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Friday, February 20, 2009
Dow effect; market below 8900
With Dow Jones down to its 6-year low and Asian markets opening weak, Sensex lost 2.20% for the day. Starting the day with a negative note (at 8944) the markets could not recover, as sentiment turned extremely bearish as the day passed. A sharp fall in heavy weights, correction in Bankex (the banking index) and drop in information technology, metal, technology and oil stocks dragged Sensex below 8800 mark in the afternoon to touch the day's low of 8763, down 280 points. The index closed the day 199 points down at 8843 whereas Nifty shed 53 points to close at 2736.
The market breadth was extremely weak. Of the 2,500 stocks traded on BSE 1,656 stocks declined, whereas 758 stocks advanced. Eighty six stocks ended unchanged. All the 13 sectoral indices were hammered. BSE Bankex led the slump and closed weaker by 3.49% followed by BSE IT (down 2.69%), BSE Metal (down 2.67%) and BSE Teck (down 2.21%).
Of the 30 scrips that make Sensex only two ended positive for the day. Of the major losers ICICI Bank slumped 7.07% to Rs335.95, Reliance Communications shed 4.55% to Rs155.30, Reliance Energy declined
3.38% to Rs491.30, Tata Consultancy Services lost 3.16% at Rs473.95, Sterlite Industries shed 3.16% at Rs248.40, Reliance Industries fell 3.10% at Rs1253.55, Mahindra & Mahindra slipped by 3.07% at Rs281.25, Larsen & Toubro plunged 2.83% at Rs622.50 and HDFC tumbled by 2.80% at Rs1,353.65. Other blue chips also fell around 1-2% each. Among select gainers, Maruti Suzuki India added 0.83% at Rs553.75 and Bharti Airtel gained marginally.
Satyam Computer Services was the most actively traded counter with volumes of over 1.44 crore shares on BSE followed by Firstsource Solutions (80.25 lakh shares), Wire & Wireless India (76.67 lakh shares), Unitech (65.60 lakh shares) and Spice Communications (65.67 lakh shares
BSE Bulk Deals to Watch - Feb 20 2009
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
20/2/2009 532853 ASAHI SONG RELIANCE CAPITAL ASSET MGT ACCOUNT PMS S 114851 12.02
20/2/2009 530393 DB(INTR) STBR MANISHA YOGESH GALA B 30000 14.31
20/2/2009 530393 DB(INTR) STBR JINAY MANSUKH GALA B 20000 14.31
20/2/2009 532696 EDUCOMP SOLN MARWADI SHARES AND FINANCE LIMITED B 87135 1809.41
20/2/2009 532696 EDUCOMP SOLN OPG SECURITIES PVT LTD B 158278 1814.10
20/2/2009 532696 EDUCOMP SOLN COPTHALL MAURITIUS INVESTMENT LIMITED B 100000 1775.70
20/2/2009 532696 EDUCOMP SOLN MARWADI SHARES AND FINANCE LIMITED S 87135 1813.42
20/2/2009 532696 EDUCOMP SOLN OPG SECURITIES PVT LTD S 158278 1815.06
20/2/2009 531602 KOFF BR PICT JINESH BHATT S 450000 3.04
20/2/2009 511728 KZLEASING JYOTIKABEN MAHESHBHAI HADVANI B 16172 47.63
20/2/2009 504823 MAHIN UGIN GIRDHARILAL AGARWAL B 1000000 20.00
20/2/2009 512267 MEDIA MATRIX PYRAMID SALES PVT LTD B 2000000 4.41
20/2/2009 512267 MEDIA MATRIX VIMOCHAN PICTURES LTD S 2000000 4.41
20/2/2009 531952 RIBA TEXTILE SHAILESH SOMABHAI PATEL B 65000 32.75
20/2/2009 531952 RIBA TEXTILE KUMKUM STOCK BROKER PRIVATE LIMITED B 57345 33.59
20/2/2009 531952 RIBA TEXTILE KUMKUM STOCK BROKER PRIVATE LIMITED S 71535 32.72
20/2/2009 511630 SAMBHAAV MED NAVKAR FINANCIAL SERVICES P LT S 2061000 1.90
20/2/2009 521206 SAMTEX FASHI RAJASTHAN GLOBAL SECURITIES LTD B 58930 12.41
20/2/2009 512048 SPLASH MEDIA PANKAJ JAIN B 8153 65.68
20/2/2009 509038 VOLTAIR LEAS BRINDAWAN DAS MUNDHRA S 28650 2.10
20/2/2009 531249 WELL PACK PA VISHESH.SHASRA B 50000 66.61
NSE Bulk Deals to Watch - Feb 20 2009
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
20-FEB-2009,ANKURDRUGS,Ankur Drugs And Pharma Li,PRIVATBANK IHAG ZURICH AG,BUY,259335,75.50,-
20-FEB-2009,EDUCOMP,Educomp Solutions Limited,C D INTEGRATED SERVICES LTD,BUY,288601,1809.62,-
20-FEB-2009,FDC,FDC Ltd.,PRIVATBANK IHAG ZURICH AG,BUY,1506628,30.65,-
20-FEB-2009,HIMACHLFUT,Himachal Fut Comm Ltd,MARYADA BARTER PVT LTD.,BUY,2468489,7.90,-
20-FEB-2009,PRETAILDVR,Class B shares (Series 1),BIRLA SUN LIFE INSURANCE COMPANY LIMITED,BUY,80500,100.00,-
20-FEB-2009,UNICHEMLAB,Unichem Laboratories Ltd.,PRIVATBANK IHAG ZURICH AG,BUY,228276,143.00,-
20-FEB-2009,ANKURDRUGS,Ankur Drugs And Pharma Li,MERRILL LYNCH CAPITAL MARKETS ESPANA S.A. SVB,SELL,259335,75.50,-
20-FEB-2009,EDUCOMP,Educomp Solutions Limited,C D INTEGRATED SERVICES LTD,SELL,288601,1810.58,-
20-FEB-2009,FDC,FDC Ltd.,MERRILL LYNCH CAPITAL MARKETS ESPANA S.A. SVB,SELL,1506628,30.65,-
20-FEB-2009,UNICHEMLAB,Unichem Laboratories Ltd.,MERRILL LYNCH CAPITAL MARKETS ESPANA S.A. SVB,SELL,228276,143.00,-
20-FEB-2009,UNIONBANK,Union Bank of India,TCI CYPRUS HOLDING LIMITED,SELL,3130000,130.36,-
20-FEB-2009,VISHALRET,Vishal Retail Limited,INDIA DISCOVERY FUND LTD,SELL,188358,43.96,-
Post Session Commentary - Feb 20 2009
Intense selling over the counters pulled the Indian market to end in negative territory with loss of more than 2%. Benchmark indices were weighed down by negative cues from US markets as continuing jobless claims reached record highs of 4.99 million as against the economist’s forecast of 4.81 million continuing claims. Negative European markets also fueled the downbeat attitude.
The domestic market tumbled since initial bell following weak cues from the global markets. US stock markets declined on Thursday, with the Dow Jones Industrial Average touching a six-year low on the back of renewed selling effort in financial stocks fueled pressure in the broader market. Market tried to recover a bit on acting Finance Minister Pranab Mukherjee''s comments that the government will provide additional resources to stimulate demand and provide more help to key sectors such as housing, infrastructure and real estate. However, the positive impetus was short and benchmark indices continued to slip sharply lower. Further, huge selling from Foreign Institutional Investors (FIIs) extended pressure in the domestic bourses. Stocks witnessed enormous sell off throughout the trading session to close the last day of week stridently downward. BSE Sensex ended below 8,850 mark and NSE Nifty closed below 2,750 level. From the sectoral front, all indices ended in red mainly contributed by Bank, IT, Metal, Teck, Oil & Gas, Reality and Capital Goods stocks. Midcap and Smallcap stocks also plunged during the trading session.
The Indian market will remain closed on Monday 23rd Feb 2009, for the celebration of Mahashivratri.
Among the Sensex pack 28 stocks ended in red territory and 2 in green. The market breadth indicating the overall health of the market remained weak as 1656 stocks closed in red while 758 stocks closed in green and 86stocks remained unchanged in BSE.
The BSE Sensex closed lower by 199.42 points at 8,843.21 and NSE Nifty ended down by 52.9 points at 2,736.45 Broader market indices were in red as BSE Mid Caps and Small Caps ended with losses of 46.68 points and 53.51 points at 2,791.72 and 3,160.59 respectively. The BSE Sensex touched intraday high of 8,943.78 and intraday low of 8,762.48.
Losers from the BSE Sensex pack are ICICI Bank (7.07%), RCom (4.55%), Reliance Infra (3.38%), TCS Ltd (3.23%), Sterlite Industries (3.16%), Reliance (3.1%), M&M Ltd (3.07%), L&T Ltd (2.83%) and HDFC (2.80%).
