Friday, December 26, 2008
The great mutual fund crisis
Srinivas Chittaluru is not the kind of man who reads four pink papers with his morning coffee and then devours research reports with breakfast. With around Rs 10 lakh in the market, you'd think this 41-year-old software engineer would be far more tense than he is about the state of the markets. But Chittaluru, who has been investing since 1995, has seen the market rise and fall and knows it will ultimately stabilise. More importantly, he has not put his money in stocks and has chosen to invest only through mutual funds. Unlike stocks, mutual fund investment is less risky and offers scope of diversification, he says. And he's tested this for himself. He moved his equity investments to debt funds this January, and has also branched out into gold and new thematic funds, which he hopes will pay out over the next three years or so. Chittaluru could be the poster-boy for the Indian mutual fund industry savvy and unfazed by temporary swings.
But why are there so few of them in the country? Retail participation in mutual funds in India is pathetically low; less than 3% of household savings go to MFs, compared with over 15% in the developed countries. So where do people invest if not in funds? They swing wildly between two extremes safe and poorly paying bank accounts on the one hand, and direct equities on the other. The reason why funds are not on the preferred list of retail investors is largely due to the way in which fund houses in India operate.
RPL refinery goes on stream
Reliance Petroleum Ltd. (RPL) announced the commissioning of its greenfield refinery in a Special Economic Zone (SEZ) at Jamnagar. It commenced its crude processing on December 25. With a crude oil processing capacity of 580,000 barrels of oil per day, the company ranks as the 6th largest refinery in the world and is also amongst the world’s most complex refineries. US-based oil major Chevron holds a 5% stake in RPL.
The secondary processing units are now under synchronization and commissioning, RPL said, adding that the entire refinery complex is expected to attain full capacity shortly. The commissioning of the RPL refinery catapults Reliance Industries Ltd. (RIL) into the league of the largest refiners globally, both in terms of complex refining capacity and earnings potential.
With the completion of the RPL refinery, Jamnagar has emerged as the ‘Refining Hub of the World’ with the largest refining complex with an aggregate refining capacity of 1.24 million barrels of oil per day in any single location in the world. The RPL refinery has been completed in 36 months from concept to commissioning.
The plant’s completion comes as refining margins, or the profit from turning a barrel of oil into fuels, have shrunk as products such as gasoline and naphtha trade below the price of crude. Energy consumption has fallen sharply due to the global economic downturn, prompting several refiners to delay new projects. But, RPL may be better placed than others, with a strategic Middle East crude supply and strength in capacity and complexity.
Govt sees more room for rate cuts
Setting stage for the much-awaited next round of stimulus package, the Government said that the country could do with more rate cuts and other fiscal measures to boost economic growth amid fears of a prolonged global recession. "Having run tight monetary policy during H1 FY09, there is considerable scope for monetary policy easing over the next 6-12 months to offset the global increase in demand for money that is being transmitted to India," the Finance Ministry said in its Mid-term Review of the economy. "An aggressive monetary policy may be necessary if the global economic depression continues to adversely affect manufacturing," the ministry said in the report that was tabled in parliament.
The country also needs to increase spending on infrastructure to offset declining private investment, the Finance Ministry said in its assessment of the economy for the first six months of the current financial year. Indian companies should prepare for economic growth of 7% in the year ending March 31, down from 9% or more in the previous three years, the Mid-Term Review said today, giving a range of 7-8% for growth for FY09. "The economic expansion in the current fiscal year is likely to be significantly lower in the second half as the impact of slower export growth and weaker domestic demand, including a possible dampening of private investment, begin to be felt," the Finance Ministry said.
On the positive side, the review expects the inflation to cool down to normal levels' by the end of the current fiscal. "The decline in the inflation rate is expected to continue for the rest of the current fiscal year," Arvind Virmani, the finance ministry’s top economist, told reporters in New Delhi today. Inflation may slow to 5% by March end, he said. He also said that the stimulus package that the Government has announced and other off-budget spending plans, including higher salaries for government workers, oil subsidies and farm-loan waivers, are likely to widen the fiscal deficit to at least 5% of GDP.
Speaking in Mumbai, the chief of prime minister's Economic Advisory Council, Suresh Tendulkar, said that it was up to the RBI to take a call on whether and when to reduce rates, which were last cut on Dec. 6. "It is desirable to reduce the repo and the reverse repo rate, I think, by 100 basis points in my judgement," Tendulkar said. The central bank has lowered the benchmark repurchase rate by 2.5% to 6.5% in three cuts from Oct. 20 to Dec. 6.
India - Pakistan War
During the Cold War, if USA launched a nuke-loaded missile, Soviet Satellites would inform the Soviet army in 3 seconds and in less than 45 seconds Soviet counter-missiles would be on their way.
Recent studies commissioned by US department of Defense included one on nuclear war between India and Pakistan :
This was the scenario................
The Pakistan army decides to launch a nuke-missile towards India. They don't need any permission from their government, and promptly order the countdowns.
Indian technology is highly advanced. In less than 8 seconds, Indian army detects the Pak countdown and decides to launch a missile in retribution.
But they need permission from the Government of India.
They submit their request to the Indian President. The President forwards it to the Cabinet. The Prime Minister calls an emergency Lok Sabha session.
The LS meets, but due to several walkouts and severe protests by the opposition, it gets adjourned indefinitely.
The President asks for a quick decision.
In the mean time, the Pak missile failed to take off due to technical failure. Their attempts for a re-launch are still on.
Just then the Indian ruling party is reduced to a minority because a party that was giving outside support withdraws it. The President asks the PM to prove his majority within a week.
As the ruling party fails to win the confidence vote, a caretaker government is installed.
The caretaker PM decides to permit the armed forces to launch a nuclear missile. But the Election Commission says that a caretaker government cannot take such a decision because elections are at hand.
The Election Commission files Public Interest Litigation in the Supreme Court alleging misuse of power.
The Supreme Court comes to the rescue of the PM, and says the acting PM is authorized to take this decision in view of the emergency facing the nation.
Just then one of the Pak missiles successfully took off, but it fell
367 miles away from the target, on its own government building in Islamabad at 11.00AM.
Fortunately there were no casualties as no employee had reached the office that early. In any case, the nuclear core of the missile had detached somewhere in flight.
The Pakistan army is now trying to get better technologies from China and USA. The Indian Government, taking no chances, decides to launch a nuclear missile of its own, after convening an all-party meeting. This time all the parties agree.
Its three months since the army had sought permission. But as preparations begin, "pro-humanity",
"anti-nuclear" activists come out against the Government's decision.
Human chains are formed and Rasta rokos organized.
In California and Washington endless e-mails are sent to Indians condemning the government and mentioning "Please forward it to as many Indians as possible".
On the Pakistan side, the missiles kept malfunctioning. Some missiles deviate from target due to technical failures or high-speed wind blowing over Rajasthan.
Many of them land in the Indian Ocean killing some fishes.
A missile (smuggled from USA) is pressed into service. Since the Pakistan army is unable to understand its software, it hits it original destination: Russia.
Russians successfully intercepts the missile and in retaliation launches a nuclear missile towards Islamabad. The missile hits the target and creates havoc.
