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Wednesday, February 11, 2009
Tata promoters need money!
Promoters of three more Tata group companies, including Tata Communications, today disclosed their share pledging details, taking the total amount raised by promoters of the nine firms to nearly Rs 10,000 crore, for meeting the group's long-term fund requirements.
In aggregate, the value of the 123 crore shares pledged by the promoters has been estimated to be about Rs 10,000 crore as per today's closing price of the nine firms -- Tata Communications, Tata Tea, Tata Chemicals, Tata Motors, Tata Coffee, Tata Steel, Tata Power, Tata Teleservices (Mah) and Indian Hotels.
Yesterday, six Tata group firms had revealed their share pledging details.
Meanwhile, the group's holding entity Tata Sons had yesterday said: "It (share pledging) is not a new practice; it has been existing since the age of joint stock companies. It has been done primarily for long-term funding requirements of Tata Sons."
Tata Communications today said two of its promoters, Tata Sons and Pantone Finvest, have pledged three crore shares, representing a 10.53 per cent stake in the company.
Estimated at today's average market price, the shares pledged would have fetched Tata Sons over Rs 1,329.65 crore.
Meanwhile, Tata Tea said its main promoter Tata Sons has pledged 70 lakh shares, representing 11.32 per cent stake in the company with lenders.
Calculated on the basis of the current market price of Tata Tea scrip, the pledging would have fetched the promoters over Rs 389 crore
Also Tata Chemicals earlier today had said three of its promoters -- Tata Tea, Tata Investment Corporation and Tata Sons -- have pledged 4.70 crore shares or 20.02 per cent stake in the company with lenders.
Calculated on the basis of current market price of Tata Chemicals, the promoters would have received over Rs 705 crore from lenders via the share pledge.
Aggregating the total shares pledged by the remaining six Tata Group companies, the promoters have raised about Rs 7,500 crore.
In the bull phase of the market, the Tata Group was on expansion spree and had made significant acquisitions then.
Starting from August 2006, the group had undertaken major acquisitions including a 30 per cent stake in US-based Glaceau (Energy Brands) for USD 677 million, steel maker Corus and British luxury brand Jaguar-Land Rover.
Tata group has 27 listed entities. However, TCS, Tata Sponge Iron, Tata Investment Corporation are among the Tata Group companies which are yet to disclose the promoter share pledging in respective firms.
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Bihar Tubes promoters pledge shares
Bihar Tubes Ltd has furnished herein below the disclosure of Shares pledged by Promoters and PACs
1. Name of the Promoter & Person Acting in Concert - Saroj Rani Gupta
No of Shares Pledged - 350,000
Purpose of Pledge - as Securities towards Cash Credit Loans raised from Bank
% of Total Paid Up Capital - 1.724%
2. Name of the Promoter & Person Acting in Concert - Sanjay Gupta
No of Shares Pledged - 196,450
Purpose of Pledge - as Securities towards Cash Credit Loans raised from Bank
% of Total Paid Up Capital - 0.968%
3. Name of the Promoter & Person Acting in Concert - Vinay Gupta
No of Shares Pledged - 21,900
Purpose of Pledge - as Securities towards Cash Credit Loans raised from Bank
% of Total Paid Up Capital - 0.108%
4. Name of the Promoter & Person Acting in Concert - SMT Finance & Investment Ltd
No of Shares Pledged - 18,350
Purpose of Pledge - as Securities towards Cash Credit Loans raised from Bank
% of Total Paid Up Capital - 0.090%
5. Name of the Promoter & Person Acting in Concert - Sameer Gupta
No of Shares Pledged - 13,300
Purpose of Pledge - as Securities towards Cash Credit Loans raised from Bank
% of Total Paid Up Capital - 0.066%
6. Name of the Promoter & Person Acting in Concert - APL Infrastructure Pvt Ltd
No of Shares Pledged - 1651,487
Purpose of Pledge - as Securities towards Cash Credit Loans raised from Bank
% of Total Paid Up Capital - 8.137%
Nijjer Agro Foods promoters pledge shares
Nijjer Agro Foods Ltd has informed BSE that the following shares held by the promoters have been pledged in favour of IDBI Ltd. The pledge was created in December 2004 as a guarantee for specific performance by the Company of one of the conditions of settlement of over-dues and a part of rehabilitation package filed before BIFR.
1. Promoter Name - Satbir Nijjer
- Number of Shares pledged - 9,04,989
- Percentage of issued capital - 8.87%
2. Promoter Name - Wassan Singh Nijjer
- Number of Shares pledged - 1,20,000
- Percentage of issued capital - 1.18%
3. Promoter Name - Gurbaksh Kaur
- Number of Shares pledged - 35,011
- Percentage of issued capital - 0.34%
The shares will be released by IDBI Ltd on Company making allotment of 1060000 shares.
Promoters of Ispat Ind. pledge 29.98% stake
Ispat Industries, an integrated steel manufacturer has revealed in a statement on the stockexchange as per Securities Exchange Board of India regulations that the promoters of the company have pledged 29.98% stake in the company for an undisclosed amount amounting 336.5 million shares.
Ispat Steel Holdings has pledged over 154,3 million shares representing 12.63% of the total equity, Goldline Tracom has pledged over 50 million shares representing 4.56% stake and Kartik Credit has pledged over 280 million shares representing 2.33% stake of the company. Apart from this 12 promoters have pledged over 10.46% stake of the company.
Shares of the company declined Rs 0.06, or 0.53%, to settle at Rs 11.23. The total volume of shares traded was 4,420,400.00 at the BSE (Wednesday).
Zandu founders pledge 50.8 pct stake
Zandu Pharmaceutical Works Ltd said on Wednesday its promoters have pledged 409,344 shares or 50.76 percent of its total equity base.
It did not say to whom they were pledged or for what purpose.
Personal care products maker Emami Ltd and its associates hold 70.34 percent stake in Zandu, post the open offer made last year.
Ahead of the news, shares in the company ended 2.35 percent lower at 4,881.50 rupees in the Mumbai market.
Alok Ind promoters pledge 4.15 cr shares
Integrated textile firm Alok Industries today said its 16 promoters have pledged 4.15 crore shares representing 20.16 per cent stake in the company.
In a disclosure to the National Stock Exchange, Alok Industries said Niraj Realtors & Shares, one of the promoters of the company, has pledged 1.29 crore shares representing 6.59 per cent stake.
Similarly, remaining shares have been pledged by 15 other promoters including Dilip B Jiwrajka (2.93 per cent), Grabal Alok Impex (2.74 per cent) and Ashok B Jiwrajka (2.55 per cent).
Shares of Alok Industries today remained unchanged from its previous close at Rs 17.15 on the NSE.
Jindal Steel & Power promoter pledges 1.65% stake
Jindal Steel & Power today said that one of its promoter Sun Investment has pledged 1.65 per cent stake of the company for an undisclosed amount.
In a filing to the Bombay Stock Exchange, the company said that its promoter has pledged over 25.50 lakh shares representing 1.65 per cent stake of the company.
Shares of Jindal Steel & Power settled at Rs 1052.45, down 2.19 per cent on the BSE.
Emami promoters pledge 27.89% stake
Consumer goods major Emami today said that its three promoters Diwakar Viniyog, Suntrack Commerce and Suraj Viniyog have pledged 27.89 per cent stake of the company, for an undisclosed amount.
In a filing to the Bombay Stock Exchange, the company said that three promoters have pledged over 1.73 crore shares representing 27.89 per cent stake.
Diwakar Viniyog has pledged over 1.05 crore shares representing 16.91 per cent stake of the company, the filing added.
Suntrack Commerce has pledged 30 lakh shares representing 4.83 per cent stake of the company and Suraj Viniyog has pledged 38.20 lakh shares representing 6.15 per cent stake of the company, the it added.
