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Tuesday, January 27, 2009
Post Session Commentary - Jan 27 2009
The Indian market ended with handsome gains on significant buying over the ground led by positive global cues along with short covering ahead of expiry of January 2009 contracts on 29th Jan 2009. Though, there was a bit of negative reaction to the Reserve Bank of India’s decision to keep interest rates unchanged. But suddenly the key indices had witnessed a sharp recovery to trigger a solid rally.
The domestic market today opened notably higher as US markets overnight gains amid expectations of stimulus and a strong start to the Asian markets boosted the domestic sentiments. The investors were closely watching RBI’s quarterly review of monetary policy and benchmark indices comes off from the day''s high after the central bank’s announcement of maintaining its status quo on interest rates. Further, market gained its wining momentum once again on strong buying in key stock. Stocks extended their gains and displayed firmness throughout the day on positive global cues. Key benchmark indices surged to day''s high during last trading hours, on firm trading in the US index futures. BSE Sensex maintained its strength and breached the 9,000 level along with NSE Nifty ended above 2,750 mark. From the sectoral front, all indices ended in green and among those most of the buying momentum was seen among Metal, Power, Teck, IT, Oil & Gas, Bank, Reality and Auto stocks. Midcap and Smallcap stocks also joined the buyers’ radar.
Among the Sensex pack 28 stocks ended in green territory and 2 in red. The market breadth remained positive as 1217 stocks closed in green while 1168 stocks closed in red and 100 stocks remained unchanged in BSE.
The BSE Sensex closed higher by 329.73 points at 9,004.08 and NSE Nifty ended up by 92.80 points at 2,771.35. The BSE Mid Caps and Small Caps ended with gains of 17.68 points and 11 points at 2,867.87 and 3,266.54 respectively. The BSE Sensex touched intraday high of 9,021.97 and intraday low of 8,789.06.
Gainers from the BSE Sensex pack are Sterlite Indus (11.84%), Reliance Infra (11.14%), Reliance Communications (7.15%), Sun Pharma (6.15%), NTPC Ltd (5.99%), Ranbaxy Lab (5.87%), Wipro Ltd (5.75%), Bharti Airtel (5.21%) and JP Associates (5.12%).
Only two losers from the BSE Sensex pack ONGC Ltd (3.84%) and L&T Ltd (0.41%).
The Reserve Bank of India in its policy review for the third-quarter of financial year 2008-09 has maintained a status quo on key policy rates after aggressively easing its monetary stance since October has kept the key rates unchanged. The central bank left its repo rate at 5.5%, reverse repo rate at 4% and the cash reserve ratio (CRR) at 5% unchanged on Tuesday. The Bank Rate has been kept unchanged at 6%. The bank, however, cut its growth forecast for the fiscal year ending March due to a slowdown in industry and services and assuming normal agricultural production. It cuts its GDP growth projection for 2008/09 to 7% with a downward bias from 7.5-8%. The economy has grown at 9% or more for the past three fiscal years. It also adds that inflation will fall to 3% by the end of March from earlier forecast of 7%.
On the global markets front, the Asian Markets ended firm after the government said it would offer funds to firms whose capital has been hurt by the financial turmoil. Tokyo launched a $16.7 billion scheme on Tuesday to help firms threatened by the financial crisis. Today among major stock markets in Asia, only Nikkei was trading while all other Asian markets were closed due to Lunar New Year. Markets in Singapore and South Korea will reopen on Wednesday. Hong Kong''s markets will reopen on Thursday. Japan’s Nikkei ended with gain of 378.93 points (4.93%) at 8,061.07.
The European Markets are trading in negative with losses from mineral extractors pressuring the top index. Mineral extractors dropped as gold and other metal futures fell. The DAX is down by 15.03 points at 4,311.84 and FTSE 100 is lower 49.05 points at 4,159.96.
The BSE Metal stocks outperformed the benchmark indices and ended higher by (5.55%) or 245.64 points at 4,672.64 due to firm commodities prices on London Metal Exchange. Main gainers are Jindal Steel (12.52%), Sterlite Indus (11.84%), Hindustan Zinc (9.11%), Sesa Goa Ltd (6.52%), JSW Steel (3.94%) and Tata Steel (3.58%).
The BSE Power index also supported the buying sentiment as ended up by (4.66%) or 79.48 points at 1,784.93. Major gainers are Reliance Infra (11.14%), NTPC Ltd (5.99%), Siemens Ltd (5.28%), ABB Ltd (4.57%), BHEL (4.57%) and Power Grid (3.25%).
The BSE Teck index was able to gain market favor and gained (4.39%) or 74.96 points to close at 1,783.44 as Oracle Fin (15.64%), Rolta Ind (12.16%), Reliance Communications (7.15%), Zee Ent (6.58%), Wipro Ltd (5.75%) and Bharti Airtel (5.21%) ended in green.
The BSE IT index rose on firm movement of Indian ADRs overnight in the US and closed with increase of (4.05%) or 83.74 points at 2,152.88. Scrips that gained are Oracle Fin (15.64%), Rolta Ind (12.16%), Wipro Ltd (5.75%), HCL Tech (5.14%), Aptech Ltd (4.14%) and Infosys tech (3.97%).
The BSE Oil & Gas index advanced by (3.35%) or 190.42 points at 5,868.90 as traders focused on short-term factors like cold U.S. weather and an Australian cyclone, despite forecasts of a further rise in U.S. crude stocks. Gainers are Reliance (6.41%), Cairn Ind (6.17%), Essar Oil Ltd (5.53%), BPCL (5.06%), Reliance Pet (4.03%) and Reliance Natural Resources (3.95%).
The BSE Bank index ended higher by (2.91%) or 130.56 points to close at 4,615.22 as investors speculated falling bond yields and lower rate would accelerate loan growth and profitability of selective company. Bank of Baroda (5.81%), ICICI Bank (4.68%), SBI (4.50%), IDBI Bank (3.45%) and Axis Bank (2.71%) ended in positive territory.
On track after week
After a subdued trend last week, Sensex staged a recovery today and Nifty scaled high. Bulls were back in action after closing flat on Friday, as the market registered sharp gains on the back of all-round buying support. Taking cue from buoyant international indices, Sensex resumed 129 points above its previous close at 8803 on the back of strong buying in heavyweight, metal and fast moving power stocks. This buoyancy triggered a major rally that propelled the index to an intra-day high of 9022 in afternoon. Though Sensex held firm above 8900 for a major portion of the trading session, it finally closed at 9004, up 330 points. Nifty advanced 92 points at 4261.
The breadth of the market was positive on BSE. Of the 2,484 stocks traded on BSE 1,208 stocks advanced, 1,176 stocks declined and 100 stocks ended unchanged. All the sectoral indices on BSE ended positive. BSE Metal ended firm with gains of 5.55% while BSE Power rose 4.66%. BSE Teck added 4.39% and BSE IT added 4.05%. While BSE Oil, BSE Bankex, BSE Realty and BSE Teck ended in the positive territory.
