Redington India
India Equity Analysis, Reports, Recommendations, Stock Tips and more!
Search Now
Recommendations
Thursday, May 27, 2010
How long and deep the ongoing correction will last?
One of the leading financial services and research firm, Morgan Stanley said its operating assumption is that the ongoing fall in the market is a correction of the bull market that began in March 2009. Indeed, given where the growth cycle and equity valuations are, it seems to be a reasonable assumption. What is history`s guidance on how long and deep the ongoing correction will last?
Morgan Stanley goes back 17 years of market (BSE Sensex) history to assimilate data on bull market corrections.
Here are the observations from history:
a) There have been four bull markets over the past 17 years (including the current one), and within those bull market there have been 30 corrections of 5% or more (including the current one).
b) The average fall during these corrections has been 13%, and the average duration of these corrections is 17 days. The worst fall (May-June 2006) was 31%, whereas the longest fall excluding the ongoing correction (July to September 1993) lasted 28 days. The standard deviation from the average fall is 5.6%.
c) The average realized inter-day volatility during corrections is 1.6% slightly more than the average during rallies.
d) The subsequent rally post the correction produces an average return of 31% over 48 days. e) India has historically underperformed emerging markets during corrections and outperformed on rallies, save for a couple of occasions.
f) It is not that FIIs are always sellers during corrections. They have been net sellers in 12 out of the 30 corrections (including the current one). Indeed, on a cumulative basis, FIIs have sold USD 6.6 billion of stocks over the past 30 corrections. FIIs have sold USD 515 million of stock in the current correction.
g) The BSE Sensex has fallen below its 200 DMA only on two occasions during these 30 corrections, i.e., in 2004 and 2006. Over the past 30 years, the market has penetrated its 200 DMA four times during a bull market with an average fall of 9.3% below the 200 DMA with the average time spent below the 200DMA being 46 days (excluding the ongoing correction).
h) There is no clear cut message from the valuations at which the market troughs, i.e., the valuation range is 11x trailing earnings to 45 times, with the average over 30 corrections being 20 times trailing earnings. We are currently at 21 times trailing earnings.
About the ongoing correction:
a) It is the longest bull market correction since FIIs starting investing money in India. This correction has already 33 days old exceeding the previous longest correction by five days.
b) The fall is in line with the average and ranks 15th in the pecking order of corrections. If the market finds a floor at one standard deviation below the average fall of the past 17 years, it could take the BSE Sensex to 14,800.
c) This is only fifth occasion in 30 years that the Sensex has fallen below its 200 DMA. As of yesterday`s close, the BSE Sensex is 4.5% below the 200 DMA and the index has spent five days below the 200 DMA. If this fall below 200 DMA matches the average of the previous fall, the Sensex will trough at 15,200.
Conclusion:
The domestic macro is strong, and the government continues to push reform (the recent gas price increase is an example). The 3G auction proceeds imply that the government`s fiscal deficit targets will be met, even exceeded, easing the pressure on the 10-year bond yield - setting the road for a bullish flattening of the yield curve. Earnings continue to be strong, with two out of three companies surprising positively in the ongoing earnings season. The fall in crude oil prices increases the chances of a decontrol of auto fuel prices. The settlement of the Ambani family dispute should also be a positive for the market, in its view.
India`s defensive behavior through the latest bout of global turmoil seems to be driven by a combination of an improving policy environment, resilient domestic growth, healthy corporate balance sheets, an improving government balance sheet and a central bank that has not been hesitant to raise rates to ward off inflation threats. Thus, the logic that India should have suffered more than the average of emerging markets, given how its external deficit is funded, has been defied, and this has come as a surprise to it. Only if the European crisis deepens further (not its base case) will India struggle to retain its defensive response to this global development, in its view. Its view is that unless this is the start of a new bear market, the ongoing correction is a buying opportunity. Its base case is that this is not the start of a new bear market.
Nifty reclaims 5K
Today's major news
Edelweiss keen on banking foray; the stock closes 0.77% higher
Hindustan Petroleum Corporation plans to set up Rs30,000 crore refinery; the stock jumps 3.72%
Tata Motors FY10 bottom line jumps 124%, the stock rises 4.74%
Click here for more stories
Global signals
European shares extended gains on Thursday tracking gains from Asian markets and after China denied that it was looking to cut its holdings of Euro zone sovereign debt. As of writing the report, FTSE 100 was trading 2.05% higher.
All the major Asian indices closed in the positive territory. Japan's Nikkei average came off a six-month low to jump 1.2%, its best one-day performance in two weeks. SGX Nifty closed 95 points higher.
The US stock index futures signal strong rebound on the Wall Street. Investors keep an eye on second reading of first-quarter US gross domestic product (GDP) growth.
Indian indices
Bulls continued to dominate the market on the second consecutive day as key benchmark index Nifty regained its psychological levels of 5000. Heavy short covering owing to May F&O expiry, strong global cues, and buying in banking, auto and oil & gas stocks helped the indices to recover heavy losses suffered in Tuesday's (May 25, 2010) session.
Weak global cues on the report that China was looking to cut its holdings in Euro zone sovereign debt and expiry of May F&O contracts set the pitch for an unappetising start. The Sensex opened 23 points higher and soon turned negative and lingered in red for brief part of the morning trade to touch the day's low - 57 points lower. However, recovery in Asian markets after China denied the report about cutting its Euro zone debt, helped the Sensex to cut its initial losses and rebound into green. The Sensex extended gains owing to short covering and buying in index heavyweights. The strong opening of European markets also supported the rally that helped the Sensex to hit the day's high of 16694 and the Nifty to regain the crucial 5000 levels. At closing, the Sensex ended with gains of 278 points at 16,666 while the Nifty shut at 5003, up 86 points.
Market sentiment
The market breadth was positive as advancing stocks outpaced declining stocks on second straight session. Of the 2,882 stocks traded on the BSE, 1,662 stocks advanced, whereas 1,108 stocks declined. Hundred and twelve stocks closed unchanged.
Sectoral & stock screening
Like yesterday (May 26, 2010), all the 13 sectoral indices on the BSE closed on a positive note. The BSE Bankex led the pack of gainers, with gains of 2.55%, followed by BSE Auto that surged by 2.10% and BSE Oil&Gas that added 2.09%. Remaining indices closed in the range of 0.53%-1.70% higher.
On 'A' group stocks' front; The star stock of the day was Areva T&D that was up by 11.91%, followed by REI Agro that surged 8.60% and Apollo Hospitals that rose by 8.02% on stock split plan. On other hand, Adani Enterprises slid the most by 6.47% after block deal, followed by Max India that fell by 3.92% and Piramal Healthcare that shed 3.86%.
Viewing volumes
Anil Dhirubhai Ambani Group firm - Reliance Natural Resources saw highest trading with over 0.90 crore shares changing hands on the BSE, followed by diversified conglomerate - Adani Enterprises (0.55 crore shares), India's largest developer - Unitech (0.49 crore shares), Iron and steel maker - Sesa Goa (0.49 crore shares) and India's leading steel maker - Tata Steel (0.42 crore share).
Turnover spurts as traders roll over positions to June 2010 series
Nifty June 2010 futures at discount to spot price
Nifty June 2010 futures were at 4,985, at a discount of 18.10 points compared to spot closing of 5,003.10. Turnover in NSE's futures & options (F&O) segment jumped to Rs 1,54,507.23 crore from Rs 1,32,052.82 crore on Wednesday, 26 May 2010 as traders rolled over positions in the derivatives segment from May 2010 series to June 2010 series ahead of the expiry of the near-month May 2010 contracts today, 27 May 2010.
Infosys Technologies June 2010 futures were at discount at 2645 compared to the spot closing of 2655.
Suzlon Energy June 2010 futures were near spot price at 58.50 compared to the spot closing of 58.25.
Reliance Industries June 2010 futures were at premium at 1030.40 compared to the spot closing of 1024.55.
In the cash market, the S&P CNX Nifty rose 85.70 points or 1.74% at 5,003.10.
Asian stocks rise further
Markets rise for a second day on risk appetite, commodity prices
Asian stock markets added impressive gains for a second day, notwithstanding a late sell off in the US markets overnight as strong commodity prices and a continued recovery in the Euro supported the sentiments. The markets were also given a life by optimistic US economic data and very positive cues from the US stock futures throughout the day. The single currency added sharp gains on reports stating China would not be reviewing its euro holdings, ending a speculation that had riffed the markets in the last few days as the Euro tumbled to four year lows against the dollar.