Shares of Emami settled at Rs 197.55, down 3.68 per cent on the BSE.
Sobha Developers promoter pledges 28.39% stake
Sobha Developers today said one of its promoter -- Shobha Menon -- has pledged 28.39 per cent stake of the company for an undisclosed amount.
In a filing to the Bombay Stock Exchange, the company said that the promoter has pledged over 2.07 crore shares, representing 28.39 per cent stake of the company.
As of December quarter, Sobha Menon holds 4.13 crore shares, representing 56.72 per cent stake.
BSE Bulk Deals to Watch - Feb 11 2009
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
11/2/2009 524804 AUROBINDO PH TOP CLASS EDUCATION FACILITIES AND SERVICES PVT LTD B 482996 140.00
11/2/2009 532696 EDUCOMP SOLN OPG SECURITIES P LTD B 92572 1866.86
11/2/2009 532696 EDUCOMP SOLN OPG SECURITIES P LTD S 92572 1870.84
11/2/2009 532951 GSS AMERICA EUREKA STOCK AND SHARE BROKING SERVICES LIMITED B 73668 142.26
11/2/2009 532951 GSS AMERICA OPG SECURITIES P LTD B 117337 143.77
11/2/2009 532951 GSS AMERICA EUREKA STOCK AND SHARE BROKING SERVICES LIMITED S 73668 142.29
11/2/2009 532951 GSS AMERICA OPG SECURITIES P LTD S 117337 143.82
11/2/2009 522259 KALIN RAIL N NOVEL SUPPLIERS PRIVATE LIMITED S 76000 155.61
11/2/2009 530255 KAY POW PAP BAMPSL SECURITIES LTD. B 67954 7.77
11/2/2009 530255 KAY POW PAP BAMPSL SECURITIES LTD. S 105719 7.36
11/2/2009 531602 KOFF BR PICT HITESH MALUKCHAND SHAH S 259000 3.35
11/2/2009 531366 KOHINOOR BRO S V ENTERPRISES B 830078 3.67
11/2/2009 531366 KOHINOOR BRO S V ENTERPRISES S 796088 3.70
11/2/2009 532907 MAYTAS INFRA SICOM LIMITED S 750000 53.96
11/2/2009 532944 ONMOBILE CAPITAL GROUP AC SMALL CAP WORLD FND INC B 370443 239.44
11/2/2009 531694 RAINBOW FOUN AMIT JAIN B 39100 4.40
11/2/2009 531694 RAINBOW FOUN ANITA JAIN S 39300 4.40
11/2/2009 531952 RIBA TEXTILE PATEL SHAILESH SOMABHAI B 35000 34.48
11/2/2009 531215 RTS POWER CO GANDHI MANISHA NAVNEETLAL B 74971 301.14
11/2/2009 531215 RTS POWER CO RAMESHBHAI V PARMAR B 71000 300.76
11/2/2009 531215 RTS POWER CO ASHOK NARAYAN WAJE B 52000 299.73
11/2/2009 531215 RTS POWER CO NITESH ASHOK JADHAV B 65000 299.50
11/2/2009 531215 RTS POWER CO MUKESH GIRIDHAR KONDE B 52000 299.50
11/2/2009 531215 RTS POWER CO MUKESH GIRDHAR KONDE B 90000 295.24
11/2/2009 531215 RTS POWER CO KANUDIA CAPITAL AND MANAGEMENT SERVICES PRIVATE LIMITED B 84000 301.57
11/2/2009 531215 RTS POWER CO GANDHI MANISHA NAVNEETLAL S 63580 301.48
11/2/2009 531215 RTS POWER CO RAMESHBHAI V PARMAR S 71000 297.39
11/2/2009 531215 RTS POWER CO HETAL RAJESH PATEL S 115067 299.50
11/2/2009 531215 RTS POWER CO SOPHIA GROWTH S 164474 298.90
11/2/2009 531215 RTS POWER CO KANUDIA CAPITAL AND MANAGEMENT SERVICES PRIVATE LIMITED S 84000 301.31
11/2/2009 522296 SS FORG ENG. DIRSHTI FINVEST PRIVATE LIMITED S 200000 9.85
11/2/2009 532966 TITAGARH WAG OPG SECURITIES P LTD B 151858 256.77
11/2/2009 532966 TITAGARH WAG OPG SECURITIES P LTD S 151858 257.12
11/2/2009 514470 WINSOME TEXT NITABEN SHAILESHBHAI PATEL S 33819 33.69
NSE Bulk Deals to WAtch - Feb 11 2009
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
11-FEB-2009,AUROPHARMA,Aurobindo Pharma Ltd.,TOP CLASS EDUCATION FACILITIES & SERVICES PVT LTD,BUY,485515,140.00,-
11-FEB-2009,EDUCOMP,Educomp Solutions Limited,C D INTEGRATED SERVICES LTD,BUY,204148,1852.28,-
11-FEB-2009,GISOLUTION,GI Engineering Solutions,BP FINTRADE PRIVATE LIMITED,BUY,80076,8.57,-
11-FEB-2009,GSSAMERICA,GSS America Infotech Limi,BP FINTRADE PRIVATE LIMITED,BUY,103633,140.58,-
11-FEB-2009,ONMOBILE,OnMobile Global Limited,CAPITAL GROUP - A/C SMALL CAP WORLD FND INC,BUY,396189,239.46,-
11-FEB-2009,SKUMARSYNF,S. Kumars Nationwide Ltd,SAMIR CHANDRA ARORA,BUY,1100000,19.55,-
11-FEB-2009,TWL,Titagarh Wagons Limited,BP FINTRADE PRIVATE LIMITED,BUY,111538,258.28,-
11-FEB-2009,EDUCOMP,Educomp Solutions Limited,C D INTEGRATED SERVICES LTD,SELL,204148,1853.70,-
11-FEB-2009,EDUCOMP,Educomp Solutions Limited,MIREA ASIA PACIFIC,SELL,131763,1870.22,-
11-FEB-2009,GISOLUTION,GI Engineering Solutions,ASHISH NANDA,SELL,39510,9.15,-
11-FEB-2009,GISOLUTION,GI Engineering Solutions,BP FINTRADE PRIVATE LIMITED,SELL,67233,8.27,-
11-FEB-2009,GISOLUTION,GI Engineering Solutions,TAIB BANK A/C TSML,SELL,50000,7.95,-
11-FEB-2009,GSSAMERICA,GSS America Infotech Limi,BP FINTRADE PRIVATE LIMITED,SELL,111321,140.12,-
11-FEB-2009,TWL,Titagarh Wagons Limited,BP FINTRADE PRIVATE LIMITED,SELL,112068,258.88,-
11-FEB-2009,TWL,Titagarh Wagons Limited,Copthall Mauritius Investment Ltd,SELL,100392,250.78,-
Post Session Commentary - Feb 11 2009
The Indian market snapped its three days gains and ended the day marginally lower after exhibiting weakness with volatility for throughout of trading session. Asian markets also tumbled today following steep drop in Wall Street overnight. US stocks plunged marking the biggest drop since December over disappointment about government''s latest bank bailout plan. The Senate passed its $838bn economic stimulus bill but investor’s sentiments turned pessimistic as the Treasury failed to provide clarity on how it will handle the toxic assets that are driving losses and write-downs on bank balance sheets.
The domestic market today opened on weak note tracking weak cues from global markets. The US stock market on Tuesday plunged on fears that new bank rescue plan announced by the government may not be sufficient to recover the economy from deepening recession. Further benchmark indices continued to trade with negative bias on sustained selling pressure over the ground. Weak European markets also contributed to the southward journey. Finally, market tried to recover during the final trading hours and touch the dotted line on some bouts of buying but still ended slightly lower. BSE Sensex ended around 9,600 mark and NSE Nifty closed below 2,950 level. On the sectoral front, Auto, Consumer Durables, Power FMCG, Teck and Reality stocks remained on limelight as witnessed most of the buying from these baskets. Midcap and Smallcap stocks were also on buyer’s radar. However, most of the selling was seen in Pharma, Metal, Oil & Gas and IT stocks.
