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Wednesday, September 26, 2007
Market likely to remain volatile
Subdued Asian indices and sharp intra-day volatility may hold the investors from taking any fresh position. However, overnight gains in the US markets coupled with a bullish sentiment in the present trades could see the market advance further. Among the local indices, the Nifty could test higher levels at 5000 and on the downside it has support at 4850. The Sensex has a likely support at 16650 and may face resistance at 17000.
In the US markets, the broader Dow Jones moved marginally up by 20 points at 13779 after profit warnings from a pair of retailers and a big drop in consumer confidences revived worries about the economic outlook., while the tech-heavy Nasdaq gained by 16 points to close at 2683.
Among the Indian ADRs trading on the US bourses, 6 out of 11 floats ended on a positive turf. Rediff led the upmove and rose 5.88% while Infosys, Satyam, Tata Motors, HDFC Bank and Wipro gained over 0.5% - 1%% each, while Dr Rrddy's Lab, ICICI Bank, MTNL, VSNL and Patni Computers slipped over 0.5% - 2%.
Crude oil prices in the international market slipped below $80, with the Nymex light crude oil for November series slipping by $1.42 to close at $79.53 a barrel. In the commodity segment, the Comex gold for December delivery slipped by 50 cents to settle at $739.30 a troy ounce.
Market to consolidate at higher levels
The market is expected to consolidate at higher levels. Global cues were positive. Asian markets were trading higher today, 27 September 2007. Japan's Nikkei (up 0.17% to 16,429.76), Taiwan Weighted (up 1.44% at 9,236.29) and Singapore's Straits Times (up 0.17% at 3,631.05) rose.
Market may see volatility ahead of the expiry of September 2007 futures & options (F&O) contracts on Thursday, 27 September 2007.
US markets ended mixed yesterday, 25 September 2007 as investors grappled with concerns about consumer spending in some parts of the economy while technology stocks showed broad gains. The Dow Jones industrial average rose 19.59 points, or 0.14%, to 13,778.65. Broader stock indicators were mixed. The Standard & Poor's 500 slipped 0.52 points, or 0.03%, to 1,517.21, while the Nasdaq Composite rose 15.50 points, or 0.58%, to 2,683.45.
As per provisional data, foreign institutional investors (FIIs) purchased shares worth a net Rs 1496.14 crore, while domestic institutional investors (DIIs) were net sellers of shares worth Rs 516.43 crore on Tuesday, 25 September 2007
Crude oil prices rose on Wednesday, 26 September 2007 after three days of losses, with traders looking toward data expected to show a further decline in U.S. crude stocks. US crude for November delivery edged up 22 cents to $79.75 a barrel while London Brent crude gained 22 cents to $77.84 a barrel.
Sensex gained 53.71 points or 0.32% at 16899.54, a record closing high, on Tuesday, 25 September 2007. The S&P CNX Nifty gained 6.65 points or 0.13% to 4,938.85, a record closing high, on that day. It hit an all-time high of 4,953.90 in intra-day trade on that day.
A tug-of-war in US Market
Though housing data beats expectation, consumer confidence slips
Concerns about overall economic environment weighed on investors’ minds today, Tuesday, 25 September 2007 and US market ended relatively flat. Reduced sales forecast from top two retailers put market in a tug-of war situation for most part of the day. Market closed mixed. Financial and energy stocks continued to be the laggards with technology trying to offset their effect.
The Dow Jones industrial Average closed higher by 19.6 points at 13,778.7. The Nasdaq Composite Index, finished higher by 15.5 points at 2,683.45. S&P 500 finished marginally lower by 0.52 points at 1,517.21.
Fifteen out of thirty Dow stocks ended in green today. Microsoft, IBM, Boeing and United Technologies led the team of Dow winners. Home-Depot, Wal-Mart, Mc Donalds and Caterpillar were the main Dow laggards.
Retailer, Lowe's today said that it expects FY07 earnings to be at the low end of prior guidance, or slightly below. Another retailer, Target, citing weak guest traffic, lowered its September same-store sales growth forecast to a range of 1.5% to 2.5% from 4.0% to 6.0%. This initiated a wave of selling interest in the early market hours.
