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Friday, January 09, 2009
Satyam kicked out from Futures and Options
Members are advised to note that due to the recent developments in M/s. Satyam Computers Services Limited, the Exchange has decided to exclude the said scrip from equity derivatives segment. Thus, fresh month contracts will not be introduced for the expiry month April 2009 on the expiration of January 2009 contracts. All existing contracts i.e. contracts with expiry dates February 26, 2009 and March 26, 2009 will expire on January 29, 2009. Accordingly, no futures and options contracts will be available in the underlying SATYAMCOMP for trading from January 30, 2009 onwards. The methodology for position adjustments shall be separately intimated by NSCCL.
The security will continue to be available for trading in the capital market segment.
This circular shall be effective from January 30, 2009.
Post Session Commentary - Jan 9 2009
The Indian market dipped further on Satyam scam as ended with losses after trading in sluggish manner. Despite easing inflation, volatility ruled the roost on the bourses. Asian stocks were also volatile as moved between positive and negative zone. Along with this, weak European markets added negative sentiments to the market.
The domestic market opened sharply lower on the back of Satyam tragedy. However, the market suddenly gained some momentum as some buying witnessed among the selective scrips. Further, stocks were not able to hold the momentum and slipped sharply to trade lower neglecting the fall in inflation number for the week ended 27th December 2009. During the final trading hours, benchmark indices came out of days'' low but still ended lower. BSE Sensex ended below 9,500 mark and NSE Nifty below 2,900 level. From the sectoral front, Metal stocks took huge beating on the bourses as ended with deep cut of more than 7%. Besides, Reality, Capital Goods, Oil & Gas, Consumer Durables, Power and Bank stocks remained out of favor. Midcap and Smallcap stocks also witnessed selling pressure. However, FMCG, Auto and IT stocks were in demand.
Satyam Computer Services chairman and founder B. Ramalinga Raju resigned on Wednesday amid a scandal over inflated profit reporting. In BSE, shares of Satyam Computer Services Ltd today opened at 32 and that remained as highest level. It touched intraday low of 11.50 during the trading session. Finally it closed at 23.85, which was 16.10 points or (40.30%) down as against the previous close of 39.95.
Inflation for the week ended 27th December 2008, declined to ten months low of 5.91%. Inflation rate has been dropped for the ninth consecutive weeks and stood at 6.38% in the previous week and 3.74% in the corresponding week of 2007. The primary articles group in the WPI declined by 50 basis points from the previous week while manufactured products group declined by 30 basis points.
Among the Sensex pack 19 stocks ended in red territory and 11 in green. The market breadth remained extremely weak as 1874 stocks closed in red while 582 stocks closed in green and 62 stocks remained unchanged in BSE.
The BSE Sensex closed lower by 180.41 points at 9,406.47 and NSE Nifty ended down by 47.40 points at 2,873. The BSE Mid Caps and Small Caps ended with losses of 77.12 points and 106.92 points at 3,120.79 and 3,555.60 respectively. The BSE Sensex touched intraday high of 9,630.40 and intraday low of 9,250.82.
Losers from the BSE Sensex pack are Satyam Computers (40.30%), Reliance Communication (9.61%), Sterlite Inds (9.55%), Tata Steel (8.20%), Reliance Infra (7.70%), DLF (7.25%), L&T (7.15%), Ranbaxy Labs (7.09%), Tata Power (5.92%) and Tata Motors (5.44%).
Gainers from the BSE Sensex pack are TCS (6.34%), HUL (4.79%), NTPC (4.03%), M&M (3.51%) and Maruti Suzuki (3.42%) and Wipro (3.02%).
The BSE Metal index took a huge beating today to close lower by (7.16%) or 401.38 points at 5,203.86. Main losers are Welspun Guj (10.16%), Sterlite Inds (9.55%), SAIL (9.02%), Hind Zinc (8.76%), Tata Steel (8.20%) and NMDC (7.83%).
The BSE Realty index tumbled (5.15%) or 101.11 points to close at 1,864.09 as Ansal Infra (10.34%), Anant Raaj (9.94%), Penland (9.52%), Sobha Dev (8.57%), Orbitco (7.50%), DLF (7.25%) and HDIL (4.90%) closed in red.
The BSE Capital Goods index lost (4.70%) or 329.35 points to close at 6,679.42 as Punj Lloyd (16.64%), Siemens (12.52%), Praj Inds (6.28%), Walchand Inds (6.11%), AIA Engineering (5.05%), Elecon Engineering (4.98%) and Jyoti Structures (4.96%) ended in negative territory.
The BSE Oil and gas index declined (2.81%) or 166.82 points at 5,777.59. Losers are Essar Oil (6.29%), RNRL (4.97%), RPL (4.64%), Aban Offshore (4.01%), Reliance Inds (3.82%) and ONGC (2.85%).
The BSE FMCG index closed with gains of (1.22%) or 24.11 points at 1,993.96. Major gainers are HUL (4.79%), Nestle (3.08%), Dabur India (1.72%), Colgate Palmolive (1.17%) and ITC (0.74%).
The BSE Auto index gained (1.01%) or 25.19 points to close at 2, 523.51. Gainers are Bajaj Auto (4.61%), Hero Honda (3.54%), M&M (3.51%) and Maruti Suzuki (3.42%).
The BSE IT index closed with marginal gains of (0.18%) or 3.83 points at 2,131.99. Scrips that gained are TCS (6.34%), Wipro (3.02%), Oracle Finance (2.16%) and Infosys (0.67%) while the scrips that lost are Satyam Computers (40.30%) along with Moser Baer (7.49%), Rolta India (6.85%), Patni Computers (3.43%) and NIIT (2.85%).
Fall amidst volatility
Sensex opened on a weak note at 9,435, about 152 points down from the previous close of 9,587. But a round of substantial buying in heavyweights turned Sensex positive and touched the intra-day low of 9,630. While the market witnessed a fluctuating trend in afternoon trades, the index tumbled below 9,300-mark to touch the day's low of 9,251 amid relentless selling pressure. Sensex finally ended the day with loss of 180 points at 9,407, while Nifty fell 47 points to close at 2,873.
The market breadth was extremely weak, as losers outpaced gainers. Of the 2,518 stocks traded on BSE, 1,876 stocks declined, whereas 579 stocks advanced. Sixty three stocks ended unchanged. All sectoral indices bar a few slid for the day. BSE Metal dropped 7.16% followed by BSE Realty (down 5.15%), BSE CG (down 4.70%), BSE Oil & Gas (down 2.81%), BSE CD (down 2.40%) and BSE Power (down 1.99%), while BSE FMCG (up 1.22%), BSE Auto (up 1.01%) and BSE IT (up 0.18%).
Most of index heavyweights witnessed heavy correction. State Bank of India tumbled 40.30% at Rs23.85, Reliance Communications dropped 9.61% at Rs186.65, Sterlite Industries moved down by 9.55% at Rs273.10, and Tata Steel lost 8.20% at Rs214.50. Among other major losers, Reliance Infrastructure slumped by 7.70% at Rs516.30, DLF slipped by 7.25% at Rs217.60, Larsen & Toubro shed 7.15% at Rs720.10 and Ranbaxy Laboratories lost 7.09% at Rs235.60. Tata Power fell by 5.92% at Rs748.35 and Tata Motors crumbled by 5.44% at Rs163.25. Other front-line stocks lost between 1-3% each. Select counters, however, bucked the downtrend and ended with gains. Tata Consultancy Services advanced by 6.34% at Rs535.65 and Hindustan Unilever moved up by 4.79% at Rs263.50, while National Thermal Power Corporation, Mahindra & Mahindra, Maruti Suzuki India, Wipro, Grasim Industries, HDFC, ITC, Infosys and HDFC Bank ended with modest gains.
Metal stocks were hit hard and dropped sharply. Welspun crumbled by 10.16% at Rs91.55, SAIL lost 9.02% at Rs79.20, Hindustan Zinc shed 8.76% at Rs383.35 and NMDC declined by 7.83% at Rs145.95. Sesa Goa, Jindal Saw, Ispat Industries, Jai Corp and Nalco were down over 5-4% each.
Over 8.19 crore shares of Satyam Computer Services (Satyam) changed hands on the BSE followed by Unitech (4.52 crore shares), JP Associates (2.63 crore shares), Reliance Natural Resources (2.28 crore shares) and DLF (1.88 crore shares).
