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Tuesday, January 22, 2008
Yesterday is gone, whats up today ?
You gave your views yesterday!
Today is new, fresh, and we smell more blood
What are you doing today ?
Pain is the name of the game...
The market may extend its losses for seventh straight day following weak global cues. Asian markets were trading weak today, 22 January 2008. Hong Kong's Hang Seng (down 5.36% at 22,542), Japan's Nikkei (down 4.41% at 12,738.31), Taiwan's Taiwan Weighted (down 5.82% at 7,638.07), Singapore's Straits Times (down 3.5% at 2,815.04), China’s Shanghai Composite (down 3.69% to 4,733.21) and South Korea's Seoul Composite (down 3.65% at 1,622.08), all fell sharply.
US stock markets were closed on Monday, 21 January 2008 in observance of Martin Luther King Day.
Sensex had tumbled 1408.35 points or 7.41% to 17,605.35 points on Monday, 21 January 2008 triggered by setback in global markets, selling by foreign institutional investors and margin calls after a proposed US stimulus package failed to soothe fears the US will tip into recession.
The BSE Sensex has now eroded 3601.42 points or 16.98% from a record high of 21,206.77 hit on 10 January 2008.
Responding to the stock market fall on Monday, 21 January 2008, the government has advised investors to take informed and responsible decisions in the situation and not be led by rumours or any unwarranted apprehensions.
As per provisional data, foreign institutional investors (FIIs) sold shares worth a net Rs 3296.73 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 3399.20 crore on Monday, 21 January 2008.
FIIs were net buyers to the tune of Rs 1,104.41 crore in the futures & options segment on Monday, 21 January 2008. They were net sellers of index futures to the tune of Rs 1,461.31 crore and bought index options worth Rs 374.46 crore. They were net buyers of stock futures to the tune of Rs 2,195.21 crore and sold stock options worth Rs 3.95 crore.
Pressure from margin calls which was the major reason for the huge fall on Monday, will continue today. A margin call is triggered when shares that an investor had bought with borrowed money decrease in value. If the investor is not able to put up additional margin, the broker/financer will resort to sale of shares.
Domestic insurance firms may continue buying at declines. Insurance firms have been raising lots of funds through unit-linked insurance plans with high weightage for equity. The money is being pumped in the secondary market.
Some of the foreign institutional investors (FIIs) recently registered with the market regulator Securities & Exchange Board of India (Sebi) may start buying at declines. Since Sebi’s restrictions on participatory notes in October 2007, 134 new FIIs have been registered with Sebi, taking their total tally to 1,259.
Collections from new funds offers (NFOs) of mutual funds may also provide support to the market at declines as the funds deploy the money in the market. A total of 10 new funds offer are currently on which include Reliance Natural Resources Fund, AIG Infrastructure & Economic Reforms Fund, HDFC Infrastructure Fund, ICICI Prudential Fusion Fund – Series III, among others.
The US economy has been hit hard by rising defaults in the sub-prime mortgage sector in which Americans with bad credit records are struggling to pay back housing loans given to them during the housing boom.
US president George Bush on Friday, 18 January 2008, called for a package of tax cuts and other measures totaling around 1% of US gross domestic product, or up to $150 billion, after weak recent reports on employment, retail sales, factory activity, and housing construction this month suggested the United States -- the world's largest economy --may be heading into recession. Under consideration in the package announced by Bush are ideas like tax rebates, incentives for businesses, and extensions of unemployment insurance.
How to become rich ...
"I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful."
-- Warren Buffett
"The stock market is filled with individuals who know the price of everything, but the value of nothing."
-- Philip Fisher
"Buy what you know"
"Buy low, sell high"
Power Premium - tera kya hoga ?
Future Capital Holding 765 440 to 450
Reliance Power 450 220 to 230
Emaar MGF 725 to 850 280 to 300
J. Kumar Infraprojects 110 to 120 8 to 10
Cords Cable Ind. 125 to 135 10 to 12
Market to witness another sell off
Weak global cues and heavy sell-off in Asian indices in morning trades coupled with yesterday's fall may weigh on local indices in the early trades and thereafter could exhibit volatility during intra-day trades. Caution should be exercised as the market may move in tandem with global indices which are currently under pressure on growing fears that the U.S. economy is heading for recession. However, strong optimism amongst investors could help the sentiment turn positive. On the downside, support for Nifty is at 5100 and on breaking below this level the next support is at 4950, while on the upside it could test 5260. The Sensex has a likely support at 17400 and may face resistance at 17800. Asahi India, Balaji Tele, Bank of India, Grasim, India Infoline, Lupin, Pidilite, Punjab Tractors, Sea Goa, Spice Jet, Tata Elexsi, Tata Teleservices, Tech Mahindra, united Spirits and Vijaya Bank are expected to announce their numbers.
