Thursday, November 19, 2009
The market is set for an uncertain start on mixed Asian stocks. The volatility may remain high as investors may remain cautious after the recent surge in indices.
The government has set reform of the insurance sector as a priority for the winter parliament session that begins today, 19 November 2009. The bill, which was stalled in the last parliament, proposes raising the foreign investment limit in insurance companies from 26 % to 49 %.The government also wants to open up the pension sector to private and foreign firms and give equal voting rights to foreigners in private-sector banks, which are currently limited to 10 % irrespective of their actual holding. Prime Minister Manmohan Singh said recently India is ready to increase the pace of reform, and the government has flagged stake sales in state firms and tax changes to help to plug a large budget deficit.
The government kicked off the discussion process towards consolidation in the banking sector at a meeting with senior bankers on Wednesday. The finance ministry has been urging banks since the last few years to start the process of mergers and acquisition on a voluntary basis, but none of the state-run banks have shown any initiative on this.
Meanwhile, the government is taking its first significant step to ward off a surge in foreign capital inflows that may threaten the stability of the financial system by drawing up new rules that will make overseas loans costlier for companies. The government is finalising plans to auction corporate entitlements to borrow abroad, a pre-emptive move relaying the message that the country is determined not to allow unruly capital inflows to disrupt the incipient economic recovery.
Finance Minister Pranab Mukherjee said on Wednesday the country is monitoring foreign capital inflows and the current higher inflows are not a matter of concern. Indian stocks have risen sharply this year on robust inflow from foreign funds. Indian officials had said on recent occasions that they welcomed fund inflows, but Mukherjee on Wednesday also noted that India is ready to deal with the flows if they become a problem. We have a system of monitoring inflows, he said.
Meanwhile, the initial public offer of Cox and Kings, a global tour operator, was subscribed 60% on the first day of bidding today. The price band has fixed at Rs 316-330 per share and the issue will close for subscription on 20 November 2009. Face value per share is Rs 10.
In a bid to speed up the process of fund mobilisation and listing, the Securities and Exchange Board of India (Sebi) is working towards bringing down the time frame for listing of an IPO on the stock exchange to seven days from the current 20 days.
Asian markets were trading mixed on Thursday. Doubts about the pace of economic recovery resurfaced with Japanese stocks falling to a four-month low, as share-sale plans at Japanese companies raised concern the value of existing holdings will be reduced. The key benchmark indices on China, HongKong and Japan fell by between 0.31% to 0.96%. The key benchmark indices in South Korea, Singapore and Taiwan rose by between 0.18% to 1.16%.
U.S. stocks fell on Wednesday on worrisome outlooks from major software makers and as a surprise drop in new home construction last month prompted concern about the strength of an economic recovery. The Dow was down 11.11 points, or 0.1%, to 10,426.31. The S&P 500 index slipped 0.52 points, or 0.1%, to 1,109.80, while the Nasdaq fell 10.64 points, or 0.5%, to 2,193.14.
Driving the losses in the US markets were some disappointing economic data. Housing starts unexpectedly fell 10.6% in October 2009 to the lowest level in six months, weighed down by a sharp decline in construction activity for both single-family and multi-family dwellings. The consumer price index rose 0.3%, indicating that inflation may not be quite as benign as some economists have indicated.
Bsck home, volatility ruled the roost on Wednesday as the key benchmark indices edged lower with investors cashing in on gains after a sharp rally in the past few days. The BSE 30-share Sensex fell 51.87 points or 0.3% to 16998.78 on Wednesday.
As per provisional data on NSE, foreign funds bought shares worth Rs 412.13 crore and domestic funds sold shares worth Rs 256.73 crore on Wednesday.
Headlines for the day
RIL to invest $3 billion in new petrochem complex – Business Standard
Bajaj Electrical okays plan to raise funds - Business Line
Gulf Oil Corporation consolidates biz portfolio; exits pharma - Business Line
Suzlon opens wind farm in Australia - Business Standard
RIL mulls entry into low-cost housing - Business Standard
Events for the day
Major corporate action:
Ex-date for the interim dividend of Allcargo Global Logistics Ltd & Central Bank of India & Ex-date for the dividend of Vipul Ltd.