DLF was the most actively traded counter on the BSE and registered a turnover of Rs378 crore followed by Reliance Industries (Rs274 crore), Reliance Capital (Rs201 crore), Jaiprakash Associates (Rs181 crore) and Satyam (Rs165 crore).
BSE Bulk Deals to Watch - Jan 9 2009
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
9/1/2009 533026 CHEMCEL AMI STOCK SHARE BROKERS PLTD S 200000 3.52
9/1/2009 531358 CHOIC INTERN EXPLICIT FINANCE LTD. B 21860 7.27
9/1/2009 531358 CHOIC INTERN TENET BIO PHARMA PVT LTD S 21860 7.27
9/1/2009 521151 DHANLAXM FAB SANTOSH ABHAYRAJ SHUKLA S 34300 12.72
9/1/2009 531646 RFL INTERNAT ISHITA MOHATTA S 186750 0.96
9/1/2009 531898 SANGUINE MD MERULAND INSURANCE SERVICES PVT LTD B 100000 7.50
9/1/2009 531898 SANGUINE MD PRASHANT MAHADEV KAMBLE S 100000 7.50
9/1/2009 500376 SATYAM COMP OPG SECURITIES P LTD B 3717813 21.17
9/1/2009 500376 SATYAM COMP THE BOSTON COMPANY ASSET MANAGEMENT LLC S 5000000 18.50
9/1/2009 500376 SATYAM COMP OPG SECURITIES P LTD S 3717813 21.29
9/1/2009 531249 WELL PACK PA MAHENDRAKUMAR JAYANTILAL SHAH B 30000 32.21
9/1/2009 531249 WELL PACK PA AMI STOCK SHARE BROKERS PLTD S 26000 32.95
9/1/2009 531249 WELL PACK PA MAHENDRAKUMAR JAYANTILAL SHAH S 30000 33.65
9/1/2009 514470 WINSOME TEXT NITABEN SHAILESHBHAI PATEL B 29544 29.56
9/1/2009 514470 WINSOME TEXT KUMKUM STOCK BROKER PRIVATE LIMITED B 33986 29.87
9/1/2009 514470 WINSOME TEXT KUMKUM STOCK BROKER PRIVATE LIMITED S 31986 30.43
NSE Bulk Deals to Watch - Jan 9 2009
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
09-JAN-2009,AKSHOPTFBR,Aksh Optifibre Limited,D K JAIN,BUY,452000,8.50,-
09-JAN-2009,EVINIX,Evinix Accessories Limite,RAKESH GUPTA,BUY,1547000,3.22,-
09-JAN-2009,HDIL,Housing Development and I,GENUINE STOCK BROKERS PVT LTD,BUY,3405912,101.57,-
09-JAN-2009,PUNJLLOYD,Punj Lloyd Limited,TOTAL SECURITIES LIMITED,BUY,1780965,116.31,-
09-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,GENUINE STOCK BROKERS PVT LTD,BUY,4199565,21.30,-
09-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,KAUSHIK SHAH SHARES & SECURITIES PVT LTD,BUY,4821993,18.83,-
09-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,LATIN MANHARLAL SECURITIES PVT. LTD.,BUY,4980380,21.02,-
09-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,P R B SECURITIES PRIVATE LTD,BUY,8563270,19.37,-
09-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,SWISS FINANCE CORPORATION (MAURITIUS) LIMITED,BUY,6000000,22.78,-
09-JAN-2009,AKSHOPTFBR,Aksh Optifibre Limited,ELARA INDIA OPPORTUNITIES FUND LIMITED(DR),SELL,512991,8.51,-
09-JAN-2009,BOMDYEING,Bombay Dyeing & Mfg Co.,BAJAJ ALLIANZ LIFE INSURANCE CO. LTD,SELL,216481,155.51,-
09-JAN-2009,EVINIX,Evinix Accessories Limite,COROLATION BUILDERS PVT LTD,SELL,1547000,3.22,-
09-JAN-2009,HDIL,Housing Development and I,GENUINE STOCK BROKERS PVT LTD,SELL,3405912,101.67,-
09-JAN-2009,PUNJLLOYD,Punj Lloyd Limited,TOTAL SECURITIES LIMITED,SELL,1780965,116.48,-
09-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,GENUINE STOCK BROKERS PVT LTD,SELL,4199565,21.34,-
09-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,JP MORGAN FLEMING ASSET MGMT (EUROPRE) S.A.R.L A/C FLAGSHIP,SELL,7462813,13.17,-
09-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,KAUSHIK SHAH SHARES & SECURITIES PVT LTD,SELL,4678593,19.37,-
09-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,LATIN MANHARLAL SECURITIES PVT. LTD.,SELL,4985380,21.14,-
09-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,P R B SECURITIES PRIVATE LTD,SELL,8450770,19.92,-
09-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,THE BOSTON COMPANY ASSET MANAGEMENT LLC,SELL,6042202,18.50,-
No Salaries for 2 months at Satyam
Satyam Computer today announced holding back employees salaries for two months, even as rumours were rife that the company might lay off close to 15,000 workers in the coming days.
The offices of Satyam Computer were rife today with the talks about forthcoming pink-slips at the company, which needs over Rs 500 crore every month just to meet its staff costs and has admitted that its cash position was not encouraging.
Employees said they have received an e-mail saying the company would hold back salaries for two months and asked staffers to bear with it. However, the company spokesperson declined knowledge of any such e-mail and the issue would be looked into.
Even as the company spokesperson denied any layoff plans as of now, the rumours put the estimated job cuts at close to 15,000 by the end of this month.
Employees at the company said on condition of anonymity that they were hearing about imminent lay-off of people who were sitting on the bench or were close to completing their assigned projects.
Besides, those being retained would be asked to take substantial salary cuts, they added.
At the same time, global HT consultancy firm Hay Group's Practice Leader Mark Thompson said that employees would suffer the most from the fraud.
Global HR consultancy firm HayGroup's Practice Leader Mark Thompson said: "Based on past experience ... As with Enron, Worldcom and the Mirror Group, it is likely to be the employees who will suffer most from the fraud perpetrated by their bosses."
In early 2000, the collapse of energy trader Enron had left thousands of people out of work, another 8,500 had lost their jobs at accounting firm Arthur Andersen; and Tyco eliminated 15,000 employees in February.
Q3 December 2008 earnings to dictate trend
The third quarter December 2008 results will dictate the near term trend of the market. The sentiment may remain edgy with investor confidence shattered by a massive over Rs 7000 crore accounting scam at IT major Satyam Computer Services. Satyam's erstwhile chairman B Ramalinga during trading hours on Wednesday, 7 January 2009, admitted that the company's books of accounts were doctored and profits inflated. The accounting scandal in excess of Rs 7000 crore has created shock and awe among the Indian and global investing community.
Market expects poor the Q3 December 2008 earnings from Indian Inc on high input costs, the credit crunch and high interest rates, coupled with the burden of piled-up inventories.
As foreign brokerage in its research report dated 5 January 2009 said earnings of 30 BSE Sensex firms are set for their first quarterly drop in Q3 December 2008, since the data was first made available in 1999. Morgan Stanley estimates the BSE Sensex earnings will drop 0.2% year-on-year basis compared with a growth of 5.5% and 20% in the September 2008 and June 2008 quarters, respectively.
IT bellwether Infosys Technologies will unveil its Q3 December 2008 earnings on Tuesday, 13 January 2009. As per a foreign brokerage, Infosys could well miss its December 2008 quarter earnings forecast in dollar terms, hurt by lower volumes and cross currency movements.
HDFC Bank, Bajaj Auto and Power Finance Corporation will unveil their December 2008 quarterly results in the week.
Inflation has been on a sustained fall since peaking at a 16-year high of 12.91% in the week to 2 August 2008, raising hopes of further softening of interest rates from the Reserve Bank of India. Wholesale Price Index (WPI) based inflation rate fell to a 10-month low of 5.91% in the week ended 27 December 2008 from 6.38% in the previous week.
On 2 January 2009, the Reserve Bank of India (RBI), cut the repo rate and the reverse repo rate by 100 basis points each, with immediate effect. 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. After the latest cuts, the repo rate is now at 5.5% and the reverse repo is now at 4%, the lowest ever.
