Auto and oil gears up markets

The benchmark Sensex started the day almost flat with a positive gap of three points at 14514. Mixed global cues and fear of recession ruled the sentiment leading to selling in front-line and fast moving consumer goods stocks dragging the index to its day's low of 8788 by mid-morning. However, firm opening in European markets and sustained buying in select heavy weights, auto and oil & gas stocks turned the tide and Sensex entered the positive territory to touch the day’s high of 8998. But, the index remained range-bound though with a positive bias thereafter due to some profit booking at higher levels and lack of buying interest. Sensex closed the session 52 points up at 8955 and the broader Nifty ended 23 points higher at 2786.

Ten out of 13 sectoral indices at BSE were up for the day, with BSE Auto leading the upsurge, posting 2.74% gains. BSE Oil & Gas (up 1.28%) and BSE Teck (up 1.21%) occupied the second and third slot respectively. However, BSE Bankex tumbled 2.15% and BSE CD lost 1.33%. The market breadth was negative. Of the 2,448 scrips traded on the BSE, 1,341 stocks declined, whereas 1,014 stocks advanced. Ninety four stocks ended unchanged.

Among Sensex stocks, auto major Tata Motors was the lead gainer soaring by 7.26% at Rs150. Maruti Suzuki India advanced 5.02% at Rs696.05, Grasim Industries moved up by 3.67% at Rs1,458.85, Reliance Communications jumped 2.95% at Rs159, ONGC shot up by 2.66% at Rs715.25, Sterlite Industries added 2.37% at Rs253 and NTPC rose 2.30% at Rs184.20. Among laggards, Ranbaxy Laboratories dropped 18% at Rs169.95, ICICI Bank shed 4.63% at Rs324.75, HDFC declined by 3.41% at Rs1,211.65 and Hindalco Industries lost 3.12% at Rs38.80.

Over 80.02 lakh shares of Unitech changed hands on BSE followed by Satyam Computer Services (76.18 lakh shares), DLF (64.80 lakh shares), Suzlon Energy (61 lakh shares) and Ranbaxy Laboratories (60 lakh shares).

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BSE Bulk Deals to Watch - Feb 26 2009

Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
26/2/2009 532696 EDUCOMP SOLN OPG SECURITIES P LTD B 95296 1531.04
26/2/2009 532696 EDUCOMP SOLN OPG SECURITIES P LTD S 95296 1531.97
26/2/2009 504000 ELPRO INTERN LOTUS GLOBAL INVESTMENTS LIMITED S 72000 275.00
26/2/2009 531137 GEMSTONE INV GANDHI MANISHA NAVNEETLAL B 49495 23.73
26/2/2009 511728 KZLEASING JYOTIKABEN MAHESHBHAI HADVANI B 33662 53.51
26/2/2009 511728 KZLEASING JYOTIKABEN MAHESHBHAI HADVANI S 19308 53.41
26/2/2009 507300 RAVALG SUG F OPG SECURITIES P LTD B 370 4075.76
26/2/2009 507300 RAVALG SUG F OPG SECURITIES P LTD S 370 4037.45
26/2/2009 521236 SRI GANAPATH ANITA JAIN B 61800 6.42
26/2/2009 521236 SRI GANAPATH AMIT JAIN S 50000 6.42
26/2/2009 531390 UPSURGE INVS BHANUMATIDHARAMRAJGIRI B 285000 11.20
26/2/2009 531390 UPSURGE INVS REETA JAIN S 148000 11.25
26/2/2009 526775 VALIANT COMM* ENGAGE COMMUNICATIONS PRIVATE LIMITED S 133826 26.75

NSE Bulk Deal Watch - Feb 26 2009

Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
26-FEB-2009,AKRUTI,Akruti City Limited,PR VYAPAAR PRIVATE LIMITED,BUY,335000,1049.29,-
26-FEB-2009,EDUCOMP,Educomp Solutions Limited,C D INTEGRATED SERVICES LTD,BUY,252697,1527.46,-
26-FEB-2009,EDUCOMP,Educomp Solutions Limited,DEUTSCHE SECURITIES MAURITIUS LTD.,BUY,108975,1569.77,-
26-FEB-2009,EDUCOMP,Educomp Solutions Limited,MORGAN STANLEY & CO INT LTD A/C MORGAN STANLEY DEAN WITTER ,BUY,122172,1564.12,-
26-FEB-2009,EVINIX,Evinix Accessories Limite,PANKHURI INVESTEMENTS & SECURI,BUY,774000,2.05,-
26-FEB-2009,IRB,IRB Infrastructure Develo,DEUTSCHE SECURITIES MAURITIUS LIMITED,BUY,10810250,99.00,-
26-FEB-2009,AKRUTI,Akruti City Limited,PR VYAPAAR PRIVATE LIMITED,SELL,250000,1034.83,-
26-FEB-2009,CHAMBLFERT,Chambal Fertilizers Ltd.,CITIGROUP GLOBAL MKTS MAURITIUS PVT LTD- SELL CODE,SELL,3001500,36.64,-
26-FEB-2009,EDUCOMP,Educomp Solutions Limited,C D INTEGRATED SERVICES LTD,SELL,252697,1528.39,-
26-FEB-2009,EDUCOMP,Educomp Solutions Limited,CITIGROUP GLOBAL MKTS MAURITIUS PVT LTD- SELL CODE,SELL,119175,1565.20,-
26-FEB-2009,EDUCOMP,Educomp Solutions Limited,Copthall Mauritius Investment Ltd,SELL,100000,1538.44,-
26-FEB-2009,EVINIX,Evinix Accessories Limite,NCR BUILDTECH PRIVATE LIMITED,SELL,756810,2.05,-
26-FEB-2009,EVINIX,Evinix Accessories Limite,PANKHURI INVESTEMENTS & SECURI,SELL,4596,2.05,-
26-FEB-2009,IRB,IRB Infrastructure Develo,DEUTSCHE BANK AG,SELL,10828991,99.00,-

Post Session Commentary - Feb 26 2009

Indian market rebounded sharply from the day’s low to conclude the day with good gains on the back of considerable buying during final trading hours. Positive European markets along firm US index futures contributed to the recovery in the bourses. Along with hopes of further rate cut by RBI also added to the sentiments. However, earlier during the trading market was showing weakness with mild volatility following fragile cues from the global markets. Sharp slide in Chinese markets weighed on the domestic stocks during afternoon trade. Market was lower despite further ease in inflation number for the week ended 14th Feb 2009, to 3.36% as against 3.92% in the previous week.

The market opened on downbeat note tracking Wall Street losses overnight and mixed cues from the Asian markets. The US markets on Wednesday ended lower after dividend cuts triggered a sell-off in insurers and an unexpected drop in home sales dragged down industrial shares. The existing homes sales for January dropped 5.3%, their lowest level since 1997, to a seasonally adjusted annual rate of 4.49 million in January. Benchmark indices were exhibiting volatility ahead of the settlement of February F&O series today. Despite drop in inflation number for 14th Feb, market continued to hold the same impetus before taking U turn during last hours. Domestic market recovered on hopes of rate cut along with firm European markets. BSE Sensex ended above 8,950 mark and NSE Nifty closed above 2,750 level. From the sectoral front, upswing was mainly led by Auto, Oil & Gas, Teck, IT, FMCG, Power and Metal, stocks. However, Bank, consumer Durables and Reality stocks witnessed most of the selling from these baskets.

Among the Sensex pack 21 stocks ended in green territory and 9 in red. The market breadth indicating the overall health of the market remained negative as 1014 stocks closed in green while 1341 stocks closed in red and 94 stocks remained unchanged in BSE.

