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Wednesday, May 20, 2009
Market back in bearish groove
The market was once again subject to strong volatile moves and swung nearly 430 points during intra-day trades. Throughout the session the market zigzagged between the negative and positive zones, making investors nervous. After resuming slightly lower at 14231, the index gained nearly 200 points in early trades before frenetic buying by mid-morning trades helped the index erase all its losses and gain around 100 points to touch an intra-day high of 14406. However, the market failed to sustain the early optimism and drifted into negative territory in noon trades, with the index nearly crashing below the 14000 mark and touching an intra-day low of 13976 on hectic selling in bank, oil and technology stocks. The Sensex finally dropped 241 points or 1.69% to close at 14061 while the Nifty shed 48 points at 4270.
Although the market fell sharply, yet the breadth of the market was highly strong. Of the 2,735 stocks traded on the BSE 2,393 stocks advanced, 298 stocks declined and 44 stocks ended unchanged. With the exception of the BSE Bankex, BSE Oil Index, BSE Teck Index and BSE IT Index, all the other sectoral indices were up by over 1-9% each. The BSE CD Index and the BSE Metal Index gained over 5-9% each while the BSE Auto Index, the BSE PSU Index and the BSE HC Index advanced by more than 1-2% each.
Select counters, however, managed to buck the downtrend and ended with sharp gains. Tata Motors rose 19.12% to Rs363.90, Tata Steel moved up by 12.81% to Rs371.30, M&M added 8.18% to Rs678.65, Hindalco ended higher at Rs83.05 and JP Associated gained 5.29% to Rs173.30. Selling was rampant in several index heavyweight stocks. DLF at Rs354.80, ICICI Bank at Rs708.80 and Bharti Airtel at Rs859.25 slumped by over 6-7% each. BHEL, HDFC, Sun Pharma, Reliance, HDFC Bank, Reliance Communication, Infosys and ITC shed around 1-5% each.
Over 7.27 crore Cals Refinery shares changed hands on the BSE followed by Unitech (3.67 crore shares), RNRL (3.03 crore shares), Ispat (2.68 crore shares) and Kashyap (2.12 crore shares).
BSE Bulk Deals to Watch - May 20 2009
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
20/5/2009 523204 ABAN OFFSHO OPG SECURITIES P LTD B 267471 916.69
20/5/2009 523204 ABAN OFFSHO OPG SECURITIES P LTD S 267471 917.50
20/5/2009 513149 ACROW INDIA PRITIKRISHNAGOPALCHANDAK S 5311 81.76
20/5/2009 532919 ALLIED COMP D. B. SECURITIES. PVT. LTD. B 1261670 0.56
20/5/2009 532919 ALLIED COMP D. B. SECURITIES. PVT. LTD. S 1587296 0.57
20/5/2009 530355 ASIAN OILFIE MASITIA CAPITAL SERVICES LTD S 60000 47.14
20/5/2009 512149 AVANCE TECHN KISHANCHANDVCHELANI S 50000 14.50
20/5/2009 512149 AVANCE TECHN JUHIBENNITINBHAICHOITHANI S 50000 14.50
20/5/2009 532989 BAFNA PHARMA VISTAR FINANCIERS PRIVATE LIMITED B 102386 29.73
20/5/2009 531682 CAT TECHNOL BASMATI SECURITIES PVT LTD B 294978 4.76
20/5/2009 531682 CAT TECHNOL BP FINTRADE PRIVATE LIMITED S 250006 4.77
20/5/2009 526987 COMMIT CAP S ANITAGUPTA B 62493 7.01
20/5/2009 526987 COMMIT CAP S SRECKO INDHAN LIMITED S 73772 7.01
20/5/2009 526550 COUNTRY CLUB GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD GDR CONV ST S 500000 18.03
20/5/2009 530407 EPIC ENERGY PRASHANTPATEL S 40031 25.97
20/5/2009 532876 EVERONN SYS OPG SECURITIES P LTD B 154253 236.35
20/5/2009 532876 EVERONN SYS OPG SECURITIES P LTD S 154253 237.02
20/5/2009 532022 FILAT FASH CHANDRESHCHANDRAKANTSHAH B 33470 89.22
20/5/2009 532081 K SERA SERA EXCEL PAINTS PRIVATE LIMITED B 1430994 10.69
20/5/2009 532081 K SERA SERA BASMATI SECURITIES PVT LTD S 587253 10.54
20/5/2009 532081 K SERA SERA EXCEL PAINTS PRIVATE LIMITED S 1430994 10.77
20/5/2009 522259 KALIN RAIL N IFLIC SHAREHOLDER FUND B 68000 139.28
20/5/2009 507180 KESAR ENTERP PACIFIC CORPORATE SERVICES LTD B 120000 67.75
20/5/2009 507180 KESAR ENTERP IVORY CONSULTANTS PVT LTD S 140000 67.75
20/5/2009 531413 KIRAN PRIN P SAPATRISHI PROPERTIES PVT LTD B 50001 10.27
20/5/2009 531413 KIRAN PRIN P ROHYL CONSULTANCY PRIVATE LIMITED S 40000 10.30
20/5/2009 526045 LUMINAI TECH POOJA ARORA B 134055 4.97
20/5/2009 500257 LUPIN LTD HDFC EQUITY FUND B 819500 835.31
20/5/2009 500257 LUPIN LTD CITICORP INTERNATIONAL FINANCE CORPORATION (FDI) S 1150000 835.05
20/5/2009 532629 MCNALLY BHA GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD FCCB S 305159 84.14
20/5/2009 519287 MODERN DAIRE NAVJOTGREWAL S 85170 16.02
20/5/2009 590011 MOVING PICTU-PMS AMITOJ SINGH B 75000 5.15
20/5/2009 506991 NOBLE EXPLOC TUSHARJIWARAJKA S 245000 4.37
20/5/2009 517417 PATEL AIRTEM KUNJAMMA EASOW B 45000 50.39
20/5/2009 532626 PONDY OXIDES ISF SECURITIES LIMITED B 52089 15.34
20/5/2009 532626 PONDY OXIDES ISF SECURITIES LIMITED S 50602 15.61
20/5/2009 526109 PRICOL LTD FRANKLIN TEMPLETON MUTUAL FUND S 650000 11.19
20/5/2009 521034 SOMA TEX IND EXCEL PAINTS PRIVATE LIMITED B 211007 9.24
20/5/2009 521034 SOMA TEX IND BASMATI SECURITIES PVT LTD S 258508 9.08
20/5/2009 521034 SOMA TEX IND EXCEL PAINTS PRIVATE LIMITED S 211007 9.01
20/5/2009 521022 SURYAJYOTI S MAVI INVESTMENT FUND LTD. B 201000 12.25
20/5/2009 521022 SURYAJYOTI S SONATA SECURITIES PRIVATE LIMITED S 201000 12.25
20/5/2009 530595 TELECANOR HEMANT KUMAR GUPTA B 33993 17.26
20/5/2009 523856 TORR CABS BIRLA MF A/C BIRLA LONG TERM ADV FUND SERIES ONE B 152841 103.00
20/5/2009 523856 TORR CABS BIRLA MF A/C BIRLA INFRASTRUCTURE FUND S 152841 103.00
