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Friday, March 13, 2009
Three suitors for Satyam
With the deadline for registering ending on Thursday, L&T, Tech Mahindra and Spice Corp have announced their intention to join the race to take a majority stake in Satyam Computer Services.
Though names such as IBM, HP, Oracle and Cognizant were doing the rounds, it was not clear whether they have registered with the company to express their willingness to take part in the bid process.
Markets were, however, not that enthused as the Satyam scrip fell by 3.18 per cent on the Bombay Stock Exchange (BSE) to close at Rs 47.20 on Thursday as against the previous close of Rs 48.75.
The market cap of the embattled IT major stood at Rs 3,162 crore.
Sources in the company told Business Line that investment bankers Goldman Sachs and Avendus would vet the formal requests.
The Satyam Board Chairman, Mr Kiran Karnik, said that the board would meet in Hyderabad on Friday.
He, however, remained tight-lipped on the agenda.
“I don’t know if we can even legally give out that information pertaining to the identity of the bidders or the number of bidders,” he said.
Mr Prasenjit Roy, Director (Marketing), Tech Mahindra Ltd, announced that the company had formally conveyed its interest in the process.
“We have registered our interest, in line with the process set out by the Satyam Board,” he said. “Once we receive the Request for Proposal and other information, we will evaluate and conclude on the next steps,” Mr Roy said.
An L&T spokesperson too confirmed that the company had sent the formal proposal.
On expected lines, SpiceCorp has registered its interest to bid for Satyam. “We are going solo,” its Chairman, Dr B.K. Modi, said.
But, the Hinduja group has backed out. “After careful consideration we have decided not to participate,” Mr Prabal Banerji, Chief Financial Officer, Hinduja Group, said.
Peers not in race
Major domestic IT companies have reiterated that they are not in the race.
When contacted, Mr V. Balakrishnan, Chief Financial Officer of Infosys, said the company did not register.
Recalling Mr Premji’s stand, a Wipro spokesperson made it clear that the company had no interest in taking over either Satyam or Maytas.
HCL Technologies also said it was not in the fray.
While IBM and CSC have declined to comment on “speculation”, HP said, “We do not comment on rumours and that all merger and acquisition activities are decided globally.”
Accenture spokespersons were not available for comment.
Sensex ends buoyant; DLF climbs 11.47%
The Sensex ended on a buoyant note following a surge in global markets. Realty, banking, metal and IT stocks led the rally.
Indian stock market started the day on a positive note. The 30-share index, BSE Sensex opened with a gain of 136.99 points, at 8,480.74 on Friday tracking firm global cues. It continued to march further on sustained buying in index pivotals as the day progressed. Finally it touched a high of 8,793.21 to close on a strong note.
Second line stocks also performed well. BSE Midcap and Smallcap index rose 2.96% and 1.97% respectively.
Amongst the sectors, BSE Realty soared 7.57%, Metal surged 6.26%, Bankex gained 5.85% and IT moved up 5.63%.
On global front, Asian stocks ended higher. Nikkei advanced 371.03 points, or 5.15%, to close at 7,569.28 and Hang Seng index surged 524.27 points, or 4.37%, to settle at 12,525.80.
European stocks climbed. Barclays and Deutsche Bank gained more than 4% as Bank of America`s chief executive officer Kenneth Lewis said he expects the biggest US bank to make money this year. FTSE 100 gained 62.21 points, or 1.68%, to trade at 3,774.27, CAC 40 rose 52.46 points, or 1.95%, to trade at 2,746.71 and DAX climbed 39.66 points, or 1%, to trade at 3,995.88. (4.05 p.m., IST).
The Sensex ended the day with a gain of 412.86 points, or 4.95% at 8,756.61 after touching a high of 8,793.21 and a low of 8,480.74. The broad-based NSE Nifty gained 101.80 points, or 3.89% at 2,719.25 after hitting a high of 2,726.15 and a low of 2,616.60.
Biggest gainers in the 30-share index were DLF (11.47%), Tata Motors (10.72%), Reliance Capital (9.31%), Tata Power Company (9.18%), ICICI Bank (8.60%), and Hindalco Industries (7.99%).
On the other hand, NTPC (2.04%), and Sun Pharmaceutical Industries (0.36%) were the biggest losers in the Sensex.
Overall market breadth was sharply positive. Out of the total 2,551 stocks traded at BSE, 1,583 advanced, 855 declined while 113 remained unchanged.
Satyam - Who will buy it ?
B K Modi
> Received Rs 2,191 cr from sale of Spice Communication
> Can bid at Rs 40 per share
> Will cost him Rs 1986 cr
Tech Mahindra
> Cash on books at Rs 4000 cr
> Can bid for Satyam till Rs 80 per share
> Will cost it Rs 3972 cr
L&T
> Cash on books at Rs 964 cr
> Investments in mutual funds at Rs 6800 cr
> Investable surplus of over Rs 7500 cr
> Can bid up to Rs 140 / share
> Will cost it Rs 6951 cr
> Total equity, post 31% offer at 97.36 cr shares
> Suitor will have to buy 51% ie 49.65 cr shares
Projected cost of acquisition
At Rs 40 Rs 1986.14
At Rs 50 Rs 2482.68
At Rs 60 Rs 2979.22
At Rs 70 Rs 3475.75
At Rs 75 Rs 3724.02
At Rs 80 Rs 3972.29
At Rs 140 Rs 6951.50
Who will buy it and why?
Tech Mahindra
Interest in Satyam driven by strategy to form a telecom industry focused IT firm to full-fledged IT service company
Only one client of Tech Mahindra contributes 60% of revenue
No overlap in biz vertical, Tech Mahindra get 100% revenue from telecom vertical
Report of BT planning to sale stake, assured revenue of $2 bn may be in trouble
L&T Infotech
Reverse merger or takeover will provide back door entry to the stock exchange
Reverse merger will bring down long and complex procedure of listing
During tough environment, globally, financially sound companies take the reverse merger route to list
For the last three years, L&T Infotech has been trying to list on the bourses
Will save 1-2% of IPO expenses
Operational synergies
Scale up business to almost four times the current size
Analysts say L&T will post revenues of Rs 2000 cr in FY2009
Post acquistion of Satyam, it will become $2.65 billion from the $400 million currently
Vertical Synergies
Consolidate its strength in manufacturing through Satyam’s ERP practice
L&T Infotech derives 34% of manufacturing vertical, Satyam nearly 24%
Forrester says Satyam frittered away advantage of SAP practice due to fraud
Nearly 42-43% of Satyam’s revenue derives from ERP practice
Satyam’s ERP practice and L&T’s manufacturing focus will increase billing rate significantly
Exposure to financial service vertical through Satyam. L&T has been striving this for long
Post scandal, Satyam employees in ERP verticals are the only ones in high demand
Expertise in ERP solution would be a useful springboard of growth
About L&T Infotech
Set up 1997, over 10,000 employees
Contributes nearly 6.3% to L&T’s consolidated profit and loss account
Caters to clients like Hitachi, Lafarge, Chevron and BPCLvia UTVi.com
BSE Bulk Deals to Watch - March 13 2009
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
13/3/2009 507852 ADDI INDUSTR URMILA JAIN B 90831 4.76
13/3/2009 507852 ADDI INDUSTR ABCWEB DEVELOPER PVT LTD S 61931 4.76
13/3/2009 523537 APM INDUSTRI ROVO MARKETING PVT LTD B 63100 11.99
13/3/2009 523537 APM INDUSTRI MADHUSHREE PROPERTIES PRIVATE LTD S 63100 11.99
13/3/2009 503960 BHARAT BIJLI RAJASTHAN GLOBAL SEC LTD B 49651 309.10
13/3/2009 505923 CEEKAY DIAKI SHILPA KETAN SHAH S 21101 21.42
13/3/2009 511672 CLARUS MANAK CHAND JAIN B 125500 2.73
13/3/2009 511672 CLARUS PLANTINUM FINVEST PRIVATE LIMITED S 125500 2.73
13/3/2009 533055 EDSERV SOFT MOTILAL OSWAL FINANCIAL SERVICES LTD B 90289 43.60
13/3/2009 533055 EDSERV SOFT NIRMAN MANAGEMENT SERVICES PVT LTD S 286522 43.24
13/3/2009 533055 EDSERV SOFT MOTILAL OSWAL FINANCIAL SERVICES LTD S 90289 44.87
13/3/2009 532696 EDUCOMP SOLN OPG SECURITIES P LTD B 88294 1691.08
13/3/2009 532696 EDUCOMP SOLN OPG SECURITIES P LTD S 88294 1692.38
13/3/2009 530407 EPIC ENERGY GANESH BARTER PVT LTD B 34852 25.49
13/3/2009 590085 GLOSTER JUTE NIMBARAM DHARMAJI PRAJAPATI B 10000 109.90
13/3/2009 590085 GLOSTER JUTE RAMKISHORE MAHESHWARI B 10000 101.25
13/3/2009 590085 GLOSTER JUTE NIMBARAM DHARMAJI PRAJAPATI S 10000 101.25
13/3/2009 590085 GLOSTER JUTE RAMKISHORE MAHESHWARI S 10000 109.90
13/3/2009 505840 JAIPAN INDUS SONU SINGH B 45713 45.00
13/3/2009 511728 KZLEASING YOGESH GIRDHARLAL PANDYA S 22949 66.44
13/3/2009 511728 KZLEASING NAINESH HIMAT JATANIA S 20000 67.18
13/3/2009 511728 KZLEASING JYOTIKABEN MAHESHBHAI HADVANI S 17375 66.62
13/3/2009 532517 PATNI COMPUT HDFC TRUSTEE COMPANY LTD GROWTH FUND B 5000000 110.00
