pack are M&M Ltd (2.55%) and Maruti Suzuki (0.50%).
China''s central bank cut its lending and deposit rate by 108 bps to 5.58% from 6.66%. The rate cut will come into effect on 27th November 2008. This move is highlighting the deteriorating conditions for the Chinese economy as it the largest move for the central bank since 1997 and the fourth time in ten weeks. Along with this, the deposit rate will drop to 2.52% from 3.60%.
The BSE Bank index gained (5.96%) or 260.23 points to close at 4,625.23. Major gainers are ICICI Bank (9.55%), HDFC Bank (8.63%), Axis Bank (6.05%), Oriental Bank (5.20%), Bank of Baroda (4.68%) and Kotak Bank (4.19%).
The BSE Oil & Gas index advanced by (4.41%) or 238.69 points to close at 5,648.06 Gainers are Reliance (6.11%), BPCL (5.01%), Essar Oil Ltd (4.53%), Reliance Petroleum (3.60%), Cairn Ind (3.26%) and Gail India (2.64%).
The BSE Metal index went up by (3.66%) or 156.28 points to close at 4,420.45. Gainers are Sterlite Industries (12.88%), SAIL (8.37%), Nalco (6.42%), Hindustan Zinc (3.50%), Tata Steel (2.72%) and Jindal Steel (2.52%).
The BSE Teck index ended higher by (2.17%) or 41.45 points at 1,953.83 as Tanla (11.01%), Deccan Chr (9.03%), HT Media (8.63%), Patni Computer (6.06%), Idea Cell (5.55%) and Wipro Ltd (5.33%) ended in positive territory.
The BSE Pharma index gained (2.16%) or 60.83 points to close at 2,879.09. Gainers are Sterlite Biotec (8.34%), Divis Lab (5.01%), Ranbaxy Lab (4.72%), Lupin Ltd (4.17%) and Cipla Ltd (3.49%).
The BSE Reality index ended higher by (2.12%) or 32.78 points at 1,576.27. Major gainers are Pheonix Mill (7.22%), Indiabull Real (6.61%), DLF Ltd (5.53%), Akruti City (3.37%) and Sobha Dev (0.86%).
Lack of clarity and weak Asian indices saw the Sensex gyrate over 72 points in early trades. After a positive opening, the Sensex eased on profit taking and touched the day's low of 8,659. The market thereafter moved within a range with a mixed bias before buying in select heavy weights and up-move in banking and oil stocks lifted the index to an intra-day high of 9,062. The Sensex ended the session with gains at 9,027, up 331 points and Nifty added 98 points to close at 2,752.
However, the market breadth was negative. Of the 2,227 stocks traded on the BSE, 1,222 stocks declined, while 937 stocks declined. Sixty-eight stocks ended unchanged. All the 13 sectoral indices ended in the green. The BSE Bankex led the pack of gaining sectoral indices rising by 5.96% and the BSE Oil gained 4.41% for the day. Other indices also ended with decent gains.
Buying was witnessed in select blue chip stocks. Sterlite Industries advanced 12.88% at Rs231, ICICI Bank jumped 9.55% at Rs350.50, HDFC Bank added 8.63% at Rs907.20, National Thermal Power Corporation gained 6.93% at Rs164.30, Reliance Industries climbed 6.11% at Rs1,137.20 and DLF moved up by 5.53% at Rs198.60. However, Mahindra & Mahindra dropped 2.55% at Rs269.60 and Maruti Suzuki India was down 0.50% at Rs532.30.
Banking stocks stole the show today. Oriental Bank vaulted 6.24% at Rs143, Axis Bank flared up 6.05% at Rs405.05, Bank of Baroda jumped 4.68% at Rs253.65 and Kotak Bank advanced 4.19% at Rs324.25. Bank of India, State Bank of India, Union Bank, Allahabad Bank and Punjab National Bank were up over 2-3% each.
Over 2.29 crore shares of Unitech changed hands on the BSE followed by Suzlon Energy (1.90 crore shares), GVK Power & Infrastructure (1.26 crore shares), Rajesh Export (0.65 lakh shares) and Reliance Natural Resources (0.61 crore shares).
Hopes that other central banks will follow suit after a surprise steep rate cut announced by China's central bank propelled the market sharply higher in late trade. The BSE Sensex raced past the psychological 9,000 mark. However, volatility was high.
Despite the rally in the key benchmark indices, the market breadth, indicating the overall health of the market remained negative as small and mid-cap stocks dropped on concerns about the weakening domestic and US economy.
China's central bank today, 26 November 2008, cut banks' benchmark lending and deposit rates by 1.08% for the fourth time since mid-September 2008. The cut in the lending rate was the biggest since October 1997. The steep rate cut by China raised expectations of a coordinated action by other central banks by way of rate cuts to counter the downside risks to the global economy.
Expectations of further cut in interest rates in India gathered momentum after Finance Minister Palaniappan Chidambaram Monday, 24 November 2008, said monetary policy was biased towards stimulating growth and the Reserve Bank of India (RBI) was likely to lower rates further as inflation cooled. Lower interest rates boost stocks as lower borrowing costs help lift corporate profits.
With corporate India forced to compete with the government domestically for raising finance, interest rates cannot drop meaningfully till either growth slows and demand for credit cools or the RBI continues to provide liquidity to banks, aggressively cutting interest rates, the cash reserve ratio (CRR) â€“ the percentage of deposits banks have to keep with the central bank and statutory liquidity ratio (SLR) â€“ the percentage of deposits bank have to hold in government and other approved securities.