Morning Call - Jan 22 2008
Market Grape Wine :
In House :
Nifty at a supp of 4970 and 4852 with resis at 5230 and 5319
Nifty downside likely to be limited to 4650 ~4600 and 16000~16100 on the sensex.
Mkt likely to stay very volatile for a couple of days.
F&O: Sell Satyam below 369 with a TGT of 350 and a SL of 378
Out House :
Markets at a support of 17017 & 16651 levels with resistance at 17989 & 18118 levels .
Markets to correct sharply with Nifty might support at 5000 below which 4800 levels .
Sell at every rise book profits at every rise .
Dark Horse : Buy A group Fundamentally sound stock at 16500 to 16800 level with 90 days horizon
Show me the money!
Lack of money is the root of all evil – George Bernard Shaw
Even as we live to fight another day, the fact remains that we are in the midst of one of the worst times ever for global equity markets. And the end is nowhere in sight for the moment. As if the bloodbath in European and Latin American markets overnight was not enough, the Asian markets this morning too have continued from where they left yesterday.
The signs are all flashing red across the world. Investors are seeing their shares erode. Leveraged players are asked to immediately cough up money. Power and Future Capital have taken a different meaning in recent days. People went head over heels borrowing money to subscribe to the high-profile IPOs and now some may see their cheques bounce if the market can't bounce back.
What could also exacerbate the matters for
Given the steep fall in Asian and other global markets, we expect another gap-down opening and further weakness. No levels will work in this kind of a market. Even fundamentals are being overlooked. Don't be surprised if there is a trading freeze. If not that, we expect at least another 1,000 points crack in the Sensex.
Things could get even worse once the
A silver lining in the dark clouds is that while FIIs pulled out Rs32.96bn (provisional) from the cash segment yesterday, domestic institutions pumped in almost a similar amount. This trend may persist for a while as a lot of MFs are sitting on cash after raising money through recent NFOs. However, the bad news is it may not be enough to stop the slide.
Results Today: Amara Raja, ANG Auto, Asahi India, Balaji Telefilms, Bank of India, Bombay Rayon Fashions, Brigade Enterprises, Corporation Bank, Cosmo Films, Deccan Aviation, Genus Power, Grasim, Greenply Industries, Gujarat Ambuja Exports, Gujarat Fluorochemicals, GSFC, HEG, i-flex, India Infoline, Info Edge, INOX, Lupin, Mangalam Timber, MIC Electronics, MindTree, Nelco, NOCIL, Noida Toll Bridge, Pantaloon Retail, Phoenix Mills, Punjab Tractors, Sesa Goa, Spicejet, Swaraj Engines, TN Newsprint, Tata Elxsi, Tata Tele (M), Tech Mahindra, United Spirits, UB and Vijaya Bank.
Brazil's Bovespa sank 6.6%, almost 3,800 points, to 53.709.11. Mexico's IPC index fell 5.35%, nearly 1,430 points, to 25,284.88. Europe officially entered bear-market territory, with the pan-European Dow Jones Stoxx 600 index, ending down 5.4% at 309.67.
Leading European indexes also slumped, with the French CAC-40, ending the day down 6.8% at 4,744.45, the German DAX 30 was down 7.2% at 6,790.19, while the UK's FTSE 100 finished 5.5% lower at 5,578.20.
The VDAX-New Index, a benchmark gauge of European stock-market volatility, surged as much as 39%, the most since 2001. The measure of expected price swings for stocks is derived from prices paid for options on Germany's DAX.
This morning the yen declined, erasing gains, on speculation that the recent surge to the strongest in 2 1/2 years against the dollar was excessive. The Australian and New Zealand dollars fell to the lowest in at least four months against the yen as global investors liquidated their higher-yielding assets funded through yen.
Head of the International Monetary Fund (IMF) has called the global economic situation serious and says markets worldwide had responded skeptically to a US stimulus plan. Dominique Strauss-Kahn stresses that a US recession would affect economies across the globe.
"The situation is ... serious," said Strauss-Kahn following a meeting in Paris with French President Nicolas Sarkozy. "All the countries in the world are suffering from a slowdown in growth in the United States."
Back in India though, the Prime Minister and the Finance Minister are still singing the "India Shining" tune. The PM says that sustained orderly growth of the capital markets is a priority area of the UPA Government.
Initially, P Chidambaram refused to comment on the market movement, but by evening his ministry issued a statement advising investors to take informed decisions.