20/5/2009 531874 VENUS VENT PRAKASHKUMARDEVSHILALSHETH B 46623 30.98
20/5/2009 531874 VENUS VENT CHANDRA SHEKHAR SUNIL BHATT B 37501 29.86
20/5/2009 531874 VENUS VENT KANCHAN VIJAYKUMAR THAKKAR S 27308 31.11
20/5/2009 531874 VENUS VENT CHANDRA SHEKHAR SUNIL BHATT S 37501 31.00
20/5/2009 532360 VINTAGE CARD BDS SHARE BROKERS PVT LTD S 4457 24.50
20/5/2009 514470 WINSOME TEXT NITABEN SHAILESHBHAI PATEL B 56515 36.02
20/5/2009 532795 WIRE& WIRLES JMP SECURITIES PVT LTD B 2109879 18.84
20/5/2009 532795 WIRE& WIRLES JMP SECURITIES PVT LTD S 1693904 18.70
20/5/2009 522108 YUKEN INDIA POOJAMEHTANEY S 17000 67.65
NSE Bulk Deals to Watch - May 20 2009
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
20-MAY-2009,ABAN,Aban Offshore Ltd.,C D INTEGRATED SERVICES LTD.,BUY,438021,908.19,-
20-MAY-2009,BOMDYEING,Bombay Dyeing & Mfg Co.,BAJAJ ALLIANZ LIFE NSURANCE COMPANY LTD,BUY,200000,343.82,-
20-MAY-2009,EVERONN,Everonn Systems India Lim,ADROIT FINANCIAL SERVICES PRIVATE LIMITED,BUY,103607,237.98,-
20-MAY-2009,EVINIX,Evinix Accessories Limite,LALIT KUMAR MALIK,BUY,700000,2.29,-
20-MAY-2009,GOLDTECH,Goldstone Tech Ltd.,BHAVESH P PABARI,BUY,100000,25.45,-
20-MAY-2009,HDIL,Housing Development and I,GENUINE STOCK BROKERS PVT LTD,BUY,1468929,295.55,-
20-MAY-2009,HYDRBADIND,Hyderabad Industries Ltd,RAMA KAPADIA,BUY,42410,234.76,-
20-MAY-2009,IBREALEST,Indiabulls Real Estate Li,DEUTSCHE SECURITIES MAURITIUS LIMITED,BUY,1670000,210.24,-
20-MAY-2009,IFCI,IFCI Ltd.,ADROIT SHARE & STOCK BROKER PVT. LTD.,BUY,4947257,41.33,-
20-MAY-2009,IOLN,IOL Netcom Limited,STRAWBERRY FIELDS TELEVENTURES PRIVATE LIMITED,BUY,370000,41.77,-
20-MAY-2009,ISPATIND,Ispat Industries Limited,JAYPEE CAPITAL SERVICES LTD.,BUY,8273192,18.38,-
20-MAY-2009,KALINDEE,Kalindee Rail Nirman (Eng,IFLIC SHAREHOLDER FUND,BUY,67000,139.67,-
20-MAY-2009,KSERAPRO,K Sera Sera Productions L,BASMATI SECURITIES PVT LTD,BUY,113152,10.99,-
20-MAY-2009,NAGARFERT,Nagarjuna Fert & Chem,ADROIT FINANCIAL SERVICES PRIVATE LIMITED,BUY,2765618,30.06,-
20-MAY-2009,NAGARFERT,Nagarjuna Fert & Chem,CLEAN FINANCE & INVESTMENT LTD.,BUY,2778013,30.34,-
20-MAY-2009,NIITLTD,NIIT Limited,BNP PARIBAS ARBITRAGE,BUY,870000,34.16,-
20-MAY-2009,SKUMARSYNF,S. Kumars Nationwide Ltd,ADROIT FINANCIAL SERVICES PRIVATE LIMITED,BUY,1188794,31.14,-
20-MAY-2009,SURYAJYOTI,Suryajyoti Spinning Mills,MAVI INVESTMENT FUND LTD DEUTSCHE BANK,BUY,136308,12.97,-
20-MAY-2009,WWIL,Wire and Wireless (India),ADROIT FINANCIAL SERVICES PRIVATE LIMITED,BUY,1278408,17.94,-
20-MAY-2009,ABAN,Aban Offshore Ltd.,C D INTEGRATED SERVICES LTD.,SELL,438021,908.76,-
20-MAY-2009,AUTOIND,Autoline Industries Limit,DUKE SPECIAL OPPORTUNITY FUND LLC,SELL,74000,80.30,-
20-MAY-2009,EDUCOMP,Educomp Solutions Limited,FEDERATED KAUFMANN FUND,SELL,103245,2635.76,-
20-MAY-2009,EVERONN,Everonn Systems India Lim,ADROIT FINANCIAL SERVICES PRIVATE LIMITED,SELL,102807,238.80,-
20-MAY-2009,EVINIX,Evinix Accessories Limite,PERFECT FINMEN SERVICES PVT LTD,SELL,1000000,2.28,-
20-MAY-2009,GLORY,Glory Polyfilms Limited,INTEGRAL VINIMAY PRIVATE LTD,SELL,140077,23.99,-
20-MAY-2009,GODFRYPHLP,Godfrey Phillips Ltd.,CITIGROUP GLOBAL MKTS MAURITIUS PVT LTD- SELL CODE,SELL,58228,1020.38,-
20-MAY-2009,GOLDTECH,Goldstone Tech Ltd.,GOPAL MARATHE,SELL,100500,25.45,-
20-MAY-2009,HDIL,Housing Development and I,GENUINE STOCK BROKERS PVT LTD,SELL,1466616,295.78,-
20-MAY-2009,IBREALEST,Indiabulls Real Estate Li,FIDELITY FUND A/C FIDELITY MAGELLAN FUND,SELL,4580000,211.76,-
20-MAY-2009,IFCI,IFCI Ltd.,ADROIT SHARE & STOCK BROKER PVT. LTD.,SELL,4947257,41.25,-
20-MAY-2009,ISPATIND,Ispat Industries Limited,JAYPEE CAPITAL SERVICES LTD.,SELL,8393280,18.38,-
20-MAY-2009,KSERAPRO,K Sera Sera Productions L,BASMATI SECURITIES PVT LTD,SELL,599426,10.73,-
20-MAY-2009,LITL,Lanco Infratech Limited,NORGES BANK A/C GOVERNMENT PETROLEUM FUND,SELL,1494000,345.43,-
20-MAY-2009,MADHUCON,Madhucon Projects Limited,MORGAN STANLEY INVESTMENT MANAGEMENT INC A/C MORGAN STANLEY,SELL,686318,107.82,-
20-MAY-2009,MBECL,Mcnally Bharat Engineerin,GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD FCCB,SELL,194841,84.04,-
20-MAY-2009,NAGARCONST,Nagarjuna Constr Co. Ltd,CITIGROUP GLOBAL MKTS MAURITIUS PVT LTD- SELL CODE,SELL,1352993,120.21,-
20-MAY-2009,NAGARFERT,Nagarjuna Fert & Chem,ADROIT FINANCIAL SERVICES PRIVATE LIMITED,SELL,2760618,30.27,-
20-MAY-2009,NAGARFERT,Nagarjuna Fert & Chem,CLEAN FINANCE & INVESTMENT LTD.,SELL,2778013,30.36,-
20-MAY-2009,NIITLTD,NIIT Limited,SWIFT CURRENT PARTNERS GLOBAL LTD,SELL,1582063,33.01,-
20-MAY-2009,NIITLTD,NIIT Limited,SWISS FINANCE CORPORATION (MAURITIUS) LTD,SELL,3533887,33.08,-
20-MAY-2009,PRICOL,Pricol Limited,FRANKLIN TEMPLETON MUTUAL FUND,SELL,784860,11.21,-
20-MAY-2009,RELCAPITAL,Reliance Capital Limited,J P MORGAN FLEMING ASSET MANAGEMENT (EUROPE) SARL A\C FLAGS,SELL,2173000,862.80,-
20-MAY-2009,SKUMARSYNF,S. Kumars Nationwide Ltd,ADROIT FINANCIAL SERVICES PRIVATE LIMITED,SELL,1154594,31.13,-
20-MAY-2009,WWIL,Wire and Wireless (India),ADROIT FINANCIAL SERVICES PRIVATE LIMITED,SELL,1318207,18.02,-
Turnover declines
May 2009 futures of Tata Steel, Reliance Communications at discount
Nifty May 2009 futures were at 4286.80, at a premium of 16.50 points over the spot closing of 4270.30. Turnover in NSE's futures & options (F&O) segment declined to Rs 70570.87 crore from Rs 105985.51 crore on Tuesday, 19 May 2009.