The RBI also announced a cut in cash reserve ratio, the proportion of deposits banks must keep with the central bank, by 50 basis points to 5% with effect from 17 January 2009. Lower interest rates may revive the domestic economy, which has been slowing faster than expected due to high interest rates and the global financial crisis.
India's economy is expected to grow 7% in the fiscal year to March 2009 despite the global slowdown, and will maintain a strong pace of expansion in coming years, the Prime Minister said on Thursday, 8 January 2009
Satyam accounting scam spooks market; Sensex sheds 5.5%
Key benchmark indices edged lower in a truncated week as investors confidence was shaken by IT major Satyam Computer's mega accounting scandal which came to light on Wednesday, 7 January 2009. Volatility was high throughout the week.
The BSE 30-share Sensex lost 551.75 points or 5.54% to 9,406.47 in the week ended Friday, 9 January 2009. The S&P CNX Nifty slipped 173.75 points or 5.70% to 2873 in the week.
The BSE Mid-Cap fell 270.39 points or 7.97% to 3,120.79 and the BSE Small-Cap index slipped 314.85 points or 8.13% to in the week. Both these indices underperformed the Sensex.
The barometer index BSE Sensex is down 11800.30 points or 55.64% from its all-time high of 21,206.77 struck on 10 January 2008.
Trading for the week started on an upbeat note as coordinated fiscal and monetary measures by policymakers over the weekend to boost sagging growth and firm global markets boosted the domestic bourses on Monday, 5 January 2009. The BSE 30-share Sensex rose 317.38 points, or 3.19%, to 10,275.60 and the S&P CNX Nifty rose 74.70 points, or 2.45%, to 3,121.45 on that day.
Key benchmark indices showed a divergent trend on Tuesday, 6 January 2009, with the Sensex rising and the broader-based S&P CNX Nifty declining. The trading session was choppy with the market caught between concerns about Q3 results and coordinated fiscal and monetary measures by policymakers to boost sagging growth. The BSE 30-share Sensex was up 60.33 points, or 0.59%, to 10,335.93. The S&P CNX Nifty fell 8.65 points, or 0.28%, to 3,112.80, on that day.
India's fourth largest IT firm by sales Satyam Computer's shocking accounting scam estimated at over Rs 7,000 crore sent the market tumbling on Wednesday, 7 January 2009. The BSE 30-share Sensex plunged 749.05 points, or 7.25%, to 9,586.88 and the S&P CNX Nifty fell 192.40 points, or 6.18%, to 2,920.40, on that day.
The financial markets were closed on Thursday, 8 January 2009 on account of Moharum.
Caution ahead of US non-form payroll data for December 2008 and fragile sentiment post IT major Satyam Computer's massive accounting scandal weighed on the market on Friday, 9 January 2009. The BSE 30-share Sensex lost 180.41 points, or 1.88%, to 9,406.47 and the S&P CNX Nifty fell 47.40 points, or 1.62%, to 2,873, on that day.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) lost 10.35% to Rs 1151.05 in the week on worries the recent steep fall in crude oil prices would dent refining margins of the firm.
India's largest oil exploration firm by revenue ONGC fell 1.40% to Rs 670.50 on reports its overseas unit ONGC Videsh (OVL) is raising about Rs 5,250 crore from Citibank India to partly fund its recent $2.1 billion acquisition of UK's Imperial Energy, an oil exploration firm. OVL will issue one-year commercial paper, which will carry an interest of 8.15%.
Satyam Computer Services slumped 86.57% to Rs 23.85, after tumbling to a 52-week low of Rs 11.50 on 9 January 2009 after Chairman Raju, on Wednesday, 7 January 2009 confessed of reporting inflated figures in the accounts of the firm.
Raju said the Q2 September 2008 results reported operating margin of about Rs 649 crore versus actual Rs 61 crore. He further said that the balance sheet as on 30 September 2008 included understated liability of Rs 1230 crore. He also said the balance sheet as on that day included inflated cash and bank balances of Rs 5040 crore.
No board member had any knowledge of the real situation of the books, Raju said. He further said the failed Maytas deal was a last attempt to fill fictitious assets with real ones. In mid-December 2008, Satyam had scrapped a deal to acquire Maytas Properties and Maytas Infrastructure, companies run by Raju's sons B Rama Raju and Teja Raju as the plan angered Satyam investors.
Satyam's loss translated into gains for other IT pivotals as investors churned positions to maintain overall portfolio weightage to the IT sector. India's second largest IT exporter by sales Infosys rose 5.62% to Rs 1195.10. Infosys Technologies will unveil its Q3 December 2008 earnings on 13 January 2009.
India's third largest IT exporter by sales Wipro rose 3.19% to Rs 250.65. India's largest IT exporter by sales Tata Consultancy Services rose 7.71% to Rs 535.65.
Realty shares fell on market perception that a number of realty firms do not strictly follow good corporate governance practices. DLF (down 27.61% to Rs 217.60), Housing Development & Infrastructure (down 26.76% to Rs 104.80), and Unitech (down 22.63% to Rs 35.90) fell.
In an effort to boost the cash-starved realty sector, the government on 2 January 2009 allowed the developers of integrated townships to borrow funds from overseas and also asked states to release land for low- and middle-income housing schemes. Earlier, as part of the first stimulus package announced last month, the public sector banks had lowered rates on home loans up to Rs 20 lakh.
Banking stocks slumped on fears of rising defaults in a slowing economy. India's largest private sector bank by net profit ICICI Bank declined 3.47% to Rs 454.85. India's biggest bank in terms of total assets and branch network, State Bank of India fell 8.58% to Rs 1215.90. India's second largest private sector bank by net profit HDFC Bank slipped 0.35% to Rs 1012.30.
Axis Bank dropped 6.16% to Rs 490 in the week after the bank on Friday, 9 January 2009 said its gross non-performing assets rose 76% to Rs 788 crore in Q3 December 2008 over Q3 December 2007. Axis Bank's net profit rose 63.2% to Rs 500.86 crore on a 62.3% rise in total income to Rs 3716.94 crore in Q3 December 2008 over Q3 December 2007.
Auto stocks were mixed amid hopes a likely reduction in fuel prices and soft interest rates may spur demand for vehicles which is mainly driven by finance. Mahindra & Mahindra (up 8.26% to Rs 311.20), and Maruti Suzuki India (up 7.59% to Rs 584.20), gained. However India's top truck maker by sales Tata Motors fell 6.90% to Rs 163.25 after its heavy commercial vehicle unit in Jamshedpur announced it would go for a six-day block closure from 12 January 2009, in view of the slowdown in demand.
Metal stocks after Goldman Sachs downgraded the world's third largest steel producer POSCO to neutral from buy. Hindalco Industries (down 5.99% to Rs 52.60), and Sterlite Industries (down 0.67% to Rs 273.10), declined.
World's sixth largest steel maker Tata Steel fell 6.60% to Rs 214.50 after the company's sales volume dipped by about 14% to 1.07 million tonnes in Q3 December 2008 over Q3 December 2007 due to the global economic slowdown.
Telecom stocks slipped on concerns of tighter profit margins due to stronger competition following an aggressive nationwide rollover of the GSM-based cellular services by Reliance Communication (RCom), India's second largest telecom services provider by sales. RCom fell 25.44% to Rs 186.65. India's largest telecom services provider by sales Bharti Airtel slipped 9.60% to Rs 637.15.
Cement stocks gained after the government on 2 January 2009 reinstated the countervailing duty on structural cement which will help protect the domestic industry from cheaper imports. ACC (up 1.66% to Rs 501.75), Ambuja Cements (up 4.12% to Rs 71.95), Grasim Industries (up 12.31% to Rs 1360.75), and UltraTech Cement (up 1.18% to Rs 393.85), rose.
Indian largest engineering and construction firm by sales Larsen & Toubro (L&T) slumped 12.46% to Rs 720.10 as the company will incur huge losses on shares of Satyam it bought before the scandal. L&T had bought shares in Satyam earlier this month and holds 3.95% stake in the company, L&T chairman A M Naik said in a television interview on Friday, 9 January 2009.
India's largest drug maker by sales Ranbaxy Laboratories fell 12.53% to Rs 218.90 after Japan's third-largest drugmaker, Daiichi Sankyo Co, said on 5 January 2009 it would book an appraisal loss of 359.5 billion yen ($3.9 billion) on a parent-company basis on its stake in Ranbaxy Laboratories. Daiichi Sankyo paid nearly 500 billion yen for a 63.9% stake it acquired in the major generic drug maker last year.