Pakistan cries for help. India expresses deep regrets for what has happened and sends in a million dollars worth of Parle-G biscuits.
Thus India never gets to launch the missile.
via Unknown Source
BSE Bulk Deals to Watch - Dec 26 2008
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
26/12/2008 524412 AAREY DRUGS NITA B BHAVSAR S 40000 19.00
26/12/2008 526433 ASM TECHNOLO IDS SYSTEMS PRIVATE LIMITED B 30571 29.79
26/12/2008 532946 BANG ACME CRAFT PVT. LTD. S 68558 160.80
26/12/2008 590050 CSS TECH SHARAD K SHAH B 30000 10.55
26/12/2008 590050 CSS TECH CREDIT SUISSE SECURITIES INDIA PRIVATE LTD AC PROPRIETARY EIO S 47000 10.54
26/12/2008 511728 KZLEASING YOGESH G PANDYA B 76000 45.83
26/12/2008 511728 KZLEASING ANJALI YOGESH PANDYA B 33598 38.38
26/12/2008 511728 KZLEASING PRAKASHBHAI GOPALBHAI PATEL B 20000 45.65
26/12/2008 511728 KZLEASING ANJALI YOGESH PANDYA S 31570 30.08
26/12/2008 511728 KZLEASING PRAKASHBHAI GOPALBHAI PATEL S 25000 45.88
26/12/2008 502587 RAMA PUL PAP MUKESH KUMAR SINGHAL B 54128 5.06
26/12/2008 526927 RELIG TECH DELI B V S 1070000 41.94
26/12/2008 524194 ROCK HARD PE AANSAL SECURITIES SERVICES PVT. LTD. B 49500 3.75
26/12/2008 524636 S.S.ORGANICS SAMRAJYA LAKSHMI K B 45500 4.80
26/12/2008 531249 WELL PACK PA SAMIR SURESHCHANDRA SHAH S 25008 21.97
NSE Bulk Deal Watch - Dec 26 2008
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
26-DEC-2008,BINDALAGRO,Oswal Chem & Fert Ltd.,OSWAL AGRO MILLS LIMITED,BUY,1147984,13.61,-
26-DEC-2008,EDUCOMP,Educomp Solutions Limited,C D INTEGRATED SERVICES LTD,BUY,94069,2488.69,-
26-DEC-2008,HCIL,HIMADRI CHEMICALS AND IND,HIMADRI DYES & INTERMEDIATES LTD,BUY,450000,114.85,-
26-DEC-2008,BINDALAGRO,Oswal Chem & Fert Ltd.,OSWAL AGRO MILLS LIMITED,SELL,10500,14.10,-
26-DEC-2008,EDUCOMP,Educomp Solutions Limited,C D INTEGRATED SERVICES LTD,SELL,94069,2489.71,-
26-DEC-2008,HCIL,HIMADRI CHEMICALS AND IND,BANKEY LAL CHOUDHARY,SELL,450000,114.85,-
Post Session Commentary - Dec 26 2008
The Indian market closed on a disappointing note tracking the more than expected inflation figures along with the sharp fall in advance tax payments by the Indian companies in the third quarter. Also, the statement by the officials of the ministry of finance that states that there is no scope for relaxing overseas borrowing rules as of now also does the spoil sport during the trading session. The advance tax payments by the Indian corporates fell by 22% to about Rs42, 600 crore during the December quarter over the same period last year. Apart from this, the weekly inflation figures fell to 6.61% for the week ended December 13, 2008 as against 6.84% reported previous week.
The domestic market continued its losing trend for the fourth consecutive trading session as the profit booking took a lead after a firm start. The domestic market had a gap up opening tracking the expectation of second stimulus package by the government to give a boost to the economy along with hopes of further rates cut by the Central banks as well as expectation of lower inflation that led the rally. However, the market didnot sustained at the higher level and took a sharp u-turn to pare all its handsome gains to close on the backfoot. The BSE Sensex closed below the 9,350 mark and NSE Nifty closed below 2,900 mark. From the sectoral front, the IT, Realty and Consumer Durables indices were the worst hit that closed with losses of more than 3% each.
Among the Sensex pack 25 stocks ended in red territory and 5 in green. The market breadth was negative as 1597 stocks closed in red while 866 stocks closed in green and 69 stocks remained unchanged in BSE.
The BSE Sensex closed lower by 239.80 points at 9,328.92 and NSE Nifty ended down by 59.6 points at 2,857.25. The BSE Mid Caps and Small Caps ended with losses of 38.92 points and 51.66 points at 3,106.68 and 3,548.54 respectively. The BSE Sensex touched intraday high of 9,706.38 and intraday low of 9,294.98.
Losers from the BSE Sensex pack are Reliance Infra down (6.10%) followed by DLF (5.97%), Infosys (5.33%), ICICI Bank (5.17%), M&M (4.65%), Hindalco (4.05%), JP Associates (3.98%).
Gainers from Sensex are Maruto Suzuki up (1.68%) along with Tata Power (0.50%), Satyam Comp (0.41%) and Ranbaxy Labs (0.30%).
The BSE IT index closed with losses of (3.92%) or 87.70 points at 2,149.44. Main losers are Rolta India (10.18%), Aptech (9.24%), Finance Tech (7.59%), Infosys (5.33%), Tech Mahindra (5.17%) and HCL Tech (2.91%).
The BSE Realty index tumbled (3.82%) or 87.36 points to close at 2,200.92 as DLF (5.97%), MahindraLife(4.88%), Parsvnath (3.16%), Omaxe (2.86%), Unitech (2.70%) and Ansal Infra (2.53%) closed in negative territory.
The BSE Consumer Durables index ended down by (3.58%) or 68.86 points at 1,852.91. Major losers are Titan Inds (4.47%), Videocon Inds (3.49%), Gitanjali GE (3.09%) and Blue Star (3.04%).
The Bankex index fell by (2.99%) or 160.42 points at 5,211.45. Pulled it down are ICICI Bank lower by (5.17%) along with Kotak Bank (3.89%), Karnataka Bank (3.34%), SBI (3.28%), Bank Of Baroda (2.10%), Bank Of India (2%) and Yes Bank (1.90%).
The Capital Goods index closed lower by (2.95%) or 200.77 points at 6,600.27. Losers are Punj Lloyd (6.24%), Walchand Inds (5.20%), Thermax (4.89%), Jyoti Structures (4.55%), BHEL (3.86%) and L&T (2.70%).
The Oil and Gas index dropped by (1.78%) or 107.29 points at 5,909.62. Scrips that fell are Aban Offshore (4.79%) followed by ONGC (3.96%), HPCL (3.63%), Essar Oil (2.93%), BPCL (2.70%) and Reliance Inds (2.35%) while RPL closed up by (6.34%).
Market may recover after steep slide
Hopes of further rate cuts by the central bank and a likely second government stimulus package to pump prime the economy may trigger a recovery on the bourses after a sharp slide last week. However, trading volumes are likely to remain low as most foreign fund managers are on a vacation for Christmas and the New Year. Domestic institutions may provide support to boost yearly net asset values.
The BSE 30-share Sensex lost 770.99 points or 7.63% to 9,328.92 in the week ended Friday, 26 December 2008.