Only two gainers from the BSE Sensex pack are ACC Ltd (0.83%) and Maruti Suzuki (0.24%).
On the global markets front, the Asian markets which opened before Indian markets ended sharply lower except China. Market tumbled on continued worries about a deepening global recession and the health of the financial sector along with US markets losses overnight. Hang Seng, Nikkei 225, Straits Times and Seoul Composite index ended down by 324.19, 141.27, 34.41 and 41.15 points at 12,699.17, 7,416.37, 1,594.94 and 1,065.95 respectively. However Shanghai Composite index ended up by 34.35 points at 2,261.48.
European markets which opened after the Indian market are also trading down. FTSE 100 is trading lower by 97.15 points at 3,921.22 and the DAX index is trading down by 130.39 points at 4,084.82.
The BSE Bank index ended down by (3.49%) or 155.67 points at 4,298.91 due to the fears of rising defaults in present economic condition along with fall in ADRs. Main losers are ICICI Bank (7.07%), Oriental Bank (4.14%), Axis Bank (3.94%), 3.59 Bank (5.20%) and Bank of Baroda (3.19%).
The BSE IT index also ended lower by (2.69%) or 56.32 points at 2,038.51 on prolonged recession in US. Losers are Aptech Ltd (5.32%), HCL Tech (5.27%), Financ Tech (4.71%), Oracle Fin (4.47%) and Moser Bayer (4.19%).
The BSE Metal stocks down by (2.67%) or 128.5 points at 4,692.47 due to high volatility in metal prices in international markets. Main losers are Sesa Goa Ltd (6.79%), JSW Steel (5.44%), Steel Authority (3.35%), NMDC Ltd (3.34%) and Sterlite Industries (3.16%).
The BSE Teck index ended lower by (2.21%) or 38.75 points to close at 1,718.26. Aptech Ltd (5.32%), HCL Tech (5.27%), Wire& Wirles Ltd (5.25%), RCom (4.55%) and Oracle Fin (4.47%) ended in negative territory.
The BSE Oil & Gas index dropped by (2.17%) or 133.74 points to close at 6,023.43. Aban Offshore (5.58%), Essar Oil Ltd (3.60%), Reliance (3.10%), Reliance Pet (1.88%) and ONGC Ltd (1.10%) ended in red.
The BSE Capital Goods index faced heavy selling pressure and closed with decrease of (1.95%) or 118.56 points at 5,953. Scrips that lost are Everest Kanto (6.57%), Usha Martin (5.76%), Gammon Indi (3.61%), Suzlon Energy (3.61%) and Areva (3.41%).
Satyam Computer Service lost 1.73%. The company won approval to bring on board a strategic investor needed to ensure the survival of the scam-tainted software outsourcer. The Company Law Board (CLB) said Satyam could raise its authorised shares on issue to 140 crore from 80 crore, and a board member said criteria for a stake sale could be finalized next week.
Larsen & Toubro fell 2.83% after its chief said it will decide on Satyam deal after evaluating the Company Law Board''s order on the bidding process.
GMR Infrastructure ended down by 1.83%. The company informed that GMR Holdings Pvt. Ltd (''GHPL''), promoter and holding Company of GMR Infrastructure Ltd (''the Company'') has purchased 3,05,319 Equity Shares of Rs 2/- each on February 16, 2009 through open market purchase in normal segment on the Stock Exchanges. Consequent to the aforesaid acquisition of 3,05,319 Equity Shares, GHPL now holds 135,12,04,029 (74.215%) Equity Shares of Rs 2/- each of the Company.
Shares of RCom have declined by 4.55% after reports stated that the government planning a special audit on the company and its subsidiaries.
Educomp Solutions lost 12.10% after reports that the Securities & Exchange Board of India is investigating the dealings in the shares of education software firm Educomp Solutions on bourses. SEBI is examining the matter with regard to dealings in the shares of Educomp Solutions on the stock exchange.
Maruti Suzuki India rose 0.24% after the company said it expects sales growth in February 2009 at around 5-7%.
Disappointment from interim budget spooks stocks
A disappointing budget and weak global markets pulled share prices sharply lower in the week ended 20 February 2009. Finance Minister Pranab Mukherjee in the interim general budget on 16 February 2009 did not offer anticipated tax sops and there was no sector-specific stimulus package for the economy, disappointing the stock markets. The market sentiment was edgy due to selling by foreign institutional investors. The BSE Sensex fell in 4 out of 5 trading sessions in the week.
In the interim budget for 2009-2010 unveiled by Mukherjee on 16 February 2009 there were no sector-specific tax sops for the industry hit by the global economic slowdown. No changes were made in direct or indirect taxes. The stock market was expecting government to offer tax sops and sector-specific stimulus package for the economy in the interim budget.
Outflow by foreign institutional investors (FIIs) totaled Rs 5,425.90 crore in calendar year 2,009 (till 19 February 2009). FIIs had pulled out a massive Rs 52,998.70 crore in calendar year 2008, as against an inflow of a huge Rs 71,486.50 crore in calendar year 2007.
The BSE 30-share Sensex fell 791.53 points or 8.22% to 8,843.21 in the week ended 20 February 2009. The S&P CNX Nifty fell 211.90 points or 7.18% at 2,736.45 in the week.
The BSE Mid-Cap index fell 221.23 points or 7.34% to 2,791.72 and the BSE Small-Cap index slipped 234.99 points or 6.92% to 3,160.59 in the week.
The barometer index BSE Sensex is 11,572.03 points or 54.56% below its all-time high of 21,206.77 struck on 10 January 2008.
Key benchmark indices slumped on Monday, 16 February 2009 on sustained unwinding in index pivotals following disappointment from the interim general budget for 2009-2010 with BSE 30-share Sensex losing 329.29 points, or 3.42%, to 9,305.45. Weak global markets also weighed on the domestic bourses on that day.
The BSE 30-share Sensex fell 270.45 points, or 2.91%, to 9,035 on Tuesday, 17 February 2009 extending Monday 16 February 2009's losses as interim budget turned out to be a non-event and weakness in global markets dampened investor sentiments.
Key benchmark indices saw divergent trends on Wednesday, 18 February 2009 in what was a highly volatile trading session. While the 30-share BSE Sensex fell, the broader based S&P CNX Nifty rose. Trend in global markets also influenced trade on the domestic bourses. The BSE 30-share Sensex was down 19.82 points or 0.22%, to 9,015.18 on that day.
The market rose on Thursday, 19 February 2009 in what was a lackluster trading session, in sync with range-bound activity in global markets. The BSE 30-share Sensex rose 27.45 points or 0.30% to 9,042.63. The BSE Sensex settled above the psychologically important 9,000 mark after alternatively moving above and below that level in intraday trade on that day.
Weak global markets pulled the domestic bourses lower with the barometer index BSE Sensex falling below the psychologically important 9,000 level on Friday, 20 February 2009. Nevertheless, a late recovery helped cut the market cut steep intraday losses. The BSE 30-share Sensex lost down 199.42 points or 2.21% at 8,843.21.
India's largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 11.21% to Rs 622.50 in the week ended Friday, 20 February 2009. The company's chairman A M Naik said on Friday 20 February 2009, L&T will decide on Satyam Computer Services deal after evaluating the Company Law Board's order on the bidding process. Larsen & Toubro is the largest shareholder in Satyam Computer Services with a 12% stake.
The Company Law Board (CLB) on 19 February 2009 allowed the government-appointed board of Satyam to bring in a strategic investor through an open bidding process. For this purpose, the CLB also permitted the board to increase the authorised share capital and issue preferential shares.
India's largest car maker by sales Maruti Suzuki rose 0.58% to Rs 633.40 after the company on 18 February 2009 said it expects sales growth in February 2009 at around 5-7%.
India's largest tractor maker by sales Mahindra & Mahindra slipped 12.37% to Rs 281.25 in the week after the company on 16 February 2009 said its promoters have pledged more than 2.09 crore or 8.09% stake in the company.
India's largest private sector firm by market capitalization and oil refiner Reliance Industries fell 9.88% to Rs 1,253.55 on fears a worsening global economy will hit demand for petrochemicals.
India's second largest telecom services provider by sales Reliance Communication declined 14.51% to Rs 155.30 after the company on 16 February 2009 said AAA Project Ventures, one of the promoters has pledged more than 27.23 crore shares or 13.19% stake in the company. Meanwhile, the Department of Telecommunications (DoT) has appointed Parakh and Co to conduct a special audit into the books of Reliance Communication (RCom) after analysts expressed concern over the way the company reported different annual gross revenue numbers to the Telecom Regulatory Authority of India (TRAI) and the stock exchanges.