The slowdown in the Indian economy and reduced availability and rising cost of funds are taking their toll on the performance of the corporate sector. Moreover, companies which have resorted to substantial overseas borrowing are seeing increase in cost of servicing the loan due to depreciation rupee which hit a record low of 50.60 against the dollar on 20 November 2008. Some companies have cut production to avoid higher inventories.
The Indian stock market witnessed high volatility today caught between concerns about the weakening domestic, US economy and volatile European shares and firmer Asian stocks on the back of the latest US Federal Reserve measures to boost the flagging US financial system. In a volatile trade, the Sensex swung 403.19 points between the day's high and low during the day.
After a rebound from lower level triggered by news of rate cut by China, European shares weakened again. Key benchmark indices in UK, Germany and France were down by between 1.41% and 2.14%.
The US Federal Reserve on Tuesday, 25 November 2008, outlined an $800 billion lending facility to support the market for consumer debt securities. The US central bank will buy billions of dollars worth of debt and mortgage-backed securities to increase the flow of credit for mortgages, student loans, car loans and credit cards.
However, the data released Tuesday showed the US economy shrank more severely during the third quarter ended September 2008 than first estimated as consumers cut spending at the steepest rate in 28 years. The Commerce Department said third-quarter gross domestic product shrank 0.5% on a sharp drop in consumer spending. That was a downward revision from the US government's first estimate that GDP had contracted 0.3% in the third quarter.
Metal shares led rally in Asian stocks as the crumbled BHP and Rio deal is seen opening opportunities in other firms. Key benchmark indices in China, Hong Kong, Singapore, South Korea and Taiwan were down up by between 0.12% and 4.72%. Miner BHP Billiton on Tuesday called off its bid to acquire rival Rio Tinto.
However, Japan bucked the strong trend in Asia after Fitch Ratings on downgraded Toyota's long-term foreign and local debt ratings to AA from AAA, with a negative outlook, saying the company needed to review its global investments, product mix and speed of expansion to address the challenges it faces. The Nikkei slipped 1.33%
The BSE 30-share Sensex jumped 331.19 points or 3.81% to 9,026.72. The Sensex opened 110.49 points higher at 8,806.02. At the day's high of 9,061.72, the Sensex gained 366.19 points in late trade. The Sensex fell 37 points at the day's low of 8,658.53 in mid-morning trade.
The S&P CNX Nifty gained 98.25 points or 3.70% to 2752.25. Nifty November 2008 futures were at 2758.55, at a premium of 6.30 points as compared to the spot closing.
Foreign institutional investors (FIIs) were net sellers worth Rs 416.82 crore while mutual funds bought shares worth Rs 362.05 crore on today, 26 November 2008, according to provisional data on NSE.
The barometer index BSE Sensex is down 11260.27 points or 55.50% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 12180.05 points or 57.43% below its all-time high of 21,206.77 struck on 10 January 2008.
Volatility may rise tomorrow 27 November 2008 ahead of the derivatives expiry for November 2008 series. As per reports, rollover of Nifty positions from November 2008 to December 2008 series stood at 39% while marketwide rollover of positions was 45%, as on Tuesday, 25 November 2008.
The market breadth, indicating the overall health of the market, was negative on BSE with 1390 shares declining as compared with 1065 that rose. 84 shares remained unchanged.
The BSE Mid-Cap index rose 0.17% to 2,877.38 while the BSE Small-Cap index fell 0.56% to 3,314.89. Both these indices underperformed the Sensex.
The total turnover on the BSE amounted to Rs 3223 crore as compared to Rs 3196 crore on Tuesday, 25 November 2008. Turnover in NSE's futures & options (F&O) segment surged to Rs 48,888.96 crore from Rs 44,612.44 crore on Tuesday, 25 November 2008.
All the sectoral indices on BSE logged gains. However only the BSE Oil & Gas index (up 5.96% to 4,625.23), and the Bankex (up 4.41% to 5,648.06), outperformed the Sensex.
The BSE FMCG index (up 1.05% to 1,920.85), the BSE Auto index (up 0.69% to 2,297.75), the BSE Realty index (up 2.12% to 1,576.27), the BSE Capital Goods index (up 0.29% to 6,405.26 ), the BSE Consumer Durables index (up 1.38% to 1,800.50), the BSE HealthCare index (up 2.16% to 2,879.09), the BSE IT index (up 1.48% to 2,468.45), the BSE PSU index (up 1.47% to 4,621.34), the BSE Power index (up 1.91% to 1,632.30), the BSE Teck index (up 2.17% to 1,953.83), the BSE Metal index (up 3.66% to 4,420.45) underperformed the Sensex.
Among the 30-member Sensex pack, 28 advanced while only 2 of them slipped. NTPC (up 7.58% to Rs 165.30), Reliance Infrastructure (up 4.91% to Rs 522), and Jaiprakash Associates (up 3.18% to Rs 56.75), edged higher from the Sensex pack.
India's largest copper maker by sales Sterlite Industries jumped 12.14% to Rs 229.50 on 16.71 lakh shares on recent reports the company is still eyeing Asarco, which operates three copper mines in Arizona, but an agreement could only be reached at a substantially reduced price. Sterlite originally offered $2.6 billion to buy Asarco but withdrew from the deal in October 2008 because of falling metals prices. It was the top gainer from the Sensex pack.