13/3/2009 532517 PATNI COMPUT HSBC GLOBAL INVST FUNDS AC HSBC GLOBAL INVST FUNDS MAURITIUS LTD S 4976206 110.00
13/3/2009 523523 RAINBOW PAPE ULTRATECH PAPER PVT LTD B 74810 34.27
13/3/2009 531500 RAJESH EXPOT ROHIT KUMAR NEMCHAND PIPARIA S 2700000 22.50
13/3/2009 531898 SANGUINE MD HEENA KAUSHIK MEHTA S 100000 2.16
13/3/2009 531249 WELL PACK PA REKHA BACHHAWAT S 25000 91.35
NSE Bulk Deals to Watch - March 13 2009
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
13-MAR-2009,AARVEEDEN,Aarvee Denims & Exports L,PARI BHOGILAL LAXMICHAND,BUY,200000,11.50,-
13-MAR-2009,BBL,BHARAT BIJLEE LTD,RAJASTHAN GLOBAL SECURITIES LTD,BUY,40991,309.51,-
13-MAR-2009,BIL,Bhartiya Intl Limited,CORONET VYAPAAR PVT LTD,BUY,50000,18.00,-
13-MAR-2009,BINDALAGRO,Oswal Chem & Fert Ltd.,OSWAL AGRO MILLS LIMITED,BUY,2000000,9.89,-
13-MAR-2009,EDSERV,Edserv Softsystems Limite,AMBIT SECURITIES BROKING PVT. LTD.,BUY,62669,44.16,-
13-MAR-2009,EDSERV,Edserv Softsystems Limite,ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD,BUY,122889,44.23,-
13-MAR-2009,EDSERV,Edserv Softsystems Limite,BP FINTRADE PRIVATE LIMITED,BUY,167481,44.96,-
13-MAR-2009,EDSERV,Edserv Softsystems Limite,DKG SECURITIES PVT. LTD.,BUY,270000,42.99,-
13-MAR-2009,EDSERV,Edserv Softsystems Limite,KISHORE KUMAR PATKI,BUY,100000,44.50,-
13-MAR-2009,EDSERV,Edserv Softsystems Limite,KSHITIJ-PORTFOLIO-PVT.-LTD.,BUY,16438,44.95,-
13-MAR-2009,EDSERV,Edserv Softsystems Limite,MOTILAL OSWAL FINANCIAL SERVICES LTD,BUY,71554,44.31,-
13-MAR-2009,EDSERV,Edserv Softsystems Limite,MULTIPLIER S AND S ADV PVT LTD,BUY,119619,45.02,-
13-MAR-2009,EDUCOMP,Educomp Solutions Limited,C D INTEGRATED SERVICES LTD,BUY,132231,1699.16,-
13-MAR-2009,IOLN,IOL Netcom Limited,CHAINANI MALKA SANJIV,BUY,225000,36.49,-
13-MAR-2009,NIITLTD,NIIT Limited,PACE SERVICES LTD,BUY,3288824,15.34,-
13-MAR-2009,RAJESHEXPO,Rajesh Exports Ltd.,RAJESH JASWANTH RAJMEHTA,BUY,1364530,21.93,-
13-MAR-2009,SHREEASHTA,Shree Ashtavinayak Cine V,PVR IMPEX PVT LTD,BUY,63594,498.26,-
13-MAR-2009,AARVEEDEN,Aarvee Denims & Exports L,DEVANG NARENDRAKUMAR SANGHVI,SELL,400000,11.50,-
13-MAR-2009,BIL,Bhartiya Intl Limited,A JAIN & COMPANY PVT.LTD.,SELL,50000,17.99,-
13-MAR-2009,BINDALAGRO,Oswal Chem & Fert Ltd.,DIVINE COMMUNICATION SYSTEMS PRIVATE LIMITED,SELL,1500000,9.88,-
13-MAR-2009,EDSERV,Edserv Softsystems Limite,AMBIT SECURITIES BROKING PVT. LTD.,SELL,62644,44.29,-
13-MAR-2009,EDSERV,Edserv Softsystems Limite,ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD,SELL,122889,44.18,-
13-MAR-2009,EDSERV,Edserv Softsystems Limite,BP FINTRADE PRIVATE LIMITED,SELL,146934,43.23,-
13-MAR-2009,EDSERV,Edserv Softsystems Limite,DKG SECURITIES PVT. LTD.,SELL,533482,44.79,-
13-MAR-2009,EDSERV,Edserv Softsystems Limite,KSHITIJ-PORTFOLIO-PVT.-LTD.,SELL,66438,44.44,-
13-MAR-2009,EDSERV,Edserv Softsystems Limite,MOTILAL OSWAL FINANCIAL SERVICES LTD,SELL,70345,42.95,-
13-MAR-2009,EDSERV,Edserv Softsystems Limite,MULTIPLIER S AND S ADV PVT LTD,SELL,66439,41.53,-
13-MAR-2009,EDSERV,Edserv Softsystems Limite,NIRMAN MANAGEMENT SERVICES,SELL,278047,42.55,-
13-MAR-2009,EDUCOMP,Educomp Solutions Limited,C D INTEGRATED SERVICES LTD,SELL,132531,1699.70,-
13-MAR-2009,EVERONN,Everonn Systems India Lim,NORGES BANK,SELL,88170,83.75,-
13-MAR-2009,IOLN,IOL Netcom Limited,CHAINANI SANJIV KANWAL (HUF),SELL,225000,36.49,-
13-MAR-2009,NIITLTD,NIIT Limited,IT INFRASTRUCTURE DEVELOPMENT CORPORATION LTD,SELL,962500,15.10,-
13-MAR-2009,NIITLTD,NIIT Limited,NYARA HOLDINGS PVT LTD,SELL,1398750,15.39,-
13-MAR-2009,NIITTECH,NIIT Technologies Limited,NYARA HOLDINGS PRIVATE LIMITED,SELL,305850,44.60,-
13-MAR-2009,ROLTA,Rolta India Ltd.,CREDIT SUISSE (SINGAPORE) LIMITED A/C CREDIT SUISSE (SINGAP,SELL,998262,42.93,-
13-MAR-2009,VARUN,Varun Industries Limited,NIMBUS INDIA LTD,SELL,223265,23.50,-
Post Session Commentary - March 13 2009
Indian market extended its gain to more than 4% to close the day on a strong note on significant buying over the ground led by strong cues from the markets all over the world. Stocks on the domestic bourses witnessed sharp rally along with its other Asian peers. Sentiments got a boost on further ease in inflation for the week ended 28th Feb 2009, to around 7 years low of 2.43%. Firm US index futures along with positive European markets also contributed to the northward journey.
The domestic market opened on the positive note on the back of firm global cues. US stock markets on Thursday ended higher on the back of better-than-expected retail sales data, renewed buying interest in bellwether General Electric and positive comments from Bank of America''s CEO about the bank''s profitability. Benchmark indices continued to extend their gains on strong buying across the board. The markets maintained its upbeat move on the back of strong global markets and sign of recovery in domestic economy. Auto sales went up in past few months and interest rates are dropped. Sustained upward movement stopped up only on the closing of trading. BSE Sensex ended above 8,700 mark and NSE Nifty above 2,700 level. From the sectoral front, all indices ended in green. Among those, Auto, Bank, Oil & Gas, Metal, IT, FMCG and Capital Goods stocks contributed mostly to the strong rally. BSE Mid Cap and Small Cap stocks were also on buyers’ radar.
Among the Sensex pack 28 stocks ended in green territory and 8 in red. The market breadth indicating the overall health of the market remained strong as 1583 stocks closed in green while 854 stocks closed in red and 114 stocks remained unchanged in BSE.
The BSE Sensex closed higher by 412.86 points at 8,756.61 and NSE Nifty ended up by 101.80 points at 2,719.25. BSE Mid Caps and BSE Small Caps ended with gains of 75.96 points and 56.79 points at 2,640.36 and 2,934.06 respectively. The BSE Sensex touched intraday high of 8,793.21 and intraday low of 8,480.74.
Gainers from the BSE Sensex pack are DLF Ltd (11.47%), Tata Motors (10.72%), Tata Power (9.18%), ICICI Bank (8.60%), Hindalco (7.99%), Sterlite Industries (7.93%), HDFC (7.53%), Tata Steel (6.89%), L&T Ltd (6.76%), Reliance (6.69%) and TCS Ltd (6.57%).
Losers from the BSE Sensex pack are NTPC Ltd (2.04%) and Sun Pharma (0.36%).
On the global markets front the Asian markets which opened before the Indian market, ended higher on expectations of a fresh stimulus measures in China and Japan. Japan announced today that it was planning a new 100-trillion-yen ($1.03 trillion) economic stimulus package. Hang Seng, Nikkei 225, and Straits Times index ended higher by 524.27, 371.03 and 83.99 points at 12,525.88, 7,569.28 and 1,577.52 respectively. However, Shanghai Composite lost 5.03 points at 2,128.85
European markets which opened after the Indian market are trading in green tracking Wall Street gains overnight. Market is witnessing decent buying led by banks and oil producers leading a broad-based advance. In London FTSE 100 is trading higher by 66.92 points at 3,778.91 and in Frankfurt the DAX index is trading down by 41.44 points at 3,997.66.
The BSE Reality index outperformed the benchmark indices and ended up by (7.57%) or 99.15 points at 1,408.56 on hopes lower rates will spur housing demand. Gainers are DLF Ltd (11.47%), Akruti City (9.27%), Mahindra Life (8.16%), Housing Dev (6.48%) and Indiabull Real (5.67%).
The BSE Metal index gained (6.26%) or 286.07 points to close at 4,852.53. Main gainers are JSW Steel (9.55%), NALCO (8.22%), Welspan Guajrat Sr (8.12%), Hindalco (7.99%) and Sterlite Industries (7.93%).
The BSE Bank index closed with increase of (5.15%) or 219.63 points at 3,973.85 on hopes lower interest rates may boost lending growth. Scrips that gained are Axis Bank (8.61%), ICICI Bank (8.60%), Bank of Boroda (7.17%), Indian Overseas Bank (6.65%) and IDBI Bank (6.46%).
The BSE IT stocks also joined the rally as advanced by (5.63%) or 116.79 points to close at 2,190.32. Main gainers are NIIT Ltd (9.52%), HCL Tech (7.19%), Oracle Fin (6.97%), TCS Ltd (6.57%) and Infosys Tech (5.64%).
The BSE Oil & Gas index ended higher by (4.71%) or 273.88 points to close at 6,088.52 as crude oil prices surged 11% on the New York Mercantile Exchange on Thursday. Aban Offshore (10.79%), Reliance Natural Resources (7.33%), Reliance (6.69%), Reliance Pet (6.44%) and Cairn Ind (3.98%) ended in positive territory.
The BSE Teck index gained (4.48%) or 73.19 points at 1,707.31. Gainers are Jagran Prak (11.33%), Sun TVNet (9.56%), NIIT Ltd (9.52%), Tel Eighteen (9.35%) and Tata Comm (9.07%).
Tata Motors gained 10.72% as entered into an understanding with State Bank of Travancore for financing its range of passenger vehicles. The finance facility will be available at all branches of the bank and also at Tata Motors 470 sales touch points.