Tata Steel May 2009 futures were at a discount at Rs 369.10 compared to the spot closing of Rs 371.50.
Reliance Communication May 2009 futures were at discount at Rs 306 compared to the spot closing of Rs 309.20.
Reliance Industries (RIL) May 2009 futures were at a premium at Rs 2166.80 compared to the spot closing of Rs 2152.45.
ICICI Bank May 2009 futures were at a premium at Rs 712.20 compared to the spot closing of Rs 708.90.
In the cash market, the S&P CNX Nifty lost 48.15 points or 1.11% at 4270.30.
Asian benchmarks struggle for direction
Most of the indices end mixed in a choppy session
Asian markets ended mixed as the regional benchmarks struggled for direction following a neutral session in the US equities overnight. However, select markets recorded decent gains as the economic outlook continued to be optimistic. Commodities were steady to positive and the upside in Japan, Malaysia and Taiwan markets continued to send across a message that the global asset markets might be well off their decade lows in the near term.
The Nikkei rose today after data showed Japanese first quarter GDP dropped a price-adjusted 4.0% on quarter, or an annualized 15.2%. It was the fourth straight quarter of shrinkage, but not as bad as the 16% decline some forecasters had predicted. Japan's Nikkei 225 was up 0.4%.
Strong gains were noted in the Malaysian equities. The Department of Statistics Malaysia said in a report today that the consumer price index or CPI rose 3% year-over-year in April, slower than the 3.5% increase in the previous month. On a monthly basis, consumer prices declined 0.2% in April, marking the same pace as in the preceding month. The KLSE composite closed up nearly 2% on the day.
Chinese equities slipped around 1% as recent gains proved difficult to be sustained. David Dollar, World Bank's country Director for China reportedly said that stimulus spending of Chinese government helped the economy to stabilize.
Dollar added that enthusiasm about an economic recovery in China is premature. He said the revival of private investment is very important for the recovery. Chinese economic growth had eased to 6.1% in the first quarter from 6.8% in the last quarter of 2008. Meanwhile, urban fixed asset investment had surged 30.5% during January to April period.
Taiwan logged a current account surplus of US$12.99 billion in the first quarter, higher than a surplus of US$8.47 billion in the same period last, a report from the Central Bank showed Wednesday. Economists expected the surplus to be US$10.5 billion.
During the quarter, the surplus in the goods account increased to US$9.04 billion from US$4.27 billion, while the services account recorded a surplus of US$0.6 billion, in contrast to a deficit of US$0.01 billion last year. Further, the current transfers account showed a smaller deficit of US$0.54 billion compared to US$0.9 billion deficit last year. On the other hand, the income account surplus decreased to US$3.9 billion from US$5.1 billion in the previous year. In other markets, Australia's S&P/ASX 200 down 0.6% and South Korea's Kospi Composite up 0.1%, Hong Kong's Hang Seng Index was 0.3% lower. Singapore's Straits Times Index was down 0.4% with Malaysian shares up 1.7%, New Zealand's NZX-50 up 0.1%, Philippine shares 0.9% higher and Indonesian shares down 2.1%.
Yesterday, the US markets posted a relatively neutral session on Tuesday, as commodity and technology stocks continued to climb amid further signs of improvement in financial and economic conditions. The VIX (US volatility indicator) fell below the 30 level for the first time since the collapse of Lehman Brothers.
Crude oil extended the recent bull charge as light, sweet crude for July contract moved to a fresh six month high of $60.75 per barrel. The counter currently trades at $60.63, up 53 cents from the previous close. Gold and copper also garnered modest gains as the US dollar fell above 1.3700 and threatened to re test a seven week low yet again.
Small-cap, mid-cap stocks are the flavour of the day
Fall in index heavyweights Reliance Industries
, ICICI Bank, Infosys, Bharti Airtel, HDFC pulled the pulled the barometer index BSE Sensex lower today after last two days' gains. Volatility was high. Auto stocks rose. Hectic buying was witnessed a number of non-Sensex stocks. The BSE 30-share Sensex lost 241.37 points or 1.69%, off close to 345 points from the day's high and up close to 85 points from the day's low. The Sensex fell below psychological 14,000 mark for a brief period in late trade before regaining that level.
The market was volatile. After an initial slide, the market soon bounced back and moved into the green on reports the key government departments have drawn up a slew of proposals to populate an ambitious reform agenda for the first 100 days of Dr Manmohan Singh's second term as the Prime Minister of India. The market once again slipped into the red shortly. The market bounced back with the Sensex surging to the day's high in mid-morning trade as Asian stocks rose.
But the rally was short-lived as the market slipped into the red once again in early afternoon trade. The market cut losses in choppy mid-afternoon trade as European stocks rose.
The Congress party-led coalition has the support of 322 lawmakers, Prime Minister-elect Manmohan Singh said on Wednesday, giving it a clear majority in a new government. Singh and Congress party chief Sonia Gandhi met President Pratibha Patil to seek approval to form a new government. Dr Singh, the 76-year-old economist-turned-politician, will be sworn in as Prime Minster of India for the second term on Friday 22 May 2009, a day after the 18th death anniversary of Rajiv Gandhi. Dr Singh was renominated as Congress Parliamentary Party leader on Tuesday (19 May 2009).
Meanwhile, as per media reports key government departments have drawn up a slew of proposals to populate an ambitious reform agenda for the first 100 days of Dr Singh's second term as the PM, aimed at giving economic growth a leg-up. PM has already prepared the broad contours of an economic revival plan to be taken up soon after the new government is formed, reports suggest While recommendations to revive growth and ease the credit squeeze are likely to find a place in the plan, tax proposals are expected to be taken up as budget recommendations. The telecom ministry has prioritised the much delayed auction of 3G airwaves and WiMAX spectrum. It has also prioritised introduction of a new spectrum policy.
The petroleum ministry is aiming for increased domestic output and a targetted-delivery system for the poor
The new government is also likely to pursue disinvestment of state-run undertakings, reports suggest. The disinvestment department under the finance ministry is reportedly working on expanding the list of companies in which the government could reduce its stake. Among these are Power Grid Corporation, Cochin Shipyard, and Rashtriya Ispat Nigam.
The Congress-led UPA defied predictions of a tight election and was only about 11 seats short of an majority from the 543 seats at stake in the recently concluded Lok Sabha election. Congress' alliance took 261 seats, sweeping aside its nearest rival, the bloc led by the Hindu-nationalist Bharatiya Janata Party (BJP), which won only 159 combined. Congress, which alone won 205 seats, needs a handful of partners to reach the 272 seats needed to take power, and is expected to seek the support of more smaller parties or independents.
Financial sector reforms are likely to get a push in the coming days, which were relegated to the back seat due to persistent opposition from the Left parties.