The BSE Sensex closed higher by 52.30 points at 8,954.86 and NSE Nifty ended up by 23.15 points at 2,785.65. BSE Mid Caps ended with gain of 2.48 points at 2,759.46 while BSE Small Caps closed with loss of 21.92 points at 3,112.77. The BSE Sensex touched intraday high of 8,998.31 and intraday low of 8,788.32.

Gainers from the BSE Sensex pack are Tata Motors (7.26%), Maruti Suzuki (5.02%), Grasim Indus (3.67%), RCom (2.88%), ONGC Ltd (2.66%), Sterlite Industries (2.37%) and NTPC Ltd (2.30%).

Losers from the BSE Sensex pack are Ranbaxy Laboratories (18%), ICICI Bank (4.63%), HDFC (3.41%), Hindalco (3.12%), Tata Power (1.81%) and SBI (1.31%).

India’s inflation has slipped to 14 month low mainly due to cheaper fuels, to 3.36% in the week ended Feb 14 as against 3.92% in the previous week. WPI for all commodities down by 0.1% to 227.8(week on week). The prices of manufactured products slipped 0.1% and prices of food articles were down 0.3% week on week.

On the global markets front the Asian markets which opened before the Indian market, closed lower tracking overnight losses in the Wall Street. Investors were worried about worsening economic and corporate profit prospects. Shanghai Composite, Nikkei 225, Hang Seng and Seoul Composite ended lower 85.32, 110.14, 3.29 and 12.29 points at 2,121.25, 12,894.94, 7,457.93 and 1,054.79 respectively. However Straits Times index closed slightly up by 0.65 point at 1,617.44.

European markets which opened after the Indian market are trading up as investors welcomed a UK government insurance scheme for banks'' assets. The UK government is ready to guarantee 600 billion pounds ($853 billion) of toxic bank assets to stabilize Royal Bank of Scotland and Lloyds Banking Group. In London FTSE 100 is trading higher by 42.66 points at 3,891.64 and in Frankfurt the DAX index is trading up by 27.33 points at 3,873.54.

The BSE Auto index ended up by (2.74%) or 71.92 points at 2,694.30 on reduction in excise duty to 8% from 10%. Gainers are Tata Motors (7.26%), Amtek Auto (7.20%), Maruti Suzuki (5.02%), Ashok Leyland (4.84%) and Bharat Forge (3.56%).

The BSE Oil & Gas index closed with increase of (1.28%) or 78.03 points at 6,165.33 as the index is expected to benefit from lower service tax on exploration & production activities which currently stands at 12.36%. Scrips that gained are ONGC Ltd (2.66%), Gail India (2.21%), Reliance (1.93%) and Cairn Ind (0.93%).

The BSE Teck index also gained (1.21%) or 21.10 points to close at 1,761.05. Mphasis Ltd (7.31%), IOL Netcom (4.74%), RCom (2.88%), Him Futr Com (1.84%) and Rolta Ind (1.71%) ended in green.

The BSE IT index ended higher by (1.14%) or 23.76 points to close at 2,110.69 as the Indian rupee plunged against dollar. Mphasis Ltd (7.31%), Oracle Fin (3.02%), Rolta Ind (1.71%), Infosys Tech (1.65%) and TCS Ltd (0.42%) ended in positive territory.

The BSE FMCG stocks gained (1.02%) or 20.49 points to close at 2,036.39. Main gainers are United Spr (6.41%), Tata Tea Ltd (3.37%), United Brew (2.70%), Dabur India (1.33%) and ITC Ltd (1.10%).

The BSE Bank index lost (2.15%) or 91.88 points at 4,185.15 on fears of rising defaults in a weakening economy. Main losers are Axis Bank (5.39%), Punjab National bank (5.07%), ICICI Bank (4.63%), IDBI Bank (3.96%) and Federal Bank (3.61%).

Tata Motors ended higher by 7.26%. The company has launched its Xenon XT (cross terrain), a five-seater pickup. Along with this, the company announced that it will launch ‘Nano’ in Mumbai on 23rd March 2009. Bookings for the world’s cheapest family car will start from April. The car was exposed at the auto expo in January 2008 in Delhi and it will be launched commercially at a function on 23rd March.

Everest Kanto Cylinder ended with gains of 6.76%. The company has informed that Cp Industries Holdings, Inc., (CPI) step down wholly owned subsidiary of the Company in USA has received orders totaling USD 5.8 Million from National Oilwell Varco, Rig Solutions Group. In addition, a Letter of Intent has also been received for supply of large pressure vessels for an additional USD 7.2 Million.

RCom has advanced by 2.88% after on reports that the company is planning raise Rs130bn debt in the next three months to meet certain capex requirements and scheduled debt repayment obligations.

L&T dropped marginally by 0.27%. L&T’s buildings and factories operating company, part of its construction division has bagged new orders worth around Rs. 11.62 bn in the fourth quarter of the current financial year for construction of factories and residential projects. The company has bagged a major design & builds order from the Andhra Pradesh Rajiv Swagruha Corporation Ltd valued at Rs. 6.05 bn for the construction of an integrated thematic township.

Turnover surges

Nifty March 2009 futures at discount

Nifty March 2009 futures were at 2767, at a discount of 18.65 points as compared to the spot closing of 2785.65. Turnover in NSE's futures & options (F&O) segment surged to Rs 50,142.32 crore from Rs 40,129.86 crore on Wednesday, 25 February 2009, as traders squared positions in February 2009 contracts and created fresh positions in March 2009 contracts ahead of today's (26 February 2009) expiry of February 2009 contracts.

NTPC March 2009 futures were at discount at 180.65 compared to the spot closing of 184.75.

Punj Lloyd March 2009 futures were near spot price at 83.40 compared to the spot closing of 82.95.

Shree Renuka Sugars March 2009 futures were near spot price at 81.45 compared to the spot closing of 81.20.

In the cash market, the S&P CNX Nifty gained 23.15 points or 0.84% at 2785.65.

RIL, Infy help market stage a strong intraday rebound

Key benchmark indices gained for the second straight day on buying in auto, IT and FMCG stocks. Firm opening of the European markets and higher US index futures aided a strong intraday rebound on the domestic bourses. Hopes of a further cut in policy rates by the Reserve Bank of India also aided the rally. Index heavyweight Reliance Industries (RIL) bounced back. But Ranbaxy Laboratories fell 18% after US regulators said one of its plants in India had falsified data and test results.

The BSE 30-share Sensex was up 52.30 points, or 0.59%, up close to 165 points from the day's low. The strong rebound took the Sensex within striking distance of the psychologically important 9,000 level. That 9,000 level is proving a strong resistance for the barometer index was evident once again as the Sensex cut gains at the fag end of the trading session after hitting an intraday high of 8,998.31. A sharp slide was witnessed in late trade yesterday, 25 February 2009, soon after the Sensex came within striking distance of the 9,000 level.

The market was volatile today, 26 February 2009, as traders squared positions in February 2009 contracts and created fresh positions in March 2009 contracts in the derivatives segment ahead of the expiry of February 2009 contracts.

After a steady opening, the market weakened in morning trade on concerns of higher borrowing costs for Indian Inc. It came off the lower level shortly. However, a sharp slide in Chinese markets weighed on the domestic bourses for a while in early afternoon trade. The market soon shrugged of the sharp slide in Chinese stocks as lower inflation raised rate cut hopes. The recovery gathered steam in late trade on firm opening of the European markets.

As per reports, rollover of Nifty positions from February 2009 series to March 2009 series stood at 62% while marketwide rollover of positions was 57%, as on Wednesday, 25 February 2009.

There are expectations that the Reserve Bank of India (RBI) will cut interest rates further to support faltering growth. Inflation rate slowed to 3.36% in mid-February 2009, the lowest in nearly 15 months, which would give the central bank more elbow room to loosen monetary policy. The government released the inflation data during trading hours today. As per reports, RBI governor D Subbarao will meet select heads of banks on Friday, 27 February 2009, to hold discussions on issues like credit flow and liquidity conditions.