Other metal shares Hindalco Industries (up 1.95% to Rs 52.35), Sesa Goa (up 2.62% to Rs 70.50), and Tata Steel (up 1.56% to Rs 153.15), rose.
Banking shares advanced on reports banks operating in India including foreign ones may soon be able to open new branches and set up automated teller machines (ATM) without a licence from the Reserve Bank of India (RBI). ICICI Bank (up 9.06% to Rs 348.95), HDFC Bank (up 8.85% to Rs 909), and State Bank of India (up 1.80% to Rs 1091.40), gained.
Rate cut hopes also aided rally in bank shares. The RBI has cut rates over the past two months to shield the domestic economic from global economic recession. The repo rate has been cut by 150 basis points to 7.5% since October this year and the CRR has been reduced by 350 basis points to 5.5%. In response, government owned banks lowered prime lending rates by up 75 basis points, but large private lenders like ICICI Bank and HDFC Bank are yet to do so.
India's top mortgage lender by net profit Housing Development Finance Corporation (HDFC) gained 5.57% to Rs 1424 after Citigroup reportedly said it is not looking to liquidate its 11.74% stake in HDFC.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) advanced 5.89% to Rs 1134.80 on high volumes of 32.21 lakh shares. Reports the company wants to restart selling petrol and diesel after margins on the two fuels turned positive, boosted the stock to day's high of Rs 1098.90. The Mukesh Ambani-run company had reportedly shut all of its 1,432 petrol pumps around March 2008 after it could not compete with public sector companies, who sold fuel at rates much lower than their cost, as they got government subsidies.
India's largest oil exploration firm Oil & Natural Gas Corporation (ONGC) was up 2.11% to Rs 700 after Russia on Tuesday, 25 November 2008, said it would not set any precondition such as a stake for its state-run firms in return for approval for ONGC's acquisition of Imperial Energy.
India's largest realty firm by market capitalisation DLF jumped 5.74% to Rs 199 on reports global gaming and theme park leader Sega Corporation, a subsidiary of the Tokyo Exchange-listed Sega Sammy, is in talks with the company for a possible India entry.
IT pivotals gained shrugged off a firmer rupee. Infosys Technologies (up 0.69% to Rs 1188.95), Satyam Computer Services (up 1.09% to Rs 236.40), Wipro (up 5.11% to Rs 240.50), and TCS (up 4.22% to Rs 524.50), gained despite the rupee rising to 49.51/54 a dollar from its previous close of 49.95/96 in sync with a rally in equity markets.
A stronger rupee impacts operating margins of IT firms as they earn most of their revenues from exports with US as the major market.
Telecom shares rose on reports India would press ahead with an auction of airwaves to offer so-called third generation or 3G mobile phone services despite the global financial crisis. India's largest cellular services provider by sales Bharti Airtel rose 4.59% to Rs 655.20. However India's second largest cellular services provider by sales Reliance Communications gained 1.30% to Rs 198.10 and was the top loser from the Sensex pack.
Without stating how many licences would be issued, reports said the auction process is expected to start in a few days and be completed in mid-January 2009.
Capital goods shares reversed early losses on hopes that lower interest rates would keep order flows strong and aid project funding. The country's largest power equipment maker by sales, Bharat Heavy Electricals, rose 1.63% to Rs 1303.90,off day's low of Rs 1246.55. India's top engineering and construction firm by sales, Larsen & Toubro (L&T), rose 1.35% to Rs 746.10, rebounding from low of Rs 721.
But Siemens tumbled 16.46% to Rs 224 on high volumes of 21.74 lakh shares as net profit fell 27.03% to Rs 225.19 crore in Q4 September 2008 over Q4 September 2007. The company announced the results after trading hours on Tuesday, 25 November 2008.
India's top pharma company by sales Ranbaxy Laboratories by sales rebounded sharply from early low of Rs 195.50 to settle 4.89% higher at Rs 213.55. Recent reports the company's subsidiary Ranbaxy Fine Chemical's (RFCL) plans to acquire the US-based speciality chemicals maker Mallinckrodt Baker is facing delays because of valuation problems, caused early slide.
Sun Pharmaceuticals Industries rose 3.12% to Rs 1109 on acquiring a US pharmaceuticals and performance chemicals firm. The company announced the acquisition before trading hours today, 26 November 2008.
India's largest tractor maker by sales Mahindra and Mahindra slumped 4.57% to Rs 264 and was the top loser from the Sensex pack. Reportedly Mahindra Renault, a venture of Mahindra and Mahindra and French auto company Renault SA, has scaled back production of Logan sedan by at least half, after sales sharply fell in the past months.
India's top truck maker by sales Tata Motors rose 2.36% to Rs 139 after its American depository receipt jumped 11.37% on Tuesday, 25 November 2008.
Bajaj Auto rebounded from its 52-week low of Rs 307.15 to settle 2.65% higher at Rs 326.15. The early fall came on reports the company is likely to scale down production targets, shrink vendor base, align production across manufacturing sites and aggressively target export market, to tackle the economic slowdown.
Reliance Industries was the top traded counter on BSE with turnover of Rs 356.70 crore followed by State Bank of India (Rs 193.65 crore), Reliance Capital (Rs 156.70 crore), Reliance Infrastructure (Rs 135.25 crore) and Educomp Solutions (Rs 130 crore).