Action in several index heavyweights lifted the market. Sterlite Industries led the pack and shot up by 11.84% at Rs267.80. Reliance Energy soared 11.14% at Rs539.60, Reliance Communications surged 7.15% at Rs171.60, Sun Pharmaceutical Industries flared up by 6.43% at Rs1075.85, Reliance Industries jumped by 6.41% at Rs1227, National Thermal Power Corporation added 5.99% at Rs190.15, Ranbaxy Laboratories advanced by 5.87% at Rs198.50, Wipro moved up by 5.75% at Rs226.15 and Bharti Airtel was up 5.21% at Rs647.75.
Over 4.84 crore shares of Satyam Computer Services changed hands on BSE followed by Unitech (1.17 crore shares), GVK Power & Infrastructure (0.88 crore shares), Reliance Natural Resources (71.40 lakh shares) and United Spirits (70.60 lakh shares).
Valuewise, United Spirits registered a turnover of Rs327 crore on BSE followed by Satyam Computer Services (Rs225 crore), Reliance Industries (Rs212 crore), Educomp Solutions (Rs131 crore) and Reliance Infrastructure (Rs128 crore).
Sensex regains 9,000 level; breadth just about positive
Frenzied buying in index pivotals, bouts of short covering ahead of the expiry of January 2009 series derivatives contracts on Thursday, 29 January 2009 and positive global cues powered a solid rally on the bourses. The BSE 30-share Sensex surged 329.73 points, or 3.8% to close above the psychological 9,000 mark. Index heavyweight Reliance Industries (RIL) anchored rally with over 6% surge. Metal, IT, and banking shares were the start performers of the day. Despite the rally, market breadth was just about positive, as small and mid-cap shares pared early gains.
Except for an odd early afternoon hiccup which was a knee jerk reaction to the Reserve Bank of India (RBI) maintaining its status quo on interest rates, market displayed firmness throughout the day.
The RBI left its repo rate, reverse repo rate and the cash reserve ratio (CRR) unchanged in its third quarter review of the Monetary Policy for 2008-09, unveiled today, 27 January 2009. However, the central bank cut its growth forecast for the fiscal year ending March 2009 on a slowdown in industry and services and assuming normal agricultural production. GDP growth projection for 2008/09 was lowered to 7% from 7.5-8% earlier. The economy has grown at 9% or more for the past three fiscal years. The central added the inflation by the end of March 2009 would be signficantly lower than the projected 7%.
Volatility may swell in the coming days as futures & options contracts for January 2009 series expire on Thursday, 29 January 2009. As per reports, rollover of Nifty positions from January 2009 series to February 2009 series was 38% while marketwide rollover of positions stood at 31%, as on Friday, 23 January 2009.
Globally, the two-day policy setting meeting of the U.S. Federal Reserve starting today, 27 January 2009 and the $825 billion US stimulus package by the Republican lawmakers which will be picked up by the Senate this week and President Barack Obama could reportedly sign the bill by mid- February 2009, will be closely watched.
Trading in the US index futures showed the Dow could rally 46 points at the opening bell. European shares fell on Tuesday, as banks retreated after hefty gains in the previous session and mining shares slipped on growth concerns with key benchmark indices in France, Germany and UK declining by between 1.02% to 1.49%.
Asian stocks gained today, 27 January 2009, as US economic indicators gave a hope that demand for commodities and Japanese-made goods will improve. Japanese benchmark index Nikkei jumped 4.93%. Stock markets in Hong Kong, China, Taiwan, Korea and Singapore will remain shut today, 27 and tomorrow, 28 January 2009 for the Lunar New Year holidays.
US stocks ended higher on Monday, 26 January 2009, on news that drug maker Pfizer will buy opponent Wyeth for $68 billion and on a sudden rise in sales of existing homes in December 2008. The Dow Jones industrial average increased 38.47 points, or 0.48%, to end at 8,116.03. The Standard & Poor`s 500 index climbed 4.62 points, or 0.56%, to settle at 836.57. The Nasdaq Composite index increased 12.17 points, or 0.82%, to close at 1,489.46.
Foreign institutional investors (FIIs) are in selling mode after an inflow of Rs 1319.10 crore in December 2008. Their outflow in January 2009 totaled Rs 3950.20 crore (till 22 January 2009).
The BSE 30-share Sensex was up 329.73 points, or 3.8%, to 9,004.08. The Sensex rose 347.62 points at the day's high of 9,021.97 in late trade. The Sensex rose 114.71 points at the day's low of 8,789.06 in early trade.
Stock markets remained shut on Monday, 26 January 2009, on account of Republic day. The market fell for the third straight week ended Friday, 23 January 2009 on weak global cues and subdued December 2008 quarter earnings from blue chip companies A rise in wholesale inflation rate for the week ended 10th January also dampened sentiment. The BSE Sensex lost 649 points or 6.96% for the week to 8,674, and the S&P CNX Nifty fell 150 points or 5.29% to 2,679.
The BSE Sensex has lost 643.23 points or 6.66% so far in 2009 from its close of 9647.31 on 31 December 2008. The barometer index had lost 10639.68 points or 52.44% in the calendar year 2008
The market breadth indicating the overall health of the market, was positive on BSE today with 1,233 shares advancing as compared with 1,196 that declined. 66 shares remained unchanged. The breadth was strong in early trade.
The BSE clocked a turnover of Rs 3,069 crore today.
Nifty January 2009 futures were near spot price at 2772, compared to the spot closing of 2771.35. Turnover in NSE's futures & options (F&O) segment increased to Rs 42,867.49 crore from Rs 36,809.97 crore on Friday, 23 January 2009. The January 2009 derivatives contract will expire on Thursday, 29 January 2009.
Among the 30-share Sensex pack, 28 advanced while only 2 of them slipped.
Sectoral indices on BSE displayed mixed trend. the BSE Metal index (up 5.55%), the BSE Power index (up 4.66%), the BSE Teck index (up 4.39%), the BSE IT index (up 4.05%) outperformed the Sensex.
The BSE Consumer Durables index (up 0.38%), the BSE FMCG index (up 1.05%), the BSE HealthCare index (up 1.23%), the BSE PSU index (up 1.25%), the BSE Capital Goods index (up 1.55%), the BSE Auto index (up 1.72%), the BSE Realty index (up 2.19%), the BSE Bankex (up 2.91%), the BSE Oil & Gas index (up 3.35%), underperformed the Sensex.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 6.41% to Rs 1,227.05. The company after market hours on Thursday, 22 January 2009 announced a lesser than expected 8.8% fall in net profit to Rs 3501.crore in Q3 December 2008 over Q3 December 2007. RIL's net profit dipped for the first time in three years, but beat forecasts as refining margins did not fall as much as expected. RIL earned $10 on every barrel of crude oil processed at its 660,000 barrel-a-day plant at Jamnagar in Gujarat, higher than other refineries in South Asia.
However India's largest oil exploration firm by revenue Oil & Natural Gas Corporation fell 3.84% on rise in crude oil prices.
Oil prices rose more than 1% on Tuesday, reversing day-ago losses as traders focused on short-term factors like cold U.S. weather and an Australian cyclone, despite forecasts of a further rise in U.S. crude stocks. U.S. light, sweet crude for March delivery rose 52 cents to $46.25 a barrel.