India's largest FMCG company by sales Hindustan Unilever rose 6.49% to Rs 263.50 on defensive buying.
Inflation has been on a sustained fall since peaking at a 16-year high of 12.91% in the week to 2 August 2008, raising hopes of further softening of interest rates from the Reserve Bank of India. Wholesale Price Index (WPI) based inflation rate fell to a 10-month low of 5.91% in the week ended 27 December 2008 from 6.38% in the previous week, government data released on Friday, 9 January 2009 showed.
The Reserve Bank of India (RBI) after trading hours on Friday, 2 January 2009, cut the repo rate and the reverse repo rate by 100 basis points each, with immediate effect. 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. After the latest cuts, the repo rate is now at 5.5% and the reverse repo is now at 4%, the lowest ever.
The RBI also announced a cut in cash reserve ratio, the proportion of deposits banks must keep with the central bank, by 50 basis points to 5% with effect from 17 January 2009. Lower interest rates may revive the domestic economy which has been slowing faster than expected due to high interest rates and the global financial crisis.
Complementing monetary easing by the RBI, the government enhanced the spending power of states with specific measures to boost credit availability in the second fiscal stimulus package. It offered additional sops to exporters and the small-scale sector, besides raising the level of protection for cement and steel sectors a tad. It has also incentivised purchase of commercial vehicles.
Credit availability has been hiked in a variety of ways, the interest ceiling on external commercial borrowings has been removed; the cap on foreign institutional investments in the domestic corporate debt market has been jacked up two-and-a-half times from $6 billion to $15 billion; a special purpose vehicle is being created to lend to non-banking finance companies to the tune of Rs 25,000 crore; Indian Infrastructure Finance Company is being permitted to raise another Rs 30,000 crore by means of tax-free bonds, and states are allowed to borrow an additional Rs 30,000 crore from the market.
In addition, public sector banks would be given additional capital to the extent of Rs 20,000 crore over the next two years, so they can lend roughly 10 times as much additionally.
The Bank of England (BOE) cut rates to the lowest level in its 315-year history, taking it into uncharted territory as it attempts to ward off a prolonged recession. The BOE cut borrowing costs by 50 basis points to a record low of 1.5% on Thursday, 8 January 2009, amid signs Britain is heading for a deep recession.
The move follows aggressive cuts by other central banks in mid-December 2008. The US Federal Reserve has already slashed its key interest rate to a record low, at a range of zero to 0.25%, while the Bank of Japan has dropped its rate to almost nothing, at 0.1%.
Sensex down 9% in two days as Satyam scandal rattles investor confidence
A massive accounting scandal at IT major Satyam Computer and caution ahead of the US non-farm payroll data for December 2008, pulled the market down for the second day in a row. IT pivotals surged as investors churned portfolio after Satyam's scandal. FMCG stocks gained on defensive buying even as realty and metal stocks fell. Volatility was high.
The BSE Sensex lost 180.41 points, or 1.88%. Extending Wednesday's (7 January 2009) s near 80% fall triggered by a confession of an accounting fraud by erstwhile chairman B Ramalinga Raju, shares of IT major Satyam Computer Services tanked 40.3% on huge volumes.
Volatility was immense right from opening bell. After an initial 2.45% slide triggered by worries that the Satyam accounting scandal in excess of Rs 7,000 crore will hit fresh inflow of foreign funds in India, the market staged a strong rebound and the Sensex moved into green as IT pivotals, other than Satyam, surged. Recovery in Asian stocks had also aided the strong rebound. But the rebound on the domestic bourses proved short-lived as the market plunged in mid-morning trade as investors were worried that the biggest scandal in the corporate history may trigger foreign portfolio outflows.
The market once again rebound from lower level in afternoon trade. It later came off the higher level. It recovered once again in late trade on reports employees of state-run oil refiner Bharat Petroleum Corporation (BPCL) have called off strike and 70% of the striking employees of the firm have returned to work. But the recovery was short-lived and the market weakened again in late trade. The Sensex swung 379.58 points between the day's high and low.
In a major relief to people across the country hit by the oil sector strike, BPCL during trading hours today, 9 January 2009, said it would resume fuel supplies at all locations starting this evening, as more than 70% cent of the striking employees returned to work. With BPCL employees resuming work, there are expectations that officers of the other oil sector companies too will follow suit and call off the strike soon. BPCL accounts for 25% of the petro goods market in the country, while HPCL accounts for 27% cent and Indian Oil Corporation (IOC) the rest. HPCL has been functioning normally throughout.
The strike by the oil company executives under the umbrella of the Oil Sector Officers Association which began on Wednesday, 7 January 2009 had brought the country to a grinding halt with over 90% of petrol pumps across the country running dry. The nation was reeling under the impact of the oil strike, compounded by the truckers' stir. The striking oil officers said that their demand of higher wages should be immediately met otherwise the strike will continue indefinitely.
European shares fell in morning trade on Friday, giving up early gains, as a rally in mining stocks on the back of higher copper prices fizzled out. The key benchmark indices in France, Germany and UK were down by between 0.2% to 0.58%.
Asian stocks were volatile and moved between positive and negative zone. Most of the Asian stocks were now in the red on an expected dismal December 2008 US job data due later in the day. key benchmark indices in Japan, Taiwan, Singapore, Hong Kong, Japan and South Korea fell by between 0.27% to 2.05%. But China's Shanghai Composite rose 1.42%.
Most US stocks rose on Thursday, 8 January 2009, after news that Citigroup Inc agreed to support legislation aimed at stemming home loan foreclosures, offsetting Wal-Mart's disappointing sales and outlook. The Dow fell, however, led down by a 7.5% decline in Wal-Mart as the discounter's sluggish December 2008 sales signaled another downturn in consumer spending, reviving fears of a prolonged recession.
The Dow Jones industrial average was down 27.24 points, or 0.31%, to 8,742.46. The Standard & Poor's 500 Index was up 3.08 points, or 0.34%, to 909.73. The Nasdaq Composite Index gained 17.95 points, or 1.12%, to 1,617.01.
Citigroup's reported backing of legislation that would bring relief to struggling borrowers brought on board the support of one of the largest US retail financial institutions -- seen as a key move in winning support for the bill.
The BSE Sensex was down 180.41 points, or 1.88%, to 9,406.47. The Sensex rose 43.52 points at the day's high of 9,630.40 hit in early trade. The Sensex fell 336.06 points at the day's low of 9.250.82 in mid-morning trade.
The S&P CNX Nifty was down 47.40 points, or 1.62%, to 2,868.40.
The market breadth, indicating the overall health of the market, was weak. On BSE, 577 stocks advanced and 1,879 stocks fell. A total of 62 stocks remained unchanged.
The BSE clocked a turnover of Rs 4,192 crore today, lower than Rs 5,831.85 on Wednesday, 7 January 2009. The financial markets were closed on Thursday, 8 January 2009 for a public holiday.
Nifty January 2009 futures were at 2860.80, at a discount of 12.20 points as compared to the spot closing of 2873. Turnover in NSE's futures & options (F&O) segment was Rs 47,709.01 crore, lower than Rs 59,555.20 crore on Wednesday, 7 January 2009.
Worries over outflow by foreign funds with the massive Satyam scandal shaking investor confidence on India Inc., weighed on the market. Institutional investors pressed heavy sales of Indian stocks on Wednesday, when the Satyam's announcement of the accounting fraud during trading hours. As per the provisional data released by the stock exchanges, foreign institutional investors (FIIs) dumped shares worth Rs 1,111.25 crore and domestic funds sold shares worth Rs 505.49 crore on Wednesday.
The BSE Sensex has lost 929.46 points or 8.99% in the last two consecutive trading sessions hit by the Satyam scandal. Before the sharp slide, the Sensex had risen 1,007.01 points or 10.79% to 10,335.93 on 6 January 2009 from a recent low of 9,328.92 on 26 December 2008.
The BSE Mid-Cap index was down 2.41% while BSE Small-Cap index was down 2.92%. Both the indices underperformed the Sensex.