Unitech led the volumes chart on BSE clocking volumes of 2.30 crore shares followed by Suzlon (1.90 crore shares), GVK Power Infrastructure (1.26 crore shares), Rajesh Exports (65 lakh shares) and Reliance Natural Resources (61.60 lakh shares)
From the small and mid-cap basket, Kingfisher Airlines (up 17.78%), GSS America (up 19.88%), KSB Pumps (up 11.33%), Ruchi Soya (up 9.05%), IVRCL Infrastructure (up 13%) surged.
However, Adhunik Metaliks (down 14.29%), Unity Infraprojects (down 15.16%), Puravankara Projects (down 9.44%), and Bhushan Steel (down 8.60%), slipped.
Adlabs Films jumped 5.16% to Rs 157 on reports of planning a Rs 200-crore push for the film services and movie exhibition businesses.
Key benchmark indices are likely to open firm tracking positive Asian markets which were boosted by the US Federal Reserve's announcement of two new efforts to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion. The SGX November 2008 Nifty futures were up 39.50 points.
However volatility may rise ahead of the derivatives expiry for November 2008 series on Thursday, 27 November 2008. As per reports, rollover of Nifty positions from November 2008 to December 2008 series stood at 39% while marketwide rollover of positions was 45%, as on Tuesday, 25 November 2008.
The central bank will purchase as much as $600 billion in debt issued or backed by government-chartered housing finance companies. It will set up a $200-billion programme to support consumer and small-business loans, the Fed said in a statement on Tuesday,24 November 2008 in Washington.
Meanwhile, Montek Singh Ahluwalia, the Deputy Chairman of Planning Commission on Tuesday, 24 November 2008 scaled down India's FY09 GDP to 7%. However, Finance Minister P Chidambaram estimates growth to be between 7% and 8% in FY09. According to him the current account deficit will go up. But, he feels India is nowhere close to a recession despite the crisis having worsened.
Most Asian markets were trading firm today, 25 November 2008. China's Shanghai Composite was up 0.32% or 5.98 points at 1,894.70, Hong Kong's Hang Seng rose 2.39% or 307.39 points at 13,185.99, Singapore's Straits Times advanced 0.75% or 12.46 points at 1,665.71, South Korea's Seoul Composite surged 3.52% or 34.66 points at 1,017.98, Taiwan's Taiwan Weighted added 1.09% or 46.69 points at 4,313.18. However, Japan's Nikkei slipped 1.30% or 108.27 points at 8,215.66
US markets ended mixed on Monday, 24 November 2008 even as the treasury commits up to $800 billion in two new programs to unfreeze credit markets & buy mortgage-related debt. On the economic data front, the US economy contracted by 0.50% in the third quarter.
The Dow Jones industrial average gained 36.08 points, or 0.43%, to 8,479.47. The S&P 500 gained 5.58 points, or 0.66%, to 857.39. The Nasdaq Composite index slipped 7.29 points, or 0.50%, to 1,464.73.
Back home, in a complete reversal of trend, the market lost ground on Tuesday, 24 November 2008 on concerns about sharply deteriorating major global economies. The BSE 30-share Sensex lost 207.59 points or 2.33%, to 8,695.53 and the S&P CNX Nifty fell 54.25 points or 2% to 2654, on that day.
Foreign institutional investors (FIIs) were net sellers worth Rs 161.88 crore while mutual funds bought shares worth Rs 155.09 crore on Tuesday, 25 November 2008, according to provisional data on NSE.
Nasdaq ends in the red despite H-P's good earning report
It was quite a choppy session at Wall Street today and stocks ultimately ended the day mixed on Tuesday, 25 November, 2008. Market started on a strong note but by mid day it failed to stick to its gains and the indices slipped into the red for a brief time. But after that, they managed to inch back in the green, though with just marginal gains. Though the government's new plan to revive the economy tried to give some boost, the energy and the technology sectors are playing the spoilsport today.
On Wall Street, the Dow Jones industrial average closed up 36 points at 8,479. The tech heavy Nasdaq lost 7 points at 1,464 and the S&P 500 surged 6 points at 857.
Eight of the ten sectors ended in then green today led by the financial sector. The technology and consumer staples sectors were the main laggards.
Sixteen out of thirty Dow stocks ended in the green today. JP Morgan was the main Dow winner while being followed by other financial stocks.
In order to save the US economy from slipping further, the Federal Reserve created a program that will purchase direct obligations of housing-related government-sponsored enterprises such as Fannie Mae and Freddie Mac. The Fed is taking this action to reduce the cost and increase the availability of credit to purchase houses. The Fed will purchase up to $100 billion in direct GSE obligations and up to $500 billion in mortgage-backed securities.
In addition, the Fed created a Term Asset-Backed Securities Loan Facility so market participants can meet the credit needs of households and small businesses by supporting asset-backed securities collateralized by student loans, auto loans, credit card loans and loans guaranteed by the Small Business Administration. The New York Fed will extend $200 billion in loans for the consumer credit facility, while the Treasury will extend $20 billion in TARP funds.
Market reacted positively to these incentives but gloom economic data soon took over.
Among economic reports for the day, the Conference Board in US reported today that falling gas prices perked up consumers in November. Confidence among consumers rose in November from a record low in October. The November consumer confidence index increased to 44.9 from an upwardly revised October reading of 38.8.