Commerce Minister Kamal Nath on Wednesday, 24 December 2008, said the government is considering another stimulus package to lift slowing growth. The new stimulus package may include steps to ease liquidity and relief measures for export and housing sectors, the trade minister said. He also said the government is looking at possible duty cuts for more goods to stimulate demand in the economy.
The second stimulus package assumes importance as the industrial production fell 0.4% in October 2008, to move into negative zone after 15 years, while exports declined by 12.1% during the month.
The first stimulus package announced early this month mainly involved an across-the-board excise duty cut of 4% and an additional public expenditure of Rs 20,000 crore. In addition to the fiscal stimulus, the Reserve Bank of India through a slew of measures reduced the key ratios and policy rates, thereby releasing about Rs 3 lakh crore of liquidity into the system.
A sustained decline in inflation has raised expectations of a further cut in key policy rates by the Reserve Bank of India. Wholesale prices increased 6.61% in the year through 13 December 2008 lower than previous week's 6.84% rise, data released by the government on Friday, 26 December 2008 showed. The central bank's fiscal year-end target for inflation is at 7%.
Inflation had surged into double digits in early June this year after an increase in state-set retail fuel prices, and peaked at 12.91% on, 2 August 2008, the highest reading since annual numbers in the current data series became available in April 1995.
The RBI had on 6 December 2008, announced a 100-basis point cut in the repo rate and the reverse repo rate each. Repo rate is the rate at which RBI lends to commercial banks and reverse repo rate is the rate at which RBI accepts deposits from banks.
However, concerns over corporate earnings may cap gains. Weaker export numbers, lower excise collections and flagging industrial production data have raised concerns about a sharp moderation in growth. The government said on Friday, 26 December 2008, advance taxes paid by companies declined 22% to about Rs 42600 crore in the December 2008 quarter over the December 2007 quarter, reflecting economic slowdown.
Also there is now the lurking tension brewing on the geopolitical front with tensions escalating between India and Pakistan although Prime Minister Manmohan Singh and his Pakistani counterpart Yousuf Raza Gilani said there would be no Indo-Pak war.
Sensex drops 7.6% on worries over Q3 results
Key benchmark indices edged lower in the week ended Friday, 26 December 2008, reversing gains in the preceding two weeks. Global economic uncertainties and concerns about corporate earnings weighed on the market ahead of next month's Q3 December 2008 earnings reporting season. The market slipped on all the four trading sessions of the truncated week.
There were also worries foreign portfolio investment could take a knock as recessions in the United States, the eurozone and Japan took their toll.
The BSE 30-share Sensex lost 770.99 points or 7.63% to 9,328.92 in the week ended Friday, 26 December 2008. The S&P CNX Nifty slipped 220.25 points or 7.15% to 2857.25 in the week.
The BSE Mid-Cap fell 157.31 points or 4.81% to 3,106.68 and the BSE Small-Cap index slipped 195.48 points or 5.22% to 3,548.54 in the week. Both these indices outperformed the Sensex.
The barometer index BSE Sensex is down 10958.07 points or 54.01% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11877.85 points or 56% below its all-time high of 21,206.77 struck on 10 January 2008.
FIIs were net sellers in calendar 2008, so far, as they offloaded shares worth Rs 52,723.40 crore.
Trading for the week started on a negative note, with the BSE Sensex ending below the psychologically important 10,000 mark on Monday, 22 December 2008. Weak global cues also played the spoilsport. The BSE 30-share Sensex slipped 171.56 points, or 1.7%, to 9,928.35 and the S&P CNX Nifty fell 38.20 points, or 1.24%, to 3,039.30.
Bears were in command on Tuesday, 23 December 2008 on setback in Asian stocks and caution ahead of the expiry of the near month derivatives contracts. The BSE 30-share Sensex declined 241.60 points, or 2.43%, to 9,686.75 and the S&P CNX Nifty was down 70.65 points, or 2.32%, to 2,968.65
Weak global markets and signs of further deterioration in the world economy weighed on the domestic bourses on Wednesday, 24 December 2008. The BSE 30-share Sensex slipped 118.03 points, or 1.22%, to 9,568.72 and the S&P CNX Nifty was down 51.80 points, or 1.74%, to 2,916.85
A sharp drop in advance tax payment by Indian companies in the third quarter pointing to dismal earnings triggered a sell-off on Friday, 26 December 2008. The BSE 30-share Sensex fell 239.80 points, or 2.51%, to 9,328.92 and the S&P CNX Nifty lost 59.16 points, or 2.04%, to 2857.25
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 10.17% to Rs 1,121 in the week on concerns the recent sharp fall in crude prices will hit refining margins.
Metal stocks declined on worries a weakening domestic and global economy will hit demand. Steel Authority of India (down 17.46% to Rs 70.45), Tata Steel (down 7.58% to Rs 211.50), Hinalco Industries (down 10.18% to Rs 48.55), and Sterlite Industries (down 11.29% to Rs 249), declined.
Capital goods stocks fell on worries a slowing economy will crimp orders. India's largest engineering & construction company by sales Larsen & Toubro fell 9.07% to Rs 744.40. India's largest power equipment maker by sales Bharat Heavy Electricals lost 9.58% to Rs 1300.10
Banking stocks fell as fears of rising defaults in a weakening economy offset hopes that lower interest rates may boost lending growth. India's largest state-run bank by net profit State Bank of India fell 3.37% to Rs 1244.25.
India's second largest private sector bank by net profit HDFC Bank slipped 7.49% to Rs 972.60. India's largest private sector bank by net profit ICICI Bank fell 11.44% to Rs 417.95
Outsourcing firms dropped in volatile trade on fears a weak global economy would cut the amount firms spent on technology. India's fourth largest software exporter Satyam Computer Services plunged 16.77% at Rs 135.50. Satyam on Thursday, 25 December 2008, said it has asked the World Bank to withdraw "inappropriate" statements about the Indian outsourcer and to issue an apology for harm done to the company. On Tuesday, 23 December 2008, the World Bank had issued a statement saying Satyam was debarred from getting direct contracts from it under its corporate procurement programme for eight years from September this year. The company was declared ineligible for contracts for providing improper benefits to bank staff and for failing to maintain documentation to support fees charged for its sub-contractors, the World Bank had said.
The World Bank, had, however, clarified that there was no evidence of Satyam being involved in malicious attacks on the bank's information system. Media reports had earlier said that data theft was one of the reasons why the World Bank had barred Satyam from doing business with it for eight years.
India's fourth largest IT exporter by sales Wipro fell 8.78% to Rs 227.05. India's largest IT exporter by sales Tata Consultancy Services shed 8.01% to Rs 472.10. India's second largest IT exporter by sales Infosys fell 6.47% to Rs 1109.55.
Real estate heavyweights dipped on reports property rates are expected to fall by 20-25% as demand has dropped off sharply over the past 9-10 months due to high interest rates. Indiabulls Real Estate (down 19.25%), DLF (down 10.07%), and Unitech (down 18.42%), slipped. Fall in property prices is expected to hit the margins of developers already hit by the demand slowdown. Additionally, developers are facing a severe cash crunch that is hindering the execution of ongoing projects and grounding new launches.