The Australian market rose on miners as speculation that the Australian Government might amend its super tax proposals, as well as the smart rally in local currency against the US dollar supported the sentiments. The benchmark S&P/ASX200 Index advanced 72.00 points, or 1.67% and closed at 4,379, while the All-Ordinaries Index ended at 4,399, representing a gain of 68.70 points, or 1.59%.
On the economic front, data released by the Australian Bureau of Statistics revealed that capital spending by private sector companies in the country recorded a small decrease between January and March. Further, the report noted that most companies have also toned down their investment spending plans for the rest of the financial year, suggesting that the economic recovery may be less robust than previously thought. As per the report, private sector industries' capital expenditure between January and March fell a seasonally adjusted 0.2% compared to the preceding quarter. It follows a 6.1% increase in the previous quarter. Total capital expenditure amounted to A$27.70 billion during the three-month period.
The Japanese stock market ended in positive territory, lifted by exporters in late trading session as the local currency, yen, eased after sharp gains in the last session on signs of stability in the Euro zone. Exporters led the gains as a weaker yen boosts export realizations from abroad when converted into local currency. The benchmark Nikkei 225 Index added 117.06 points, or 1.2%, to 9640 while the broader Topix index of all First Section issues was up 10.89 points, or 1.3%, to 870.
On the economic front, a report released by the Ministry of Finance in Japan revealed that the country registered a merchandise trade surplus of 742.262 billion yen in April, topping forecasts for a surplus of 700.5 billion yen, following 948.9 billion yen surplus recorded in March. On an annual basis, trade surplus was up by 1,415.2% over surplus of 48.988 billion yen reported in the same month last year. The report further revealed that exports surged 40.4% on year to 5.889 trillion yen - beating forecasts for a 38.3% annual increase after jumping 43.5% in the previous month.
Chinese markets rose for a second day as markets sniffed the country's central bank delaying its monetary tightening campaign slightly given the recent turbulence in the global markets and seek an assessment of the Euro zone impact on the Chinese export demand. The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, climbed 30.13, or 1.2 percent, to 2,655.92 at the close. The CSI 300 Index rose 1.6% to 2,859.98. Concern that the government will step up measures to curb property speculation and government debt in Europe will prevent nations from bolstering their economies has dragged the Shanghai Composite down 19 percent this year.
In Mumbai, stocks were flying right from the start and heavy buying was seen in blue chips. The Sensex closed at 16677, up 289 points and the Nifty was at 5003, up 85 points, as per provisional data. Banks rose and the sentiments were seen getting stronger on reports of the monsoon reaching the Indian coasts in the next three-four days. The rebound in sensex from levels near 16000 earlier in the week also proved critical.
In other markets, Hang Seng in Hong Kong added 1.22% while Straits Times in Singapore rose1.62% while the TSEC in Taiwan moved up 1.06%
In commodities, crude oil rose sharply on tremendous risk appetite. July WTI gained $1.79 to $73.30 a barrel, hitting a high of $73.67 earlier in the electronic session. Dollar is unable to garner much of gains and trades above 1.2300 against the Euro. Gold hit highs near 1220 and eased as rising equities led to some profit selling.
BSE Bulk Deals to Watch - May 27 2010
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
27/5/2010 530093 Ace India KIRIT RAMANLAL SHAH B 22217 31.44
27/5/2010 530093 Ace India PRISM SHARE TRADING SERVICES PRIVATE LIMITED S 26108 31.45
27/5/2010 531591 Bampsl Sec PRAKASHCHAND GUPTA B 376600 1.35
27/5/2010 531591 Bampsl Sec BHAGWANSAHAIKHANDELWAL B 375000 1.36
27/5/2010 531591 Bampsl Sec SUNDERDASS AGARWAL B 376000 1.36
27/5/2010 531591 Bampsl Sec KAUSHALYA GARG S 430000 1.35
27/5/2010 531591 Bampsl Sec ANJALI KAUSHIK S 429752 1.36
27/5/2010 500019 Bank of Rajasthan SURBHI INVESTMENTS & TRADING COMPANY PRIVATE S 914154 160.28
27/5/2010 501430 Bombay Cycle KAMDHENU COMMERCIALS PVT LTD. B 3050 63.00
27/5/2010 501430 Bombay Cycle M A PRADHAN S 2100 63.00
27/5/2010 511628 Brescon Corp RAVINDRA KUMAR TOSHNIWAL B 45000 102.00
27/5/2010 511628 Brescon Corp RAMESHWARLALTOSHNIWAL B 45000 102.00
27/5/2010 511628 Brescon Corp SHALEEN TOSHNIWAL B 40642 102.00
27/5/2010 511628 Brescon Corp PINKY EXHIBITORS PRIVATE LIMITED S 130642 102.00
27/5/2010 509499 Centron Indl ANJALI TALWAR S 11000 30.35
27/5/2010 532456 Compuage Info NiravJaysukhbhai Doshi B 156333 135.69
27/5/2010 532456 Compuage Info NiravJaysukhbhai Doshi S 156333 135.72
27/5/2010 512361 Cupid Trades PARVATIMINERALS PRIVATELTD B 10000 54.00
27/5/2010 512361 Cupid Trades SHAMANJWALI PVT LTD S 10000 54.00
27/5/2010 532903 Dhanus Tech IFCI VENTURE CAPITAL FUND LTD S 150000 14.05
27/5/2010 526473 Elegant Flori BHANDARI HEMANT AMOLAKCHAND B 91036 8.49
27/5/2010 526473 Elegant Flori AMITVIJAYKUMARMAHAJAN S 100000 8.49
27/5/2010 531601 Gujarat Capital NIDHI MAHENDRA SHAH B 105849 49.19
27/5/2010 531601 Gujarat Capital MITTAL SECURITIES FINANCE LIMITED B 125000 49.20
27/5/2010 532770 Hanung Toys CROSSEAS CAPITAL SERVICES PRIVATE LIMITED B 134199 211.30
27/5/2010 532770 Hanung Toys CROSSEAS CAPITAL SERVICES PRIVATE LIMITED S 134199 211.34
27/5/2010 514312 Jaihind Syn VANDANA VIMAL MEHTA B 50000 10.30
27/5/2010 530255 KAY Power BAMPSL SECURITIES LTD B 166448 15.08
27/5/2010 530255 KAY Power BAMPSL SECURITIES LTD S 117470 14.32
27/5/2010 530255 KAY Power SUNIL KUMAR GUPTA S 60000 15.03
27/5/2010 509011 Livingroom Life SHAKERA JEHANGIR NAGREE S 29500 44.60
27/5/2010 530039 Lords Chemicals VINOD SHARES LTD B 25002 37.66
27/5/2010 530039 Lords Chemicals VINOD SHARES LTD S 25002 37.66
27/5/2010 502250 Marathwada Refrac ABHA DALMIA S 5000 401.00
27/5/2010 590111 MASTER SATYANARAYANA VARAPRASAD GARIKIPATY B 30060 35.17
27/5/2010 590111 MASTER JAYA VEER V. DURGA PRAKASH M. B 26983 34.93
27/5/2010 590111 MASTER BALA RAMA VENKATA SIVA NAGA S S 80010 35.33
27/5/2010 590111 MASTER JAYAVEERAPRAKASH MADDULA S 28600 35.23
27/5/2010 590111 MASTER JAYAKIRAN KUMAR S 27000 34.93
27/5/2010 531496 Omkar Overseas JYOTIBEN OMPRAKASH PUNJABI B 40008 74.20
27/5/2010 531496 Omkar Overseas TEKCHANDHARISH DUA B 25000 74.00
27/5/2010 531496 Omkar Overseas SARDA MADHUSUDAN NARAYANLAL B 25000 74.30
27/5/2010 531496 Omkar Overseas PRANALI COMMODITIES PVT.LTD S 30000 78.63
27/5/2010 531496 Omkar Overseas JYOTIBEN OMPRAKASH PUNJABI S 40008 73.69
27/5/2010 512097 Oregon Comm PARESHRAMJIBHAI CHAUHAN B 6949 316.31
