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Friday, March 07, 2008
Today's Pick - SKF India
We recommend a buy in SKF India from a short-term perspective. It is evident from the charts that the stock was on a medium-term downtrend from its late December 2007 peak of Rs 488 till its February 2008 trough of Rs 320. However, it found support from the long-term support level of Rs 320 and reversed from there in mid February penetrating the medium-term down trend-line in the process. The long-term up trend-line too is not penetrated yet. We see that the stock is trading well above the 21-day moving average. The daily momentum indicator is rising in neutral region towards the bullish zone. The daily moving average convergence divergence is steadily rising towards the positive territory. Our short-term outlook for the stock is bullish and we expect the stock to make a rally to our target price level of Rs 406 in the coming trading sessions. Short-term investors can buy the stock while keeping the stop loss at Rs 337.
Precious metals give up some gains
Gold and silver prices drop as sellers take to profit booking
Precious metal prices fell today, Thursday, 6 March, 2008, a day after gold and silver prices touched all time new highs. The fall in prices today was mainly due to profit taking. Prices fell even as crude oil price closed above $105/barrel. Silver prices also fell substantially today.
Comex Gold for April delivery fell $11.4 (1.2%) to close at $977.1 an ounce on the New York Mercantile Exchange. Prices had touched a record $995.2/ounce during intra day trading yesterday. This year, gold prices have gained 17% till date. In January, prices gained 11%, the highest monthly gain since April 2006. For February, it gained 6%. Last week, gold gained $27 (2.8%).
Comex Silver futures for May delivery fell by 56 cents (2.7%) to $20.225 an ounce. Silver has gained 31% in 2008. The metal had climbed 16% in FY 2007. The metal also has gained for seven straight years. In January this year itself, prices climbed 14%. In February, it gained another 15%.
The dollar has been dampened since last year, more since start of FY 2008 after interest rates were cut twice in January, 2008. Gold, as a dollar-denominated commodity, suffers from dollar strength. On the contrary, gold prices rise with falling dollar as inflationary concerns boosts the metal's appeal as an inflation hedge.
Since the past few days, the bullion metal prices have been on a roll after the Federal Reserve Chairman, Ben Bernanke hinted that Fed in all possibility will go for another soft landing in its next meeting thereby reducing interest rates by another 50 bps to avoid the US economy in all ways from slipping into a recession. With this, the dollar had slumped sharply against its rival currencies.
The Fed has cut the federal funds rate to 3% this year from 5.25% in mid-September, 2007. January 2008 itself saw two rate cuts in a gap of ten days.
In the energy market today, crude-oil futures closed at almost $106/barrel after Energy Department reported an unexpected drop in crude inventories yesterday. The dropping dollar also surged up crude prices.
In the currency market today, the dollar index, which tracks the performance of the greenback against other major currencies, dropped 0.7% to 72.96.
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. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.
Gold witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. The Fed reduced federal funds rate three times in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
At the MCX, gold prices for April delivery closed lower by Rs 149 (1.1%) at Rs 12,619 per 10 grams. Prices rose to a high of Rs 12,835 per 10 grams and fell to a low of Rs 12,520 per 10 grams during the day’s trading.
At the MCX, silver prices for May delivery closed Rs 667 (2.5%) lower at Rs 25,500/Kg. Prices opened at Rs 26,580/kg and fell to a low of Rs 25,500/Kg during the day’s trading.
Crude glides up further
Price settles above $105 for the first time in history since trading began
Crude prices shot up further today, 06 March, Thursday after dollar fell to new lows against the euro and after Energy Department reported a an unexpected drop in crude inventories for last week. Prices had shot up by more than $5 yesterday itself. Energy prices have surged over the past year as the dollar plunged, prompting investors to seek a hedge against inflation.
Crude-oil futures for light sweet crude for April delivery today closed at $105.47/barrel (higher by $0.95/barrel or 0.9%) on the New York Mercantile Exchange. Prices are 74% higher than a year ago. The contract was trading in the intraday range of $105.97 and $99.88 in the volatile session.
In the currency market today, the dollar index, which tracks the performance of the greenback against other major currencies, dropped 0.7% to 72.96. The euro rose to a record against the dollar after European Central Bank President said there is strong upward pressure on inflation. Market took it as a hint that he will not soon cut interest rates.