The BSE Metal index (down 7.16%),the BSE Realty index (down 5.15%), the BSE Capital Goods index (down 4.7%), the BSE Oil & Gas index (down 2.81%), the BSE Consumer Durables index (down 2.4%), the BSE Power index (down 1.99%), the BSE Bankex (down 1.97%), underperformed the Sensex.
The BSE FMCG index (up 1.22%), the BSE Auto index (up 1.01%), the BSE IT index (up 0.18%), the BSE HealthCare index (down 0.46%), the BSE PSU index (down 1.31%), the BSE Teck index (down 1.87%) outperformed the Sensex.
Ranbaxy Laboratories, Reliance Infrastructure, Tata Power Company fell by between 7.09% to 7.7%.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) was down 3.82% to Rs 1,151.05 on worries the recent steep fall in crude oil prices would dent refining margins of the firm. The stock came off the lower level. It had lost 8.72% at the day's low of Rs 1,092.35.
PSU OMCs rose as crude oil prices declined sharply. BPCL, HPCL and Indian Oil Corporation rose by between 1.08% to 3.86%.
Oil rose for the first time in four days on Friday, 9 January 2009, on speculation prices had fallen too far, too fast in response to the global recession. Crude oil for February 2009 delivery gained as much as 94 cents, or 2.3%, to $42.64 a barrel on the New York Mercantile Exchange.
Crude had lost nearly $1 to settle at $41.70 a barrel on Thursday, 8 January 2009 at New York Mercantile Exchange (NYMEX) extending Wednesday's (7 January 2009) 12.25% or $5.95 fall to $42.63 a barrel. Wednesday's fall was the biggest single day percentage drop in seven years, triggered by a US government report that showed crude inventories rose much more than expected in the world's top energy consumer.
Lower crude oil prices will help oil marketing firms reduce losses on sale of kerosene and liquified petroleum gas at a controlled price. The PSU OMCs are, however, making profit on sale of petrol and diesel thanks to a sharp fall in global crude oil prices over the past few months.
FMCG stocks rose on a defensive buying. ITC, Hindustan Unilever Tata Tea and Nestle India rose by between 0.32% to 4.79%.
India's fourth largest IT firm by sales Satyam Computer Services slumped 40.3% to Rs 23.85 on huge volumes of 8.19 crore shares, recovering from the day's low of Rs 11.50. The stock had tanked 77.69% to Rs 39.95 on Wednesday after Raju confessed of reporting inflated figures in the accounts of the firm. The accounting fraud is estimated at over Rs 7000 crore.
Meanwhile, SRSR Holdings, an investment vehicle of the promoters of Satyam Computer, has sold a 1.27% stake of pledged shares in the outsourcing firm, a disclosure to the stock exchange showed on Thursday, 8 January 2009. The stock was sold on the open market, and SRSR Holdings now held 2.34% of the company's stock, the disclosure showed.
Satyam's banker Citibank has reportedly frozen more than 30 operational accounts of Satyam Computer Services. These are trade receivable accounts, and the aim may be to protect the bank's $70-million exposure to the troubled technology firm.
IT pivotals, other than Satyam Computer, surged as investors shifted positions from Satyam in favour of other IT pivotals to maintain overall portfolio weightage to the sector. India's second largest IT exporter by sales Infosys rose 0.67% even as its American depository receipt (ADR) fell 1.11% on Thursday, 8 January 2009. India's third largest IT exporter by sales Wipro rose 3.02% even as its ADR slipped 2.54% on Thursday. India's largest IT exporter by sales Tata Consultancy Services rose 6.34%.
Another reason for the rally in IT pivotals was expectations that Satyam's woes will see other IT firms getting more business. IT firms shrugged of a firmer rupee. The Indian rupee strengthened on Friday after initial weakness. The partially convertible rupee was at 48.30 per dollar, stronger compared with its close at 48.80/81 on Wednesday. A stronger rupee negatively impacts operating margins of IT firms as they earn most of their revenues from exports.
Banking stocks were volatile caught between hopes fall in inflation may give room to the Reserve Bank of India for further rate cuts and worries of rising bad loans in a slowing economy. India's largest private sector bank by net profit ICICI Bank fell 2.82% to Rs 454.85. It touced a high of Rs 482.20 and a low of Rs 441.05 during the day.
India's biggest bank in terms of total assets and branch network, State Bank of India fell 1.84% to Rs 1,215.90. It touched a high of Rs 1249 and a low of Rs 1,190.15. India's second largest private sector bank by net profit HDFC Bank rose 0.12% to Rs 1,012.30, touching a high of Rs 1,052 and a low of Rs 975.10.
India's largest dedicated housing finance firm by operating income HDFC rose 1.18%.
Axis Bank fell 6.97% after the bank said its gross non-performing assets rose 76% to Rs 788 crore in Q3 December 2008 over Q3 December 2007. In percentage terms, non-performing assets (NPAs), Axis Bank's nudged up to 0.9% of total advances as on 31 December 2008 from 0.8% on 31 December 2007, Axis bank said at the time of announcing Q3 December 2008 results during trading hours. Axis Bank's net profit rose 63.2% to Rs 500.86 crore on a 62.3% rise in total income to Rs 3716.94 crore in Q3 December 2008 over Q3 December 2007.
Inflation based on the whole price index (WPI) rose 5.91% in the year through 27 December 2008, lower than previous week's 6.38% rise, data released by the government today, 9 January 2009, 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 Satyam accounting scandal hit realty shares for the second day in a row on market perception that a number of realty firms do not strictly follow good corporate governance practices. DLF, Housing Development & Infrastructure, Indiabulls Real Estate and Unitech fell by between 1.37% to 7.37%.
In an effort to boost the cash-starved realty sector, the government on 2 January 2009 allowed the developers of integrated townships to borrow funds from overseas and also asked states to release land for low- and middle-income housing schemes. Earlier, as part of the first stimulus package announced last month, the public sector banks had lowered rates on home loans up to Rs 20 lakh.
Metal stocks extended Wednesday's fall on profit taking after a recent solid surge. Hindalco Industries, Steel Authority of India, National Aluminum Company and Sterlite Industries fell by between 3.75% to 9.95%. The BSE Metal index fell 7.16% today. The BSE Metal index had fallen 6.38% to 5,605.24 on Wednesday, 7 January 2009. Earlier, the BSE Metal index had risen 20.95% to 5,987.46 on 6 January 2009 from a recent low of 4950.22 on 26 December 2008.
World's sixth largest steel maker Tata Steel fell 8.2% after the company's sales volume dipped by about 14% to 1.07 million tonnes in Q3 December 2008 over Q3 December 2007 due to the global economic slowdown.
Capital goods stocks fell on worries a slowing economy will crimp orders. Bharat Heavy Electricals, Praj Industries, AIA Engineering, BEML fell by between 1.61% to 6.28%.
Indian largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 7.15% as it will make huge losses on shares of Satyam it bought before the scandal. L&T had bought shares in Satyam earlier this month and holds 3.95% stake in the company, L&T chairman A M Naik today, 9 January 2009, said in a television interview. The company, which has a small outsourcing unit, had made the investment in Satyam in the hope of forming a strategic alliance, he said.
Punj Lloyd tumbled 16.64%, extending losses for the second consecutive session after the company said its UK based subsidiary has initiated legal case against UK based SABIC Petrochemicals
India's largest commercial vehicle maker by sales Tata Motors fell 5.54% after its heavy commercial vehicle unit in Jamshedpur announced it would go for a six-day block closure from 12 January 2009, in view of the slowdown in demand.
But other auto stocks rose on hopes lower interest rates will spur demand for vehicles which is mainly driven by finance. Mahindra & Mahindra, Maruti Suzuki India, Hero Honda Motors rose by between 3.42% to 3.54%.
Sun Pharmaceuticals Industries rose 5.7% as index focused mutual funds built position in the stock ahead of its entry in the coveted BSE 30-share Sensex with effect from 12 January 2009.
Aditya Birla Nuvo slipped 1.33% after the company shut its fertilizer plant due to non-availability of gas because of oil officers strike.
Maytas Infra hit the lower circuit limit of 5% to Rs 151.10 on reports the company also fudged account books like the group firm Satyam Computer.
Satyam Computer Services clocked the highest volume of 8.1 crore shares on BSE. Unitech (4.52 crore shares), Jaiprakash Associates (2.63 crore shares), Reliance Natural Resources (2.28 crore shares) and DLF (1.88 crore shares) were the other volume toppers in that order.
