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Monday, August 16, 2010
Post Market Review - Aug 16 2010
After a steady first half, markets saw a sharp spike down in the afternoon trade to close deep in the red. Sensex lost 116 points to close at 18050 while Nifty ended at 5418, down 34 points. BSE Midcap index though managed to close in green, up 0.1% while the small-cap index lost 0.2%. The big story of the day was Vedanta buying stake in Cairn India. Vedanta Resources Plc will acquire a 51-61% equity stake in Cairn India, 31-40% directly and 20% via Sesa Goa, for approximately USD 8.5-9.6 billion. The deal was struck at `. 405/share including a non-compete fee of `. 50/share. An additional 20% open offer will be made at `. 355 per share. The stocks of Cairn India and Sesa Goa ended lower by 6.4% and 9% respectively. Suzlon plunged 7.2% after a disappointing set of earnings announced over the weekend. European markets turned negative after a positive opening while US stock indices futures were marginally in the red ahead of release of Empire manufacturing index and NAHB housing market index.
BSE Bulk Deals to Watch - Aug 16 2010
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
16/8/2010 523120 Ador Multi VSL SECURITIES PVT LTD B 12349 25.00
16/8/2010 530713 Ajel Info ANGEL VENTURES PRIVATE LIMITED B 120000 27.90
NSE Bulk Deals to Watch - Aug 16 2010
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
16-AUG-2010,AJMERA,Ajmera Realty & Inf I Ltd,JMP SECURITIES PVT LTD,BUY,195114,223.86,-
Turnover surges
Cairn India, Tata Motors, Tata Steel August 2010 futures at premium
Nifty August 2010 futures were near spot price at 5,418.20 compared to spot closing of 5,418.30. Turnover in NSE's futures & options (F&O) segment surged to Rs 1,02,320.78 crore from Rs 94,861.02 crore on Friday, 13 August 2010. The near-month August 2010 derivatives contracts expire next Thursday, 26 August 2010.
Mixed start for Asia
Caution rules the roost as sentiments seen uncertain in first session of the week
Asian markets ended mixed in choppy trades as the traders tried to assess the precise damage inflicted by the last week's US Fed action and the weak economic releases. Chinese stocks edged up amid volatile action in the currency markets as traders continued to believe that the Asian economy is headed for a soft landing. The US dollar rose slightly in the early Asian trades but then gave up in London trades.
SKS Microfinance attracts 10.5% premium on debut
Settles at Rs 1,088.58 on BSE
Shares of Hyderabad-based microfinance firm SKS Microfinance ended at Rs 1,088.58 on BSE, a 10.52% premium over the initial public offering price of Rs 985.
Most sectoral indices on BSE in red
The key benchmark indices edged lower on the first day of the week on doubts over global economic recovery. European stocks and US index futures declined. The BSE 30-share Sensex lost 116.25 points or 0.64%, off close to 155 points from the day's high and up close to 50 points from the day's low. The BSE Sensex settled above the psychological 18,000 mark after falling below that level for a brief period in mid-afternoon trade. IT, Realty and metals stocks fell. Index heavyweight Reliance Industries (RIL), too, edged lower. The market breadth was weak, in contrast to a strong breadth earlier in the day.
Markets likely to begin lower
Headlines for the day:
Sugar firms to look up only from October
Vedanta buyout of Cairn India likely today
RBI to address concerns on new HTM bond order
Daily News Roundup - Aug 16 2010
HDFC Bank and Kotak Mahindra Bank plan to raise car loan rates by at least 0.5% in the next few days. (ET)
PE fund TPG Capital and a US-based global energy fund are in separate talks with Suzlon to acquire up to 25% stake in its German wind energy subsidiary, REpower Systems, for US$500mn. (ET)
Sensex finishes up...Nifty ends above 5450
The Indian market closed higher today, with the NSE Nifty closing above the 5450 mark, as investors cheered strong results by index heavyweights like SBI and Tata Steel. But, the key indices came off intra-day highs after European markets erased all gains and turned lower.
A smart improvement in key Asian markets like Japan, China and Hang Seng coupled with a stronger-than-anticipated GDP growth data from the euro-zone, especially in Germany and France, also helped perk up the mood after the recent reversals.
The BSE Sensex closed at 18,167, up 93 points or 0.5% from the previous close. It had earlier been as high as 18,260 and as low as 18,050 after opening at 18,080. The Nifty was up 35 points at 5,452 after touching a high of 5,475 and a low of 5,415.
The BSE Small-Cap index and the BSE Mid-Cap index extended their out-performance of the main indices, with gains of 0.7% and 1% respectively. Market breadth was positive and all but one sectoral index on the BSE closed in the green territory.
The BSE Metal index was down largely owing to weakness in Sterlite Industries.