India's largest private sector power utility firm by revenue Reliance Infrastructure plunged 13.7% to Rs 491.30 after the company on 16 February 2009 said one of the promoters has pledged more than 3.72 crore shares or 16.35% stake in the company.
India's largest dedicated mortgage lender by market capitalization Housing Development Finance Corporation fell 12.14% to Rs 1,353.65 as the company expects 2009/10 loan growth at about 20%, slightly lower than the previous year's rise, as property demand falls.
Metal stocks declined as there was no changes in import duty in the interim budget announced on 16 February 2009. Tata Steel (down 13.44% to Rs 168.05), Hindalco Industries (down 13.89% to Rs 39.35), Sterlite Industries (down 9.84% to Rs 248.40), National Aluminum Company (down 5.35% to Rs 197.10), Steel Authority of India (down 12.41% to Rs 79.40), slipped.
A section of the market was expecting increase in import duties on metals to protect the domestic industry from cheap imports.
Realty shares dropped in the absence of any tax sops for the housing sector in interim budget. DLF (down 3.46% to Rs 155.05), Indiabulls Real Estate (down 14.62% to Rs 93.15) and Unitech (down 11.93% to Rs 28.05) slipped.
Infrastructure shares fell in the absence of any major sops for the sector in the interim budget. Jaiprakash Associates (down 11.26% to Rs 67), Bharat Heavy Electricals (down 6.94% to Rs 1,364.95), Lanco Infratech (down 12.08% to Rs 120.40), and GVK Power Infrastructure (down 13.15% to Rs 19.15), slipped.
Infosys (down 6.08% to Rs 1,178.45), ICICI Bank (down 22.65% to Rs 335.95), HDFC Bank (down 8.31% to Rs 866.95) slipped.
The stock market regulator Securities & Exchange Board of India (Sebi) on Friday, 13 February 2009, relaxed takeover regulations for companies whose boards have been superseded and replaced by the Government or other regulatory authority. The regulator will provide relaxation under provisions of chapter III of the takeover regulations. Chapter III relates to the timing, pricing and size of open offers by acquiring companies. The amendment to the regulation would enable smoother and faster change of management of such companies on a normative basis.
Meanwhile, inflation based on the wholesale price index rose 3.92% in the year through 7 February 2009, much lower than previous week's annual rise of 4.39%. It was the index's lowest annual rise since 3.83% on 29 December 2007.
Investors may adopt a cautious approach
The market may remain subdued to weak in the near term as sentiment remains edgy on concerns of a slowing domestic economy and weak global markets. Yet, stock-specific buying on expectations of rate cuts and industry specific export sops could restrict losses. Volatility is expected to remain high ahead of the expiry of February 2009 futures & options (F&O) contracts on Thursday, 26 February 2009. It is a truncated trading week as the market remains closed on Monday, 23 February 2009, on account of Mahashivratri.
Inflation based on the wholesale price index rose 3.92% in the year through 7 February 2009, much lower than previous week's annual rise of 4.39%. It was the index's lowest annual rise since 3.83% on 29 December 2007. Falling inflation has provided room for the Reserve Bank of India (RBI) to cut interest rates further to shield the domestic economy from the global financial sector crisis and recession in key global economies.
Meanwhile Commerce minister, Kamal Nath is likely to announce an export booster package later this month which would address some of the crucial concerns of the exporters. The sops under consideration include simplification of rules for service tax refund, extension of time given to exporters to meet export obligation and an increase in rates of input duty reimbursement schemes like drawback and duty entitlement pass book (DEPB) scheme for some sectors.
Stocks fell in the week ended Friday, 20 February 2009, after the acting Finance Minister Pranab Mukherjee in the interim general budget on 16 February 2009 did not offer anticipated tax sops and there was no sector-specific stimulus package to revive economic growth, causing disappointment among the investors.
Gloomy US unemployment data reinforced fears the world's largest economy is in a severe slump. US government data showed a record number of continuing unemployment claims, at nearly 5 million, and a surprisingly sharp drop in manufacturing in the mid-Atlantic states.
Meanwhile, foreign institutional investors (FIIs) outflow in 2009 totaled Rs 5,425.90 crore (till 19 February 2009). FIIs had pulled out a massive Rs 52,998.70 crore in calendar year 2008, as against an inflow of a huge Rs 71,486.50 crore in calendar year 2007.
Sensex falls below 9,000 on weak global stocks
Weak global markets pulled the domestic bourses lower with the barometer index BSE Sensex falling below the psychologically important 9,000 level. Nevertheless, a late recovery helped cut the market cut steep intraday losses. The Sensex lost 199.42 points, or 2.21% at 8,843.21, off 80.13 points from the day's low.
Weak European bourses, lower US index futures and sustained selling pressure by foreign institutional investors (FIIs), whose outflow in calendar year 2009 has totaled Rs 5094.30 crore (till 18 February 2009), weighed on the sentiment. As per the provisional data on BSE, FIIs today, 20 February 2009, sold shares worth a net Rs 201.17 crore while mutual funds bought shares worth a net Rs 167.18 crore.
The market opened on a weak note on weak global markets. An intermittent recovery from lower level was witnessed during the day. The recovery from lower level in early afternoon trade was triggered by Finance Minister Pranab Mukherjee's comments that the government will provide additional resources to stimulate demand and provide more help to key sectors such as housing, infrastructure and real estate. However, the intraday recovery proved short-lived as the market came off the higher level later.
A sell-off gripped the market in mid-afternoon trade as European markets, which opened after Indian markets, declined sharply in early trade. At the day's low of 8763.08, the Sensex shed 3.09% in mid-afternoon trade. After the sharp slide, the market immediately witnessed a rebound from lower level as the finance minister's statement raised hopes for more measures from the government for the economy. Rate cut hopes also aided the intraday rebound in late trade.
The government has so far announced two stimulus packages including tax cuts and the capital injections for banks to shield the domestic economy from the impact of the global financial sector crisis and recession in key global economies.
Meanwhile Commerce minister Kamal Nath is likely to announce an export booster package later this month which would address some of the crucial concerns of the exporters. The sops under consideration include simplification of rules for service tax refund, extension of time given to exporters to meet export obligation and an increase in rates of input duty reimbursement schemes like drawback and DEPB for some sectors.
Global cues were weak. Trading in US index futures showed the Dow could fall 130 points at the opening bell on Friday, 20 February 2009. European shares fell sharply on Friday, 20 February 2009, with banks the worst performers, as investors continued to fret about the outlook for the global economy. Key benchmark indices in UK, Germany and France were down by between 2.38% and 3.08%.
Asian markets declined today, 20 February 2009, after Wall Street tumbled to six-year low on Thursday, 19 February 2009, as a gloomy US unemployment data reinforced fears the world's largest economy is in a severe slump. Key benchmark indices in Hong Kong, Japan, Singapore, South Korea and Taiwan were down by between 2.03% and 3.72%. However, China's Shanghai Composite rose 1.54%.
US markets tumbled on Thursday, 19 February 2009 on mounting concerns about the fate of major banks and signs that the recession is deepening, pushing the Dow to its lowest level in more than six years. The Dow Jones industrial average lost 89.68 points, or 1.19%, at 7,465.95. The Standard & Poor's 500 Index fell 9.48 points, or 1.2%, at 778.94. The Nasdaq Composite index shed 25.15 points, or 1.71%, at 1,442.82.
US government data showed a record number of continuing unemployment claims, at nearly 5 million, and a surprisingly sharp drop in manufacturing in the mid-Atlantic states.
The BSE 30-share Sensex lost down 199.42 points or 2.21% at 8,843.21. The Sensex opened 98.85 points lower at 8,943.78, also its day's high. At the day's low of 8,763.08, the Sensex lost 279.55 points in mid-afternoon trade.
The S&P CNX Nifty lost 52.90 points or 1.9% to 2736.45. Nifty February 2009 futures were at 2722, a discount of 14.45 points as compared to the spot closing.
The barometer index BSE Sensex is down 804.10 points or 8.33% in calendar 2009 from its close of 9,647.31 on 31 December 2008. The Sensex currently trades at a PE multiple of 10.19 based on projected earnings per share (EPS) of about Rs 867 for the 30-Sensex firms in the year ending March 2010.
The market breadth, indicating the overall health of the market, was weak on BSE with 1631 shares declining as compared with 793 that advanced. A total of 88 shares remained unchanged.
BSE clocked a turnover of Rs 2591 crore, lower than Rs 2,428.97 crore on Thursday, 19 February 2009. Turnover in NSE's futures & options jumped to Rs 43149.65 crore compared with Rs 30637.67 crore on Thursday, 19 February 2009.
