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Monday, February 02, 2009
BSE Bulk Deals to Watch - Feb 2 2009
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
2/2/2009 502820 DCM LIMITED AGGRESAR LEASING FINANCE PVT. LTD. B 94000 17.62
2/2/2009 502820 DCM LIMITED SEWASTUTI FINANCE PVT. LTD. S 88839 17.65
2/2/2009 531367 DOLLEX INDUT RAMA DEVI KANDAGATLA B 97603 5.12
2/2/2009 531367 DOLLEX INDUT EMERALD CORPORATE A PVT LTD S 115863 5.03
2/2/2009 531508 EVEREDY INDL DEUTSCHE SECURITIES MAURITIUS LIMITED S 506422 15.50
2/2/2009 512267 MEDIA MATRIX VIMOCHAN PICTURES LIMITED B 584127 3.81
2/2/2009 512267 MEDIA MATRIX RDB INDUSTRIES LIMITED S 586797 3.81
2/2/2009 513558 REAL STRIP L SHYAM STAR GEMS LTD B 25000 34.64
2/2/2009 531626 SILVER SMITH GVN FUELS LIMITED S 21100 12.55
2/2/2009 512048 SPLASH MEDIA MAHENDRAHAPOMALDAWANI B 10006 44.95
2/2/2009 512048 SPLASH MEDIA KAMLESH GOYAL B 11030 44.00
2/2/2009 512048 SPLASH MEDIA AJIT KUMAR JAIN B 8650 44.13
2/2/2009 512048 SPLASH MEDIA DAZZEL CONFINDIVE LTD B 11000 44.00
2/2/2009 512048 SPLASH MEDIA VIJAY VELJIBHAI PADHARIA S 7800 44.00
2/2/2009 512048 SPLASH MEDIA SANTOSH ABHAYRAJ SHUKLA S 10168 44.00
2/2/2009 512048 SPLASH MEDIA SUPERLINE TRADING COMPANY PVT S 45695 44.01
2/2/2009 511431 VAKRAN SOFTW GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD S 282772 22.47
2/2/2009 531249 WELL PACK PA VISHESHSHAHRA B 26500 54.10
2/2/2009 531249 WELL PACK PA PURSHOTTAM SURAJMAL KOTHARI B 90000 54.07
NSE Bulk Deals to Watch - Feb 2 2009
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
02-FEB-2009,AMARAJABAT,Amara Raja Batt Ltd,HDFC TRUSTEE CO.LTD. A/C HDFC EQUTY FUND,BUY,500000,40.01,-
02-FEB-2009,EDUCOMP,Educomp Solutions Limited,C D INTEGRATED SERVICES LTD,BUY,110777,1758.22,-
02-FEB-2009,INDOCO,Indoco Remedies Limited,NARSINH INVESTMENT & FIN PVT LTD,BUY,146206,110.00,-
02-FEB-2009,SATYAMCOMP,Satyam Computers Ltd,TRANSGLOBAL SECURITIES LTD.,BUY,3483861,57.65,-
02-FEB-2009,VAKRANSOFT,Vakrangee Softwares Limit,CYBER NETIX AUTOMATION P LTD,BUY,115000,22.00,-
02-FEB-2009,AMARAJABAT,Amara Raja Batt Ltd,TEMPLETON MUTUAL FUND,SELL,500000,40.00,-
02-FEB-2009,EDUCOMP,Educomp Solutions Limited,C D INTEGRATED SERVICES LTD,SELL,110777,1759.33,-
02-FEB-2009,SATYAMCOMP,Satyam Computers Ltd,TRANSGLOBAL SECURITIES LTD.,SELL,3484661,57.78,-
02-FEB-2009,VAKRANSOFT,Vakrangee Softwares Limit,GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD,SELL,500000,22.07,-
Post Session Commentary - Feb 2 2009
The Indian market closed in deep red backed by weak global cues following renewed concerns about the deteriorating state of the US economy. The government data last week showed that the US economy contracted at its fastest pace in over two decades. Sentiment was also weighed down by a survey that showed Indian manufacturing activity fell for a third straight month in January as faltering business and consumer confidence and a sharp global slowdown crimped demand.
The domestic market today belled the day on negative note on the back of negative cues from the markets all over the world. Further, the disappointing earnings results from the realty majors DLF and Unitech also added to the negative sentiments. Further, benchmark indices continued to plunge and extended its losses to touch the day’s low during last trading hours. Finally, market ended the day with huge losses as the sentiment received a jolt due to weak trend in Asian markets. Lower European markets also fueled the negative sentiments. Along with this, US stock futures were pointing to a weak opening on Wall Street later today. BSE Sensex extended its losses to more than 3% and ended below 9057 mark along with NSE Nifty ended below 2,800 level. From the sectoral front, investors off-loaded their position across the sectors and among those Reality stocks under performed the benchmark indices as ended with deep cut of more than 10%. Besides, Metal, Bank, Consumer Durables, Power, Oil & Gas, Teck and Capital Goods stocks contributed to most of the selling pressure. Midcap and Smallcap stocks also remained under pressure during the trading session.
Among the Sensex pack 29 stocks ended in red territory and 1 in green. The market breadth indicating the overall health of the market remained negative as 1577 stocks closed in red while 867 stocks closed in green and 83stocks remained unchanged in BSE.
The BSE Sensex closed lower by 357.54 points at 9,066.70 and NSE Nifty ended down by 100.15 points at 2,766.65. Broader market indices were also down as BSE Mid Caps and Small Caps ended with losses of 45.56 points and 51.10 points at 2,895.91 and 3,287.95 respectively. The BSE Sensex touched intraday high of 9,363.58 and intraday low of 9,048.97.
Losers from the BSE Sensex pack are JP Associates (17.90%), DLF Ltd (13.64%), Reliance Infra (10.50%), ICICI Bank (7.54%), HDFC (7.37%), Tata Steel (6.63%), RCom (6.29%), Hindalco (6.01%), SBI (4.91%) and Wipro Ltd (4.76%).
Only gainer from the BSE Sensex is HUL (0.17%).
The government today said that the exports dropped 1.1% to $12.7bn in December from a year earlier. India''s merchandise exports fell for a third month in a row in December due to continued decline in demand from its top overseas markets like the United States and European Union (EU). Imports in December climbed 8.8% to $20.3bn, widening the trade deficit to $7.6bn.