Meanwhile, the stock market will keep a close eye on the allocation of portfolios in the new government. It remains to be seen who gets the key ministries viz. power, transport and education sectors likely to be decided at the crucial UPA meet scheduled to be held in New Delhi today. Analysts say growth in these three sectors are key for India to achieve strong economic growth. If those seen as strong performers are given charge of these three ministries, the market may extend gains.
As per reports, Congress's strong showing in election means reformers will almost certainly be named to key ministerial portfolios viz. finance, trade, defence and foreign affairs. The ministers should be named this week. Fresh reformist faces may also join the cabinet for the first time, including Rahul Gandhi, heir to the powerful Gandhi dynasty and seen as pushing a new generation of leaders into the Congress.
Among the contenders for the post of the finance minister are C Rangarajan, an economic adviser to the prime minister, Montek Singh Ahluwalia, deputy chairman of the Planning Commission, Trade Minister Kamal Nath, and External Affairs Minister Pranab Mukherjee. As per market talks, P Chidambaram could retain his home portfolio.
According to analysts the new government should give priority to reforming the subsidy mechanism aimed at improving delivery mechanism while at the same time reducing costs. Restoring fiscal health is also required. In this regard, disinvestment is an immediate channel for raising funds.
The fiscal deficit jumped to an estimated 10.6% of the nation's gross domestic product in the year ended 31 March 2009.
Foreign funds have aggressively bought Indian stocks. FII inflow in May 2009 totaled Rs 15,368.80 crore (till 19 May 2009) while their inflow in calendar year 2009 totaled Rs 15,725.30 crore.
Meanwhile, raising funds from the bourses may soon become a simpler, shorter process, as the market regulator reportedly plans an overhaul of existing norms to raise funds by way of IPO, QIP and rights issue taking them closer to standard global practices, reports suggest
European shares edged up on Wednesday, on course for a fifth day of gains, with miners among the top gainers. Key benchmark indices in France and Germany were up by between 0.22% to 0.5%. But UK's FTSE 100 fell 0.4%.
Asian stocks rose as oil traded above $60 a barrel and the Baltic Dry Index, a measure of shipping costs for commodities, jumped for a 13th-straight session to a level not seen since 8 October 2008. Key benchmark indices in Japan, South Korea, Singapore and Taiwan were up by between 0.39% to 0.72%. But key benchmark indices in China and Hong Kong were down 0.39% to 0.94%.
The Japanese economy contracted an annualized 15.2% in the three months ended 31 March 2009, less than some economists predicted.
Trading in US index futures indicated Dow could rise 9 points at the opening bell on Wednesday, 20 May 2009.
US markets ended a rocky session on a mixed note on Tuesday 19 May 2009 as the rally in bank stocks fizzled and an unexpected drop in the housing starts left investors a little shaky. The Dow Jones Industrial Average shed 29.23 points or 0.34%, to close at 8,474.85 and the S&P 500 Index lost 1.58 points or 0.17%, to 908.13. However, the Nasdaq Composite gained 2.18 points or 0.13% at 1,734.54.
In economic news, US housing starts tumbled 12.8% to 458,000 units in April 2009 over April 2008. Building permits for April 2009 hit a rate of 4,94,000. Both marked record lows.
The BSE 30-share Sensex lost 241.37 points or 1.69% to 14,060.66. The Sensex jumped 103.48 points at the day's high of 14,405.51 in mid-morning trade. At the day's low of 13,976.49, the Sensex fell 325.54 points in late trade.
The S&P CNX Nifty was down 48.15 points or 1.11% to 4,270.30. Nifty May 2009 futures were at 4286.80, at a premium of 16.50 points over the spot closing of 4270.30. Turnover in NSE's futures & options (F&O) segment declined to Rs 70570.87 crore from Rs 105985.51 crore on Tuesday, 19 May 2009.
BSE clocked a turnover of Rs 8,390 crore, lower than Rs 11781.35 crore on Tuesday, 19 May 2009.
Small-cap and mid-cap stocks witnessed hectic buying. The BSE Mid-Cap index rose 6.03% to 4673.77 and the BSE Small-Cap index rose 8.86% to 5,208.18.
Small-cap and mid-cap indices have risen sharply in the past two months. From a low of 2,553.49 on 9 March 2009, the BSE Mid-Cap index has galloped 2,120.28 points or 83.03%. The BSE Small- Cap index has jumped 2,341.50 points or 81.67% from a low of 2,866.68 on 9 March 2009.
The Sensex has risen 4413.35 points or 45.74% in calendar year 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex has surged 5,900.26 points or 72.3%. The BSE Consumer Durables index (up 9.69%), the BSE Metal index (up 5.22%), the BSE Auto index (up 4.7%), the BSE PSU index (up 2.93%), the BSE Healthcare index (up 1.93%), the BSE Capital Goods index (up 1.48%), the BSE Power index (up 1.32%), the BSE Realty index (up 0.38%), the BSE FMCG index (down 0.02%), the BSE IT index (down 0.02%), the BSE TECk index (down 1.33%), outperformed the Sensex.
The BSE Bankex (down 2.45%) and the BSE Oil & Gas index (down 2.09%), underperfomed the Sensex.
The market breadth, indicating the overall health of the market, was strong. On BSE, 2,394 shares rose as compared with 305 that fell. A total of 43 shares remained unchanged.
From the 30 share Sensex pack, 16 stocks rose while rest fell.
India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 3.78% to Rs 2,150.95, extending losses for the second day in a row. The stock had lost 5.2% on Tuesday, 19 May 2009 after surging close to 21% on Monday 18 May 2009. Analysts expect strong growth in bottom line in coming quarters from sale of gas which it started pumping last month from its deep-sea field off the east coast.
Auto stocks gained on hopes the new government will treat auto sector as a priority sector and attend to some pressing concerns of the sector, mainly differential excise duty, lack of retail finance and lack of focus on infrastructure. India's largest car maker by sales Maruti Suzuki India rose 4.45%.
India's largest tractor maker by sales Mahindra & Mahindra surged 8.18% after the company said the workers union at the Nashik plant have withdrawn strike from 18 May 2009.
India's largest commercial vehicle maker by sales Tata Motors rose 19.12% as firm reportedly will open book-building on Wednesday to sell Rs 4200 crore ($877 million) of bonds, 12% more than planned because of strong demand for its paper.
The debentures will be issued in four tranches. Credit rating agency CRISIL has given the debentures AAA rating. Tata Motors bought the Jaguar and Land Rover brands last year, and is raising funds to cover the $1.9 billion residual bridge loan taken for the acquisition.
Banking stocks fell in choppy trade after a recent sharp surge triggered by expectations that the UPA government will pursue financial sector reforms. India's second largest private sector bank by operating income HDFC Bank was down 2.36% as its American depository receipt (ADR) fell 4.11% on Tuesday, 19 May 2009.
India's largest private sector bank by net profit ICICI Bank fell 6.56%. Its American depository receipt (ADR) fell 0.34% overnight.
But India's biggest bank in terms of branch network State Bank of India rose 1.47% on hopes the Congress-led UPA government may go ahead on a plan to merge six associate banks with State Bank of India to create a Indian banking behemoth.
India's biggest dedicated housing finance firm by operating income HDFC fell 5.73%. As per recent reports, HDFC is likely to cut deposit rates and follow it with a cut in lending rates.
With a decisive mandate, there are expectations that the UPA government may pursue financial sector reforms. There is likely to be some movement on passage of the Bill to amend the Insurance Act, 1938. Apart from raising the foreign investment ceiling to 49%, from 26% at present, the Bill had proposed to do away with the stipulation on Indian promoters having to mandatorily sell a part of their holdings after 10 years of operation.