Technology sector continued to be in the forefront with Apple, Yahoo and Microsoft shares gaining more considerably. While Microsoft was up by 1.5%, following the launch of its flagship videogame, Halo 3, Apple was by more than 3%. Cisco Systems reached a six year high.
Retailers start a wave of selling ineterst
When market opened in the morning, sellers took position with disappointing news from the retail sector. Dow was down by almost 15 points.
On the top of it, home developer, Lennar posted a sizable loss of $3.25 per share for its third quarter and said it plans on cutting more staff in the fourth quarter.
The Conference Board reported that its Consumer Confidence index slipped to 99.8 in September versus 105.6 in August. But this was not surprising given the rising oil prices in recent days.
National Association of Realtors reported that existing-home sales fell in August for the 13th month in a row. Sales of existing homes fell 4.3% to a seasonally adjusted annual rate of 5.50 million in August, the lowest in five years. Nevertheless, the figure topped expectations of a 5.49 million count.
Among Indian ADRs, Rediff.com continued to be the top gainer for second consecutive day gaining 5.8%. Patni Computers was the topmost loser today shedding 2.3%.
Crude slips below $80
Crude oil prices fell back below $80 today after production resumed after a storm passed through the Gulf of Mexico. The Gulf accounts for about 25% of U.S. With this, crude slipped for the third consecutive day.
Crude-oil futures for light sweet crude for November delivery closed at $79.53/barrel (lower by $1.42/barrel or 1.82%) on the New York Mercantile Exchange. Crude oil fell as low as $78.96 a barrel on the New York Mercantile Exchange today as output increased in the Gulf. Prices are up 29% from a year earlier.
At the New York Stock Exchange, nearly 1.3 billion shares were exchanged, with declining stocks topping advancers about 10 to 7. At the Nasdaq, more than 1.8 billion shares traded, and declining issues ran ahead of advancers 4 to 3.
For tomorrow, the energy inventory report is expected at 10.30 am at Washington. The Mortgage Bankers' Association will release its latest measure of mortgage applications before market opens. Domestic manufacturers will report the newest orders, providing a glimpse into the manufacturing sector's health.
Grey Market - Saamya Biotech, Supreme Infra, MAYTAS Infra
Power Grid Corporation 44 to 52 22 to 23
Dhanus Tech. 280 to 295 80 to 90
Koutons Retail 370 to 415 90 to 95
Consolidated Construction 460 to 510 190 to 200
Supreme Infra 95 to 108 60 to 65
Saamya Biotech 10 8 to 9
MAYTAS Infra 320 to 370 160 to 165
Circuit Systems (India) Ltd. 35 4 to 5
Kaveri Seeds 150 to 170 13 to 15
Morning Call - Sep 26 2007
Market Grape Wine :
In House :
Nifty at a supp of 4904 and 4876 with resis at 5017
Intra Day: Buy Bharatforge above 282 with a TGT of 296 and a SL of 270
Buy Neyvelilignite above 107 with a TGT of 117 and a SL of 103
Positional Buy: Monnet Ispat and Tatasteel
Out House :
Markets at a support of 16453 & 16363 levels with resistance at 17071 & 16996 levels .
Buy : RIL
Buy : Relcap
Buy : IDBI bullet
Buy : SBIN
Buy : RNRL , TTML , IFCI , Nagarfert & JpHydro bullet with strict stop loss
Buy : Grasim
Buy : ABAN
Buy : JpAsso
Buy : IndiaCement
Dark Horse : RIL , Rnrl , Aban , JpHydro , RelCap , SBIN & IDBI
Bullet for the Day : IDBI & Gmrinfra with stop loss .
Daily Technical Analysis
Nifty — The index opened on a flat note; it witnessed range-bound trading for the day’s trading session. The index ended the day with gains of 7 points.
Indecision — On the daily candle chart the index has formed a “doji,” which signifies indecision (day’s opening and closing around same levels at 4939). Yesterday’s high of 4954 is intra-day resistance; break above 4954 can see index test 4970 levels. The intra-day support is around 4878; break below 4878 can see it drift down toward 4856 levels.
Conclusion — Expect intra-day strength above 4954 levels.
Turnover surges
Nifty October 2007 futures at discount
Volumes in derivatives segment surged today in the run up to expiry of September 2007 derivatives contracts. NSE’s futures & options segment clocked a turnover of Rs 83677.53 crore compared to Monday (24 September 2007)’s Rs 79397.68 crore.