27/5/2010 512097 Oregon Comm PRAVINBHAI DADUJITHAKOR B 6004 316.53
27/5/2010 512097 Oregon Comm AMUL GAGABHAI DESAI S 5200 312.13
27/5/2010 590077 Ranklin Sol MEDEPUDI NAGENDRA BABU B 30015 75.32
27/5/2010 590077 Ranklin Sol RAMESH KUMAR TUMMAPALA B 29332 74.39
27/5/2010 590077 Ranklin Sol BALA RAMA VENKATA SIVA NAGA S S 68300 73.32
27/5/2010 532918 Rathi Bars WALLFORT FINANCIAL SERVICES LTD B 100000 19.09
27/5/2010 532918 Rathi Bars PRAGYA EQUITIES PRIVATE LIMITED B 119633 18.97
27/5/2010 532918 Rathi Bars BP FINTRADE PRIVATE LIMITED B 122035 20.37
27/5/2010 532918 Rathi Bars SAINATH HERBAL CARE MARKETING P.LTD S 274781 18.70
27/5/2010 532918 Rathi Bars PRAGYA EQUITIES PRIVATE LIMITED S 119633 19.51
27/5/2010 532884 Refex Refr ELLKAY DEVELOPERS PVT LTD S 83536 25.45
27/5/2010 512359 Rotam Comm KRUNAL GOPALDAS RANA B 7000 82.70
27/5/2010 512359 Rotam Comm KRUPA SANJAY SONI B 5300 82.70
27/5/2010 512359 Rotam Comm KRUNALGOPAL DASRANA B 7300 82.71
27/5/2010 512359 Rotam Comm BHARAT A PANCHAL S 7418 82.70
27/5/2010 512359 Rotam Comm KAPILABENRASIKLAL PANDYA S 14965 82.72
27/5/2010 533056 SARK SYS MV TRADECOM PRIVATE LIMITED B 91922 42.40
27/5/2010 533056 SARK SYS SHRIRAM TIBREWALA B 50000 42.35
27/5/2010 513097 Shivalik Bimet SAINATH HERBAL CARE MARKETING P.LTD B 153956 34.51
27/5/2010 590091 TRINETHRA IN BALA RAMA VENKATA SIVA NAGA S S 229411 37.63
27/5/2010 532765 Usher Agro ASHA AND ASSOCIATES PRIVATE LIMITED B 132000 76.99
27/5/2010 532372 Virinchi Tech VIKASLAXMAN DEVAKAR S 94000 15.09
27/5/2010 531249 Well Pack Papers ADHAU RAVI B 400000 38.68
27/5/2010 531249 Well Pack Papers VISHAL PARE S 473500 38.63
27/5/2010 522108 Yuken India KANCHAN CHHABRA B 58111 197.24
27/5/2010 522108 Yuken India KANCHAN CHHABRA S 58111 190.36
* B - Buy, S - Sell
NSE Bulk Deals to Watch - May 27 2010
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
27-MAY-2010,ALKALI,Alkali Metals Limited,MBL & COMPANY LTD.,BUY,70610,112.51,-
27-MAY-2010,BANKRAJAS,Bank Of Rajasthan Ltd,SURBHI TRADING CO, PVT LTD,BUY,687989,159.85,-
27-MAY-2010,BIRLAPOWER,Birla Power Solutions Ltd,EDELWEISS ESTATES P LTD,BUY,5366621,2.40,-
27-MAY-2010,CINEVISTA,Cinevistaas Limited,SACHIN JAIN,BUY,644000,7.40,-
27-MAY-2010,GTL,GTL Limited,SOCIETE GENERALE,BUY,521250,388.51,-
27-MAY-2010,HANUNG,Hanung Toys and Textiles,CROSSEAS CAPITAL SERVICES PVT. LTD.,BUY,134199,210.95,-
27-MAY-2010,ONMOBILE,OnMobile Global Limited,ICICI PRUDENTIAL LIFE INSURANCE COMPANY LTD,BUY,300000,262.00,-
27-MAY-2010,TARAPUR,Tarapur Transformers Ltd,RAINDROP FINANCIAL SERVICES PVT LTD,BUY,120084,39.17,-
27-MAY-2010,ALKALI,Alkali Metals Limited,MBL & COMPANY LTD.,SELL,70610,112.46,-
27-MAY-2010,BANKRAJAS,Bank Of Rajasthan Ltd,SURBHI TRADING CO, PVT LTD,SELL,1944800,159.87,-
27-MAY-2010,BIRLAPOWER,Birla Power Solutions Ltd,EDELWEISS ESTATES P LTD,SELL,5366621,2.30,-
27-MAY-2010,CINEVISTA,Cinevistaas Limited,Minal Patel,SELL,315000,7.37,-
27-MAY-2010,CINEVISTA,Cinevistaas Limited,SACHIN JAIN,SELL,643229,7.48,-
27-MAY-2010,DHANUS,Dhanus Technologies Limit,IFCI VENTURE CAPITAL FUND LTD,SELL,150000,14.04,-
27-MAY-2010,HANUNG,Hanung Toys and Textiles,CROSSEAS CAPITAL SERVICES PVT. LTD.,SELL,134199,211.25,-
27-MAY-2010,MLL,Mercator Lines Limited,M/S MACQUARIE BANK LIMITED,SELL,1464434,44.60,-
27-MAY-2010,NOIDATOLL,Noida Toll Bridge Company,MACQUARIE BANK LIMITED,SELL,1336600,26.87,-
27-MAY-2010,ORCHIDCHEM,Orchid Chemicals Ltd.,BARCLAYS CAPITAL MAURITIUS LIMITED,SELL,425758,132.92,-
27-MAY-2010,TARAPUR,Tarapur Transformers Ltd,RAINDROP FINANCIAL SERVICES PVT LTD,SELL,120184,39.20,-
Bank, oil stocks lead rally
Bulls were back with a bang as the key benchmark indices surged for the second straight day on firm global stocks after China signalled support for the euro zone. The BSE 30-share Sensex jumped 278.56 points or 1.76%, up close to 335 points from day's low and off close to 25 points from the day's high. The 50-unit S&P CNX Nifty regained the psychological 5,000 mark. Bank and oil shares led the rally.
From a recent low of 16,022.48 on Tuesday, 25 May 2010, the Sensex has jumped 643.92 points or 4.01% in the past two trading sessions. The Sensex has lost 1302.62 points or 7.25% from a recent peak of 17,970.02 on 7 April 2010. The barometer index has lost 798.41 points or 4.57% in calendar 2010 after jumping 81% in 2009.
Coming back to today's trade, the market breadth was strong. Metal stocks gained as copper futures rose on Thursday. Auto shares advanced ahead of May 2010 sales figures due to be announced next week. Capital goods and IT pivotals gained on fresh buying.
Stocks were volatile as traders rolled over positions in the derivatives segment from May 2010 series to June 2010 series ahead of the expiry of the near-month May 2010 contracts today, 27 May 2010. The market recovered from lower level after an initial slide, mirroring a recovery in Asian stocks. The market extended gains in morning trade. Stocks came off the higher level in mid-morning trade.
Fresh buying pushed the key benchmark indices to the day's high in early afternoon trade. The market pared gains in afternoon trade after hitting a fresh intraday high. The market regained strength in mid-afternoon trade on firm European stocks. Stocks extended gains in late trade.
NSE's volatility index India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, tumbled 9.77% to 29.01, extending Wednesday's 6.87% slide. India VIX is calculated based on the S&P CNX Nifty options prices. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days.
As per provisional data, foreign institutional investors (FIIs) today, 27 May 2010, sold stocks worth a net Rs 533.07 crore. Domestic funds bought equities worth a net Rs 410.44 crore. FIIs have dumped shares worth a net Rs 13,067.32 crore so far this month, till 27 May 2010, according to data from the stock exchanges. They had bought stocks worth a net Rs 2667.35 crore last month. Domestic funds have bought stocks worth a net Rs 6,092.31 crore so far this month, till 27 May 2010.
In an attempt to create a level-playing field with the retail investors, the market regulator Securities & Exchange Board of India (Sebi) reportedly proposes to change margin requirement norms for institutional investors so that these investors settle the margin requirement on the same day.
Meanwhile, the Reserve Bank of India (RBI) on Wednesday eased rules to boost liquidity at banks to avoid a cash crunch because of payments for corporate advance tax and license fees for third-generation mobile-phone spectrum. As per RBI's circular released on 26 May 2010, banks can borrow as much as 0.5% of their deposits from the central bank under the repurchase agreement till 2 July 2010. In addition, RBI said that as an ad hoc measure, banks can seek a waiver for any shortfall in maintenance of the prescribed 25% statutory liquidity ratio (SLR) while availing the temporary facility.