But concerns about rising borrowing costs for Indian corporates linger in the minds of investors as fears of a downgrade of India's sovereign rating by global rating agencies loom large. Rating agency S&P on Tuesday, 24 February 2009, cut its outlook on India's long-term sovereign credit rating to negative from stable citing worsening government finances, which could raise Indian firms' overseas borrowing costs and weaken the rupee. Moody's Economy.com on Wednesday, 25 February 2009, said India's wider fiscal deficit will boost funding costs and weaken investor confidence.

The Union Cabinet today raised the cost of living allowance paid to government employees to 22% of basic salary, from an earlier 16%, Home Minister P Chidambaram said. The move would cost Rs 3514 crore ($700 million) to the government exchequer.

In another decision, the Cabinet allowed state government to run up higher fiscal deficits.

Meanwhile, in the interim trade policy, Union Commerce Minister Kamal Nath on Thursday announced a cut in customs duty to 3% from 5% under the export promotion capital goods (EPCG) scheme. He also announced that the duty entitlement pass book (DEPB) scheme for exporters has been extended till December 2009. Nath also said he is confident that India would achieve a target of $175 billion in exports in financial year ending March 2009 (FY 2009). He added that exports from SEZs in FY 2009 is seen at Rs 90,000 crore.

The global financial sector crisis and recession in key global economies have pushed economic growth in India down to a six-year low. The Central Statistical Organisation (CSO) has pegged India's projected GDP growth for the year ending March 2009 at 7.1%, the slowest in six years and below the previous year's 9% rise. S&P, however, feels that India's medium term growth prospects remain strong.

Trading in US index futures indicated that the Dow could rise 83 points at the opening bell on Thursday, 26 February 2009.

European markets, which opened after Indian markets, rose on Thursday, snapping a four-day losing streak, as investors digested a flood of results and welcomed a UK government insurance scheme for banks' assets. The key benchmark indices in France, Germany and UK were up by between 1.47% to 1.8%.

But Asian markets, which opened before Indian market, edged lower after an early rally fizzled and investors found few incentives to make long-term bets with economic and corporate profit prospects worsening. Shanghai Composite index was down 3.87%. Key indices in Japan, South Korea, Singapore and Hong Kong were down by between 0.04% to 1.15%.

US stocks made a strong intraday bounce back on Wednesday, 25 February 2009. The Dow Jones Industrial Average, which had been off nearly 200 points earlier in the session, ended the day down 80.05 points, or 1.09%, at 7270.89. US bank stocks rose after US officials unveiled details of the Treasury's plan to convert stakes to common stock, although the wider index remained anchored by a bleak housing report from The National Association of Realtors.

The BSE 30-share Sensex was up 52.30 points, or 0.59%, to 8,954.86. At the day's high of 8,998.31 Sensex gained 95.75 points in late trade. At the day's low of 8,788.32 the Sensex lost 114.24 points in mid-morning trade.

The S&P CNX Nifty was up 23.15 points, or 0.84%, to 2,785.65.

The market breadth, indicating the overall health of the market was weak on BSE with 1,026 shares advancing as compared with 1,372 that declined. A total of 71 shares remained unchanged.

The BSE clocked a turnover of Rs 2,640 crore, higher than Rs 2,217.43 crore on Wednesday, 25 February 2009.

Nifty March 2009 futures were at 2767, at a discount of 18.65 points as compared to the spot closing of 2785.65. Turnover in NSE's futures & options (F&O) segment surged to Rs 50,142.32 crore from Rs 40,129.86 crore on Wednesday, 25 February 2009.

The barometer index BSE Sensex has gained 132.80 points or 1.5% in last two trading sessions. But it is down 692.45 points or 7.17% in calendar 2009 from its close of 9,647.31 on 31 December 2008.

The BSE Auto index (up 2.74%), the BSE Oil & Gas index (up 1.28%), the BSE TECk index (up 1.21%), the BSE IT index (up 1.14%), the BSE FMCG index (up 1.02%), the BSE Power index (up 0.89%), the BSE Metal index (up 0.82%) outperformed the Sensex.

The BSE Bankex (down 2.15%), the BSE Consumer Durables index (down 1.33%), the BSE Realty index (down 0.07%), the BSE Healthcare index (up 0.2%), the BSE PSU index (up 0.32%), the BSE Capital Goods index (up 0.35%) underperfomed the Sensex

From the 30 share Sensex pack, 21 stocks rose while rest fell.

India's largest drugmaker by sales Ranbaxy Laboratories fell 18% after an investigation by the US Food and Drug Administration (FDA) found that Ranbaxy had falsified data and test results of medicines manufactured at its Himachal Pradesh (HP) facility to obtain marketing approval in the United States. The stock was the major loser from the Sensex pack.

But Piramal Healthcare rose 16.93% on report French drug maker Sanofi-Aventis has emerged as the front-runner to buy a substantial stake in the Indian firm.

Matrix Laboratories rose 4.66% after the company said it got approval from the World Health Organisation for generic version of a HIV drug.

Strides Arcolab jumped 4.32% on reporting a net profit of Rs 6.13 crore in the year ended December 2008 as compared to net loss of Rs 115.21 crore in the year ended December 2007.

Other healthcare stocks, Cipla, Dr. Reddy's Laboratories and Fortis HealthCare rose by between 0.48% to 3.19%.

Oil exploration and production firms rose as they stand to benefit from lower service tax on exploration & production activities which currently stands at 12.36%. India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 1.93% to Rs 1,290.45. The stock came off the day's low of Rs 1,252.40.

India's largest oil exploration firm by sales ONGC rose 2.66% as crude oil prices surged over 6% on the New York Mercantile Exchange on Wednesday, 25 February 2009. Other oil & gas stocks Cairn India and Gail India rose 0.93% and 2.21% respectively.

Seamec jumped 20% extending gains for the second day, on reporting a net profit of Rs 54.57 crore in Q4 December 2008 as compared to net loss of Rs 15.88 crore in Q4 December 2007.

Auto stocks extended recent gains on cut in excise duty by the government on Tuesday, 24 February 2009. India's largest commercial vehicle maker by sales Tata Motors jumped 7.26% after company said bookings for its Rs 1-lakh car Naco will commence from the second week of April 2009. India's second largest commercial vehicle maker by sales Ashok Leyland rose 4.97%.

Other auto stocks, Hero Honda Motors, Maruti Suzuki India and Mahindra & Mahindra rose by between 0.74% to 5.02%.

Ashok Leyland on Wednesday, 25 February 2009 said it had decided to pass on the full benefit of the tax reduction to customers, and that the average prices of its vehicles will be lowered by Rs 16,000. Tata Motors also reportedly cut vehicle prices by about 2%.

However, price cut alone is unlikely to revive sluggish demand for trucks. Currently, the commercial vehicles (CV) industry is struggling to source retail finance as banks and other financial institutions have refrained from lending to the sector. According the latest report from the Society of Indian Automobile Manufacturers (Siam), sales in the CV industry fell by almost 20% at 3,11,283 units for the period April 2008-January 2009 over the period April 2007-January 2008. High interest rates and a slowdown in the economy have impacted demand for trucks.

FMCG stocks gained on defensive buying. ITC, Dabur India, Nestle India, Hindustan Unilever and United Spirits rose by between 0.05% to 6.41%.

Outsourcing focussed IT stocks gained as rupee tumbled against the dollar. India's second largest software services exporter Infosys Technologies rose 1.65% to Rs 1,236.35 off the day's low of Rs 1,200.55. Its ADR slipped 0.65% overnight. India's third largest software services exporter, Wipro fell 0.69% to Rs 215.95, off the day's low of Rs 213.30. Its ADR fell 1.15% overnight.