On the global markets front, the Asian markets ended lower except Shanghai Composite index, which closed higher by 21.03 points at 2,011.68. However, the Hang Seng, Nikkei 225, Straits Times and Seoul Composite index ended lower by 416.72, 120.07, 41.18 and 15.16 points at 12,861.49, 7,873.98, 1,705.29 and 1,149.95 respectively. China after a week-long holiday edged higher on the back of the Prime Minister’s positive remarks about the economy. He said that he saw signs of recovery in the Chinese economy, though further stimulus measures might be needed. However, the survey by brokerage CLSA reported that China''s manufacturing output declined in January for the sixth month in a row. The PMI index stood at 42.2, rising slightly from 41.2 in December. The reading is the third biggest fall on record, following declines in December and November. Japanese shares came into pressure today on the back of grim company’s earnings outlook.
European markets are following the weak Asian markets and are trading in red as FTSE 100 is trading lower by 89.96 points at 4,059.68 and the DAX index is trading lower by 106.96 points at 4,231.39.
The BSE Reality index slipped on recent reports that falling interest rates have failed to boost housing demand as ended down by (10.32%) or 172.11 points at 1,495.97. Major losers are DLF Ltd (13.45%), Housing Dev (12.43%), Indiabull Real (12.08%), Ansal Infra (9.59%), Unitech Ltd (9.02%) and Orbit Co (6.31%).
The BSE Metal index dropped on investors’ worries after weak results posted by the metal firms on fall in demand round the globe and ended lower by (5.34%) or 272.38 points at 4,827.76. Main losers are Steel Authority (7.91%), JSW Steel (6.90%), Tata Steel (6.63%), Hindalco (6.01%), Sesa Goa Ltd (5.96%) and Jindal Steel (5.28%).
The BSE Bank index fell on fears of rising default in a weakening economy and closed with decrease of (5.11%) or 250.48 points at 4,649.48. Scrips that lost are Axis Bank (8.16%), Oriental Bank (7.84%), ICICI Bank (7.54%), SBI (4.91%), Kotak Bank (3.65%) and Bank of India (3.63%).
The BSE Consumer Durables index ended lower by (4.16%) or 73.90 points to close at 2,473.26. Blue Star L (5.28%), Titan Ind (4.29%), Rajesh Export (4.17%), Videocon Ind (2.36%) and Gitanjali GE (1.79%) ended in negative territory.
The BSE Power index tumbled (3.59%) or 64.39 points to close at 1,727.96 as ABB Ltd (5.01%), Reliance Infra (10.50%), Reliance Power (6.34%), Suzlon Energy (5.92%), ABB Ltd (5.15%) and Power Grid (4.82%) ended in red.
The BSE Oil & Gas index ended tumbled (3.11%) or 194.26 points at 6,058.20. Losers are Reliance Natural Resources (7.59%), Reliance Petroleum (5.44%), Cairn India (5.13%), Reliance (3.60%) and Aban Offshore (3.09%).
DLF lost 13.54%. The company posted a fall of 70.6% in net profit to Rs 1780.60 million for the quarter ended December 31, 2008 as compared to Rs 6058.40 million for the quarter ended December 31, 2007. Total Income has decreased from Rs 18125.90 million for the quarter ended December 31, 2007 to Rs 6833.90 million for the quarter ended December 31, 2008. The consolidated results for the Quarter ended December 31, 2008- The Group has posted a net profit of Rs 6707.90 million for the quarter ended December 31, 2008 as compared to Rs 21449.80 million for the quarter ended December 31, 2007. Total Income has decreased from Rs 36512.50 million for the quarter ended December 31, 2007 to Rs 15027.90 million for the quarter ended December 31, 2008.
Unitech Ltd ended down by 9.02% as reported a 74.12% fall in consolidated net profit after tax to Rs 1,360.50 million for the quarter ended Dec. 31, 2008 as against Rs 5,257.80 million in quarter ended Dec. 31, 2007. The consolidated net sales fell 57.15% to Rs 4,893.9 million for quarter ended Dec. 31, 2008 as against 11,421 million for quarter ended Dec. 31, 2007.
Essar Oil ended lower by 2.90%. The company posted a net loss of Rs (12300) million for the quarter ended December 31, 2008 as compared to net loss of Rs (140) million for the quarter ended December 31, 2007.
Sensex below 9100
Sensex had witnessed a pullback on Friday and surged around 188 points on strong buying support. However, the bears hit back strongly and triggered a major sell-off in the market during intra-day trades. Tracking the subdued Asian markets, Sensex began the session marginally lower than its previous close, but slipped sharply on sustained selling in frontline stocks and continued moving southwards. After plunging below 9,100-mark to touch the day's low of 9,049, the market moved in a range with a negative bias. The market witnessed panic selling towards the close and Sensex ended the session with a loss of 358 points at 9,067 whereas Nifty shed 108 points and closed at 2,767.
All sectoral indices had a weak outing. BSE Realty was the major loser with down 10.32% followed BSE Metal and BSE Bankex dropped over 5% each, while BSE CD, BSE Power, BSE Oil & Gas, BSE Teck, BSE CG, BSE PSU and BSE IT were down over 2-4% each.
Market breadth was extremely negative, Of the 2,526 stocks traded on the BSE, 1,570 stocks declined, 871 stocks advanced and 85 stocks ended unchanged. All the 30 Sensex stocks posted losses for the day. JP Associates was the major loser, tumbling by 14.30% at Rs,65.35. DLF at Rs152.95, Reliance Infrastructure at Rs517, HDFC at Rs1410, ICICI Bank at Rs384, Reliance Communications at Rs157.70 slumped over 7-13% each. Among other major losers Tata Steel dropped 6.99% at Rs171.75, Hindalco Industries lost 6.63% at Rs45.80, Ranbaxy Laboratories fell 5.38% at Rs204.10 and Wipro declined by 5.13% at Rs219.25.
Strong buying was evident in several mid-cap stocks. Veer Energy at Rs138 and SJ Corporation at Rs598.65 hit the new high.
Over 3.43 crore shares of Satyam Computer Services changed hands on BSE followed by Cals Refineries (3.33 crore shares), Spice Tele (2.59 crore shares), Unitech (1.78 crore shares) and Reliance Natural Resources (1.02 crore shares).
Realty, bankex, metal shares lead an over 350-point Sensex plunge
Wide-based selling in stocks
and sectors across the board took their toll on bourses with key benchmark indices suffering an over 3.5% slide. Bears dominated throughout the day following renewed concerns about the deteriorating state of the US economy. Data showing the Dow could plunge 135 points at the opening bell, sustained selling by foreign institutional investors and profit booking after an over 8% surge in the week ended Friday, 31 January 2009 also played the spoilsport. The BSE 30-share Sensex slumped 357.54 points, or 3.79%.