Auto stocks fell on concerns about the weakening domestic demand. Mahindra & Mahindra, Maruti Suzuki India and Tata Motors fell by between 7.06% to 17.34%.
Among the side counters, Maytas Infrastructure (down 33.15%), TVS Motor Company (down 17.93%), and Development Credit Bank (down 16.05%), slipped.
Investors are bracing for poor Q3 December 2008 results. The advance tax paid by corporate India has reportedly declined 22% to about Rs 42600 crore in the December 2008 quarter over the December 2007 quarter. The Indian economy has slowed down after a strong growth in the past three years.
Wholesale prices increased 6.61% in the year through 13 December 2008 lower than previous week's 6.84% rise, data released by the government on Friday, 26 December 2008 showed. The central bank's fiscal year-end target for inflation is at 7%.
Commerce Minister Kamal Nath on 24 December 2008 said the government is considering another stimulus package to lift slowing growth. The new stimulus package may include steps to ease liquidity and relief measures for export and housing sectors, the trade minister said.
IT, banking stocks lead 2.5% Sensex slide
IT, banking, realty and capital goods shares led losses after a sharp drop in advance tax payments by Indian companies in the third quarter pointed towards dismal quarterly earnings next month. The BSE 30-share Sensex lost 239.80 points, or 2.51%, shedding close to 380 points from the day's high. A statement by a finance ministry official that there is no scope for relaxing overseas borrowing rules, also weighed on the market.
The market breadth, indicating the overall health of the market, turned weak in the second half of the trading session. The breadth was strong earlier in the day.
The market had surged in early trade on expectations of a second government stimulus package for the slowing economy and on hopes of further rate cuts by the central bank. It pared gains in early afternoon trade. The Sensex slipped into the red in afternoon trade before cutting losses. It fell sharply in mid-afternoon trade on reports of lower advance tax paid by the corporate sector in the third quarter. It extended the losses in the late trade.
Investors are bracing for poor Q3 December 2008 results. The government said during trading hours today, 26 December 2008, advance taxes paid by companies declined 22% to about Rs 42600 crore in the December 2008 quarter over the December 2007 quarter, reflecting economic slowdown. The Indian economy has slowed down after a strong growth in the past three years.
A finance ministry official today, 26 December 2008, said there is no scope for relaxing overseas borrowing rules as of now. Planning Commission's deputy chairman's advisor Gajendra Haldea had said on, 19 December 2008, that the norms for external commercial borrowing (ECB) would be liberalied further in about a week's time.
The RBI had relaxed ECB norms in October 2008 to ease the pressure on funds with the sources dwindling as a fall out of global financial meltdown. Now, the companies are allowed to bring in funds up to US $500 million for rupee or foreign currency expenditure under the automatic route.
Meanwhile, the softening stance of inflation continues. Inflation based on the wholesale price rose 6.61% in the year through 13 December 2008, below the previous week's annual rise of 6.84%, data released by the government at about 12:00 IST today, 26 December 2008, showed.
Inflation had surged into double digits in early June this year after an increase in state-set retail fuel prices, and peaked at 12.91% on, 2 August 2008, the highest reading since annual numbers in the current data series became available in April 1995.
The sustained declined in inflation will provide room for the Reserve Bank of India (RBI) to further cut interest rates. Inflation is below RBI's target level of 7%.
Commerce Minister Kamal Nath after trading hours on Wednesday, 24 December 2008, said the government is considering another stimulus package to lift slowing growth. The new stimulus package may include steps to ease liquidity and relief measures for export and housing sectors, the trade minister said. He also said the government is looking at possible duty cuts for more goods to stimulate demand in the economy.
The first stimulus package announced early this month mainly involved additional government spending and an across-the-board cut in excise duties.
Japan's Nikkei average posted its highest close in six weeks on Friday, 26 December 2008, as investors bet a raft of government measures will help the global economy recover next year. The Nikkei 225 average rose 1.63%, as investors shrugged off a weak economic data. Data on Friday, 26 December 2008, Japan's industrial output dived at a record pace and core consumer inflation fell faster than forecast in November 2008, putting the shrinking economy on course for a spell of deflation next year.
But other Asian markets were mostly in the red. Key benchmark indices in China, South Korea and Singapore were down by between 0.05% to 0.94%. Taiwan's Taiwan Weighted rose 0.26%.
US stocks edged higher in a holiday-shortened session on Wednesday, 24 December 2008, after a barrage of economic data signalled the economy was weak, but not as bad as feared, while the fall in crude oil prices and bargain hunting helped retail and airline stocks.on Wednesday, 24 December 2008. The Dow Jones Industrial Average gained 48.99, or 0.58%, to 8,468.48. The S&P 500 index futures advanced 4.99 points, or 0.58%, to 868.15. The Nasdaq composite index rose 3.36 points, or 0.22%, to 1,524.90.
A government report on Wednesday showed US consumers cut spending for the fifth straight month in November 2008, while incomes shrank, suggesting intensifying recessionary pressures. Still, the data was not as bad as feared, sparking a glimmer of hope that the economy had seen its worst. Data that showed US mortgage rates fell to the lowest level in 37 years and applications for mortgage loans hit a five-year high also offered some reason for optimism.
US durable goods orders, which are orders for long-lasting manufactured goods such as washing machines and refrigerators, fell 1% in November 2008 -- less than forecast.
Among the gloomy news, a US Labour Department report measuring initial applications for unemployment benefits showed a 30,000 jump last week to a 26-year high of 586,000 versus the 556,000 in the previous week.
The BSE 30-share Sensex was down 239.80 points, or 2.51%, to 9,328.92. At the day's low of 9,294.98, the Sensex fell 273.74 points in late trade. The Sensex gained 137.66 points at the day's high of 9,706.38 hit in early trade.
The S&P CNX Nifty was down 59.60 points, or 2.04%, to 2,857.25.
The BSE Sensex has lost 770.99 points or 7.63% in last four trading sessions from a high of 10,099.91 on 19 December 2008. Before the fall, the market had risen sharply. From a recent low of 8,739.24 on 2 December 2008, the Sensex had jumped 1,360.67 points or 15.56% in nine trading sessions to 10,099.91 on 19 December 2008.
The barometer index is down 10,958.07 points or 54.01% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11,877.85 points or 56% below its all-time high of 21,206.77 struck on 10 January 2008.
The BSE clocked a turnover of Rs 3,162 crore today lower than Rs 3,189.50 crore on Wednesday, 24 December 2008. The market was closed on Thursday, 25 December 2008 on account of Christmas.
Nifty January 2009 futures were at 2866.35, at a premium of 9.10 points as compared to the spot closing of 2857.25. Turnover in NSE's futures & options (F&O) segment was Rs 24,153.90 crore, much lower than Rs 45,355.58 crore on Wednesday, 24 December 2008.
The BSE Mid-Cap index fell 1.24% while, the BSE Small-Cap index slipped 1.43%. Both the indices outperformed the Sensex.
The BSE IT index (down 3.92%), the BSE Realty index (down 3.82%), the BSE Consumer Durables index (down 3.58%), the BSE Bankex (down 2.99%), the BSE Capital Goods index (down 2.95%), the BSE Metal index (down 2.77%) underperformed the Sensex.