Among the Sensex pack 20 stocks ended in red territory and 10 in green. The market breadth indicating the overall health of the market remained strong as 1263 stocks closed in green while 1138 stocks closed in red and 106 stocks remained unchanged in BSE.
The BSE Sensex closed lower by 28.93 points at 9,618.54 and NSE Nifty ended down by 8.8 points at 2,925.7. Broader market indices were in green as BSE Mid Caps and Small Caps ended with gains of 10.89 points and 8.45 points at 2,965.14 and 3,350.97 respectively. The BSE Sensex touched intraday high of 9,648.39 and intraday low of 9,459.59.
Losers from the BSE Sensex are Ranbaxy Lab (5%), Grasim Indus (4.07%), Rel Infra (3.73%), Tata steel (3.38%), Tata Motors (2.09%), Sun Pharma (1.94%), TCS Ltd (1.90%) and Wipro Ltd (1.60%).
Gainers from the BSE Sensex pack are Maruti Suzuki (4%), ACC Ltd (2.64%), JP Associates (2.47%), Tata Power (1.81%), Bharti Airtel (1.72%) and ICIC Bank (1.71%).
On the global markets front, the Asian markets ended mostly lower following US market losses on concerns that the U.S. government''s latest plan to rescue the ailing U.S. banking sector lacked specifics to thaw credit markets and ease the deepening recession. Also, Chinese exports and imports slumped in January 2009 for the third month in a row. Shanghai Composite index, Hang Seng and Seoul Composite index ended down by 4.34, 341.43 and 8.69 points at 2,260.82, 13,539.21 and 1,190.18 respectively. However Straight Times gained 18.68 points at 1,721.97. Japanese markets were closed today for a public holiday.
European markets which opened after the Indian market are trading in red. In London FTSE 100 is trading lower by 16.66 points at 4,196.42 and in Frankfurt the DAX index is trading down by 6.15 points at 4,499.39.
The BSE Pharma index ended down by (1.20%) or 33.16 points to close at 2,723.15 on some profit booking. Ranbaxy Lab (5.00%), Dr Reddy’s Lab (3.75%), Piramal Health (3.66%), Aurobindo Pharma (2.76%), IPCA Lab (2.02%) and Sun Pharma (1.94%) ended in negative territory.
The BSE Metal stocks as ended lower by (1.19%) or 62.75 points at 5,188.71 due to fluctuation in commodity prices at international level. Scrips that lost are Tata Steel (3.38%), Sesa Goa Ltd (2.37%), Jindal Steel (2.19%), JSW Steel (1.83%) and Sterlite Industries (1.46%)
The BSE Oil & Gas index also ended down by (0.82%) or 53.98 points at 6,530.81 as US light crude oil for March delivery fell by $2.01 to settle at $37.55 a barrel on the New York Mercantile Exchange. Losers are Cairn Ind (2.88%), ONGC Ltd (1.41%), Reliance (1.25%), Essar Oil Ltd (0.61%) and Aban Offshore (0.57%).
The BSE IT index closed with losses of (0.65%) or 15.53 points at 2,225.73 on weak sentiments. Scrips that lost are Patni Computer (2.72%), HCL Tech (2.16%), TCS Ltd (1.90%), Wipro Ltd (1.60%) and Tech Mahindra (1.27%).
The BSE Auto index advanced by (0.80%) or 20.14 points to close at 2,531.28 as India''s auto exports zoom at 63% in passenger car sales during April to January period of current financial year. Amtek Auto (9.57%), Maruti Suzuki (4%), Hero Honda Motors (1.45%), Exide Indus (1.55%) and Escorts Ltd (1.06%) ended in green.
The BSE Consumer Durable index ended higher by (0.25%) or 4.13 points at 1,679.20. Main gainers are Gitanjali GE (2.27%), Videocon Ind (1.83%) and Blue Star L (1.71%).
Ranbaxy Laboratories fell 5% despite reports that it has bagged its first big drug approval from US Food and Drug Administration for its generic Imitrex.
DLF Ltd plunged 1.08% as it is reportedly expected to secure Rs. 2,000 crore of long term debt in two weeks from public sector banks and other financial institutions. The company has already secured Rs. 1,000 crore of long-term debt over the last few months.
Reliance Power slipped by 0.44% after reports stated that the company may face delays in building its largest coal-fired plants as the credit crunch has seen its loan approvals held up.
Jaiprakash Associates gained 2.47% to Rs. 76.00 on profit booking after the stock rose over 9% in the past three trading sessions.
Bharti Airtel ended up by 1.72%. The company has announced lifetime prepaid recharge option for Rs. 49. Existing Airtel customers can avail themselves of this facility at Rs. 48 only.
Market snaps three-day gains in volatile trade
Media reports of the finance ministry is drafting a proposal to remove the securities transaction tax
(STT) and news that the Centre has eased some foreign direct investment (FDI) norms triggered a solid rebound on the bourses in late trade. Despite the sharp intraday recovery, the key benchmark indices ended slightly lower, ending three-day winning streak.The BSE 30-share Sensex fell 28.93 points or 0.30%, recovering 158.95 points from the day's low.
The market bounced back after a near 2% slide in early trade caused by investors concern that a revamped plan by the United States to shore up banks may not be enough to alleviate the credit crisis. The market breadth turned positive in late trade, reversing early weakness. US index futures which indicated the Dow could rise 44 points at the opening bell on Wednesday, also aided the rebound on the domestic bourses.
Volatility was high. After an initial slide caused by overnight sharp slide in US stocks, the market recovered in mid-morning trade on recovery in Chinese shares. But the market weakened again in early afternoon trade as intraday rebound in Chinese shares proved short-live. The market staged a solid rebound in late trade.
As per media reports, the finance ministry has drafted a proposal to remove the securities transaction tax (STT) in a move aimed at boosting the stock market sentiment. At present a 0.125% tax is levied on all transactions of securities traded on stock exchanges and for derivatives STT stands at 0.017%.
Easier FDI norms also aided the rebound in Indian stocks. Foreign investment through an investing Indian company will not be taken into account in determining the sector FDI cap, the government on Wednesday said. The Cabinet Committee on Economic Affairs (CCEA) approved the changes in the guidelines for calculating total foreign investment, direct and indirect, in Indian companies. Home Minister P Chidambaram said the objective is to make it simple and transparent, according to the Department of Industrial Policy and Promotion (DIPP).
European markets were slightly lower as investors feared a $2 trillion US bank rescue plan would not be enough to prop up the troubled financial system. Key benchmark indices in UK, Germany and France were down by between 0.06% and 0.45%.
Chinese stocks fell 0.19% after data on Wednesday after data showed Chinese exports and imports slumped in January 2009 for the third month in a row, underlining how badly the world's third-largest economy has been hit by the global financial crisis. Earlier, Chinese stocks had reversed intraday losses. Key indices in Hong Kong and South Korea fell 2.46% and 0.72% respectively. Japanese markets were closed today for a public holiday. Indices in Taiwan and Singapore rose 1.10% each.
US markets plunged on Tuesday, 10 February 2009, as investors soured on the financial rescue plan and seemed to ignore the Senate's approval of its $838 billion economic stimulus package. The Dow Jones industrial average slumped 381.99, or 4.62%, to 7,888.88. Broader stock indicators also tumbled, with the Standard & Poor's 500 index down 42.73, or 4.91%, to 827.16 and Nasdaq Composite index down 66.83 points or 4.2% to 1,524.73.