There are two other Bills act for providing statutory backing to the pensions regulator and to amend the Banking Regulation Act which have been pending in Parliament for over five years, mainly due to the opposition from the Left parties. But now the Left is no longer an ally of the re-elected UPA, the Bills may finally be enacted.
The Pension Fund Regulatory & Development Authority Bill will allow the regulator to issue regulations, instead of the present system where it has to enter into agreements with service providers such as the fund managers. In addition, it will also help PFRDA regulate the pension products offered by life insurance companies. The new government may also announce tax benefits on investment in the New Pension Scheme, which will help make it attractive for investors, reports suggest
The amendments to the Banking Regulation Act will allow foreign investors to exercise voting rights in line with their shareholding. While the Reserve Bank of India has concerns on greater play for foreign banks, it will have no reservations in getting more powers for regulation of banks and supercession of borads, which are provided for in the Bill.
The government may also re-introduce the Micro-finance Development and Regulation Bill and the State Bank of India (Amendment) Bill. The former Bill seeks to bring about regulations, while the amendments to the law governing SBI will enable the Centre to reduce its stake to 51% from current 59.41%.
Metal stocks rose even as a copper prices declined in China. Hindustan Zinc, Hindalco Industries, National Aluminum Company and Steel Authority of India, rose by between 0.14% to 7.09%.
India's largest steel maker by sales Tata Steel jumped 12.81% on reports the company has secured a Rs 2000-crore from Life Insurance Corporation of India for infusing funds into its UK subsidiary Tata Steel, UK.
Shanghai copper prices eased on Wednesday, under pressure from a sharp decline in Japan's economy and an unexpected fall in US housing starts in April 2009 that defused investor confidence for an economic recovery.
Realty stocks rose on expectations stability at the Centre will attract more money from foreign investors into the sector. Housing Development & Infrastructure, Omaxe, Akruti City and Unitech rose by between 4.13% to 20%.
Indiabulls Real Estate gained 3.35% gaining for the third straight day after the company's shareholders approved raising up to $600 million through share sale to qualified institutional buyers.
But India's largest realty player DLF fell 7.77% on profit taking after the stock surged 65.46% in the preceding four trading sessions.
Outsourcing focussed IT stocks rose on bargain hunting after Tuesday's steep fall that was triggered by a firm rupee. India's largest software services exporter by sales TCS rose 0.8%. TCS last week it has been selected for a five-year IT services contract for auto maker Volkswagen group's operations in the United Kingdom.
India's third largest software services exporter by sales Wipro rose 2.31% even after its ADR fell 2.87% overnight. But India's second largest software services exporter by sales Infosys fell 1.9% after its American depository receipt (ADR) fell 5.39% overnight.
The rupee extended gains on Wednesday. The partially convertible rupee was at 47.42 per dollar, higher than its Tuesday's close of 47.75/76. A firm rupee affects operating profit of IT firms negatively as they earn most of their revenues from exports.
Shares of power and capital goods companies surged following a thumping victory of the Congress-led United Progressive Alliance (UPA) government in the Lok Sabha elections, clearing the way for the landmark civilian nuclear deal with the US. Reliance Infrastructure, Hindustan Construction Company, Bharat Heavy Electricals, Crompton Greaves, Tata Power Company, ABB, and Walchandnagar Industries rose by between 1.26% to 12.23%.
India's largest engineering and construction firm by sales Larsen & Toubro jumped 0.97% extending gains for the second straight day after the company bagged three orders aggregating Rs 518.20 crore from various customers in Oman. The company announced the order win during trading hours on Tuesday, 19 May 2009
The nuclear deal will give India access to US nuclear fuel and technology without joining the 1970 Nuclear Non-Proliferation Treaty. It is potentially worth billions of dollars to US and European nuclear supplier companies and would give India more energy alternatives to drive its booming economy.
Some FMCG stocks fell as investors pulled out from the so called defensive stocks. ITC, United Breweries, Godrej Consumer HealthCare and Dabur India, fell by between, 0.13% to 6.53%.
Healthcare stocks rose on hopes newly elected UPA government will give primary importance to healthcare segment and health of citizens. Dr Reddy's Laboratories, Biocon, Lupin, Ranbaxy Laboratories and Cipla, rose by between 0.26% to 6.63%.
Sugar stocks rose as sugar prices are set to rise further on fall in sugar output. Bajaj Hindustan, Balrampur Chini, Triveni Engineering rose by between 2.71% to 11.13%.
Construction stocks rose on expectations that the Congress-led UPA government will increase infrastructure spending, including new power plants, to boost growth. Hindustan Construction Company, Nagarjuna Construction Company, IVRCL Infrastructure & Projects and Gammon Infrastructure, rose by between 3.11% to 24.06%.
Shares of state-run companies rose on hopes of recommencement of the PSU disinvestment programme after the Congress-led UPA government got a clear mandate in the Lok Sabha election. Dredging Corporation of India, HMT, Shipping Corporation of India, Hindustan Copper, Power Finance Corporation, Central Bank of India, rose by between 4% to 19.8%.
It may be recalled that the BJP-led National Democratic Alliance (NDA) had vigorously pursued PSU divestment. However, it was put in deep freeze in the last five years by the Congress-led United Progressive Alliance (UPA) government as the Left parties which supported the UPA government from outside, were bitterly opposed to the idea.
Airlines stocks rose on hopes the newly elected government may allow foreign direct investment in the sector. Jet Airways, Kingfisher Airlines and SpiceJet rose by between 13.81% to 27.36%.
The Indian aviation industry has been plagued by large losses, rising debt levels and a serious liquidity crunch. According to reports, measures like increasing the present cap on Foreign Direct Investment (FDI) in the aviation sector as well as withdrawing the restrictions on investment by foreign airlines in the domestic carriers are important to save the industry from the current crisis that it finds itself in.
Currently, foreign airlines are not allowed to pick up equity in aviation companies while foreign investors and financial institutions can hold up to a 49% stake.
Cals Refineries clocked the highest volume of 7.27 crore shares on BSE. Unitech (3.67 crore shares), Reliance Natural Resources (3.03 crore shares), Ispat Industries (2.68 crore shares) and Kashyap Technologies (2.12 crore shares) were the other volume toppers in that order.
DLF clocked the highest turnover of Rs 321.05 crore on BSE. Tata Steel (Rs 316.15 crore), Reliance Industries (Rs 294.67 crore), Unitech (Rs 271.60 crore) and Reliance Capital (Rs 251.83 crore) were the other turnover toppers in that order.
Market may extend gain
Key benchmark indices may extend gain as Congress Parliamentary Party leader Dr Manmohan Singh readies to stake claim at the centre today. Recent buying by the foreign funds aid the sentiment. Positive Asia may also support the market. However profit taking may not be ruled out after recent solid surge.
Manmohan Singh was renominated as Congress Parliamentary Party leader on Tuesday (19 May 2009) and is expected to stake claim today to head the new Government of the UPA which saw BSP and SP scramble to give it unexpected support to have 44 seats more than the required majority. The 76-year-old economist-turned-politician is likely to be sworn in on Friday 22 May 2009, a day after the 18th death anniversary of Rajiv Gandhi.
Singh may stake claim to be the Prime Minister for a second term after meeting of the leaders of the UPA today where he is likely to get a formal backing of the ruling Congress-led alliance.
Singh was named by Congress President Sonia Gandhi as the CPP leader and Leader of the Rajya Sabha after she was unanimously elected its Chairperson on Tuesday.
As the top Congress leadership discussed modalities of government formation on Tuesday, the UPA's tally in the new Lok Sabha rose by 55 to touch a comfortable 316 mark after it received an unexpected bonus in the form of support from BSP and SP besides some other parties and independents.