DLF, ITC, Maruti, Jaiprakash Associates, Jindal Steel, Kotak Bank, PowerGrid, IDFC, Unitech, HCL Tech, Axis Bank and Gail India were the leading gainers in the Sensex and Nifty.
SBI and Tata Steel advanced after both the index heavyweights reported strong set of results for the April to June quarter. ICICI Bank rose after its merger with the Bank of Rajasthan was approved by the Reserve Bank of India (RBI).
Cairn India was a big winner after reports suggested that Vedanta Resources would pick up a majority stake in the company.
On the other hand, shares of Sterlite fell nearly 4% amid reports that its parent Vedanta Resources was looking to buy a majority stake in Cairn India.
Other notable losers included RCOM, which was down 3% ahead of its results. Suzlon too was soft before its first-quarter results.
M&M shares declined slightly as well after the utility major was named the preferred bidder for acquiring the cash strapped South Korean SUV maker SsangYong.
Tata Motors, Ambuja Cement and Reliance Infra were the other notable losers. Hindalco and Bharti Airtel also ended in the red.
No freedom from fear!
Freedom in general may be defined as the absence of obstacles to the realization of desires - Bertrand Russell.
The Indian market has yet to achieve freedom from the range it has been stuck in for quite a while now. While a breakout is long overdue, no sharp and swift moves are expected this week. The bulls will have to be a little more patient as the external situation remains murky. One good thing is that our market hasn’t cracked despite a series of bad global cues. At the same time that leaves it slightly vulnerable to some correction.
The overall bias towards India remains positive if the inflow of overseas capital is any indication. Inflation continues to be the biggest bugbear and may continue to cast a shadow on the markets for some time to come. July inflation will be out today and will be closely followed, for anticipating the next RBI action. Counters outside the main indices have been buzzing and the trend is likely to continue for a while.
The NSE Nifty last week bounced back from support of ‘rising wedge’ to close in positive terrain above 5450 levels and in process has formed higher top and higher bottom, says IIFL's Technical Analyst Amit Harchekar. The resistance line of ‘rising wedge’ corresponds at levels 5530 where one needs to exhibit caution and any close below 5400 levels will provide confirmation of a breakdown, he adds. Most technical experts see resistance upwards of 5500 and support near 5370. The broad trading range for the Nifty remains 5300-5600.
Shares of SKS Microfinance Ltd. will list today.
Shares of Cairn India could continue to gain amid the reported deal with Vedanta. Also, there are reports that Cairn India may have stumbled upon a major oil discovery onshore KG Basin.
Economic data points from key geographies will keep the markets on tenterhooks during the course of the week. UK will release this week data on consumer price inflation and retail sales. The latest US industrial production and capacity utilisation statistics are due to be published by the Federal Reserve. Data on CPI, along with a couple of housing reports are also due this week in the US. The latest monthly balance of payments figures for the eurozone are due to be announced by the European Central Bank. Australia will go to the polls on August 21.
Results from several big companies in the US, Europe and elsewhere will also be announced this week. Consumer spending in the US will be in focus as some of the biggest US retailers, including Wal-Mart and Home Depot, deliver their most recent quarterly results. Technology giants Hewlett-Packard and Dell will also release their results this week.
Barring China, most other Asian markets are down, with the region’s benchmark index dropping to a three-week low. The yen and the dollar strengthened after Japan’s economy expanded more slowly than economists estimated. Copper futures rallied.
Japan’s economy grew at less than a fifth of the pace economists estimated last quarter, pushing it into third place behind the US and China and adding to evidence the global recovery is faltering.
Asia (ex-Japan) remains in a good shape though, with China leading the pack even as the US economy has hit a soft patch. Though euro-zone GDP data came in ahead of estimates, most of that was propped up by Germany. Also, the region’s debt problems are not entirely settled as was shown by lackluster demand for Italy’s government bonds on Friday.
FIIs were net buyers of just Rs501.5mn in the cash segment on Friday (provisionally), according to the NSE web site. Local funds were net buyers of Rs333.8mn. In the F&O segment, they were net buyers at Rs12.15bn on Friday. Foreign funds were net buyers of Rs4.49bn in the cash segment on Thursday, according to SEBI's web site. Mutual Funds were net sellers at Rs1.4bn on the same day.
US stocks ended lower on Friday, the fourth consecutive day of declines, as investors digested another round of disappointing economic reports in the retail and consumer sectors.
The Dow Jones Industrial Average fell 17 points, or 0.2%, to end at 10,303.15. The S&P 500 lost 4 points, or 0.4%, to settle at 1,079.25 and the Nasdaq index was down 17 points, or 0.8% at 2,173.48.
All three indexes had been trading on either side of breakeven in morning trade.
Quite a few Wall Street traders are on vacation, and that tends to result in wild movements in the indices.