Besides, the central bank has decided to conduct two rounds of liquidity adjustment facility (LAF) operations till 2 July 2010. Through LAFs, that are conducted at least once a day, banks can avail of funds through the repo window or park surplus cash through the reverse repo route.
European shares edged higher on Thursday, tracking gains in Asian stocks and after China denied a report it was looking to cut its holdings of euro zone sovereign debt. The key benchmark indices in France, Germany and UK were up by between 1.82% to 2.22%.
China State Administration of Foreign Exchange (Safe), the agency which manages the nation's reserves, said Thursday that media reports that it is considering selling some of it holdings of euro-bonds are "groundless". Safe also said it supports measures taken by the European Union and the International Monetary Fund to ensure financial stability within the euro zone and is confident markets will overcome the recent difficulties.
Safe also said it views the euro zone as one of the most important investment markets and a key component in its strategy to hold diversified investments for the long term. Worries about the health of the European economy have been at the core of recent turbulence in global financial markets.
Asian stocks jumped after staging an intra-day reversal in early trade. The key benchmark indices in Hong Kong, China, Indonesia, Japan, South Korea, Singapore and Taiwan were up by between 0.64% to 1.62%.
Japan's exports jumped 40.4% to 5.9 trillion yen in April 2010 from a year earlier, marking the fifth straight monthly year-on-year increase, boosted by global demand for Japanese cars and semiconductors.
US markets declined in volatile trading session on Wednesday on selling pressure in financial and technology stocks. The Dow Jones Industrial Average slipped 69.30 points, or 0.69%, at 9,974.45. The S&P 500 was down 6.08 points, or 0.57%, to 1067.95. The Nasdaq was down 15.07 points, or 0.68%, at 2195.88.
Data released on Wednesday showed new home sales rose 14.8% to a seasonally adjusted rate of 504,000 in April 2010, up from an upwardly revised 439,000 in March 2010.
Trading in US index futures indicated that the Dow could jump 199 points at the opening bell on Thursday, 27 May 2010.
China, India, Brazil and Russia are powering ahead, the Organisation for Economic Cooperation and Development (OECD) said on Wednesday, 26 May 2010, revising upwards its growth outlook for all four largest emerging economies. The OECD revised India's GDP growth forecast for 2010 to 8.2% from its earlier estimate of 7.3%. It also raised the growth forecast for 2011 to 8.5% from its earlier estimate of 7.6%. The OECD also said that underlying inflationary pressures are likely to persist given the strong outlook for demand.
In its World Economic Outlook in April 2010, the International Monetary Fund (IMF) pegged India's GDP growth forecast at 8.75% in calendar 2010 and 8.5% in calendar 2011. IMF's optimism was based on expectations of strengthening of domestic demand as the labour market improves. Expectations of increase in investment on the back of strong corporate profitability, rising business confidence and favourable financing conditions, were other factors cited by IMF for its prediction of strong growth in India's economy.
Prime Minister Manmohan Singh early this week said inflation is showing signs of moderating and the government expects to achieve a medium term target of 10% GDP growth annually. The Prime Minister said he expects inflation to moderate to 5-6% by December 2010. Singh expects 8.5% GDP growth in the year ending March 2011 (FY 2011).
The RBI expects India's economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias, assuming a normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand. The RBI at its annual policy review on 20 April 2010 said it will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted.
The monsoon rains are likely to hit the country's southern coast in three to four days, the India Meteorological Department said in its latest forecast on Thursday. Conditions are becoming favourable for onset of southwest monsoon over Kerala during next 3-4 days, the weather office said.
The weather office had said late last week that rains were on track to hit the country's southern coast on 30 May 2010, and the Laila cyclone in the Bay of Bengal would not derail the vital June-September rainfall. The India Meteorological Department (IMD) in late April 2010 said rainfall is likely to be 98% of the long-term average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.
The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The quantum of rainfall in the crucial sowing month of July and distribution of rainfall during the monsoon season also holds key.
The fourth quarter corporate results have been decent. The combined net profit of a total of 2,570 companies rose 18.5% to Rs 68967 crore on 23.8% rise in sales to Rs 675845 crore in the quarter ended March 2010 over the quarter ended March 2009.
The BSE 30-share Sensex rose 278.56 points or 1.76% to 16,666.40. The index fell 56.74 points at the day's low of 16,331.10 in early trade. The Sensex rose 306.71 points at the day's high of 16,694.55 in late trade.
The S&P CNX Nifty jumped 85.70 points or 1.74% to 5,003.10.
The BSE Mid-Cap index rose 0.93% and the BSE Small-Cap index rose 0.77%. Both the indices underperformed the Sensex.
All the sectoral indices on BSE rose. Banking sector index Bankex (up 2.55%), BSE Auto index (up 2.1%) and Oil & Gas index (up 2.09%), outperformed the Sensex. BSE Realty index rose 1.7% and matched Sensex's gains. BSE Consumer Durables index (up 0.63%), IT index (up 0.75%), Healthcare index (up 0.85%), Metal index (up 1.41%), Power index (up 1.43%), PSU index (up 1.51%) FMCG index (up 1.55%) and Capital Goods index (up 1.63%) and underperformed the Sensex.
The market breadth, indicating the overall health of the market, was strong. The breadth strengthened as trading progressed. On BSE, 1669 shares advanced as compared with 1128 that declined. A total of 89 shares remained unchanged.
The total turnover on BSE amounted to Rs 3809 crore, higher than Rs 3234.39 crore on Wednesday, 26 May 2010.
From the 30 share Sensex pack, 26 stocks gained while only 4 of them slipped.
Auto shares advanced ahead of May 2010 sales figures due to be announced next week. India's top truck maker by sales Tata Motors surged 4.74%, extending Wednesday's 5.28% rally. It was the top gainer from the Sensex pack.
The company posted consolidated net profit of Rs 2571.06 crore for the year ended March 2010 (FY 2010) as compared with net loss of Rs 2505.25 crore in the year ended March 2009 (FY 2009). The result was announced after trading hours today.
India's largest tractor maker by sales Mahindra & Mahindra rose 1.78%, with the stock gaining for the second straight day after the company during market hours on Wednesday, 26 May 2010, said it has entered into high growth electric car segment by acquiring a majority 55.2% equity stake in Reva Electric Car Company. The company will announce its Q4 result on Saturday, 29 May 2010.
India's largest small car maker by sales Maruti Suzuki India rose 2.79%, with the stock rebounding from a three-day slide on bargain hunting.
Metal stocks gained as copper prices surged on better-than-expected US economic data. India's largest steel maker by sales Tata Steel rose 1.76% to Rs 493, staging a sharp rebound from day's low of Rs 473.40. Tata Steel reported consolidated net loss of Rs 2,009.22 crore in the year ended March 2010 (FY 2010) compared with a net profit of Rs 4950.09 crore in the year ended March 2009 (FY 2009). Total income decreased 29.82% to Rs 103578.97 crore in FY 2010 over FY 2009. The results were announced after market hours on Wednesday, 26 May 2010.
Sterlite Industries (up 4.26%), Hindalco Industries (up 0.44%), Hindustan Zinc (up 1.33%), Sesa Goa (up 3.83%), Steel Authority of India (up 0.53%), and JSW Steel (up 2.21%), edged higher.
Index heavyweight Reliance Industries (RIL) advanced 1.44% to Rs 1021.85, rebounding from day's low of Rs 1002.15. The company is reportedly evaluating acquiring or forming joint ventures for two shale gas assets in the US.
Oil exploration stocks gained after crude oil rose on Wednesday, 26 May 2010. India's largest oil & gas exploration firm by sales Oil & Natural Gas Corporation rose 4.64%. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms. Crude oil for July delivery rose $2.36 or 3.4% to $71.11 per barrel on the New York Mercantile Exchange on Wednesday, 26 May 2010 after a US government report showed demand for fuels rose to the highest level since January 2009 and durable goods orders increased.
Cairn India rose 1.29%. Consolidated net profit jumped 53% to Rs 1051.10 crore on 45% increase in operating revenue to Rs 1623 crore in the year ended March 2010 over the year ended March 2009. The results were announced after trading hours today.
Oil India rose 1.63% after the company reported 509.17% rise in net profit to Rs 430.99 crore on 34.02% rise in net sales to Rs 1832.14 crore in Q4 March 2010 over the Q4 March 2009.
Shares of state-run oil marketing stocks on reports of a fuel price hike next month. A meeting of the empowered group of minister (eGoM) is scheduled on 7 June 2010 to discuss fuel pricing. HPCL (up 3.72%), and Indian Oil Corporation (up 4.87%), gained.
