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Thursday, September 20, 2007
Market to scale further ground
The market is expected to scale further ground on global cues. Asian stocks advanced today, 20 September 2007 tracking gains on Wall Street overnight, 19 September 2007. Japan's Nikkei (up 0.08% at 16,395.22), Hang Seng (up 0.40% at 25,656.20), Taiwan Weighted (up 1.42% at 9,052.73), gained. However Singapore's Straits Times declined 0.28% at 3,584.37.
US stocks posted steady gains overnight, 19 September 2007 building on a huge rally the previous day as markets cheered the US Federal Reserve's cut in key interest rates. The Dow Jones Industrial Average climbed 76.17 points or 0.55% to 13,815.56. The tech-heavy Nasdaq Composite index rose 14.82 points or 0.56% to 2,666.48 while the broad-market Standard & Poor's 500 index gained 9.25 points or 0.61% to 1529.03
NYMEX crude for October delivery held near $82 a barrel, aided by a bigger than expected drawdown in US crude inventories, after hitting an all-time intraday high of $82.51 on Wednesday, 19 September 2007.
As per provisional data, foreign institutional investors (FIIs) purchased shares worth a net Rs 2457.62 crore, while domestic institutional investors (DIIs) were net sellers of shares worth Rs 328.15 crore on Wednesday, 19 September 2007
The 30-shares BSE Sensex posted biggest single-day point gain rallying 653.63 points or 4.17% at 16,322.75, on Wednesday, 19 September 2007. It also hit an all-time high of 16,335.30.
Sensex has surged 2,333.64 points or 16.68% to 16,322.75 from a recent low of 13,989.11 on 21 August 2007, in just 21 trading sessions.
The S&P CNX Nifty jumped 186.15 points or 4.09% at 4,732.35, on that day. It also struck an time high of 4,739.
The global rally was triggered after the US Federal Reserve announced a higher than expected 50 basis points cut in fed funds rate to 4.75% from 5.25% on Tuesday, 18 September 2007, easing concerns about housing slump driving the world's largest economy into recession. Prior to this, it had hiked rates for 17 consecutive times in the span of four years.
Meanwhile, after discussing the nuclear deal for two hours yesterday, 19 Seoptember 2007, neither the UPA nor the Left budged an inch from their earlier position on the contentious Hyde Act. The Left, led by CPI(M) general secretary Prakash Karat, rejected this argument and reiterated that the Hyde Act would supersede the 123 Agreement.
The discussions will continue further at the next meeting of the committee scheduled to be held on 5 October 2007
US Market continues with its joyride
Rate-cut rally continues at Wall Street in spite of crude touching $82/barrel
US Market continued with its joyful journey today, Wednesday, 19 September 2007, a day after, Federal Reserve Chairman, Ben Bernanke mesmerised US market by cutting fed fund interest rate by 50 basis points from 5.25% to 4.75%. This was the first rate cut since June 2003. The Fed had also cut its discount rate from 5.25% to 4.75%. All ten sectors once again closed higher today.
The Dow Jones industrial Average closed higher by 76.17 points at 13,815.56. The Nasdaq Composite Index, finished higher by 14.82 points at 2,666.48. S&P 500 finished higher by 9.25 points at 1,529.03.
Twenty-four out of thirty Dow stocks ended in green today. Merck was the top gainer today as shares soared by more than 2%. GM was the main laggard as the company is still continuing its discussion with United Auto Workers. Shares of GM slid more than 2%.
Financial stocks were once again in the forefront. But today’s rally was led by telecom services sector and was followed by utilities and basic materials. Energy sector also provided notable support with crude prices rising. The financial sector ignored a disappointing earnings report from Morgan Stanley.
Consumer price report offsets negative news from housing report
When market opened in the morning, all the indices were trading strongly higher. Stocks were trading with previous day’s enthusiasm. Yesterday it was Producer Price Index report and today it was Consumer Price Index report that provided good support to the market.
At the top of the hour, Labour Department reported that consumer prices unexpectedly fell in August by 0.1%. It was the first decline in the Consumer Price Index (CPI) since October of last year. The CPI had risen 0.1% in July.
The core CPI, which takes out volatile food and energy prices, rose 0.2% from July, and was up 2.1% year over year, the lowest level in more than 2½ years.
The Commerce Department reported that U.S. housing starts and permits fell to a 12-year low in August, dropping 2.6% to an annualized rate of 1.331 million, slightly under the 1.35 million forecast by the market.
Indian ADRs closed mixed today. Infy, Wipro Tech, WNS and VSNL registered loss today. Sify and Patni were the two top gainers gaining more than 4.6% each. HDFC Bank and ICICI Bank gained 2.7% and 2.2% respectively.