Dr. Reddy''s increased by 3.33%. The Pharma Company received favorable summary judgment ruling in the Omeprazole Mg OTC litigation. US District Court (Southern District, New York) has granted a summary judgment that the Omeprazole Mg OTC ANDA filed by Dr. Reddy''s does not infringe the patents in suit related to Astra Zeneca’s Prilosec OTC.
Tata Communication ended higher by 9.07%. The company said on Thursday that it has raised $350 million in the form of debt and there is no liquidity problem in the company.
Reliance Industries Ltd advanced 6.69%, on reports the company has recommenced crude oil production from its predominantly gas-rich KG-D6 block.
Cairn India gained 3.98% to as crude oil prices surged 11% on the New York Mercantile Exchange on Thursday, 12 March 2009.
Wipro rose 5.87% after its unit won an outsourcing contract worth Rs. 1182.00 crore from an Indian government agency. The deal is for a period of six and half year.
Sun Pharma Industries lost 0.36% despite reports the company has secured US Food and Drug Administration (USFDA) approval to go ahead approval for anti-cancer injections.
FII activity, global equities hold key
Key benchmark indices may track movements in global equities and foreign institutional investor activity will be closely watched in a near term. Sings of recovery in the economy and expectations of further rate cuts by the central bank after recent sharp fall in inflation, may provide support to the markets.
A section of the market expects further rate cuts by the Reserve Bank of India. Foreign securities firm Nomura expects another 100 basis points cut in both the repo and reverse repo rates each from the Reserve Bank of India (RBI) by mid-2009. Inflation based on the wholesale price index (WPI) rose 2.43% in the year through 28 February 2009, much lower than previous week's 3.03% rise, data released by the government on, 12 March 2009, showed. It was the smallest annual rise in inflation since 8 June 2002 when inflation was at 2.18%. Its lowest ever was 1.13% on 2 February 2002.
The sharp fall in inflation over the past few months has provided room for the central bank to cut interest rates to protect the domestic economy from the negative impact of the global financial sector crisis and the recession in key global economies. The Reserve Bank of India (RBI) on 4 March 2009 cut the repo rate and reverse repo rate by 50 basis points each, with immediate effect. At that time, RBI said it will continue to maintain ample liquidity in the system. Repo rate is the rate at which RBI lends to commercial banks and reverse repo rate is the rate at which RBI accepts deposits from banks.
Meanwhile, there are signs that the stimulus packages announced by the government since December 2008 and an aggressive rate cuts announced by the central bank since October 2008 have started having some positive impact - lower interest rate have helped automobile sales rebound in the past few months. Interest rates have dropped drastically over the past few months.
A pick up the production of consumer goods and capital goods point to a rise in investment and consumption demand. Government data released during trading hours on Thursday, 12 March 2009, showed consumer durables output rose 2.5% in January 2009, moving into positive territory after three months of decline on the back of high growth in automobile sales. The capital goods sector saw strong growth, with output rising 15.4%, led by an impressive expansion in production of machinery and equipment. The pick up in production in these two segments also indicates that there is an improvement in the credit availability to the industry.
Further, a large government spending plan may help pump-prime the economy. The economy will also get another stimulus in the form of a huge spending by the political parties for the forthcoming Lok Sabha elections. As per reports, around Rs 6,000 crore would be pumped into the system as political parties and candidates splurge on their campaign and the Election Commission pays a huge bill for conducting the election. And the main beneficiary would be the services sector that often spurs growth.
Another plus point is that prospects look bright for the Rabi harvest in contrast to the previous kharif harvest which saw coarse grains recording lower output. Agriculture remains the mainstay of the economy and if rabi output increases as has been projected, rural demand may rise in the coming months, though perhaps not as much as had been hoped.
Meanwhile, the fourth tranche of advance tax payments of India Inc is due on 15 March 2009. Companies have to pay 25% of their annual tax bill in the March installment. Despite the economic slowdown, the income tax department expects advance tax collections to be marginally better than the collections in the third quarter. Corporate India had paid Rs 45400 crore as the third tranche of advance tax by 15 December 2008, much lower than the Rs 54900 crore companies shelled out in the third tranche a year before.
However, investor sentiment may remain edgy due to sustained selling by foreign funds. FII outflow in March 2009 totaled Rs 2276.20 crore (till 12 March 2009). FII outflow in calendar year 2009 totaled Rs 9217.20 crore (till 12 March 2009). Globally, investors are pulling out money from hedge funds, forcing hedge fund managers to dump assets.
Also due to political uncertainty, investors are unlikely to build large positions with general election to be held in mid-April 2008 to mid-May 2009. More so at a time when it is highly unlikely that either Congress or BJP comes to power on its own i.e. without the support of other smaller/regional parties.
The market may recover if a coalition led either by Congress or BJP comes to power. But the recovery will be subject to BJP or Congress led coalition coming to power without a support from the Left front which is against key economic reforms. The market will then look for whether the new government which comes to power undertakes second generation reforms that could bring India back on a strong growth path witnessed in five years between 2003 and 2008.
Market vaults on signs of economic recovery
Indian equities jumped in a truncated week on signs that the stimulus packages announced by the government since December 2008 and an aggressive rate cuts announced by the central bank since October 2008 have started having some positive impact - lower interest rate have helped automobile sales rebound in the past few months. Interest rates
have dropped drastically over the past few months. Expectations of further rate cuts by the central bank after recent sharp fall in inflation also aided the rally.
The market gained in 2 out of 3 trading sessions in the week. The market remained shut on Tuesday, 10 March 2009 for Id-E-Milad and Wednesday, 11 March 2009 for the Holi festival.
Auto sales rose 10.61% to 10.4 lakh units in February 2009 over February 2008, data released by Society of Indian Automobile Manufacturers (SIAM) on 9 March 2009, showed.
Inflation based on the wholesale price index (WPI) rose 2.43% in the year through 28 February 2009, much lower than previous week's 3.03% rise, data released by the government on 12 March 2009, showed. It was the smallest annual rise in inflation since 8 June 2002 when inflation was at 2.18%. Its lowest ever was 1.13% on 2 February 2002.
Recovery in global stocks also supported the market. Most Asian markets gained for a fourth day on Friday, 13 March 2009, helped by a smaller-than-expected decline in US retail sales and hopes that the largest US banks will survive without a government takeover.
The BSE 30-share Sensex rose 430.79 points or 5.17% to 8,756.61 in the week ended 13 March 2009. The S&P CNX Nifty gained 99.10 points or 3.78% to 2,719.25 in the week.
The Sensex is down 890.70 points or 9.23% in calendar 2009 from its close of 9,647.31 on 31 December 2008. The S&P CNX Nifty is down 239.90 points or 8.1% in calendar 2009 from its close of 2,959.15 on 31 December 2008.
The BSE Mid-Cap index gained 54.06 points or 2.09% to 2,640.36 and the BSE Small-Cap index was up 22.33 points or 0.77% to 2, 934.06 in the week.
The BSE Metal index (up 7.24%), the BSE Bankex (up 6.34%), the BSE Auto index (up 6.81%), the BSE IT index (up 5.69%) outperformed the Sensex.
The BSE Realty index (up 4.58%), the BSE Capital Goods index (up 4.09%), the BSE Power index (up 1.92%), the BSE FMCG index (up 1.6%) underperformed the Sensex.
Foreign institutional investors (FIIs) outflow in March 2009 totaled Rs 2276.20 crore (till 12 March 2009). FII outflow in calendar year 2009 totaled Rs 9217.20 crore (till 12 March 2009).
The BSE 30-share Sensex lost 165.42 points or 1.99%, to settle at 8,160.40 its lowest closing since 2 November 2005 on Monday, 9 March 2009 as subdued-to-weak trend in global markets, a dismal US job data, a weak rupee and concerns of sustained outflow by foreign funds weighed on the domestic bourses.
The Sensex jumped 183.35 points, or 2.25%, to 8,343.75 on Thursday, 12 March 2009. Expectations of further cut in policy rates by the central bank helped the market shrug off a weak data on industrial output. Easing inflation raised hopes for further monetary-policy easing. Sell-off in Bharti Airtel capped sharp gains in the key benchmark indices triggered by rally in battered index pivotals Reliance Industries and ICICI Bank.
Key benchmark indices surged on Friday, 13 March 2009 led by a rally in global equities. The BSE 30-share Sensex jumped 412.86 points or 4.95% to 8,756.61. Equities across the global rallied on speculation the worst might be over for the financial sector. Apart from strong global markets, signs of a recovery in the domestic economy, bolstered investor sentiment.
India's third largest IT exporter by sales Wipro jumped 5.32% to Rs 224.55 in the week. The firm announced on 12 March 2009 that its unit won an outsourcing contract worth Rs 1,182 crore from an Indian government agency.
India's largest electric equipment maker by sales Bharat Heavy Electricals rose 4.69% to Rs 1,374.10. The company on 9 March 2009 announced bagging an order worth Rs 81 crore.
India's largest copper maker by sales Sterlite Industries (India) jumped 13.18% to Rs 283. Foreign brokerage Credit Suisse retained its 'outperform' rating on stock with a target price of Rs 500.
Auto shares were in demand on reports that the Indian defence forces are planning to place immediate orders to buy vehicles to meet their requirements for two years. The major vehicle suppliers for the three defence forces - Mahindra and Mahindra (up 8.8% to Rs 344.80), Ashok Leyland (up 8.75% to Rs 17.40), Maruti Suzuki (up 9.74% to Rs 712.35) advanced.
India's largest commercial vehicle maker by sales Tata Motors surged 16.68% to Rs 161.60. The British government announced a monetary grant to its Jaguar Land Rover unit for producing a new eco-friendly car.
India's largest cellular services provider by market share Bharti Airtel tumbled 7.22% to Rs 558.70 after the telecom regulator announced a cut in a key expense item for network operators, pressuring firms to lower call tariffs. The Telecom Regulatory Authority of India (Trai) reduced termination charges on all domestic phone calls by 33% to 20 paise per minute from 30 paise per minute.
Another reason why Bharti Airtel slumped was news of its chief executive, Manoj Kohli, offloading his holding in the telecom firm through open-market transactions. Kohli, who owned 1,23,000 shares, sold 53,000 shares on 6 March and 70,000 shares on 9 March 2009.
After trading hours on 12 March 2009, Kohli, however, clarified that he sold the shares for personal reasons and that he continues to be the chief executive officer and joint managing director of the company. He further said he still held 1,80,000 options in the company.
India's largest IT exporter by sales Tata Consultancy Services (TCS) spurted 5.36% to Rs 506.55. The company on 10 March 2009 announced signing a multi-year IT solutions contract with German semiconductor maker Infineon Technologies AG.