BPCL rose 3.25%. Net profit declined 80.61% to Rs 703.18 crore on 40.7% rise in total income to Rs 38158.70 crore in Q4 March 2010 over Q4 March 2009. The result was announced at the fag end of the trading session today, 27 May 2010.
Banking pivotals gained on fresh buying. India's largest private sector bank by net profit ICICI Bank rose 1.06% to Rs 856.60, recovering from day's low of Rs 833. India's second largest private sector bank by net profit HDFC Bank rose 3.78% to Rs 1894.95, recovering sharply from the day's low of Rs 1,811.45
India's largest commercial bank by net profit and branch network State Bank of India rose 2.01% to Rs 2251.70. Among other PSU banks, Bank of Baroda, Bank of India and Punjab National Bank rose by between 1.1% to 4.9%.
Capital goods pivotals gained on fresh buying. India's largest engineering and construction firm by sales Larsen & Toubro rose 1.69%, with the stock gaining for the second straight day. At the time of announcing Q4 March 2010 results on 17 May 2010, L&T's management gave a guidance of 20% growth in revenue and 25% growth in new orders in the current financial year.
India's largest equipment maker by sales Bharat Heavy Electricals rose 1.94%. Net profit jumped 41.71% to Rs 1909.58 crore in Q4 March 2010 over Q4 March 2009. The company announced the result during market hours on Wednesday, 26 May 2010.
IT pivotals rose on renewed buying. India's largest software services exporter by sales TCS rose 0.65%. India's second largest software services exporter by sales Infosys rose 0.95% and India's third largest software services exporter by sales Wipro was up 1.15%.
Some realty stocks rose for the second straight day on bargain hunting after a recent steep slide. Sobha Developers, DLF, Unitech, Omaxe, Orbit Corporation, Ackruti City, Parsvnath Developers rose by between 0.13% to 3.49%.
Lodha Developers on Tuesday, 25 May 2010, paid more than twice the asking price to win a 25,000-square meter plot of land in the central Mumbai suburb of Wadala for Rs 4050 crore.
Cals Refineries clocked the highest volume of 7.91 crore shares on BSE. Birla Power Solutions (1.64 crore shares), Reliance Natural Resources (90.38 lakh shares), Adani Enterprises (55.56 lakh shares) and Unitech (49.88 lakh shares) were the other volume toppers in that order.
Adani Enterprises clocked the highest turnover of Rs 301.78 crore on BSE. Tata Steel (Rs 209.06 crore), Sesa Goa (Rs 165.53 crore), State Bank of India (Rs 112.89 crore) and Tata Motors (Rs 109.76 crore) were the other turnover toppers in that order.
Sensex at day's high as auto stocks rally
Key benchmark indices advanced to the day's high in morning trade mirroring recovery in Asian markets. US index futures rose. The BSE 30-share Sensex was up 78.93 points or 0.48% to 16,466.77, up 135.67 points of the day's low and off just 2.77 points from day's high.
The market breadth was positive. Index heavyweights Reliance Industries (RIL) and State Bank of India turned positive after suffering initial losses. Auto stocks gained on fresh buying. Metal stocks saw mixed trend.
Volatility may rise during the day as traders roll over positions in the derivatives segment from May 2010 series to June 2010 series ahead of the expiry of the near-month May 2010 contracts today, 27 May 2010.
Meanwhile, stock brokers have advised clients not to sell shares today which they had bought in the cash segment on Wednesday, 26 May 2010, due to clubbing of settlements due to a bank holiday today, 27 May 2010. There will be no settlement of trades today due to bank holiday.
On the macro front, the government will unveil data on some wholesale price indices for the year through 15 May 2010 viz. the food price index, the primary articles index and the fuel price index at about 12:00 IST today.
Meanwhile, the Reserve Bank of India (RBI) on Wednesday eased rules to boost liquidity at banks to avoid a cash crunch because of payments for corporate advance tax and license fees for third-generation mobile-phone spectrum. As per RBI's circular released on 26 May 2010, banks can borrow as much as 0.5% of their deposits from the central bank under the repurchase agreement till 2 July 2010. In addition, RBI said that as an ad hoc measure, banks can seek a waiver for any shortfall in maintenance of the prescribed 25% statutory liquidity ratio (SLR) while availing the temporary facility.
Besides, the central bank has decided to conduct two rounds of liquidity adjustment facility (LAF) operations till 2 July 2010. Through LAFs, that are conducted at least once a day, banks can avail of funds through the repo window or park surplus cash through the reverse repo route.
Asian stocks extended gains after staging an intra-day reversal. The key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were up by between 0.36% to 1.21%. However, key benchmark indices in China and Indonesia were down 0.02% and 0.05% respectively.
US markets declined in volatile trading session on Wednesday on selling pressure in financial and technology stocks. The Dow Jones Industrial Average slipped 69.30 points, or 0.69%, at 9,974.45. The S&P 500 was down 6.08 points, or 0.57%, to 1067.95. The Nasdaq was down 15.07 points, or 0.68%, at 2195.88.
Data released on Wednesday showed new home sales rose 14.8% to a seasonally adjusted rate of 504,000 in April 2010, up from an upwardly revised 439,000 in March 2010.
Trading in US index futures indicated that the Dow could gain 81 points at the opening bell on Thursday, 27 May 2010.
China, India, Brazil and Russia are powering ahead, the Organisation for Economic Cooperation and Development (OECD) said on Wednesday, 26 May 2010, revising upwards its growth outlook for all four largest emerging economies. The OECD revised India's GDP growth forecast for 2010 to 8.2% from its earlier estimate of 7.3%. It also raised the growth forecast for 2011 to 8.5% from its earlier estimate of 7.6%. The OECD also said that underlying inflationary pressures are likely to persist given the strong outlook for demand.
In its World Economic Outlook in April 2010, the International Monetary Fund (IMF) pegged India's GDP growth forecast at 8.75% in calendar 2010 and 8.5% in calendar 2011. IMF's optimism was based on expectations of strengthening of domestic demand as the labour market improves. Expectations of increase in investment on the back of strong corporate profitability, rising business confidence and favourable financing conditions, were other factors cited by IMF for its prediction of strong growth in India's economy.
Prime Minister Manmohan Singh early this week said inflation is showing signs of moderating and the government expects to achieve a medium term target of 10% GDP growth annually. The Prime Minister said he expects inflation to moderate to 5-6% by December 2010. Singh expects 8.5% GDP growth in the year ending March 2011 (FY 2011).
The RBI expects India's economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias, assuming a normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand. The RBI at its annual policy review on 20 April 2010 said it will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted.
India's monsoon rains are on track to hit the country's southern coast on 30 May 2010, and the Laila cyclone in the Bay of Bengal would not derail the vital June-September rainfall, a weather office spokesman told a news agency last week. The India Meteorological Department (IMD) in late April 2010 said rainfall is likely to be 98% of the long-term average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.
The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The quantum of rainfall in the crucial sowing month of July and distribution of rainfall during the monsoon season also holds key.
The fourth quarter corporate results have been decent. The combined net profit of a total of 2,523 companies rose 17.10% to Rs 68147 crore on 23.90% rise in sales to Rs 670843 crore in the quarter ended March 2010 over the quarter ended March 2009.
The BSE 30-share Sensex was up 78.93 points or 0.48% to 16,466.77 at 10:17 IST. The index fell 56.74 points at the day's low of 16,331.10 in early trade. The Sensex rose 81.70 points at the day's high of 16,469.54 in morning trade.
The S&P CNX Nifty was up 19.20 points or 0.39% to 4936.60
The market breadth, indicating the overall health of the market, was positive. On BSE, 1155 shares advanced as compared with 906 that declined. A total of 80 shares remained unchanged.
The total turnover on BSE amounted to Rs 940 crore by 10:25 IST as compared with Rs 472 crore by 09:25 IST.
From the 30 share Sensex pack, 22 stocks gained while the rest slipped. Bharti Airtel (down 0.95%), TCS (down 0.57%), and Jaiprakash Associates (down 0.46%), edged lower from the Sensex pack.
Oil & Natural Gas Corporation (up 2.16%), ITC (up 1.86%), and Larsen & Toubro (up 1.59%), edged higher from the Sensex pack.
India's largest tractor maker by sales Mahindra & Mahindra surged 2.42%. The company during market hours on Thursday, 26 May 2010, said it has entered into high growth electric car segment by acquiring a majority 55.2% equity stake in Reva Electric Car Company.