India's largest software services exporter by sales TCS rose 0.42% after it said on Thursday Singapore Airlines had extended an IT services contract for three years.

The Indian rupee tumbled against the dollar as higher oil prices spurred demand for dollars from importers, while mixed Asian shares offered little comfort. The partially convertible rupee was at 50.46, weaker than Wednesday's close of 49.96/97. A weak rupee boosts revenues of IT firms in rupee terms as IT companies earn a lion's share of revenue from exports.

There have been concerns of cut back in technology spend by global firms amid a recession in the US economy and due to the global financial sector crisis. IT firms derive a lion's share of revenue from exports to US.

Banking stocks were volatile caught between fears of rising defaults in a weakening economy and hopes a further fall in interest rates may boost lending growth. India's largest private sector bank by net profit ICICI Bank fell 4.63% to Rs 324.75, off the day's low of Rs 318.60. Its American Depository Receipts (ADR) slipped 3.97% on Wednesday, 25 February 2009. Recently, Life Insurance Corporation of India hiked its stake in ICICI Bank by 2.04% to 9.38%.

India's second largest private sector bank by net profit HDFC Bank rose 1.03% to Rs 873.05, off the day's low of Rs 842.20. Its ADR fell 5.21% on Wednesday, 25 February 2009.

India's largest bank in terms of assets and branch network State Bank of India fell 1.31% to Rs 1,024.15, off the day's low of Rs 1,015.50. The Indian government on Tuesday 24 February 2009 introduced a bill in Parliament which will enable it to increase the capital base of State Bank of India's subsidiaries and issue preference and bonus shares of these entities.

PSU bank stocks, Indian Overseas Bank, Union Bank of India, Bank of Baroda, Bank of India fell by between 1.25% to 3.39%.

As per the latest data by the Reserve Bank of India, the banking sector lent over Rs 10000 crore in the fortnight ended 13 February 2009. Food credit rose Rs 547.82 crore, while non-food credit rose went up by Rs 9124.95 crore. This is the highest fortnightly growth in bank loans since November 2007.

Despite a steep cut in policy rates in India since October 2008, there has not been a commensurate reduction in lending rates by banks as fears of rising bad loans have made banks cautious in increasing advances.

Rate sensitive real estate shares reversed losses on hopes lower rates will spur housing demand. DLF, Unitech and Indiabulls Real Estate rose by between 0.29% to 3.02%. Most of the realty deals including sale of commercial property and housing sales is driven by finance.

Steel stocks extended recent gains on reports steel prices are set to come down by up to Rs 600 a tonne following the government cutting excise duty from 10% to 8%. Jindal Steel, Steel Authority of India, Tata Steel, Bhushan Steel rose by between 0.52% to 9.36%. The cut in prices may spur demand.

Madras Aluminium Company was locked at 5% upper limit at Rs 94.95 after Twin Star Holdings set a price of Rs 105 for acquiring 20% stake in the Indian aluminium maker as part of a delisting offer.

Cement shares extended yesterday's (25 February 2009) gain on reports cement prices are likely to drop by Rs 4 to Rs 5 per 50-kilogram bag following a reduction in excise duty which may boost demand for the commodity. UltraTech Cement, Grasim Industries, Birla Corporation India and ACC rose by between 0.27% to 8.36%. The rate of central excise on bulk cement has been cut from 10% or Rs 290 per metric tonne (PMT) whichever is higher to 8% or Rs 230 PMT whichever is higher.

Everest Kanto Cylinder rose 6.76% after company said its US unit has received orders worth a total $5.8 million from National OilWell Vargo, Rig Solutions Group.

Unitech clocked the highest volume of 80.26 lakh shares on BSE. Satyam Computer Services (76.84 lakh shares), DLF (64.8 lakh shares), Cals Refineries (61.76 lakh shares) and Suzlon Energy (61.37 lakh shares) were the other volume toppers in that order.

Educomp Solutions clocked the highest turnover of Rs 193.16 crore on BSE. Akruti City (Rs 168.41 crore), United Spirits (Rs 146.98 crore), Reliance Industries (Rs 140.73 crore) and ICICI Bank (Rs 125.83 crore) were the other turnover toppers in that order.

Trading with caution

The market is likely to remain volatile ahead of derivatives expiry for Frebruary series and weak global markets may put pressure on domestic indices in early trades. However, presence of strong bullish sentiment may help the market to turn positive. The Nifty could test higher levels at 2790 and may dip around 2733, while the Sensex has a likely support at 8750 and may face resistance at 9050.

US indices ended weak on Wednesday as investors took a mixed response to new details on Treasury's plan to help stabilize the banking system. The DowJones end 80 points lower at 7271 and the Nasdaq slipping by 16 points to close at 1425 amid selling in technology stocks.

Most of the Indian ADRs barring few ended in the red on the US bourses. HDFC Bank tumbled nearly 5.21% and Rediff slipped 4.19% while Satyam, ICICI Bank, Wipro, Dr Reddy's Lab and Infosys lost over 0.65-3% each. However, Tata Motors gained 7.76% followed by MTNL advanced 6.80%, VSNL and Patni Computer gained over1% each.

The Nymex light crude oil for April delivery gained $2.54 at $42.50 a barrel. In the commodity segment, the Comex gold for April series tumbled by $3.30 to settle at $966.20 an ounce.

Pre Session Commentary - Feb 26 2009

Today domestic markets are likely to open positive as the government is expected to come up with its interim trade policy today, which may bring certain non-monetary aids to the export business. The contracting exports due to the recessionary waves across the developed nations have drastically hit the forex reserves of developing nations. Therefore as per RBI data, India’s current-account deficit widened to a record US$12.5bn during the last quarter, from US$9.8bn in the previous quarter. The roll over contracts and inflation data would also play a major role in moving the markets. Inflation is expected to further fall by another 50-60bps and Auto sector may witness fresh and remarkable positions in the open interest.

On Wednesday, the markets opened with phenomenal gains on the back of the stimulus package and the positive trend across other markets in Asia and Europe. After a flat trade in yesterday’s session, the investors today showed remarkable buying interest amidst the positive sentiments prevailing across the globe. The post mid-session however witnessed some profit booking pressures and therefore could not sustain its early gains. Auto sector gained the highest by 3% as car makers were benefited by the duty cuts, which they are likely to pass on to consumers to fillip the sales. Sectors like Auto, IT, TECK and Metal gained by 3%, 2.52%, 1.56% and 1.28% respectively. Realty and CG fell by 0.39% and 0.36% respectively. During the session we expect the markets to be trading positive with mild volatility.

The BSE Sensex closed high by 80.50 points at 8,902.56 and NSE Nifty ended high by 30.90 points at 2,764.80. The BSE Mid Caps and Small Caps ended with gains of 14.53 points and 18.58 points at 2,756.98 and 3,134.69 respectively. The BSE Sensex touched intraday high of 8,995.04 and intraday low of 8,879.72.

On Wednesday, the US stock markets closed in red. January existing homes sales report recorded a fall more than expected to their lowest level since 1997. Many of the sales were distressed, contributing to a near 15% year-over-year drop in the median home price. Inventory supply increased slightly to 9.6 months. On the other hand the investors also booked profits on the 4% rise on previous day’s trade. The Fed and Treasury released key details of its bank stress test plan. The Fed officials will assess the overall losses incurred by banks and accordingly the Fed will absorb such losses. US light crude oil for April delivery grew by USD2.54 to settle at USD42.50 a barrel on the New York Mercantile Exchange.

The Dow Jones Industrial Average (DJIA) declined by 80.05 points to close at 7,270.89. The NASDAQ Composite (RIXF) index fell by 16.40 points to close at 1,425.43 and the S&P 500 (SPX) fell by 8.24 points to close at 764.90.