The BSE HealthCare index (up 0.5%), the BSE FMCG index (down 1.09%), the BSE Auto index (down 1.72%), the BSE Oil & Gas index (down 1.78%), the BSE Power index (down 2.27%), the BSE Teck index (down 2.3%), the BSE PSU index (down 2.39%) outperformed the Sensex.
The market breadth, indicating the overall health of the market, was weak. On BSE, 866 shares rose as compared with 1,597 that declined. 69 shares remained unchanged.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 2.35% to Rs 1,212 on concerns the recent sharp fall in crude prices will hit refining margins. Its subsidiary Reliance Petroleum (RPL) commissioned its refinery at Jamnagar in the state of Gujarat with a crude oil processing capacity of 5.80 lakh barrels per day. RPL was up 6.93%.
India's largest state-run oil exploration firm by revenue ONGC fell 3.96% after the oil prices tumbled 9.3% on Wednesday, 24 December 2008. The oil price recovered today climbing above $36 a barrel, after the UAE joined Saudi Arabia in deepening oil supply curbs to comply with the Organisation of Petroleum Exporting Countries (Opec) biggest-ever output cut last week, telling refiners it would stiffen shipping limits on exports of its main grades. Crude for February 2009 delivery was trading up 82 cents at $36.17.
Real estate shares slipped after initial gains on recent reports property rates are expected to fall by 20-25% as demand has dropped sharply over the past 9-10 months due to high interest rates. Indiabulls Real Estate, DLF and Unitech fell by between 2.24% to 5.97%. Fall in property prices is expected to hit the margins of developers already hit by the demand slowdown. Additionally, developers are facing a sever cash crunch that is hindering the execution of ongoing projects and grounding new launches.
Metal stocks declined on worries a weakening domestic and global economy will hit demand. Sterlite Industries, Hindalco Industries, Tata Steel, Steel Authority of India fell by between 2.74% to 4.21%.
Auto stocks fell on concerns about the weakening domestic demand. Mahindra & Mahindra, Tata Motors and Hero Honda Motors fell by between 2.41% to 4.65%.
However, India's top small car maker by sales, Maruti Suzuki India, rose 1.68% on reports sales of small cars in India has risen smartly following an across-the board excise duty cut early this month.
Tyre-maker CEAT declined 1.65% after the company said it has temporarily shut down two its plants in Maharashtra to avoid inventory pile-up.
Capital goods stocks fell on worries a slowing economy will crimp orders. Larsen & Toubro, Bharat Heavy Electricals and ABB fell by between 2.13% to 3.86%.
Banking stocks fell as fears of rising defaults in a weakening economy offset hopes lower interest rates may boost lending growth.
India's largest private sector bank by net profit ICICI Bank fell 5.7%. Its advance tax payment declined 6% to Rs 470 crore in Q3 December 2008 over Q3 December 2007. ICICI Bank said on Friday, 19 December 2008, joint managing director Chanda Kochhar would succeed Chief Executive K.V. Kamath who retires in April 2009. Kamath, chief executive since 1996, will become non-executive chairman from May 2009 replacing N. Vaghul who retires.
India's largest commercial bank State Bank of India (SBI) fell 3.28%. On Saturday, 20 December 2008, SBI slashed its lending rate by 75 basis points, to be effective from 1 January 2009. The bank also cut its deposit rates by 25 to 100 basis points across maturities.
India's second largest private sector bank by net profit HDFC Bank fell 1.38% even as insurance giant and a top domestic institution Life Insurance Corporation of India increased its stake to over 5% in the private sector bank.
India's largest home loan lender by operating income Housing Development Finance Corporation (HDFC) fell 1.1%. It cut its retail lending rates by 50 basis points, effective 22 December 2008.
Cholamandalam DBS Finance jumped 9.93% after the company said promoters would subscribe to Rs 300 crore worth of convertible preference shares.
The Reserve Bank of India (RBI) has aggressively cut rates to shield the domestic economy from the global economic recession. The RBI, had on 6 December 2008, announced a 100-basis point cut in the repo rate and the reverse repo rate each. Repo rate is the rate at which RBI lends to commercial banks and reverse repo rate is the rate at which RBI accepts deposits from banks.
Outsourcing firms dropped as fears a weak global economy would cut the amount firms spent on technology offset a weaker rupee.
India's third largest IT exporter by sales Wipro fell 2.3% as its ADR slipped 2.67% on Wednesday. The company said on Tuesday, 23 December 2008 it is buying Citi Technology Services (CTS), the India-based captive provider of information technology services and solutions to Citi entities worldwide, for $127 million in an all cash deal.
India's second largest IT exporter by sales Infosys fell 5.33%. Infosys sees the Indian IT industry going through a slow phase of growth for some time, its chief executive said last week. India's largest IT exporter by sales Tata Consultancy Services slipped 1.24%.
Satyam Computer Services, India's fourth largest IT major by sales rose 0.41% as investors speculated the company's board would set a higher price at a share buyback it is scheduled to consider on Monday, 29 December 2008. Satyam on Thursday, 25 December 2008, said it has asked the World Bank to withdraw "inappropriate" statements about the Indian outsourcer and to issue an apology for harm done to the company. On Tuesday, 23 December 2008, the World Bank had issued a statement saying Satyam was debarred from getting direct contracts from it under its corporate procurement programme for eight years from September this year. The company was declared ineligible for contracts for providing improper benefits to bank staff and for failing to maintain documentation to support fees charged for its sub-contractors, the World Bank had said.
The World Bank, had, however, clarified that there was no evidence of Satyam being involved in malicious attacks on the bank's information system. Media reports had earlier said that data theft was one of the reasons why the World Bank had barred Satyam from doing business with it for eight years.
In a volatile trade on Friday, the rupee gave up its early gains and fell sharply in the afternoon session on fresh dollar demand from importers. The rupee was traded at 48.46/47 against the previous close of 48.06/08 a dollar. The rupee touched a high of 47.73 in early trade on stronger inflows. A weaker rupee benefits the IT sector which earns most of the revenues from exports.
Organic Coatings galloped 9.94% after its promoter raised stake in the company through open market purchases
Ready-to-eat food product maker Kohinoor Foods gained 0.59% after the company said Temptation Foods has increased its stake in the firm.
Jubilant Organosys fell 1.13% after the company said its board would consider buying back of foreign currency convertible bonds.
Reliance Natural Resources clocked the highest volume of 2.04 crore shares on BSE. Reliance Petroleum (1.72 crore shares), Unitech (1.54 crore shares), Suzlon Energy (1.39 crore shares) and Satyam Computer Services (1.17 crore shares) were the other volume toppers in that order.
Bharti Airtel clocked the highest turnover of Rs 194.06 crore on BSE. Reliance Industries (Rs 187.27 crore), DLF (Rs 177.58 crore), Reliance Capital (Rs 176.90 crore) and Satyam Computer Services (Rs 163.23 crore) were the other turnover toppers in that order.
Pre Session Commentary - Dec 26 2008
Today, the markets are expected to open red following the Wednesday’s falling streak and mixed cues from Asian market. The benchmark indices may turn volatile as the inflation numbers may see further fall. The commerce minister has also assured some relief is on the way for export oriented companies.