India's exports fell an annual 1.1% in December 2008 to $12.69 billion, government data showed on Monday, a third straight loss as the global slowdown cuts demand for Indian goods.The trade deficit narrowed to $7.57 billion in December 2008 compared with $10.07 billion in November 2008, due to a sharp drop in the cost of oil imports. Imports were up an annual 8.8 % at $20.26 billion in December 2008, while oil imports fell 30.9% during the month from a year earlier to $4.71 billion.
European shares were lower today as investors worried about corporate profits, with banks and energy stocks the biggest losers on the index. The key benchmark indices in France, Germany and UK were down by between 1.85% to 2.49%.
Asian stocks were mixed today, 2 February 2009 as shrinking factory output in Australia and declining corporate profits increased concerns that the global recession is intensifying. Key benchmark indices in China and Taiwan rose by between 0.28% to 1.06%. While indices in Hong Kong, Japan, Singapore and South Korea fell by between 1.38% to 3.12%.
US markets slumped on Friday, 30 January 2009 in response to the latest economic data with the US economy seeing a 3.8% contraction in the fourth quarter - at the fastest pace in nearly 27 years in the fourth quarter, deepening fears that the ongoing global recession could prevail longer than expected.
The Dow Jones Industrial Average lost 148.15 points, or 1.82%, to 8,000.86. The Standard & Poor's 500 Index slid 19.26 points, or 2.28%, to 825.88. The Nasdaq Composite index tumbled 31.42 points, or 2.08%, to 1,476.42.
Meanwhile, Indian manufacturing activity shrank for a third straight month in January 2009 as faltering business and consumer confidence and a sharp global slowdown crimped demand, a survey showed.
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 4233.70 crore (till 29 January 2009).
According to provisional data on NSE, FIIs were net sellers worth Rs 64.15 crore while mutual funds bought shares worth Rs 398.39 crore on Friday, 30 January 2009.
The BSE 30-share Sensex was down 357.54 points, or 3.79%, to 9,066.70. The Sensex fell 60.66 points at the day's high of 9,363.58 in early trade. The Sensex fell 375.27 points at the day's low of 9,048.97 in late trade.
The S&P CNX Nifty fell 108.15 points, or 3.76%, to 2,766.65.
Markets had ended the truncated week ended Friday 30 January 2009 with smart gains on buying frenzy in index pivotals coupled with short covering of open positions ahead of January 2009 derivative contracts on Thursday (29 January 2009). The BSE 30-share Sensex rose 749.89 points or 8.64% to 9,424.24 and the S&P CNX Nifty rose 103.45 points or 3.73% at 2874.80 in the week.
The BSE clocked a turnover of Rs 3,020 crore today as compared to Rs 3,606.30 crore on Friday, 30 January 2009.
Nifty February 2009 futures were at 2738, at a discount of 28.65 points as compared to the spot closing of 2766.65. Turnover in NSE's futures & options (F&O) segment was Rs 34,205.27 crore lower than Rs 34,242.93 crore on Friday, 30 January 2009.
All BSE sectoral indices logged losses. The BSE Realty index (down 10.32%), the BSE Metal index (down 5.34%), the BSE Bankex (down 5.11%), the BSE Consumer Durables index (down 4.16%), underperformed the Sensex.
The BSE FMCG index (down 0.63%), the BSE HealthCare index (down 1.2%), the BSE Auto index (down 1.41%), the BSE IT index (down 2.49%), the BSE PSU index (down 2.51%), the BSE Capital Goods index (down 2.72%), the BSE Teck index (down 3.04%), the BSE Oil & Gas index (down 3.11%), the BSE Power index (down 3.59%) outperformed the Sensex.
The market breadth, indicating the overall health of the market, was weak on BSE with 884 shares advancing as compared with 1,600 that declined. 62 shares remained unchanged.
Hindustan Unilever was the lone gainer from the 30-member Sensex pack. India's largest FMCG company by sales rose 0.31% to Rs 262.
Among losers from the Sensex pack, Jaiprakash Associates, Bharti Airtel, Reliance Communications, fell by between 2.86% to 13.7%.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 3.6% to Rs 1,277.55. Reliance Industries-owned Reliance Retail has reportedly deferred its cash and carry operations with the entire operational management headed for an exit.
Metal stocks fell on worries after weak results posted by the metal firms on fall in demand. Tata Steel, Hindalco Industries, Sterlite Industries, Steel Authority of India, National aluminum Company fell by between 4.31% to 7.91%.
Rate sensitive realty stocks slumped on recent reports falling interest rates have failed to revive housing demand. The BSE Realty index plunged over 10%. Indiabulls Real Estate, Ansal Properties, HDIL fell by between 9.59% to 12.43%.
India's largest realty player by market capitalization DLF slumped 13.54%. DLF reported 69% fall in consolidated net profit to Rs 670.79 crore on a 58.8% decline in total income to Rs 1502.79 crore in Q3 December 2008 over Q3 December 2008, before market hours today.
Unitech fell 9.02% after it announced a 74.12% fall in consolidated net profit after tax in Q3 December 2008 over Q3 December 2007.
Banking stocks fell as fears of rising defaults in a weakening economy and on fall in American Depository Receipts (ADRs) offset hopes a further fall in interest rates may boost lending growth. India's second largest private sector bank by net profit HDFC Bank fell 3.9% as its American depository receipt (ADR) fell 1.92% on Friday, 30 January 2009.
India's largest bank in terms of assets and branch network State Bank of India declined 4.91%. State Bank of India will lower its home loan rates to 8% for new customers over the coming year, the second time it has reduced mortgage rates in as many months as the economy slows. The new rate will be offered between 2 February and 30 April 2009, the bank said in a statement. SBI had previously charged 9.75% on a floating basis for home loans, and 11.25-12.25% on a fixed basis.
India's largest private sector bank by net profit ICICI Bank fell 7.54%.
India's largest dedicated housing finance company by total income HDFC fell 7.37%.
Auto stocks fell on worries high interest rates and sluggish consumer spending have dented demand for automobiles, including for trucks, motorcycles and scooters. India's top small car maker by sales Maruti Suzuki India fell 1.01% even after the company said its vehicle sales rose 5.4% in January 2009 over January 2008.