All the sectoral indices on BSE were in the red. The BSE Power index (down 1.41%), the BSE Auto index (down 1.11%), the BSE PSU index (down 1.56%), BSE Consumer Durables index (down 1.09%), BSE Realty index (down 1.93%), the BSE Capital Goods index (down 1.95%), and the FMCG index (down 0.28%), BSE Healthcare index (down 1.12%), BSE Oil & Gas index (down 2.17%), outperfomed the Sensex.
The BSE TECk index fell 2.21%, in line with Sensex's fall.
The BSE IT index (down 2.69%), BSE Bankex (down 3.49%), and BSE Metal index (down 2.67%), underperformed the Sensex.
Among the 30-share Sensex pack 26 declined while only 4 of them managed gains. DLF (up 0.74%), ACC (up 0.66%), and Maruti Suzuki India (up 0.55%), gained from the Sensex pack.
Banking stocks were hard hit as fears of rising defaults in a weakening economy and overnight fall in American Depository Receipts (ADRs), offset hopes of rate cuts from the Reserve Bank of India (RBI). India's largest private sector bank by net profit ICICI Bank plunged 7.03% to Rs 336.10 on a 1.36% fall in its ADR on Thursday, 19 February 2009. It was the top loser from the Sensex pack.
India's second largest private sector bank by net profit HDFC Bank lost 2.12% to Rs 866.10 as its ADR fell 0.26% on Thursday, 19 February 2009. After market hours on 19 February 2009, the bank on a private placement basis issued unsecured, non-convertible, redeemable subordinated bonds in the nature of debentures towards tier - II capital as with upper tier - II bonds for an amount aggregating Rs 200 crore and lower tier - II bonds for an amount aggregating Rs 150 crore.
India's largest bank in terms of assets and branch network State Bank of India shed 0.73% to Rs 1051.80
India's largest dedicated housing finance company by total income Housing Development Finance Corporation dropped 2.35% to Rs 1359.90 as the company expects 2009/10 loan growth at about 20%, slightly lower than the previous year's rise, as property demand falls.
Inflation rose at the lowest level in 13-months at 3.92% in the year through 7 February 2009, much lower than previous week's annual rise of 4.39%, data released by the government on Thursday, 19 February 2009, showed. Falling inflation provides room for the Reserve Bank of India (RBI) to cut interest rates further to shield the domestic economy from the global financial sector crisis and recession in key global economies.
Only on Wednesday, 18 February 2009, the Reserve Bank of India Governor D Subbarao said that there is room to cut interest rates further. The statement comes at a time when the market is expecting further action from the central bank.
Market men see a bigger role for RBI to shield the domestic economy from the global financial sector crisis and recession in key global economies in the coming months as election code will be in force by the end of the month which means that there cannon be any policy action from the government.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) shed 2.99% to Rs 1255 on fears a worsening global economy will hit demand for petrochemicals. Nevertheless the stock recovered from day's low of Rs 1241.30.
India's second largest cellular services provider by sales Reliance Communications (RCom) slumped 4.36% to Rs 155.60 on reports the government on Thursday, 19 February 2009 reportedly informed the Parliament that it will do a special audit on the books of RCom and its subsidiaries over allegations that the telecommunications company had diverted revenues earned from its mobile services to a subsidiary to bring down the total amount it had to pay to the government as licence fee and spectrum charge.
India's largest private sector power generation firm by sales Reliance Infrastructure slipped 3.04% to Rs 493.05. The finance ministry late evening on 18 February 2009 reportedly told Parliament that companies Reliance Infrastructure and Reliance Petroleum were being investigated for alleged violation of norms governing insider trading and overseas borrowings, respectively. Reliance Petroleum fell 2.01% to Rs 78.10
IT shares declined after research firm Gartner warned of an unprecedented deceleration in IT spending across markets and geographic regions in 2009, after its annual global survey of Chief information officer (CIOs).
India's third largest software services exporter, Wipro slipped 2.16% to Rs 215.60 despite a 1.12% rise in ADR on Thursday, 19 February 2009. India's second largest software services exporter Infosys Technologies lost 2.33% to Rs 1180 as its ADR fell 1.71% on Thursday, 19 February 2009. India's largest software services exporter by sales TCS slipped 3.01% to Rs 475 and India's fifth largest IT exporter by sales HCL Technologies declined 5.08% to Rs 103.60.
Shares of computer hardware firms HCL Infosystems (down 2.50%), Moser Baer India (down 5.08%), CMC (down 1.07%), Tata Elxsi (down 1.85%), declined.
Overall, the total IT market globally is expected to grow by only 0.5% in 2009, the Gartner report added.
Educomp Solutions tumbled 11.86% to Rs 1776.60 on reports the market regulator Securities & Exchange Board of India (Sebi) is probing the dealings in the shares of education software firm on bourses.
IT shares fell despite a weak rupee. Indian rupee slipped today on concerns of capital outflows following decline in global markets. The partially convertible rupee was at 49.86/88 per dollar against previous close of 49.62. A weaker rupee boosts operating margins of IT firms which earn a lion's share of revenue from exports.
Rate sensitive real estate shares rebounded in late trade on hopes lower rates will spur housing demand. India's largest realty developer by market capitalisation DLF rose 0.74% to Rs 157.50, off day's low of Rs 147.50. Foreign brokerage Goldman Sachs in its recent research report lowered DLF's 12-month target price to Rs 124 post weak Q3 December 2008 results.
Unitech (down 1.40% to Rs 28.20, from day's low of Rs 27.60), HDIL (down 2.15% to Rs 77.60 after touching day's low of Rs76.50), and Indiabulls Real Estate (down 3.97% to Rs 93.20 after hitting day's low of Rs 92.50), fell.
India's largest engineering and construction firm by sales Larsen & Toubro fell 2.47% to Rs 624.80 after its chief A M Naik said it will decide on Satyam deal after evaluating the Company Law Board's order on the bidding process for the fraud-hit IT firm. L&T is the single largest shareholder in Satyam with a 12% stake.
India's largest power equipment maker by sales Bharat Heavy Electrical (Bhel) fell 0.58% to Rs 1374.25, off sharply from day's low of Rs 1347.10. The early fall came on reports quoting Chairman K. Ravi Kumar said the company expects profit growth to slow to 10% in the year ending March 2009 on higher raw material costs and wages, compared with 18% in March 2008.
ABB rose 1.82% to Rs 400.35 after the company reported higher than expected net profit in the year ended December 2008. ABB's net profit rose 11.3% to Rs 547.41 crore on a 16.1% increase in total income to Rs 6967.45 crore in the year ended December 2008 over December 2007. The company has recommended a dividend of Rs 2.20 per share of face value Rs 2 each for the year ended on December 2008.
Metal stocks fell on worries a weakening domestic and global economy will hit demand for metals. India's largest copper maker by sales Sterlite Industries India (down 3.02% to Rs 248.75), Sail (down 2.50%), Sesa Goa (down 6.22%), Nalco (down 2.02%), declined.
India's largest private sector steel maker by sales Tata Steel dropped 2.44%
India's largest private sector aluminium maker by sales Hindalco Industries fell 1.50% to Rs 39.50. As per recent reports, the company plans to raise Rs 25000 crore by pledging assets and future earnings of its units.
Auto stocks fell on profit booking after a recent rise. The BSE Auto index was down 1.11% to 2,544.47 today, 20 February 2009. The BSE Auto index rose 2.15% in one month to 19 February 2009.
Tata Motors (down 0.45%), Mahindra & Mahindra (down 3.62%), Hero Honda Motors (down 1.81%) declined. However Bajaj Auto (up 0.76%) and Maruti Suzuki India (up 0.55%), rebounded from day's low.
FMCG shares were mixed, outperforming the Sensex, on defensive buying. Hindustan Unilever (down 0.22%), Britannia Industries (down 0.28%), ITC (down 0.03%), United Spirits (down 1.38%), and Nestle India (down 0.26%), declined. Some FMCG shares Dabur India (up 0.11%), Tata Tea (up 4.36%) and Marico Industries (up 0.60%) rose
Educomp Solutions was the top traded counter on BSE with turnover of Rs 293.70 crore followed by Reliance Industries (Rs 170.30 crore), United Spirits (Rs 153.30 crore), ICICI Bank (Rs 127 crore) and State Bank of India (Rs 92 crore).
Satyam Computer Services topped volumes chart on BSE clocking volumes of 1.44 crore shares followed by Firstsource Solutions (80.20 lakh shares), Wire & Wireless India (76.67 lakh shares), Unitech (74.40 lakh shares) and Spice Communications (65.67 lakh shares).
Great Eastern Shipping Company climbed 2.56% to Rs 172.05 as Baltic Exchange's chief sea freight index Baltic Dry Index which tracks rates to ship dry commodities, hit a four-month high on Thursday, 19 February 2009.