The Congress-led UPA defied predictions of a tight election and was only about 11 seats short of an majority from the 543 seats at stake in the recently concluded Lok Sabha election. Congress' alliance took 261 seats, sweeping aside its nearest rival, the bloc led by the Hindu-nationalist Bharatiya Janata Party (BJP), which won only 159 combined. Congress, which alone won 205 seats, needs a handful of partners to reach the 272 seats needed to take power, and is expected to seek the support of more smaller parties or independents.
Dr Manmohan Singh met President Pratibha Patil on Monday and submitted the resignations of his Council of Ministers. Manmohan Singh formally stepped down as the Prime Minister. President Pratibha Patil on Monday dissolved the 14th Lok Sabha with immediate effect and asked the Prime Minister and his Council of Ministers to continue in office till the new government is formed.
Financial sector reforms are likely to get a push in the coming days, which were relegated to the back seat due to persistent opposition from the Left parties, with the Congress-led UPA set to form the next government.
A near term trigger for the market will be allocation of portfolios in the new government. It remains to be seen who gets the key ministries viz. power, transport and education sectors likely to be decided at the crucial UPA meet scheduled to be held in New Delhi today. Analysts say growth in these three sectors are key for India to achieve strong economic growth. If those seen as strong performers are given charge of these three ministries, the market may extend gains.
Meanwhile, key government departments have drawn up a slew of proposals to populate an ambitious reform agenda for the first 100 days of Manmohan Singh's second term, as the re-elected UPA coalition talks up expectations and sets itself up to be judged early into its new stint in power.
The BSE Sensex crawled up marginally on Tuesday, 19 May 2009 extending gains for the second straight day after Indian stocks had witnessed a historic rally on Monday, 18 May 2009, when the key indices viz. the Sensex and the Nifty surged more than 17% each on hopes a new stable government will be able to push reforms. The Sensex has risen 4654.72 points or 48.24% in calendar year 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the has Sensex has surged 6,141.63 points or 75.26% to 14,302.03 its highest closing since 11 September 2009 on Tuesday 19 May 2009.
Foreign funds have aggressively bought Indian stocks
in the recent past. As per the provisional figures on NSE, foreign institutional investors (FIIs) bought shares worth Rs 4,792.56 crore and domestic funds sold shares worth Rs 1964.19 crore on 19 May 2009. FII inflow in May 2009 totaled Rs 10,324 crore (till 18 May 2009) while their inflow in calendar year 2009 totaled Rs 10,680.50 crore.
Meanwhile, raising funds from the bourses may soon become a simpler, shorter process, as the market regulator reportedly plans an overhaul of existing norms to raise funds by way of IPO, QIP and rights issue taking them closer to standard global practices.
Asia stocks were flat today as investors trim positions with investors reluctant to keep a near three-month rally in risky assets going without more good economic news. Key benchmarkm indices in Japan, South Korea, Singapore and Taiwan rose by between 0.43% to 0.88%. While key benchmark indices in China and Hong Kong fell by between 0.09% to 0.12%.
The US markets ended a rocky session mixed on Tuesday 19 May 2009 as banks rally fizzled and an unexpected drop in the housing starts left investors a little shaky. The Dow Jones Industrial Average shed 29.23 points or 0.34%, to close at 8,474.85 and the S&P 500 Index lost 1.58 points or 0.17%, to 908.13. However, the Nasdaq Composite gained 2.18 points or 0.13% at 1,734.54.In the economic news, housing starts tumbled 12.8 % to 458,000 units in April 2009 over April 2008. Building permits for April 2009 hit a rate of 4,94,000. Both marked record lows.
Pre Session Commentary - May 20 2009
Today domestic markets are likely to open positive as the UPA will form a new government today. There are no global cues to guide the domestic markets sentiments and therefore the local news about the cabinet formation of the UPA will play a major role in deciding the market movements. However profit booking at this high level is also indispensable as there were indications in yesterday’s late trading session which turned choppy.
Tuesday, the domestic markets closed flat after a rigorous volatile session. The timid opening caused some selling pressure in the beginning however after the post morning session both the benchmark indices were trading with phenomenal gains. Cautiousness and profit booking pressures pulled the sentiments down and markets pared off its gains to close flat. This trading day once again marked a red letter day by recording a whopping Rs. 1.57 Lakh crores of trading ever in the history of Indian stock markets. Sectors like Realty, Bankex and CG closed with huge gains of 12.80%, 6.84% and 6.33% respectively. On the other hand the bottom line stocks outshined the benchmark indices by clocking remarkable gains of 3.60% and 2.52% respectively. We expect the markets to be trading positive with an essence of volatility.
The BSE Sensex closed high by 17.82 points at 14,302.03 and NSE Nifty ended with marginal loss of 4.70 points at 4,318.45. BSE Mid Caps and Small Caps closed with gains of 153.34 points and 117.40 points at 4,407.82 and 4,784.14 respectively. The BSE Sensex touched intraday high of 14,930.54 and intraday low of 13,834.13.
On Tuesday, the US stock markets closed mixed. The late selling pressure due to bad housing data pushed the markets into choppy session. The financial sector fell by 2.06% as the consumer finance and banking stocks traded weakly. The consumer finance stocks came under huge selling pressure after the news set ablaze the traders that the senate had passed a new legislation to imply restrictions on the credit card industry. American Express showed weakness despite the company announced plans to save $800 million this year by slashing jobs, investments, and costs. On the other hand the new housing starts and building permits fell below expectations as the April housing starts came in an annualized rate of 4,58,000, while the building permits recorded at 4,94,000. The US light crude oil futures for June which expired at this session closed higher by 1.1% at $59.65 per barrel on the New York Mercantile Exchange.
The Dow Jones Industrial Average (DJIA) declined by 29.23 points to close at 8,474.85 The NASDAQ Composite (RIXF) index inclined by 2.18 points to close at 1,734.54 and the S&P 500 (SPX) closed low by 1.58 points at 908.13.
Today major stock markets in Asia are trading mixed. Hang Seng is trading low by 64.08 points at 17,479.95 followed by Shanghai Composite which is low by 3.07 points at 2,673.61. Japan''s Nikkei is up by 28.10 points at 9,318.39, Strait Times is flat by 0.03 points at 2,260.33. Seoul Composite rose by 2.35 points at 1,430.56 respectively.
Indian ADRs ended lower. In technology sector, Infosys ended down by 5.39% along with Wipro by 2.87%. Further, Satyam lost 8.47% and Patni Computers ended lower by 8.99%. In banking sector ICICI Bank and HDFC Bank dropped by 0.34% and 4.11% respectively. In telecommunication sector Tata Communication decreased by 2.21% and MTNL lost 5.23%. Sterlite Industries decreased by 3.37%.
The FIIs on Tuesday stood as net buyers in equity and debt. Gross equity purchased stood at Rs 58.10 Crore and gross debt purchased stood at Rs 100.40 Crore, while the gross equity sold stood at Rs 4.70 Crore and gross debt sold stood at Rs. 68.30 Crore. Therefore, the net investment of equity and debt reported were Rs 53.40 Crore and Rs 32.20 Crore respectively.
On Tuesday, the partially convertible rupee ended at 47.75/77 per dollar, 0.3 percent stronger than previous close at 47.88/90. Rupee continued gaining strength touching 47.27 in early trade but central bank’s intervention contained the further gain of the local currency against the green back.
On BSE, total number of shares traded were 90.89 Crore and total turnover stood at Rs 11,781.35 Crore. On NSE, total number of shares traded was 192.26 Crore and total turnover was Rs 40,151.91 Crore.
