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Wednesday, November 07, 2007
Gold and silver rise to new highs
Tumbling dollar and spiraling crude impart all the shine to precious metal prices
Dollar stumbling to a new fresh low against its rival currencies sent precious metals to new highs today, Tuesday, 6 November, 2007. Crude prices spiraling above $97/barrel also lent a hand in this rising price of bullion metals. Gold prices touched highest level I 28 years. Silver price too was at highest level in 26 years.
Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices. Rising crude increases inflationary pressures. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.
Comex Gold for December rose $12.6 (1.6%) to close at $823.4 an ounce on the New York Mercantile Exchange today. Earlier in the day, prices touched $827.2/ounce. It was the highest price after a record $873 on 21 January, 1980.
Comex Silver futures for December delivery rose 59.5 cents (4%) to $15.38 an ounce. The metal has climbed 19% this year. For the month of October, prices gained 3.7%.
Gold had climbed 18% in the past two months (Sept-Oct) as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. In October itself, gold prices gained 6%. The metal's October rally was the fourth straight monthly gain.
In 2006, silver had jumped 46% while gold gained 23%.
In the currency market today, the dollar traded down against the euro after sinking to new record lows, as investors weighed ongoing credit woes and surging crude-oil futures. The dollar index, which tracks the greenback against a basket of six major currencies, dropped 0.5% at 76.05.
Crude oil price today climbed as high as $97.1 a barrel today.
On 31 October, 2007, Federal Reserve cut the fed funds rate by a quarter-point to 4.50% and said that the recent spike in commodity prices may put renewed upward pressure on inflation. Prior to that, Federal Reserve had cut interest rates by half percentage point on 19 September, 2007.
In recent times, the weakening of dollar have continued to affect the price of the metal. Dollar had been witnessing a free fall since Federal Reserve cut interest rates in September. The U.S. currency has lost almost 9.5% against the euro this year and has fallen 4% since the September rate cut.
Gold prices have jumped 15% during the third quarter and it is the most since 1999. The yellow metal has climbed 29% this year. Since the rate cut in September, prices have gone up by almost 12%.
At the MCX, gold prices for December delivery closed at Rs 10,398 per 10 grams. The closing price is Rs 132 (1.3%) higher as against previous closing price. Prices rose to a high of Rs 10,429 per 10 grams and fell to a low of Rs 10,250 per 10 grams during the day’s trading.
At the MCX, silver prices for December delivery closed Rs 527 (2.7%) higher at Rs 19,854/Kg. Prices opened at Rs 19,300/kg and rose to a high of Rs 19,970/Kg during the day’s trading.
FIIs continue to exit the market
Outflow of Rs 656.90 crore on 5 November 2007
Foreign institutional investors (FIIs) sold shares worth net Rs 656.90 crore on Monday, 5 November 2007, compared to their selling of Rs 761.40 crore on Friday, 2 November 2007.
FIIs outflow of Rs 656.90 crore on 5 November 2007 was a result of gross purchases of Rs 4550.20 crore and gross sales Rs 5207.10 crore. The 30-shares BSE Sensex lost 385.45 points or 1.93% to 19,590.78 on that day.
FII inflow in calendar year 2007 totaled Rs 70,747.40 crore (till 5 November 2007).
There are a total of 1,134 FIIs registered with the Securities & Exchange Board of India (Sebi).
Daily Technical Analysis
Nifty — The index opened on a flat note and tested intra-day high of 5957 in the morning trades, after which it declined throughout the day’s trading session. It ended the day with loss of 58 points.
Range-bound — The index has been stuck in a trading band of 5709-6011 for the last seven trading sessions. A breakout from the trading band should see a directional move.
Support & Resistance — The index has support around 5737 (high of 18 october 07), while lower support is around 5709. The resistance level for the day’s trading is around 5840, with higher resistance around 5948.
Conclusion — Index could decline towards the 5737 support level.
Tuesday, November 06, 2007
Post Market Commentary
The market closed the session on a negative note as BSE Sensex closed lower by 190.11 points at 19,400.67. A lot of volatility is seen in today''s trading session as the Sensex touched an intrady high of 19,919.34 and low of 19,337.85. Overall, the market breadth was weak as 1606 stocks are closed in red while 1108 stocks are closed in green. The market breadth becomes weak towards the end of the session as the sellinf of scrips across the sectoral indices intensified. Except PSU and Reality index, all the sectoral indices closed in red. The BSE Mid Cap and Small Cap closed lower by 60.51 points and 43.99 points at 8,015.30 and 9,803.03 respectively.