Stocks closed lower for a third straight session on Thursday, as investors digested an unexpected rise in jobless claims and Cisco Systems' cautious outlook. After slight gains Monday, all three stock indexes closed lower from Tuesday to Friday amid a raft of downbeat economic reports and some tepid earnings results.
The Dow lost 3.3% over the week, the S&P fell 3.8% and the Nasdaq plummeted 5%.
Stocks were also under pressure throughout the week after a Tuesday report from the Federal Reserve, which gave its most bearish outlook in more than a year and said that the economic recovery is weakening.
The Dow snapped a three-week winning streak, representing its biggest weekly decline since the week ended July 2.
The S&P 500 had its second week in the red out of the past three weeks. The S&P 500 has declined 3.21% this year. The Nasdaq is now off 4.22% for the year.
Friday's stock declines came despite small increases in US retail sales and consumer sentiment. The sales growth was driven by sales of cars and gasoline, while demand fell in many other categories, adding to investors' recent worries about the sustainability of the economic recovery.
Meanwhile, a bigger-than-expected rise in US business inventories came as sales fell, suggesting that the growth in stockpiles was involuntary.
The dollar gained against the euro, the UK pound, but fell versus the Japanese yen.
Oil futures for September delivery fell 35 cents to settle at $75.39 a barrel.
Gold futures for December delivery fell 10 cents to settle at $1,216.60 an ounce.
Prices for Treasurys were higher. The 10-year yield hovered near a 16-month low of 2.69% on Friday from 2.75% late on Thursday.
A report from the Commerce Department said that July retail sales gained 0.4%, just missing economists' forecasts.
The Labor Department's July Consumer Price Index, a key measure of inflation, snapped a three-month streak of declines and ticking slightly higher than economists expected.
A report released later in the morning showed business inventories had edged up 0.3% in June.
The University of Michigan Consumer Sentiment Index for early August rose to 69.6 from 67.8 the previous month, just missing expectations.
IBM said that it will purchase software firm Unica for $480 million, offering a whopping 120% premium for the marketing analytics company.
General Motors (GM) is expected to announce a stock offering as early as Friday to bring the company public again - a day after the automaker said that it is getting its fourth CEO in just under 18 months.
Dell was accused of refusing to comply with court orders to reveal secret documents in an ongoing dispute with client Advanced Internet Technologies over allegedly faulty computers.
JC Penney shares dropped after the department-store retailer swung to a profit in the second quarter. But, it gave a cautious third-quarter earnings and revenue forecast and cut its earnings target for the year.
Eli Lilly declined after the pharmaceutical company said that it lost its patent dispute over attention-deficit hyperactivity disorder drug Strattera, opening the gates for a generic to hit the market.
Nvidia shares climbed after the graphics-chip maker's fiscal second-quarter loss widened on higher charges, but revenue climbed.
Rambus shares advanced after the company that designs and licenses memory chip technology, reached a patent-licensing agreement with Nvidia regarding certain memory controllers, although litigation between the companies remains outstanding.
Autodesk shares rose after the design-software company's fiscal second-quarter profit surged following year-earlier restructuring charges as revenue jumped.
Nordstrom shares sank after the upscale retailer's fiscal second-quarter earnings rose 39%, right where analysts expected. But investors were disappointed with weakness in its expanding discount-store channel.
European shares ended slightly higher on Friday, as strong regional economic data was countered by ongoing worries about euro-zone sovereign debt. The Stoxx Europe 600 index rose 0.2% to close at 255.56 in a choppy session dominated by data from both sides of the Atlantic.
The euro-zone economy grew at its fastest quarterly pace in four years in the second quarter, boosted by much stronger-than-expected German growth.
Telecom, which are less leveraged to growth than some other sectors, performed well for the second straight session. Retailers were among the worst performers in Europe.
The UK's FTSE 100 index rose 0.2% to close at 5,275.44, the French CAC-40 index declined 0.4% to end at 3,610.91, and the German DAX index gave up 0.4% to settle at 6,110.41. The Irish Iseq 20 index fell 1.4%, with banks declining.
Sovereign-debt worries resurfaced in the euro zone last week as peripheral bond yields rose. The rise in yields came amid growing concern about the cost of bailing out Ireland's banking sector. Sovereign worries were further reinforced by weak demand at an Italian government bond auction.
The euro fell versus the dollar.
Germany's ThyssenKrupp said it swung to a fiscal third-quarter net profit of €272 million from a loss of €639 million in the year-earlier period, beating analyst forecasts for a €188 million profit.
The steel maker said its performance "has improved notably" through the fiscal year so far, with order intake and sales increasing quarter by quarter, and it now expects a significant improvement in earnings compared to the previous fiscal year.
Shares of TUI Travel climbed after Goldman Sachs lifted its stance on the firm to buy from neutral on valuation grounds.
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