India's largest bank in terms of assets and branch network State Bank of India rose 1.3% to Rs 953.05. The biggest domestic institutional investor Life Insurance Corporation of India hiked its stake in the state-run bank to 9.16% through open market purchases.
Reliance Industries (up 9.55% to Rs 1,282.35), Larsen & Toubro (up 6% to Rs 614.95), ICICI Bank (up 14.63% to Rs 308.70) and Infosys Technologies (up 6.33% to Rs 1,296.35), were among the major gainers in the week.
Industrial production declined for the second month in a row in January 2009, data released by the government on 12 March 2009, showed. Industrial production declined 0.5% in January 2009 compared to a revised 0.6% fall in December 2008. Manufacturing production fell 0.8% in January 2009 from a year earlier.
The market regulator Securities & Exchange Board of India (Sebi) on Thursday 12 March 2009 proposed relaxing the disclosure norms for rights issues to reduce overall cost of issuance. Rights issues are further issuance of capital made by listed entities to its existing shareholders.
Sebi said it may suffice to have a more restricted set of disclosures rather than exhaustive disclosure requirements about the rights issue and the entity. The argument is that the certain information about the entities that are listed and traded on the exchanges is already available in the public domain.
Sensex surges the most in 3 months
Key benchmark indices recorded their biggest rally in a single trading session in three months mirroring a rally in global markets and on signs of a recovery in the domestic economy. The BSE 30-share Sensex jumped 412.86 points, or 4.95%. The barometer index hit a 2-week high. Equities across the global rallied on speculation the worst might be over for the financial sector.
All the BSE sectoral indices logged gains. The market breadth was strong. BSE clocked a turnover of Rs 3,219 crore, higher than Rs 2,726.77 crore on Thursday, 12 March 2009.
The Income Tax department's optimism that the fourth tranche of advance tax payments of India Inc, due on 15 March 2009, will be healthier than the previous one, also lifted sentiment. Companies have to pay 25% of their annual tax bill in the March installment.
Despite the economic slowdown, the department expects advance tax collections to be marginally better than the collections in the third quarter. Corporate India had paid Rs 45400 crore as the third tranche of advance tax by 15 December 2008, much lower than the Rs 54900 crore companies shelled out in the third tranche a year before.
Indian equities rose for the second day in a row today on signs that the stimulus packages announced by the government since December 2008 and an aggressive rate cuts announced by the central bank since October 2008 have started having some positive impact - lower interest rate have helped automobile sales rebound in the past few months. Interest rates have dropped drastically over the past few months.
A pick up the production of consumer goods and capital goods point to a rise in investment and consumption demand. Government data released during trading hours on Thursday, 12 March 2009, showed consumer durables output rose 2.5% in January 2009, moving into positive territory after three months of decline on the back of high growth in automobile sales. The capital goods sector saw strong growth, with output rising 15.4%, led by an impressive expansion in production of machinery and equipment. The pick up in production in these two segments also indicates that there is an improvement in the credit availability to the industry.
Further, a large government spending plan may help pump-prime the economy. The economy will also get another stimulus in the form of a huge spending by the political parties for the forthcoming Lok Sabha elections. As per reports, around Rs 6,000 crore would be pumped into the system as political parties and candidates splurge on their campaign and the Election Commission pays a huge bill for conducting the election. And the main beneficiary would be the services sector that often spurs growth.
Another plus point is that prospects look bright for the Rabi harvest in contrast to the previous kharif harvest which saw coarse grains recording lower output. Agriculture remains the mainstay of the economy and if rabi output increases as has been projected, rural demand may rise in the coming months, though perhaps not as much as had been hoped.
A sharp slide in inflation over the past few months provides room for the central bank to cut policy rates further to shield the domestic economy from the negative impact of the global financial sector crisis and recession in key economies. The Reserve Bank of India (RBI) on 4 March 2009 cut the repo rate and reverse repo rate by 50 basis points each, with immediate effect. At that time, RBI said it will continue to maintain ample liquidity in the system.
According to a domestic brokerage, the latest RBI rate cut will set the ball rolling for lower interest rates in the economy and increase credit flow to individuals and the corporate sector. The latest rate cut brings the reverse repo to 3.5%, identical to the rate at which banks mobilize savings deposits. The lower repo rate in turn could dissuade banks from parking surplus funds with the RBI and increase lending, it notes in a recent report. Banks have been parking large sums of money with RBI through the repo window.
European markets advanced today, 13 March 2009 after signs of stabilisation in US consumer spending fuelled a sharp rise on Wall Street on Thursday. Key benchmark indices in UK, Germany and France were up by between 1.80% and 2.65%.
Most Asian markets gained for a fourth day on Friday, 13 March 2009 helped by a smaller-than-expected decline in US retail sales and hopes that the largest US banks will survive without a government takeover. Key benchmark indices in Hong Kong, Singapore and Taiwan were up by between 3% and 4.37%. South Korea's Seoul Composite fell 0.21% and China's Shanghai Composite index slipped 0.24%.
Japan's Nikkei 225 index jumped 5.15% on speculation the government will introduce additional stimulus measures to lift the sagging economy, which in the fourth quarter contracted at its sharpest rate in 35 years.
China, the engine of world growth in recent years, has rolled out a 4 trillion yuan ($585 billion) plan to expand and speed up government spending, and Premier Wen Jiabao today, 13 March 2009, said it was ready to do more.
Trading in US index futures indicated the Dow could rise 59 points at the opening bell on Friday, 13 March 2009. Earlier in the day, the Dow futures were in the red.
US stocks spurted on Thursday, 12 March 2009, on relief that a ratings cut by S&P in General Electric was just one notch and that no further cuts loomed, while retail sales data showed some stabilisation in consumer spending. The Dow Jones industrial average climbed 239.66 points, or 3.46%, to 7,170.06, the Standard & Poor's 500 Index jumped 29.38 points, or 4.07%, to 750.74 and the Nasdaq Composite index added 54.46 points, or 3.97%, to 1,426.10.
On Thursday, 12 March 2009 Bank of America followed Citigroup Inc. and JPMorgan Chase & Co in saying it was profitable in the first two months of 2009, easing concerns about the global credit crisis that has caused writedowns and losses at institutions worldwide to swell to more than $1.2 trillion. The comments from the banks triggered speculation the worst may be over for the financial sector. Massive losses at big banks tied to risky home loans triggered a dramatic seizure in credit markets that set off the worldwide recession.
The BSE 30-share Sensex jumped 412.86 points, or 4.95%, to 8,756.61, registering its biggest single day gain in percentage terms since 10 December 2008. Sensex opened 136.99 points higher at 8,480.74, which was also its low for the day. At the day's high of 8,793.21, the Sensex gained 449.46 points in late trade, its highest level since 27 February 2009.
The S&P CNX Nifty advanced 101.80 points, or 3.89%, to 2,719.25. Nifty March 2009 futures were at 2720.80, a premium of 1.55 points as compared to the spot closing. Turnover in NSE's futures & options (F&O) segment was Rs 47,689.67 crore lower than Rs 49,526.24 crore on Thursday, 12 March 2009.
The barometer index BSE Sensex had settled at its lowest level in more than three years on Monday, 9 March 2009. The Sensex is down 890.70 points or 9.23% in calendar 2009 from its close of 9,647.31 on 31 December 2008. The S&P CNX Nifty is down 239.90 points or 8.10% in calendar 2009 from its close of 2,959.15 on 31 December 2008.
The BSE Mid-Cap index (up 2.96%) and BSE Small-Cap index (up 1.97%), both underperformed the Sensex.
All sectoral indices on BSE logged gains. The BSE IT index (up 5.63%), the BSE Metal index (up 6.26%), the BSE Realty index (up 7.57%), and the BSE Bankex (up 5.85%), outperformed the Sensex.
The BSE Auto index (up 2.93%), the BSE FMCG index (up 2.20%), the BSE Oil & Gas index (up 4.71%), BSE Capital Goods index (up 4.07%), the BSE Consumer Durables index (up 1.87%), the BSE Power index (up 2.76%), the BSE PSU index (up 1.74%), the BSE Healthcare index (up 0.57%), the BSE TECk index (up 4.48%), underperfomed the Sensex
The market breadth, indicating the overall health of the market, was strong on BSE with 1586 shares advancing as compared with 865 that declined. A total of 105 shares remained unchanged.
The National Stock Exchange had earlier said that trading would continue in the normal course from 5 March 2009 to 19 March 2009 despite Sun Outage between 11:45 IST to 12:25 IST. The exchange has advised members to use alternative mode of connectivity instead of VSAT during the above mentioned period for continuing trading without any disruptions on account of Sun outage.
Earlier on 25 February 2009, the Indian Space Research Organization (ISRO) had informed the NSE that there would be Sun Outage from 5 March 2009 to 19 March 2009 between 11:45 IST to 12:25 IST due to which trading members may face connectivity problems at different times on different dates based on geographical location during this period.
NTPC was the lone loser from the 30-member Sensex pack. India's largest power generation firm by sales lost 1.96% to Rs 170.35. Reportedly, the Power Ministry will take up the issues of the company with other ministries, such as Shipping and Railways, to expedite the delivery of fuel to the PSU, which is reeling under coal shortage.
Meanwhile state-run hydro power producer NHPC today, 13 March 2009, said it would come out with its initial public offer only after the market conditions improve. The company had proposed to come out with a public issue in October 2008 to partially fund expansion programmes, but it was forced to shelve plans due to volatile market conditions.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) shot up 7.66% to Rs 1294, extending yesterday's (12 March 2009) 4.22% surge on reports the company has resumed crude oil production from its predominantly gas-rich KG-D6 block after a three-month shutdown, which was forced by an equipment failure. RIL is the operator with a 90% stake in the 7,645 square kilometre D6 block, off the Andhra coast. Niko Resources of Canada holds the remaining 10% interest.
India's largest state-run oil exploration firm by sales ONGC gained 3.36% and India's largest private sector oil exploration firm by sales Cairn India rose 3.98% as crude oil prices surged 11% on the New York Mercantile Exchange on Thursday, 12 March 2009. Rise in crude oil prices would result in higher realizations from crude sales for the oil exploration firm.
However, shares of state-run oil marketing firms on a surge in crude oil prices and on concerns arising from a weak rupee. HPCL (down 3.75%), BPCL (down 2.73%), and Indian Oil Corporation (IOC) (down 0.69%) slipped.