Global cues to pinch
The market is moving in tune with global markets and the weak Asian indices in current trades coupled with overnight fall in the US markets is likely to weigh on the local indices. Nervousness in the market is likely to continue after the Sensex reporting losses in last week's trades. The domestic funds resorting to selling of equities in the last session could make the investors jittery from taking any fresh position. Among the key local indices, the Nifty could decline to 2765 on the downside while on the upside there is a near term resistance at 2825. The Sensex has a likely support at 8890 and may face resistance at 9180.
The Dow Jones industrial average slumped to a more than 6-year low Thursday, as fears of a prolonged recession sent stock investors heading for the exits. While the Dow Jones shed 90 points at 7466, the Nasdaq was down 25 points to close at 1443.
Most of the Indian ADR's fell on the US bourses. Satyam was the biggest loser and dropped over 7% followed Dr Reddy declined 2.15%, while Infosys, ICICI Bank, HDFC Bank and Tata Motors were down around 0.26-2% each. However, Rediff soared over 8% while Wipro, Patni Computer and VSNL gained around 1% each.
Crude oil prices gained sharply, with the Nymex light crude oil added $4.86 at $39.48 per barrel. In the metals segment, the Comex gold for April series lost $1.70 to settle at $976.50 an ounce.
FII Investment Activity
| Date | Purchase (Rs cr.) | Sale ( Rs Crore ) | Investment ( Rs Crore) |
|---|---|---|---|
| Feb-2009 | 15583.30 | 16010.20 | -426.80 |
| Jan-2009 | 27874.00 | 32119.10 | -4245.30 |
| Dec-2008 | 31355.20 | 29604.90 | 1750.10 |
| Nov-2008 | 29427.20 | 31818.10 | -2391.50 |
| Oct-2008 | 46745.40 | 61017.80 | -14272.40 |
CLB approves Satyam capital expansion
Satyam Computer Services stake sale plan has been approved by the Company Law Board (CLB). It has also approved the expansion of its share capital base to Rs 2.8 billion. Satyam is expected to sell 26% to a strategic partner and will issue another 600 million shares at a face value of Rs 2.
The board has authorized an open competitive price bidding to instruct a strategic partner. It wants the process to be transparent. A retired Supreme Court judge has been inducted by the CLB to oversee the strategic partner induction.
The preferential allotment will be made either at par or at premium and have instructed that the share base should be increased under Section 17 and Sec 81 IA of the Company's Act, as per CLB.
Shares of the company declined Rs 2.3, or 4.74%, to settle at Rs 46.25. The total volume of shares traded was 7,938,382 at the BSE (Thursday).
Market bound lower
Key benchmark indices are likely to see a subdued start as investors sentiment was shattered on fears the deepening recession is raising bad-loan costs and hurting corporate earnings. Markets across the globe were hit on account of a series of bad economic news. The SGX Nifty futures for February 2009 series were sharply lower by 42 points in Singapore.
Inflation rose at the lowest level in 13-months at 3.92% in the year through 7 February 2009, much lower than previous week's annual rise of 4.39%, data released by the government on Thursday, 19 February 2009, showed. Falling inflation provides room for the Reserve Bank of India (RBI) to cut interest rates further to shield the domestic economy from the global financial sector crisis and recession in key global economies.
Only on Wednesday, 18 February 2009, the Reserve Bank of India Governor D Subbarao said that there is room to cut interest rates further. The statement comes at a time when the market is expecting further action from the central bank.
Market men see a bigger role for RBI to shield the domestic economy from the global financial sector crisis and recession in key global economies in the coming months as election code will be in force by the end of the month which means that there cannon be any policy action from the government.
Meanwhile, Commerce minister Kamal Nath is likely to announce an export booster package later this month which would address some of the crucial concerns of the exporters. The sops under consideration include simplification of rules for service tax refund, extension of time given to exporters to meet export obligation and an increase in rates of input duty reimbursement schemes like drawback and DEPB for some sectors.
Asian stock markets declined today, 20 February 2009, after Wall Street tumbled to six-year lows as gloomy US unemployment data reinforced fears the world's largest economy is in a severe slump. Key benchmark indices in china, Hong Kong, Japan, Singapore, South Korea and Taiwan were down by between 1.21% and 3.04%.
US markets tumbled on Thursday, 19 February 2009 as stocks tumbled on mounting concerns about the fate of major banks and signs that the recession is deepening, pushing the Dow to its lowest level in more than six years. The Dow Jones industrial average lost 89.68 points, or 1.19%, at 7,465.95. The Standard & Poor's 500 Index fell 9.48 points, or 1.2%, at 778.94. The Nasdaq Composite index shed 25.15 points, or 1.71%, at 1,442.82.
US government data showed both a record number of continuing unemployment claims, nearly 5 million, and a surprisingly sharp drop in manufacturing in the mid-Atlantic states.
Back home, key benchmark indices ended slightly higher on Thursday, 19 February 2009, in what was a lackluster trading session, in sync with range-bound activity in global markets. The BSE 30-share Sensex rose 27.45 points, or 0.30%, to 9,042.63 and the S&P CNX Nifty rose 13.20 points or 0.48% to 2789.35.
According to provisional data on NSE, FIIs were net sellers worth Rs 363.48 crore while mutual funds bought shares worth Rs 108.44 crore on Thursday, 19 February 2009.
Pre Session Commentary - Feb 20 2009
Today domestic markets are likely to open positive as we expect a bounce back after a flat trade yesterday. The US markets and other Asian markets don’t show good signs of sentiments and therefore there could be some significance of bad cues on domestic market movements also. However on the other hand, we anticipate a good come back of rate sensitive sectors like banking, CG and Realty today, as amidst global recessionary pressures and its ripple effect across emerging nations, Reserve Bank of India governor D Subbarao said there''s "certainly room" to cut interest rates as the impact of the global recession was "much sharper" than expected. According to Subbarao, investments have declined as bank credit to companies and individuals shrank. The lackluster stock markets and the deteriorating IIP numbers are compelling Reserve Bank of India to reduce the key rates to levels where the economic activity sustains against the havoc of recession in other countries.
On Thursday, the markets opened with a shy positive numbers and continued to trade range bound. The volumes of trade were less and sentiments were weak as in the US markets yesterday. The Asian and other European markets also traded in a similar fashion as there was lack of news to move the markets in either direction. After the post mid session the markets witnessed mild volatility as the investors were apprehensive about the low inflation numbers. However towards the end the domestic markets managed to close in green. Sectors like IT, Tech, CD, Auto, Power and PSU closed with gains of 2.45%, 1.71%, 1.12%, 0.96%, 0.34% and 0.31% respectively. On the other hand sectors like CG, Realty, Bankex and Metal conceded 0.93%, 0.63%, 0.56% and 0.38% respectively. Mid caps and Small caps fell by 0.21% and 0.37% respectively. During the session we expect the markets to be trading positive with mild volatility.
The BSE Sensex closed high by 27.45 points at 9,042.63 and NSE Nifty ended with a marginal gain of 13.20 points at 2,789.35. The BSE Mid Caps and Small Caps ended with losses of 5.90 points and 11.96 points at 2,838.40 and 3,214.10 respectively. The BSE Sensex touched intraday high of 9,111.95 and intraday low of 8,977.66.
On Thursday, the US stock markets closed with losses. The investors reacted on pessimistically on the last set of quarterly results which were little discouraging. On the other hand, the Producer prices, which measure inflation, increased more than expected in January. The January PPI and core PPI were up 0.8% and 0.4%, respectively. The news that brought bearishness was the Initial jobless claims, which totaled at 627,000, topping the 620,000 claims that were expected. Initial claims were unchanged week-over-week, while the four-week moving average moved up to 619,000 from 608,500. The continuing jobless claims reached record highs of 4.99 million. Economists forecast 4.81 million continuing claims. The four-week moving average for continuing claims stands at 4.84 million, up from 4.75 million. US light crude oil for March delivery grew by $4.86 to settle at $39.48 a barrel on the New York Mercantile Exchange. The March contract will going to expire on Friday. The crude prices surged after the government said that crude supplies fell last week for the first time in two months.
The Dow Jones Industrial Average (DJIA) fell by 89.68 points to close at 7,465.95 The NASDAQ Composite (RIXF) index fell by 25.15 points to close at 1,442.82 and the S&P 500 (SPX) lost 9.48 points to close at 778.94.
Today major stock markets in Asia are trading mixed. Shanghai composite is up by 13.03 points to 2,240.15, Japan''s Nikkei is low by 116.96 points at 7,440.69. Hang Seng lost 265.61 points at 12,757.75, South Korea''s Seoul Composite is low by 33.60 points at 1,073.50 and Singapore''s Strait Times is lower by 22 points to 1,607.35.