India's largest commercial vehicle maker by sales Tata Motors fell 4.48% after it posted an unexpected Rs 227 crore loss in Q3 December 2008 after market hours on Friday 30 January 2009.
India's largest tractor maker by sales Mahindra & Mahindra slipped declined 4.52% after its consolidated net profit fell 93.4% to Rs 26.67 crore on a 6.2% decline in gross revenue and other income in Q3 December 2008 over Q3 December 2007. The results were announced at the fag end of the day's trading session on Friday, 31 January 2009.
Outsourcing focussed IT firms fell on fears a weak global economy would cut the amount firms spent on technology. India's second largest software services exporter Infosys Technologies slipped 2.05% as its ADR fell 3.28% on Friday.
India's third largest software services exporter, Wipro dipped 4.76% as its American depository receipt (ADR) fell 0.86% on Friday. 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.
TCS, India's largest software services exporter by sales fell 3.91% while India's fifth largest IT exporter by sales HCL Technologies fell 2.24%.
Satyam Computer Services rose 6.57% on 3.44 crore shares on reports India's market regulator will consider relaxing takeover rules for an open offer in Satyam Computer Services to help the fraud-scarred outsourcer attract suitors.
Fertiliser stocks were up after an Indian court allowed Reliance Industries to sell gas from its KG basin fields at government-approved prices. Deepak Fertlisers , Rashtriya Chemicals and Fertlisers, GSFC, National Fertiliser, Nagarjuna Fertilisers & Chemicals rose by between 0.34% to 4.92%.
Sun Pharmaceutical Industries fell 2.52% even after its consolidated net profit rose 28% in Q3 December 2008 over Q3 December 2007.
Grasim Industries fell 0.63% as its net profit fell 40.5% in Q3 December 2008 over Q3 December 2007.
Spice Communication jumped 68.9% to Rs 80.65, extending 81.21% surge on Friday, 30 January 2009 on the back of reports industrialist BK Modi's firm joined the fray to buy out the troubled IT firm Satyam Computer Services. Modi, however, made it clear that the telecom group would be interested in buying out Satyam and that it was not looking at a piecemeal acquisition. He added that he saw Rs 2,000 crore as a benchmark for Satyam.
Century Textiles fell 4.3% after it said it is cutting production of denim cloth at its factory in Madhya Pradesh to 50% of the total capacity, due to demand recession.
Satyam Computer Services clocked the highest volume of 3.44 crore shares on BSE. Cals Refineries (3.33 crore shares), Spice Communications (2.59 crore shares), Unitech (1.78 crore shares) and Reliance Natural Resources (1.03 crore shares) were the other volume toppers in that order.
Reliance Industries clocked the highest turnover of Rs 229.11 crore on BSE. Satyam Computer Services (Rs 199.18 crore), Spice Communications (Rs 189.55 crore), DLF (Rs 138.03 crore) and United Spirits (Rs 128.01 crore) were the other turnover toppers in that order.
Pre Session Commentary - Feb 2 2009
Today domestic markets are likely to open negative as the sentiments prevailing in the other markets of Asia are bearish. The US markets also closed in the red on the back of contraction in GDP numbers and weak consumer spending. There is no specific news that would shield the domestic markets from the influence of other foreign markets. As the domestic markets had gained some momentum on Friday’s trade, today we anticipate some profit booking and a volatile trading session.
On Friday, the markets ended in green after a negative gap opening. Heavy buying in the frontline stocks helped the broader markets to stay alive till the end. The markets exuded surprising trend after a negative opening. Majority of sectors except the HC sector recovered the early losses and managed to close in green. Sectors like Realty, Metal, Oil & Gas and FMCG closed with phenomenal gains of 4.32%, 4.05%, 3.58% and 2.04% respectively. Mid caps and Small caps also gained by 1.31% and 1.08% respectively. During the session we expect the markets to be trading volatile.
The BSE Sensex closed high by 187.96 points at 9,424.24 and NSE Nifty ended with a gain of 50.85 points at 2,823.95 The BSE Mid Caps and Small Caps ended with gains of 38.03 points and 35.64 points at 2,941.47 and 3,339.05 respectively. The BSE Sensex touched intraday high of 9,438.31 and intraday low of 9,087.36.
The US markets on Friday closed in red. The session started with a gain on the back of better than expected GDP report. Later the investors were caught by the fear of contraction in GDP. U.S. economy contracted at an annualized rate of 3.8% during the fourth quarter, marking the steepest drop in economic activity since 1982. The decline was less severe than the 5.5% drop that was expected, but that was largely due to an unexpected increase in inventories. Consumer spending, which accounts for roughly 70% of economic activity, remains weak as consumption expenditures dropped at a 3.5% annual rate. Crude oil futures for the month of Mach delivery grew by $0.42 to $41.86 per barrel on New York Mercantile Exchange. Earlier the crude futures rose more than 4% to USD 43.44.
The Dow Jones Industrial Average (DJIA) closed lower by 148.15 points at 8,000.86 NASDAQ index lost 31.42 points at 1,476.42 and the S&P 500 (SPX) tumbled 19.26 points at 825.88.
Indian ADRs ended mixed. In technology sector, Satyam ended up by 0.53% along with Patni Computers by 1.28%. However, Infosys ended with decrease of 3.28% and Wipro closed lower by 0.86%. In banking sector ICICI Bank gained 0.73% while HDFC Bank dropped by 1.92%. In telecommunication sector, MTNL advanced by 0.34% while Tata Communication slipped 0.99%. Sterlite Industries increased by 2.88%.
Today major stock markets in Asia have opened negative. Shanghai composite is up by 10.20 points to 2,000.86. Japan''s Nikkei slipped 85.09 points at 7,908.96 along with Hong Kong''s Hang Seng that plunged 280.44 points at 12,997.77. South Korea''s Seoul Composite is down by 2.06 points at 1,160.05 and Singapore''s Strait Times dropped by 37.93 at 1,728.79.
The FIIs on Friday stood as net buyers in equity and net sellers in debt. Gross equity purchased stood at Rs 2,097.20 Crore and gross debt purchased stood at Rs 69.30 Crore, while the gross equity sold stood at Rs 1,822.10 Crore and gross debt sold stood at Rs 76.50 Crore. Therefore, the net investment of equity and debt reported were Rs 275.10 Crore and Rs (7.30) Crore respectively.
On Friday, the Indian rupee ended at 48.87/88 per dollar, 02% stronger than previous close of 48.97/98. The rupee rose on Friday as foreign banks unwound long dollar positions and domestic share market reported smart gains.