The capital goods index declined by 354.99 points to close at 19,697.29. Leading the losers pack are Siemens (4.64%), Alstom (3.96%), L&T (3.77%), Praj industries (2.20%) closed lower.
BSE bankex index fell by 221.44 points to close at 10,786.51 as BOB (6.12%), BOI (3.84%), Axis bank (3.52%), ICICI bank (2.36%), PNB (1.87%) and SBI (1.41%) closed lower.
BSE Metal index dropped by 195.63 points to close at 17,206.06 as Jindal Steel (5.17%), Sesa Goa (3.76%), Jindal Saw (3.13%), Tata Steel (2.20%), Hind Zinc (2.33%), SAIL (1.25%) closed in negative.
The oil and gas index slipped by 116.33 points to close at 11,389.21. Pushing it down are RPL (17.64%), CAIRN India (1.58%), Reliance industries (0.31%), BPCL (0.30%) and HPCL (0.16%) closed in red.
The IT index dropped by 26.44 points to close at 4,540.69. Pushing it lower are Tech mahindra (3.33%), Iflex (2.65%), Satyam (2.34%), TCS (0.65%) and Infosys (0.30%) closed in negative.
Market Close : Finally a fall, Heavyweights under pressure..
Rally at the started was witnessed with dowsides at the close. Market trade on cautious mode after opening strong. FII's have been net sellers in cash and Fno too while Domestic funds were buyers. This shows FII's are exiting their positions. Market trade in yoyo fashion as the investors traded cautious. Indices witnessed profit booking at high levels as it lost ground in the late sessions and fell in the red zone but managed to recovered as value buying was seen in almost all segments but the power sector stocks were the front runners. RIL some how kept its hold on the market after Morgan Stanley raised the price target on the stock by 25% to 3,150 and its earnings forecast on RIL by 4% for the year ending 31 March 2008. But RIL alone couldnt hold the market for long as the market saw heavy profit bookings in the last hour of trade with index heavy weights leading the way.
Banking and telecom stocks led the decline with Auto majors like Tata Motors and Maruti Udyog followed them. L&T witnessed heavy selling pressure towards the end as it was down by 4%. Some of the Reliance group shares tumbled with RPL leading the way. All BSE Sectoral Indices end in the red Except the Realty Index which showed ended marginal in green. Small and Mid caps could not sustain the selling pressure as both ended in Red. Metals and oil & gas stocks continue to see selective action with some value buying seen in stocks like GAIL, Hindalco and Nalco. Another sector which was in favour with the investors was the Fertilizer sector which saw good value buying.
In Auto stocks 4 wheelers ended weak but two wheelers like Bajaj Auto and Hero Honda ended up. As per some reports, Bajaj Auto has picked up a 14.5% stake in Vienna based sports bike manufacturer KTM Power Sports for more than Rs 300 cr. KTM which is the second largest sport bike maker in Europe will be using Bajaj's Chakan plant to locally produce their bikes and engines for the Indian and south east Asian markets. The alliance apart from enabling Bajaj Auto to take over the distribution of KTM products in India and South East Asia, will also provide access to the European market through acquisition. KTM is into producing sports bike which are above 250cc and go up to almost 900+ cc. The Indian markets are not made for these types of bikes as the Indian mentality is to have bikes with better mileage and the efficiencies. The market for such sports bikes are very niche in India. But, Bajaj being the only distributor for KTM for its Asian territory saw Bajaj end up in green.
Titan announced spectacular numbers. Revenues were up over 35% and profits grew by 45%. Watches is high margin business which grew by over 20%. Jewelry business grew by over 45% with higher gold prices and of course volume growth as well with a higher retail network. Titan now has 223 World of Titan outlets, 100 Tanishq outlets (earlier 80) and 17 Gold Plus (earlier 10) outlets. Going ahead we see that the eyewear and the precision engineering are expected to bring in the extra. However, at current valuations of 45 X FY09 leaves nothing on the table near term. As per some market reports, Reliance Retail will make its jewelry foray with the launch of Reliance Jewelry this Diwali. Reliance will be the second corporate after the Tatas to enter the Rs 70,000 crore Indian jewellery industry, which is dominated by almost 3 lakh traditional family jewellers. Some competition is building up in the jewelry segment which has grown really fast and with Reliance foray in this means some hard tuff fight for Titan is there. Today we proved the power of WOW as the negative note on Titan and the short call went hand on hand is delivering superb profits.