While falling gas prices perked up consumers in November, concern has grown over the current jobs market. However, consumers' view of current conditions worsened in November, with those saying jobs are "hard to get" rising to 37.2% from 36.6% in the prior month.
However, consumers' view of current conditions worsened in November, with that index declining to 42.2 from 43.5. Overall consumers' expectations were less pessimistic, with that index rising to 46.7 from 35.7. Those expecting business conditions to worsen over the next six months declined to 28.1% from 36.5%, and those expecting fewer jobs declined to 33.3% from 41.5%.
In a separate report, The Case-Shiller home price index reported that home prices in 20 major U.S. cities dropped 1.8% in September from the prior month, and they fell a record 17.4% on a year-over-year basis. September's prices were down in all 20 cities, compared to both August 2008 and September 2007.
Also, the preliminary GDP report revised the contraction in the economy during the third quarter to 0.5% from 0.3%, which matched expectations. Third quarter consumption was revised to -3.7% from -3.1%, which was a larger decline than the expected reading of -3.2%.
Among major earning reports for the day, H-P reported earnings after yesterday's close. The company held its 2009 earning guidance steady. Also it reported its fourth quarter results matching expectations. The stock still skidded 7% today. This has pulled the technology sector down today though Google is trying to give some support.
Crude prices ended substantially lower today. Crude prices fell after traders speculated that tomorrow's weekly inventory report will show rise in weekly supplies. But losses in crude price were limited due to the weak dollar. Crude-oil futures for light sweet crude for January delivery closed at $50.77/barrel (lower by $3.73 or 6.8%) on the New York Mercantile Exchange. Earlier in the day, prices touched a low of $50.52.
Volume on the New York Stock Exchange neared 1.9 billion, and advancers ousting decliners more than 2 to 1. On the Nasdaq, more than 1 billion shares traded, and advancers topped decliners 5 to 4.
For tomorrow, most investors will turn their attention to the October durable goods orders data and October personal income and spending data. Initial jobless claims data and October new home sales for the week ended 22 November will also hit the wires tomorrow.
Finance Minister P Chidambaram today said private sector banks will be forced to cut lending rates sooner than later due to competition from public sector counterparts.
"Public sector banks have reduced their prime lending rates by 75 basis points and extended it to all kinds of loans, like home loans and personal loans. Private sector banks at a meeting with Finance Secretary had said they will also follow the suit. But they have not," Chidambaram told a press conference organised by Delhi Pradesh Congress Committee.
It may be recalled that in response to the measures taken by the Reserve Bank to ease liquidity situation, PSU banks slashed their prime lending rates by 75 basis points, but the private sector banks are yet to make a move in this regard.
The Finance Minister added, "They have their own reasons. I am not commenting on those reasons, but I have no doubt in my mind that competition from public sector banks will force private sector banks to reduce their lending rates sooner than later...it will happen sooner than later."
Taking a dig at BJP ahead of the Assembly elections in Delhi on November 29, he criticised their proposal during the NDA rule to bring down government equity in public sector banks from 51 per cent to 33 per cent. He wondered as to what would have happened had that proposal been implemented.
While maintaining that "our banks are 100 per cent safe", the Finance Minister said, "Even though flow of foreign capital into India has slowed down, it will eventually reverse and rupee will find its true level as India remains the most attractive investment destination."
We recommend a sell in Bank of India from a short-term trading perspective. It is apparent from the charts that the stock has been on a broad sideways consolidation in the range of Rs 200 and 300 from this July. The stock tested the upper boundary level of Rs 300 thrice between September and October and was unable to move beyond this level. The 200-day moving average was providing significant resistance for the stock. It conclusively breached its 21- and 50-day moving average by tumbling almost 10 per cent last week. The daily relative strength index has entered into the bearish zone from the neutral region. Moving average convergence and divergence is indicating a sell and is declining in the negative territory which is inline with the stock. We are bearish on the stock from a short-term horizon. We anticipate the stock’s current decline to prolong further until it hits our price target of Rs 208 in the forthcoming trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 246.
Market may open on a positive note as Asian indices are trading in the mix in morning trades followed by mix trend in the US markets may keep the market volatile. Pressure on the liquidity front due to institutional investors are net sellers of equity could make the investors jittery. On the upside, the Nifty could test the recent high around the 2700 level and may witness support around the 2600 level. The Sensex has a likely support at 8500 and may test higher levels of 8800.
US indices remained flat on Tuesday as investors welcomed the government's latest efforts to jumpstart lending, but remained cautious, with the Dow Jones adding 36 points to close at 8479 while the Nasdaq decline by 7 points at 1465.
Crude oil prices in the global market declined yesterday. The Nymex light crude oil for January 09 series slipped by $3.73 at $50.77 per barrel. In the commodity segment, the Comex gold for February 09 delivery rose by 10 cents to settle at $820.50 an ounce.