Crude almost touches $82
Crude oil closed above $81/barrel for the second time today in New York after an Energy Department report showed a larger-than-expected U.S. inventory decline. As per today’s weekly inventory report by the Energy Dept, crude supplies fell 3.8 million barrels during the week ended 14 September. This was more than analysts’ expectation of 2 million barrels.
Crude-oil futures for light sweet crude for October delivery closed at $81.93/barrel (higher by $0.42/barrel or 0.52%) on the New York Mercantile Exchange. The contract had climbed as high as $82.50 to set an all-time high level for a front-month contract on the exchange.
Volume hit nearly 1.7 billion shares at the New York Stock Exchange, with advancing stocks ahead of decliners 2 to 1. At the Nasdaq, more than 2.2 billion shares were exchanged, and advancing issues overtook those declining, also by a 2-to-1 count.
Tomorrow investors will again look for economic data to help set the tone of trading. Initial Claims will be out at 8:30 ET, followed by Leading Indicators at 10:00 ET. The Philadelphia Fed Index, meanwhile, will hit the wires at 12:00 ET. On the earnings front, financial companies like Bear Stearns, Goldman Sachs, and AG Edwards will report their earnings before the bell.
Grey Market - Circuit, Consolidated, Kouton, Dhanus
Circuit Systems 35 4 to 5.50
Consolidated Constructions 460 to 510 120 to 140
Koutons India 370 to 415 100 to 120
Dhanus Tech 280 to 295 90 to 100
Kaveri Seeds 150 to 170 5 to 6
Allied Computers 12 1 to 1.50
PGICL 44 to 52 19 to 20
Magnum Ventures 27 to 30 3 to 4
Intraday Stock Ideas
NIFTY (4732) Supp 4678 Res 4796
Buy RCOM (564) SL 559
Target 571, 574
Buy Voltas (157) SL 153
Target 163, 165
Buy Praj Inds (224) SL 220 Target 232, 234
Sell Dabur (107) SL 110
Target 101, 100
Sell HPCL (240) SL 245
Target 232, 230
After Wonderful Wednesday, Tired Thursday!
On the day of victory no one is tired
The bulls batting on the bourses more or less resembled Yuvraj Singh smashing 36 runs (6x6) in an over. The bears, like the beaten bowler Stuart Broad had to look over the covers to find the ball. For the market, it was by far the best day for the bulls in recent memory. The Sensex surged past the 16k mark in the initial trades itself and made a new all-time high. The Nifty too crossed its own lifetime peak, as did some other indices. The fact that the trend has reversed in favour of the bulls after the carnage last month made it even better. The market's ability to bounce back after a brief correction has improved considerably. The main indices are taking less time now to stage a turnaround from an intermediate downtrend. This should be music to the ears of the bulls.
Today could be a tired Thursday as bulls may run out of energy. Expect indices to drop in the red. The bears will look at staging a comeback sooner or later. Liquidity in terms of FII inflows will be the key. We may have a situation of domestic funds booking profits even as FIIs may look at putting in fresh money.
The rate cuts by the Fed will boost inflows towards emerging markets where returns are better. India, with its strong economic fundamentals and earnings momentum, should get a big slice out of this. So, the outlook remains upbeat, though one needs to be careful as valuations may just be getting a little bit expensive.
A stock centric approach always pays rich dividends in every market cycle. Its no different today. While the global response to the Fed rate cuts so far has been positive, the question is what happens after investors get over the euphoria. Locally, we have to grapple with the developing political situation with mid-term polls a certainty. Oil is also on the boil again. And, of course how the RBI copes with the deluge of foreign money and what it does with interest rates remains a mystery.
IT stocks should be under pressure as the Rupee has risen past the 40 per dollar mark this morning.
Also keep an eye on Magnum Ventures, which gets listed on the bourses today.
US stocks extended their biggest rally in four years on hope that the interest rate cuts will help contain the housing sector mess and boost earnings growth.
AT&T helped lead the Dow Jones Industrial Average to within 1.4% of a record after saying sales of Apple's iPhone have increased. Freeport-McMoRan Copper & Gold, the world's second-largest copper producer, climbed to a new high.
The Standard & Poor's 500 Index rose 9.25 points, or 0.6%, to 1,529.03. The Dow gained 76.17 points, or 0.6%, to 13,815.56. The Nasdaq Composite Index added 14.82 points, or 0.6%, to 2,666.48. All 10 S&P 500 industry groups gained for a second day.