Metal stocks surged on firm commodities prices on London Metal Exchange. Hindalco Industries, Hindustan Zinc, Tata Steel, National Aluminum Company rose by between 1.38% to 9.11%.
Sterlite Industries rose 11.84% even after it reported 11.6% fall in net profit to Rs 204.01 crore on 2% fall in sales to Rs 2,583.08 crore in Q3 December 2008 over Q3 December 2007. It was the top gainer from the Sensex pack.
India's second largest steel maker by sales Steel Authority of India rose 3.14% even after its net profit fell 56.4% in Q3 December 2008 over Q3 December 2007.
IT stocks rose on firm ADRs overnight in the US. India's third largest software services exporter, Wipro rose 5.75 % as its ADR rose 1.66% overnight. The company forecasted a 7% fall in revenue for Q4 March 2009 on global economic downturn and pricing pressure from western clients, at the time of declaring results before market hours on 21 January 2009.
India's second largest software services exporter Infosys Technologies rose 3.97% as its ADR rose 2.46% overnight. While, India's fifth largest IT exporter by sales HCL Technologies rose 5.09% after its net profit rose 56.82% to Rs 398.01 crore on 10.97% rise in sales to Rs 1,304.85 crore in Q2 December 2008 over Q1 September 2008.
TCS, India's largest software services exporter by sales rose 2.9%.
Banking stocks rose after an odd blip in midmorning trade when the Reserve Bank of India kept its key rates unchanged in its credit policy today, 27 January 2009. India's largest bank in terms of assets and branch network State Bank of India rose 4.5% after its net profit rose 37.03% to Rs 2478.42 crore in the quarter ended December 2008 as against Rs 1808.64 crore during the previous quarter ended December 2007. Total operating income rose 42.34% to Rs 18030.34 crore in the quarter ended December 2008 as against Rs 12666.82 crore during the previous quarter ended December 2007. The bank announced the result on 24 January 2008.
India's second largest private sector bank by net profit HDFC Bank rose 1.93% as its American depository receipt (ADR) rose 1.1% on Monday, 26 January 2009.
India's largest private sector bank by net profit ICICI Bank rose 4.68% even as its ADR fell 1.08% overnight. Net profit of ICICI Bank rose 3.41% to Rs 1272.15 crore in the quarter ended December 2008 as against Rs 1230.21 crore during the previous quarter ended December 2007. Total operating income declined 0.96% to Rs 7836.08 crore in the quarter ended December 2008 as against Rs 7911.77 crore during the previous quarter ended December 2007. The unexpected rise in net profit was because earnings from fees and bond trading offset slowing credit growth and rise in bad loans. The bank announced the result on Saturday, 24 January 2008.
India's largest dedicated housing finance company by total income HDFC rose 4.18%.
Auto shares rose on hopes lower interest rates and fall in fuel prices would spur demand for vehicles which is mainly driven by finance. India's largest commercial vehicle maker by sales Tata Motors rose 3.85% on recent reports the much delayed and much awaited Tata Nano is ready to hit the dealer networks by February 2009 end. Both the “base” model and the “fully loaded” model will be available at the dealer showrooms mid-to late February. Meanwhile company which bought the luxury brands Jaguar and Land Rover from Ford Motor last year, is in reportedly in talks with the UK government on assistance for the luxury units as sales plummet in their largest markets.
Among other auto stocks, Maruti Suzuki India, M&M and Hero Honda Motors rose by between 1.53% and 4.29%.
Rate sensitive real estate shares rose on hopes lower rates will spur housing demand. HDIL, Indiabulls Real Estate Omaxe, Unitech, DLF, Akruti City rose by between 0.89% to 7.51%.
Power stocks rose. Tata Power Company, Reliance Infrastructure, Reliance Power, Power Grid Corporation of India rose by between 3.25% to 11.14%.
NTPC rose 5.99% after its net profit rose 26.5 % to Rs 2,250.91 crore on 20.9% rise in sales to Rs 11,277.06 crore in Q3 December 2008 over Q3 December 2007.
India's second largest telecom services provider by sales of Reliance Communication rose 7.15% even after its net profit declined 9.04% to Rs 397.04 crore in the quarter ended December 2008 as against Rs 436.48 crore during the previous quarter ended December 2007. Sales declined 2.04% to Rs 3334.22 crore in the quarter ended December 2008 as against Rs 3403.52 crore during the previous quarter ended December 2007.
India's largest FMCG major by sales Hindustan Unilever rose 2.51% even after reporting a 2.48% fall in net profit in Q3 December 2008 over Q3 December 2007.
Cadila HealthCare rose 2.56% after its net profit rose 14.5% in Q3 December 2008 over Q3 December 2007.
Power stocks rose. Tata Power Company, Reliance Infrastructure, Reliance Power, Power Grid Corporation of India rose by between 2.44% to 11.22%.
NTPC rose 5.6% after its net profit rose 26.5 % to Rs 2,250.91 crore on 20.9% rise in sales to Rs 11,277.06 crore in Q3 December 2008 over Q3 December 2007.
India's largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 0.41% after it hiked stakes in Satyam Computer Services from 4.48% to 12.04%. It acquired additional 7.56% stake in open market purchases at average price of Rs 34.5per share. The company's stake hike is an attempt to secure Satyam's board seat. While Satyam Computer Services jumped 21.36%.
REI Agro fell 2.49% after its net profit declined 92.29% to Rs 2.0389 crore in Q3 December 2008 over Q3 December 2007.
Divi's Laboratories slumped 8.46% after the company reported an 18.1% fall in net profit to Rs 82.42 crore in Q3 December 2008 over Q3 December 2007.
Sun TV Network jumped 4.43% after the company reported a 9.7% rise in net profit to Rs 112.24 crore in Q3 December 2008 over Q3 December 2007.
Asian Paints lost 12.69% after the company reported a 53.5% slide in net profit to Rs 50.11 crore in Q3 December 2008 over Q3 December 2007.
Satyam Computer Services clocked the highest volume of 4.85 crore shares on BSE. Unitech (1.18 crore shares), Cals Refineries (1.1 crore shares), GVK Power & Infrastructure (88.61 lakh shares) and Reliance Natural Resources (71.52 lakh shares) were the other volume toppers in that order.
United Spirits clocked the highest turnover of Rs 327.70 crore on BSE. Satyam Computer Services (Rs 226.10 crore), Reliance Industries (Rs 212.88 crore), Educomp Solutions (Rs 131.16 crore) and Reliance Infrastructure (Rs 128.22 crore) were the other turnover toppers in that order.
Satyam - L&T analysis
CNBC has just flashed post 3.30 pm the news that L&T has asked SEBI for relaxation in the cut-off date for the open offer so that they can make the offer at Rs.30 (if 7th Jan'09 is agreed as cut-off) or at Rs.98 (if 16th Dec'08 is the cut-off) INSTEAD of Rs.275 (the last 6-month average).