Today major stock markets in Asia are trading mixed. Shanghai composite is down by 4.47 points to 2,202.12, Japan''s Nikkei is high by 99.09 points at 7,560.31. Hang Seng is low by 159.51 points at 12,845.57, South Korea''s Seoul Composite is up by 11.46 points at 1,078.54 and Singapore''s Strait Times is low by 9.14 points to 1,607.65.

Indian ADRs ended mostly lower. In technology sector, Infosys ended down by 0.65% along with Satyam by 3.41%. Further, Wipro ended with decrease of 1.15% while Patni Computers closed up by 1.62%. In banking sector HDFC Bank and ICICI Bank lost 5.21% and 3.97% respectively. In telecommunication sector, MTNL and Tata Communication advanced by 6.80% and 1.07% respectively. However, Sterlite Industries decreased by 2.29%.

The FIIs on Wednesday stood as net sellers in equity and debt. Gross equity purchased stood at Rs 725.20 Crore and gross debt purchased stood at Rs. 521.30 Crore, while the gross equity sold stood at Rs 1,117.10 Crore and gross debt sold stood at Rs. 754.60 Crore. Therefore, the net investment of equity and debt reported were Rs (391.90) Crore and Rs (233.30) Crore respectively.

On Wednesday, the Indian rupee closed at 49.95/96, 02% weaker than its previous close of 49.87/88. The rupee slipped further for the third consecutive day as importers bought dollars to settle the month end bills.

On BSE, total number of shares traded were 18.85 Crore and total turnover stood at Rs 2,217.43 Crore. On NSE, total number of shares traded were 41.95 Crore and total turnover was Rs 6,626.73 Crore.

Top traded volumes on NSE Nifty – Unitech with 27206123 shares, DLF with 19310594 shares, Suzlon with 15783656 shares, ICICI Bank with total volume traded 10843876 shares followed by SAIL with 7963931 shares.

On NSE Future and Options, total number of contracts traded in index futures was 764310 with a total turnover of Rs 9,965.56 Crore. Along with this total number of contracts traded in stock futures were 1015733 with a total turnover of Rs 12,675.08 Crore. Total numbers of contracts for index options were 1201343 with a total turnover of Rs 16,728.16 Crore and total numbers of contracts for stock options were 57290 and notional turnover was Rs 761.06 Crore.

Today, Nifty would have a support at 2,783 and resistance at 2,814 and BSE Sensex has support at 8,952 and resistance at 9,112.

Derivatives expiry may keep market volatile; inflation data eyed

Key benchmark indices are likely to open flat to positive on mixed cues from global shores. The SGX Nifty futures for February 2009 series was up 8 points in Singapore. However expiry of F&O contracts for February 2009 series today, 26 February 2009 will keep market volatile. Also inflation data for the week ended 14 February 2009 to be released by noon today will be closely watched.

Volatility is also likely to remain high ahead of the February series F&O expiry today, 26 February 2009. As per reports, rollover of Nifty positions from February 2009 series to March 2009 series stood at 62% while marketwide rollover of positions was 57%, as on Wednesday, 25 February 2009.

There are expectations that the Reserve Bank of India (RBI) will cut interest rates further to support faltering growth. A sharp fall in inflation to 13-month low in the week ended 7 February 2009, raised speculation of the central bank having more room to cut rates.

Most Asian markets were trading higher today, 26 February 2009, as investors bet government "stress tests" of U.S. banks will bring the ailing industry closer to a fix, while the dollar extended its rally against the yen.

Key benchmark indices in Taiwan, South Korea, Japan and Singapore were up by between 0.36% and 0.87%. However indices in China and Hong Kong fell 0.32% and 1.53% respectively.

US markets fell on Wednesday, 24 February 2009 after President Barack Obama warned of stricter oversight for Wall Street. Also, dividend cuts triggered a sell-off in insurers and an unexpected drop in home sales dragged down industrial shares, overshadowing speculation that banks will pass the government's so-called stress tests.

The Dow Jones Industrial Average lost 80.05 points or 1.1% at 7,270.89. The S&P 500 Index shed 8.24 points or 1.1% to 764.90 while the Nasdaq Composite index fell 16.40 points or 1.1% to 1,425.43.

Median home prices in the U.S. fell 9.5% in 2008, according to the National Association of Realtors, though many big cities like Los Angeles, Las Vegas and Miami showed far larger declines. For all of 2008, GDP rose 1.3%, which was the smallest increase since 2001. In the fourth quarter, GDP fell 3.8%, the biggest contraction since 1982. The unemployment rate last month surged to 7.6%, the highest in more than 16 years. It was 5.8% last year, the highest since 2003.

Meanwhile the House of Representatives has approved a $410 billion bill on Wednesday, 24 February 2009 that boosts spending on domestic programs, bristles with congressional pet projects and chips away at policies left behind by the Bush administration.

Back home, key benchmark indices rose on Wednesday, 24 February 2009, snapping two day's losses, on a third stimulus package for the economy and firm global markets. The BSE 30-share Sensex rose 80.50 points, or 0.91%, to 8,902.56 and the S&P CNX Nifty was up 28.60 points, or 1.05%, to 2,762.50.

According to provisional data on NSE, FIIs were net sellers worth Rs 384.37 crore while mutual funds bought shares worth Rs 367.84 crore on Wednesday, 25 February 2009.

U.S. crude oil rose 25 cents to $42.74 a barrel today, 26 February 2009 after jumping 6% overnight after data showed a larger-than-expected drop in gasoline stocks.

Wall Street back in the red

Financial sector controls market's direction for entire day

Stocks at Wall Street ended with modest losses on Wednesday, 25 February. The losses came after a day of huge gains on Wall Street yesterday. Though the financial sector gave a strong start to the day today, weakness in the same led the indices end in the red at the end. Top of it came an optimistic speech from President Barack Obama who said that US will definitely come out stronger from this recession. That, somewhat lent some support to the stocks.

The Dow Jones Industrial Average ended lower by 80 points at 7,270, the Nasdaq closed lower by 16 points at 1,425 and the S&P 500 closed lower by 8 points at 765.

Nine of the ten sectors ended in the red today led by industrials and telecom sectors. Telecom was the sole gainer.

Yesterday night, President Barack Obama delivered an optimistic speech before a joint session of Congress, saying that the U.S. will emerge from the recession "stronger than before." In a lengthy speech, Obama rolled out more of his economic agenda, promising job creation, a doubling of renewable-energy production, health-care reform and a bolstering of education.

The financial sector lent good support to the market today at the start after Ben Bernanke said that there are no plans to nationalize Citibank. But with the day, the strength in the sector fizzled away.

Among the only economic data scheduled for the day, National Association of Realtors reported existing-home sales in January fell 5.3%, a faster pace than forecast, while prices fell to near six-year lows. Sales fell more than expected to their lowest level since 1997. Many of the sales were distressed, contributing to a near 15% y-o-y drop in the median home price. Inventory supply increased slightly to 9.6 months.

Federal regulators begin stress testing banks today. The tests will help determine whether banks have sufficient capital to withstand shocks to the economy. The tests will help determine how much capital banks need, not whether they should be taken into government hands.

Oil prices shot up on Wednesday, 25 February, 2009. Prices rose after energy department reported in its weekly inventory report that gasoline inventories dropped during last week. On Wednesday, crude-oil futures for light sweet crude for April delivery closed at $42.5/barrel (higher by $2.54 or 6.4%) on the New York Mercantile Exchange.

EIA reported today that crude inventories rose by 700,000 barrels to 351.3 million during last week. Market had expected a rise of more than 2 million barrels. Total products supplied over the past four weeks, including gasoline, diesel and jet fuel, averaged 19.7 million barrels per day, down 0.8% from a year ago. Excluding jet fuel, total products supplied rose slightly.

EIA also reported that U.S. gasoline consumption during the past four weeks rose 1.7% from a year ago. Gasoline inventories fell by 3.4 million barrels.