Oil marketing firms suffer under-recovery on domestic sale of petrol, diesel, LPG and kerosene at a controlled price. Further, the recent sharp slide in the rupee against the dollar will raise cost of crude imports of oil refiners unless they undertake effective hedging strategies. Oil firms rely substantially on import of crude oil.
US light, sweet crude for April 2009 delivery surged 11.1% or $4.70 to 47.03 a barrel on the New York Mercantile Exchange on Thursday, 12 March 2009, rebounding from heavy losses in the previous session, as traders weighed a potential output cut when the Organization of Petroleum Exporting Countries (Opec) meets on Sunday, 15 March 2009.
Realty shares gained on hopes lower rates will spur housing demand. India's largest real estate developer by sales DLF galloped 12.02% to Rs 153.30 on 62.03 lakh shares It was the top gainer from the Sensex pack.
Indiabulls Real Estate (up 5.72%), Akruti City (up 10.22%), HDIL (up 6.26%), and Unitech (up 4.79%), surged. Most of the realty deals including sale of commercial property and housing sales are driven by finance.
Banking shares gained on hopes lower interest rates may boost lending growth and on rally in American depository receipt (ADRs) on Thursday, 12 March 2009.
India's largest private sector bank by net profit ICICI Bank vaulted 9.73% to Rs 311.90, extending yesterday's (12 March 2009) 8.06% surge, after its ADR surged 4.26% on Thursday, 12 March 2009. The counter saw high volumes of 64.63 lakh shares.
India's second largest private sector bank by operating income HDFC Bank advanced 4.43% to Rs 835 after its ADR rose 2.27% on Thursday, 12 March 2009.
India's largest bank in terms of assets and branch network State Bank of India (SBI) gained 4.82% to Rs 954.80. State-run Life Insurance Corporation of India during market hours today said it has raised its stake in SBI by 2.12% to 9.16% through market purchases. LIC bought 13.46 million shares between mid November 2008 and early March 2009, the filing showed.
Auto shares were in demand on reports that the Indian defence forces are planning to place immediate orders to buy vehicles to meet their requirements for two years. The major vehicle suppliers for the three defence forces - Mahindra and Mahindra (up 4.68%), Ashok Leyland (up 5.12%), Maruti Suzuki (up 2.37%) and Tata Motors (up 11.17%) advanced.
According to a report, if the government approves the plan, the auto sector is expected to get Rs 3,000 crore to Rs 4,000 crore worth of orders that will be spread over the next two quarters.
Metal shares gained on positive news from China, the world's largest consumer of a number of commodities. India's top copper maker by sales Sterlite Industries India vaulted 7.17% to Rs 281 after foreign brokerage Credit Suisse retained its 'outperform' rating on stock with a target price of Rs 500.
On 7 March 2009, the company announced that it will pay $1.7 billion in cash and notes to buy bankrupt US copper miner Asarco LLC, lower than the $2.6 billion it offered last year.
Steel Authority of India (up 6.01%), Hindalco Industries (up 8.88%), National Aluminium Company (up 8.98%), Sesa Goa (up 5.54%), Tata Steel (up 6.48%), Hindustan Zinc (up 6.47%), and JSW Steel (up 9.97%), soared.
Prices of metals rose in the commodities market on comments from Chinese Premier Wen Jiabao, who said 595 billion yuan had been allocated in this year's budget for stimulus moves and the country could issue new measures if needed.
Outsourcing focussed IT firms gained as higher ADRs offset a firm rupee. India's largest software services exporter by sales TCS rose 6.94%. The company before market hours on Thursday, 12 March 2009, said it signed a multi-year IT solutions contract with German semiconductor maker Infineon Technologies AG, one of the leading semiconductor manufacturers. The financial details were not disclosed.
India's second largest software services exporter Infosys Technologies advanced 5.86% on the back of 3.67% rise in its ADR on Thursday, 12 March 2009. India's fifth largest IT major by sales HCL Technologies gained 7.58%.
India's third largest software services exporter, Wipro galloped 6.27% after its unit Wipro Infotech won an outsourcing contract worth Rs 1,182 crore from the Employees State Insurance Corporation (ESIC). Its ADR jumped 4.84% on Thursday, 12 March 2009.
However Satyam Computer Services fell 4.03%. Larsen & Toubro (L&T), Spice group and Tech Mahindra among the bidders who have completed the first step of registration to acquire the troubled Satyam Computer Services, whereas the Hinduja group is not participating in the race.
The Indian rupee was firm today, 13 March 2009 as dollar weakened against other currencies and on expectations of capital inflows in domestic stock market. The partially convertible rupee was at 51.55 per dollar as compared to its previous close of 51.88. A stronger rupee negatively impacts operating margins of IT firms as they earn a lion's share of revenues from exports.
India's largest engineering and construction by sales Larsen & Toubro (L&T) advanced 7.20% to Rs 617.50 on recent reports Oman has shortlisted six firms including Larsen & Toubro, to build a $1.4 billion airport terminal. The lowest bidder is a consortium of the local NRI-owned Galfar Engineering & Contracting Company and L&T, the Middle East Economic Digest (MEED) reported last week.
Meanwhile, L&T has registered interest to participate in the bidding process for Satyam Computer Services, its spokesman said on Thursday, 12 March 2009. L&T is the single largest shareholder in Satyam with a 12% stake.
Capital goods shares gained for a second running on steady progress to the landmark India-US civil nuclear deal. Areva T&D (up 1.09%), Siemens (up 6.43%), Gammon India (up 1.53%), and Punj Lloyd (up 4.41%), gained.
India's largest power equipment maker by sales Bharat Heavy Electricals (Bhel) gained 2.10% to Rs 1370.55. The company may reportedly join the consortium of French nuclear technology provider Areva and Bharat Forge for its proposed nuclear forging business.
Emco jumped 8.06% to Rs 28.15 on bagging orders worth Rs 550 crore. The company announced the new orders after trading hours on Thursday, 12 March 2009.
India's Foreign Secretary Shivshankar Menon, who discussed the nuclear deal with both Secretary of State Hillary Clinton and his counterpart Under Secretary for Political Affairs William Burns, said on Thursday 12 March 2009 the deal is on track with both sides determined to go forward with an initiative. Noting that deal had already been signed in 2008, Menon said now its a question of operationalisation and bringing it down to the commercial level. For that India had already signed an additional protocol with the International Atomic Energy Agency (IAEA).
India's largest pharma company by market capitalisation Sun Pharma Industries gained 0.93% to Rs 1035 on reports the company has secured US Food and Drug Administration (USFDA) approval to market anti-cancer injections.
Dr Reddy's Laboratories surged 3.18% to Rs 412 after the company said it received a favorable summary judgment from a US district court on patent infringement litigation for a drug. The company made this announcement after trading hours on Thursday, 12 March 2009
India's largest pharma company by sales Ranbaxy Laboratories spurted 3.01% to Rs 138.50. On 9 March 2009, the company received the final approval from the US Food and Drug Administration's (USFDA) to sell Ramipril capsules, a drug used to used treat cardiovascular diseases.
However India's third largest pharma company by sales Cipla shed 0.27% to Rs 203.20 after a block deal of 3.88 lakh shares was executed on NSE at Rs 205 per share. The block deal constituted 0.05% of the company's equity.
Strides Arcolab soared 8.23% to Rs 71 after the firm ended a pact with a US drug firm, which faced lawsuits in the United States. The company made the announcement during market hours today, 13 March 2009.
Shares of India's largest cellular services provider by sales Bharti Airtel rose 1.82% to Rs 560.30, off day's low of Rs 545.30. Concerns that large operators like the company and unlisted Vodafone will likely get hurt from the cut in domestic termination charges as they are the net collectors of termination fees, had triggered a 6.69% fall on the counter yesterday, 12 March 2009.
Another reason why Bharti Airtel slumped on Thursday, 12 March 2009 was news of its chief executive, Manoj Kohli, offloading his holding in the telecom firm through open-market transactions. Kohli, who owned 1,23,000 shares, sold 53,000 shares on 6 March and 70,000 shares on 9 March 2009.
After trading hours on 12 March 2009, Kohli, however, clarified that he sold the shares for personal reasons and that he continues to be the chief executive officer and joint managing director of the company. He further said he still held 1,80,000 options in the company.
Media shares sizzled on hopes the forthcoming Indian Premier League (IPL) - the domestic cricket series and Lok Sabha elections - will result in a substantial business to the Indian advertising, media and entertainment industry.
Zee Entertainment (up 3.92%), TV 18 (up 10.37%), NDTV (up 8.26%), Sun TV (up 10.99%), Adlabs Films (up 5.02%), and Bag Films (up 1.01%) gained.
Tea shares gained on reports prices are expected to rise 15-20% in 2009/10 due to weather problems in India and a crop shortage in Kenya.
McLeod Russel India (up 5.17%), Jayshree Tea (up 3.26%), Asian Tea (up 5.70%), Assam Company (up 7.69%), Harrisons Malayalam (up 3.78%), Goodricke Group (up 8.28%), and Warren Tea (up 5.30%), gained.
The absence of the light February 2009 and March 2009 showers in Assam and South India will hurt the output and prices will also get support from the Kenyan crop shortfall, Aditya Khaitan, the Chairman of Indian Tea Association, said in a interview to a news agency.
ICICI Bank topped the turnover chart on BSE with a turnover of Rs 253.54 crore followed by Akruti City (Rs 192.75 crore), Reliance Industries (Rs 180.70 crore), Educomp Solutions (Rs 168.85 crore) and Bharti Airtel (Rs 122.28 crore).
Satyam Computer Services led the volume chart on BSE clocking volumes of 2.38 crore shares followed by Cals Refineries (87 lakh), ICICI Bank (82.90 lakh), Unitech (73.85 lakh) and Suzlon Energy (67.45 lakh).
Sintex Industries surged 21.06% to Rs 86.80 on value buying after the stock fell 23.72% in five consecutive sessions from a recent high of Rs 94 on 26 February 2009. The stock fell 37.18% in past one month till 12 March 2009.
Pantaloon Retail (India) jumped 5.49% to Rs 122 on reports the company is demerging some businesses to unlock value and is likely to go for a preferential allotment of equity to fund expansion.
DCM rose 0.69% on increase in promoters' stake in the firm. The company made the announcement about the hike in promoter holding during trading hours today, 13 March 2009.
MVL declined 4.94% after the company said its promoters have pledged more than 24.77 lakh shares or 4.69% of the equity capital of the company. The company made this announcement after trading hours on Thursday, 12 March 2009.