DLF clocked the highest turnover of Rs 378.75 crore on BSE. Reliance Industries (Rs 274.46 crore), Reliance Capital (Rs 201.44 crore), Jaiprakash Associates (Rs 181.41 crore) and Satyam Computer Services (Rs 165.27 crore) were the other turnover toppers in that order.
Satyam -Stay Away!
Stay away from Satyam - you can make a lot of money .. in case there is a merger/acquisition or a good news (if any!) - however, you could lose your pants - REMEMBER GTB ?? Equity holders come last when it comes to compensation. No one knows what the liabilities are.
STAY AWAY!
Market may extend losses
The market may extend Wednesday's (7 January 2009) sharp losses as softwaere major Satyam Computer's accounting scandal in excess of Rs 7000 crore has created shock and awe among the Indian and global investing community. Satyam's erstwhile chairman B Ramalinga Raju's startling admission that the company's books of accounts were doctored and profits inflated, triggered a 7.2% fall in the Sensex on Wednesday. After the Satyam saga, investors will have lesser confidence in Indian companies especially the ones with suspect corporate governance practices. That in turn could affect inflow of foreign funds in India.
Institutional investors pressed heavy sales of Indian stocks on Wednesday, when the Satyam's announcement of the accounting fraud. As per the provisional data released by the stock exchanges, foreign institutional investors (FIIs) dumped shares worth Rs 1,111.25 crore and domestic funds sold shares worth Rs 505.49 crore on Wednesday.
Meanwhile, the stock exchanges have removed the Satyam stocks from their key benchmark indices. The BSE said Sun Pharmaceutical Industries will replace Satyam in the barometer index BSE Sensex with effect from Monday, 12 January 2009. The NSE said Reliance Capital will replace Satyam in the S&P CNX Nifty with effect from 12 January 2009.
Asian stocks were mixed on Friday, 9 January 2009, with investors bracing for the December 2008 US payrolls data, expected to show sharp job losses and deal another blow to hopes for a speedy recovery this year.
Most US stocks rose on Thursday, 8 January 2009, after news that Citigroup Inc agreed to support legislation aimed at stemming home loan foreclosures, offsetting Wal-Mart's disappointing sales and outlook. The Dow fell, however, led down by a 7.5% decline in Wal-Mart as the discounter's sluggish December 2008 sales signaled another downturn in consumer spending, reviving fears of a prolonged recession.
The Dow Jones industrial average was down 27.24 points, or 0.31%, to 8,742.46. The Standard & Poor's 500 Index was up 3.08 points, or 0.34%, to 909.73. The Nasdaq Composite Index gained 17.95 points, or 1.12%, to 1,617.01.
Citigroup's reported backing of legislation that would bring relief to struggling borrowers brought on board the support of one of the largest US retail financial institutions -- seen as a key move in winning support for the bill.
Pre Session Commentary - Jan 9 2009
Today the markets are likely to open positive, as we expect little bounce back after a drastic fall on Wednesday session. The fear and negative sentiments have once again afflicted investor at large numbers and hence a major bounce back is still far. On the macro economic perspective the inflation numbers to be announced today may influence the markets sentiments to some extent. Today’s session, one may witness some extreme volatility amidst selling pressures.
On Wednesday, the markets crashed the worst ever in the past a few weeks. The sentiments were weak since the post morning session, which further deteriorated further. The fire of selling pressure was ignited by Satyam after its Chairman Mr. Ramlinga Raju admitted the fraud of Rs 5000 crore plus due to inflated bottom margins over many years. The stock plummeted a drastic 77.69% to close at Rs 39.95 after touching a low at Rs 30.70 in BSE. Further sectors like Realty, Oil & Gas, IT and Bankex were brutally shattered as they lost by 16.95%, 9.35%, 9.32% and 8.06% respectively. Sensex and Nifty lost by 7.25% and 6.18% respectively. On the other hand, Mid caps and Small caps were also thrashed as they lost 7.17% and 6.29% respectively. During the session we expect the markets to be trading highly volatile.
The BSE Sensex closed lower by 749.05 points at 9,586.88 and NSE Nifty ended lower by 192.40 points at 2,920.40. The BSE Mid Caps and Small Caps ended with losses of 247.05 points and 246.03 points at 3,197.91 and 3,662.52 respectively. The BSE Sensex touched intraday high of 10,469.72 and intraday low of 9,510.15.
On Thursday, the US markets closed mixed. The Wart Mart’s lower fourth quarter outlook caused a cautious trading ahead of the unemployment data to be released today. Wal-Mart has shaved more than a dime from its fourth quarter earnings outlook, which now ranges from $0.91 to $0.94 per share. Wall Street was expecting $1.06 per share for the quarter. The company further disappointed the investors by announcing December same-store sales increased by a less-than-expected 1.7%. On the other hand, economists expect December non-farm payrolls to show a decline of 545,000 jobs. Crude oil futures for the month of February delivery fell marginally by $0.93 to $41.70 per barrel on New York Mercantile Exchange. The dwindling energy demand across the world is a major concern in this economic turmoil.
The Dow Jones Industrial Average (DJIA) closed lower by 27.24 points at 8,742.46 NASDAQ index gained 17.95 points at 1,617.01 and the S&P 500 (SPX) also closed higher by 3.08 points to close at 909.73.
Indian ADRs ended mixed. In technology sector, Infosys lost 1.11% while Satyam remained unchanged. Further Patni Computers ended with decrease of 3.45% and Wipro closed down by 2.54%. In banking sector ICICI Bank dropped by 0.94% whereas HDFC Bank gained 0.18%. In telecommunication sector, Tata Communication lost 3.49% and MTNL declined by 5.23%. Sterlite Industries increased by 1.13%.
Today the major stock markets in Asia have opened mixed. The Shanghai Composite is trading high by 5.34 points at 1,883.52 while Hang Seng is high by 73.99 points at 14,489.90. Further Japan''s Nikkei is low by 83.70 points at 8,792.72. South Korea’s Seoul Composite is low by 18.27 points at 1,187.43 and Singapore’s Strait Times is high by 10.54 points at 1,838.15.
The FIIs on Wednesday stood as net buyer in equity and net sellers in debt. Gross equity purchased stood at Rs 2389.90 Crore and gross debt purchased stood at Rs 403.40 Crore, while the gross equity sold stood at Rs 1945.10 Crore and gross debt sold stood at Rs 420.40 Crore. Therefore, the net investment of equity and debt reported were Rs 444.80 Crore and Rs (17.00) Crore respectively.
On Wednesday, Indian Rupee closed at 48.80/81 per dollar, 03% weaker than Tuesday’s close of 48.66/69. The rupee traded range bound for the day as there was good demand for dollar from some large companies.
On BSE, total number of shares traded were 57.58 Crore and total turnover stood at Rs 5,831.85 Crore. On NSE, total number of shares traded were 125.99 Crore and total turnover was Rs 15,509.18 Crore.
Top traded volumes on NSE Nifty – Satyam with 330164149 shares, Unitech with 80289320 shares, Suzlon Energy with total volume traded 60140875 shares, ICICI Bank with 19189173 shares followed by SAIL with 17824328 shares.
On NSE Future and Options, total number of contracts traded in index futures was 1332039 with a total turnover of Rs 18,480.07 Crore. Along with this total number of contracts traded in stock futures were 1715697 with a total turnover of Rs 15,542.17 Crore. Total numbers of contracts for index options were 1574422 with a total turnover of Rs 24,115.96 Crore and total numbers of contracts for stock options were 135139 and notional turnover was Rs 1416.99 Crore.
Today, Nifty would have a support at 2,819 and resistance at 2,943 and BSE Sensex has support at 9,238 and resistance at 9,695.
All eyes on Satyam
SRSR Holdings, an investment vehicle of the promoters of Satyam Computer, has sold a 1.27% stake of pledged shares in the outsourcing firm, a disclosure to the stock exchange showed on Thursday (8 January 2009). The stock was sold on the open market, and SRSR Holdings now held 2.34% of the company's stock, the disclosure showed.
Meanwhile, Citibank has reportedly frozen more than 30 operational accounts of Satyam Computer Services. These are trade receivable accounts, and the aim may be to protect the bank's $70-million exposure to the troubled technology firm.