Indian ADRs ended mixed. In technology sector, Satyam ended lower by 7.10% along with Infosys by 1.71%. Further, Wipro ended with increase of 1.12% and Patni Computers closed up by 1.41%. In banking sector HDFC Bank and ICICI Bank lost 0.26% and 1.36% respectively. In telecommunication sector, MTNL and Tata Communication advanced by 1.89% and 0.96% respectively. However, Sterlite Industries remained unchanged..
The FIIs on Thursday stood as net sellers in equity and net buyers in debt. Gross equity purchased stood at Rs 958.90 Crore and gross debt purchased stood at Rs. 822.50 Crore, while the gross equity sold stood at Rs. 1,392.60 Crore and gross debt sold stood at Rs. 653.90 Crore. Therefore, the net investment of equity and debt reported were Rs (433.70) Crore and Rs 168.60 Crore respectively.
On Thursday, the Indian rupee closed at 49.61/63, 0.62% stronger than its previous close of 49.92/93. The rupee gained strengths as the stocks markets showed some gain. During the last three days the rupee has lost 125 paise (2.57%) and as per the forex dealers the rupee fell drastically due to heavy buying of dollars by foreign banks to sell in the offshore markets non-deliverable forward markets to make profits.
On BSE, total number of shares traded were 21.51 Crore and total turnover stood at Rs 2,428.97 Crore. On NSE, total number of shares traded were 45.42 Crore and total turnover was Rs 6,739.07 Crore.
Top traded volumes on NSE Nifty – Unitech with 29398778 shares, Suzlon with 20946417 shares, DLF with 15095147 shares, ICICI Bank with total volume traded 11655190 shares followed by SAIL with 10880071 shares.
On NSE Future and Options, total number of contracts traded in index futures was 621793 with a total turnover of Rs 8,030.58 Crore. Along with this total number of contracts traded in stock futures were 871997 with a total turnover of Rs 9715.33 Crore. Total numbers of contracts for index options were 867934 with a total turnover of Rs 12,165.03 Crore and total numbers of contracts for stock options were 63248 and notional turnover was Rs 726.74 Crore.
Today, Nifty would have a support at 2,756 and resistance at 2,838 and BSE Sensex has support at 8,986 and resistance at 9,165.
DOW drops to six year low
Stocks at Wall Street ended in the red on Thursday, 19 February, 2009. While economic data remained largely uninspiring, the financial sector weighed on the market sentiment today and all three indices ended in the red. A mixed earning report from Hewitt Packard also weighed on investor sentiment today weakening the technology sector from the very start.
The Dow Jones Industrial Average ended lower by 90 points at 7,465, the Nasdaq closed lower by 25 points at 1,442 and the S&P 500 closed lower by 9.5 points at 778.
Six of the ten sectors ended in the red today. Consumer staples, telecom and energy were the only gainers. Citigroup, Bank of America and GE were the main Dow laggards today.
There were a number of economic reports scheduled for the day today. The Federal Reserve Bank of Philadelphia reported that the business climate for factories in the Philadelphia region worsened at the fastest rate in more than 18 years in February, 2009.
The Philly Fed index plunged from a reading of negative 24.3 for January to negative 41.3 in February, marking the lowest since October 1990. The index has fallen for 14 months out of the past 15. Readings below zero show that more manufacturing firms in the survey reported worsening conditions than reported improvements.
The Labor Department reported today that first-time claims for state jobless benefits were unchanged in the latest week, but remained at a high not seen since the early 1980s. Initial claims came in at 627,000 for the week ending 14 February, 2009. The four-week average of initial claims, which measures the underlying trend, rose by 10,500 to 619,000.
Continuing jobless claims remained at record high levels, edging closer to 5 million in the week ending 7 February, 2009. Continuing claims rose by 170,000 to 4.98 million, while the four-week average of continuing claims climbed by 92,500, to 4.83 million.
In a separate report, The Labor Department reported that U.S. producer prices in January rose for the first time since July,2008. It was mainly for the energy prices that staged a comeback and propelled the overall producer price index higher.
Producer prices for finished goods climbed by 0.8% in the month. The core PPI, which strips out food and energy prices, rose by 0.4%. Energy prices staged a huge turnaround in January, rising by 3.7% after falling 9.1% in December and 12.4% in November.
Oil prices shot up on Thursday, 19 February, 2009. Prices rose substantially after Energy Department reported unexpected drop in crude inventories for last week. Prices had been dropping in the past few sessions due to the ongoing recession concerns gripping the overall US economy and also many parts of the world. The report came a day late due to the Presidents Day holiday on Monday.
On Thursday, crude-oil futures for light sweet crude for March delivery closed at $39.48/barrel (lower by $4.86 or 14%) on the New York Mercantile Exchange. The March contract will expire tomorrow. The more active April contract rose 7.4% to $40.18. Last week, crude ended lower by 6.6%.
EIA reported today that U.S. oil inventories fell 200,000 to stand at 350.6 million barrels in the week ended 13 February, 2009. Market had expected today's report to show a buildup of crude inventories to the tune of 3 million barrels. Total products supplied over the last four-week period averaged 19.95 million barrels per day, down just 0.1% compared to the similar period last year. Excluding jet fuel, petroleum demand actually rose 1.2% from a year ago. U.S. refineries operated at 82.3% of their operable capacity last week, still a low level but up from the previous week's 81.6%.
Other than a few earning reports, the consumer price index for January is the only economic data scheduled for tomorrow.
Bullion metals stay steady
Gold prices trade in a narrow band
Bullion metal prices ended marginally lower after staying steady for the entire day on Thursday, 19 February, 2009. In the previous few sessions, bullion metal prices had risen to seven month high and were just around $35 away from touching its all time high set around March, 2008. Deep recession fears had increased the appeal of the precious metals as a safe haven against alternatives.
Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.
On Thursday, Comex Gold for February delivery fell $1.6 (0.2%) to close at $976.1 an ounce on the New York Mercantile Exchange. During the day, it rose to a high of $986 and also dropped to a low of $972. Last week, gold prices ended up by 3%. For January, 2009, gold had gained 3.9%. Year to date, gold prices are higher by 11%.
On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (11%) since then.
On Thursday, Comex silver futures for March delivery rose 35 cents (2.5%) to end at $13.935 an ounce. Year to date, silver has climbed 24.5% this year. For 2008, silver had lost 24%.
The World Gold Council reported yesterday that demand for gold surpassed $100 billion last year for the first time ever, amid increased industrial and jewelry consumption and investors' purchase of the metal as a safe haven. Gold demand - including jewelry consumption, industrial demand and identifiable investments such as bars, coins and gold exchange-traded funds - hit $102 billion in 2008, up 29% from a year ago. In tonnage terms, gold demand rose 4% to 3,659 tons.
In the currency market on Wednesday, the dollar index ended lower by 0.7%.
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 70 (0.45%) at Rs 15,561 per 10 grams. Prices rose to a high of Rs 15,617 per 10 grams and fell to a low of Rs 15,372 per 10 grams during the day's trading.
At the MCX, silver prices for March delivery closed Rs 371 (1.6%) higher at Rs 23,155/Kg. Prices opened at Rs 22,700/kg and rose to a high of Rs 23,392/Kg during the day's trading.
Crude shoots up
Prices rise by more than 14% in one session
Oil prices shot up on Thursday, 19 February, 2009. Prices rose substantially after Energy Department reported unexpected drop in crude inventories for last week. Prices had been dropping in the past few sessions due to the ongoing recession concerns gripping the overall US economy and also many parts of the world. The report came a day late due to the Presidents Day holiday on Monday.
On Thursday, crude-oil futures for light sweet crude for March delivery closed at $39.48/barrel (lower by $4.86 or 14%) on the New York Mercantile Exchange. The March contract will expire tomorrow. The more active April contract rose 7.4% to $40.18. Last week, crude ended lower by 6.6%.
Prices reached a high of $147 on 11 July, 2008 but have dropped almost 77% since then. Year to date, in 2009, crude prices are lower by 8%. On a yearly basis, crude prices are lower by 60%.
EIA reported today that U.S. oil inventories fell 200,000 to stand at 350.6 million barrels in the week ended 13 February, 2009. Market had expected today's report to show a buildup of crude inventories to the tune of 3 million barrels. Total products supplied over the last four-week period averaged 19.95 million barrels per day, down just 0.1% compared to the similar period last year. Excluding jet fuel, petroleum demand actually rose 1.2% from a year ago. U.S. refineries operated at 82.3% of their operable capacity last week, still a low level but up from the previous week's 81.6%.