On BSE, total number of shares traded were 31.60 Crore and total turnover stood at Rs 3,606.30 Crore. On NSE, total number of shares traded were 7297.26 Crore and total turnover was Rs 9,835.98 Crore.
Top traded volumes on NSE Nifty – Unitech with 73505933 shares, Suzlon Energy with 43843350 shares, Reliance Comm with 16838256 shares, DLF with total volume traded 15466199 shares followed by SAIL with 13357229 shares.
On NSE Future and Options, total number of contracts traded in index futures was 786286 with a total turnover of Rs 10,344.13 Crore. Along with this total number of contracts traded in stock futures were 1019105 with a total turnover of Rs 9,427.72 Crore. Total numbers of contracts for index options were 9,15,801 with a total turnover of Rs 13,367.98 Crore and total numbers of contracts for stock options were 106853 and notional turnover was Rs 1,103.11 Crore.
Today, Nifty would have a support at 2,762 and resistance at 2,918 and BSE Sensex has support at 9,198 and resistance at 9,545.
Trading Calls - Feb 2 2009
NIFTY (2,875) SUP 2,840 RES 2,923
Buy ICICI Bank (413-419) SL 406 Target 425, 428
Buy Hero Honda (878-879) SL 870 Target 895, 898
Buy Axis Bank (429-433) SL 424 Target 442, 446
Buy Reliance Infra (578-585) SL 571 Target 598, 603
Sell Aurobindo Pharma (160) SL 164 Target 154, 152
Daily News Roundup - Feb 2 2009
The Bombay High Court Reliance Industries to sell KG basin gas at US$4.2/mmbtu .(BL)
PNB to cut PLR by 50bps to 11.5%.(FE)
Future Group exploring the idea of renting clothes.(BL)
Proposed merger between Take Solutions and Four Soft has been called off.(BL)
SBI opposes UTI AMC plans to acquire funds.(Mint)
Educomp Solutions receives Rs1.2bn orders from Uttar Pradesh, Assam.(BL)
Areva to sign deals for setting up nuclear reactors with Nuclear Power Corporation.(BL)
Suzlon Energy puts on hold its capacity expansion plans in India. (BS)
Infosys Technologies cuts onsite employees in United states.(DNA)
NHAI sends notices to Madhucon Projects for delaying work on World Bank-funded highway stretches.(Mint)
ONGC receives two Nigerian oil blocks; board approves Rs70bn for Mumbai High project.(FE)
Satyam Computers open offer price may be set at a two weeks’ average price.(ET)
Dena Bank seeks Rs5bn from government to bolster its capital base. (BS)
Spice Group team to meet SEBI officials on Monday and Satyam’s new board during the week to convey its intention to acquire the stake through an auction process.(BS)
ADAG is planning a major restructuring exercise for some of its business divisions at its infrastructure and telecom arms.(TOI)
TVS Motors January sales rise marginally on 7% increase in exports.(Mint)
Sun Pharmaceuticals is likely to acquire a mid-sized generic company in US.(DNA)
DLF may back out of Delhi convention complex project.(BS)
Reliance Retail exits cash and carry business.(ET)
Air India plans further fare cuts.(FE)
L&T says exposure to Satyam Computers not subject to mark-to-market accounting.(BL)
Cairn India seeks more land near Rajasthan oilfield. (ET)
Satyam Computers bags more than 10 new clients in January.(DNA)
SBI cuts home loan rates to 8%.(Mint)
Indian Oil Corp, BPCL and HPCL cuts jet fuel prices by 4%.(Mint)
S&P cuts ratings on TCS and Infosys Technologies to ‘stable’ from ‘positive’.(BL)
Department of Corporate Affairs says to the finance ministry that L&T has expressed interest in acquiring a sufficient stake in Satyam to take management control.(BS)
RPG mulling private equity to part fund Rs20bn retail capex. (ET)
Tata Motors to soon finalize Jaguar, Land Rover retail plans; may set up first outlet in Mumbai.(ET)
DLF plans to sells assets to improve cash flows.(ET)
Indian Overseas Bank will join hands with Bank of Baroda and Andhra Bank to start operations in Malaysia.(BS)
Elecon Engineering delays Rs4bn overseas acquisition plans.(BS)
M&M expresses interest in acquiring Satyam Computers.(Mint)
Bhushan Energy, an unlisted arm of Bhushan Steel, buys stake in Orissa Sponge.(BL)
IRB Infrastructure raises Rs25bn for Surat road project.(ET)
IT Department has ordered a special audit of FY06 accounts of DLF.(DNA)
Jet Airways to seal deal for hedging 25% of its fuel needs.(ET)
Jindal Group plans Rs1bn health sector foray.(BS)
Reliance Communications started its GSM mobile operations in Delhi.(FE)
Tata Motors’ subsidiary JLR to seek 1bn pound loan facility.(FE)
GMR Energy plans to start the construction work of its 1200MW power plant in Chhattisgarh from September.(BS)
Ambuja Cements December shipments up 12% YoY. (ET)
Reliance Money is planning to float a stock exchange for small and medium enterprises with 26% stake, and is scouting for partners to start the venture in about a year's time.(BS)
Government objects to Tata Communication’s plans to raise Rs51bn in loans to fund its expansion plans. (ET)
Spice Group acquires Cellucom’s India arm in share-swap deal. (ET)
BPCL plans to shut down the 240,000 bpd Mumbai refinery's crude distillation unit for 30 days from March 6, while the unit at Kochi would be shut for 50 days from April 5. (FE)
Forex reserves dip by US$4.6bn to US$248bn in the week ended January 23.(BL)
RBI to allow prepaid instruments up to maximum value of Rs50,000.(BL)
Sic core infrastructure industries registered a 2.3% growth in December 2008.(TOI)
Government may revive a proposal limiting the number of Ultra Mega Power Projects awarded per developer.(BS)
SEBI asks promoters to disclose pledged shares in seven days.(Mint)
TRAI to consider calling card option to provide a subscriber a option to chose his operator for making STD and ISD calls.(Mint)
Centre to set up five coastal terminals for petroleum, petrochemicals.(FE)
Government clears infrastructure projects worth Rs340bn. (BS)
RBI has turned down suggestions to relax rules for recognizing non-performing assets NPAs by doubling the duration to 180 days.(BS)
Fiscal deficit up 164% of full-year target.(FE)
Don’t expect too much
A great obstacle to happiness is to expect too much happiness.