Stock-split of Allcargo Global Logistics Ltd from Rs10/- to Rs2/- & Stock-split of Geekay Finance & Leasing Company Ltd from Rs10/- to Rs1/-.
Reduction of Capital of Midpoint Software & Electro System & Polygenta Technologies Ltd
The European stocks opened the Tuesday with gain but not able to sustains the gain. At the end, FTSE 100 closed 0.07% lower at 5342.
While the US markets halts its northward journey & closed in red zone. Nasdaq 100 shed the 11 points and closed the day at 2193.
In today's trade, the Asian indices showing the mixed trend in the early trading hours. Indices like Shanghai Composite, Nikkei 225 & Hang Seng all trading in red territory. While Kospi & Straits Times trading with gain. And at the time of writing this report, SGX Nifty that opened marginally lower, had not recover its lost and was trading lower by 12 points.
The domestic indices are expected to open marginally lower, remain range bound and volatile owing to the Mixed Asian cues & weak US Markets.
Among the local indices, the Nifty could test the 5100-5150 range on the up side, while on the down side it could find support at 5000 and 4920. While the Sensex is likely to get support at 16600 and may face resistance at 17300.
Among the Indian ADRs trading on the US bourses, only Wipro, Tata Motors & Tata Communication managed to closed in green. While rest all of the Indian ADR closed in the Red wherein Rediff slides the most & fell 6.56%.
In the commodity space, wherein the Crude oil prices recorded marginal loss, with the Nymex light crude oil for December series marginally fell by $0.04 to settle at $79.58 a barrel.
In the metals space, Comex Gold for December series surges $1.90 to settle at $1141.20 to a troy ounce.
Daily trend of FII/MF investment in equities
On November 18, 2009, FIIs were the net buyers of the Indian Stocks in the tune of Rs593.70 crore (with the gross purchase of Rs2379.40 crore and gross sales of Rs1785.60 crore).
While the Domestic mutual funds, on November 17, 2009, were the net Seller of the stocks in the tune of Rs308.40 crore (with gross purchase of Rs458.70 crore and gross sales of Rs767.10 crore).
We recommend a buy in the stock of Essar Shipping Ports and Logistics from a short-term perspective. The stock’s 11.5 per cent jump accompanied with heavy volume on November 18 strengthened its bullish momentum. Following a medium-term up move from its multi-year low of Rs 19 to Rs 90, the stock has been consolidating sideways in a broad range of Rs 55 and Rs 75 since July. Taking key support at Rs 55, the stock has been on a short-term uptrend from the beginning of November. With the recent surge it penetrated its 21- as well as 50-day moving averages. The daily relative strength index has entered the bullish zone from the neutral zone. The daily moving average convergence and divergence indicator has signalled a buy and is heading towards the positive territory. Our short-term forecast on the stock is bullish. We anticipate it to rally breaching the sideways range until it hits our price target of Rs 78. Traders with a short-term horizon can buy the stock while maintaining a stop-loss at Rs 66.5
RIL is planning to spend US$3bn for the new petrochemical complex at Jamnagar. (BS)
RIL plans to enter no-frills, low-cost housing business in 2010. (BS)
ITC has increased prices of two of its brands, India Kings and Benson & Hedges, by Rs10 and Rs5, respectively. (BS)
Ratan Tata, Chairman of Tata Group, has said that his successor may be an expatriate. (BS)
ONGC to go solo in development of Satpayev oil block in Kazakhstan after Mittal Investments pulled out of the project. (DNA)
Japan’s JFE is forging an alliance with JSW Steel, whereby it will supply technology to Indian company to make auto grade steel. (DNA)
JSW Steel is close to entering into a strategic alliance with a global steel company. (ET)
Hero Honda may announce special dividend payout to its shareholders. (ET)
Exide Industries to raise Rs5bn via QIP to fund R&D. (ET)
Blackstone is planning to delist Bangalore-based textile exporter Gokaldas Exports, is in talks to launch the buyback offer. (ET)
Gujarat State Petronet is set to bid for two pipeline projects. (ET)
Union Bank of India is looking at raising US$500mn via bonds before March 2010 to expand its operations abroad. (BL)
Suzlon Energy has officially opened Infigen Energy’s Capital wind farm, the largest wind farm in Australia at Bungendore in New South Wales. (BS)