Other auto stocks also nudged higher on fresh buying. India's largest small car maker by sales Maruti Suzuki India rose 0.73%. India's largest truck maker by sales Tata Motors advanced 1.66% ahead of its year ended March 2010 (FY 2010) result today, 27 May 2010.
India's largest motorbike maker by sales Hero Honda Motors rose 0.57%. India's second largest motorbike maker by sales Bajaj Auto was up 0.08%.
Index heavyweight Reliance Industries (RIL) rose 0.18% to Rs 1009.20, rebounding from day's low of Rs 1002.15. The company is reportedly evaluating acquiring or forming joint ventures for two shale gas assets in the US.
Banking pivotals saw mixed trend. India's largest private sector bank by net profit ICICI Bank fell 0.95% after its ADR slipped 0.74% on Wednesday. India's second largest private sector bank by net profit HDFC Bank rose 0.38% to Rs 1832.95, recovering from the day's low of Rs 1,811.45
India's largest commercial bank by net profit and branch network State Bank of India rose 0.29% to Rs 2178.50, staging a recovery from day's low of Rs 2,158.25.
India's largest steel maker by sales Tata Steel lost 0.21% after it reported a consolidated net loss of Rs 2,009.22 crore in the year ended March 2010 (FY 2010) compared with a net profit of Rs 4950.09 crore in the year ended March 2009 (FY 2009). Total income decreased 29.82% to Rs 103578.97 crore in FY 2010 over FY 2009.
Other metal stocks saw mixed trend. India's largest private sector aluminium maker by sales Hindalco Industries declined 2.06% to Rs 144.80 and was the top loser from the Sensex pack.
India's largest non-ferrous metal producer by sales Sterlite Industries gained 2.79% to Rs 635.10 and was the top gainer from the Sensex pack.
Grey Market Premiums - Standard Chartered
| Company Name | Offer Price (Rs.) | Premium (Rs.) |
| Standard Chartered PLC | 100 to 115 | Discount |
Flat-to-negative start likely on Asian cues
Headlines for the day:
RBI announces measures to boost liquidity
M&M forays into alternative fuel tech with Reva buy
Realty IPOs face fresh market heat
Events for the day:
Major corporate action
F&O Expiry for the month of May
Weekly inflation to be announced today
Results: Colgate, Cairn India, Tata Motors
For more events, log on to Sharekhan.com
Pre-market report
Global signals
The European shares almost recovered the previous session's losses on Wednesday in a broad market rebound with miners notching up strong gains.
Wall Street staged yet another late-day reversal on Wednesday to end lower as news suggesting China was reassessing its euro-zone debt holdings pushed investors into profit-taking mode.
In today's trade, the Asian markets were trading in red. At the time of writing this report, SGX Nifty was trading 16.5 points lower.
Indian Indices
The Asian indices were lower in their early trade after the Dow Jones industrial average closed below the 10,000 line for the first time in nearly four months on concerns that Europe's debt crisis could stifle the global economic recovery. A fall in the euro against the dollar was main trigger and also was sparked by a media report saying that China is reviewing its holdings of European government bonds due to the debt crisis also sparked selling of the euro.
The Indian equities are likely to start on a flat-to-negative note on back of the weak Asian and US cues. The market sentiment is expected to sluggish following the Asian market path and a fall in Wall street on the fears that Europe's fiscal crisis could cause a slowdown in the global economy. Also going in to the session, the market is expected to remain volatile owing to the F&O expiry for May series and weekly inflation readings, which are to be announced later today.
The earnings of Colgate-Palmolive (India), Cairn India, Gujarat State Petronet, Neyveli Lignite Corporation, Tata Motors and Bharat Petroleum Corporation are later to be announced today — the stocks will be closely eyed.
Commodity cues
In the commodity space, the crude oil prices rose about 4% Wednesday, as world financial markets rebounded from losses, with the Nymex light crude oil for the June series jumped by $2.76 per barrel, whereas in the metals space, the Comex Gold for the June series rose by $15.50 and the Comex Silver for the June series was up by $0.53 to a troy ounce respectively.
Daily trend of FII/MF investment in equities
On May 26, 2010, the FIIs were the net sellers of the Indian stocks to the tune of Rs1421.50 crore, whereas the domestic mutual funds, on May 25, 2010, were the net sellers of the stocks to the tune of Rs432.80 crore.
Expiry of May 2010 derivatives contracts may keep market volatile
Volatility may rise as traders rollover positions in the derivatives segment from May 2010 series to June 2010 series ahead of the expiry of the near-month May 2010 contracts today, 27 May 2010. Trading in S&P CNX Nifty index futures on the Singapore stock exchange indicated that the Nifty could rise 11 points at the opening bell. The government will unveil data on some wholesale price indices for the year through 15 May 2010 viz. the food price index, the primary articles index and the fuel price index at about 12:00 IST today.
Meanwhile, stocks brokers have advised clients not to sell shares today which they had bought in the cash segment on Wednesday, 26 May 2010, due to clubbing of settlements due to a bank holiday today, 27 May 2010. There is no settlement of trades today due to the bank holiday.
Meanwhile, the Reserve Bank of India (RBI) on Wednesday eased rules to boost liquidity at banks to avoid a cash crunch because of payments for tax and license fees for third-generation mobile-phone spectrum. As per RBI's circular released on 26 May 2010, banks can borrow as much as 0.5% of their deposits from the central bank under the repurchase agreement till 2 July 2010.
In addition, RBI said that as an ad hoc measure, banks can seek a waiver for any shortfall in maintenance of the prescribed 25% statutory liquidity ratio (SLR) while availing the temporary facility. Besides, the central bank has decided to conduct two rounds of liquidity adjustment facility (LAF) operations till 2 July 2010. Through LAFs, that are conducted at least once a day, banks can avail of funds through the repo window or park surplus cash through the reverse repo route.
Asian stocks declined on Thursday on rising concern that Chinese property curbs and Europe's debt crisis will hurt global economic growth. The key benchmark indices in Hong Kong, Japan, China, Indonesia, Singapore and Taiwan were down by between 0.36% to 1.72%. However South Korea's Seoul Composite index rose 0.07%.
US markets declined in volatile trading session on Wednesday on selling pressure in financial and technology stocks. The Dow Jones Industrial Average slipped 69.30 points, or 0.69%, at 9,974.45. The S&P 500 was down 6.08 points, or 0.57%, to 1067.95. The Nasdaq was down 15.07 points, or 0.68%, at 2195.88.
Close home, Tata Steel reported a consolidated loss of Rs 2,009.22 crore in the year ended March 2010 compared with a net profit of Rs 4950.09 crore in the year ended March 2009. Total income decreased 29.82% to Rs 103578.97 crore in the year ended March 2010 over the year ended March 2009.
BPCL, Cairn India, Gujarat State Petronet, Omaxe and Tata Motors, will announce their January-March 2010 quarter results today.
Prime Minister Manmohan Singh on Monday said inflation is showing signs of moderating and the government expects to achieve a medium term target of 10% GDP growth annually. The Prime Minister said he expects inflation to moderate to 5-6% by December 2010. Singh expects 8.5% GDP growth in the year ending March 2011 (FY 2011).
The RBI expects India's economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias, assuming a normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand. The RBI at its annual policy review on 20 April 2010 said it will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted.
China, India, Brazil and Russia are powering ahead, the Organisation for Economic Cooperation and Development (OECD) said on Wednesday, 26 May 2010, revising upwards its growth outlook for all four largest emerging economies. The OECD revised India's GDP growth forecast for 2010 to 8.2% from its earlier estimate of 7.3%. It also raised the growth forecast for 2011 to 8.5% from its earlier estimate of 7.6%. The OECD also said that underlying inflationary pressures are likely to persist given the strong outlook for demand.
In its World Economic Outlook in April 2010, the International Monetary Fund (IMF) pegged India's GDP growth forecast at 8.75% in calendar 2010 and 8.5% in calendar 2011. IMF's optimism was based on expectations of strengthening of domestic demand as the labour market improves. Expectations of increase in investment on the back of strong corporate profitability, rising business confidence and favourable financing conditions, were other factors cited by IMF for its prediction of strong growth in India's economy.
India's monsoon rains are on track to hit the country's southern coast on 30 May 2010, and the Laila cyclone in the Bay of Bengal would not derail the vital June-September rainfall, a weather office spokesman told a news agency last week. The India Meteorological Department (IMD) in late April 2010 said rainfall is likely to be 98% of the long-term average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.