The US government on Tuesday, 10 February 2009 announced details of the new bank rescue plan. The 'financial stability plan,' as it's now called, consists of four main components. It will set up a public-private fund to mop up to $500 billion of spoiled bank assets. It will also set up a consumer-lending facility to support up to $ 1 trillion in new lending. The plan will devote up to $50 billion to help stem home foreclosures and provide new funding to banks after a "stress test" to determine if the bank is healthy
Meanwhile, the US administration's $800-billion-plus stimulus bill -- a mix of tax cuts and public spending measures -- was approved by the Senate on Tuesday, but that version must be reconciled with one passed by the House of Representatives, which may require several days of negotiations.
The BSE 30-share Sensex fell 28.93 points or 0.3%, to 9,618.54. The Sensex opened 185.33 points lower at 9,462.14. At the day's low of 9,459.59, the Sensex lost 187.88 points in early trade. At the day's high of 9,648.39 hit in late trade, the Sensex rose 0.92 points.
The S&P CNX Nifty slipped 8.8 points, or 0.3%, to 2,925.70. Nifty February 2009 futures were at 2933.05, at a premium of 7.35 points as compared to the spot closing.
The domestic bourses have spurted in the past few days on expectations the forthcoming interim budget will contain fiscal incentives to revive sagging growth. Buying by foreign funds aided the surge. The BSE Sensex jumped 556.69 points or 6.12% in the three trading sessions to 9,647.47 on 10 February 2009 from its close of 9090.88 on 5 February 2009. The barometer index is down 28.77 points or 0.29% in the calendar 2009 from its close of 9647.31 on 31 December 2008.
Foreign institutional investors (FIIs) bought shares worth a net Rs 416.20 crore on Tuesday, 10 February 2009, data released by the stock market regulator Securities & Exchange Board of India (Sebi) after trading hours today showed. Foreign funds had bought shares worth a net Rs 289.10 crore on Monday, 9 February 2009. There has been a substantial outflow of foreign funds in 2009. FII outflow in calendar year 2009 totaled Rs 3631.10 crore (till 10 February 2009).
The Congress party-led coalition government will unveil an interim railway budget on Friday, 13 February 2009 followed by a mini general budget on 16 February 2009, ahead of national elections due by May 2009.A full budget for 2009-2010 will come only after a new government takes over. Foreign Minister Pranab Mukherjee, who is also responsible for finance and will present the mini budget, said on 6 February 2009 the government would take measures to boost growth, especially in sectors where jobs are at stake.
The market is agog with talks that the forthcoming interim budget may offer tax sops and sector-specific stimulus package. The government has so far announced two stimulus packages including tax cuts and the capital injections for banks.
The market breadth, indicating the overall health of the market, turned positive in late trade after a weak start. On BSE, 1293 shares advanced as compared with 1128 that declined. A total of 98 shares remained unchanged.
The BSE Mid-cap index rose 0.37% to 2,965.14 and BSE Small-cap index gained 0.25% to 3,350.97. Both these indices outperformed the Sensex
The total turnover on BSE amounted to Rs 3267 crore, lower than Rs 3,726.87 crore on Tuesday, 10 February 2009. Turnover in NSE's futures & options (F&O) segment fell to Rs 32,988.37 crore, from Rs 39,017.91 crore on Tuesday, 10 February 2009.
Sectoral indices on BSE displayed mixed trend. The BSE HealthCare index (down 1.20%), BSE IT index (down 0.65%), BSE Metal index (down 1.19%), BSE Oil & Gas index (down 0.82%), underperformed the Sensex.
The BSE Bankex (up 0.02%), BSE Realty index (up 0.03%), BSE Capital Goods index (down 0.18%), the BSE Auto index (up 0.80%), BSE Teck index (up 0.04%), BSE Consumer Durables index (up 0.25%), the BSE FMCG index (up 0.17%), the BSE PSU index (down 0.08%), the BSE Power index (up 0.20%), outperformed the Sensex.
Among the 30-member Sensex pack, 16 slipped while the rest gained.
Reliance Infrastructure (down 3.56%), Grasim (down 3.70%), and Sun Pharma (down 2.04%), edged lower from the Sensex pack. Jaiprakash Associates (up 2.54%), ACC (up 4.08%), and HDFC (up 2.85%), edged higher from the Sensex pack.
India's top small car maker by sales Maruti Suzuki India gained 4% to Rs 632.50, rebounding sharply from day's low of Rs 585, on reports the government is considering an excise duty cut for automobiles in addition to enhancing depreciation benefit on commercial vehicle purchases in the interim budget.
However, India's largest truck maker by sales Tata Motors shed 2.35% to Rs 135.60 mirroring a 4.94% slide in American depository receipt (ADR) on Tuesday, 10 February 2009. India's top tractor maker by sales Mahindra & Mahindra slipped 0.85% to Rs 281.10 on profit booking after a 3.35% rally on Tuesday, 10 February 2009.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 0.89% to Rs 1389 on profit booking following a 21.76% surge in a month to Rs 1401.50 on 10 February 2009 from Rs 1151.05 on 9 January 2009. Nevertheless, the stock recovered from the day's low of Rs 1362.20.
India's largest state-run oil exploration firm by market capitalisation ONGC fell 0.86% to Rs 711 after US light, sweet crude for March 2009 delivery fell $2.01 or 5% to $37.55 a barrel on Tuesday, 10 February 2009 on the New York Mercantile Exchange (NYMEX) on a downward revision by the US government on its oil demand forecasts and doubts over the effectiveness of the US government's bank rescue plan. A sharp fall in crude oil prices would result in lower realizations from crude sales for the oil exploration firm.
State run oil-marketing companies gained on lower crude prices. HPCL (up 0.35%), BPCL (up 2.42%), and IOC (up 1.12%), rose. Lower crude oil prices will reduce under-recoveries of state run firms on sale of fuel at controlled prices. They are currently making profit on sale of petrol and diesel, but continue to make losses on sale of kerosene and liquefied petroleum gas.
Banking shares were mixed caught between fears of rising defaults in a weakening economy and recovery in bond prices. India's second largest private sector bank by net profit HDFC Bank lost 1.20% to Rs 935.50. However India's largest private sector bank by net profit ICICI Bank rose 1.85% to Rs 436. India's largest bank in terms of assets and branch network State Bank of India was unchanged at Rs 1164.
Higher bond prices could boost treasury income of banks. Government bond prices rose on Wednesday, ending a two-day slide, on speculation the central bank will cap yields by purchasing securities from investors amid record debt sales by the government.
Central Bank of India (up 2.5%), UCO Bank (up 4.12%), and Vijaya Bank (up 3.14%), rose after India's Cabinet today, 11 February 2009, approved a government proposal to infuse Rs 3800 crore into these three state-run banks in two tranches spread over financial years 2009 and 2010.
IT pivotals declined as investors feared the new bank rescue plan announced by the US government may not be enough to revive the economy from a deepening recession. TCS, India's largest software services exporter by sales slipped 1.70%. India's third largest software services exporter, Wipro declined 1.57% after its ADR lost 5.58% on Tuesday, 10 February 2009. India's second largest software services exporter Infosys Technologies shed 0.33% as its ADR declined 7.60% on Tuesday, 10 February 2009.
India's fifth largest IT exporter by sales HCL Technologies fell 1.95%. IT firms derive a lion's share of revenue from export to the US.
Telecom shares were in demand after latest data showed GSM operators have added a record 9.3 million subscribers in January 2009. India's largest cellular services provider by sales Bharti Airtel gained 2.15% to Rs 677.05 on adding 2.73 million more customers in January 2009. Idea Cellular jumped 7.21% on adding 2 million new users. India's second largest cellular services provider by sales Reliance Communications advanced 0.82% to Rs 173.05.