RCom has entered into a strategic tie-up with Atom Technologies, an m-commerce solutions provider from the Financial Technologies India Ltd group. (BL)
OPaL, the petrochemicals SPV of ONGC, is exploring the option of a public issue to part-finance its Rs125bn petrochemical chemical complex being commissioned at Dahej, Gujarat. (BL)
Petronet LNG is keen to acquire up to 10% stake in OPaL. (BS)
SAIL has re-tendered the four-million-ton Tasra open-cast coking coal mine redevelopment project in Jharkhand. (BL)
BHEL is scouting for a technology partner for its ambitious nuclear turbine and reactor project. (BS)
Wockhardt and Sun Pharmaceutical have received final approval from the USFDA to market generic versions of Nicardipine, the hypertension drug. (BS)
Bharati Shipyard and ABG Shipyard have got Sebi’s nod for their open offer bids to buy additional stake in Great Offshore. (BS)
Pantaloon Retail is looking to acquire a fast-moving consumer goods company. (DNA)
IOC is looking to invest up to Rs15bn in its maiden nuclear venture in partnership with Nuclear Power Corporation of India Ltd (NPCIL). (BL)
Kochi port has extended wharfage waiver to BPCL-Kochi Refinery for back-loading of crude oil at Cochin Oil Terminal for one more year. (BL)
EKC has decided to shelve plans of adding capacity at its China plant. (DNA)
The Union Government may consider including Andhra Pradesh in the Chennai-Mumbai Industrial Development Corridor project. (BL)
Bank credit for the fortnight ended November 6 increased by Rs231bn. (BL)
The Empowered Group of Ministers on the auction of 3G spectrum will meet today to discuss the vacation of spectrum by defence forces. (BS)
The Union Cabinet is expected to take up today a proposal for increasing the foreign direct investment limit in print media to 49%. (BL)
The NHAI, having failed to meet the deadline for awarding 126 projects during FY10, has brought down the number of projects to be awarded in FY11 to 92. (BS)
The government has appointed Subir Vithal Gokarn, Standard and Poor’s Asia-Pacific Chief Economist and a Business Standard columnist, as the fourth deputy governor of the RBI. (BS)
The government is finalizing plans to auction corporate entitlements to borrow abroad. (ET)
Centre is in talks with the Jharkhand and Orissa governments to facilitate the multi-billion dollar India projects of global steel giants ArcelorMittal and Posco. (ET)
Quality is never an accident. It represents the wise choice of many alternatives.
The bulls and bears seem to be running out of alternatives. Another lackluster start and an equally insipid day of trade could be in store for us. Fatigue seems to be taking a toll on the bulls. The key indices are attempting to break out of a range where the correction had set-in last month. The trouble is there are no great events in the near term that could trigger a big push towards new highs. Winter session of parliament begins today.
What is favouring the bulls so far is the relentless inflow of overseas money. This may continue as the dollar is unlikely to rebound sharply. But, as Christmas holidays approach there is likely to be some softening even in these flows. Local funds have already turned net sellers. Add to this, the anxiety over the shape of the economic recovery and the market could see some cooling. Valuations for many of the leading stocks are not too compelling either. In the immediate future, the market will remain sideways and listless though action would be seen in non-index counters.
The Nifty could continue to struggle in the 5000-5100 range till a big rally materialises. Even then, the upside may not be much after having witnessed a stupendous rebound from bear market lows. We do not completely rule out a new 2009 high for the key indices before the end of December. Things could remain anemic early on in the new year as the market considers the latest quarterly results and a possible rate hike in January. Budget will of course be another event that will have a bearing on the market's behaviour in the near year.
Global markets have generally been moving in tandem since March lows. Apart from consistent signs of economic recovery another big factor behind this rally has been a weak US dollar. The yen carry trade has shifted into dollars, as the Fed keeps rates near zero. It is unlikely to press the 'exit' button from the accommodative policy until after the first half of 2010. This means that the dollar will remain under pressure and this in turn will continue to fuel the risky asset rally across the globe.