Nifty September 2007 futures were at 4946.90, a premium of 8.05 points over spot Nifty closing of 4938.85. Nifty October 2007 futures were at 4935, a discount of 3.85 points over spot closing.
September 2007 derivatives contracts expire on Thursday, 27 September 2007.
Trading Calls
Nifty (4939) Sup 4895 Res 4975
Buy ITC (187) SL 183 Target 194, 196
Buy Ranbaxy (424) SL 420 Target 432, 435
Buy ZEE (313) SL 308 Target 321, 324
Sell Parsvnath (339) SL 343 Target 331, 329
Sell SRF (143) SL 147 Target 136, 133
So near...17K for Sensex, 5K for Nifty!
Fast is fine, but accuracy is everything.
The recent rally may well be the fastest 1000-point run gain one can remember. When speed is the key, safety should not be left behind. But hell to all concerns for the day and hopefully we'll Look at cheering a new milestone for the key indices. The Sensex just needs to crack a ton (100 points) to hit the 17k mark, while the Nifty will need to score another 60-odd points more to attain 5k. The undertone has been bullish since late August, and last week's Federal Reserve's move has only improved the outlook for emerging markets like India. FII inflows have crossed $1.5bn in the past five days, topping the $11bn mark for the year. There are still three more months to go in the year.
Indications from the F&O segment are also positive, though the record open interest of Rs1 trillion could pose some trouble whenever a correction happens. So, avoid over leveraging at this stage and wait for the next round of quarterly results before taking a broader call on the market. Valuations are not cheap after the sharp run-up in the past several sessions. A whole host of stocks have rallied without any significant events backing up the meteoric rise. All these may be signs of some softening though the overall outlook remains upbeat. Today, we expect a flat to slightly positive opening and wild intra-day gyrations as usually is the case during a derivative expiry week.
A long day is in store and it remains to be seen whether the new milestones will be achieved or will it be so near yet so far!
Media Video and Pantaloon Retail will announce their audited results today. STC India will consider a bonus issue today.
BAG Films could gain as Fidelity has picked up more than 10mn shares of the television software company.
US technology shares climbed on Tuesday, but the broader market was subdued following profit warnings from a couple of retailers and grim reports on consumer confidences and home sales.
Oil prices dropped below $80 a barrel. Gold prices slipped. Treasury prices rose, lowering the corresponding yields. The dollar slumped against the euro anew.
The S&P 500 finished flat at 1,517.21. The Dow Jones Industrial Average rose 19.59 points, or 0.1%, to 13,778.65. The Nasdaq Composite Index added 15.50 points, or 0.6%, to 2,683.45, helped by a 1.7% gain in Microsoft.
About eight stocks dropped for every five that rose on the New York Stock Exchange.
Target Corp. and Lowe's Cos. reduced their earnings forecasts, heightening concern that the housing slump has slowed consumer spending.
Target, the second-largest US discount chain, fell the most in six weeks after slashing its projection for September sales. Lowe's, the second-biggest home-improvement retailer, posted its steepest decline since 2003 after saying earnings this year may miss its previous forecast.
Lennar Corp., the largest US homebuilder, sank to a four-year low on the worst quarterly loss in its history.
The September consumer confidence report showed a bigger-than-expected drop to 99.8, down from an upwardly revised 105.6 in the previous month. Existing home sales fell to a five-year low in August, while July home prices posted the biggest monthly drop in 16 years.
GM resumed contract talks with the United Auto Workers union one day after the UAW launched a nationwide strike against the automaker. Microsoft shares rose after the launch of its Halo 3 video game at midnight.
Treasury prices rose modestly, with the yield on the 10-year note at 4.63%, little changed from late on Monday. In currency trading, the dollar fell against the euro and also inched lower versus the yen. COMEX gold for December delivery fell 50 cents to settle at $738.80 an ounce.
US light crude oil for November delivery lost $1.43 to settle at $79.53 a barrel in New York. Last week, the October contract settled at a record high of $83.32.
European shares lost some ground. The pan-European Dow Jones Stoxx 600 index declined 1.1% to 372.42. In London, the commodity-heavy FTSE 100 closed down 1.1% at 6,396.90. The French CAC-40 fell 0.9% to 5,641.59 and the German DAX 30 lost 0.2% at 7,769.44.