The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The quantum of rainfall in the crucial sowing month of July and distribution of rainfall during the monsoon season also holds key.
The fourth quarter corporate results have been decent. The combined net profit of a total of 2,523 companies rose 17.10% to Rs 68147 crore on 23.90% rise in sales to Rs 670843 crore in the quarter ended March 2010 over the quarter ended March 2009.
The key benchmark indices rebounded on Wednesday, 26 May 2010, tracking recovery in world stocks triggered by bargain hunting after a recent sharp slide. The BSE 30-share Sensex rose 365.36 points or 2.28% to 16,387.84 and the S&P CNX Nifty gained 110.65 points or 2.3% to 4,917.40
As per the provisional data from the stock exchanges, foreign institutional investors (FIIs) offloaded stocks worth a net Rs 166.66 crore and domestic funds bought shares worth a net Rs 64.86 crore on Wednesday, 26 May 2010.
Daily News Roundup - May 27 2010
Reliance Industries-RNRL to present gas supply agreement to government in two weeks. (ET)
Reliance Industries may consider buying minority stake in gas-based power plant of Reliance Power. (ET)
Mahindra & Mahindra buys majority stake in electric car maker Reva. (ET)
Bombay High Court refuses to stay state government order asking Tata Power to supply 360MW to Reliance Infra. (ET)
Reliance Industries has suspended drilling of a well in K-G Basin using a rig hired from Transocean. (BS)
IVRCL bags an order worth Rs5.67bn. (BS)
Shopper Stop is close to buy additional 32% stake in Hyper City for 1.25bn. (BS)
GVK Power and Infra to merge all power units under one sub holding company. (BL)
HPCL plans to set-up Rs300bn refinery on the west coast. (ET)
DLF seeks to revive SEZ in kolkatta. (ET)
Ranbaxy seeks US FDA approval for selling a new drug made in a factory, which is under scrutiny of the US regulator. (ET)
SpiceJet to raise US$75mn for capex. (ET)
Bajaj Electrical plans acquisitions in home appliance space. (ET)
Mukund may sell its Thane land for Rs6bn. (ET)
Telecom companies have raised Rs360bn to pay for 3G spectrum. (ET)
RBI announces measures to overcome short-term liquidity crunch; cuts SLR by 50bps. (ET)
Government announces measures to stream line and speed-up its disinvestment of PSUs. (ET)
Broadband Wireless Access (BWA) auction bids cross Rs100bn on 3rd day. (ET)
Government frees import of radial tyres by removing it from the restricted list. (BL)
Food inflation to come down to 5% till November says planning commission member Abhijit Sen. (ET)
Sugar industry seeks lifting of stock limit on bulk users. (ET)
F&O choppiness…brace for swings!
An idea that is developed and put into action is more important than an idea that exists only as an idea - Buddha.
Given the current action in the markets, the bulls seem to have no idea what to do. Today’s F&O expiry will only add to the choppiness as we brave for a negative end to the May series. To begin with we expect a shaky start as most Asian markets are trading lower. Besides, the anxiety over the external environment remains. Results are still pouring in, which may impact the concerned stocks. The Reliance packs could once again be in spotlight on news of fresh collaboration between the two Ambani siblings.
Notwithstanding Wednesday’s big bounce the overall scenario remains quite volatile and uncertain with a negative bias. The Dow Jones erased early gains to end below 10,000 despite a couple of encouraging economic reports. The late selling came as the euro dipped below $1.22 on reports that China is reviewing its holding of the shared currency. The dollar index rose above 87. Crude is hovering around $70 a barrel. Gold is trading above $1210.
Risk-reward continues to be unfavourable and may remain so in the short term. Avoid needless bravado and wait for some more declines before snapping up your favorite stocks.
Results Today: BPCL, BPL, Britannia, Cairn India, Colgate, DB Corp., DS Kulkarni, Engineers India, Essar Shipping, GSPC, GSPL, Jagran, Nagarjuna Fertilizers, National Fertilizers, Neyveli Lignite, Omaxe, Orchid Chem, Royal Orchid Hotels, Sangam India, Tata Motors Vakrangee Software and ZF Steering.
FIIs were net sellers of Rs1.66bn in the cash segment on Wednesday on a provisional basis, according to the NSE data. The local institutions were net buyers at Rs648.6mn on the same day. In the F&O segment, the foreign funds were net buyers of Rs19.81bn. On Tuesday, FIIs were net sellers of Rs14.22bn in the cash segment, according to the SEBI data.
US stocks retreated from session highs to close slightly lower on Wednesday, with the Dow slipping below 10,000 for the first time in three months. A drop in the euro below a key threshold spooked investors on reports that China might review its holding of the euro-zone common currency.
The Dow Jones Industrial Average shed nearly 70 points, or 0.7%, at 9,974.45, ending at the lowest point since Feb. 8. The S&P 500 index lost 6 points, or 0.6%, to 1,067.95, and the Nasdaq Composite index was down 15 points, or 0.7%, to 2,195.88.
This was the first time the blue chip Dow closed below 10,000 since early February. It had risen as much as 135 points during the day.
On the S&P 500, industrials were the only sector of 10 that managed to cling to gains. Telecoms and tech stocks led declines.
All three US stock indexes are down for the week and the month.
For every stock declining, fewer than two were on the rise at the New York Stock Exchange, where nearly 1.9 billion shares traded hand.
The CBOE Volatility index (VIX), Wall Street's fear gauge, ended modestly higher after having fallen through most of the session. The VIX had dropped as much as 13% as the market initially rallied, but turned higher when stocks fell.
The dollar index rose to 87.23 from 86.799 in late North American trading on Tuesday.
A stronger dollar hurts US exports overseas. Also, a weaker euro reflects many investors' concerns about European growth and its impact on the global economic recovery.
US stocks seemed to react to a late-day dip in the euro below $1.22, after the Financial Times said that China is reviewing its euro-zone debt holdings in the wake of Europe's financial problems.
China's State Administration of Foreign Exchange, which manages the reserves, has expressed concerns about its exposure to the five euro-zone markets of Greece, Ireland, Italy, Portugal and Spain, the newspaper said.
The euro fell below to $1.2185 from $1.2308 late Tuesday.
Crude oil futures climbed above $71 a barrel even as the government reported a bigger-than-expected increase in inventories. US light crude oil for July delivery rose $2.76 to settle at $71.51 a barrel on the New York Mercantile Exchange, a gain of over 4%.
COMEX gold for June delivery rose $15.40 to settle at $1,213.40 an ounce.
Treasury prices tumbled, raising the yield on the 10-year note to 3.24% from 3.16% late on Tuesday.
In the day's economic news, new home sales jumped 15% in April, thanks to still-low mortgage rates and a homebuyer tax credit that expired at the end of last month. Sales rose to a seasonally adjusted rate of 504,000 from a revised 439,000 in the previous month. Economists expected sales of 425,000.
Another report released before the start of trading showed that durable goods orders rose 2.9% in April, versus forecasts for a gain of 1.5%. Goods orders were flat in March, a revision on an earlier reading that showed a drop in orders.
However, orders excluding transportation fell 1% after rising 4.8% in the previous month. Economists thought orders excluding transportation would rise 0.7%.
European shares ended higher, with investors picking up shares of companies battered by heavy selling in the previous session.
After a 2.5% downturn on Tuesday, the Stoxx Europe 600 index rose 2.5% to 237.95, with markets volatile amid worries that sovereign-debt issues will curtail growth and spur a rerun of the 2008 banking crisis.
The Organization for Economic Cooperation and Development (OECD) said that economic growth across the world's developed economies is picking up faster than expected, even in Europe, although it did highlight that sovereign debt poses a risk to recovery.
Italy joined other European countries in setting out austerity measures to bring its debt down. The FTSE MIB index rose 2.9% to 18,921.75. Read more on Italy. The French CAC-40 index climbed 2.3% to 3,408.59, the UK FTSE 100 index moved back over 5,000 to close up 2% at 5,038.08 while the German DAX index jumped 1.6% to 5,758.02.
BP shares climbed 1.4%, reversing early losses. The oil giant is attempting a "top-kill" procedure to stem the Gulf of Mexico oil spill. BP said the procedure may take up to two days and warned that the live video feed that Congress forced the company to set up may "not provide a reliable indicator of the overall progress, of success or failure, of the top kill operation as a whole."