However, there concerns as to how the world will react once governments start withdrawing the emergency fire-fighting measures and the carry trades unwind. Inflation might rear its ugly head again and there could possibly be a few asset price bubbles. The so-called global imbalances will continue to pose problems.
FIIs were net buyers in the cash segment on Wednesday at Rs4.12bn on a provisional basis. The local funds were net sellers of Rs2.56bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs13.72bn. The foreign funds were net buyers of Rs594bn on Tuesday. Mutual funds were net sellers of Rs3.08mn in the cash segment on the same day. FIIs' net investments in Indian stocks this year has already crossed $15bn.
Hero Honda, Gokaldas Exports, Great Offshore, Bharati Shipyard and ABG Shipyard will be among the stocks that will be in the limelight. JSW Steel might continue to hog the limelight amid reports of a strategic alliance with a foreign partner.
After rallying for three straight days, bulls seem to have lost some steam as the BSE Sensex ended below the 17,000 mark, however, the NSE Nifty managed to hold on the 5050 mark. Weak cues from the Asian and the European markets coupled with selling pressure in the Oil & Gas and the Banking stocks dragged the Sensex to end below the 17,000 levels.
The BSE Sensex slipped 52 points to end at 16,998 after touching a high of 17,098 and a low of 16,958. The index opened at 17,050 against the previous close of 17,050. The NSE Nifty ended flat at 5,054.
In Asia, the Nikkei in Japan was down 0.6%, while Australia's S&P/ASX ended marginally higher by 0.2% at 4,739. Shanghai SE Composite was up 0.5% and Hang Seng index in Hong Kong fell 0.3%.
In Europe, stocks were trading in the green. The DAX in Germany was up 0.6% and the CAC 40 index in France was up 0.5%. The FTSE in the UK was up 0.2%.
Coming back to India, among the BSE sectoral indices, the Oil & Gas index was the top loser, shedding 1%, followed by the Banking index that was down 0.91% and the BSE Capita Goods index was down 0.7%.
Major gainers were BSE Metals index up 1.2% and BSE FMCG index up 0.6%.
The BSE Mid-Cap index ended flat while the BSE Small-Cap index was up by 0.7%.
Among the 30-components of Sensex, 18 stocks ended in the red and 12 ended in the positive terrain. Reliance Infra, L&T, Reliance Industries, ICICI Bank and Grasim were among the top losers. On the other hand, among the major gainers were Tata Motors, Tata Steel, ITC, Infosys and JP Associates.
Outside the frontline indices, the big losers in the broader market were Mphasis,Exide Ind, Spice Tele, Jain Irrigation and Fin Tech. On the other hand, gainers included Pantaloon Retail, GE Shipping, GTL Infra and Sintex Ind.
Shares of SAIL advanced by 0.5% to end at Rs187. Reports stated that Jharkhand government has agreed to renew the company’s lease for the Buddhaburu mine, having reserves of 810mn tons.
The company also announced that it was planning to spend Rs600bn for expansion in next 3 years and the company is also reportedly planning to jointly develop a limestone project at Arki in Himachal Pradesh with a 3MTPA capacity.
BHEL announced that it formed a joint venture with Madhya Pradesh Power Generation for 1600MW power plant. Shares of BHEL ended flat at Rs2275. The stock opened at Rs2273 and made an intra-day high of Rs2283 and a low of Rs2255. Total traded volumes stood at 0.11mn shares.
Union Bank of India plans to raise US$500mn by selling bonds by March; the Chairman M.V. Nair was quoted as saying. The bank plans to use the proceeds to fund its overseas operations
The stock ended at Rs270 adding 1.7%, it opened at Rs266 and made an intra-day high of Rs271 and a low of Rs262. Total traded volumes stood at 0.11mn shares.
Wockhardt announced that it launched anti-hypertensive drug Nicardipine injections in USA. The stock erased early gains and ended lower by 1.5% at Rs180 after it opened at Rs183. It made an intra-day high of Rs187 and a low of Rs179. Total traded volumes stood at 0.14mn shares.
Shares of Redington surged by over 3% to end at Rs316 after 2.2% of its equity, or ~1.7mn shares were traded in a single block on the BSE. The deal was transacted at an average price of Rs310 per share on the BSE.