The EIA also reported motor gasoline inventories increased by 1.1 million barrels last week, and distillate fuel inventories, which includes diesel and heating oil, decreased by 800,000 barrels.
Recently, Paris based, IEA has reported that this year's global oil demand will fall by 1 million barrels a day, or 1.1%, from last year. If realized, it will be the biggest yearly drop since 1982. The IEA cited a worsening economic outlook across all regions as the reason for the weakness in oil demand.
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 3.1% to $1.0986 a gallon and March heating oil rose 5% to $1.2045 a gallon.
Natural gas futures fell on Thursday after data showed U.S. inventories fell less than expected. Natural gas for March delivery fell 3.2%, to $4.078 per million British thermal units on the Nymex.
Daily Trading Calls - Feb 20 2009
Nifty (2789) Sup 2730 Res 2820
Sell L&T (641) SL 649
Target 626, 622
Sell Nalco (201) SL 205
Target 193, 191
Sell IVRCL Infra (111) SL 116
Target 103, 102
Buy PFC (141) SL 138
Target 147, 148
Buy Cairn (153) SL 149
Target 160, 162
Daily News Roundup - Feb 20 2009
Satyam Computers gets the Company Law board (CLB) approval to increase its capital base and rope in strategic investor. (ET)
The cash flow estimates of RIL from sale of gas evacuated from D6 block in KG basin are likely to slip below company estimates, says company official. (DNA)
Government plans special audit on RCom and its subsidiaries. (BS)
Government says no plans to bail out fraud-hit Satyam Computers. (ET)
NALCO may incur losses for the first time in its history in 2009-10, as per CMD, CR Pradhan. (BS)
TCS working on five RFPs for e-commerce deal worth US$75-100mn. (BS)
Sebi is probing Educomp Solutions for market manipulation of its shares. (DNA)
BEL is all set to commence production of the much-expected Akash air defense weapon system. (BS)
Ashok Leyland to supply 500 more buses to Angola by March-end. (ET)
JSW Steel is negotiating a 66% lower rate for coking coal from global suppliers at US$100 per tonne. (DNA)
TV 18 promoter group pledges 32% stake. (ET)
Radico Khaitan says three of its promoters have pledged 14.86% stake in the company for an undisclosed amount. (DNA)
Torrent Power has emerged the highest bidder for the distribution franchisee for Kanpur. (DNA)
Gayatri Projects wins two orders worth Rs21.3bn from AP government. (DNA)
Dabur not planning to hive-off its retail business. (BS)
BoB may raise Rs5bn through Tier-II bonds. (BS)
HDFC Bank raises Rs3.5bn through private placement of bonds. (ET)
NIIT launches program for International Financial Reporting Standard. (BS)
Lok Housing to restate accounts. (BS)
Essar Group may make further investments in Canada. (ET)
Jet Airways may take stake in GMR MRO venture. (DNA)
Jubilant Organosys to buy back a portion of FCCBs worth US$48mn. (ET)
Subhiksha promoter opposes ‘fresh’ audit. (ET)
Inflation rate dips to a 13-month low of 3.92% for the week ended February 7, 2009. (ET)
The government has notified the new emission norms, Bharat Stage IV, effective from April 2010, which would require huge investments to upgrade the technology of popular cars. (ET)
Companies can bring in foreign capital through the issue of partly paid-up shares if these are converted into fully paid up shares in 18 months. (ET)
Pharma companies can no longer increase prices of medicines by tweaking their composition. (ET)
Domestic Airlines are looking to hire more Indian pilots following a government directive to replace their foreign pilots by 2010. (ET)
India’s tea exports are expected to touch 203mn kg in FY09 on Kenyan shortfall. (ET)
RBI to review the issue of holding companies for banks. (BS)
RBI may cut rates next week, says Moody arm. (BS)
Global IT services spent to decrease by 1% in 2009, according to results from 2009 CIO agenda survey conducted by Gartner. (BS)
Push and pull to continue
There are two ways of exerting one's strength: one is pushing down, the other is pulling up.
After struggling for direction for two days, the market seems to be delicately poised with bias still mostly negative. Initial indicators point to a pull at start due to fresh losses across the globe. The Dow has hit a six-year low. Though European stocks closed flat, they were actually up slightly earlier. Asian markets are all in the red this morning. The remaining day will see usual push and pull among the bulls and bears with lower volume. Meanwhile, oil prices have spiked and gold has taken a slight breather even as it remains among the most sought after asset class globally.
After threatening to break down earlier in the week, the market now needs a trigger(s) to make its next move. With inflation at a 13-month low, there is every chance that the RBI may go for another round of monetary easing. The central bank governor has indicated his willingness to do so. The question is not if, but when and by how much will the RBI cut policy rates. The markets and India Inc will definitely welcome another rate cut. But then, will it be enough to entice the bulls? That’s the big question. We have a long weekend to think it over.
FIIs were net sellers in the cash segment on Thursday at Rs3.63bn while the local institutions pumped in Rs1.08bn. In the F&O segment, the foreign funds were net buyers at Rs4.26bn. On Wednesday, FIIs were net sellers in the cash segment at Rs4.34bn. Mutual Funds were net sellers at Rs1.07bn on the same day.
US stocks slipped on Thursday, with the Dow Jones Industrial Average touching a six-year low after Hewlett-Packard cut its profit forecast and concerns about rising credit-card defaults dragged financial shares to the lowest level since 1995.
The Dow slid 89 points, or 1.2%, to 7,465..95, closing at the lowest point since Oct. 9, 2002, the low of the last bear market. It had dropped as low as 7,447.55 during the session.
The Standard & Poor's 500 index lost 9.5 points, or 1.2%, to 778.94, ending at its lowest point since Nov. 20. That sets the index just above the so-called bear market lows hit in November.
The Nasdaq Composite index shed 25 points or 1.7%, to finish at 1,442.82. Technology has held up better than the rest of the market and the Nasdaq stands almost 10% above its Nov. 20 close.
The Dow has now broken through the so-called bear market lows of late November. And, some analysts say that the major indices have done enough damage on the technical side in the last few days that they are at risk of falling a lot more.
Stocks are likely to continue drifting lower through the first half of the year, as there is no big catalyst looming to change Wall Street's momentum. The Obama administration has introduced or modified a number of new plans as part of efforts to steady the ship. But the market reaction has been muted at best.
The number of Americans filing new claims for unemployment held steady last week at 627,000, versus forecasts for a drop to 620,000. But the number of Americans continuing to file claims rose to a record 4,987,000.
Wholesale inflation prices advanced more than expected last month, partly as a result of higher energy costs. The Producer Price Index (PPI) rose 0.8% after falling 1.9% in December. Economists had forecast an increase of 0.3%.
The so-called core PPI, which strips out volatile food and energy prices, rose 0.4% after rising 0.2% in December. Economists had estimated a gain of just 0.1%.
The Philadelphia Fed index, a regional reading on manufacturing, fell to minus 41.3 from minus 24.3 in January. Economists thought it would dip to minus 25. It was the lowest reading since 1990, according to High Frequency Economics.
On the upside, the index of leading economic indicators, issued by the Conference Board, rose 0.4% in January from a revised 0.2% in December. Economists thought it would rise 0.1%.
Hewlett-Packard (HP) reported lower earnings that met analysts' estimates on higher revenue that missed estimates in a report released late on Wednesday. The company also gave a forecast for current-quarter results that is short of forecasts. HP shares fell nearly 8%.
Sprint Nextel reported a quarterly loss and said 1.3 million subscribers ditched its mobile phone service. But the loss narrowed from a year earlier and was smaller than analysts had expected. Revenue fell from the prior year and was shy of expectations. Investors focused on the positive and the stock rose 20%.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.81% from 2.75% on Wednesday. Treasury prices and yields move in opposite directions.
Lending rates were little changed. The 3-month Libor rate was 1.25%, unchanged from Wednesday. The overnight Libor rate fell to 0.29% from 0.30% Wednesday. Libor is a bank lending rate.
US light crude oil for March delivery settled up $4.86 to $39.48 a barrel on the New York Mercantile Exchange. Prices spiked after the government said that crude supplies fell last week for the first time in two months.
Gasoline prices decreased eight-tenths of a cent to a national average of $1.949 a gallon.
The dollar fell against the euro and gained against the yen. COMEX gold for April delivery fell $1.70 to settle at $976.50 an ounce.
Friday brings a key report on consumer prices and quarterly results from JC Penney and Lowe's.
European shares clung near the year's lows on Thursday. The pan-European Dow Jones Stoxx 600 index finished the day pretty much where it started, up a fraction of a percentage point to 183.39.
Germany's DAX 30 index climbed 0.2% to 4,215.21, while the French CAC-40 index fell 0.1% to 2,872.60 and the UK's FTSE 100 index rose 0.3% to 4,018.37.