Burberry shares jumped 7.6%. The luxury retailer swung to a fiscal-year net profit of 81.4 million pounds ($116.9 million), as exceptional charges fell sharply and sales of shoes and non-apparel accessories climbed.
Portugal Telecom shares rose 6% after the finance director of Spanish telecom giant Telefonica said in an interview published in the Financial Times that the company could launch a hostile takeover bid for Portugal Telecom if the Portuguese group won't sell its share of Brazilian mobile-phone joint venture Vivo. Telefonica shares advanced 0.5%. Read more on possible Telefonica deal.
Deutsche Telekom climbed 1.6%. The company said the head of its T-Mobile USA subsidiary said its veteran CEO would step down next year in a move that signals DT is looking for new ideas to help it regain its footing in this key market.
L'Oreal shares rose 2.9% after the cosmetics company was upgraded to buy from neutral at UBS.
After the bloodbath in previous trading session, bulls were back with a bang thanks to overnight recovery in the US markets. Asian markets rebounded after the Dow Jones staged remarkable come back on Wall-Street. Europe which ended sharply lower on Tuesday also followed suit.
"Similarly, the NSE Nifty opened with a gap up and stayed in a narrow range for majority of the first half. However, markets picked up momentum in the second half led by the IT, Realty and the Metal stocks. Even the second rung stocks were in demand", says Amar Ambani, Vice President Research IIFL.
The turnover yet again past the Rs1 lakh crore mark for the second straight day. The advance decline ratio on the BSE was quite positive today, Out of the total 2885 stocks, 1886 advances as against 901 declines and 98 stocks remained unchanged. Finally, the BSE 30-share Sensex surged 365 points at 16,387 and NSE Nifty advanced 111 points at 4,917.
Markets in Asia ended in the green; the Nikkei in Japan ended marginally higher by 0.7%, Australia's S&P/ASX gained by 1%, while the Hang Seng index in Hong Kong rose 1.1% and Shanghai SE Composite declined 3.5%.
European indices were trading in the green as well, the DAX in Germany was up 1.6%, the CAC 40 index in France was up 2.3% and the FTSE in the UK was up 1.6%.
All the BSE sectoral indices ended in the green, BSE IT index was the top gainer, the index was up 3.5%, followed by BSE Realty index was up 3% and BSE Metal index was up 3%. Even the BSE Mid-Cap index ended lower by 3% and the Small-Cap index gained 1.5%.
Outside the frontline indices, the big gainers in the broader market were GMDC, IDFC, GMR Infra and United Phos. On the other hand, losers included Godrej Cons, Indian Hotels, Concor and IOB.
Crude crawls back higher again
Prices rise as energy department shows increased demand
Crude oil prices ended higher at Nymex on Wednesday, 26 May 2010. Prices rose on the back of stronger than expected economic data. The weekly inventory report showing increased demand for crude products also led to higher crude prices today.
On Wednesday, crude-oil futures for light sweet crude for July delivery closed at $71.51/barrel (higher by $2.76 or 4%). Last week, crude shed 2.2%. For the month of April, crude rose 2.8%. For the first quarter of this year, crude rose by 5.5%. Year to date, crude is lower by 0.3%.
Prices have shed almost 22% since it hit a high of $86.5 during first week of April this year. Prices are also very much lower as compared to 3 July, 2008 settlement of $145.29 a barrel and an intraday high of $147.27 on 11 July, 2008, an all-time high.
In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies rose by 0.3%.
The EIA reported in its weekly inventory report that crude stockpiles showed an increase of 2.4 million barrels in the week ended 21 May against an increase of 100,000 barrels.
The report also showed that gasoline stocks fell 200,000 barrels, while distillates stocks fell 300,000 barrels. The EIA also reported a rise in demand for gasoline and other oil products. Over the last four weeks, gasoline demand was up by 1.2% over the same period last year. Distillate fuel demand in the four-week period rose 16%. Total products supplied over the last four-week period were up 7% compared to last year's.
Among other energy products on Wednesday, gasoline for July delivery added 5 cents, or 2.4%, to finish at $1.96 a gallon.
Natural gas for June delivery rose 10 cents, or 2.6%, to $4.15 per million British thermal units.
Crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. It reached a high of $82 earlier in October 2009 and hit a low of $33.98 on 12 February 2009. 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 higher by Rs 116 (3.56%) at Rs 3,374/barrel. Natural gas for June delivery closed at Rs 200.9, higher by Rs 4.5 (2.3%).
Crompton Greaves
Investors with a short-term perspective can consider buying the stock of Crompton Greaves. It is apparent from the charts of the stock that after marking an all-time high of Rs 279 on April 15, it has started to decline.
The stock, however, recently found support at Rs 223, which is a 23 per cent Fibonacci retracement of its prior uptrend that commenced from March 2009 low of Rs 57.
This level of Rs 223 is also a significant medium-term support level. The support has, with its 200-day moving average positioned at Rs 223, provided support for the stock. The stock rebounded 4 per cent on Wednesday, taking significant support.
Moreover, the positive divergence displayed in the daily relative strength index backs the stock's rebound. The daily RSI has entered the neutral region from the bearish zone and weekly RSI is hovering in the neutral region. Taking in to consideration the important support and the positive divergence, we are bullish on the stock from a short-term perspective.
We expect the stock to move up until it hits our price target of Rs 250. Short-term traders can buy the stock with stop-loss at Rs 225.
via BL
Precious metals stay bright
Prices rise for third straight day
Precious metals ended higher for third straight day on Wednesday, 26 May 2010 at Comex. Prices rose despite a strong dollar. Prices rose today as global stocks markets recovered partially and as traders thought that last week's selling of commodities leading to lower prices was overdone.
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 June delivery ended at $1,213.4 an ounce, higher by $15.4 (1.3%) an ounce on the New York Mercantile Exchange. Gold for June delivery had settled above $1,200 in early December, only to pull back to $1,172 area and dip as much as the $1,050 vicinity in early February.
Last week, gold ended lower by 4.2%. This month, till date gold is trading higher by 3%. For the month of April, gold ended higher by 6%. For the first quarter of this year, gold rose by 1.7%, its sixth quarterly rise. On a year to date basis, gold is higher by 10.5%.
On Wednesday, July Comex silver futures ended higher by 53 cents (2.9%) at $18.3 an ounce. Last week, silver ended lower by 8.1%. For the month of April, silver ended higher by 4.1%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 8.6%.
In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies rose by 0.3%.
Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.
Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end. Silver futures had hit a low at $10.42 on 15 January 2009 and hit a high at $19.30 per ounce on 2 December 2009. Like gold, silver also ended lower than its all time high level.
At the MCX, gold prices for June delivery closed higher by Rs 31 (0.17%) at Rs 18,542 per ten grams. Prices rose to a high of Rs 18,648 per 10 grams and fell to a low of Rs 18,526 per 10 grams during the day's trading.
At the MCX, silver prices for July delivery closed Rs 368 (1.3%) higher at Rs 29,280/Kg. Prices opened at Rs 28,949/kg and rose to a high of Rs 29,493/Kg during the day's trading.
Markets may see flat-to-negative opening
Indian equities are likely to open flat on Thursday, May 27, 2010. SGX Nifty is trading at 4,890 (7.38 am), 19 points lower than Wednesday closing of 4,909.
Asian stocks fell after reports China may consider cutting its investment in European government bonds, and the euro weakened amid concerns the European debt crisis will worsen. Japanese benchmark index Nikkei 225 fell 20.20 points, or 0.21%, to trade at 9,502.46.
US stocks fell, with the Dow Jones Industrial Average closing below 10,000 for the first time since February, as reports that China may review investments in European government bonds spurred concern the credit crisis will worsen and wiped out an early rally. The Dow fell 69.30 points, or 0.69%, to 9,974.45.
European stocks rebounded from an eight-month low as investors speculated that recent declines may have been overdone and stronger-than-forecast U.S. data bolstered confidence the debt crisis won`t derail the economy. UK`s benchmark index FTSE 100 advanced 97.40 points, or 1.97%, to end at 5,038.08.
Oil prices rebounded sharply Wednesday after weeks of being knocked down by economic uncertainty. Benchmark crude for July delivery added USD 2.76 to settle at USD 71.51 a barrel on the New York Mercantile Exchange. The price was USD 86.84 on April 6.
In the spot market, the Dollar Index increased 0.01% to 87.13. It touched a high of 87.32 and a low of 87.04 after opening at 87.30. (21:55 ET)
Subscribe to:
Posts (Atom)