In the emerging markets, the Bovespa in Brazil was up 0.2% at 58,858 while the IPC index in Mexico was down 0.8% at 30,294. The RTS index in Russia tumbled 1.6% to 2008 and the ISE National-30 index in Turkey dropped 1.3% to 67,059.
Asian markets were flat to lower in early trading. Weak data on US home sales and consumer confidence fueled speculation that the Federal Reserve will slash rates further to bolster the world's largest economy. A regional benchmark touched a two-month high.
The Morgan Stanley Capital International Asia-Pacific Index gained 0.2% to 159.04 at 10:40 a.m. in Tokyo, set for the highest close since July 26. An index of financial shares posted the biggest gain among the MSCI's 10 industry groups.
The Nikkei 225 Stock Average added 0.2% to 16,426.98 in Japan, where the government today reported that the trade surplus more than tripled in August. Taiwan's Taiex index climbed 1% on the island's first trading day this week, the best performance in the region.
Markets in Hong Kong and South Korea are shut today.
Markets staged an impressive recovery in a highly volatile session led by index heavyweights like Reliance Industries, HDFC Bank, Bharti Airtel and Hindustan Unilever. Benchmark Sensex recouped over 200 points and NSE Nifty recovered over 50 point’s from their respective lows. IT stocks ended with modest gains after rupee, which reached a nine- year high yesterday, paused its advance on speculation the central bank will sell the currency to curb a rally that is eroding export earnings. However, Others like Realty, Auto and Capital Good stocks were offloaded.
Finally, BSE 30-share benchmark Sensex ended 53 points higher to close at 16899. NSE Nifty added 6 points to close at 4938.
HCC slipped by 3% to Rs143. The company is in joint venture with Alpine Mayreder and Samsung Corporation bagged a prestigious contract worth Rs7.7bn from DMRC. The scrip has touched an intra-day high of Rs148 and a low of Rs141 and recorded volumes of over 7,00,000 shares on NSE.
Opto Circuits gained by 1% to Rs569 after reports stated that the company would drawn up plans to enter the US market with a range of cardiac care products. The scrip touched an intra-day high of Rs579 and a low of Rs561 and recorded volumes of over 1,00,000 shares on NSE.
Gayatri Projects marginally gained by 0.5% to Rs310 after the company announced that they have secured new order valued Rs1.54bn. The scrip touched an intra-day high of Rs319 and a low of Rs305 and recorded volumes of over 1,00,000 shares on NSE.
BPCL has surged by over 9.5% to Rs357 on reports of Assam Gas Discovery. The scrip has touched an intra-day high of Rs360 and a low of Rs333 and has recorded volumes of over 2,00,000 shares on NSE.
Tata Power gained by 0.3% to Rs836 as reports have stated that the company would pick up 15% stake in power exchange to be set up by NCDEX and NTPC. The scrip touched an intra-day high of Rs842 and a low of Rs814 and recorded volumes of over 5,00,000 shares on NSE.
GAIL dropped by 3.2% to Rs363. According to reports the company has announced its plan to explore options for strategic co-operation with BPCL for petrochem and E&P activities. The scrip touched an intra-day high of Rs382 and a low of Rs357 and recorded volumes of over 15,00,000 shares on NSE.
Pharma stocks ended higher following reports that National Pharmaceutical Pricing Authority decided to revise prices of over 200 life saving medicines. Ranbaxy gained 1.8% to Rs424, Galxo was up by 0.6% to Rs1125 and Sun Pharma added 0.2% to Rs951.
IT stocks bounced back after rupee, which reached a nine- year high yesterday, paused its advance on speculation the central bank will sell the currency to curb a rally that is eroding export earnings. Satyam Computer gained by 0.8% to Rs412, Infosys advanced by 0.5% to Rs1771 and NIIT Ltd added 1.1% to Rs147.
Telecom stocks were a mixed bag. Reports stated that Department of Telecommunications is setting up an internal committee for developing guidelines for companies seeking fresh unified access service licenses. Bharti Airtel surged 2% to Rs962. However, R Com slipped 0.5% to Rs594 and Idea was down 2% to Rs125.