Ten-year Treasury notes fell for a third day as investors bet that rate cuts will fuel inflation, even after the government said consumer prices fell in August. The dollar rose from an all-time low against the euro and gold gained.
Thursday brings earnings reports from Bear Stearns, Goldman Sachs and Circuit City. Thursday also brings several economic reports after the start of trading, including the leading economic indicators and the Philadelphia Fed index - a regional manufacturing reading.
Fed chief Ben Bernanke is due to testify on Capitol Hill as part of a hearing on the subprime mortgage crisis. Treasury Secretary Henry Paulson is also due to testify.
The day's economic news seemed to support the Fed decision. Housing starts fell to a 12-month low in August, according to a government report that also showed a big drop in building permits, a measure of builder confidence. But another government report was more positive, showing a surprise drop in consumer prices in August, versus forecasts for a flat reading.
US light crude oil for October delivery rose 42 cents to settle at $81.93 a barrel on the New York Mercantile Exchange, briefly hitting a fresh record trading high of $82.50 after a report showed a negligible rise in weekly crude oil and gas inventories.
Treasury prices tanked, pushing the yield on the 10-year note to 4.53% from 4.47% late on Tuesday. In currency trading, the dollar slumped against the euro and was little changed versus the yen. COMEX gold for December delivery rallied $5.80 to $729.50 an ounce.
European shares ended higher. The broad pan-European Dow Jones Stoxx 600 index rose 2.7% to 377.61, putting in its best one-day gain this year. The UK's FTSE 100 index closed up 2.8% at 6,460.00, the German DAX 30 added 2.3% to 7,750.84 and the French CAC-40 climbed 3.3% to 5,730.82.
In the emerging markets, the Bovespa in Brazil rose 1% to 57,264 while the IPC index in Mexico was down 0.3% at 30,512. The RTS index in Russia shot up by nearly 4% to 2015 and the ISE National-30 index in Turkey soared by 7.4% to 68,691.
Asian markets were trading mixed this morning. The the Hang Seng in Hong Kong was up 0.5% while the rest of the markets were more or less flat.
Markets further extended its rally and the benchmark Sensex not only tested the 16k levels but managed to breach it as bulls were overjoyed after Federal Reserve announcement that it had cut its benchmark interest rate by 50 basis points. The Banking and the Realty stocks were the leading gainers on hopes that the Fed’s decision might also prompt the RBI to relax its hawkish stance on the monetary policy going forward.
The index heavyweights partied hard as RIL, SBI, DLF, BHEL, SAIL, Tata Steel and RPL hit their respective lifetime high. Further announcement from the government it may allow mills to make Ethanol directly from Cane juice lifted the sugar stocks from their lows and Cement stocks also recorded concrete gains after cement manufacturers increased prices by Rs3 a bag in the largest markets of Maharashtra and
Reliance Communication surged by over 5% to Rs564 after the company’s owned Flag Telecom signed a five year contract with
Bharti Airtel jumped by over 6.5% to Rs886 after reports stated that the company has awarded $150mn contract to Chinese vendor Huawei for building and managing GSM mobile infrastructure for its Sri Lankan operations. The scrip touched an intra-day high of Rs894 and a low of Rs845 and recorded volumes of over 11,00,000 shares on NSE.
Crompton Greaves advanced 2.2% to Rs316 following reports that the won bid to distribute and bill power in three major divisions in
BPCL ended flat at Rs310. Reports stated that the company has planned to submit a US$350mn non-binding bid to acquire 10% interest in a
ITC gained by 4% to Rs187 following reports that the company is planning to set up a third food factory in
Sugar stocks turned sweeter as government would allow mills to make Ethanol directly from Cane juice. Renuka Sugar jumped by over 24% to Rs683, Bajaj Hindustan surged by over 20% to Rs176, Sakhti Sugar was locked at 20% upper circuit to Rs92.80.
Cement stocks recorded concrete gains after cement manufacturers increased prices by Rs3 a bag in the largest markets of Maharashtra and
Banking stocks rallied after the Fed's decision to cut interest rates by 50 basis points. HDFC Bank surged by over 7.5% to Rs1324, ICICI Bank surged by over 5% to Rs973 and SBI added 4.4% to Rs1769. Union Bank, Bank of Baroda and PNB were the major gainers among the Mid-Cap stocks.
Realty stocks also were among the major gainers. DLF surged by over 8.5% to Rs713, Parsvnath advanced by 5.4% to Rs337, Sobha gained by 4.5% to Rs797, Akruti added 3.2% to Rs718 and Peninsula land added 2.6% to Rs586.
Tata Motors is planning to replace its existing range of 100-180hp trucks with the 'world truck' by September 2008 to meet competition from Volvo, Man and others.