Though SEBI has not give any verdict on the same, however, L&T's demand opens up a pandora's box.
1. It implies that L&T is "willing" to buy stake even at Rs.98. This means, for the open offer, the additional outflow required is ~Rs.1350 cr. (67.4 cr sh x 20% x Rs.98). At Rs.30, the outgo will be Rs.400 cr.
2. Can SEBI set a new precedent by giving a lee-way for faulty corporate decisions like this? Or is it "pre-decided"?
3. If SEBI does permit a lower open offer price, what about the small investors who must have ignorantly bought Satyam shares in the free fall from Rs.186 - only to repent later. Will SEBI give them "REFUND" for the difference? If not, isn't SEBI for the protection of "all investors" rather than the bigger ones? Will Mr.Kirit Somaiya not raise a 'foul' cry?
4. Even at Rs.98, some cross-bidding is not ruled out, which can take the open offer price cost a little higher for L&T. (At Rs.30, it will boomerang on SEBI/L&T as all IT cos would jump in the fray for the acquisition. Hence, this is ruled out).
5. A further CASH infusion in Satyam would be needed to ensure its smooth operations. The amount could be as high as Rs.1000 cr or Rs.500 cr on an optimistic note.
6. Upaid case liability is expected to be $1 bn. This will cost Rs.5000 cr. Even if we assume L&T can settle the same at half of that amount, it still means Rs.2500 in cash.
7. Further, there is a class-action suit filed by the US investors - the liability on this account cannot be quantified at present - but can be significant enough to dent Satyam's cashflows (if any, that is.)
8. Thus, L&T needs TOTAL cash of either Rs.8,650 cr (1300 + 1350 + 5000 + 1000) conservatively OR Rs.4,700 cr. (1300 + 400 + 2500 + 500) optimistically to gain a meaningful control over Satyam.
9. Rs.8650cr is = almost 3.5 year's likely cash flow of the company whereas Rs.4700 is over 2 year's cash flow of the company. No doubts that these will fully wipe-off the cash & cash-equivalents / investments of L&T.
10. Note that L&T has "other income" of Rs.794 crore in last 4 trailing quarters, implying a reduction in EPS of appx. Rs.13.5 pre tax or Rs.9.50 post-tax = Rs.76 if one give s a P/E of just 8x to its non-core income (instead of the current 14x).
11. It is quite probable that the acquisition, if possible, will not be EPS accretive.
12. Thus, a highly regarded corporate like L&T is now involved in a possible acquisition process, whose benefits can not be measured until the Upaid case is settled, the US class-action action is settled and also the other assets/liabilities of Satyam group of companies are identified. Do you think all these can be resolved in very short time?
via Delhi Dreamer
Daily Technicals - Jan 28 2009
DLF
Short @ 165.30
Stop @ 172.10
Target around @ 157-160
ICICI Bank
Short @ 383-381
Stop @ 393
Target around @ 365.70
Unitech
Short @ 27.20
Stop @ 29.10
Target @ 26.30
by Anurag Jain
Daily Call - Jan 27 2009
The markets could open higher despite a weak closing on Friday courtesy the Nikkei, which is warming up to a weak Yen and mild positive Friday close of the US markets on upbeat housing data. We will get to hear from the RBI in the afternoon. The Government has played down the expectations from this policy, so possibilities for an upward surprise does exist for the banking stocks if the RBI does wield the scissors.
The over all derivatives data as of Friday indicates that the punters have dug in their heels for a close below the 2700 level in the current settlement. The covering of the January 2700 Puts, writing of the 2700 February calls, the massive 35 points discount in the February Nifty Futures and a higher than normal roll over in the Nifty Futures indicates shorts in the system. Satyam would pop in the early trade and L&T could wilt. But once traders need to take their morning profits. Wyeth could surge on hopes of an open offer after Pfizer decided to buy Wyeth in the US. Investors must remember that buying in anticipation of an open offer is fraught with danger and delay as companies either fight it out with the regulator or buy time.
Pre Session Commentary - Jan 27 2009
Today the markets are likely to have gap up opening. The sentiments are positive as the US markets closed in green amid expectations of stimulus. Also, the Asian market opened with gains. However Indian market was closed on Monday for Republic day holiday. Investors will closely watch RBI’s quarterly review of monetary policy today.
On Friday, the markets ended in red territory tracking grim cues from the markets all over the world. The opening was marginally lower due to selling by the foreign institutional investors along with huge selling in key benchmark indices led by weak global markets. Subdued start of European markets also weighed on the market sentiments. Though market tried to recover in early trade on account of energy giant Reliance Industries Ltd that rose on lower-than-expected drop in quarterly profit. However, market slipped again on intense selling activity being witnessed across board. Further market keeps tumbling and BSE Sensex closed below 8,700 mark and NSE Nifty below 2,700 level. Sectors like Bank, Metal, Capital Goods, Reality and IT closed with losses of 4.16%, 3.35%, 2.87%, 2.45% and 2.04% respectively. Mid caps and Small caps lost 1.56% and 1.50% respectively. On the other hand Pharma, Oil & Gas and Consumer Durables managed to remain in limelight with gains of 0.49%, 0.26%, and 0.08% respectively. During the session we expect the markets to exhibit some volatility ahead of RBI’s quarterly monetary policy today.
The BSE Sensex closed lower by 139.49 points at 8,674.35 and NSE Nifty ended down by 35.25 points at 2,678.55. The BSE Mid Caps and Small Caps ended with losses of 45.26 points and 49.41 points at 2,850.19 and 3,255.54 respectively. The BSE Sensex touched intraday high of 8,858.84 and intraday low of 8,631.60.
The US markets on Monday closed in green but off day''s high off day''s high. The multi-billion Pfizer-Wyeth deal, coupled with encouraging report on existing home sales and leading indicators pushed US shares higher. Market gained ground as investors eyed President Barack Obama''s stimulus plan weaving through Congress. US light crude oil for March delivery dropped 74 cents to close at $45.73 a barrel on the New York Mercantile Exchange.
The Dow Jones Industrial Average (DJIA) closed higher by 38.47 points at 8,166.03. NASDAQ index gained 12.17 points at 1,489.46 and the S&P 500 (SPX) also closed up by 4.62 points at 836.57.
Indian ADRs ended mostly up. In technology sector, Satyam ended up by 10.53% along with Infosys by 2.46%. Further Patni Computers ended with increase of 0.62% and Wipro closed higher by 1.66%. In banking sector ICICI Bank dropped by 1.08% while HDFC Bank gained 1.10%. In telecommunication sector, Tata Communication gained 2.62% and MTNL advanced by 1.39%. Sterlite Industries decreased by 0.61%.
Today among major stock markets in Asia, only Nikkei is trading while all other Asian markets are closed due to Lunar New Year. Markets in Singapore and South Korea will reopen on Wednesday. Hong Kong''s markets will reopen on Thursday. Japan’s Nikkei is trading with gain of 3.49% at 7,950.07.