However, as per a report by the global rating agency Fitch, the wireless average revenue per user (ARPUs) are expected to fall severely in calendar 2009 due to increased competition. Also, incremental subscribers are now mainly coming from the smaller cities, who are mostly prepaid customers with lower minutes of usage.
India's largest private sector power generation form by market capitalisation Tata Power rose 2.13% to Rs 810.45. As per reports the company has signed a memorandum of understanding with Hirco, listed in London's Alternative Investment Markets to provide power supply and distribution solutions to residents and tenants of Hirco's Panvel special economic zone.
Metal shares slipped on persistent worries about global demand with key global economies in recession. Sesa Goa (down 2.41%), Jindal Steel & power (down 2.77%), and Sterlite Industries (down 0.40%), slipped.
India's largest private sector steel maker by sales Tata Steel dropped 3.02% to Rs 191 after the world's largest steelmaker, ArcelorMittal reported a 42% drop in fourth-quarter core profit on Wednesday after a sharp slump in demand, forecast a very weak first quarter and cut its dividend.
India's largest real estate firm by market capitalisation DLF lost 1.77% to Rs 149.80, after surging 14.75% to Rs 152.50 on 10 February 2009 from Rs 132.90 on 3 February 2009.
Educomp Solutions topped the turnover chart on BSE with a turnover of Rs 227.50 crore followed by Reliance Industries (Rs 190.50 crore), Reliance Capital (Rs 180.65 crore), Reliance Infrastructure (Rs 167.25 crore) and United Spirits (Rs 145 crore).
Satyam Computer Services led the volume chart on BSE with volumes of 2.98 crore shares followed by Unitech (2.15 crore shares), IFCI (2.10 crore shares), GVK Power (1.37 crore shares) and Cals Refineries (83 lakh shares).
Fertiliser shares rose after India's cabinet approved a plan to help fertiliser plants use natural gas instead of fuel oil and naphtha. Chambal Fertilisers & Chemicals (up 3.19%), Nagarjuna Fertilizers & Chemicals (up 6.34%), Zuari Industries (up 4.46%), National Fertilizer (up 14.29%), and Rashtriya Chemicals & Fertilizers (up 8.82%), spurted.
Fertilizer companies consume 70% of the gas available in the country. However, inadequate supply of gas forces them to operate at 50-60% of their capacity.
Zee Entertainment tumbled 11.65% to Rs 114.50 while Axis Bank gained 2.74% to Rs 432.60 after the National Stock Exchange said the later will replace the former in the S&P CNX Nifty index from 27 March 2009.
Shoppers Stop galloped 20% to Rs 104.40 after the company said promoters had revoked a substantial portion of the shares they had pledged. The company made this announcement during trading hours today, 11 February 2009.
Meanwhile, the Bombay Stock Exchange (BSE), has announced the shifting of 20 scrips from B group to A group, effective from 16 February 2009, an exchange release late Tuesday, 10 February 2009 said.
The scrips which are shifted from group B to group A include Andhra Bank, Apollo Hospitals Enterprises, Cadila Healthcare, Castrol (India), Central Bank of India, Corporation Bank, Everest Kanto Cylinder, Fortis Healthcare, Glaxosmithkline Consumer, GTL, Hindustan Copper, Koutons Retail India, Madras Cements, Mahindra & Mahindra Financial Services, Moser Baer India, Procter & Gamble Hygiene, PTC India, Religare Enterprises, Syndicate Bank and Tulip Telecom.
The BSE also announced shifting of 20 scrips from group A to group B, which includes Adlabs Films, Bajaj Finserve, Bajaj Hindustan, BGR Energy Systems, Blue Star, Bombay Dyeing, Deccan Chronicle Holdings, Edelweiss Capital, Essar Shipping Ports & Logistics, Future Capital Holdings, Gammon India, Indiabulls Securities, New Delhi Television, Omaxe Ltd, Onmobile Global Ltd, Parsvnath Developers, Patni Computer Systems, Phoenix Mills, Triveni Enginnering & Industries and United Breweries (Holdings).
Market may slide
Key benchmark indices are geared for a weak start mirroring weak global cues. US markets tumbled overnight on fears the new bank rescue plan announced by the government may not be enough to revive the economy from deepening recession. The SGX Nifty futures for February 2009 series lost 56 points in Singapore.
The index of industrial production (IIP) data for December 2008 will be released today, 11 February 2009. The IIP for the November 2008 stood at 2.4%, compared to contraction of 0.4% in October 2008.
Asian markets declined today, 11 February 2009 following a steep sell-off on Wall Street overnight, as investors reacted with skepticism to the US government's latest plan to heal the country's ailing banking industry. Hong Kong's Hang Seng fell 3.35% or 465 points at 13,415, South Korea's Seoul Composite slipped 1.83% or 22 points at 1177, China's Shanghai Composite went down 1.32% or 30 points at 2235, Singapore's Straits Times fell 1% or 17 points at 1686, Japan's Nikkei lost 0.29% or 23 points at 7946 and Taiwan's Taiwan Weighted fell 0.85% or 38 points at 4487.
US markets plunged on Tuesday, 10 February 2009, as investors soured on the financial rescue and seemed to ignore the Senate's approval of its $838 billion economic stimulus package. The Dow industrials slumped 381.99, or 4.62%, to 7,888.88. Broader stock indicators also tumbled, with the Standard & Poor's 500 index down 42.73, or 4.91%, to 827.16.
The US government on Tuesday, 10 February 2009 announced details of the new bank rescue plan. The 'financial stability plan,' as it's now called, consists of four main components. It will set up a public-private fund to mop up to $ 500 billion of spoiled bank assets. It will also set up a consumer-lending facility to support up to $ 1 trillion in new lending. The plan will devote up to $ 50 billion to help stem home foreclosures and provide new funding to banks after a "stress test" to determine if the bank is healthy.
Back home, key benchmark indices advanced for the third straight day on Tuesday, 10 February 2009, on hopes an interim budget will contain fiscal incentives to revive sagging growth. The BSE 30-share Sensex rose 63.58 points or 0.66% to 9,647.47 and the S&P CNX Nifty gained 14.60 points or 0.5% to 2934.50.
The BSE Sensex jumped 556.69 points or 6.12% in the last three trading sessions from its close of 9090.88 on 5 February 2009.
According to provisional data on NSE, FIIs were net buyers worth Rs 368.96 crore while mutual funds sold shares worth Rs 116.99 crore on Tuesday, 10 February 2009.
The Congress party-led coalition government will unveil an interim railway budget on Friday, 13 February 2009 followed by a mini general budget on 16 February 2009, ahead of national elections due by May 2009.
A full budget for 2009-2010 will come only after a new government takes over. Foreign Minister Pranab Mukherjee, who is also responsible for finance and will present the mini budget, said on Friday, the government would take measures to boost growth, especially in sectors where jobs are at stake.
The market is agog with talks that the forthcoming interim budget may offer tax sops and sector-specific stimulus package. The government has so far announced two stimulus packages including tax cuts and the capital injections for banks.
Financial Technologies
We recommend a buy in the stock of Financial Technologies India from a short-term perspective. It is evident from the charts of the stock that it was on an intermediate-term down trend between early November and late January, from Rs 744 to Rs 404. However, the stock found support around Rs 435 and reversed direction. This reversal has been supported by positive divergence displayed in the moving average convergence and divergence. On February 9, the stock conclusively broke through its intermediate-term down-trendline by jumping 15 per cent. We observe above-average volume over the past two trading days. The daily relative strength index (RSI) is rising towards the bullish zone in the neutral region and weekly RSI is displaying prolonged positive divergence. Moreover, the price rate of change indicator has entered the positive territory that indicates increase in buying pressure. Our short-term outlook is bullish for the stock. We anticipate it to move up until it hits our price target of Rs 570. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 490.