Realty stocks were badly beaten up on back of profit booking. Akruti dropped by 5% to Rs705, HDIL was down by 4% to Rs608, DLF slipped by 2% to Rs765 and Parsvnath lost 2.7% to Rs339.
Auto stocks were also in the reverse gear. Hero Honda lost 3% to Rs744, M&M was down by 2.3% to Rs765, Bajaj Auto declined 1.8% to Rs2529 and Tata Motors dipped 1% to Rs741.
Stocks in News:
The RBI has allowed corporates, individuals and mutual funds to invest more overseas. It has also increased ECB prepayment limit for companies up to $500mn.
Essar Communications plans to raise $3.6bn in term loans against put options that exist in the Vodafone-Essar agreement.
Wipro has reportedly bagged $130mn five year contract from British utility Thames Water.
Reliance Fresh has decided to shut shops in UP owing to the mass opposition from local shopkeepers and traders.
SRF will set up a new polyster industrial yarn spinning unit with an annual capacity of 14500 tonnes at its existing Gumminipoondi plant in Tamil Nadu.
Arcelor Mittal aims to invest $20bn for building two 12mn tonnes steel plants in India.
PFC has invited preliminary bids from prospective developers for setting up the Ultra Mega Power Project at Tilaiya in Jharkhand.
Hindustan Unilever announced that the buy back of 551.6mn shares at up to Rs230 would begin from October 3.
Pfizer has been asked by NPPA to reduce prices of two drugs, Benadryl and Caladryl.
IT companies have indicated that billing rates for new contracts will go up by 3-4% and the old ones by 2-3%, to rein in margin pressure.
Fund Activity:
FIIs were net buyers of Rs14.96bn (provisional) in the cash segment on Wednesday and the local institutions pulled out Rs5.16bn. In the F&O segment, foreign funds were net buyers of Rs855.5mn.
On Tuesday, FIIs were net buyers to the tune of Rs12.84bn in the cash segment. With this, their net investment in Indian shares in the past five days to more than US$1.5bn.
Major Bulk Deals:
Morgan Stanley has sold Patni Computer. There are no other major bulk deals.
Upper Circuit:
Accel Frontline, RIIL, Bag Films, Gremac Infrastructure, Jayant Agro, Crazy Infotech, Ruby Mills, IID Forgings, Jai Corp, Marathon Nextgen and BF Utilities.
Lower Circuit:
Post Market Commentary
The Sensex opened with a positive gap of 45 points at 16,891, and soon touched a new all-time intra-day high of 16,928 - just 72 points shy of the 17,000-mark.
Profit-taking at higher levels saw the index pare gains and drop into red to a low of 16,677 - down 251 points from the day's high. However, the index rebounded into the positive zone on the back of fresh buying at lower levels.
The Sensex finally ended with a gain of 54 points at a record 16,900.
The BSE Oil & Gas index gained 1.3% at 9778. The Realty index, however, dropped 3% to 9085.
The market breadth was negative - out of 2,816 stocks traded, 1,654 declined, 1,111 advanced and 51 were unchanged today.
INDEX MOVERS...
HDFC Bank soared nearly 4% to Rs 1,398. Hindalco surged 3% to Rs 168.
Bharti Airtel rallied over 2% to Rs 965. Reliance and Ranbaxy moved up 1.8% each to Rs 2,400 and Rs 424, respectively.
Hindustan Unilever advanced 1.5% to Rs 227. Cipla and Maruti were up over 1% each to Rs 169 and Rs 991, respectively.
...AND THE SHAKERS
Mahindra & Mahindra plunged 2.6% to Rs 763. Bajaj Auto slipped over 2% to Rs 2,519.
SBI and Wipro dropped 1.6% each to Rs 1,804 and Rs 436, respectively.
Larsen & Toubro is down over 1% to Rs 2,865.
VALUE & VOLUME TOPPERS
IFCI topped the value chart with a turnover of Rs 449 crore followed by Reliance Natural Resources (Rs 441.60 crore), J P Hydro-power (Rs 275.30 crore), Reliance Petro (Rs 266.60 crore) and Reliance Energy (Rs 238.50 crore).
Reliance Natural Resources led the volume chart with trades of around 4.72 crore shares followed by IFCI (4.42 crore), Ispat Industries (4.33 crore), J P Hydro-power (3.70 crore) and Tata Tele (2.76 crore).
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