The FIIs on Friday stood as net sellers in equity and debt. Gross equity purchased stood at Rs 1207.50 Crore and gross debt purchased stood at Rs 1170.40 Crore, while the gross equity sold stood at Rs 1458.80 Crore and gross debt sold stood at Rs 1332.60 Crore. Therefore, the net investment of equity and debt reported were Rs (251.30) Crore and Rs (162.20) Crore respectively.
On Friday, Indian Rupee ended at 49.27/29 per USD, 0.3% weaker than previous close of 49.13/16. Rupee lost its strength as concerns of rising risk aversion among investors weighed on sentiment due to loss in domestic stock market, along with a broad dollar rally against major currencies also weighed.
On BSE, total number of shares traded were 33.31 Crore and total turnover stood at Rs 3,325.55 Crore. On NSE, total number of shares traded were 68.39 Crore and total turnover was Rs 8,458.87 Crore.
Top traded volumes on NSE Nifty – Unitech with 52951024 shares, Suzlon Energy with 12403760 shares, SAIL with 11482752 shares, DLF with total volume traded 11112282 shares followed by ICICI Bank with 10743196 shares.
On NSE Future and Options, total number of contracts traded in index futures was 838837 with a total turnover of Rs 10,546.08 Crore. Along with this total number of contracts traded in stock futures were 1234770 with a total turnover of Rs 10,764.96 Crore. Total numbers of contracts for index options were 1061649 with a total turnover of Rs 14,641.96 Crore and total numbers of contracts for stock options were 92950 and notional turnover was Rs 856.98 Crore.
Today, Nifty would have a support at 2,652 and resistance at 2,743 and BSE Sensex has support at 8,590 and resistance at 8,968.
Trading Calls - Jan 27 2009
Nifty (2679) Sup 2635 Res 2750
Buy Cipla (186)
SL 182 Target 193, 196
Buy Union Bank (144)
SL 140 Target 150, 153
Buy Tata Tea (618)
SL 612 Target 630, 633
Sell LIC Housing (206)
SL 211 Target 199, 196
Sell McDowell (478)
SL 484 Target 468, 465
Market seen opening firm; RBI monetary policy eyed
Key benchmark indices are likely to open firm tracking positive global markets. The Reserve Bank of India's (RBI) quarterly review of the monetary policy will be closely watched.
Volatility may rise in the coming days as futures & options contracts for January 2009 series expire on Thursday, 29 January 2009. As per reports, rollover of Nifty positions from January 2009 series to February 2009 series was 38% while marketwide rollover of positions stood at 31%, as on Friday, 23 January 2009.
The street expects the RBI to signal a softer interest rate stance in its meet today, 27 January 2009, although the key rates are expected to stay on hold. Economic research firm Moody's Economy.com predicts the central bank may take a relatively smaller step, following a series of aggressive interest rate cuts from October 2008. It forecasts a 50-basis point reduction in the repo rate, to 5%. Meanwhile, the cash reserve ratio and the reverse repo rate are likely to be kept unchanged, as their current settings leave little room for further cuts.
Since October 2008, the RBI has released over Rs 3,20,000 crore into the banking system to usher in a low-interest regime in the economy, as prices of fuel, agricultural commodities and metals plunged, easing inflationary pressure.
The research firm added that in the present economic environment, the RBI is expected to focus on the growth rate and credit market stability when reviewing monetary policy and so the monetary easing cycle will continue through the first half of 2009.
After declining for 10 consecutive weeks, inflation, based on wholesale prices, rose by 0.36 percentage points to 5.6% for the week-ended 10 January 2009, from 5.24% for 3 January 2009. The PM's economic advisory panel member Mr Saumitra Chaudhuri expects inflation to come down to 3 to 4% by the end of this fiscal.
Earlier, inflation has more than halved from a 16-year high of 12.91% in August 2008 as a global economic slump drives down prices of oil and other commodities.
Asian stocks gained today, 27 January 2009, as US economic indicators gave a hope that demand for commodities and Japanese-made goods will improve. Japanese benchmark index Nikkei gained 267.93 points, or 3.49%, to 7,950.07. Hong Kong, China, Taiwan, Korea and Singapore`s stocks are not trading today. The markets will be closed from Monday to Wednesday for the Lunar New Year holidays and will reopen on Thursday, 29 January 2009.
US stocks ended higher on Monday, 26 January 2009, on news that drug maker Pfizer will buy opponent Wyeth for $68 billion and on a sudden rise in sales of existing homes in December 2008. The Dow Jones industrial average increased 38.47 points, or 0.48%, to end at 8,116.03. The Standard & Poor`s 500 index climbed 4.62 points, or 0.56%, to settle at 836.57. The Nasdaq Composite index increased 12.17 points, or 0.82%, to close at 1,489.46.
Back home, the street was anticipating poor 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. Aggregate results of 660 companies showed 21.70% fall in net profit on 18.60% increase in net sales in Q3 December 2008 over Q3 December 2007.
Foreign brokerage Morgan Stanley 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. It estimates the BSE Sensex earnings to 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
Foreign institutional investors (FIIs) are in selling mode after an inflow of Rs 1319.10 crore in December 2008. Their outflow in January 2009 totaled Rs 3950.20 crore (till 22 January 2009).
According to provisional data on NSE, FIIs were net sellers worth Rs 522.91 crore while mutual funds bought shares worth Rs 203.98 crore on Friday, 23 January 2009.
Wall Street continues to deal with more layoffs
Fifty thousand job cuts announced in a single day by US and global companies
Stocks at Wall Street managed a steady end with some modest gains on Monday, 26 January, 2009, paring most of their earlier gains. Job cut news was the hot topic in Wall Street today with more than 50,000 layoffs announced in one single day, today. Reports of an increase in sales prices of homes in December, 2008 tried to inject some enthusiasm in the US stocks today. The report of Pfizer acquiring Wyeth for a whopping $68 billion deal also acted as a positive catalyst.
After being up by more than 140 points earlier during the day, The Dow Jones Industrial Average ended higher by 38 points at 8,116, the Nasdaq closed higher by 12 points at 1,489 and the S&P 500 closed higher by 4.6 points at 836. Dow had slipped in the red for a very brief period of time.
Nine out of thirty Dow stocks ended in the red today led by Caterpillar and GM.
It was a job cut bloodbath on this Monday today. Among major accompanies announcing job cuts today were Caterpillar, Sprint, GM and Home Depot. The companies announced layoffs to the tune of 20,000, 8,000, 2000 and 7,000 respectively.
Job losses came from overseas as well, with Philips Electronics, Europe's biggest consumer electronics firm, saying it would lay off 6,000 workers. It also reported its first quarterly loss in five years. Steel giant Corus Group said it would cut 3,500 jobs around the globe, with most, or about 2,500, coming in Britain.
Among acquisition news, Pfizer announced that it is acquiring Wyeth for $68 billion, or $50.19 per share. The offer comes as a 29% premium to Wyeth's last closing. On the other hand, Dow Chemical announced this morning that it does not intend to close the pending acquisition with Rohm and Haas on or before tomorrow.