Pre Session Commentary - Feb 11 2009
Today domestic markets are likely to open with a negative gap as US markets closed with huge losses and the other Asian markets have also opened with heavy blood bath. The stimulus package of $ 838 billion by the US treasury could not lift the sentiments of investors as there was no clarity on the bill. The other Asian markets have also reacted pessimistically towards the downfall witnessed on the US markets and therefore one can anticipate the domestic markets to shed its gains buildup on previous sessions. The selling pressure could be immense during the early trading hours of today’s session.
On Tuesday, the markets opened shy and traded volatile. The sentiments were weak and cautious since the opening bell, however for most of the time it managed to trade in the northwards. After the brutal opening of the European markets, the sentiments across the domestic markets started shattering. At the later session some buying of frontline stocks helped the markets to close in green with marginal gain. Sectors like Realty, CG, Bankex, HC and Auto gained 6.58%, 3.14%, 1.16%, 1.14% and 1% respectively. Mid caps and Small caps also gained 0.76% and 0.29% respectively. During the session we expect the markets to be trading negative.
The BSE Sensex closed up by 63.58 points at 9,647.47 and NSE Nifty ended with gains of 14.60 points at 2,934.50. The BSE Mid Caps and Small Caps ended with gains of 22.30 points and 9.81 points at 2,954.25 and 3,342.52 respectively. The BSE Sensex touched intraday high of 9,724.87 and intraday low of 9,510.50.
The US markets on Tuesday closed with heavy losses. The sentiments were very bearish on the US markets as the Treasury bill failed to provide the details that could have uplifted the investors’ sentiments. The bill worth $ 838 billion could not pump the confidence among the investors as they had expected. However the Treasury along with Fed, FDIC, and private sector will establish a public-private investment fund to provide capital and financing to help leverage private capital to get private markets working. There is a range of different structures for this program, but Treasury believes it should ultimately provide up to $1 trillion in financing capacity. US light crude oil for March delivery fell by $2.01 to settle at $37.55 a barrel on the New York Mercantile Exchange.
The Dow Jones Industrial Average (DJIA) closed low by 381.99 points at 7,888.88. NASDAQ index lost 66.83 points at 1,524.73 and the S&P 500 (SPX) plummeted 42.43 points at 827.16.
Indian ADRs ended in red. In technology sector, Infosys ended lower by 7.60% along with Wipro by 5.58%. Further, Patni Computers ended with increase of 3.09% while Satyam closed down by 12.50%. In banking sector ICICI Bank and HDFC Bank lost 5.95% and 7.48% respectively. In telecommunication sector, MTNL advanced by 4.24% while Tata Communication lost 3.53%. Sterlite Industries decreased by 3.19%.
Today major stock markets in Asia have opened negative. Shanghai composite is down by 12.75 points to 2,252.41, Japan''s Nikkei is also low by 23.09 points at 7,945.94. Hang Seng fell 436.76 points at 13,443.88. South Korea''s Seoul Composite is low by 21.57 points at 1,177.30 and Singapore''s Strait Times is low by 5.69 points to 1,697.60.
The FIIs on Tuesday stood as net buyers in equity and net sellers in debt. Gross equity purchased stood at Rs 1,293.70 Crore and gross debt purchased stood at Rs 840.40 Crore, while the gross equity sold stood at Rs 1,004.60 Crore and gross debt sold stood at Rs 845.70 Crore. Therefore, the net investment of equity and debt reported were Rs 289.10 Crore and Rs (5.20) Crore respectively.
On Tuesday, the Indian rupee closed at 48.72/73, 0.3% weaker than its previous close of 48.57/58. The volatile domestic stock markets and overseas rally in dollar pulled the rupee.
On BSE, total number of shares traded were 35.40 Crore and total turnover stood at Rs 3,726.87 Crore. On NSE, total number of shares traded were 72.63 Crore and total turnover was Rs 97.24 Crore.
Top traded volumes on NSE Nifty – Unitech with 115522052 shares, DLF with 24050943 shares, Suzlon Energy with 18658502 shares, SAIL with total volume traded 12496162 shares followed by Reliance Comm with 11654716 shares.
On NSE Future and Options, total number of contracts traded in index futures was 851535 with a total turnover of Rs 11,529.36 Crore. Along with this total number of contracts traded in stock futures were 1080229 with a total turnover of Rs 9,797.48 Crore. Total numbers of contracts for index options were 1152004 with a total turnover of Rs. 16,822.93 Crore and total numbers of contracts for stock options were 88480 and notional turnover was Rs 868.14 Crore.
Today, Nifty would have a support at 2,859 and resistance at 2,903 and BSE Sensex has support at 9,383 and resistance at 9,556.
Wall Street gives thumbs down to Treasure Secretary's plans
Investors continue to ponder about how Treasury will deal with the toxic assets
Stocks
at Wall Street ended drastically lower on Tuesday, 10 February, 2009. Investors at Wall Street dumped stocks today as they were dissatisfied with the way Treasure Secretary Timothy Geithner laid down his plans for bailing out the US banks and the broader economy. Investors understood that Washington has still not found out a way about how to deal with the toxic assets.
After opening 42 points lower earlier in the day, The Dow Jones Industrial Average started plunging as Treasure Secretary and Fed Chairman continued with their testimony and the plunge just deepened with the day. Finally the Dow ended lower by 382 points at 7,888, the Nasdaq closed lower by 67 points at 1,524 and the S&P 500 closed lower by 42 points at 827.69.89.
All thirty Dow stocks ended in the red today led by IBM, GM, Exxon Mobil. All the tens sectors ended in the red today. Today's drop of indices was the largest ever in the past two and half months.
In recent developments in Washington today, Treasury Secretary, Timothy Geithner said in a speech that the government may spend as much as $1 trillion to rescue banks. He also said that the Treasury and other federal agencies will partner with private capital to create a fund for troubled bank assets that could produce up to $1 trillion in financing capacity.
U.S. Senate approved an $800 billion-plus stimulus bill today, which now must be reconciled with a House version before being sent to the President for his signature.
But investors continued to ponder about how Treasury will deal with the toxic assets that are diluting bank capital. The Treasury indicated it is still exploring different structures for this program. The recognition that the plan has yet to be finalized came as a disappointment to investors.
The Federal Reserve Board announced today that it could expand the Term Asset-Backed Securities Loan Facility (TALF) to encompass other types of newly issued AAA-rated asset-backed securities, such as commercial mortgage-backed securities, and private-label residential mortgage-backed securities. The date that the TALF will begin operations will be announced later this month.
In a separate event, Fed chairman Ben Bernanke's testimony to the Financial Services Committee failed to provide any major comfort. He stated extraordinary programs have improved market conditions and eased strains. He also indicated the U.S. remains well capitalized and the Fed will be able to offset any losses through eventual gains on asset sales.
Among major job loss reports for the day, GM and UBS announced they are reducing their workforce. Other than that, Boeing revised its recent quarterly earnings downward and Monsanto reaffirmed its previous guidance.
Oil prices gave up earlier gains and ended lower on Tuesday, 10 February, 2009 as traders anticipated that the stimulus plan that has been planned by Obama administration will not be enough to fuel energy demand in the coming months. The strong dollar also impacted crude prices today. Crude-oil futures for light sweet crude for March delivery closed at $37.55/barrel (lower by $2.01 or 5.1%) on the New York Mercantile Exchange. Earlier during the day, it went up by 5.7%. It dropped below the $40 level for the first time in three weeks yesterday.