The bulls and most investors may been happy with last week’s gains. For the month, US stock indices (except Nasdaq) had their worst January on record, with the Dow losing 8.8%. Back home though, the Sensex and the Nifty fell by 2-3% in January. Still, one should not allow complacency to set in, as the outlook remains bleak. Much of the fears, relating to the health of the western financial systems and its global ramifications are still in place. A raging debate is underway on whether a bad bank be created to take toxic debt from troubled banks. While US President Barack Obama seems to be in favour of the plan, others like Joseph Stiglitz bag to differ. Obama’s much-hyped new stimulus is also facing stiff opposition from Republicans. Senate will take up the bill this week.
Global markets will be on edge this week ahead of monthly US jobs data. No big events are due in India for the time being. Politics will dominate headlines over the next few months. Today, we expect some softening after last week’s stellar gains.
RIL and RNRL will be in focus post the Bombay High Court order. Auto and cement companies will hog the limelight as they release monthly sales data. Satyam will continue to see action based on the news-flow.
FIIs were net sellers in the cash segment on Friday at Rs641.5mn (provisional) while the local institutions pumped in Rs3.98n. In the F&O segment, the foreign funds were net buyers at Rs668.2mn. On Thursday, FIIs were net buyers at Rs2.75bn in the cash segment.
Castrol India and Gujarat State Petronet will declare their results today.
L&T, BHEL, Wipro, HCL Tech and Bharat Electronics might gain amid news that Boeing Co. will buy aerospace structures and aviation electronics products worth at least $600mn, or Rs29.4bn, from seven India companies as part of the so-called offsets against winning a $2.1bn contract early in January to supply eight P-8I reconnaissance planes to the Indian Navy.
US stocks slid on Friday after government data showed that fourth-quarter GDP contracted at its fastest pace in well over two decades, capping the worst January for the Dow Jones Industrial Average and the S&P 500 index.
The Dow ended the day down 148 points, or 1.8%, at 8,000.86. The S&P 500 lost 19 points, or 2.3%, to 825.88. The Nasdaq Composite index shed 31 points, or 2%, to 1,476.42.
US stocks gained in the morning as investors welcomed news that fourth-quarter GDP report was not as bad as many economists had expected. Upbeat earnings from Amazon.com and a few other companies also helped stocks in early trading.
But the early euphoria soon fizzled out and stocks turned lower. Weak reports on manufacturing and consumer sentiment added to the grim sentiment, as did more layoff news. Speculation that Senate Republicans could derail the proposed US$819bn economic stimulus plan also weighed on the sentiment.
Stocks had tumbled on Thursday following bleak reports on earnings, housing and employment. That caused the Nasdaq and S&P 500 to break a four-session winning streak and the Dow to break a three-session advance.
It was the worst January ever for the Dow industrials and S&P 500, according to Stock Trader's Almanac data. The Dow lost 8.8% and the S&P 500 dropped 8.6% in the month. The Nasdaq's loss of 6.4% was eclipsed by last January's loss of 9.9%. That 2008 loss was the worst in the tech average's history.
Among the sector decliners during January, it was a particularly ugly month for bank stocks. According to some Wall Street observers, a weak January means a down year.
S&P market historian Sam Stovall has looked at the correlation going back to 1945. Since then, whenever the S&P 500 gained in January, the market continued to rise during the rest of the year 85% of the time, posting an average gain of 11.6% during those 11 months.
But, the statistics are less consistent when the market fell in January. Since 1945, a decline in that month yielded a decline in the next 11 months only 48% of the time, for an average loss in that period of 2.2%.
In the day's economic data, GDP growth plunged at a 3.8% annual rate in the fourth quarter of last year. It was the biggest drop in GDP since the first quarter of 1982, when it declined 6.4%. Economists had forecast that GDP would decline 5.4%.
In other economic news, the Chicago PMI, a regional reading on manufacturing, declined to 33.3 from a revised 35.1 in the prior month. Wall Street economists had expected the reading to come in at 34.9.
The revised reading on January consumer sentiment fell to 61.2 from an initial reading of 61.9, according to a University of Michigan report. Economists thought sentiment would hold steady. Confidence stood at 60.1 in December.
Amazon.com reported quarterly sales and earnings that topped analysts' forecasts after the market close on Thursday. Shares rallied 17% Friday afternoon, but failed to help the broader market.
Dow component Exxon Mobil reported the largest yearly profit in US history, earning US$45.22bn amid high oil prices. Its fourth-quarter profit fell 33% from a year ago. Nonetheless, results still topped analysts' forecasts.
Fellow oil company and Dow component Chevron reported higher quarterly earnings that topped estimates. Shares of both Exxon and Chevron ended lower.
Dow component P&G reported a higher quarterly profit that was nonetheless short of forecasts. The company also warned that full-year earnings would not meet its earlier forecast due to weakening demand. Shares fell 6.4%.
Caterpillar announced that it was cutting another 2,110 jobs at three Illinois production plant on top of the 20,000 job cuts announced earlier this week. Shares of the Dow component fell almost 3%.
US companies announced over 100,000 layoffs last week alone, including Starbucks, Boeing, Eastman Kodak and Target.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 2.83% from 2.86% on Thursday. 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 worsened. The 3-month Libor rate rose to 1.18% from 1.17%, according to Bloomberg.com. Overnight Libor rose to 0.30% from 0.22%. Gasoline prices rose three-tenths of a cent to a national average of US$1.846 a gallon.
US light crude oil for March delivery rose 42 cents to settle at US$41.86 a barrel on the New York Mercantile Exchange. Earlier it rose more than 4% to US$43.44. In a week of volatile trading, crude has fallen three out of five sessions. It ended the week down 10% and the month down 14%.
The dollar gained versus the euro and fell against the yen.
Gold futures rose, ending the week at their highest level in six months, as investors sought the safety of the metal amid grim economic reports, disappointing corporate earnings and mounting job losses. COMEX gold for April delivery rose US$21.90 to settle at US$928.40 an ounce. The benchmark contract has risen 3.5% this week and 4.9% this month.
Investors put money back into stock mutual funds over the past week, after withdrawing money in the previous week. For the week ended Jan. 28, investors poured US$6.5bn into stock funds. In the previous week, investors pulled US$138mn out of funds.
European stock indices ended higher after a volatile session, with BNP Paribas, Rio Tinto and Switzerland's Roche leading the gains amid deal-related news.
The Dow Jones Stoxx 600 index closed up 0.2% at 191.23, having bounced in and out of positive territory throughout the session. It declined earlier in the day after the release of unemployment data for the eurozone.