The Bank of Japan (BOJ) today kept interest rates unchanged and economists expect the policy makers to say later today that the world's second-largest economy is growing slower than it had estimated.
Governor Toshihiko Fukui and his colleagues left the benchmark overnight lending rate at 0.5% by a unanimous vote, the bank said in a statement today in Tokyo. The key rate was doubled in February.
Will bounce back remain a hope?
After falling over 1800 points in the previous week, markets further extended their losses on Monday (Jan 21, 2008). It was blood-bath on Dalal Street as a massive sell was triggered on Indian bourses amid rising worries over the US economy and its wider global fallout. It was undoubtedly the biggest ever fall in Indian stock markets history in absolute point’s term. The fall could be attributed to selling pressure all over. Further there were also reports stating margin calls getting triggered and few terminals being shut. All the 30 components of Sensex declined with Reliance Energy losing the most, down 16.38%.
Among the BSE sectoral indices, BSE Metal index (down 13.3%), BSE Realty index (down 12.8%), BSE Oil & Gas index (down 11.9%), BSE Mid-Cap index (down 11.3%) and BSE Power index (down 10.9%) bore the brunt of the selling. Sugar and cement shares too fell sharply.
About 138 stocks advanced on the BSE, while 2,658 stocks declined and 13 stocks remained unchanged. In the BSE 500 index, there were only 5 advancing stocks. Finally, the 30-share Sensex closed at 17,605, plunging 1,408 points (7.4%). The NSE Nifty nose-dived 496 points or 8.7% to close at 5,208.
Reliance Industries slipped 9% to Rs2540. According to reports the company has planned to produce 30-40mn cubic meters of gas a day from six finds in the Mahanadi block with an investment of US$1.14bn and also has acquired 1,000 hectares for Mumbai SEZ. The scrip touched an intra-day high of Rs2779 and a low of Rs2345 and recorded volumes of over 82,00,000 shares on NSE.
Rcom plunged over 12% to Rs613. The company has planned to invest Rs200bn for its network expansion this year reports stated. The scrip touched an intra-day high of Rs704 and a low of Rs571 and recorded volumes of over 1,00,00,000 shares on NSE.
L&T was down over 6% to Rs3696. It is among nine companies that have qualified for 2000-MW Talwandi Sabo coal-based thermal power plant at Mansa in Punjab stated reports. The scrip touched an intra-day high of Rs3939 and a low of Rs3470 and recorded volumes of over 16,00,000 0shares on NSE.
Hero Honda slipped 7% to Rs643. The company announced that it is considering using excess capacity at its existing factories to make components and export motorcycle kits after a new factory at Haridwar, Uttarakhand starts production in April accordig to reports. The scrip touched an intra-day high of Rs697 and a low of Rs634 and recorded volumes of over 1,00,000 shares on NSE.
TVS Motors plummeted over 20% to Rs48 after reports stated that the Supreme Court directed the company not to accept any fresh bookings- for the new TVS Flame bike- till Jan29, 2008. The scrip touched an intra-day high of Rs64 and a low of Rs43 and recorded volumes of over 16,00,000 shares on NSE.
Tata Steel dropped 7.7% to Rs721. According to reports the company may partner Vale, Brazil mining company for projects in Brazil. The company has also signed a joint venture with Oman’s Al Bahja Group to develop limestone deposits in Salalah in the sultanate reports stated. The scrip touched an intra-day high of Rs780 and a low of Rs626 and recorded volumes of over 37,00,000 shares on NSE.
Mysore Cements declined 20% to Rs39. Reports stated that Sebi asked Heidelberg Cement AG to acquire shares of the company from the Indian promoters, the SK Birla group, at the same price at which it bought shares from public shareholders by open offer. The scrip touched an intra-day high of Rs48 and a low of Rs39 and recorded volumes of over 4,00,000 shares on BSE.