Markets ended on a flat note for the second straight trading session on Thursday. Key indices started with slight positive gains but were unable to build on to it on account of lack of follow up buying. Even, better than expected inflation figures had a minimal impact on the market sentiments. Inflation dropped to 3.92% for week ended Feb 7 against expectation of 4.01%.
Finally, the BSE Sensex gained 27 points to close at 9,042 and the NSE Nifty gained 13 points at 2,789.
Among the 30-components of Sensex, 18 stocks ended in positive terrain and 12 stocks ended in the red. The top gainers in the Sensex were, Wipro, Grasim, Infosys, Maruti Reliance Infra, HDFC and M&M. On the other hand, the major losers were Hindalco, ACC, ICICI Bank, L&T, DLF and SBI.
Shares of Orchid Chemicals gained by 1% to Rs70.5 after reports stated that the company plans to raise overseas debt via ECB to buy back FCCBs. The scrip touched an intra-day high of Rs72 and a low of Rs69 and recorded volumes of over 35,000 shares on BSE.
Shares of SpiceJet surged higher by 2.5% at Rs15.1 after reports stated that the company was open for equity dilution to foreign airlines if the government permits overseas companies to pick up stake in local carriers. The scrip touched an intra-day high of Rs15.7 and a low of Rs15 and recorded volumes of over 10,00,000 shares on BSE.
Shares of TRF Ltd surged by over 3% to Rs238 after the company announced that it received an order worth Rs997.4mn from Andhra Pradesh Power Generation Corporation Ltd (A Govt. of A.P. Undertaking, for setting up the Coal Handing Plant for its Rayalaseema Thermal Power Project, Stage-III, Unit - 5 (1 X 210 MW). The scrip touched an intra-day high of Rs257 and a low of Rs236 and recorded volumes of over 3,000 shares on BSE.
The IT sector staged a strong comeback as stocks witnessed some value buying after slipping sharply in the past few trading session. Tech Mahindra rallied by over 12%, Wipro rose over 5.5%, Infosys advanced 2.5% and TCS advanced by 2%.
Shares of Suzlon Energy surged by over 3% to Rs43 after the company announced that REpower, a subsidiary of Suzlon, won an order worth nearly EURO 2bn. The scrip touched an intra-day high of Rs43.9 and a low of Rs42.6 and recorded volumes of over 81,00,000 shares on BSE.
Shares of Tata Motors gained by 1.1% to Rs134 after the company announced that it has entered into an agreement with Central Bank of India for financing its range of passenger vehicles. The scrip touched an intra-day high of Rs136 and a low of Rs131 and recorded volumes of over 28,00,000 shares on BSE.
Market direction might continue to be indecisive in the coming days. There is no clear direction until we get fresh news-flow (bad or good) either locally or globally.
Tulip Telecom - Buyback of FCCBs
Tulip Telecom Ltd has informed that in terms of the approval granted by the Board of Directors of the Company on January 19, 2009 to extinguish, restructure, buyback / redemption of FCCBs, the Company, till date, has repurchased the FCCBs aggregating to US$ 30.50 million.
Indian Overseas Bank
We recommend a sell in Indian Overseas Bank stock from a short-term trading perspective. It is apparent from the charts of Indian Overseas Bank that it has been on a long-term downtrend from its January 2008 peak of Rs 228. Since then, the stock has been forming lower peaks and lower troughs. Moreover, the intermediate and medium-term trend also is down.
On February 2, the stock penetrated a key support level at Rs 60 by declining 3 per cent that reinforced the downtrend. The stock is experiencing heavy selling pressure over the past three trading session. The stock is trading well below its 21 and 50-day moving averages. Both daily and weekly relative strength indices (RSI) are featuring in the bearish zone.
The daily moving average convergence and divergence is also indicating a sell and is hovering in the negative territory. Considering that the intermediate-term downtrend is intact, we are bearish on the stock from a short-term. We expect the decline to continue until it hits our price target of Rs 45.5. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 54.
Turnover declines sharply
Educomp Solutions February 2009 futures at discount
Nifty February 2009 futures were at 2785.90, at a discount of 3.45 points as compared to the spot closing of 2789.35. Turnover in NSE's futures & options (F&O) segment was Rs 30,637.67 crore, much lower than Rs 41,094.83 crore on Wednesday, 18 February 2009.
Educomp Solutions February 2009 futures were at discount at 1997 compared to the spot closing of 2019.05.
Reliance Industries February 2009 futures were near spot price at 1293 compared to the spot closing of 1293.75.
Infosys Technologies February 2009 futures were at 1208.55, at the same level as the spot closing of 1208.55.
In the cash market, the S&P CNX Nifty gained 13.20 points or 0.48% at 2789.35.
Satyam CEO - Murty's Email to Employees
Dear Associates:
Over the last few days, I have been interacting with many of our customers – of differing size, representing different industries and locations. Almost without exception, they tell me the same thing, over and over: how our service remains excellent – even in the face of extreme difficulty – and how very impressed they are with your professionalism and dedication.
These inputs act as a reminder – not that one was needed – that Satyam is a very special place with very special people. I really do feel enormously privileged to serve you at this time.
Two things are very clear to me.
First, we can – and we will – rebuild this great company. Already, we are winning fresh orders from new customers. This is a very strong sign of renewed confidence in Satyam, and shows that we can eventually compensate the few loses we have seen to date. You will learn more about these wins later this week, in NewsToday.
Second, the global economic condition and outlook remain dismal, even as we begin our own financial recovery. This means our challenges are extraordinary, and meeting them will require extraordinary efforts. To do this, we must control costs and conserve cash; and the Taskforce has reviewed and recommended a few action points.
I am asking for your help to reduce, avoid or defer operational expenses wherever and whenever possible, beginning with the following items. I know this will mean personal sacrifices and inconveniences, but these should only be temporary, and will help us build a stronger and more competitive Satyam. Once our situation eases and conditions allow, we will revert to normal practices.
Onsite (high-cost countries):
· The current policy that provides for a maximum waiting period between projects of two weeks will continue. Compliance to this needs to be adhered to, totally
· As a policy, Pre-sales, Solution Architects, Delivery Support and Operations Support personnel will be located in low-cost countries. Exceptions to this rule will be rare, if at all, and considered on a case-by-case basis.
Travel:
· All units have been asked to sharply reduce non-billable domestic and international travel (by more than 60%). While unavoidable travel will continue (for consulate appearances, visa stamping, etc.), virtual meetings to be adopted wherever possible.
· Business class travel – where permitted – is suspended until further notice.
· Hotel stays are suspended for all associates in cities where Satyam has guest houses. As much as possible overnight stays to be based on absolute need. When guest houses are not available, hotel stays within eligible limits will be permitted. Requests for deviations from these limits are being completely discouraged.
· For associates at their base locations, the use of car services for intra-city conveyance is suspended. Associates are encouraged to use their personal transportation (and claim eligible reimbursement) or hire a 'call taxi'. For associates onsite, the use of public transit (tube trains and trams) is encouraged; limousine service is suspended.
· For local conveyance while visiting another location within India, only "small car" service is permitted, regardless of the Associate's level. The use of premium and luxury cars is suspended (except for visits by customers / dignitaries).
Communication
expenses are to be kept to the barest minimum and associate support sought to utilize low cost modes.
Marketing:
· Participation at events and conferences, and business entertainment activities are being suspended. In rare cases where exceptions are unavoidable, prior approval from the Group AIC (Associate-In-Charge) is required.
All Advertising and Marketing Collateral expenses are suspended
Training :
· External Training is suspended for the time being. We will maximize use of internal training facilities and instructors. In rare cases where exception cannot be avoided due to customer requirements, prior approval of Group AIC is necessary.
Infrastructure :
· We have identified several rented premises whose lease will be terminated to provide sizeable savings. This space is anyway in excess and was invested based on anticipated growth. We will also be requesting associates on Business Wait to operate in shifts to optimize available space.
Capex :
· All capex expenditures – unless required to meet customer deliveries – are being suspended till further notice. This includes time-bound renewal of laptops, office renovation etc
These measures are necessitated not just because of our financial situation, but are relevant given the larger economic slow-down.
Let us operate on the premise that every dollar has to be conserved so that our path to success is faster. All expenses that we incur should be questioned and when in doubt, it is preferable to seek clarifications than incur the same. Please be assured that these measures will not impede our ability - to keep our business running smoothly, and competing effectively in the market for new business.
We clearly recognize that these won't work without your help and cooperation. We are confident that we can count on your cooperation and goodwill – which you are already demonstrating in the most trying of circumstances – and for that we remain very grateful.
Warm regards,
ASM
(AS Murty)
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