Reliance Power to swap ECB into a Rupee loan. (FE)
ONGC strikes oil at a block in KG Basin. (BS)
BHEL lines up Rs30bn for solar energy foray. (DNA)
Siemens plans a capex of Rs2bn for the year ending September 2009. (DNA)
Bhushan Steel is likely to resume its normal production of steel by December. (BS)
Great Offshore has chartered two of its vessels to Egypt for US$22mn. (BS)
Bosch India is likely to shut 2 off its facility for 3 days. (BS)
Sun Pharma, fully owned US subsidiary, buys Chattem Chem from Elcat. (BS)
Air-India and Kingfisher to cut air fare by Rs350-500 on domestic routes with immediate effect. (ET)
Tata Chemicals has agreed to invest US$25mn for 35% stake in Singapore based company. (ET)
Emami plans to set-up a plant in Africa with a total investment of Rs900mn. (ET)
TVS Motors ties up with IndusInd Bank for providing financial support to its dealers. (ET)
Adlabs plans to spend Rs2bn for film services and exhibition business. (ET)
RIL and Essar Oil are beginning to re open petroleum stations that were shut over the past year. (FE)
Sega Corp is in talks with DLF for a possible entry in India, talks are focused on developing indoor gaming complexes. (ET)
BHEL wants finance ministry to impose a 15% duty on imported power generating equipment. (ET)
Educomp is planning to enter the higher education space by setting up a private university in New Delhi. (BS)
Peninsula has delayed its new project launches in Nashik, Pune and Hyderdabad by 6-12 months. (DNA)
Bajaj Auto has scaled down its production targets for the next few months. (DNA)
Jindal Steel aims to add hydro electric, nuclear, wind and solar projects to its steel business. (DNA)
Dabur plans to launch ayurvedic skin care range may be delayed. (BL)
Banks may soon be able to open new branches and set-up ATM’s without a license from RBI. (ET)
Government may scrap the condition that new telecom operators should cover 10% of districts in a circle in the 1st year itself. (ET)
Government to discuss relief measures for power project developers soon. (ET)
Government has imposed import restrictions on specific steel products used by construction, automobile and oil sector. (ET)
Government plans to cut retail prices of petrol, diesel and cooking gas after state elections. (BS)
Banks wants easier NPA norms, special window for lending to SMEs. (BS)
3G and WiMAX spectrum to be auctioned in two phases says Telecom minister. (BL)
IT minister to approach PM for seeking an extension of tax exemptions available under the STPI scheme for three more years beyond March 2010. (BL)
Reasonable people adapt themselves to the world. Unreasonable people attempt to adapt the world to themselves. All progress, therefore, depends on unreasonable people.
We sure don’t want you to be among the unreasonable lot. Investors` return expectations and investment horizon should be examined in general and then specifically in the context of the current environment. (Read what Nirmal Jain, has to say on What`s a reasonable investment horizon today)
We expect the market to open on a cautious note, with a mixed close on Wall Street and a similar trend in Asian markets this morning. Plus, we have to consider that the US markets will be shut tomorrow on account of Thanksgiving; the next day usually referred to as Black Friday in US will see trading for around half a day. Back home, we will have the F&O expiry tomorrow. While the Citigroup's massive bailout coupled with the latest US government measures to revive lending may have provided some relief to global equities, investors remain jittery. As a result, one should not read too much into any short-term spurt.
The macro-economic situation is not getting any better, with reports of a sharp slowdown in investments. Consumer demand too has also taken a beating amid a severe credit crunch. A case in point is that realty firms are taking loans from mutual fund players as banks are reluctant to lend amid a worsening outlook for the sector. The picture is also dismal for most other sectors. The Government and the RBI have taken several steps to ease the cash squeeze and boost consumption. However, the measures are likely to take some more time to work their way through the system. In fact, the Centre and the RBI are expected to announce more steps (fiscal and monetary) if the situation doesn't improve shortly.
Inflation (which almost touched 13% in August) is on its way down over the next few weeks. It was at 8.9% for the week ended November 8. The Government will announce the latest figures on Thursday. The timing of tomorrow's announcement of inflation will hinge on whether the numbers are good or bad. One more crucial piece of economic data will be unveiled on Friday. The Centre will release the advanced estimates on the second-quarter GDP on Friday. India's economic growth slowed to 7.9% in the first quarter, and expectations are that Q2 reading will be even lower. To put in perspective, India has clocked a GDP growth of 9% or more over the past three fiscal years.
Petroleum Minister Murli Deora has reportedly written to Congress president Sonia Gandhi stating that the current economic conditions are conducive for a cut in retail fuel prices. Deora has apparently sought a Rs5 per liter reduction in petrol prices and Rs20 per cylinder drop in cooking gas. Interestingly, he has not recommended any cut in the prices of diesel and kerosene. A cut in fuel prices has been on the cards with crude oil plunging from $147 per barrel in July to around $50 a barrel. However, the Government had refrained from lowering fuel prices, citing losses for public sector oil marketing companies. Pressure is growing on the UPA to cut fuel prices, though any announcement on this is possible only after the end of the state assembly polls. That will be after Dec. 24. Meanwhile, the BJP has accused the UPA of violating the election code of conduct.
FIIs were net sellers of Rs1.62bn (provisional) in the cash segment on Tuesday while the local institutions pumped in Rs1.55bn. In the F&O segment, foreign funds were net buyers at Rs6.45bn. On Monday, FIIs were net sellers at Rs3.11bn in the cash segment, taking their total this year to over $13.4bn. Mutual Funds net bought Indian shares worth Rs1.04bn.
Hindustan Copper and Mphasis will declare their quarterly results today.
US stocks closed mixed on Tuesday, with the blue chips rising for a third successive day after the Bush administration announced two new programs to unclog the credit markets, even as the housing market remained in doldrums.