The PMO has asked the Jharkhand Government to renew SAIL's Chiria mines lease.
Bharti Airtel is the only Indian company left in the fray for bagging the second mobile license in Qatar.
Shipping Corporation of India has floated four joint ventures to enter into shipbuilding, container terminal operation, dredging and offshore services.
Titan Industries has entered into a five-year tie-up for exclusive marketing-cum-distribution of Hugo Boss watches in India with MGI Luxury.
HCL Infosystems plans to set up a major systems integration hub in Kolkata over next 8-12 months.
L&T is close to acquiring a stake in Feedback Ventures.
ONGC Videsh, the overseas investment arm of ONGC, has won three exploration blocks in Colombia in the latest round of auctions.
The Carlyle Group and Citigroup Venture are in the race to acquire 15% stake in Pyramid Saimira.
Britannia will take legal action against Group Danone for unauthorized use of the Tiger biscuit brand in other countries.
SREI Infrastructure Finance has proposed a preferential issue of up to 25mn warrants to the promoter group at Rs100 per share.
The government is planning to allow manufacturing of ethanol directly from sugarcane.
Production of kharif foodgrains during FY08 will touch 112.24mn tons. This is 1.72mn tons more than that of last year.
The Ministry of Information & Broadcasting may cut the entertainment tax.
The Telecom Regulatory Authority of India has suggested that telecom operators can offer mobile television services to subscribers without licence.
Fund Activity:
FIIs were net buyers of Rs24.58bn (provisional) in the cash segment on Wednesday and the local institutions pulled out Rs3.28bn. In the F&O segment, foreign funds were net buyers of Rs42.55bn.
On Tuesday, FIIs were net sellers to the tune of Rs1.38bn in the cash segment. Mutual Funds were net sellers of Rs190mn on the same day.
Major Bulk Deals:
Macquaire Bank has sold Atul; Merrill Lynch has bought Dwarikesh Sugar while HSBC Global has sold it; Emerging Capital Advisors has sold Evinix and has purchased Gremac Infra; Deutsche Bank has sold Karuturi Networks; BNP Paribas has picked up Megasoft while Sundaram BNP Paribas Select Mid-Cap Fund has sold it; Deutsche Securities has bought Unity Infra.
Upper Circuit:
RIIL, Mawana Sugar, Rana Sugar, Tourism Finance, KM Sugar, Bombay Burmah, Goldstone Tech, Uttam Sugar, Jai Corp and Prakash Industries.
Lower Circuit:
Hindo SPG and Shree Precoated Steels.
Trading Calls
Buy SBI with stoploss of Rs 1700 for target of Rs 2100.
Buy Core Projects with a stop loss of Rs 168 for a short-term (3 Months) target of Rs 210.
Buy DLF with stoploss of Rs 640 for target of Rs 840.
More cheap cellphones coming soon
It’s official now. Along side the Nokias, Samsungs, Motorolas and Sony Ericssons there’ll be a new mass cellphone brand in India — Vodafone! Vodafone Essar, which will spend nearly Rs 250 crore on a high-profile brand transition from Hutch to Vodafone being unveiled on Thursday, is poised to launch cheap cellphones in India under the Vodafone brand. It will also launch co-branded handsets sourced from major global vendors.
“On the heels of the brand change from Hutch to Vodafone, Vodafone Essar will launch an array of low-cost cellular handsets in India which will be directly marketed under the Vodafone brand or co-branded with select overseas handset makers,” a Vodafone Essar director told ET on condition of anonymity. “The objective is to leverage Vodafone Group’s global scale in bringing millions of low-cost handsets from across the world into India and use Vodafone Essar’s famed cellphone distribution reach to maximise sales,” he added.
With Reliance Communications (RCOM) recently launching ultra budget handsets with prices starting at Rs 777, the industry buzz is that Vodafone would lower the entry barrier to an unbelievable Rs 666. There’s also speculation that Vodafone may follow the pricing model of Rs 666, Rs 777, Rs 888 and Rs 999 for its ultra-cheap handsets.
The Vodafone director refused to confirm this: “I cannot share pricing details but there will be no discounts or subsidised handset offers. Instead, Vodafone Essar may come up with innovative handset-bundled schemes for its 35 million consumers.” Company sources also said that the bundled handsets will primarily be distributed through Vodafone Essar’s four lakh-odd distribution outlets. “Vodafone Essar is also entering collaborative arrangements with some of the top vendors to achieve unprecedented sales,” a top company official told ET.