Technically Sepaking: Weaik trade with Declines outnumbering Advances. Tunover was low at Rs 9840cr. The market trend is slowly weakening, though there are few pleasant moves in the midcaps (as we had expected). Sensex supports are at 19260 and 19075. The large caps are likely to be strong once again only if Sensex stabilise above 20000.
Market takes heavy pounding
Indices were off highs as traders booked profits on every rise. Banking shares were worst hit followed by capital goods and tech stocks. However, realty and PSU stocks remained strong. The Sensex resumed on a positive note at 19,690, 99 points above its last close of 19,591 and by mid-morning trades accumulated gains of 328 points on all-round buying to touch the day's high of 19,919. Although the index managed to trade above 19,750 till afternoon, unabated selling dragged it below the 19,350 level towards the close. After slipping over 581 points from the day's high, the Sensex finally dropped 0.97% and was down 190 points for the day at 19,401. The Nifty shed 1.04% and was down 61 points at 5,787.
The market breadth was extremely negative. Of the 2,782 stocks traded on the Bombay Stock Exchange (BSE), 1,597 stocks declined, 1,116 stocks advanced and 69 stocks remained unchanged. Barring the BSE Realty index and the BSE PSU index, most of the sectoral indices closed in negative territory. The BSE Banking index was down 2.01% at 10,787 followed by the BSE CG index (down 1.77% at 19,697), the BSE Teck index (down 1.60% at 3,838), the BSE Metal index (down 1.12% at 17,206) and the BSE Oil & Gas index (down 1.01% at 11,389).
Barring a few, the index stocks came under heavy selling pressure. Reliance Communication led the slump and crashed by 4.35% at Rs745. Among the other major laggards, L&T tumbled by 3.77% at Rs4,126, Bharti Airtel dropped 2.52% at Rs918, ICICI Bank slumped 2.36% at Rs1,241, Satyam Computer fell 2.34% at Rs453, Tata Motors declined by 2.24% at Rs723 and Maruti Suzuki lost 2.24% at Rs723. However, few frontline stocks bucked the downtrend. Hindalco rose 4.19% at Rs191, Bajaj Auto gained 2.49% at Rs2,455, BHEL surged 2.29% at Rs2,724, Dr Reddy's Lab added 1.99% at Rs613 and ACC moved up by 1.34% at Rs1,022.
Over 7.62 crore Reliance Petroleum shares changed hands on the BSE followed by Reliance Natural Resources (7.22 crore shares), Tata Teleservices (1.96 crore shares), Power Grid Corporation (1.81 crore shares), and Ispat Industries (1.73 crore shares).
Value-wise Reliance Petroleum registered a turnover of Rs1,845 crore on the BSE followed by Reliance Natural Resources (Rs1315 crore), Reliance Energy (Rs372 crore), Power Grid Corporation (Rs287 crore) and HDFC (Rs211 crore).
Sensex sheds 190 points on profit taking
The market drfited lower, coming sharply off day's high as investors booked profit after the early rise. Volatility was high. Banking and telecom stocks were worst hit. Power stocks ended strong. Some of the Reliance group stocks tumbled.
Asian indices ended on a mixed note after Monday (5 November 2007)'s fall caused by worries about the credit crunch in the US. European markets were trading firm.
The 30-share BSE Sensex settled 190.11 points or 0.97% lower at 19,400.67. Sensex hit a high of 19919.34 in mid-morning trade. At day's high of 19919.34, Sensex had risen 328.56 points. It hit a low of 19,337.85 in late trade. At day's low, Sensex lost 252.93 points.
The broader based S&P CNX Nifty was down 61 points to 5786.50.
The market breadth was negative with decliners outpacing advancers. On BSE, 1606 stocks declined, while 1108 stocks advanced and 70 shares were unchanged. From the Sensex pack, 18 out of 30 stocks were in red.