Other than a few earning reports, the economic calendar is light tomorrow. The December trade balance is due tomorrow morning followed by the weekly crude oil inventory data. The January monthly budget statement is due in the afternoon
Trading Calls - Feb 11 2009
Nifty (2935) Sup 2840 Res 2960
Sell ACC (543-537) SL 549
Target 530, 525
Sell Reliance Capital (410) SL 415 Target 400, 397
Sell HDFC Bank (947) SL 956 Target 929, 925
Sell Tata Steel (197) SL 200 Target 191, 189
Daily News Roundup - Feb 11 2009
Reliance Industries to sell KG-D6 gas by March end or early April. (ET)
Wipro, TCS and WNS are vying for US$500mn BPO contract from Walmart. (ET)
Cisco is re-evaluating its JV with Satyam. (ET)
Cisco-TCS JV to develop solutions for virtualization of data centres. (ET)
IL&FS is poised to acquire management control of Maytas Infra. (BS)
DLF to invest Rs10bn in Orissa IT Park. (BS)
Ranbaxy gets nod to sell anti migrane drug in US. (ET)
Tata Power signs MoU with Hirco Developments to provide power supply and distribution management solution within Hirco’s Panvel SEZ area. (FE)
PTC India plans to foray into PE business with an initial investment of more than Rs5bn. (BS)
GE Capital, Carlyle, New Silk Route and Tata Capital are in race for a significant stake in PNB’s Housing Finance Company. (ET)
Infotech Enterprises signs MoU with Eurocopter, a Germany based company for the attack helicopter program of the Indian defence ministry. (BS)
Axis Bank will replace Zee in Nifty with effect from March 27.
Sasken has implemented pay-cuts and will work for only three days a week in the current quarter. (BS)
Wockhardt promoters pledge 40% stake in the company to raise around Rs3.5bn. (ET)
Kingfisher, Air India, SpiceJet and IndiGo have more than doubled their low-end fares with immediate effect. (BS)
Praj Industries to set up commercial demo ethanol plants. (FE)
MRF decides to cut output following a reduced offtake from OEMs and after sales market. (FE)
Finance Ministry is considering various proposals including lowering excise duties for auto components, automobiles and cement. (ET)
Petroleum ministry seeks oil bonds for Rs130bn. (ET)
DoT to review 2G spectrum allocation policy. (BL)
Aluminum Industry seeks 15% increase in import duty. (ET)
Government may soon remove licensing restrictions on imports of hot-rolled steel coils. (BS)
Government set to borrow additional Rs460bn. (ET)
GSM companies add above 9mn users in January 2009. (ET)
Steel minister seeks a ban on export of high-grade iron ore. (ET)
Maharashtra government and co-operative sugar factories have joined hands to double sugarcane production. (ET)
Shipping sector seeks Rs100bn corpus for acquisition of ships. (FE)
Bulls will give in…
When defeat is inevitable, it is wisest to yield.
Well, the much-awaited Washington events are finally out of the way. The new bank bailout plan and the passing of the stimulus bill in the Senate were not received too well by Wall Street. US indices slumped over 4% each with the S&P 500 bearing the brunt of the sell-off. European shares ended 2-3% down. Asian markets, barring the Hang Seng, are relatively better off this morning.
We expect a steep fall in opening trades as bulls yield to the global trend. A pull-back to positive zone seems less likely.
Any hope could come on expectations that the Government may announce further stimulus measures in Monday’s interim budget. Top government officials are hinting at sector-centric sops in the vote-on-account. And if media reports are anything to go by, Real Estate, Auto and IT sectors are likely to be major beneficiaries.
Meanwhile, the IIP data for December is likely to be better than the past couple of months. Inflation may also soften a bit further. We see the key indices losing recent momentum and turn sideways again, even if the Government announces more stimulus measures.
FIIs were net buyers of Rs3.69bn (provisional) in the cash segment on Tuesday, while the local institutions pulled out Rs1.17bn. In the F&O segment, the foreign funds were net buyers at Rs1.18bn. On Monday, FIIs were net buyers at Rs2.89bn in the cash segment while Mutual Funds pumped in Rs629mn on the same day.
US stocks plunged on Tuesday, with the S&P 500 index suffering its biggest fall since Barack Obama's inauguration as the new President. Bond prices rallied on skepticism about the revamped bank bailout plan. The dollar and gold rose.
The Dow Jones Industrial Average ended at a 3-month low, as the government's bank rescue plan failed to reassure investors hit by the 14-month old recession. The Dow average lost 382 points, or 4.6%, to end at 7,888.88, closing at its lowest point since Nov. 20. The Dow had lost as much as 422 points in the afternoon.
The S&P 500 dropped 43 points or 4.9%, to 827.16, the most since Jan. 20, to 827.16. The Nasdaq Composite index lost 66 points, or 4.2%, to close at 1,524.73.
US stocks slipped leading into Treasury Secretary Timothy Geithner's late-morning speech and accelerated after he finished outlining the plan. He is providing more details this afternoon in a congressional hearing.
Geithner discussed some of the causes of the current financial meltdown and outlined some of the basics of the new plan, which revamps the Treasury's Troubled Asset Relief Program (TARP).
However, he did not put a price tag on the new plan, which is expected to exceed the remaining half of the original US$700bn TARP. He also said the Treasury will not ask Congress for more money right now.
The Treasury will "stress test" the big banks to get a sense of whether they can handle a further economic slowdown, and will provide additional funds as needed.
Banks receiving money will have to provide details about their intended uses for the money. The plan will also make more credit available to consumers and businesses by expanding an existing Federal Reserve program.
The plan also addresses the housing crisis by making money available to reduce mortgage payments and create loan-modification guidelines. The Treasury also said it will create a combined public and private investment fund that would take the bad assets off bank balance sheets.
Separately, the Senate passed its US$838bn economic stimulus bill by 61 to 37. Now leaders will need to negotiate a final bill with the House, which already approved an US$819bn version of the plan two weeks ago.
Investors also considered Fed chairman Ben Bernanke's prepared testimony before a House committee. Bernanke said that the central bank's efforts to increase liquidity are "no panacea" to the credit crunch. Yet he also said that the Fed's actions are easing the strain.
General Motors (GM) said it was cutting 10,000 workers, or 14% of its salaried jobs, around the world. One-third of those jobs will be in the US. The automaker also said it will cut the pay for its remaining salaried workers. Shares fell 4.6%.
Wal-Mart Stores said it is cutting as many as 800 jobs at its headquarters as a means of cutting costs.
UBS reported a US$7bn quarterly loss in the last three months of 2008, worse than expected, and also said it was cutting 2,000 jobs. Shares gained 1.5%.
Treasury prices surged, lowering the yield on the benchmark 10-year note to 2.81% from 2.99% on Monday.
Lending rates were modestly lower. The 3-month Libor rate slipped slightly to 1.22% from 1.23% on Monday. The overnight Libor rate slipped to 0.30% from 0.31% Monday. Libor is a bank lending rate.
US light crude oil for March delivery dropped US$2.01 to US$37.55 a barrel on the New York Mercantile Exchange. Gasoline prices rose four-tenths of a cent to a national average of US$1.928 a gallon.
The dollar fell against the euro and yen. COMEX gold for April delivery rose US$21.40 to settle at US$914.20 an ounce.
European shares fell for the first time in six sessions on Tuesday, with oil producers and mineral extractors under pressure, as investors shrugged off the US government's plans to shore up the country's financial system and the economy.
The pan-European Stoxx 600 index fell 2.8% to 193.82, ending a five-session run of gains. The sell-off accelerated at the end of trade as the new U.S. administration said it will set aside up to US$2 trillion to stem the financial crisis.
The UK's FTSE 100 index declined 2.2% to 4,213.08, while Germany's DAX 30 index fell 3.5% to 4,505.54 and the French CAC-40 index lost 3.6% to 3,020.75.
It was the third straight trading session where markets ended with positive gains. Key indices gained momentum after a flat start with the Nifty crossing the 2,950 mark in intra-day. However, markets turned highly volatile and slipped sharply on the back of weak cues from the European markets.