While CDMA players like RCOM and Tata Teleservices have adopted handset-driven expansion strategies to drive up subscriber base, this is the first time that a GSM player is venturing into this space on a pan-India level.
China’s ZTE, which is looking to set up a cellphone manufacturing unit in India, is expected to provide many Vodafone handsets in India. Early this year, Vodafone inked a global low-cost handset procurement deal with ZTE.
ZTE global vice-president (handset systems) He Shiyou told ET that as per the deal, Vodafone would offer ZTE’s handsets to its subscribers in India. “ZTE hopes to ship over 10 million of these to India. Though, we ship high-end phones to the West, our plan for India revolves around low-cost phones, which we offer in collaboration with operators there,” Mr Shiyou added.
The company will unveil the Vodafone brand on Thursday in one of the biggest brand transition exercises in the recent times. According to PTI, Vodafone will keep in-tact its predecessor’s assurance of following customers wher-ever they go, but will replace Hutch’s ‘Wherever you go our network follows’ catchline with ‘Make the most of now’.
Market Close : 16k conquered with aplomb !
It took 53 days for the journey from 15k to 16k for the Sensex. .The magical figure of 16k was crossed early in the morning as the indices zoomed like a rocket sparked by a rally across global markets. The US Fed slashed benchmark interest rates by half a percent. As the day started markets were on a rampage as major stocks cutting across sectors rose sharply for the day. The Reality stocks sang their way as the reality index moved up by almost 6%. But Sugar shares were stars as the Agriculture Minister Sharad Pawar said the government plans to give more fiscal incentives to sugar mills and that it would decide on monetary sugar sops in 8-10 days.
Tech stocks started positive but soon were the weaker of the lot. The Rupee attempted its highest levels in more than nine years after it rose by 0.7% to 40.20 per Dollar. The appreciating Rupee would put more pressure on the Tech stocks. The Banking and financial sectors saw action as they felt that the Fed move to cut the rates would put pressure on RBI to loosen its monetary policy. Buying was witnessed across the board with Auto, Banking, and Energy stocks leading the way. BSE Oil & Gas Index and the BSE Bank advanced by 5% and 4.8% respectively. Mid & Small caps also joined the rally with the frontline stocks.
Sensex ended the day up by 653 points at 16322 helped up by gains in HDFC (2367,+9 percent), HDFC Bk (1322,+7 percent), ONGC (899,+6 percent), Maruti (923.2,+5 percent) and Bharti Tele (874.5,+5 percent). There were no drags on the Sensex components.
Sugar was the story for the day. The sugar stocks rallied and most sugar stocks locked in upper circuit. This was on the back of the news that government will decide on monetary sops in 8-10 days. If this goes in line with the market expectations it would be a big positive for the sugar industry. There were other rules allowing them to manufacture Ethanol and that was seen as a profitable initiative. Integrated players like Shree Renuka Sugars and Balrampur Chini in particular would be benefited the most by the impending government move. And on the Ethanol blending issue sugar industry will need to increase ethanol production capacity by 40%. With this even the bigger market for ethanol will improve the sugar market. Currently a price of Rs 21.50 for ethanol translates to a price of Rs 14.50 for sugar. This is seen fairly attractive in the ethanol market. Requirement is for yet another 1 bn litre of ethanol production capacity for the current demand. Another report said that the sugar mills may be allowed to produce ethanol directly from cane juice instead of molasses to lower dependence on sugar prices. It was a sweet day.
DLF reported that the company plans to raise about $2 bn and list as a real estate investment trust in Singapore. The company also plans to enter the business of retail of luxury brands and is in talks with well-known retail chains including Georgio Armani, Versace and Dolce Gabbana. DLF may tie up with a foreign major for the supermarket business at a later stage. However, its first priority would be to partner with luxury brands. DLF is looking at franchising as well as joint ventures through the single brand FDI route. On real estate front the company continues to be in talks with international firms for investing in DLF projects. It had also tied up with Prudential for insurance, Hilton for hospitality segment, Nakheel group for SEZ's. This move is a part of the company's strategy to diversify its area of operations. All Reality stocks ended the day on a high note following DLF which ended the day up by 9%.
It was a rally of the Sensex stocks and the Index rallied. The current actions of the US and Europe will see their economies slow. Asia is seen as the haven for equities and the the rally reflects that. Asia is suddently becoming hot and thats the reason.
Technically Speaking: Sensex scaled up to 16000 levels and sustained above this levels. Indices made a high of 16335 and low of 16192. Whooping Turnover of Rs 7405 Cr for the the day. Sensex has done our target of 16100+ which we have been advocating for long. The rally is strong and 16600 is the next target for Sensex..
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