BSE clocked a turnover of Rs 9840 crore, compared to Monday (5 November 2007)'s Rs 9,049.87 crore.
The BSE Mid-Cap index was down 60.51 points, or, 0.75% at 8,015.30, while the BSE Small-Cap index fell 43.99 points, or, 0.45% at 9,803.03. Both these indices outperformed the Sensex
Telecom stocks dropped. Reliance Communications lost 4.35% to Rs 745.25 and Bharti Airtel shed 2.52% to Rs 918.45.
, Larsen & Toubro (down 3.77% to 4125.70), and Satyam Computer (down 2.34% to 453.10) were among other top Sensex losers.
Hindalco Industries (up 4.19% to Rs 191.30), Dr Reddy's Laboratories (up 2.59% to Rs 613.35), Bajaj Auto (up 2.49% to Rs 2454.65), Bharat Heavy Electricals (up 2.29% to Rs 2724.25) and ACC (up 1.34% to Rs 1021.75) were the major gainers from Sensex.
The BSE Bankex fell 221.44 points, or, 2.01% to 10,786.51. The banking index underperformed the Sensex in today’s trade.
ICICI Bank dropped 2.36% to Rs 1240.80. ICICI Bank said during trading hours today, it will cut interest rates on deposts by 0.25% to 0.50% points 12 November 2007.
State bank of India fell 1.41% to Rs 2208.75, HDFC Bank fell 0.21% to Rs 1705.95, Bank of Baroda skid 6.12% to Rs 359.65 and Bank of India slipped 3.84% to Rs 367.90.
The BSE Capital Goods index fell 354.99 points, or, 1.77% at 19,697.29. The BSE Metal index lost 195.63 points, or, 1.12% at 17,206.06. The BSE Oil & Gas index fell 116.33 points, or, 1.01% at 11,389.21. All these indices underperformed the Sensex
Oil and Natural Gas Corp (ONGC) ended up 0.13% to Rs 1300.75 on reports the state-run firm was in talks to buy a 30% stake in Sudan's Block 8 from Malaysia's Petronas, as well as a second exploration block.
Bajaj Auto, India's second biggest motorbike maker by sales, rose 2.49% to Rs 2454.65 on reports that it subsidiary has bought 14.5% in Austrian sports motorbike maker KTM Power Sports AG for more than Rs 300 crore.
Real estate firm Unitech settled lower 0.26% to Rs 385.15 on reports that the promoters of the company are said to be close to acquiring up to 40% stake in Orissa Sponge Iron and Steel.
Biotech firm Biocon edged higher by 1.93% to Rs 573.75 on reports that the company is in the final stages of negotiations with a drug marketing and distribution firm in the US.
Reliance Energy was up 1.32% to Rs 1844.95. It was the only gainer from the Reliance pack. Reliance Petroleum lost 17.64% to Rs 220.35, Reliance Natural Recources shed 9.02% to Rs 162.45, Reliance Industrial Infrastructure fell 5% to Rs 2388.20, Relaince Communications dropped 4.35% to Rs 745.40 and Reliance Capital slipped 3.62% to Rs 1833.55.
Reliance Industries fell 0.31% to Rs 2655.50. Morgan Stanley raised the price target on the stock by 25% to 3,150 and raised its earnings forecast by 4% for the year ending 31 March 2008. The key reasons for the upgrade were news flows on exploration and production business, including pricing contracts being signed, retail business being executed ahead of expectations and higher global refining and petrochemical margins.
New additions in MSCI index announced by MSCI as part of a semi-annual rejig were mixed. GMR Infrastructure ended up 3.01% to Rs 196.50), DLF rose 1.40% to Rs 927.90, NTPC gained 1.16% to Rs 239.55 and Sterlite Industries rose 0.07% to Rs 991.65.
United Spirits (down 3.26% to Rs 1816.80), Cairn India (down 1.85% to Rs 217.95), HCL Technologies (down 0.44 to Rs 305.85) and Reliance Natural Resources (down 9.02% to Rs 16.45), edged lower.
The change is effective 30 November 2007. Stocks earmarked to be added to the MSCI indexes tend to rise, as funds tracking these indexes will have to buy them.
Reliance Petroleum clocked highest volumes of 7.62 crore shares on BSE, followed by Reliance Natural Resources (7.22 crore shares), Tata Teleservices (1.96 crore shares), Power Grid Corporation of India (1.81 crore shares) and Ispat Industries (1.73 crore shares), in that order.