Top traded volumes on NSE Nifty – Unitech with 155065407 shares, Suzlon Energy with 66090397 shares, DLF 57111448 shares, ICICI Bank with 29985698 shares followed by Reliance Comm with 23255224 shares.
On NSE Future and Options, total number of contracts traded in index futures was 1467599 with a total turnover of Rs 31,082.77 Crore. Along with this total number of contracts traded in stock futures were 641588 with a total turnover of Rs 32,867.31 Crore. Total numbers of contracts for index options were 1941044 with a total turnover of Rs 40,080.98 Crore and total numbers of contracts for stock options were 39830 and notional turnover was Rs 1,954.46 Crore.
Today, Nifty would have a support at 4,359 and resistance at 4,410 and BSE Sensex has support at 14,415 and resistance at 14,789.
Daily Call - May 20 2009
After some artificial trading seen on Monday, markets did some real business on Tuesday, providing ample opportunity for the bulls and the bears to sweat it out on the bourses. As the bourses traded for their full trading hours, volumes breached previous records. Both the Sensex and the Nifty ended absolutely flat after wild two way swings.
Markets gave a clear thumbs down to IT and FMCG stocks and chased infrastructure, reality and bank stocks to the moon, making no pretences of where its priorities lay. The ADAG stocks were on fire making the markets guess whether SP will eventually end up in the Government. While buying could emerge today as well, it is more likely to happen at lower levels. Expect the markets to lose some altitude in the morning.
Market may move sideways
The presence of a sharp intra-day volatile trend due to lack of clarity may see the market remain edgy and move on the either side of the zone. Mixed fund inflows into the domestic equities and the global market trend will be closely monitored for further direction. The Sensex swung over 1000 points during intra-day trades and closed flat on Tuesday across-the-board selling pressure which may keep the investors cautious. Among the key local indices, the Nifty has good support around 4270 and upside till 4370-4420 levels. The Sensex has a likely support at 14150 and may face resistance at 14450.
US indices ended mixed Tuesday, after trading in a tight range on both sides of breakeven, following an unexpected drop in homebuilding that clouded the economic outlook. The Dow ended marginally down at 8475, while the tech-laden Nasdaq advanced to close 2 point higher at 1735.
All the Indian floats witnessed selling pressure. Tech ADRs Infosys, Satyam, Wipro and Patni Computers tumbled over 2-8% each. Dr Reddy's, Tata Motors, ICICI Bank, HDFC Bank, MTNL, VSNL and Rediff dropped over 0.50-5% each.
Crude oil prices in the international market edged higher, with the Nymex light crude oil for June delivery rose by 62 cents to close at $59.65 per barrel. In the commodity space, the Comex gold for June series gained $926.70 to settle at $5 a troy ounce.
Crude rises on hopes of inventory drop
Prices surpass $60 during intra day trading
Crude oil prices ended higher on Tuesday, 19 May, 2009 on expectation that tomorrow's inventory report by the energy department will show drop in crude inventories. But the disappointing housing data checked the rise in price.
On Tuesday, crude-oil futures for light sweet crude for June delivery closed at $59.65/barrel (higher by $0.62 or 1.1%) on the New York Mercantile Exchange. During intra day trading, it reached a high of $60.48. Last week, crude ended lower by 3.9%.
Crude ended April higher by 2.9%. Previously, March trading ended up 10.9%. It rallied 11.3% in the first quarter. For the month of February, crude prices had ended higher by 1.5%.
Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 59.8% since then. Year to date, in 2009, crude prices are higher by 26%. On a yearly basis, crude prices are lower by 44%.
The energy department is scheduled to report the latest weekly crude and crude product stockpiles report tomorrow. Market is expecting a 1.5 million drop in crude inventories for last week.
In the currency market on Tuesday, the U.S. dollar index, fell 0.9%. The index, which tracks the greenback against a trade-weighted basket of six major currency rivals including the euro and yen, has fallen nearly 3% so far this month, furthering the allure of gold as an investment vehicle.
Among economic reports scheduled for the day, The Commerce Department in US reported on Tuesday, 19 May, 2009 that construction on new housing projects slowed to a record-low pace in April. New construction of single-family homes and apartments plunged 12.8% from March 2009 to a record-low annual rate of 458,000. On a yearly basis, it was 54.2% below the revised April 2008 rate of 1,001,000.
This is the weakest level since the government began publishing the series in 1959. Starts are now 79.9% below their peak in January 2006. The report detailed that the drop was caused by a slump in construction of multifamily housing, which fell 46.1% to a record low 78,000. This was the biggest drop since January 1994.
Last week, the International Energy Agency reported on Thursday that it now expects demand to fall 2.6 million barrels a day from 2008 levels. This is 200,000 barrels more than the IEA had projected a month ago. This perhaps kept further rise in crude prices from check.
Also at the Nymex on Tuesday, June-dated reformulated gasoline rose 5.44 cents, or 3.1%, to $1.8125 a gallon, and June heating oil gained 1.09 cent, or 0.7% to $1.4866 a gallon.
Natural gas for June delivery fell 22.5 cents, or 5.4%, to $3.914 per million British thermal units.
Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
At the MCX, crude oil for June delivery closed at Rs 2,884/barrel, higher by Rs 28 (0.98%) against previous day's close. Natural gas for June delivery closed at Rs 195.2/mmbtu, lower by Rs 9.3/mmbtu (4.5%)
Bullion metals add some shine
Prices rise due to subdued dollar
Precious metals ended higher on Tuesday, 19 May, 2009 at Comex. Prices rose today following the depressed dollar. The dollar was subdued today on reports that a few bailed out banks are moving ahead in paying off the bailout money to the government partly.
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 Tuesday, Comex Gold for June delivery gained $5 (0.5%) to close at $926.7 an ounce on the New York Mercantile Exchange. Last week, gold ended higher by 1.8%. Year to date, gold prices are higher by 6.8%.
For the month of April, gold had lost 3.7%, the second consecutive monthly drop. For the month of March, gold fell 2.1%, down for the first month in five. But the metal gained 4.3% in the first quarter. Before March, for the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%.
On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (10.4%) since then.
On Tuesday, Comex silver futures for July delivery gained 29.5 cents (2.1%) at $14.125 an ounce. Year to date, silver has climbed 25% this year. For 2008, silver had lost 24%.
In the currency market on Tuesday, the U.S. dollar index, fell 0.1%. The index, which tracks the greenback against a trade-weighted basket of six major currency rivals including the euro and yen, has fallen nearly 3% so far this month, furthering the allure of gold as an investment vehicle.
Among economic reports scheduled for the day, The Commerce Department in US reported on Tuesday, 19 May, 2009 that construction on new housing projects slowed to a record-low pace in April. New construction of single-family homes and apartments plunged 12.8% from March 2009 to a record-low annual rate of 458,000. On a yearly basis, it was 54.2% below the revised April 2008 rate of 1,001,000.
This is the weakest level since the government began publishing the series in 1959. Starts are now 79.9% below their peak in January 2006. The report detailed that the drop was caused by a slump in construction of multifamily housing, which fell 46.1% to a record low 78,000. This was the biggest drop since January 1994.
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 June delivery closed higher by Rs 115 (0.8%) at Rs 14,321 per 10 grams. Prices rose to a high of Rs 14,333 per 10 grams and fell to a low of Rs 14,121 per 10 grams during the day's trading.
At the MCX, silver prices for July delivery closed Rs 577 (2.7%) higher at Rs 22,333/Kg. Prices opened at Rs 21,783/kg and rose to a high of Rs 22,385/Kg during the day's trading.