Tomorrow there are quite a few earnings and economic reports scheduled. January durable goods orders and weekly initial jobless claims are scheduled at 9:30ET followed by the January new home sales report.

Tata Chemicals

We recommend a sell in Tata Chemicals stock from a short-term horizon. It is apparent from the charts of Tata Chemicals that it has been on a long-term downtrend since its life-time high of Rs 440 touched in May 2008.

In early January 2009, the stock resumed this downtrend, after encountering significant resistance at Rs 180 levels. Since then, the stock has been on a declining. It is trading well below the 21- and 50-day moving averages.

On February 24, the stock breached the support level at Rs 137 by declining 3 per cent. Both daily and weekly relative strength indices are featuring in the bearish zone. The daily moving average convergence and divergence indicator is steadily declining in the negative territory. Considering that the long-term down trendline is intact, we are bearish on the stock. We expect the stock’s decline to prolong until it hits our price target of Rs 116. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 137.

Daily News Roundup - Feb 26 2009

French drug major Sanofi-Aventis has emerged as the front-runner to buy a substantial stake in Piramal Healthcare at over 50% premium to the current share price. (ET)

The Income-Tax department has ordered a special audit of the accounts of DLF. (ET)

GMR Energy, a subsidiary of GMR Infrastructure has acquired 100% stake in Barasentosa Lestari PT, an Indonesian coal mining company for US$80mn. (ET)

Reliance Communications to raise Rs130bn debt in the next three months to meet certain capex requirements and scheduled debt repayment obligations. (BS)

The Enforcement Directorate seeks nod to take probe of RPL role in oil-for-food scam overseas. (FE)

The proposed capacity expansion at SAIL’s Bhilai Steel Plant (BSP) to 7.5mtpa of hot metal may not be complete within the scheduled 2010-11 period due to concerns over iron ore and man power shortages. (BL)

Tata Motors and Ashok Leyland plan to cut prices post 2% cut in excise duty and service tax. (FE)

Reliance Industries has sent the draft gas sales purchase agreements to the 12 fertiliser firms for supply of the first 15mmscmd of gas from KG basin. (ET)

SAIL to acquire the sick Malvika Steel on February 27. (FE)

L&T has no plans of selling its 12% stake in Satyam. (ET)

Suzlon Energy signed an agreement between its Australian operations arm, Suzlon Energy Australia Pty and AGL Energy Ltd of Australia for supply of 54 turbine units. (BL)

The shareholders are accusing that Siemens India has showed lower profits before sale of subsidiaries to its parent. (ET)

SBI plans to raise around Rs20bn through the issue of upper Tier-II bonds to LIC by the end of this month. (ET)

Reliance Industries’ profits for seven quarters ended December 31, 2008 would have been lower by Rs11.47bn, if it had followed the Accounting Standard 11. (FE)

US FDA has alleged that Ranbaxy has falsified data for some of the over 24 low-cost drugs made at its Paonta Sahib plant. (ET)

HUL sues Subhiksha for non-payment of dues. (BS)

Mauritius based investment firm SRS Orion Investment has demanded Rs8.06bn from Maytas Properties. (FE)

JK Tyre has reduced tyre prices for commercial vehicles following a 2% excise duty cut. (FE)

Sical Logistics has formed a SPV with MMTC Ltd to set up an iron ore terminal at the Ennore port at a proposed investment of ~Rs5bn. (BS)

Uco Bank may face pressure on its fourth-quarter profits on account of possible provisions of Rs974mn for an exposure to credit-linked notes. (BS)

Vedanta Aluminium plans to invest Rs600bn in aluminium, alumina and power sector in Orissa by 2013. (BS)

Deepak Parekh has been reappointed as the executive chairman of HDFC till December 2009. (ET)

US lobbies with Coal India for bigger pie of Indian mining equipment market. (FE)

The country is expected to have a generation loss of 11,000mw from March onwards as the South Eastern Coalfields Ltd, an arm of Coal India plans to close down Gevra and Dipka mines. (FE)

Suzuki Motorcycle to invest Rs1.5bn in phases to ramp up its manufacturing capacity in the country. (BS)

India Inc's foreign loan costs go up by 3%. (ET)

The Government has advised RBI and commercial banks to further reduce lending rates. (ET)

The TRAI has recommended that broadcasters should not be allowed to own more than 20% in TV distribution platforms such as cable and DTH. (BL)

Indian subsidiaries of MNCs may now be able to invest in the country without further approval as removal of distinction between holding companies and holding-cum-operating companies for crucial sectors such as oil and gas, mining, real estate and construction is likely. (ET)

The Maharashtra Government has liberalised the construction redevelopment rules for old and dilapidated buildings. (BS)

The Government has approved the restructuring of the NHAI, including constituting a search committee for the appointment of chairman for the highways regulator. (BS)

Retail prices of diesel may go down further by Rs2. (ET)

The PSU companies which have parked their Rs2,000bn surplus funds with banks, will not be allowed to transfer their deposits from one bank to another for better returns. (ET)

Commerce and industry minister is likely to announce a special package for exporters in the foreign trade policy today. (ET)

India is likely to launch the next round of auction of oil and gas exploration blocks by mid-April. (ET)

The Government is likely to allow sick public sector companies to raise cash by selling surplus land available with them. (ET)

India’s tobacco exports surged by ~39% to Rs25.6bn in the first 10 months of this fiscal. (ET)

The Government plans to invest Rs558.04bn in the Indian port sector. (FE)

Seek more information!

Knowledge is of two kinds. We know a subject ourselves, or we know where we can find information on it.

As expected, the bulls managed to hold their own, thanks largely to optimism surrounding the latest round of fiscal stimulus. The market is hoping that the tax cuts will help provide cushion to the sluggish Indian economy against any further fallout from the global economic mess. A recovery may already be underway if one goes by the latest bank lending data. But, keep a close watch on upcoming macro numbers to gauge the pulse of the economy. In a world of I-T audits and fresh FDA moves against companies, probe deeper before taking a call.

Today’s inflation figures and Friday’s Q3 GDP report will be keenly followed. While inflation will moderate further the GDP for Oct-Dec quarter is likely to come in at around 6-6.5%. For the whole year, the government sees GDP growing at 7.1%. The Government is also slated to unveil an interim trade policy today. Exporters, especially those hit by the global downturn may get some additional sops.

Coming to today’s market, we expect the key indices to open with a positive bias, but may run out of steam later. Considering today’s F&O expiry, we do not rule out increased intra-day gyrations. US stocks closed lower overnight while their counterparts in Europe advanced. Asian markets are mixed this morning.

Ranbaxy may come under pressure on the latest regulatory action by USFDA. DLF will also hog the limelight amid news of a special audit of its accounts by the I-T Department. Satyam of course will remain in the spotlight as its board meets today to finalise the details of the proposed preferential allotment and the criteria for shortlisting potential bidders.

Piramal Healthcare is among the other stock to keep an eye on as a newspaper reports that French drugmaker Sanofi Aventis is the front-runner for buying the Mumbai-based pharma major. RPL is also under regulatory scanner for the oil-for-food scam.

FIIs were net sellers in the cash segment on Wednesday at Rs3.84bn, while the local institutions pumped in Rs3.67bn. In the F&O segment, the foreign funds were net buyers at Rs4.14bn. On Tuesday, FIIs were net sellers in the cash segment at Rs3.92bn. Mutual Funds poured in Rs240mn on the same day.

US stocks ended in the red on Wednesday, notwithstanding a late-session rally. Dividend cuts triggered a sell-off in insurers and an unexpected drop in home sales dragged down industrial shares, overshadowing speculation that banks will pass the government’s so-called stress tests.

The Dow Jones Industrial Average lost 80 points, or 1.1%, to end at 7,270.89. The S&P 500 index fell 8 points, or 1.1%, to close at 764.90. The Nasdaq Composite index dropped 16 points, or 1.1%, to finish at 1,425.43.