Following a sharp plunge in Satyam's stock price on Wednesday (7 January 2009), both BSE and NSE have excluded Satyam Computer from their respective benchmarks effective 12 January 2009. Sun Pharmaceuticals Industries will replace Satyam on the Sensex, while Reliance Capital will replace Satyam on the Nifty.
The government has decided Reliance Industries would reportedly provide gas from its KG basin to Reliance Power for its 7,480 megawatt power project in Uttar Pradesh, subject to availability.
Sterlite Industries may see action after copper prices in London jumped as much as 8% overnight and in Shanghai the copper prices hit their upper circuit limit today as commodity markets pushed higher after US jobs data proved better than expected.
Tata Motors' heavy commercial vehicle unit in Jamshedpur announced it would go for a six-day block closure from 12 January 2009, in view of the slowdown. This will be the fifth block closure undertaken by the firm.
NTPC reportedly expects to start production from the captive coal mine block allocated in Jharkhand by end of 2009 as it tries to reduce dependence on Coal India.
Shares of the state run oil marketing firms may see action as an indefinite strike for higher pay hikes by officers of state-run oil companies entered the second day on Thursday. Flights too were delayed by 30-40 minutes as replacemnet staff took longer to refuel aircraft. An indefinite strike by the PSU oil firm employees may hit revenues in the near term.
Mastek has slashed its revenue growth target for the year to June 2009, saying it expects hits from a continued slowdown in demand and an adverse foreign exchange environment. The company now expects full-year revenue to rise 10% to 15% in rupee terms, over last year's revenue of Rs 916 crore. The company had earlier expected revenue to rise by about 33%.
Chambal Fertilizers & Chemicals has shut down its units in Gadepan in Rajasthan due to the disruption in gas supplies caused by the Oil Sector Officers Association's strike. The shutdown, which started on Wednesday (7 January 2009), was likely to continue until normal gas supplies are restored, the company said in a statement.
Simplex Projects has been awarded a Rs 2000 crore contract to develop a housing project in Libya. The project, comprising the construction of 2,000 houses, a public building and infrastructure like roads, drainage and sewage systems, is scheduled to be completed in 36 months, it said in a statement.
Great Eastern Shipping Company has cancelled two new ship-building contracts, citing the highly uncertain business environment. The company had placed the orders for the construction of two Supramax bulk carriers with a Chinese shipyard in 2007, it said in a statement.
The board of Radico Khaitan has approved a plan to explore opportunities to buy back some of its foreign currency convertible bonds.
Trading Calls - Jan 9 2009
Global scene too continues to be precarious and fragile. There is no dearth of bad news, whether on economic front on corporate earnings. Given the kind of headwinds and uncertainty we are facing, it would be prudent to stay on the sidelines for a while and let the dust settle.
Daily News Roundup - Jan 9 2009
US law firm file class-action suits against Satyam Computers (BL)
Government orders inspection of eight Satyam companies including Maytas Properties and Maytas Infrastructure (BL)
Satyam may axe 10,000 employees next month (ET)
Satyam CFO Mr.Srinivas Vadlamani puts in papers (ET)
Satyam Computers to be replaced by Reliance Capital in Nifty 50 and by Sun Pharmaceuticals in Sensex w.e.f January, 12, 2009 (BL)
Promoters holding in Satyam further declines to 2.3% (BS)
Satyam and Maytas SEZs to come under scanner (FE)
NTPC and BHEL to set up engineering institutes to cater specifically to the needs of the power sector (BL)
Sun Pharma rejects Taro’s proposal of US$15/share for merger. (BL)
L&T denies any strategic interest in Satyam Computers (BL)
Tata Communications to raise Rs30bn (ET)
CESC hopes for financial closure of 1,000MW plant in Orissa by 2010. (BS)
A JV between BAE Systems and Mahindra & Mahindra to produce land systems was cleared by the FIPB. (BS)
Bank of India in talks with Credit Agricole, a French bank, and BBVA, the Spanish financial services group, to set up an AMC for its foray into the mutual funds business. (BS)
Punj Lloyd wins two contracts worth Rs11.5bn (FE)
United Spirits registered a volume growth of 18% in April-December 2008
AP government to review Maytas Infra implementation of Hyderabad Metro. (BL)
Maytas Infrastructure’s non-executive director and chairman, Mr.R C Sinha, quits (BS)
IDBI Bank SPV for NBFC may get CCEA nod (ET)
Kingfisher Airlines through a change in its accounting principles was able to save Rs7.4bn for the six-month period and Rs1.3bn for the quarter ended 30 September 2008. (BS)
MMTC invites bid for 60,000 tones of pig iron export (ET)
Electrotherm will set up a battery manufacturing plant in Gujarat this year with an investment of around Rs200mn (BL)
Government says that the gas from RIL’s KG basin would be given to the proposed Dadri power project by Reliance Power (ET)
DoT may allow 8 bidders per 3G circle (ET)
Government may allow public sector banks may to raise cheaper long term funds through tax-free bonds to meet the requirement of the infrastructure sector (ET)
Fuel price cuts likely in 2-3 weeks, says Petroleum Minister (ET)
Government has cleared 34 FDI proposals worth Rs16.2bn (ET)
Seventeen urea plants closed and 11 may shut shop on fuel supply cut off (ET)
Coal imports have recorded a CAGR of 17.1% between 2003-2008 (BL)
Stainless steel imports decline 70% in December 2008 (ET)
What lies beneath?
Truth is like the sun. You can shut it out for a time, but it ain't goin' away.
The sun has set on Satyam but we are not convinced if the confessions are to be taken at face value. Almost a decade ago India Infoline was the first to cite issues in Satyam’s balance sheet. In the coming days, a political angle could emerge. The real money may have made its way to a political party close to Satyam’s promoters. Figures of bribes paid for mega government projects through group companies too may be out it in the open soon.
The market has witnessed many a catastrophes and this too shall pass. But, one should not get carried away, as the undertone appears to have turned a bit weak yet again. Even globally, there has been a string of bad news in terms of profit warnings and grim economic numbers.
Today, the US government will release the monthly jobs report, which is expected to be bad. Back home, today’s inflation data will reveal further moderation in prices at the wholesale level. IIP may also rebound into positive zone (to be released on Monday). Corporate earnings announcements will gather pace from next week, with Infosys slated to declare results on January 13.
We see the key indices opening flat to slightly lower. Some bounce back may come later in the day. The market may turn choppy over the next few days given the anxiety over earnings and uncertainty about the emerging global situation. Stay on the sidelines for a while and wait for some more clarity on direction.
US stocks ended mixed on Thursday, as investors chose to remain cautious ahead of Friday's monthly jobs data. Earlier, losses were sparked by Wal-Mart's gloomy forecast and on a private survey that the private sector shed 693,000 jobs in December.
Bouncing back from a triple-digit decline, the Dow Jones Industrial Average ended down 27.24 points, or 0.3%, at 8,742.46.
The S&P 500 index gained 3.08 points, or 0.3%, to 909.73, with telecom services, energy and materials faring the best among the S&P's 10 industry groups. Also turning positive, the Nasdaq Composite index added 17.95 points, or 1.1%, to 1,617.01.
Wal-Mart proved to be the biggest laggard, off 7.5%. The world's largest retailer posted lower-than-expected December sales and cut its fourth-quarter forecast.
Market breadth was positive. Volume on the New York Stock Exchange came to nearly 1.2bn, and advancers outpaced decliners more than 3 to 2. On the Nasdaq, almost 754mn shares traded, and advancers led decliners 8 to 5.
US stocks had slipped on Wednesday and drifted on Thursday, as weak labor market reports and dour retail sales reports gave investors reasons to retreat after the recent rally.
But stocks recovered on Thursday afternoon after Democratic lawmakers said they have reached a deal with Citigroup to let bankruptcy judges change home loans in a bid to prevent foreclosures.
The combination of weak retail sales, questions about the economic stimulus plan and jitters about Friday's jobs report kept stocks choppy. The market should drift higher over the next few weeks, as more details of president-elect Barack Obama's new stimulus plan are revealed.
Obama made the case for his administration's $775bn stimulus package on Thursday morning, warning that failure to act could mean the recession lingers on for years.
As expected, the nation's retailers reported dismal December sales, as the recession continued to hit consumer spending. Many retailers also warned that quarterly results will decline as well.