India Economic Review
Economy: Decisive election mandate: A positive surprise
* Contrary to street expectations, the decisive mandate in favour of the United Progressive Alliance (UPA) has come as a pleasant surprise. This essentially means that the new government would be more confident and stable (without the baggage of the ideology of the Left parties and reduced influence of the regional parties). Given the higher flexibility that the new government will enjoy in policymaking, the markets have started hoping for major reforms that would encourage investment in various sectors and lead to the return of capital inflows into the country.
* On April 21, 2009, the Reserve Bank of India (RBI) announced its annual policy review. The RBI announced a token cut in the repo and reverse repo rates while leaving the cash reserve ratio (CRR) and the statutory liquidity ratio (SLR) unchanged. The announcement was in line with our expectations and highlighted the central bank’s decision to wait for the realisation of the fuller impact of the past measures while stressing the need to bring down the lending rates. The FY2010 macro aggregate estimates now stand at: Gross domestic product (GDP) growth of 6%; inflation at 4.0% by March 2010; credit growth of 20%; deposit growth of 18%; and money supply (M3) growth of 17%.
* India’s trade deficit declined sequentially to USD4.05 billion in March 2009 from USD4.91 billion in the previous month. The trade deficit for March 2009 declined (for the third consecutive month) by 36.0% year on year (yoy) and by 17.6% on a month-on-month (m-o-m) basis. With this, the trade deficit for FY2009 has widened to USD109.0 billion from USD81.2 billion in FY2008.
* In March 2009, the industrial production growth contracted sharply by 2.3% yoy, the steepest contraction in the past one and half decade. Importantly, the Index for Industrial Production (IIP) figure for February 2009 has been revised upwards to indicate a decline of 0.7% yoy against a drop of 1.2% (provisional) earlier. The fall in the industrial output was led by a strong year-on-year (y-o-y) decline of 3.3% and that of 8.2% in the output of the manufacturing and capital goods segments respectively. For FY2009, the IIP growth stood at 2.4% and was significantly weaker compared with the 8.5% growth achieved in the previous year. Though there has been some pick-up in the overall industrial activity, the high base of the previous year has had its bearing on March 2009 figures. Even though the recent uptick seen in the automobile sales, cement dispatches and steel production sustained in April 2009 as well, we believe there is still some time to conclusively term this uptick as a revival in the overall industrial activity.
* After falling sharply to 0.18% in the previous month, the inflation rate inched up to 0.48% for the week ended May 02, 2009. The gradual decline in the inflation rate follows its rise to a record high of 12.91% in August 2008. However, on a week-on-week (w-o-w) basis, the inflation rate has inched up by 0.4% on the back of higher food prices and higher inflation in primary articles. The inflation rate is near zero levels and we believe it is likely to enter the negative territory in the coming few weeks as the high base effect comes into play.
* Globally, the real economies showed some early signs of revival during the last month. There has been some pick-up lately in some of the indicators, like the housing start-ups, new home sales, the Purchase Managers’ Index (PMI) Manufacturing Index. Though the pace of deterioration has slowed down, the trend has not reversed completely as head winds persist (read more under “Global round-up”).
Banking: Credit growth remains subdued
* The non-food credit growth (as on April 24, 2009) improved to 18.1% yoy from the 17.5% y-o-y growth seen a month ago. The deposit growth improved to 22.5% yoy in April from the 20.0% y-o-y growth registered in the previous month. The central bank targets a 20% credit growth and an 18% deposit growth in the current fiscal.
* The deployment rate (ie the credit-deposit [CD] ratio) dipped to 68.6% in April 2009 vs 71.1% in the previous month. Similarly, the incremental CD ratio too fell to 57.2% from 63.7% in the previous month.
* The M3 growth rate increased to 20.8% as on April 24, 2009 compared with 18.6% on March 27, 2009. For FY2010, the RBI targets a 17% growth in the money supply and the target is largely in line with the growth seen in the previous year.
* Yields on government securities (G-Secs) cooled off a bit in May 2009. After touching a high of 7% in March 2009, the ten-year G-Sec yield stood at 6.41% as on May 15, 2009. We expect the movement in the bond market to remain volatile on the back of the recent government-borrowing plan.
Equity markets: Volumes take a breather
* Since March 2009, the strong rally in the broader markets has boosted the volumes in the equity markets. In April 2009, the average daily volumes in the futures and options (F&O) and the cash segment were higher by 29.5% and 53.5% respectively as compared with the levels seen in the previous month. Meanwhile, during the MTD period in May 2009, the average daily volumes fell by 21.4% in the F&O segment while it remained flat in the cash segment. For May 2009, the MTD fund flows indicate the foreign institutional investors (FIIs) as well as the local mutual funds (MFs) have remained net buyers.
* The total assets under management (AUMs) for the MF industry registered a strong 11.7% sequential increase. However, on a y-o-y basis, the total AUMs for the MF industry fell for the seventh consecutive month (albeit at a slower pace) by recording a 3.3% decline in April 2009 and stood at Rs552,006 crore.
Insurance: Premium contraction slows down
* In March 2009, the annualised premium equivalent (APE) for the life insurance industry declined by 11.0% yoy, slower compared with the 23.7% y-o-y decline in the previous month. The APE for the private players fell by 15.7% yoy, continuing its declining trend for the fifth consecutive month. For Life Insurance Corporation of India (LIC) it fell by 4.6% yoy.
* In the non-life insurance business, the gross premium underwritten for the industry registered a growth of 7.6% yoy in March 2009. The growth in the gross premium underwritten of the public sector players increased to 10.5% yoy, while for the private sector players it increased by 3.0% yoy.
FIIs buy equities worth Rs 124.05 bn on May 19
Foreign Institutional Investors (FIIs) remain net buyers in the equity segment worth Rs 47.92 billion on both the BSE and the NSE on May 19 as per provisional data available at NSE. They bought equities worth Rs 124.05 billion and sold equities worth Rs 76.13 billion.
While, Domestic Institutional Investors (DIIs include banks, DFIs, Insurance and MFs) remain net sellers in the equity segment worth Rs 19,641.9 million on both the BSE and the NSE on May 19, as per provisional data available at the NSE. They bought equities worth Rs 26,589.7 million and sold equities worth Rs 46,231.6 million.
FIIs extend buying
Buy shares worth Rs 53.40 crore on 18 May 2009
Foreign institutional investors (FIIs) bought shares worth a net Rs 53.40 crore on Monday, 18 May 2009, as trading was halted in just a minute of trade due to the triggering of market-wide circuit filters as investors latched stocks after the Congress-led United Progressive Alliance (UPA) got a clear mandate in the 15th Lok Sabha election. FIIs have been on a buying spree this month as they remained net buyers in 11 out of 12 trading sessions.
FII inflow of Rs 53.40 crore on 18 May 2009 was a result of gross purchases Rs 58.10 crore and gross sales Rs 4.70 crore. The 30-share Sensex jumped 2110.79 points or 17.34% at 14,284.21, its biggest single day point gain
FII inflow in May 2009 totaled Rs 10,324 crore (till 18 May 2009) while their inflow in calendar year 2009 totaled Rs 10,680.50 crore.
There are a total of 1656 foreign funds registered with the Securities & Exchange Board of India (Sebi).
Rupee pares gains
Ends at 47.75/77 per dollar
Rupee extended its post-election rally on Tuesday but ended off a five-month high hit in early trade due to suspected RBI's intervention to stem its rise and a flat close in the stock market.
Rupee ended at 47.75/77 per dollar, 0.3% stronger than Monday's close of 47.88/90.
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