The French CAC 40 index closed down 1.2%, at 2,973.92, having dropped back below the 3,000 level earlier in the session. The UK's FTSE 100 index lost 1% to 4,149.64 and Germany's DAX 30 index fell 2% to 4,338.35.
Unemployment in the euro area rose to 8% in December from 7.9% in November. The latest reading represents a two-year high and compares to an unemployment level of 7.2% a year earlier. Inflation in the region, meanwhile, fell faster than expected, to a 1.1% rate in January from 1.6% in December.
European markets turned higher after figures showed that the US economy contracted less than expected in the fourth quarter. GDP growth plunged at a 3.8% annual rate in the fourth quarter of last year. It was the biggest drop in GDP since the first quarter of 1982, when it declined 6.4%. Economists had forecast that GDP would decline 5.4%.
Shares in France's BNP Paribas rose 1.7% in Paris. The bank agreed to a new deal to acquire parts of Fortis after the Belgian company's shareholders won a court battle to challenge an earlier deal. Under the revised agreement, BNP will take a much smaller stake in the Fortis insurance business than originally planned.
Other banks were also mostly higher, though shares of Dexia fell 7.2% after it announced a loss of about €2.3bn (US$3bn) in the final quarter of 2008. Dexia said it won't pay a dividend for the year and is also planning to cut 900 jobs and close its operations in several countries.
Markets ended the week with solid gains on Friday with the BSE benchmark Sensex rising over 2% and the NSE Nifty surging nearly 2%. The rally was led by the realty, metals’ and oil & gas stocks. However, the Pharma stocks were under pressure. Finally, the BSE benchmark Sensex rose 187 points to close at 9,424 and the Nifty rose 50 points to close at 2,874.
Among the 30-components of Sensex, 25 stocks ended in the green and only 5 stocks ended in the negative terrain. Among the major gainers in the Sensex were Reliance Industries, SBI, L&T and ITC. BHEL, Sun Pharma, Infosys and NTPC were among the major laggards.
Shares of Spice Communication shot up by over 80% to Rs47. The only available news was that BK Modi, Chairman, Spice Group was reported as saying that "Spice Innovation is interested in acquiring 51% stake in Satyam Computers." The scrip touched an intra-day high of Rs47 and a low of Rs27 and recorded volumes of over 9mn shares on BSE.
Shares of Akruti City declined by over 6% to Rs816 after the company registered a net profit of Rs190.80mn (down 79%) for the quarter ended December 31, 2008 as compared to Rs924.10mn for the quarter ended December 31, 2007.
The total Income decreased from Rs1,400.2mn for the quarter ended December 31, 2007 to Rs516.8mn for the quarter ended December 31, 2008.On Consolidated basis, the Group posted a net profit of Rs217mn for the quarter ended December 31, 2008 as compared to Rs1,017.70mn for the quarter ended December 31, 2007.
The total Income decreased from Rs1,363.50mn for the quarter ended December 31, 2007 to Rs495.90mn for the quarter ended December 31, 2008.
Shares of Tata Power ended flat at Rs761. The company posted a net profit after tax of Rs1.01bn (down 48%) for the quarter ended December 31, 2008 as compared to Rs1.97bn for the quarter ended December 31, 2007.
However, Total Income increased from Rs14.562bn for the quarter ended December 31, 2007 to Rs18.228bn for the quarter ended December 31, 2008. The scrip touched an intra-day high of Rs771 and a low of Rs729 and recorded volumes of over 1,00,000 shares on BSE.
Shares of BHEL declined by over 2.5% to Rs1320 after the company posted a net profit of Rs7.90bn for the quarter ended December 31, 2008 as compared to Rs7.71bn for the quarter ended December 31, 2007.
Total Income has increased from Rs52.290bn for the quarter ended December 31, 2007 to Rs63.285bn for the quarter ended December 31, 2008.
Shares of Cairn India gained by 3% to Rs164 after the company reported a profit of Rs2.4bn in the fourth quarter compared with a loss of Rs139.1mn a year earlier. The scrip touched an intra-day high of Rs166 and a low of Rs158 and recorded volumes of over 6,00,000 shares on BSE.
Shares of Jindal Steel & Power surged by over 13% to Rs1037 after the company posted a net profit of Rs3251.7mn for the quarter ended December 31, 2008 as compared to Rs3190.5mn for the quarter ended December 31, 2007.
Total income increased from Rs14074.1mn for the quarter ended December 31, 2007 to Rs17914.6mn for the quarter ended December 31, 2008. The scrip touched an intra-day high of Rs1060 and a low of Rs896 and recorded volumes of over 7,00,000 shares on BSE.
Markets might drift lower in the coming week with the US economy contracting at the fastest pace in nearly three decades in the fourth quarter of last year sentiments continue to remain weak.
Sesa Goa
We recommend a buy in Sesa Goa from a short-term trading perspective. It is apparent from the charts of Sesa Goa that it has been trending up since its 52-week low of Rs 60, recorded in late November 2008. The stock recently found support around Rs 68 and bounced up. On January 28, the stock jumped by 10 per cent, accompanied with heavy volume. This steep gain has reinforced the bullish momentum. Furthermore, on January 30, the stock breached its 21- and 50-day moving averages by gaining 4 per cent, with above-average volume. The daily relative strength index is rising in the neutral region towards the bullish zone and the weekly RSI has just entered the neutral region. The daily moving average convergence and divergence is signalling a buy. The price rate of change indicator has entered the positive territory. We are bullish on the stock from a short-term horizon. We expect the stock to move up until it hits our price target of Rs 94. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 80.
Weekly Stock Picks - Feb 2 2009
Buy Indiabulls Real Estate
Buy Axis Bank
Buy KFA
Buy Power Grid
Buy Divis Labs
Weekly Newsletter - Feb 2 2009
It was a winning week but a losing month. Even as the main indices recorded their first green week in 2009, the sentiment remains weak, A number of earlier issues including those of crude prices, inflation and interest rates are more or less under control. But the fear that something could go wrong again is giving bears an edge quite too often. The coming week has no major events except for the ongoing results. But expecting the unexpected is something markets have got used to during the last year or so. Stay guarded and watch the events as they unfold. Heavyweights like Reliance may again lead the market, be it up or down.
Progress on the US government's plan to absorb banks' rotten assets could provide some relief. Global investors are also hoping for some more clarity on the fate of President Obama's massive stimulus package. But, any positive news from Washington could be countered by bad corporate news, especially on job cuts. In this context, next week's data on US unemployment for January will be keenly followed. January sales figures from the US auto industry and retailers could also have a bearing on the global market's direction. Back home, we will get the latest sales figures from auto and cement companies. Companies that announced their results over the weekend will also be in focus.