On Wednesday, the markets continued southward journey in line with the other Asian markets. The markets were trading in negative zone on the concerns over the global economic outlook. The second stimulus package and a possible rate cut are over shadowed by the derivative settlement of the monthly contracts on Wednesday. The New Year may not begin in a good mood as investors expect this quarter to be one of the worst quarters in terms of results. Sensex and Nifty lost 1.22% and 1.24%. Realty, Metal, Oil & Gas, Capital Goods and Auto conceded lose of 4.91%, 1.87%, 1.46%, 0.98% and 2.38% respectively. However, the Indian benchmark indices are expected to continue with the green rally before the result session begins.
The BSE Sensex closed lower by 118.03 points at 9,568.72 and NSE Nifty ended low by 70.65 points at 2,968.65. The BSE Mid Caps and Small Caps ended with loss of 30.21 points and 38.98 points at 3,145.60 and 3,600.20 respectively. The BSE Sensex touched intraday high of 9,653.42 and intraday low of 9,502.53
On Wednesday, US stocks closed a truncated session up, with the key indices logging gains for the first time in three days after reports showed that consumer spending and orders for durable goods topped economists’ forecasts. Crude oil futures for the month of February delivery fell $3.63 to $35.35 per barrel on New York Mercantile Exchange. The crude futures slipped for the third consecutive day on the back of the energy department report that showed inventories hit a record. The EIA reported total U.S. crude-oil stockpiles, excluding those in the Strategic Petroleum Reserve, fell 3.1 million barrels to 318.2 million for the week ended Dec. 19.
The Dow Jones Industrial Average (DJIA) closed up with 48.99 points at 8,468.48, NASDAQ index improved by 3.36 points at 1,524.90 and the S&P 500 (SPX) also closed higher by 4.99 points to close at 868.15 points.
Indian ADRs ended mixed. In technology sector, Infosys gained by 0.71% while Wipro lost by 2.67% whereas Satyam that surged by 3.81% and Patni Computers closing low by 0.18%. In banking sector ICICI Bank improved by 4.35%, HDFC Bank grew by 2,75%. In telecommunication sector, Tata Communication surged by 1,21%, while MTNL inclined by 4.11%.
Today the major stock markets in Asia opened Mixed. The Shanghai Composite is trading low by 5.31 at 1,847.10 Hang Seng is low by 36.65 points at 14,184.14 Further Japan''s Nikkei is higher by 71.48. points at 8,670.98 Tiwan weighted high by 24.82 points at 4,438.27 and Singapore’s Strait Times is up by 8.39 points at 1,745.38.
The FIIs on Wednesday stood as net sellers in equity and net buyer in debt. Gross equity purchased stood at Rs 645.80 Crore and gross debt purchased stood at Rs 154.00 Crore, while the gross equity sold stood at Rs 917.10 Crore and gross debt sold stood at Rs 135.40 Crore. Therefore, the net investment of equity and debt reported were Rs (271.40) Crore and Rs 18.60 Crore respectively.
On Wednesday Indian Rupee closed at 48.07/08 a dollar, recovering more than 2.00% as compared to Monday''s close of 48.78/81. After the three consicative fall in Indian rupee, it recovered by 70 paise. Exporters sold the dollar aggressively following its weakness against a basket of currencies, including the Japanese yen.
On BSE, total number of shares traded were 28.22 Crore and total turnover stood at Rs 3,189.50 Crore. On NSE, total number of shares traded were 67.76 Crore and total turnover was Rs 9,913.68 Crore.
Top traded volumes on NSE Nifty – Unitech with 89899711 shares, Satyam with 87155098 shares, Suzlon Energy with total volume traded 33461620 shares, Reliance Petro with 16013580 shares, followed by SAIL with 14523937 shares.
On NSE Future and Options, total number of contracts traded in index futures was 935595 with a total turnover of Rs 13123.72 Crore. Along with this total number of contracts traded in stock futures were 1485481 with a total turnover of Rs 15900.86 Crore. Total numbers of contracts for index options were 1030137 with a total turnover of Rs 15490.17 Crore and total numbers of contracts for stock options were 71964 and notional turnover was Rs 840.83 Crore.
Today, Nifty would have a support at 2,872 and resistance at 2,961 and BSE Sensex has support at 9,429 and resistance at 9,719.
Market seen higher in lacklustre trade, inflation data eyed
Key benchmark indices are likely open firm mirroring positive global cues. However there is a possibility of dip in trading volumes due to a likely decline in foreign institutional participation on account of the Christmas and New Year celebrations.
In that case, domestic institutions are expected to play a key role in determining the market direction. Mutual funds bought shares worth Rs 613.98 crore while foreign institutional investors (FIIs) were net sellers worth Rs 144.26 crore on Wednesday, 24 December 2008, according to provisional data on NSE.
Inflation data in the 12 months to 13 December 2008 about to be released by noon today, 26 December 2008 will be keenly watched.
F&O contracts for December 2008 series expired on Wednesday, 24 December 2008. As per reports, rollover of Nifty positions from December 2008 series to January 2009 series stood at 66.5% while marketwide rollover stood at 76%.
Market remained closed on Thursday, 25 December 2008 on account of Christmas. Weak global markets and signs of further deterioration in the world economy weighed on the bourses on Wednesday, 24 December 2008. The BSE 30-share Sensex slipped 118.03 points, or 1.22%, to 9,568.72 and the S&P CNX Nifty was down 51.80 points, or 1.74%, to 2,916.85, on that day.
Most Asian markets were trading firm today, 26 December 2008. China's Shanghai Composite was up 0.22% or 4.01 points at 1,856.43, Japan's Nikkei surged 1.12% or 96.27 points at 8,695.77, Singapore's Straits Times gained 0.55% or 9.52 points at 1,746.51, Taiwan's Taiwan Weighted rose 1.11% or 48.99 points at 4,462.44. However, South Korea's Seoul Composite was down 0.12% or 1.41 points at 1,127.10.
Wall Street ended on a quiet note on Wednesday, 24 December 2008, ending five-day losing streak on better than expected durable goods and consumer spending. The Dow Jones gained 48.99, or 0.58%, to 8,468.48. The S&P 500 index futures advanced 4.99 points, or 0.58%, to 868.15, and the Nasdaq composite index rose 3.36 points, or 0.22%, to 1,524.90.
Crude oil prices rebounded in Asian trade today, 26 December 2008 after tumbling to four-year lows before the Christmas break, with economic gloom weighing on the market. New York's main contract, light sweet crude for February 2009 delivery, rose 93 cents to $36.28 dollars.
Daily Call - Dec 26 2008
We begin the January settlement, which will see encompass the results season, with very low baggage from the past month. The OI of Rs 31460 cr is the lowest we have seen in 27 months. This tells you that the confidence among the punters is less. The plus side is derivative positions cannot be blamed for any mess that may be created in January by corporate results and there is enough room to build longs if the punters so want.
Our markets could open marginally higher on account of the 23 point premium which existed yesterday. The RPL refinery going on stream may help breath life in the counter, but may not lead to sustainable gains unless the shorts that happened Wednesday scamper for cover. The PSU Banks are relatively better placed. The absence of any major Call or Put writing will keep the boundaries of the Nifty trade quite tentative, with the initial range being 3000-2800.