News Snippets:
Reliance Energy raises Rs78.4bn through allotment of convertible warrants to AAA Project Ventures, a promoter group company. (ET)
Reliance Communications awards GSM roll-out contract valued at US$500-600mn to Chinese telecom network major Huawei. (ET)
Satyam Computers has acquired US-based consulting firm Bridge Strategy Group in an all-cash deal of US$35mn. (ET)
L&T bags Rs17bn order from Kuwait National Petroleum Company to manufacture and supply reactors for its clean fuel project. (ET)
Dr. Reddy’s have entered into a settlement agreement with Novartis to suspend the launch of its generic capsule rivastigmine tartrate till 2014. (ET)
Ranbaxy has reached an out-of-court settlement with GSKSmithKlime to market generic copies of the latter’s US$1bn migraine drug Imitrex in the US. (ET)
Wipro Infotech wins a US$100mn deal from Saudi Arabian Airlines. (ET)
The Supreme Court refuses to allow TVS to market its 125cc bike ‘Flame’ till the Madras high court hears the patent case filed by Bajaj Auto. (DNA)
RIL multi-product SEZ in Jhajjar district in Haryana is approved by the Centre. (FE)
IOC, Oil India and an Algerian company to prospect oil in Libyan onshore block. (BL)
MRPL and Shell in JV to market and supply aviation fuel in Bangalore and Hyderabad airports. (BL)
Sintex Industries is close to acquiring a composites company abroad in a deal worth around US$100mn. (DNA)
Private equity players acquire 21% equity in Ballarpur Paper Holdings for Rs7bn. (ET)
Network 18 group plans to launch a 24-hour home shopping television channel soon. (DNA)
Raj TV to spent Rs500mn for adding more channels over next 20 months. (BL)
Sona Okegawa, part of Sona group, acquires ThyssenKrupp’s precision forging company. (BL)
Vodafone Essar to invest US$6bn over next three years to increase its mobile subscriber base to over 100mn. (BL)
Finance Minister agrees to meet fertilizer sector subsidy needs and other demands. (FE)
Government proposes to introduce new regulations for mining operations to penalize companies delaying development of mines by levying higher rent on the leasehold area. (ET)
Decision on hike in petroleum products postponed until next week. (FE)
10% surcharge on personal and corporate income tax may by halved or scrapped in the Budget. (BS)
Poll Results - Will you sell Reliance Power on listing?
Yes 471 (67.5%)
No 226 (32.5%)
TOTAL VOTES : 697
What do you think ? People will be a position to sell Reliance Power on listing ? How different would this poll results be if we re-ran it again ?
And Mr. Ambani was trying to sell "ALL" the shares to retail :)
See the Older Poll results to find what percentage of you wanted to apply for the issue in the first place
Welspun Gujarat
We recommend a sell in Welspun-Gujarat Stahl Rohren at current market price. The chart of the Welspun-Gujarat Stahl Rohren suggests that the stock had been on a steady bull run from its March 2007 low of Rs 90 till it marked a life high of Rs 537 in mid of January 2008. However, after marking life high, the stock reversed direction and began to decline. The prolonged bearish divergence in the weekly momentum indicator and the weekly moving average convergence divergence lines in the overbought region have strongly supported this reversal. On January 21, the stock tumbled 14 per cent, penetrating the intermediate up trendline as well as the 21-day and 50-day moving average lines. The daily momentum indicator is likely to enter the bearish zone and the weekly momentum indicator is likely to enter the neutral region from the bullish zone. On the upside, the immediate resistance for the stock is at Rs 462 and the subsequent resistance is at Rs 490 levels. The short-term investors can book profit or sell the stock while keeping the stop-loss at Rs 455 level. Considering the above arguments, we expect the stock to decline further in the short-term to the immediate support level of Rs 370.
Gold falls too
US markets are shut on account of King Martin Luther Day
Yellow metal nose-dived today despite the turmoil in the global financial markets over the heightened concerns that US will lead a global economic slowdown. Bullion tumbled today on dollar strength against the euro and on plunge in the oil prices on continuously rising demand concerns. Though U.S. markets are shut for a holiday, stock futures declined a whopping 400 points as global indexes become unhinged.
The downbeat start to the week followed a poor performance from the U.S. on Friday, which triggered steep losses in the Asian and European markets today. Losses from financials were to blame in both cases, after U.S. bond insurers came under fire from a ratings agency last week and as a proposed economic stimulus plan from President Bush failed to generate much enthusiasm in a week of U.S. banking sector results.
MCX bullion futures are trading down around Rs 100 at 11097 per 10 grams in the late electronic session. Its international counter part is trading at $872 down nearly $10 an ounce.
Base metals also dropped very steeply hurt by the growth concerns in US and its spill over effects on the global economies.
In currencies today, Euro floundered against both the US dollar and Japanese yen. The euro tumbled following weekend remarks from a European Central Bank policymaker that further underlined expectations for slower growth across the nations that make up the single currency. Also the speculation that the Societe Generale the main European financial services companies may be forced to write down assets reflected that the US recession is having impact on Europe.
The Bank of Japan is widely expected to hold interest rates steady at 0.50% when it announces its policy decision on Tuesday. The pound fell to its lowest in nearly a year against the dollar on Monday, pressured by a spike in global risk appetite and further evidence that the UK housing market is heading for a sharp downturn.
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