Stocks tumbled in the morning after a report showed existing home sales plunged to an 11-year low in January. But they managed to cut losses and even turn higher in the afternoon after the bank plan announcement, with a number of financial stocks rallying.

After a brief rally, stocks erased the gains and turned lower again, as investors continued to worry about the depth and duration of the recession.

Treasury plans to test the 19 banks with more than $100 billion in assets to see if they have enough capital to hold up if unemployment rises to 10% and the housing market contracts another 20%. The testing will be over by the end of April.

Treasury's bailout plan is ideally meant to keep banks afloat, but also get them to lend again. The plan may achieve that, but it doesn't resolve the problem of how to value the bad assets at a price that is both good for the holders and good for the buyers.

Shares of bank stocks were volatile after the Treasury announcement.

Speaking on Tuesday night before both chambers of Congress, US President Barack Obama told the nation: "We will rebuild, we will recover and the United States of America will emerge stronger than before."

The president outlined plans for creating jobs, stabilizing the credit markets, reforming health care and improving schools, among other issues. Separately, President Obama told Congress on Wednesday that stronger financial sector regulation is needed.

Federal Reserve chairman Ben S. Bernanke told the House Financial Services Committee on Wednesday that fixing the mortgage market is necessary for fixing the financial market, even if it means bailout out irresponsible buyers.

In company news, Ford Motor's CEO and chairman agreed to cut their pay by 30% for the next two years and to suspend bonuses for salaried workers. Ford will also offer another round of buyouts and early retirement packages to all of its hourly workers. The changes were announced as union members are nearing a vote on contract concessions.

General Motors (GM) rallied nearly 15%. Currently, an Obama administration task force is reviewing turnaround plans from GM and Chrysler, which have asked for a combined $22 billion more in bailout money on top of the $17.4 billion they have already received.

GM issues fourth-quarter results before the start of trading on Thursday.

In deal news, Canadian fertilizer Agrium made a hostile bid for US rival CF Industries worth $3.6 billion in cash and stock - a 30% premium over CF's closing price on Tuesday. Any deal is conditional on CF giving up its hostile offer for Terra Industries, which the company has already rejected.

First Solar plunged 22% in unusually active Nasdaq trade after the solar panel maker warned late on Tuesday that first quarter and full-year 2009 revenue will fall from a year ago amid a bleak outlook for the industry and economy.

Treasury prices tumbled, raising the yield on the benchmark 10-year note to 2.92% from 2.79% on Tuesday. Treasury prices and yields move in opposite directions.

US light crude oil for April delivery rose $2.54 to settle at $42.50 a barrel on the New York Mercantile Exchange. The price of oil was volatile after the government said the supply of crude increased less than expected last week.

COMEX gold for April delivery fell $3.30 to settle at $966.20 an ounce.

In currency trading, the dollar gained versus the euro and the yen. On Thursday, investors will focus on Obama's fiscal 2010 budget plan, the weekly jobless claims and reports on new home sales and durable goods orders.

European shares pulled back from early gains to close lower again on Wednesday, as losses from drugmakers and utilities offset gains for banks. The pan-European Dow Jones Stoxx 600 index fell 0.3% to 172.31.

Germany's DAX 30 index slid 1.3% to 3,846.21 and the French CAC-40 index lost 0.4% to 2,696.92. The UK's FTSE 100 index gained 0.9% to 3,848.98.

Markets ended with modest gains on Wednesday led by the auto, IT, telecom and metal stocks. Overnight gains in the US and firm cues from the Asian markets lifted the Indian bourses at open. Key indices were in a constant uptrend until profit booking at higher levels dragged the benchmark index to close with modest gains.

Finally, the BSE Sensex advanced 80 points to close at 8,902 and the NSE Nifty was up 28 at 2,762.

Among the 30-components of Sensex, 23 stocks ended in positive terrain and 7 stocks ended in the red. Among the major gainers were, M&M, Tata Motors, Reliance Infra, Wipro, TCS and Infosys.

Among the major laggards were, HDFC, Ranbaxy, DLF, L&T and RCom.

Shares of M&M surged by over 8% 6to Rs318 after reports stated that the company’s agri arm has entered into a strategic alliance with Dutch Co HZPC. The scrip touched an intra-day high of Rs320 and a low of Rs295 and recorded volumes of over 4,00,000 shares on BSE.

Shares of Suzlon Energy surged by over 2.5% to Rs41.3 after the company announced that, Suzlon Energy Australia Pty Ltd., a step-down wholly owned subsidiary of the company entered into an agreement with AGL Energy Ltd for supply of 54 units of Suzlon's S88-2.1 MW wind turbine generators translating to 113.4 MW capacity in Australia in 2009. The scrip touched an intra-day high of Rs42.6 and a low of Rs41 and recorded volumes of over 62,00,000 shares on BSE.

India’s income tax department ordered an audit of accounts of DLF Ltd., India’s biggest developer, as part of a probe of housing companies, a junior minister of finance said.

Shares of DLF slipped by 1.7% to Rs154 after the government said that it was examining a special audit report for the assessment year 2006-2007. Some housing companies have misstated income and profits, the minister said today. The scrip touched an intra-day high of Rs162 and a low of Rs153 and recorded volumes of over 72,00,000 shares on BSE.

Shares of Hindustan Dorr-Oliver were locked at 20% upper circuit to Rs31.8 after the company announced that it won order worth Rs4.41bn. The scrip touched an intra-day high of Rs31.8 and a low of Rs25.1 and recorded volumes of over 2,00,000 shares on BSE.

Shares of Sical Logistics ended flat at Rs23. The company announced its strategic partnership with MMTC Limited for its greenfield iron ore terminal project at Ennore Port.

MMTC would hold 26% stake in Sical Iron Ore Terminals Ltd (SIOT), the special purpose vehicle (SPV) building the 12 MTPA (mn tons per annum) iron ore terminal and Sical will hold 63% stake. The balance 11% will be held by L&T Infrastructure Development Projects Ltd. The scrip touched an intra-day high of Rs24.6 and a low of Rs23.6 and recorded volumes of over 2,000 shares on BSE.

Shares of Jet Airways slipped by 2.5% to Rs140. According to reports, the company would lease out four aircrafts to Gulf Air Company GSC Bahrain. The scrip touched an intra-day high of Rs151 and a low of Rs139 and recorded volumes of over 2,00,000 shares on BSE.

SGX Nifty Live Update - Feb 26 2009

SGX Nifty currently at 2,762.0 and is trading +10.0 points

Next Oil Shock ?

The world is breathing easy, now that oil prices are below $40 a barrel, down sharply from $147 a barrel in June. But, in fact, the current financial crisis and recession could accentuate the severe supply-side constraints that drove up prices last year to record highs, cautions Mikkal Herberg, research director of the energy security programme at the National Bureau of Asian Research in Washington and a veteran strategist in the oil industry.

"It's hard to say how long and deep this recession will be and how soon the global economy -- and demand for oil -- will recover, but when it does, in a year or two, it will immediately run into supply constraints," says Herberg.

In fact, the current financial crunch has already led to the postponement or cancellation over $100 billion worth of oil projects in the past six months, which will aggravate the "supply pathology" when recovery begins, he points out.

At that point, oil prices will ride swiftly back up the escalator, perhaps even beyond their earlier highs. Last year's 'oil shock' was the culmination of a "perfect storm" that built up over five years -- in the sense that "nearly everything that could go wrong went wrong," recalls Herberg.

Full Article here

Valuations Summary, Economy, Glaxo, Automobiles

Valuations Summary, Economy, Glaxo, Automobiles

Stimulus may widen Fiscal deficit

The government has announced a slew of so-called stimulus measures to stimulate growth in the country.