Reliance Petroleum clocked highest turnover of Rs 1845.38 crore on BSE, followed by Reliance Natural Resources (Rs 1315.38 crore), Reliance Energy (Rs 372.57 crore), Power Grid Corporation of India (Rs 287.86 crore) and Housing Development Finance Corporation of India (Rs 211.76 crore), in that order.
Diamond Power Infrastructure rose 10% to Rs 374 after the company said it will raise Rs 228 crore from GE Capital and Clearwater Capital Partners, to fund expansion.
Subhash Projects & Marketing ended lower 1.28% to Rs 307.55 despite securing an order worth Rs 52.06 crore for a water supply project in Rajasthan.
Fiber optics cables maker Sterlite Optical Technologies rose 1.43% to Rs 304.55 after bagging a Rs 143 crore order from BSNL for supply of copper telecom cables.
Great Eastern Shipping Company rose 1.70% to Rs 478.75 after the company said its subsidiary signed a contract for 2 multi purpose platform supply and support vessels.
Mahindra & Mahindra, India's largest tractor and utility vehicle maker by revenue, moved down 0.26% to Rs 740.95 on reports that it has put in the highest bid of 105 million pounds to take over Italian gear maker Metalcastello.
Brokerage house Motilal Oswal Financial Services fell 1% to Rs 1193 after credit rating agency CRISIL assigned "P1+" rating to its short term debt programme to raise Rs 50 crore.
Infrastructure development firm Pratibha Industries moved up 2.09% to Rs 256.85 on securing an order for designing and constructing storm water pumping station at Irla, Andheri West, Mumbai from Municipal Corporation of Greater Mumbai.
Asian markets were mixed today. Hang Seng was up 1.71% at 29,438.13, Nikkei was down 0.12% at 16,249.63, Taiwan Weighted was down 0.17% at 9,292.80, Straits Times was up 0.35% at 3,683.10 and Seoul Composite was up 1.91% at 2,054.24.
The European markets held firm. France’s CAC 40 was up 0.21% at 5,696.72, Germany’s DAX was up 0.43% at 7,841.04 and UK’s FTSE 100 rose 0.30% at 6,481.
US stocks crumbled on Monday, 5 November 2007, after Citigroup warned of billions of dollars in loan losses, reigniting fears about the health of financial firms and the broader US economy. Dow Jones Industrial Average lost 51.70 points or 0.38% to 13,543.40. The tech-laden Nasdaq Composite index lost 15.20 points or 0.54% to 2,795.18.
FIIs have turned sellers in equities recently after a slowdown in their inflow was witnessed at the fag end of October 2007 and at the onset of this month. FIIs sold shares worth a net Rs Rs 656.90 crore on Monday, 5 November 2007, the day when Sensex had lost 385.45 points or 1.93% to 19,590.78 on renewed fears over the impact of US credit crisis after US financial giant Citigroup said it may suffer up to $11 billion in write-downs for subprime losses. FIIs had sold shares worth a net Rs 761.40 crore on Friday, 2 November 2007.
FII sales/slowdown in inflow comes when Securities & Exchange Board of India (Sebi) put restrictions on issue of participatory notes (PNs) and it also directed unwinding of some exiting PNs within 18 months. The Sebi restrictions on use of PNs came into force from 25 October 2007.
Massive FII inflow had send the market surging in the last two months. FII inflow was a robust in the last two months - at Rs 16132.60 crore in September 2007 and Rs 20590.90 crore in October 2007. FII inflow had surged as huge liquidity infused by a steep 50 basis points cut in Fed funds rates in mid-September 2007 found its way into emerging markets.
The Q2 September 2007 results of India Inc.were decent to strong which means that strong fundamentals would support Indian equities at declines. At the macro level, the India’s economy is expected to post decent to strong growth for a long period of time, mainly due to favourable demographics. Mutual funds are said to be sitting on a strong cash pile of about Rs 14000 crore and they may step up buying if and when there is a steep correction on the bourses.
At current 19,400.67, Sensex trades at a PE multiple of 18.47 to 19.40 based on projected FY 2009 EPS of Rs 1000-to-Rs 1050 for 30 Sensex companies.
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