Daily News Roundup - Dec 26 2008
Reliance Petroleum’s 29mn tons export refinery goes on stream.(TOI)
GVK Power & Infrastructure through its wholly owned subsidiary GVK Oil & Gas has entered into a PSC with the Ministry of Petroleum and Natural Gas for 7 deepwater blocks. (BL)
KEC International plans to increase total capacity to 200,000 metric tons by March through a combination of its own manufacturing and outsourcing, (BS)
Ten companies including Suzlon Energy have bid for Gujarat State Petroleum Corp.’s 200MW wind power project.(BL)
SBI plans to inject funds in to its insurance arm.(Mint)
Unitech lays off 10% of its employees.(BL)
Fortis Healthcare has decided to raise Rs18bn through fresh shares and warrants on a rights basis, of which the rights portion will be Rs10bn.(BS)
PT Bumi, an Indonesian mining company in which Tata Power has a 30% stake, ups coal reserves by 18%.(DNA)
Tata Motors has gone in for a fourth block closure during this year from December 28 to December 31.(FE)
BHEL says it had won two contracts from NTPC, totally worth Rs 21bn.(FE)
Tata Steel’s Vietnam project gets delayed due to delay in land acquisition.(BS)
United Spirits to start clearing debt on Whyte & Mackay acquisition; first tranche of Rs1.6bn due by next March.(BL)
Satyam Computer Services issues a statement “vigorously” objecting to “inappropriate statements” by the World Bank.(Mint)
World Bank turns down Satyam’s apology demand.(TOI)
Maruti Suzuki has cut production for December by over 6%. (BS)
Maruti Suzuki‘s first consignment of contract manufactured cars for Nissan is likely to be shipped during the next two to three months.(BL)
Tata Sons, the holding company of Tata Power, has decided not to exercise its option to convert 10.4mn outstanding warrants into equity shares. (BS)
The Bench at the Bombay High Court hearing the case between Reliance Industries and RNRL over supply of gas from the KG basin has reportedly been changed.(BS)
NTPC may emerge as a successful bidder for the upcoming UMPP.(BS)
Reliance Infrastructure has emerged as the sole bidder for NHAI’s Eastern Peripheral Expressway project, entailing an investment of Rs27bn.(BS)
Regulator okays GSPC claim on commercial viability of KG gas.(ET)
Government plans to review SAIL expansion plans to reach 26mn tonnes steel production by 2010 on a fortnightly basis to ensure time-bound completion.(Mint)
A consortium of oil and gas services firms led by Deep Industries (70%) has been awarded a block in Satpura-Rewa in the central state of Chattisgarh.(BS)
Reliance Power is raising around Rs115bn via syndicated loans, and US$500-600mn through ECBs to finance its upcoming UMPP at Sasan in Gujarat.(BS)
Aurobindo Pharma has received regulatory approval from Health Canada for Terbinafine drug, used in the treatment of fungal infections.(BS)
Vedanta decides to commence work on its Rs120bn aluminium project in West Bengal.(ET)
Bharat Forge plans to cut output and put its expansion on fast track.(BS)
Future Groups retail chain Big Bazaar plans to open 48 stores in Maharashtra by FY11.(BS)
ONGC’s bid for Imperial to expire on 30th December, 2008.(ET)
Coal India will finalize its JV partners for coal extraction from abandoned mines by March 2009.(ET)
PGCIL to get a part of the US$3bn World Bank loan by July 2009.(ET)
Satyam board to discuss buyback on Monday.(BS)
Government to push for easier credit, more duty relief.(BL)
3G auctions likely to miss January date.(ET)
Government may allow import of raw sugar for domestic use.(Mint)
STPI scheme that grants a ten-year income-tax holiday is expected to continue beyond its March 2010 deadline in a move that should help smaller players.(FE)
Government on Wednesday issued bonds worth Rs40bn to fertilizer companies to compensate them for their losses. (ET)
Department of Industrial Policy and Promotion proposes to change FDI norms for tobacco industry.(BS)
Finance ministry is learnt to have raised objections to a proposed relaxation in the FDI norms in restricted sectors such as telecom and insurance.(BS)
Farm credit may touch Rs1.2tn in April-October 2008.(Mint)
PE investments have declined by 80% in the first two months of December quarter.(FE)
Power deficit for November rises to 14.3%.(BS)
Iron Ore exports rebound in the month of November mainly due to increase in Chinese demand.(ET)
Domestic drug retail industry has bounced back registering 6.3% growth in November compared to the same month last year. (ET)
Centre is mulling the option of extending the re-export deadline for raw sugar imports to the tune of about 0.8mn tonnes under Advanced License scheme.(ET)
Bulls hope for moments of joy!
A minute's success pays the failure of years.
The market seems to be paying heavily ever since the start of the year and success is nowhere in sight. The mini-Santa Claus rally that started sometime in late November was over before Christmas as investors remain nervous about weak economic conditions, both in India as well as abroad. The fear is that things may get worse over the next few months, as consumers and companies alike cut spending plans.
For the day, we see a sleepy start. There is no clear direction, but a steeper than expected fall in inflation could perk up the sentiment, as it did last Friday. Select heavyweights may be propped up to make the markets look good. Still, one cannot afford to go overboard, as things like additional dose of fiscal and monetary stimulus have already been discounted. Traded volume will remain low across the globe, with many participants choosing to extend the Christmas vacation. Asian markets are pretty mixed this morning, with the Nikkei in Tokyo up over 1%. Others are marginally up or down. Hong Kong markets are shut for Christmas.
The results for the next few couple of quarters will be crucial, as they will show the real impact of the financial meltdown and sluggish growth. The most critical factor will be how fast the frozen credit markets and global economy rebound from the current slump. Its a given that the recovery will be slow and painful.
India is better placed than others due to the dominance of domestic factors in its GDP. The Government and the RBI have already taken various steps to pump-prime the economy. More are due over the next few days. Though these measures may take time to work their magic, eventually things will improve. What is uncertain is the timing of the recovery. Apart from corporate earnings and global issues, politics will also have some bearing on the sentiment in the next few months, as we head for the general elections sometime in April or May. FIIs too need to resume their shopping spree in emerging markets like India. One also needs to take into account the growing tension between India and Pakistan.
FIIs were net sellers of Rs1.44bn (provisional) in the cash segment on Wednesday while the local institutions poured in Rs6.14bn. In the F&O segment, the foreign funds were net sellers at Rs6.83bn. On Tuesday, FIIs were net sellers at Rs2.71bn in the cash segment. Mutual Funds were net sellers at Rs1.03bn.
US stocks close a truncated session up on Wednesday, with the key indices logging gains for the first time in three days after reports showed that consumer spending and orders for durable goods topped economists’ forecasts.
The New York Stock Exchange closed early, ahead of the Christmas holiday. Most world markets were shut on Thursday.
The Dow Jones Industrial Average gained 49 points, or 0.6% to end at 8,468, with 22 of its 30 components trading higher. The Nasdaq Composite rose 3 points, or 0.2%, to 1,524. The S&P 500 rose nearly 5 points, or 0.6%, to 868.