In the earning arena today, Caterpillar reported earnings results that missed the consensus estimate. It also issued downside guidance and plans to cut roughly 20,000 jobs. On the other hand, another Dow component, McDonald's reported earnings per share results that surpasses consensus forecast and later indicated that global comparable sales continue to be strong in January. Same-store sales increased more than 7% in the fourth quarter.
Among major economic reports for the day, existing home sales in December increased 6.5% to an annualized rate of 4.74 million units. The December number was better than the consensus estimate, which was set at 4.40 million. But median home prices declined 9.3%, which is the biggest drop since the 1930s. The month's supply of unsold homes at the current sales rate fell to 9.3 in December from 11.2 in November.
On Monday, crude-oil futures for light sweet crude for March delivery closed at $45.73/barrel (lower by $0.74 or 1.6%) on the New York Mercantile Exchange. Last week, crude prices ended higher by 9%. Prices had reached a high of $49 earlier during the day today.
Other than few earning reports, The Federal Open Market Committee begins its two-day meeting tomorrow. It will announce its latest monetary policy decision on Wednesday.
Daily News Roundup - Jan 27 2009
L&T raised its holding in Satyam Computers to 12% from 4%.(FE)
Kazakh national oil firm will assign a 25% stake in the medium-size Caspian concession of Satpayev to ONGC-Mittal Energy.(TOI)
EGoM on commercial utilization of gas produced from fields awarded under NELP has called for according priority to power plants in Andhra Pradesh while allocating gas from Reliance Industries' D6 field in the KG basin. (DNA)
Tata Motors is in talks with the UK government on assistance for its luxury units as sales dip.(BS)
iGate says it is interested in acquiring parts of troubled IT major Satyam Computers.(TOI)
NTPC close to clinching a deal to set up a 500MW coal-fired pant in Sri Lanka.(TOI)
L&T (Oman) secured orders worth Rs11.98bn comprising construction of a hotel and apartments for the second Asian beach games. (BL)
HCC-Halcrow consortium bags Rs27.26bn order from NHPC for setting up 330MW project in Jammu and Kashmir. (FE)
Tata Steel plans to become a partner in Canada-based New Millennium Capital Corp’s, having iron ore reserves in excess of two billion tonnes.(BS)
Tata Motors’ heavy commercial vehicles is going to resort once again to a block closure, from January 27 to 31.(FE)
Unitech-Telenor deal closure to take more time.(BL)
PNB plans to invest around Rs2.5bn in the next 12 months across nine countries.(ET)
Jet Airways and its subsidiary JetLite cuts its economy class fares by 50%.(BS)
Financial Institutions, GVK Power in talks on Maytas Infra stake.(BL)
PwC officials held for Satyam fraud; no proof of wrongdoing, says the auditor.(FE)
MRPL is reviving plans to set up fuel retail outlets.(BS)
Tatas are expected to cut as many as 5,000 jobs at their steel and auto subsidiaries in the UK-Corus and Jaguar Land Rover-in the coming weeks.(BS)
Tata Realty and Infrastructure returns Rs8bn to its parent after the former decided to pull back some of its planned projects(Mint)
RPG group plans Rs180bn in capital expenditure in the next two years.(Mint)
Voltas to exit its chemical trading business. (FE)
Emami sets up its second production facility in Assam for an investment of Rs500mn.(BS)
Private equity investor Wilbur Ross may become owner of up to one-third of carrier Spicejet by next year, if he decides to execute the rights he got as part of a deal struck last year. (DNA)
CEAT to set up a Rs7bn new radial tyre plant at Halol after signing an MOU at the Vibrant Gujarat Global Investors Summit in Ahmedabad.(ET)
Petronet LNG will sign a gas supply contract with Australian consortium Gorgan Projects for supply of LNG to its 2.5mn tonne a year terminal in Kochi to be commissioned by March 2012.(BL)
UB Holdings pledges about 81% of its stake in United Spirits as corporate guarantee to help loss-making group firm Kingfisher Airlines raise money for expansion plans. (ET)
Godrej Consumer promoters pledge as much as 7.8% of their holding with JP Morgan Securities to borrow funds.(BS)
Whirlpool to invest Rs1.2bn for product development by 2010.(ET)
Wheels India to set up manufacturing facility for an investment of Rs450mn. (BL)
Forex reserves dip by US$2.6bn to US$252bn in the week ended January 16.(BL)
Final GDP estimate for 2008-09 is 7.1%, says the government’s top economic advisory body.(FE)
Government extends the repayment date six months under the farm loan waiver scheme.(BS)
Centre plans 40 generic drug stores by March.(BL)
Home Minister says called for more stimulus packages to ensure that aggregate demand remains high.(FE)
Global economic outlook has deteriorated sharply since September 2008 and in India too, there is evidence of a slowing down of economic activity, says RBI in its Macroeconomic and Monetary Developments Q3 review.(FE)
India and Kazakhstan signs a civil nuclear pact for supplying the fuel to atomic plants in the country.(BS)
Petrol prices likely to be cut by Rs5/litre, diesel by Re1/litre.(Mint)
Steel ministry has decided to push for 10% import duty on steel items to protect the domestic industry against cheap shipments from overseas.(FE)
DoT invites bids from companies with worldwide experience to implement MNP in India.(ET)
NHAI will likely spend more than Rs300bn in the calendar year 2009 to develop highways and roads under about 220 different programmes being implemented currently.(DNA)
TRAI is planning against posing any restriction on media cross-holding in the country. (FE)
Have a good time!
This time, like all times, is a very good one, if we but know what to do with it.
After another tumultuous week, and an extended weekend, the bulls are hoping for some liberation from the recent drubbing. They could have their wish granted with global markets back on their feet. The multi-billion Pfizer-Wyeth deal, coupled with encouraging report on existing home sales and leading indicators pushed US shares higher. Some soothing remarks from Barclays and ING managed to lift the sagging spirits across the Atlantic. Shares in Japan and Australia are up sharply this morning, with rest of the Asia-Pacific markets shut on account of the Lunar New Year.
As a result, markets here should get strong fillip at least in early days. Later on of course, the trade will hinge on what the RBI does in its quarterly review. Expectations of further monetary easing are relatively muted this time around. The odds on another round of aggressive rate cuts are not quite as favourable. Still, the central bank commentary will be keenly followed. The RBI is likely to slash its GDP estimate for FY09. (Also read PM panel trims FY09 growth projection) Apart from the RBI review, the market will also keep tabs on the earnings and global developments. Trading might turn more volatile ahead of Thursday’s F&O expiry.
Key Results: Birla Corp., Blue Star, Cadila Healthcare, Century Textiles, Corporation Bank, Cummins India, Educomp Solutions, EIH, Engineers India, Finolex Cables, GSK Consumer, Glenmark Pharma, Godrej Industries, Gujarat Alkalies, Gulf Oil, HCL Infosystems, Jubilant Organosys, Monsanto India, Nagarjuna Construction, Opto Circuit, Oracle Financial, REC, Sesa Goa, SAIL, Sun TV and Zicom.
US stocks gained on Monday, ending a volatile session higher, as investors looked beyond massive job cuts at Caterpillar and Home Depot among others and opted to snap up battered stocks.