The Standard & Poor’s 500 Index posted its first three-day advance since September after the Federal Reserve committed as much as $800bn to help resuscitate lending. The Dow Jones Industrial Average's last three-day streak of gains came towards the end of August.
Cisco Systems and Hewlett-Packard led a decline in technology companies, limiting the market’s advance, on concern about the deepening recession after the US economy saw its worst quarterly decline in seven years.
Wednesday brings a strong of economic reports, including readings on jobless claims, income and spending, manufacturing, housing and consumer sentiment.
The US financial markets are closed on Thursday for Thanksgiving. Markets have a shortened session on Friday.
The S&P 500 added 0.7% to 857.39, extending its rebound from an 11-year low on Nov. 20 to 14 percent. The Dow rose 36.08 points, or 0.4%, to 8,479.47. The Nasdaq Composite Index slipped 0.5% to 1,464.73.
Market breadth was mixed and volume was moderate. Almost two stocks rose for each that fell on the New York Stock Exchange.
US stocks rose in the morning after the government announced a couple of new programs that will provide roughly $800bn to increase the availability of consumer and mortgage lending.
But the advance petered out and stocks plunged through the afternoon as investors sorted through weak reports on third-quarter GDP and housing and opted to cash out of some of the recent gains in technology space.
US stocks had surged on Monday in a broad rally as Citigroup's massive rescue package and President-elect Barack Obama's picks for his economic team pushed investors off the sidelines.
The Commerce Department reported that the US GDP declined at an annual rate of 0.5% in the third quarter versus an earlier reading of a decline of 0.3%. The drop in GDP was in line with expectations.
Although the US is not officially considered to be in recession, it is generally believed to have been in recession since at least the start of the third quarter.
Another report showed the continued weakness of the housing market. The S&P Case-Shiller Home Price national index posted a 16.6% decline in the third quarter, the biggest drop on record.
On the positive side, consumer confidence recovered a bit in November from a record low hit in October.
Late on Monday, HP reported better-than-expected sales and revenue and forecast upbeat fiscal 2009 profit, matching its pre-announcement from a week earlier. However, analysts questioned whether it would be able to maintain its sales pace considering the slowdown in tech spending. HP shares fell 7%.
GM shares continued to plunge amid worries about the ability of the company and the industry to stay afloat without government support.
In other news, BHP Billiton said it was giving up its $68bn all-stock hostile bid for fellow miner Rio Tinto, due to the downturn in commodities amid the economic slowdown. BHP shares gained 14.5%, while Rio shares fell 27%.
US light crude oil for January delivery fell $3.73 to settle at $50.77 a barrel on the New York Mercantile Exchange.
Gasoline prices continued to slump to 3-1/2 year lows, with gas down 2.3 cents to a national average of $1.885 a gallon. Gasoline prices have been dropping for over two months. In that time, prices have lost $1.97 a gallon, or over 51%.
The dollar gained versus the euro and the yen.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.10% from 3.34% on Monday. Last week, the 2-year, 10-year and 30-year government bonds all hit the lowest levels since the Federal Reserve started keeping records in 1962.
The yield on the 3-month Treasury bill rose to 0.115% from 0.105% on Tuesday, not far from 68-year lows of zero. The 3-month - seen as the safest place to put money in the short term - last hit these levels in September as investor panic peaked.
The low yield means nervous investors would rather preserve their money despite no interest rather than risk the stock market.
Lending rates rose a bit. The 3-month Libor rate rose to 2.2% from 2.17% on Monday, while overnight Libor rose to 0.93% from 0.8% Monday, according to Dow Jones. Libor is a key bank lending rate.
Stocks in Europe built on outsized gains made in the previous session. The pan-European Dow Jones Stoxx 600 index rose 0.7% to 198.79. It soared 8.4% in the previous session.
The French CAC-40 index rose 1.2% to 3,209.56. The UK's FTSE 100 index rose 0.4% to 4,171.25, weighed down by the 36.7% tumble for Rio Tinto after BHP Billiton withdrew its $66bn takeover bid. BHP shares rose 7.2% on relief the takeover bid ended.
Germany's DAX 30 index edged up 0.1% to 4,560.42, as a 22.7% plunge for Volkswagen limited gains. The automaker may extend holiday downtime as its Wolfsburg factory for three weeks, according to reports.
Meanwhile, Bank of England Governor Mervyn King told a parliamentary committee that the very significant fiscal-policy steps by the British government and interest-rate cuts will act to mitigate economic slowdown over the next year.
The BSE benchmark Sensex on Tuesday fell by over 250 points in the fag-end on the back of volume based selling seen across the board only barring the consumer durables.
Bulls were unable to follow up after posting a strong start. Unabated selling in index heavyweights like RIL, SBI, L&T and ITC dragged the markets from their day’s high.
The BSE benchmark Sensex lost 207 points or 2.3% to close 8,695 and the NSE Nifty index was down 54 points to close at 2,654.
Among the 30-components of Sensex, 23 stocks were in the negative terrain and 7 stocks ended in the green.
Dr. Reddy's Lab announced that it has started selling the authorized generic version of GlaxoSmithKline Plc.'s Imitrex migrane treatment drug in the U.S. The stock was down 3% to Rs417 after touching an intra-day high of Rs433 and a low of Rs414 and recorded volumes of over 1,00,000 shares on BSE.