As the day progressed, bulls yet again staged s smart come back towards the end with the BSE Sensex finally adding 49 points to close at 9,633 and the Nifty advanced 76 points to close at 2,934.
Among the 30-components of Sensex, 17 ended in the positive terrain and 13 stock ended in the red. The major gainers in the Sensex were DLF, BHEL, L&T, M&M, HDFC Bank and Reliance Communication.
Shares of Reliance Industries edged higher by 1% to Rs1401 after reports stated that the company is planning to start selling fuel from its new refinery in April. The scrip touched an intra-day high of Rs1414 and a low of Rs1373 and recorded volumes of over 24,00,000 shares on BSE.
Shares of BHEL further surged by over 4% to Rs1451 after the company yesterday announced that it has secured four orders worth Rs70bn. The scrip touched an intra-day high of Rs1461 and a low of Rs1391 and has recorded volumes of over 3,00,000 shares on BSE.
Shares of BEML surged by over 5% to Rs392 after reports stated that the BEML was looking for a slice of the global high speed train parts market. The scrip touched an intra-day high of Rs405 and a low of Rs376 and recorded volumes of over 1,00,000 shares on BSE.
Maytas Infrastructure continued its downward trend. The stock was locked at 5% lower circuit to Rs51.55 after reports stated that the Rs121bn Hyderabad Metro Rail Project awarded to the company may be taken back if it is unable to achieve financial closure. The scrip touched an intra-day high of Rs51.8 and a low of Rs51.8 and recorded volumes of over 10,000 shares on BSE.
Shares of Bajaj Auto advanced by 1.5% to Rs466 after reports stated that the company would hike its stake in KTM Power Sports, Europe, to 30% from 25% currently. The scrip touched an intra-day high of Rs475 and a low of Rs463 and recorded volumes of over 8,000 shares on BSE.
A lot would depend upon the Obama administration’s stimulus package. Also being eagerly awaited is the unveiling of a revamped bank rescue plan. Both the key events would take place later today in the US. So, the global cues would be playing an important role in dictating the trend atleast in the opening trades.
Aban Offshore, 11 others disclose their pledge shares
Aban offshore disclosed that the company has pledged 8.14 per cent of the total outstanding shares of the company.
Another Tata group company, Indian Hotels said that 3.46 per cent of its total shares are pledged with financial institutions. Other major disclosures include Bajaj Auto that has pledged 2.57 per cent of its shares, Kamat Hotels has pledged 4.2 per cent shares, Madras Cements has pledged 2.11 per cent and Uttam Sugar Mills have pledge 23.28 per cent of the total out standing shares of the company.
The other mid and small enterprises companies that declared pledged shares, include Blue Coast Hotels and Resorts (19.82 per cent), South Asian Petrochem (22.75 per cent), Aksh Optifibre (1.69 per cent), Sudal Industries (37.72 per cent) Reliance Chemotex Industries (16.91 per cent) and KEI Industries (4.59 per cent).
Bullion metals shine
Inflation concerns due to stimulus hope take precious metals higher
Bullion metal prices went up on Tuesday, 10 February, 2009. Anticipation that the bailout plan for banks and stimulus package for overall economy will increase inflation increased the appeal of the precious metals as alternate investment. Silver prices also gained today. Prices rose despite a strong dollar.
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 Tuesday, Comex Gold for February delivery rose $21.4 (2.4%) to close at $913.7 an ounce on the New York Mercantile Exchange. Last week, gold prices ended down by 1.5%. For January, 2009, gold had gained 3.9%. Year to date, gold prices are higher by 3.4%.
On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (14%) since then.
On Tuesday, Comex silver futures for March delivery rose 30 cents (2.3%) to end at $13.13 an ounce. Year to date, silver has climbed 16% this year. For 2008, silver had lost 24%.
In recent developments in Washington today, Treasury Secretary Timothy Geithner said in a speech that the government may spend as much as $1 trillion to rescue banks. The Senate passed an $838 billion stimulus bill, moving it toward final congressional action. He also said that the Treasury and other federal agencies will partner with private capital to create a fund for troubled bank assets that could produce up to $1 trillion in financing capacity.
In the currency market today, the dollar index ended higher by 0.6%.
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 April delivery closed higher by Rs 284 (2.03%) at Rs 14,222 per 10 grams. Prices rose to a high of Rs 14,310 per 10 grams and fell to a low of Rs 13,927 per 10 grams during the day's trading.
At the MCX, silver prices for March delivery closed Rs 284 (1.4%) higher at Rs 20,548/Kg. Prices opened at Rs 20,275/kg and rose to a high of Rs 20,649/Kg during the day's trading.
Crude continues to drop
Prices end more than 5% lower after rising 5% higher earlier
Oil prices gave up earlier gains and ended lower on Tuesday, 10 February, 2009 as traders anticipated that the stimulus plan that has been planned by Obama administration will not be enough to fuel energy demand in the coming months. The strong dollar also impacted crude prices today.
On Tuesday, crude-oil futures for light sweet crude for March delivery closed at $37.55/barrel (lower by $2.01 or 5.1%) on the New York Mercantile Exchange. Earlier during the day, it went up by 5.7%. It dropped below the $40 level for the first time in three weeks yesterday.
Prices reached a high of $147 on 11 July but have dropped almost 75% since then. Year to date, in 2009, crude prices are lower by 16.5%. On a yearly basis, crude prices are lower by 60%.
In recent developments in Washington today, Treasury Secretary Timothy Geithner said in a speech that the government may spend as much as $1 trillion to rescue banks. The Senate passed an $838 billion stimulus bill, moving it toward final congressional action. He also said that the Treasury and other federal agencies will partner with private capital to create a fund for troubled bank assets that could produce up to $1 trillion in financing capacity.
In the currency market today, the dollar index ended higher by 0.6%.
Traders also anticipated today that tomorrow's weekly inventory report will show a buildup in crude inventories for last week.
Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
OPEC has been trying to cut production consistently in order to step up prices from their current low levels. OPEC agreed to reduce production by a record amount of 2.2 million barrels a day, starting from 1 January, 2009 adding to previous cuts of 2 million barrels. Overall, the reduction is equal to about 5% of the world's oil demand.
Against this background, March reformulated gasoline rose 1% to $1.2595 a gallon and March heating oil lost 0.5% to $1.3453 a gallon.
March natural gas futures fell 4% to $4.617 per million British thermal units.
At the MCX, crude oil for February delivery closed at Rs 1,909/barrel, lower by Rs 73 (3.7%) against previous day's close. Natural gas for February delivery closed at Rs 226.7/mmbtu, lower by Rs 6.2/mmbtu (2.7%).
Edserv Softsystems IPO ends with full subscription
Gets bids for 51.49 lakh shares as against 39.73 lakh shares on offer
The initial public offering of Edserv Softsystems (ESL) closed with full subscription. The issue, which was subscribed 1.30 times, got bids for 51.49 lakh shares as against 39.73 lakh shares on offer. The issue closed on 9 February 2009.
The qualified institutional buyer category was subscribed 1.07 times, the non institutional investors category (3.10 times), and the retail investors category (1.02 times).
The company came with an initial public offering of 39.7 lakh equity shares of Rs 10 each in the price band of Rs 55 - Rs 60. The company plans to raise between Rs 23.8 crore and Rs 21.8 crore through the issue. Post issue, the founder's stake would come down to 29.5% from 44.06%. The shares are proposed to be listed on the BSE and NSE.
Incorporated in 2001, Chennai-based Edserv provides integrated learning and placement solutions, customized software solutions and placement consulting to clients in the field of IT and non-IT verticals.
For the year ended on March 2008, the company posted net sales of Rs 3.94 crore with a net profit of Rs 2.53 cores.
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