The Dow Jones Industrial Average rose 38.50 points, or 0.5%, to 8,116.03. The Standard & Poor's 500 index added 4.6 points points, or 0.6%, to 836.57. The Nasdaq Composite index advanced 12.20 points or 0.8%, to 1,489.46.
US stocks had tumbled last week on disappointing set of earnings, continued problems for the ailing bank sector and questions about when and how the new administration will be able to engineer the economic revival.
Pfizer's confirmation of a $68bn Wyeth acquisition lifted investor sentiment. Better-than-expected readings on existing home sales and the index of leading economic indicators also helped lift stocks. But gains were limited after corporations announced more than 71,000 job cuts.
The fourth-quarter earnings have been devastating as expected, but that investors have been taken by surprise by how aggressively companies have been cutting jobs in anticipation of worse results in the future.
Year-to-date, the three major indices are all down between 6% and 8%, as investors have scaled back after pushing stocks higher in December and the first week of January.
The sell-off has been the process of the market trying to discount how bad things are going to get in future.
Pfizer is buying rival Wyeth in a $68bn cash-and-stock deal that values Wyeth at almost 15% above Friday's closing price. Thousands of job cuts are expected to follow the completion of the deal. Pfizer also said it is cutting its dividend in half to 16 cents a share. Pfizer lost 10% and Wyeth lost less than 1%.
Caterpillar, a Dow component, said it will cut 20,000 jobs, or 10% of its workforce due to the impact of the rough economic environment. Caterpillar also reported that fourth-quarter earnings tumbled 32% from a year ago. Caterpillar shares lost 8.4%.
Home Depot said it was eliminating 7,000 jobs as a result of closing its high-end EXPO business and cutting its support staff. Shares gained 4.7%.
Sprint Nextel said it will cut up to 8,000 jobs in the first quarter and take a charge of more than $300 million, as it contends
with the sluggish economy. Shares gained 1.2%.
In other company news, McDonald's, a Dow component, reported weaker fourth-quarter earnings that were nonetheless better than expected. Shares rose less than 1%.
After the market close, Dow component American Express reported lower quarterly sales and earnings that missed expectations. Despite that, shares gained 3% in after-hours trading.
Also after the close, Texas Instruments said it was cutting 3,400 jobs due to weakening demand in a sluggish economy. Shares gained almost 5% in extended-hours trading.
December existing home sales rose by 6.5% from the previous month, topping forecasts, according to a report from the National Association of Realtors released Monday morning.
The median sales price plunged 15.3% from a year ago, the largest year-over-year decline since the NAR began keeping records and probably the largest drop since the Great Depression, Reuters reported.
The December index of leading economic indicators rose 0.3% in December after falling 0.4% in the previous month. Economists thought it would fall 0.3%.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.66% from 2.61% on Friday. Treasury prices and yields move in opposite directions. Yields on the 2-year, 10-year and 30-year Treasurys all hit record lows last month.
Lending rates were mixed. The 3-month Libor rate increased to 1.18% from 1.17% on Friday. Overnight Libor fell to 0.23% from 0.24%. Libor is a bank-to-bank lending rate.
US light crude oil for March delivery fell 74 cents to settle at $45.73 a barrel on the New York Mercantile Exchange.
Gasoline prices fell three-tenths of a cent to a national average of $1.845 a gallon.
The dollar fell versus the euro and the yen. COMEX gold for April delivery rose $13 to settle at $910.70 an ounce.
The Senate is expected to meet on Monday night to decide on Timothy Geithner's nomination as Treasury Secretary. Also this week, President Obama's $825bn stimulus package is expected to be taken up in the House, amid opposition from several influential Republican lawmakers.
Dow components DuPont and Verizon Communications are expected to report quarterly results before the start of trade on Tuesday.
Tuesday also brings the January consumer confidence index from the Conference Board, which is expected to hold steady at an all-time low of 38.0, unchanged from December. The S&P/CaseShiller home index for November is due as well and is expected to show steep declines.
The Federal Reserve begins its two-day policy setting meeting Tuesday, with an announcement expected Wednesday afternoon.
Barclays and ING led a rally for European stocks on Monday. The pan-European Dow Jones Stoxx 600 index rose 3.1% to 188.06, with financial stocks firmly in the lead. The UK's FTSE 100 index closed up 3.9% to 4,209.01, while the French CAC-40 index climbed 3.7% to 2,955.37 and Germany's DAX 30 index advanced 3.5% to 4,326.87.
Markets yet again ended the trading session with losses on Friday led by fall in the index heavyweights like ICICI Bank, SBI, Infosys and L&T. The BSE benchmark Sensex slipped 139 points to close at 8,674 and the Nifty lost 35 points to close at 2,678.
Among the 30-components of Sensex, 26 stocks ended in the red and only 4 stocks ended in the positive terrain. Among the major laggards in Sensex were ICICI Bank, SBI, Infosys and L&T.
Among the major gainers were Reliance Industries, Tata Motors, NTPC, Ranbaxy and Hindalco.
Among the BSE Sectoral indices BSE Bankex index was the top loser, the index lost 3.8%. Among the other losers were BSE Metal index (down 3.1%), BSE Capital Goods index (down 2.8%) and BSE Realty index (down 2. 7%). Even BSE Mid-cap and the BSE Small-Cap index lost over 1.5% each.
Reliance Industries gained 2% to Rs1153 after reporting earning. The scrip has touched an intra-day high of Rs1335 and a low of Rs1120 and has recorded volumes of over 2,00,000 shares on NSE.
The company announced its financial results for the fiscal third quarter with net profit at Rs35.01bn compared to Rs38.82bn in the same quarter last year. Net sales for the quarter ended December 31, 2008 stood at Rs315.63bn as against Rs345.90bn in the third quarter of last year. The company posted other income of Rs6.63bn against Rs2.41bn in the third quarter of last year.
The scrip touched an intra-day high of Rs1174 and a low of Rs1120 and has recorded volumes of over 20,00,000 shares on BSE.
Pfizer rallied by over 6% to Rs514 after reports stated that US pharma giant Pfizer is believed to be in talks to acquire rival American drugmaker Wyeth for about US$60bn. The scrip touched an intra-day high of Rs528 and a low of Rs481 and recorded volumes of over 13,000 shares on BSE.
Crompton Greaves slipped by 1% to Rs129. The Company posted a net profit from ordinary activities after tax of Rs847.7nm for the quarter ended December 31, 2008 as compared to Rs679mn for the quarter ended December 31, 2007.
Total Income has increased from Rs9,290.6mn for the quarter ended December 31, 2007 to Rs1,0882.7nm for the quarter ended December 31, 2008. The scrip touched an intra-day high of Rs131 and a low of Rs125 and recorded volumes of over 1,00,000 shares on BSE.
Canara Bank plunged by over 14% to Rs174 on rumors that it had exposure in Maytas Infrastructure. However, later the management clarified there would be no major impact.
The bank posted a net profit of Rs7,015mn for the quarter ended December 31, 2008 as compared to Rs4,588.30mn for the quarter ended December 31, 2007.