Shares of Great Offshore pared gains and ended lower by 4% to Rs255. The company announced that it has chartered two of its vessels - Malaviya Thirty Three and Gal Ross Sea to Petroleum Marine Services Co., Egypt.
Accordingly, the vessels have commenced operations in the Khafji Oilfields for Saudi Aramco under one year firm charter with option for two more extensions. The aggregate value of the one year firm charter is around US$22mn. The scrip touched an intra-day high of Rs276 and a low of Rs252 and recorded volumes of over 1,00,000 shares on BSE.
Shares of Triveni Engineering surged by over 3% to Rs36 after 1.42cr around 5.5% equity shares of the company changed hands at an average price of Rs35.9 on NSE. The scrip touched an intra-day high of Rs37.8 and a low of Rs35.6 and recorded volumes of over 1,00,00,000 shares on BSE.
Shares of Jindal Steel edged higher by over 0.5% to Rs705 after the company announced that it aims to add hydroelectric, nuclear, wind and solar projects to its larger steel business.
The company also announced that it is considering hydroelectric plants of as much as 1,000MW in India and Nepal and a 50MW wind-power unit in India’s Maharashtra state. The scrip touched an intra-day high of Rs752 and a low of Rs692 and recorded volumes of over 1,00,000 shares on BSE.
Losses in equity markets drag down precious metals
Bullion metals gave up their earlier gains and ended little lower on Tuesday, 25 November, 2008. Losses in gold and silver prices were limited due to the falling dollar. Prior to today, gold had gained $90 in past four sessions.
On Tuesday, Comex Gold for December delivery fell $1 (0.1%) to close at $818.5 an ounce on the New York Mercantile Exchange. Earlier in the day, it touched a high of $833 and fell to a low of $808. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (18%) since then. Last week, gold prices ended higher by 6.6%. For the month of October, gold had ended lower by 18%. It was the biggest percentage loss for gold since February, 1983.
This year, gold prices have lost 2% till date. Futures have averaged $882 in 2008. The dollar index has gained 9% 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 Tuesday, Comex silver futures for December delivery fell 9 cents (0.8%) to $10.27 an ounce. Last week, silver gained 0.15%. For the month of October, silver had slipped by 20%. Till date, silver has lost 27.8% 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 and also vice versa. Losses in equity markets also force traders to sell gold.
At the currency market on Tuesday, the dollar fell against its major rivals after the Federal Reserve unveiled a new plan to support the issuance of debt backed by consumer and small-business debt.
In order to save the US economy from slipping further, the Federal Reserve created a program that will purchase direct obligations of housing-related government-sponsored enterprises such as Fannie Mae and Freddie Mac. The Fed is taking this action to reduce the cost and increase the availability of credit to purchase houses. The Fed will purchase up to $100 billion in direct GSE obligations and up to $500 billion in mortgage-backed securities.
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 lower by Rs 66 (0.5%) at Rs 12,981 per 10 grams. Prices rose to a high of Rs 13,156 per 10 grams and fell to a low of Rs 12,885 per 10 grams during the day's trading.
At the MCX, silver prices for December delivery closed Rs 166 (0.95%) lower at Rs 17,192/Kg. Prices opened at Rs 17,379/kg and fell to a low of Rs 17,005/Kg during the day's trading.
Traders anticipate build up in supplies for last week
Crude prices ended substantially lower on Tuesday, 25 November, 2008. Crude prices fell after traders speculated that tomorrow's weekly inventory report will show rise in weekly supplies. But losses in crude price were limited due to the weak dollar.
On Tuesday, crude-oil futures for light sweet crude for January delivery closed at $50.77/barrel (lower by $3.73 or 6.8%) on the New York Mercantile Exchange. Earlier in the day, prices touched a low of $50.52. Prices reached a high of $147 on 11 July but have dropped almost 62% since then. Last week, prices fell by 13%. For this year in 2008, crude prices have dropped 52%.
For the month of October, 2008, crude prices ended lower by 32.6%, the biggest monthly drop since 1983.
At the currency market on Tuesday, the dollar fell against its major rivals after the Federal Reserve unveiled a new plan to support the issuance of debt backed by consumer and small-business debt. The dollar index shed 1%.
As per reports last week, The Organization of Petroleum Exporting Counties will trim supplies by 3.8% this month as members implement an October agreement. Thirteen OPEC members, due to meet in Cairo seven days from now, are set to supply 30.98 million barrels a day this month compared with 32.2 million a day in October.
Prior to this, 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 decided to cut by 1.5 million in November. After that, Organization of the Petroleum Exporting Countries had pledged to cut production even deeper if prices are not in the $70-$90 range in its 1st December meeting.
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 dropped 3.4% to end at $1.12 a gallon, while December heating oil fell 4.5% to $1.71 a gallon.
December natural gas closed down 3.3% to trade at $6.66 per million British thermal units. The December contract expired today. Natural gas for January delivery slumped 6.4% to end at $6.39 per million British thermal units.
At the MCX, crude oil for November delivery closed at Rs 2,578/barrel, lower by Rs 157 (5.7%) against previous day's close. Natural gas for November delivery closed at Rs 319.4/mmbtu, lower by Rs 17.2/mmbtu (5.1%).
The energy department is scheduled to release its weekly report on crude and crude product inventories tomorrow, 26 November at 10 a.m. in Washington.