About 3.63bn shares changed hands in the US, the least since Dec. 26, 2003.
The Dow is down 500 points since its Dec. 16 close of 8,924. The blue-chip average is down 36% for the year to date, while the broad S&P 500 has lost 40%, and the Nasdaq has fallen 42%.
Trading has been light through the week with many investors on vacation. In addition, to light participation, many investors have closed their books for the year and are not planning to make any large moves until 2009.
Eight of the S&P's 10 sectors advanced, led by a 1.3% gain in financials, a 1% rise among industrials, and a 0.9% gain in consumer staples. Energy fell 1%.
Bucking the trend among financials, CIT Group shares slumped 10%, reversing from the prior day, after the financial company announced the results of an exchange offer.
Shares of General Motors (GM) hit hard this week, led the blue-chip gains, up 8%. Automotive rival Toyota said its domestic production dropped 27.2% in November from a year earlier to 288,138 vehicles, the fourth straight monthly decrease.
Banking stocks advanced with Citigroup adding nearly 4% and Bank of America up more than 5%.
Energy shares were among the weak points in the broad market as crude-oil futures tumbled 9% to end at US$35.35 a barrel, their lowest close since April 2004. Traders focused on higher stockpiles at Cushing, Okla., the delivery point used for the benchmark crude contract.
Shares of Wal-Mart Stores added 0.3%. The world's largest retailer said late on Tuesday it will settle 63 wage-and-hour class-action lawsuits, some of which have been pending against the company over the last several years.
The shares of other retailers such as JC Penney and Best Buy also rose in the broad market.
Before the opening bell, the Labor Department said that weekly claims for unemployment benefits rose more than expected. New jobless claims rose to 586,000 in the week ended Dec. 20. That is an increase of 30,000 from the previous week's revised figure of 556,000, and is more than the 558,000 total forecast by economists. Wednesday's report revealed the highest number of jobless claims since Nov. 1982, when initial filings hit 612,000.
The Commerce Department said both personal income and spending decreased in November. Personal income dipped 0.2% after a modest 0.3% increase in October. The reading was expected to be flat. Personal spending fell 0.6% versus a decline of 1% the month before. But the figure was better than the 0.8% decline that economists were expecting.
New orders of durable manufactured goods fell for the fourth month in a row, according to the Census Bureau. Durable goods orders fell 1% to US$1.9bn in November. Excluding orders related to transportation, new orders increased 1.2%.
Still, the decline was not as sharp as had been expected. Economists had forecast durable goods orders to sink 3.1% after plummeting 6.2% in October - the biggest decline since 2006.
Applications for home loans and refinancing activity surged last week, according to the Mortgage Bankers Association. The MBA's overall Market Composite Index, a measure of mortgage loan application volume, shot up 48% on a seasonally adjusted basis for the week ending Dec. 19.
The benchmark 10-year note fell, while its yield held steady at 2.17%. The 10-year yield dipped below 3% in November for the first time since the note was first issued in 1962.
The 3-month Libor rate held steady at 1.47%. The overnight Libor edged up to 0.15% from 0.12% on Tuesday. Libor is a key bank lending rate.
US light crude oil for February delivery was down US$1.32 at US$37.64 a barrel in New York. Crude prices fell sharply after the government reported an unexpected decline in crude inventories.
Gasoline prices fell overnight to a national average of US$1.655 from US$1.659 a gallon.
The dollar fell versus the euro and the yen. COMEX gold for February delivery was up US$11.30 to US$849.60 an ounce.
European shares ended lower on Wednesday in a short session ahead of a two-day break. The UK's FTSE 100 index fell 0.9% to 4,216.59, while the French CAC-40 index was down 0.4% at 3,116.21. Markets in Germany were closed for the holiday.
Amsterdam's AEX index fell 1% to 241.90, with shares of lender Fortis down 5.8%. The Dutch bank said that it has recorded a loss of 295 million euros ($412.1mn) related to currency transactions.
AstraZeneca shares fell 3% after the drug major said it has received a letter from the US Food and Drug Administration asking for additional information for its supplemental new drug application for Seroquel XR tablets.
Shares of chocolate maker Cadbury slipped 0.25%. It has conditionally agreed to sell its Schweppes Beverages business in Australia to Asahi Breweries for 550 million pounds ($811.8mn).
Seems like Santa has skipped Dalal Street, as there were no holiday cheers ahead of Christmas. Not only in India, but there was no cheer in equity markets across the world. The Santa Clause rally further lost steam as worries abound over the deepening global recession in its adverse impact on earnings.
The BSE benchmark Sensex ended at 9,590 losing 95 points and the NSE Nifty index ended at 2,916 losing 71 points.
Barring the BSE Bankex index all the other major indices ended in the red with BSE Realty index (down 5%), BSE Auto index (down 2%), BSE Teck index (down 2%) and BSE Metal index (down 2%).
Market breath was weak, 1,497 stocks declined against 920 advances, while, 92 stocks remained unchanged.
Aurobindo Pharma surged by over 3% to Rs155 after the company announced that the company has received approval for Terbinafine Tablets from Health Canada.The scrip touched an intra-day high of Rs158 and a low of Rs147 and recorded volumes of over 53,000 shares on BSE.
Shares of Satyam rebounded sharply from a low of Rs114 finally losing over 4% to Rs134. Reports stated that the World Bank barred the company from doing business with it. The company was banned by the World Bank from doing business with it for eight years for reasons relating to staff benefits and lack of documentation.
The scrip touched an intra-day high of Rs139 and a low of Rs114 and recorded volumes of over 4,00,00,000 shares on BSE.
Shares of PBA Infrastructure surged by over 5% to Rs29 after winning two contracts worth about Rs480mn. The company won construction orders worth Rs289.8mn from Maharashtra Industrial Development Corp. and Rs189.8mn from the Mumbai Metropolitan Region Development Authority. The scrip touched an intra-day high of Rs32.5 and a low of Rs29 and recorded volumes of over 36,000 shares on BSE.
In Asia...
Asian markets dropped for fourth straight trading session as a drop in the U.S. house prices and a slump in confidence among Japanese manufacturers stoked concern recessions in the world’s largest economies are deepening.
In Europe...
Equity markets acros Europe were also down, FTSE 100 index was down by a percent, the CAC 40 index was down 0.7% and the DAX index declined fell half a percent.
HCL Infosystems
We recommend a buy in HCL Infosystems from a short-term trading perspective. It is evident from the charts of HCL Infosystems that it was on a long-term downtrend from its January high of Rs 299 till it found support at Rs 64 – its 52-week low – in November. However, after finding support, the stock reversed direction triggered by the positive divergence in both daily as well as weekly relative strength index (RSI).
In early December the stock breached its long-term down trend-line which was in place since January. The stock has been on a new medium-term up trend since its 52 week low. On December 24, the stock penetrated its 50-day moving average by gaining 4 per cent, reinforcing the bullish momentum.
The daily RSI has entered in the bullish zone from the neutral region and the weekly RSI is on the brink of entering the neutral region. Moreover, the daily moving average convergence and divergence (MACD) has entered in to the positive territory. Our short-term forecast is bullish for the stock.
We expect HCL Infosystems to move up until the stock hits our price target of Rs 93 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 78.
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