The total income increased from Rs40.97bn for the quarter ended December 31, 2007 to Rs53.82bn for the quarter ended December 31, 2008. The scrip touched an intra-day high of Rs212 and a low of Rs167 and recorded volumes of over 25,00,000 shares on BSE.
L&T slipped 3.5% to Rs640. Larsen & Toubro (Oman) LLC, secured major orders cumulatively valued at Rs.11.98bn. The orders cover construction of a hotel and apartments for the 2nd Asian Beach Games, a mosque and underground cabling.
The 2nd Asian Beach Games complex is being developed by Oman Tourism Development Company - the government of Oman's tourism development, and its investment arm. The project comprises construction of a hotel, marine apartment buildings, administrative buildings for the Games and an athletes' village. All these projects are scheduled to be completed in less than two years.
The scrip has touched an intra-day high of Rs668 and a low of Rs637 and has recorded volumes of over 12,00,000 shares on BSE.
Shares of Gujarat Apollo gained by over 3.5% to Rs57 after almost 6% equity shares changed hands in blocks. The scrip touched an intra-day high of Rs60 and a low of Rs52 and recorded volumes of over 85,00,000 shares on BSE.
RCOM books to be scrutinised
The Department of Telecom has finalised an auditor to scrutinise the account books of Reliance Communications and its subsidiaries to ascertain whether the company has violated revenue reporting norms by showing income from non-voice services under its Internet services licence.
While five auditing firms were shortlisted, DoT has approved the appointment of Parekh & Co to audit RCom’s accounts for 2007-08.
The other short-listed auditors were Chhajed & Doshi, Contractor, Nayak & Kishnadwala, Varma & Varma and G D Apte &Co.
These firms are empanelled by the Comptroller & Auditor General of India. DoT had received a list of 10 auditors from the office of CAG of which four firms have quoted between Rs 10 lakh and Rs 1.35 crore as their fees.
Special audit
DoT will ask the auditing firm to conduct a special audit of RCom’s accounts after it was alleged that the company was separating its revenues generated from data services to give lower revenue share to the Government.
Income from services such as R-world, SMS, rural telephones under support from USO fund, Internet browsing was reported under RCom’s Internet subsidiary as the Government levies a lower revenue share on revenues from ISP licence.
The company has strongly refuted all allegations.
In an earlier response to a similar query, Reliance Communications had stated that its accounts have been duly audited and certified by internationally recognised auditors and are in full compliance with the prescribed reporting framework.
The company operates a wide range of telecom services using multiple technologies in order to serve the communication needs of many million Indians. These services are classified under the respective licences for reporting to authorities according to the prescribed guidelines.
Public domain
The company had also said earlier that the reporting formats are available in the public domain and details of every head have been clearly specified while reporting to the respective authorities according to the formats.
The Chief Vigilance Commission had asked DoT to investigate alleged irregular revenue reporting by RCom.
The issue had come to light after the Cellular Operators’ Association of India had pointed out to the Government that RCom was showing its income from non-voice services under the Internet licence even though the facility was being provided through the cellular network.
While operators do not have to pay any revenue share for income earned from Internet services, they have to pay between 6 per cent and 10 per cent of their annual revenue from mobile services to the Government. COAI had pointed out that an operator could make huge profits by showing income from data services under the ISP licence.
Dish TV
We recommend a buy in Dish TV India from a short-term trading perspective. It is evident from the charts of Dish TV that it has been on an intermediate-term up trend from its 52-week low of Rs 11.75, recorded in late October 2008. On December 10, the stock conclusively broke through a key resistance level of Rs 18 by surging 16 per cent. This resistance level is currently acting as a significant support level for the stock.
Taking twin support from a significant support level at Rs 18 and the intermediate-term up trendline, the stock moved up by 3.5 per cent with good volume on January 23. This up move has reinforced the bullish momentum.
The daily relative strength index (RSI) is rising in the neutral region towards the bullish zone. Considering that the intermediate-term up trendline continues to be intact, we are bullish on the stock from a short-term perspective. We anticipate the stock to move up further until it hits our price target of Rs 21 in the upcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 18.
via BL
Weak dollar imparts shine on precious metals
Gold prices cross $900 mark
Precious metals ended substantially higher on Monday, 26 January, 2009 due to the weak dollar and also as nervousness and unsteadiness in equity markets increased the appeal of the precious metals as a safe haven against alternatives. Reports of job cuts across USA unnerved investors today.
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. But silver prices dropped.
On Monday, Comex Gold for February delivery rose $13 (1.4%) to close at $908.8 an ounce on the New York Mercantile Exchange. Last week, gold prices ended higher by 6.7%. This year gold has gained 2.5% till date. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (20%) since then.
On Monday, Comex silver futures for March delivery gained 17 cents (1.4%) to end at $12.11 an ounce. For 2008, silver had lost 24%.
At the currency market on Friday, the dollar index, which tracks the dollar against a trade-weighted basket of six major currencies, rose 1%.
It was a job cut bloodbath on this Monday today. Among major accompanies announcing job cuts today were Caterpillar, Sprint, GM and Home Depot. The companies announced layoffs to the tune of 20,000, 8,000, 2000 and 7,000 respectively.
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%.
At the MCX, gold prices for February delivery closed lower by Rs 4 (0.02%) at Rs 14,072 per 10 grams. Prices rose to a high of Rs 14,132 per 10 grams and fell to a low of Rs 13,977 per 10 grams during the day's trading.
At the MCX, silver prices for March delivery closed Rs 13 (0.06%) higher at Rs 19,260/Kg. Prices opened at Rs 19,300/kg and rose to a high of Rs 19,333/Kg during the day's trading.
Crude ends lower paring earlier gains
Demand concerns weigh on crude prices
Global economic concerns pushed crude prices lower on Monday, 26 January, 2009. Prices were initially trading higher earlier in the day but then, prices fell as news of job cuts swayed across Wall Street today.
On Monday, crude-oil futures for light sweet crude for March delivery closed at $45.73/barrel (lower by $0.74 or 1.6%) on the New York Mercantile Exchange. Last week, crude prices ended higher by 9%. Prices had reached a high of $49 earlier during the day today.
Prices reached a high of $147 on 11 July but have dropped almost 65% since then. Year to date, in 2009, crude prices are lower by 9.6%. On a yearly basis, crude prices are lower by 50%.
It was a job cut bloodbath on this Monday today. Among major accompanies announcing job cuts today were Caterpillar, Sprint, GM and Home Depot. The companies announced layoffs to the tune of 20,000, 8,000, 2000 and 7,000 respectively. Roughly 50,000 layoffs were announced today by US and overseas companies.
Against this background, March reformulated gasoline fell 0.1% to $1.1531 a gallon and March heating oil lost 1.6% to $1.427 a gallon.
February natural gas futures slid 0.6% to $4.49 per million British thermal units.
At the MCX, crude oil for February delivery closed at Rs 2,238/barrel, higher by Rs 39 (1.8%) against previous day's close. Natural gas for February delivery closed at Rs 221.3/mmbtu, lower by Rs 0.4/mmbtu (0.2%).
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