Meanwhile, the stock market regulator Securities and Exchange Board of India (Sebi) on Thursday, 12 March 2009, proposed relaxing the disclosure norms for rights issues to help shareholders retain their stake and reduce overall cost of issuance.
Rights issues are further issuance of capital made by listed entities to its existing shareholders and so certain information about the entities that are listed and traded on the exchanges is available in the public domain, Sebi said in a discussion paper while making a case for less disclosures for rights issues.
Market to open firm
The market sentiment is likely to remain bullish following firm Asian markets in current trades and overnight gains in US markets. The renewed buying interest in heavyweights may keep the bias positive for the day. Among the key domestic indices, the Nifty could test higher levels in the 2660-2700 range and has a support at 2560. The Sensex has a likely support at 8240 and may face resistance at 8500.
US indices finished higher on Thursday with the Dow Jones closing 3.46 % higher at 7170, up 240 points, while the Nasdaq changed 54 points up to close at 1426.
The upsurge in both the domestic and US markets spurred the Indian ADRs trading on the US bourses. Tata Motors led the pack with gains of 10.57% followed by Rediff gaining 9.15% while Patni Computer, ICICI Bank, Wipro, Infosys, Dr Reddy, HDFC Bank, VSNL and Satyam surged over 1-7% each. However, MTNL slipped around 2%.
Crude oil prices in the international market moved up, with the Nymex light crude oil for April delivery rising by $4.70 to close at $47.03 per barrel. In the commodity space, the Comex gold for April series surged by $13.30 to settle at $924 a troy ounce.
Pre Session Commentary - March 13 2009
Today domestic markets are likely to open positive as the US markets closed with phenomenal gains and the other Asian markets have also opened with green numbers. The sentiments are strong on the global front as such one could witness similar trend on the domestic front also. There is no specific news to support the market sentiments therefore there would be some room for profit booking that may lead to mild volatility.
On Thursday, the domestic markets opened with a positive gap to catch up with the global markets that had surged on the Tuesday and Wednesday. Phenomenal buying was witnessed across frontline stocks. Though there was little profit booking pressures in the morning session, but the buying strength helped maintain the northward movement. The IIP data for the January month recorded a contraction of 0.5% as against 2% contraction in the month of December. The inflation on the other hand recorded at 2.43% for the week ended Feb 28. Investors were well aware of the IIP contraction and therefore no turbulence was seen during the day’s trade. Sectors like Auto, Bankex, Oil & Gas and Metal gained phenomenally by 3.70%, 3.33%, 3.21% and 2.87% respectively. Whereas CD and Teck were the only sectors that conceded losses of 1.30% and 0.09% respectively. During the session we expect the markets to be trading positive.
The BSE Sensex closed high by 183.35 points at 8,343.75 and NSE Nifty gained by 44.30 points at 2,617.45. The BSE Small cap and Mid Cap closed with gains of 10.91 points and 10.59 points at 2,564.40 and 2,877.27 respectively. The BSE Sensex touched intraday high of 8,439.71 and intraday low of 8,274.78.
On Thursday, the US stock markets closed with remarkable gains. The phenomenal surge in the markets was inspired by better than expected retail sales data, renewed buying interest in bellwether General Electric, and more encouraging news from the financial sector. February retail sales declined just 0.1%, which is better than the 0.5% decline that was expected. Excluding autos, retail sales increased 0.7%. A decline of 0.1% was expected. Meanwhile, January total sales and sales less autos were revised to show an even larger increase. Weekly initial claims climbed 9,000 to 654,000, which was worse than expected. Continuing claims jumped nearly 200,000 to 5.32 million, which was also worse than expected. US light crude oil for April delivery grew by $4.70 to settle at $45.27 a barrel on the New York Mercantile Exchange. The crude oil prices surged ahead of the OPEC meeting this weekend to consider a fourth production cut.
The Dow Jones Industrial Average (DJIA) inclined by 239.66 points to close at 7,170.06 The NASDAQ Composite (RIXF) index grew by 54.46 points to close at 1,426.10 and the S&P 500 (SPX) grew by 29.38 points to close at 750.74.
Today major stock markets in Asia are trading positive. Shanghai composite is up by 13.20 points to 2,147.08 along with Hang Seng that is trading higher by 471.88 points at 12,473.41 and South Korea''s Seoul Composite is up by 5.07 points at 1,133.46. Japan''s Nikkei is also high by 354.90 points at 7,553.15 and Singapore''s Straits Times is high by 52.63 points at 1,546.16.
Indian ADRs closed up. In technology sector, Satyam ended higher by 0.56% along with Infosys by 3.67%. Further, Patni Computers gained 7.39 and Wipro closed up by 4.84%. In banking sector ICICI Bank and HDFC Bank gained 4.26% and 2.27% respectively. In telecommunication sector, MTNL dropped by 2.46% while Tata Communication advanced by 2.55%. Further, Sterlite Industries increased by 3.78%.
The FIIs on Thursday stood as net buyers in equity and net sellers in debt. Gross equity purchased stood at Rs 1,028.40 Crore and gross debt purchased stood at Rs 130.30 Crore, while the gross equity sold stood at Rs 1,016.40 Crore and gross debt sold stood at Rs. 571.70 Crore. Therefore, the net investment of equity and debt reported were Rs 12 Crore and Rs (441.40) Crore respectively.
On Thursday, the Indian rupee closed at 51.88/89, 0.03 paise weaker than its previous close of 51.85/87. The gain in the stock markets kept the rupee firm.
On BSE, total number of shares traded were 23.72 Crore and total turnover stood at Rs 2,726.77 Crore. On NSE, total number of shares traded were 50.87 Crore and total turnover was Rs 8,353.43 Crore.
Top traded volumes on NSE Nifty – ICICI Bank with 27371681, Suzlon Energy with 20824838 shares, Unitech with 15143785 shares, Bharti Airtel with 14874877 shares followed by Reliance Comm with 9316917 shares.
On NSE Future and Options, total number of contracts traded in index futures was 1049444 with a total turnover of Rs 13,098.44 Crore. Along with this total number of contracts traded in stock futures were 420857 with a total turnover of Rs 10,639.76 Crore. Total numbers of contracts for index options were 1863364 with a total turnover of Rs 24,621.59 Crore and total numbers of contracts for stock options were 41948 and notional turnover was Rs 1,166.44 Crore.
Today, Nifty would have a support at 2,639 and resistance at 2,674 and BSE Sensex has support at 8,396 and resistance at 8,528.
Three straight days of rally at Wall Street
Encouraging retail sales data take stocks higher for third consecutive day
Stocks at Wall Street witnessed huge gains on Thursday 12 March, 2009. For stocks at Wall Street, it was the best three days since November, 2008. Couple of better than expected economic reports, mainly the retail sales data acted as the main catalyst behind today's rally. The fact a congressional subcommittee is meeting to examine mark-to-market accounting rules also helped support a positive bias. All the ten sectors surged led by huge gains in the financial sector.
The Dow Jones Industrial Average ended higher 239 points at 7,170, the Nasdaq closed higher by 55 points at 1,426 and the S&P 500 closed higher by 30 points at 750. Dow had started the day 36 points down earlier during the day
All but one of thirty Dow stocks ended in the green. Microsoft was the sole loser. American Express, Bank of America and JP Morgan Chase were the main Dow winners. GE stock also rallied today despite the company getting a downgrade.
The financial sector had some good news once again today after Bank of America announced that it has witnessed profits for two months in a row this year. Other than that, the company also announced that it is perhaps done with taking further government aid.
Among major economic news at Wall Street today, the Commerce Department reported today that U.S. retail sales began the year 2009 much stronger than expected. It came after a disastrous holiday shopping season in 2008. Retail sales dropped 0.1% on a seasonally adjusted basis in February, better than the 0.4% decline expected. More importantly, January's sales gain was revised much higher, to a 1.8% growth rate from the 1% increase estimated a month ago.
Retail sales are down 8.6% in the past year and had declined for a record six straight months before January's surprising gain. Sales had plunged 3.1% in December.
The report detailed that auto sales sank 4.3% in February, after automakers reported their worst month for sales in a generation. Excluding autos, retail sales rose 0.7% in February after an upwardly revised 1.6% gain in January. Sales excluding both gasoline and autos rose 0.5% in February after a 1.4% gain in January.
Other than the above report, the Labor Department reported today that the number of workers filing initial claims for state unemployment benefits rose 9,000 to a seasonally adjusted 654,000 last week. The average of new claims over the past four weeks also gained, rising 6,750 to stand at 650,000, the highest level since October 1982.
Initial claims represent job destruction, while the level of continuing claims indicates how hard or easy it is for displaced workers to find new jobs.
In a separate report, February business inventories declined 1.1%, which is essentially in-line with the consensus estimate.
Crude prices shot up on Thursday, 12 March, 2009. Prices rose today as traders mulled over OPEC's forthcoming meeting at Vienna this coming weekend where the cartel is expected to decide another production cut to restore crude prices. Crude-oil futures for light sweet crude for April delivery closed at $47.03/barrel (higher by $4.7 or 11.1%) on the New York Mercantile Exchange.
Tomorrow the main important economic reports expected are February export and import prices and the January trade balance. Around 10:00ET, the University of Michigan will release its preliminary consumer sentiment survey for March.
Market seen extending gains on strong global cues
Key benchmark indices are likely to extend Thursday's 12 March 2009 rally on the back of surge in global markets. The SGX Nifty futures for March 2009 series jumped 67 points in Singapore.
Asian markets gained mirroring overnight rally in US markets. Key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan were up by between 0.41% and 4.63%.
US stocks spurted on Thursday, 12 March 2009, on relief that a ratings cut by S&P in General Electric was just one notch and that no further cuts loomed, while retail sales data showed some stabilisation in consumer spending. The Dow Jones industrial average climbed 239.66 points, or 3.46%, to 7,170.06, the Standard & Poor's 500 Index jumped 29.38 points, or 4.07%, to 750.74 and the Nasdaq Composite index added 54.46 points, or 3.97%, to 1,426.10.
On Thursday, 12 March 2009 Bank of America followed Citigroup Inc. and JPMorgan Chase & Co in saying it was profitable in the first two months of 2009, easing concerns about the global credit crisis that has caused writedowns and losses at institutions worldwide to swell to more than $1.2 trillion.
Back home, Key benchmark indices advanced on Thursday, 12 March 2009, attempting to catch up with the global markets which surged in the past two days on 10 and 11 March 2009 while the local markets were shut for holiday. Expectations of further cut in policy rates by the central bank helped the market shrugged off weak data on industrial output whereas easing inflation raised hopes for further monetary-policy easing.