In the final hour of trading, investors seemed cheered by news of a breakthrough agreement that could help curtail home foreclosures. Sen. Richard Durbin, D-Ill., hailed a decision by Citigroup to drop opposition to legislation that would give bankruptcy judges the power to eliminate some mortgage debt.
Better-than-anticipated weekly jobless claims data did little to overshadow the disappointing retail results, and they did not alter gloomy forecasts for Friday's unemployment report.
The US government early on Thursday reported a drop in weekly jobless claims, but analysts said the decline was likely due to technical glitches that come with seasonally adjusting the numbers around the holidays.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 2.44% from 2.49% on Wednesday. Yields on the 2-year, 10-year and 30-year Treasurys all hit record lows last month.
Lending rates improved. The 3-month Libor rate fell to 1.35% from 1.40% on Wednesday. That marked a fresh 4 1/2 year low. Libor is a key bank lending rate.
In other overseas news, the Bank of England lowered its key interest rate by 50 basis points to 1.5%, the lowest level in the bank's history dating back to the late 17th century.
The dollar tumbled versus the euro and yen.
COMEX gold for February delivery rose $12.80 to settle at $854.50 an ounce.
US light crude oil for February delivery fell 93 cents to settle at $41.70 a barrel on the New York Mercantile Exchange after slumping 12% Wednesday.
Gasoline prices rose 3.5 cents to a national average of $1.762 a gallon.
Stocks in Europe fell on Thursday. The pan-European Dow Jones Stoxx 600 index fell 0.7% to 208.77, the second straight day of losses for the index. It gained about 10% in the five trading sessions ending Monday. The UK FTSE 100 index closed down 0.1% at 4,505.37. Germany's DAX 30 index fell 1.2% to 4,879.91 and the French CAC-40 index declined 0.7% to 3,324.33.
Indian market was jolted severely on Wednesday as stock markets snap a four day rally after the biggest corporate scam in India. Markets were unable to hold on to their early gains as sentiment was badly hit post the resignation of Ramalinga Raju from Satyam’s board.
Promoters of Satyam had cheated on its investors and stake holders as Ramalinga Raju confessed that the company had been manipulating its books of accounts by inflating its balance sheet for several years.
It was complete mayhem on Dalal-Street as all round selling in scrips across the sectors dragged the BSE benchmark Sensex and the NSE Nifty to drop below the 10,000 and 3,000 level respectively.
Heavy offloading was witnessed in the realty, oil & gas and IT stocks. Also the second rung stocks were badly battered as the BSE mid-cap and the BSE small-cap indices fell over 6% each.
The BSE benchmark Sensex ended down by 749 points at 9,586 and the NSE Nifty index was down by 192 points at 2,920.
Shares of Satyam tumbled by over 77% to Rs39 after Ramalinga Raju the chairman resigns from Satyam’s board. The scrip plunged to an intra-day low of Rs30 after hitting an intra-day high of Rs188. The stock recorded volumes of over 3,00,00,000 shares on NSE.
Shares of Unity Infraprojects declined 13% to Rs126. The company announced that it received a contract amounting to Rs740mn from Project Seabird, Deputy Director General, Government of India West Block New Delhi for Construction of Township and associated facilities at Amadalli for Project Seabird, Karwar (Civil Works Pkg - IX).
The scrip touched an intra-day high of Rs157 and a low of Rs120 and recorded volumes of over 33,000 shares on BSE.
Shares of HCC lost 15% to Rs50. Reports stated that the company plans to set up a high end township project near Sanand at a cost of Rs300bn. The scrip touched an intra-day high of Rs61 and a low of Rs48 and recorded volumes of over 15,00,000 shares on BSE.
Bullion metals end mixed
Economic data weighs on dollar pulling gold higher
Bullion metals ended higher on Thursday, 08 January, 2009 as the dollar weakened today due to the weak economic data. 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.
On Thursday, Comex Gold for February delivery rose $12.8 (1.5%) to close at $854.5 an ounce on the New York Mercantile Exchange. This year gold has lost 3.3% till date. Last week, gold prices gained 1%. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (15%) since then.
On Thursday, Comex silver futures for March delivery fell marginally to $11.097 an ounce. Last week, silver has gained 9%. For 2008, silver lost 24%.
At the currency market on Thursday, the dollar was down against most major counterparts. The dollar index lost 0.8%.
Among the major economic reports for the day, the Labor Department reported that initial jobless claims fell 24,000 to a seasonally adjusted 467,000 in the week ended 3 January, 2009. Despite the decline in the most recent weekly data, the level of initial claims is 42% higher than the year-earlier period and was at highest level in twenty six years. The four-week average of new claims fell 27,000 to 525,750, and is up 53% from the prior year.
In the crude market on Thursday, crude prices fell by almost a dollar and closed at $41.7/barrel.
In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.
Last year, the weakening dollar and higher global demand for raw materials had led to records for commodities including gold. Gold reached a record in March 2008 as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the last move, the Federal Reserve has cuts its target bank lending rate to 0.25% from 5.25% in September, 2007. The Fed did it in nine steps.
Prior to 2008, 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%.
Crude drops by a dollar
Prices drop further due to weak economic report
After rallying for four previous sessions, crude oil prices ended lower for the third consecutive day today on Thursday, 08 January, 2009. Prices fell due to the dour economic reports that questioned the country's energy demand.
On Thursday, crude-oil futures for light sweet crude for February delivery closed at $41.7/barrel (lower by $0.93 or 2.2%) on the New York Mercantile Exchange. Prices reached a high of $147 on 11 July but have dropped almost 63% since then. Year to date, in 2009, crude prices are lower by 6.2%.
Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
Among the major economic reports for the day, the Labor Department reported that initial jobless claims fell 24,000 to a seasonally adjusted 467,000 in the week ended 3 January, 2009. Despite the decline in the most recent weekly data, the level of initial claims is 42% higher than the year-earlier period and was at highest level in twenty six years. The four-week average of new claims fell 27,000 to 525,750, and is up 53% from the prior year.
The EIA had reported yesterday that U.S. crude stockpiles gained 6.7 million barrels to 325.4 million in the week ended 02 January, 2009. Market had expected a buildup of 1.5 million barrels.
Against this background, February reformulated gasoline rose slightly to $1.0882 a gallon, while February heating oil lost 1.5% to $1.5196 a gallon.
February natural-gas futures dropped 4.3% to $5.62 per million British thermal units.
Satyam Employees - Jan Salary for you ?
A legendary entrepreneur overstated his company’s assets and understated the liabilities. Many clients who had reposed their trust in Satyam may feel cheated and might walk away. In the hypothetical scenario of Satyam facing a zero-revenue and zero-account receivables situation starting today, how long would it be able to pay its 53,000 employees?
The ‘fudged’ cash and bank balances could have lasted them 10 months but Ramalinga Raju has already confessed on Wednesday that Rs 5,040 crore out of the Rs 5,361 crore is non-existent.
Satyam pays Rs 522 crore in salaries and bonuses on an average per month, according to its last quarterly financial update. Along with this, it also pays a smaller amount of roughly Rs 10 crore in staff welfare and employee stock compensation expenses per month.
If you include items such as reimbursements for travel, communication and other personnel-related expenses - the monthly outgo for salaries would amount to Rs 580 crore.
Now with Raju stating that it had an actual cash and bank balance of only Rs 320 crore at the end of September 30, 2008 itself, this means Satyam could have practically paid a month’s salary or so at the most. But four months have passed since then and this is why there is more than a question mark on whether Satyam employees would be paid their monthly remuneration for January 2009.
“All the records were fudged. To find out whether something is at all left with Satyam, we need a full restatement of accounts. At this point, it is well nigh impossible to find out whether Satyam has any cash left with it, or not,” IT analyst Harit Shah of Angel Broking said.
Raju, in his 5 page confession, has already accepted that an amount of Rs 1,230 crore was arranged to Satyam to keep operations in the last two years.
“This was done by way of pledging shares and raising funds from sources. This could mean that not only was the money paid to Satyamites as salary a loan taken by the promoter group, but also that Satyam’s own resources would in all probability be extinguished,” says an industry source.
Without cash, Satyam promoters apparently arranged for working capital by taking loans. Now with Ramalinga Raju and his men leaving the company in doldrums, how and more importantly, who will raise fresh loans to keep paying salaries is the million dollar question.
via Economic Times
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