The stock opened at Rs307 and made an intra-day high of Rs324 and a low of Rs306. Total traded volumes stood at 1.9mn shares.
Lloyd Electric & Engineering announced that through Janka Engineering s.r.o., (a wholly owned subsidiary company) having its registered seat at Prague, Czench Republic has signed a purchase agreement for the acquisition of assets (no liabilities) with Trademarks and 'JANKA' brand of Janka Radotin a.s., a leading czech based manufacturer of diversified Air Handling Product portfolio well positioned in the Czech market for a total consideration of approx. Euro 3.66mn, which is subject to the adjustment on the closing date.
The stock rose over 2% to end at Rs55.5. The stock opened at Rs54.6 and made an intra-day high of Rs56.85 and a low of Rs53.60. Total traded volumes stood at 0.18mn shares.
Prices rise as dollar continues to stay weak
Copper prices ended higher once again on Wednesday, 18 November, 2009 at Comex. Prices rose to its highest levels in fourteen months as the dollar continued to hover in its weak levels.
At USA, copper futures for March delivery ended higher by 0.25cents (0.0.6%) to 3.1355 a pound. Earlier on Monday, it had touched a high of $3.142.
On the London Metal Exchange, copper for delivery in three months ended higher by $64 (0.8%) at $6,880 a metric ton. On 3 July, 2008, prices had touched an all time intra day high of $8,940.
In the currency market on Wednesday, the dollar continued to remain at its weak levels. The dollar index, which measures the strength of dollar against basket of six other currencies, fell by almost 0.5%.
The Commerce Department in US reported today that housing starts in US fell a sharp 10.6% in October. New construction on housing units dropped to a seasonally adjusted annual rate of 529,000, the lowest level since April. The 10.6% drop was the biggest percentage decline for starts since January. Both single-family homes and multifamily units declined last month.
The U.S. buys about 13% of the 17 million metric tons of copper sold annually and China buys about 20%.
In FY 2008, copper prices dropped by 54%. Prior to 2008, copper prices ended FY 2007 with a gain of mere 5.5% after a whopping 44% gain in FY 2006. The price of copper gained every year since 2002 as global economic growth boosted demand for the metal used in pipes and wires.
At the MCX, copper for November delivery closed at Rs 317/Kg. The closing price was Rs 0.6/Kg (0.19%) higher than previous closing price. Prices rose to a high of Rs 322.8/ Kg and fell to a low of Rs 315.65/Kg during the day's trading.
Among other metals traded in the LME on Wednesday, lead added 0.6% to $2,399 a ton and zinc gained 2.1% to end at $2,289 a ton. Nickel gained 0.9% to end at $17,050. Aluminium gained 1.6% to $2,066 a ton.
Gold marks another new record for itself
Precious metal prices marked another record high on Wednesday, 18 November, 2009. Prices rose as the dollar continued to stay weak despite weak set of economic data at Wall Street.
Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.
On Wednesday, gold for December delivery ended at $1,141.2, higher by $1.8 (0.1%) an ounce on the New York Mercantile Exchange. During intra day trading, it hit a high of $1153.4. This was an all time high prices marked by the yellow metal. Last week, gold ended higher by 2%. Year to date, gold prices are higher by almost 30%.
On Wednesday, December Comex silver futures ended higher by just 2 cent (0.002%) $18.41 an ounce.
In the currency market on Wednesday, the dollar continued to remain at its weak levels. The dollar index, which measures the strength of dollar against basket of six other currencies, fell by almost 0.5%.
The Commerce Department in US reported that housing starts in US fell a sharp 10.6% in October. New construction on housing units dropped to a seasonally adjusted annual rate of 529,000, the lowest level since April. The 10.6% drop was the biggest percentage decline for starts since January. Both single-family homes and multifamily units declined last month.
In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.
At the MCX, gold prices for December delivery closed higher by Rs 83 (0.48%) at Rs 17,105 per ten grams. Prices rose to a high of Rs 17,236 per 10 grams and fell to a low of Rs 17,001 per 10 grams during the day's trading.
At the MCX, silver prices for December delivery closed Rs 163 (0.58%) higher at Rs 28,227/Kg. Prices opened at Rs 28,134/kg and rose to a high of Rs 28,688/Kg during the day's trading.