The BSE 30-share Sensex jumped 183.35 points, or 2.25%, to 8,343.75 and the S&P CNX Nifty advanced 44.30 points, or 1.72%, to 2,617.45.
According to provisional data on NSE, Foreign institutional investors (FIIs) were net sellers worth Rs 186.66 crore while mutual funds bought shares worth Rs 227.10 crore on Thursday, 12 March 2009.
Industrial production declined for the third time in fours months in January 2009, government data released during trading hours on Thursday, 12 March 2009 showed. The index of industrial production (IIP) declined 0.5% in January 2009 against a upwardly revised 0.6% decline in December 2008. Industrial production had risen 6.18% in January 2008.
Manufacturing and mining contracted at 0.8% and 0.4% respectively while capital goods, consumer durables and consumer goods expanded at 15.4%, 2.5% and 1.1% respectively.
Inflation based on the wholesale price index (WPI) rose 2.43% in the year through 28 February 2009, much lower than previous week's 3.03% rise, data released by the government on Thursday, 12 March 2009 showed. It was the smallest annual rise in inflation since 8 June 2002 when inflation was at 2.18%. Its lowest ever was 1.13% on 2 February 2002. However, the inflation for the year through 3 January 2009 was revised upwards to 5.33% from 5.24%.
The National Stock Exchange had earlier said that trading would continue in the normal course from 5 March 2009 to 19 March 2009 despite Sun Outage between 11:45 IST to 12:25 IST. The exchange has advised members to use alternative mode of connectivity instead of VSAT during the above mentioned period for continuing trading without any disruptions on account of Sun outage.
Earlier on 25 February 2009, the Indian Space Research Organization (ISRO) had informed the NSE that there would be Sun Outage from 5 March 2009 to 19 March 2009 between 11:45 IST to 12:25 IST due to which trading members may face connectivity problems at different times on different dates based on geographical location during this period.
Daily Trading Calls - March 13 2009
Nifty (4872) Sup 4650 Res 5073
Buy Tata Com (513) SL 507 Target 522, 526
Buy Tata Chem (331) SL 326 Target 340, 343
Sell Amtek Auto (281) SL 286 Target 271, 269
Sell Dr Reddy’s (553) SL 559 Target 543, 540
Sell NDTV (391) SL 396 Target 382, 379
Daily News Roundup - March 13 2009
Vedanta Resources to set up a large aluminum complex at Bihanbag, Asansol, at an investment of Rs200bn. (ET)
DLF REIT to raise Rs20bn from a clutch of PE investors. (ET)
TCS forms JV with Thai Re-Insurance Public Corporation to offer IT outsourcing services on an ASP model to insurance providers in Thailand. (BL)
Bharti Airtel signs a US$100mn investment agreement with the Board of Investment of Sri Lanka to begin operations there. (ET)
Ashok Leyland plans to invest Rs60bn to shore up CV business in the next few years. (ET)
NTPC Board approves an investment of Rs73.4bn in 1,920 MW Barh super thermal power project stage-II in Bihar. (FE)
Tata Steel to source chrome ore from Iran for its upcoming ferro chrome plant in South Africa. (BS)
IOC to invest Rs5bn in R&D during the 11th five-Year plan ending 2012. (BL)
M&M’s arm, Mahindra Intertrade opens an electrical steel plant in Vadodara, Gujarat. (BL)
Alok Industries has taken 50% stake in Ashford Infotech through a 100% subsidiary for joint development of realty projects. (BS)
Hikal to invest Rs2bn to set up four new manufacturing facilities in Bangalore and Mumbai and a R&D centre in Pune. (BS)
Gujarat Gas Company expects 10% drop in the availability of natural gas from Panna-Mukta-Tapti source from April. (BL)
Voltas eyes 20% share in AC market by adding 1,000 new channel partners to the distribution network. (DNA)
Gayatri Projects to enter the urban infrastructure and water treatment business segments. (DNA)
Everonn Systems plans to raise US$50mn to carry forward the expansion in the virtual classroom segment. (ET)
Tanla Solutions is in acquisition talks with 3-4 US-based firms with annual revenues in the range of US$30-70mn. (DNA)
Godfrey Phillips launches ‘Fundamint’ brand of mouth freshner. (DNA)
Goldstone Tech plans to roll-out IPTV services in 11 countries by the end of FY09. (BS)
Mumbai-based property developer, Oberoi Constructions, is planning Rs40bn IPO by the year end. (BS)
Piaggio eyes 5-fold increase in its Ape Truk (sub-one-tonne light CV) sales. (BS)
Shriram Properties to invest Rs5bn to develop mid-income housing projects across India over next 2-3 years. (ET)
Blackstone has picked up minority interest in Titagarh Wagons at Rs672/share. (ET)
The Government has notified new FDI norms for sectors including PSU oil refineries, industrial parks, credit information companies, titanium mining, commodity exchanges and civil aviation. (BL)
Royalty on iron ore mining may be changed to an ad Valorem rate of 10% from the current fixed rate of Rs13-27/ton. (ET)
Cement sales for the month of February were up 13% yoy. (BL)
Indian battery industry is set to double by 2011, says Exide Industries. (BL)
India's Travel & Tourism revenues are estimated at US$100bn in 2008 and may increase to US$276bn by 2018. (ET)
Global PC shipments to grow 12.8% this year, as per IDC. (BL)
Just not durable!
Man must be prepared for every event of life, for there is nothing that is durable.
Hoping for One Fine Day has also become difficult these days. Just when global cues seemed better, grim industrial output report spooked the bulls yesterday. We expect the market to open soft in the wake of the weakness in US and Asian markets. The trend thereafter will partly hinge on global cues. Tomorrow, we will get the weekly inflation data. A fresh spike there could deal another blow to the sentiment.
Shares of V-Guard Industries will get listed today on the bourses. The company has fixed the issue price at Rss82 per share. The issue was subscribed 2.45 times. The stock may list around Rs90 to Rs100. It can see the intraday level of Rs105 to Rs110.
India's industrial production halved in January (5.3%) from 11.6% in the year-ago period. The steep drop was led by continuing weakness in the consumer durables segment, which shrunk yet again. But, surprisingly, growth dipped sharply even in capital goods (2.1% vs 16.3%), which had so far held up quite well in the face of a slowdown on the consumption side. The figures are certainly worrisome and point to a clear slowdown in the domestic economic activity from the peak of last year.
The bad news on the industrial slowdown comes in the backdrop of an imminent recession in the US and persistent turmoil in the global financial markets. Another factor that could pose serious challenge for policymakers worldwide is the spurt across various commodities over the past few weeks. So, what we have is a weird situation where economic growth is slipping across the globe while at the same time inflation has started shooting up again.
It will be really tough for the Finance Minister and the RBI Governor to revive momentum in the Indian economy. The budget is partly an exercise in this direction. Another remedy to boost both consumption and investment demand could be an immediate easing of interest rates. But, it remains to be seen if the RBI obliges when it meets for its annual policy meeting next month. Before that we will have the Fed meet on March 18 and of course the all-important fourth quarter and annual results.
Asian stocks fell for the first time in three days, on concerns that demand for the region's exports will slow as record crude oil prices threaten to dent consumer spending worldwide.
Toyota dropped as the dollar slumped to the lowest against the yen since 1995. Mitsubishi UFJ Financial Group led declines among banks. But, Japanese oil producer Inpex Holdings rose.
The MSCI Asia Pacific Index fell 0.7% to 139.53 as of 10:24 a.m. in Tokyo, snapping a two-day, 2.3% gain. Nine of the benchmark's 10 industry groups declined, with more than three stocks dropping for each one that climbed.
The Nikkei in Tokyo was down 2% at 12,600 while the Hang Seng in Hong Kong slid 2.1% to 22,915. The Kospi in Seoul fell 1.2% to 1639 while the Straits Times in Singapore dropped 1.3% to 2880.
The Shanghai Composite in China shed 1.2% to 4019 after briefly slipping below 4,000 for the first time since July. The Taiex in Taiwan fell 0.6% to 8382. Australia's S&P/ASX 200 Index declined 1.4%. All markets open for trading fell except New Zealand.
US stocks ended lower on Wednesday, erasing early gains, as record oil and gas prices overshadowed the Fed announcement that it will inject $200bn into the banking system to soften the liquidity crunch. Some Wall Street observers also attributed the decline to investors taking profits from the previous session's rally.
Stocks rose through the early afternoon as investors continued to cheer the Fed's plan to restore sanity in the credit markets. But the rally fizzled out late in the session and stocks turned lower as investors paid attention to record oil and gas prices.
The S &P 500 Index dropped 12 points, or 0.9%, to 1,308.77. The Dow Jones Industrial Average slipped 47 points, or 0.4%, to 12,110.24. The Nasdaq Composite fell 12 points, or 0.5%, to 2,243.87.
The Dow fell 211 points from its midday high as oil rose. On Tuesday, the bluechip benchmark had rallied 416 points, or 3.6%, its largest percentage climb since March 2003 and its fourth biggest point jump.
Market breadth was negative. Two stocks dropped for every one that rose on the New York Stock Exchange.
Nine of 10 industries in the S&P 500 fell after Merrill Lynch, Goldman Sachs and others said that the Fed's plan may not be able to ease the strain in the credit markets.
Crude oil prices resumed their advance, topping $110 for the first time, as the dollar remained under pressure. Oil had fallen in the morning after the government's weekly inventory report showed a surprise jump in crude supplies.
US light crude oil for April delivery rose $1.19 to settle at $109.72 a barrel in New York, a record close. COMEX gold for April delivery added $4.50 to $980.50 an ounce.
In currency trading, the dollar fell versus the euro but was off its worst levels of the day after touching a fresh record low against the European currency earlier. The greenback fell versus the yen.
Treasury prices rallied after plunging a day before. The advance lowered the yield on the benchmark 10-year note to 3.45% from 3.59% late on Tuesday.
European shares rose for a second straight session. The pan-European Dow Jones Stoxx 600 index climbed 1.2% to end at 311.48. The UK's FTSE 100 closed up 1.5% at 5,776.40, while the French CAC-40 climbed 1.5% to 4,697.10 and the German DAX 30 advanced 1.2% to 6,599.37.
In the emerging markets, the Bovespa in Brazil was down 0.3% at 62,176 while the IPC index in Mexico shed 0.6% to 29,283. The RTS index in Russia rose 1% to 2079 and the ISE National 30 index in Turkey gained 2.4% to 55,190.