All these measures have cost the exchequer to the tune of 70,000 crores.

This will widen the fiscal deficit for the next year. Fiscal deficit is the difference between the revenue earned by the government and its expenditure.

In lay man terms, the government is going to spend much than what it earns. Common sense tells us that if one's spending increases but earning declines then one is headed for financial disaster.

The government target for fiscal deficit is 3 pc. For this year, it has shot to 6 pc and with these cuts it will balloon to closer to 10 pc.

The farm subsidies, oil bonds all add up. Now, if crude shoots up as it should, then the real fun will start.

What this means that sovereign rating (The ability to repay debt as judged by the ratings agencies) will be lowered.

This in turn will make it difficult for Indian companies to raise debt abroad as they will have to pay a risk premium. Also, this will lead to lower FII/FDI inflows.

This is the very same reason personal loans are expensive than housing loans to give you an analogy. The risk of default is more in personal loans as there is no collateral

Cutting of Service Tax is like 2 wrongs are equal to a Right. Service Tax is wrong n the first place because both the provider and utilizer of the Service are already taxed. This is an additional burden.

The excise cuts may not really stimulate much demand. People are not spending not because the cost is too high, but because there is no demand. People will not take housing loans because the rates have lowered by 2-3 pc but because there is uncertainty of jobs and other factors.

Fiscal stimulus is not bad per se, but the deficit should also be kept in mind.

This tax should never have been there in the first place. Now cutting it, they are trying to reduce the burden on the common man. A burden which should not be there in the first place.

FIIs have been heavy sellers for the month of Feb, which has accelerated in the past few days. they are offloading almost 400 crores of stock everyday. DII have been heavy buyers, buying huge quantities.

I suspect LIC is buying to hold up the markets by holding the indices. The broader market is simply collapsing. Just check out the new 52 week lows made today.

The market is above Oct lows simply because of Reliance. Reliance had hit lows of 930 in Oct is now at 1266. Almost 33 pc up. By pumping up few index stocks, an appearance of all is well can be given.

Markets is just waiting for a trigger to go down and the dam will burst.


by Nishit

via Email-Forward/Another Forum

Bullion metals go down

Gold and silver prices drop for third consecutive day

Bullion metal prices ended lower for third straight day on Wednesday, 25 February, 2009. Prices fell as traders anticipated that economy will recover in the coming months and this decreased the appeal of the precious metals. Deep recession fears have been increasing the appeal of the precious metals as a safe haven against alternatives since past few days. The stronger dollar also weighed on the metal today.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Wednesday, Comex Gold for April delivery fell $3.3 (0.3%) to close at $966.2 an ounce on the New York Mercantile Exchange. Last week, gold ended roughly higher by 5.5%. 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 (6%) since then.

On Wednesday, Comex silver futures for March delivery fell 12.1 cents (0.9%) to end at $13.91 an ounce. Year to date, silver has climbed 24.2% this year. For 2008, silver had lost 24%.

Yesterday night, President Barack Obama delivered an optimistic speech before a joint session of Congress, saying that the U.S. will emerge from the recession "stronger than before." In a lengthy speech, Obama rolled out more of his economic agenda, promising job creation, a doubling of renewable-energy production, health-care reform and a bolstering of education.

The World Gold Council reported last week 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 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 10 (0.06%) at Rs 15,494 per 10 grams. Prices rose to a high of Rs 15,653 per 10 grams and fell to a low of Rs 15,210 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 73 (0.32%) higher at Rs 22,762/Kg. Prices opened at Rs 22,646/kg and went to a high of Rs 23,023/Kg during the day's trading.

Crude shoots up

Prices end higher after inventory report shows more usage of gasoline

Oil prices shot up on Wednesday, 25 February, 2009. Prices rose after energy department reported in its weekly inventory report that gasoline inventories dropped during last week. Prices also rose after OPEC spoke yesterday about another production cut in coming months.

On Wednesday, crude-oil futures for light sweet crude for April delivery closed at $42.5/barrel (higher by $2.54 or 6.4%) on the New York Mercantile Exchange. Last week, crude ended higher by 3.8%.

Prices reached a high of $147 on 11 July, 2008 but have dropped almost 68% since then. Year to date, in 2009, crude prices are lower by 1.5%. On a yearly basis, crude prices are lower by 62%.

EIA reported today that crude inventories rose by 700,000 barrels to 351.3 million during last week. Market had expected a rise of more than 2 million barrels. Total products supplied over the past four weeks, including gasoline, diesel and jet fuel, averaged 19.7 million barrels per day, down 0.8% from a year ago. Excluding jet fuel, total products supplied rose slightly.

EIA also reported that U.S. gasoline consumption during the past four weeks rose 1.7% from a year ago. Gasoline inventories fell by 3.4 million barrels. Distillate stockpiles, which include diesel and heating oil, rose by 800,000 barrels. The EIA also said in the report U.S. refineries operated at 81.4% of their operable capacity last week, down slightly from the previous week.

Prices had been sliding since past couple of months after fear gripped the US economy that US banks might be nationalized.

OPEC has been trying to cut production consistently in order to step up prices from their current low levels. As per reports during the last weekend, Algerian Energy Minister Chakib Khelil said that OPEC is likely to reduce output in March, 2009. OPEC has already agreed to cut cartel quotas by 4.2 million barrels a day since September, equivalent to about 5% of global oil demand. The cartel is supposed to meet on 15 March at Vienna.

Against this background, March reformulated gasoline rallied 7.5% to $1.166 a gallon, while March heating oil rose 3% to $1.2439 a gallon.

March natural gas futures fell 0.5% to $4.213 per million British thermal units.

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.

At the MCX, crude oil for March delivery closed at Rs 2,111/barrel, higher by Rs 179 (9.2%) against previous day's close. Natural gas for February delivery closed at Rs 203.4/mmbtu, lower by Rs 2/mmbtu (0.97%).

Up but gives away gains

Market closes higher, but 92 points off its day's high of 8995
Opening with a positive gap of 91 points at 8913 the market remained up for the better part of the day. In the first half of the session, the market remained firm above 8900 levels due to action in several counters. In the second half it gained further strength to touch the day's high of 8995. Towards the close, the market slipped, as if for a negative close, as weakness in select heavyweight, realty and capital goods stocks shaved off nearly 115 points from the day?s high to an intra-day low of 8880, only 58 points over its previous close. Sensex ended the session 81 points up at 8903, whereas Nifty added 29 points to close at 2762.

The market breadth was slightly positive. Of the 2,523 stocks traded on BSE, 1,228 stocks advanced, whereas 1,188 stocks declined. 107 stocks ended unchanged. Of the 13 sectoral indices only BSE CG and BSE Realty posted losses for the day. BSE Auto topped the list of gaining sectors posting a gain of up 3% followed by BSE IT (up 2.52%), BSE Teck (up 1.56%) and BSE Metal (up 1.28%).

Select blue chips notched significant gains. Mahindra & Mahindra rose 8.27% at Rs319.50, Tata Motors advanced 5.90% at Rs139.90, Reliance Infrastructure climbed 3.44% at Rs506, Tata Consultancy Services surged 3.11% at Rs481, Wipro scaled up 2.83% at Rs218.20, Infosys added 2.36% at Rs1212.10 and Hindalco Industries jumped 2.30% at Rs40. Among laggards, HDFC tumbled by 4.19% at Rs1235.05 and Ranbaxy Laboratories dropped 3.40% at Rs207.55 while DLF, Larsen & Toubro, Reliance Communications, Hindustan Unilever and Tata Steel ended with marginal losses.

Over 0.96 crore shares of Satyam Computer Services changed hands on the BSE followed by Cals Refineries (79 lakh shares), DLF (72 lakh shares), Unitech (67 lakh shares) and Suzlon Energy (62 lakh shares).