Bullish on bullion
It's the beginning of the new year, but will that mean good news for your investments? By all accounts, 2009 is not going to be very bright. With one exception. Gold. The metal has managed to retain its sheen even through the darkest of times. So it's a smart move to invest in companies that mine gold, isn't it? After all, it would be like investing in the mother lode.
Mutual fund houses thought so and launched gold equity funds to invest in companies involved in gold mining and allied activities. These funds were launched because of the popularity of gold exchange traded funds (ETFs), which invest in gold bullion. Sadly, the results have not been the same. Take the DSP Black Rock's World Gold fund, which was launched in August 2007. In the past one year, it has delivered a negative return of 22% compared with a positive return of 25% by the Gold ETF.
Satyam says staff will get January salaries
The government-appointed Board of Satyam Computer Services announced that employees will get January salaries on time. The salaries would be paid as scheduled and that would be achieved from the company’s internal accruals and receivables. The Board has appointed the Boston Consulting Group as the management advisor to support the Directors and Satyam leadership team and Goldman Sachs and Avendus as investment bankers. The advisor and bankers have been entrusted with the task of identifying strategic investors, obtaining expressions of interest and ensuring a fair, transparent approach to the entire process. The Satyam board also said that it has received several proposals from corporate entities and private equity firms, but ruled out selling the company by unbundling it into different parts.
Meanwhile, Larsen & Toubro Ltd. (L&T) said that it may increase its stake in Satyam to 15% because it expects the value to increase. "There may be a counter-bid," L&T Chairman A.M. Naik told analysts on a conference call. On January 23, the engineering giant raised its holding in Satyam to 12% from 4% to have greater say in the software maker’s rescue. The average price of L&T's stake in Satyam has dipped to Rs80 a share from the Rs174 it paid, Naik said. L&T is looking to expand its software unit by trebling its stake in fraud-hit Satyam, Naik added.
Fidelity Investments raised its holding in Satyam to 6.79%. Fidelity, which held 3.17%, bought 3.62% on Jan. 28, Satyam said in a filing to the stock exchanges. Stock exchanges said late on Wednesday that two Fidelity funds had bought a 2.5% stake in Satyam in block deals worth US$18.7mn. Separately, the Hinduja group and B.K. Modi group thrown in their hats for buying the scam-tainted IT major. The Spice group said it is ready to invest about Rs20bn (US$408mn) in Satyam. Other suitors in the race for Satyam include Tech Mahindra, iGate Global and private equity firms.
In a related development, the regional officers of the Provident Fund Organisation lodged a complaint against the Rajus for not depositing Rs75mn which was the employees' share of PF for December. They also confirmed that Satyam's total headcount is 43,622, and not in excess of 52,000 as claimed by the promoters and even the government nominated board.
Also, the Company Law Board (CLB) passed an order providing immunity to six government appointed board members and other new directors of Satyam from all legal action relating to Rs70bn fraud. The CLB's order will help the new board take a decision on the appointment of a new chief executive officer and chief financial officer. "We will act like court officials discharging public service," said C Achutan, a member of the new Satyam board. Satyam is facing two class action law suits in the US. These were filed by two US-based law firms, Izard Nobel LLP and Vianale & Vianale LLP.
Reports also said that former MD of Tata Chemicals, Homi Khusrokhan and ex-group finance director of the Murugappa group, Partho S Datta could be named Satyam's CEO and CFO, respectively. The new board was likely to announce on Saturday the names of its new CEO and CFO. Among the other Satyam related news, General Electric (GE) and Bombardier said they will continue their business association with Satyam, while National Australia Bank said it was reviewing its outsourcing plans with Satyam. At the same time, reports said that Citigroup, Merrill Lynch, Novartis and GlaxoSmithKline may discontinue their deals with Satyam. T
RBI maintains status quo
The Reserve Bank of India (RBI) maintained a status quo on key policy rates after aggressively easing its monetary stance since October, as the central bank ascertains the impact of its previous measures on the Indian economy. The repo rate is unchanged at 5.5% while the reverse repo rate is static at 4% and the cash reserve ratio (CRR) has also been left steady at 5%.
The Bank Rate has been kept unchanged at 6%. The RBI also slashed its estimate on FY09 GDP growth to 7% from 7.5-8% earlier with a negative bias. The outlook on real GDP growth has been affected further and the downside risks to growth have amplified because of slowdown of industrial activity and weakening of external demand as reflected in decline in exports, the RBI said. Services sector activities are likely to further decelerate in the second half of 2008-09, it added.
"There is now distinct evidence of further slowdown as a consequence of the global downturn. The knock-on effects of the global financial crisis, economic slowdown, and falling commodity prices are affecting the Indian economy in several ways," the RBI said.
The only positive that one can draw comfort from is that the headline inflation has decelerated, though consumer price inflation is yet to show moderation, the central bank said. Inflation, based on the WPI, will fall sharply by the end of March to 3% from its earlier forecast of 7%. "Inflation on account of primary articles still remains at the double digit level, reflecting sustained price pressures, particularly on food articles," the RBI said. WPI inflation, excluding food and fuel, too remains higher this year as compared with the previous year, it added.
Since mid-September 2008, the RBI has taken a number of monetary easing and liquidity enhancing measures. At the same time, the Government has also launched two fiscal stimulus packages to boost aggregate demand. But, their effectiveness will be known only a few months down the line. There is a period of painful adjustment ahead of us, the RBI said. However, once the global economy begins to recover, India’s turnaround will be sharper and swifter, it added. The challenge for the Government and the central bank is to manage the adjustment with as little pain as possible, the RBI said.
For monetary policy to have demand inducing effects, lending rates will have to come down, the RBI said, hinting that banks will have to slash rates further. The current deposit and lending rates have significant room for further reduction, the central bank said. Interest rates in the money and bond markets have already declined perceptibly since their peaks in October. Banks’ cost of funds would come down, and this should encourage banks to reduce their lending rates in the coming months, the RBI said.
Taking into account the diminished upside risk to inflation, the projection of money supply (M3) growth for 2008-09 is raised to 19% from 16.5-17% earlier. The aggregate deposit growth for 2008-09 is revised to 19% from 17% earlier. The projection of growth of adjusted non-food credit for 2008-09 is revised to 24% from 20% earlier.
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