The start was quite promising for bulls with the benchmark Sensex hitting an intra-day high of 16,683. Key indices were firm and were in momentum ahead of break. However, post sun-outage disappointing IIP figures dampened the sentiments on Dalal Street.
Government data indicated that India’s industrial growth dropped. India's industrial output growth shrank sharply in January as high interest rates sapped consumer spending in Asia's fourth-biggest economy even as a US-led global economic slowdown loomed.
Production at factories, mines and utilities rose by 5.3% in January as against 11.6% in the same month last year, data released by the Government showed today. The reading was lower than average expectations of 7-8% expansion.
Finally, the 30-share Sensex closed flat at 16,127 hitting an intra-day low of 16,064. The NSE Nifty also closed flat at 4,872 touching an intra-day high of 5,019 and a low of 4,854.
Overall about 1,264 stocks advanced, 1,442 stocks declined while 57 stocks remained unchanged. Among the Nifty-50 stocks 28 stocks advanced while 22 stocks declined.
Among the BSE Sectoral indices; BSE Metal index (down 2.3%), BSE IT index (down 2.1%), FMCG index (down 1.05%) and BSE Auto index (down 0.4%).
REC Electrification Corporation a public sector enterprise engaged in financing and promoting transmission, distribution and generation projects started trading at Rs124.65 against the issue price of Rs105. During the day the scrip took a beating hitting a low of Rs118, however, it managed to make a come back finally closing at Rs121 translating into a premium of 15%.
REC raised close to Rs1,640crore through its IPO. The company entered the capital market with its issue offering of 15.6crore shares. The issue got subscribed over 27 times. The price band for the IPO was Rs90 to Rs105.
The initial public offering of Rural Electrification Corporation was subscribed 27.30. The retail portion was subscribed 0.78 times of the 30% of the total offer on offer. The non-institutional investor portion was subscribed 0.76 times. The qualified institutional buyers segment, was subscribed 6.5 times.
Strides Arcolab slipped by 2% to Rs148. The company said that it secured an approval from Canada for its Tazo PIP Sterile. The company also secured approval for Penicillin Sterile facility. The scrip touched an intra-day high of Rs157 and a low of Rs148 and recorded volumes of over 71,000 shares on NSE.
Bajaj Auto gained by a percent to Rs2093. The company said that it would change name to Bajaj Holdings and Investments Ltd and would exit from benchmark Sensex and Nifty from March 14, 2008. The scrip touched an intra-day high of Rs2150 and a low of Rs2055 and recorded volumes of over 4,0,000 shares on NSE.
Orbit Corp lost ground and slipped 2% to Rs521. Rodere Holdings, the Cyprus-based private equity investor, would invest Rs2bn in Orbit Corp. The scrip touched an intra-day high of Rs583 and a low of Rs515 and recorded volumes of over 60,000 shares on NSE.
Suven Life Science surged by over 8% to Rs38.30 after the company announced that it entered in a drug discovery pact with Eli Lilly. The scrip touched an intra-day high of Rs38.30 and a low of Rs31.35 and recorded volumes of over 7,00,000 shares on NSE.
Fiscal Deficit woes
The UPA Government, which had expressed a strong intent at the beginning of its term to go by the rule-book in achieving the Fiscal Responsibility and Budget Management targets, is completing its five-year term without achieving those fiscal targets.
The FRBM targets of 3 per cent fiscal deficit and the elimination of revenue deficits will not be met and the goalposts have been shifted in the wake of the economic compulsions arising from the global financial meltdown. Things may not look up even in the next fiscal.
Rupee pressured
The huge fiscal deficit – which is estimated to cross 11 per cent (as percentage to GDP) by March 2009 – has prompted foreign funds to rush out of India, placing downward pressure on the rupee. Standard & Poor’s, international credit rating agency, had recently revised the outlook on India’s long-term sovereign credit rating to “negative” from “stable”.
It would be wrong to blame the financial meltdown alone for the fiscal mess because the subsidies on food, fertiliser and fuels have also played a part when the global commodity cycle was on the upswing. But for the income-tax bounty that came the way of the UPA Government, many of the new schemes could not have been rolled out.
Critics feel that India could have done well to save some portion of the tax collections to be spent in the “bad times” rather than splurging them on “politically dividend paying” farm debt waiver and pay hike for government employees.
The three rounds of stimulus packages have only been the last nail in the fiscal coffin. The latest package, unveiled after the Interim Budget, involved revenue foregone of about Rs 30,000 crore through excise duty and service tax cuts.
In 2008-09, the counter-cyclical fiscal measures to minimise the impact of the global meltdown resulted in a cash spend of over Rs 1,50,000 crore. There was unprecedented rise in the subsidy bill of the Government for 2008-09. The higher subsidy bill will be met through issuance of special securities to the tune of Rs 95,942 crore for the fiscal year under review. While oil bond estimates for 2008-09 stood at Rs 75,942 crore, fertiliser bond estimates stood at Rs 20,000 crore.
via BL
Asian stocks open in green
Asian stocks climbed, after statements from Bank of America and General Electric eased concern the financial crisis will deepen.
Mizuho Financial Group gained more than 4%. Sony jumped 5.5% after the electronics maker said it will form a partnership with Seiko Epson on liquid-crystal displays.
Japanese benchmark index Nikkei advanced 90.15 points, or 1.22%, to trade at 7,285.97.
Hong Kong`s Hang Seng index rose 25.19 points, or 0.21%, to trade at 11,905.47.
China`s Shanghai Composite gained 22.48 points, or 1.05%, to trade at 2,116.54.
Taiwan`s Taiex index went up 18.31 points, or 0.38%, to trade at 4,778.27.
South Korea`s Kospi index increased 9.50 points, or 0.84%, to trade at 1,118.01.
Singapore`s Straits Times climbed 6.75 points, or 0.45%, to trade at 1,498.76. (7.39 a.m., IST).
Gold and silver continue to shine
Prices rise for second consecutive day
After dropping for two straight days, precious metals shone for second straight day on Thursday, 12 March, 2009. Prices rose today as buyers were back in action who had been refraining since quite some time due to the overall gloomy economic conditions.
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 April delivery rose $13.3 (1.5%) to close at $924 an ounce on the New York Mercantile Exchange. Last Tuesday, gold had dropped below $900 for first time in two months. Last week, the yellow metal remained almost unchanged. For the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%. Year to date, gold prices are higher by 4.7%.
On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (8.9%) since then.
On Thursday, Comex silver futures for May delivery rose 14.3 cents (1.1%) to end at $12.943 an ounce. Last week, silver rose 1.7%. In February, 2009, silver had rose 4.3% after climbing 14% in January. Year to date, silver has climbed 12.4% this year. For 2008, silver had lost 24%.
Crude takes a huge leap
Prices rise more than 11% at one shot
Crude prices shot up on Thursday, 12 March, 2009. Prices rose today as traders mulled over OPEC's forthcoming meeting at Vienna this coming weekend where the cartel is expected to decide another production cut to restore crude prices.
On Thursday, crude-oil futures for light sweet crude for April delivery closed at $47.03/barrel (higher by $4.7 or 11.1%) on the New York Mercantile Exchange. Last week, crude ended higher by 1.7%. For the month of February, crude prices had ended higher by 1.5%.
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 higher by 11.3%. On a yearly basis, crude prices are lower by 55%.
OPEC has been trying to cut production consistently in order to step up prices from their current low levels. There has been conflicting reports in the market regarding the fact 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, 2009 at Vienna.
Crude had slumped more than 10% in its past two sessions. The EIA had reported yesterday in its weekly inventory report that crude inventories rose by 700,000 million barrels last week. Market had expected a decline of 1 million barrels. As per the report, refinery capacity utilization rate remained low at 82.7%. It also showed that inventories at Cushing, Oklahoma, the delivery point for Nymex futures, fell for a fourth week to $33.6 million barrels.
The EIA report also showed petroleum demand has been falling. Total petroleum products supplies over the past four weeks, including gasoline, jet fuel and diesel, averaged 19.3 million barrels a day, down by 2.1% from a year ago. But gasoline demand over the past four weeks rose by 1.6% from a year ago.
Also at the Nymex on Thursday, April reformulated gasoline rose 7.6% to $1.3457 a gallon and April heating oil gained 8.2% to $1.2264 a gallon.
April natural-gas futures rose 5.2$ to $3.995 per million British thermal units. EIA reported today that U.S. natural-gas inventories fell by 112 billion cubic feet in the week ended 6 March, 2009. At 1,681 billion cubic feet, inventories were 271 billion cubic feet higher than last year at this time and 197 billion cubic feet above the five-year average.
Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex
Inflation down, food still costly
The annual Wholesale Price Index-based inflation dipped 60 basis points to a six-year low of 2.43 per cent. Food inflation, however, continued to hover around the double-digit levels, offering little respite despite the declining trend in the headline inflation.
While the dip has largely been driven by low fuel group inflation and slowing manufactured product inflation levels, the latest reported data show that year-on-year inflation in case of primary articles, led by mass consumption food items, continued to stay near double-digit levels. Besides, the sequential inflation in some of these items is also high; the week-on-week inflation in vegetables recorded an alarming 4 per cent.
According to the latest data, the WPI-based inflation rose 2.43 per cent for the week ended February 28, lower than the 3.03 per cent annual rise the previous week. Items such as cereals (11 per cent), pulses (13 per cent) and sugar (23 per cent) showed a year-on-year inflation well over the double digits. Besides, inflation levels in case of milk and fruits (both 7 per cent) and vegetables and spices (both 9 per cent) were within touching distance of the double-digit mark. On a sequential basis as well, inflation in the case of vegetables (4 per cent), fruits (1 per cent) and sugar (1 per cent) showed a surge during the latest reported week.
“There is no doubt that continuing food-based inflation is a worrying sign, though there’s been a bit of a declining trend. Also, food inflation tends to hit the poor the hardest,” an analyst said.
With food-based inflation continuing to stay high, the year-on-year inflation rate of primary articles was at 6 per cent; for manufactured products, it was at 4 per cent during the latest week. In ‘fuel and power’, inflation continued to decline at (-) 5.1 per cent vis-a-vis (-) 4.0 per cent dip last week, mainly on account of fall in non-administered oils.
Inflation in the overall food index (with a weight of 25.43 per cent in the index) declined marginally to 7.5 per cent the latest week, compared to 7.7 per cent last week, on account of fall in manufactured food products.
Even as food inflation stayed high, some analysts warn the drop in headline inflation has been too rapid. WPI-based inflation is “on track to turn negative in the next two or three months,” according to HSBC economist Mr Robert Prior-Wandesforde
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