Yesterday, EIA reported today that crude inventories fell for the first time in eight weeks, dropping 3.1 million barrels to stand at 305.4 million barrels for the week ended 29 February. Inventories had gained about 25 million barrels this year. U.S. refineries operated at 85.9% of their operable capacity last week, up from the previous week's 84.7%.
Brent crude oil for April settlement today rose $0.97 (1%) to $102.61 on the London-based ICE Futures Europe exchange. The London benchmark rose 54% in FY 2007, the most since 1999 when prices more than doubled.
Natural gas remains unchanged even as inventories decline
Natural gas was little changed as crude oil surged above $105 a barrel and a government report showed inventories declined more than average for this time of year. Gas for April delivery rose 0.1 cent to settle at $9.742 per million British thermal units.
EIA reported today that stockpiles were at 1.484 trillion cubic feet in the week ended 29 February, 63 billion cubic feet higher than the average amount over the past five years.
Against this backdrop, April reformulated gasoline gained 2.11 cents to $2.6532 a gallon and April heating oil gained 3.02 cents to $2.9733 a gallon.
Yesterday, OPEC members agreed to hold production steady at a meeting in Vienna.
Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.
At the MCX, crude oil for March delivery closed at Rs 4,179/barrel, higher by Rs 12(0.3%) against previous day’s close. Natural gas for March delivery closed at Rs 391.6/mmtbu, lower by Rs 0.3/mmtbu (0.07%
Thursday, March 06, 2008
Midcapmania Multibaggers - March 6 2008
Buy Core projects & Technologies Ltd @196.95 for a target of 400+ in 12 months and 500+ levels in 18-24months. (Core projects & Technologies Ltd is an emerging player in IT education space. Its tie up with IL&FS for contracts under the Sarva Shiksha Abhiyan(SSA) and NASA's Centre of High Learning(CHL) for delivering education content internationally, would take the company to new highs post FY09. Further company has successfully acquired seven companies in the past two financial years. This has helped it triple revenues in FY07 with the acquired companies contributing 65% to the revenue and profits. Also it has posted better than expected Q3FY08 numbers).
By Uttam Saraf
Disclaimer: DP doesn't vouch for these recommendations and these are by a independent analyst
US Markets end higher
Mixed economic data and bond insurer’s news try to impart positive momentum
After five days of drop, US Market managed to close higher today, Wednesday, 05 March, 2008. A batch of favorable earnings reports and continued news that a bailout for the beleaguered bond insurer was imminent kept the momentum ongoing in the market. Despite that, indices slipped in the red during intra day trading and once again thorugh a late day recovery, market managed to finish with modest gains. Eight out of ten sectors ended in the green today, financials and healthcare being the only exceptions.
In other parts of the market, commodities hit a new high today as the dollar slipped to new lower levels against the euro. Crude oil closed up more than $5 up. Gold and silver prices too ended substantially higher.
At the end, The Dow Jones industrial Average ended the day with a gain of 41 points at 12,255. The Nasdaq Composite Index, finished higher by 12 points at 2,273. S&P 500 finished higher by 7 points at 1,333. Eighteen out of thirty Dow stocks ended in the green today led Chevron.
In the morning a batch of economic reports came out. The February Institute of Supply Management (ISM) Services reading came in at 49.3, which is above the 47.3 consensus. The reading is also above the prior month's reading of 44.6.
But there was some negative economic data too. The ADP Employment Report for February showed nonfarm private jobs fell by 23,000, as against a consensus that called for 18,000 jobs to be added. The results were the worst since 2003. Also, January factory orders were -2.5%, which is even with the -2.5% market was anticipating. December posted a revised 2% increase.
Much of the financial sector was today dictated by anticipation around a word that Ambac would likely be announcing a bailout after meeting with a consortium of banks. Trading of Ambac shares infact halted. But to everyone’s surprise the company just announced that it would be issuing common stock and equity units to raise capital. The stock re-opened sharply lower.
Crude prices shot up by more than $5/barrel today after Energy Department reported an unexpected drop in crude inventories last week. Prices were also fuelled by an all time low dollar against the euro and thirteen member Organization of Petroleum Exporting Countries (OPEC) cartel deciding to keep production quotas unchanged in today’s meeting. Crude-oil futures for light sweet crude for April delivery today closed at $104.52/barrel (higher by $5/barrel or 5%) on the New York Mercantile Exchange. Prices are 74% higher than a year ago. It touched a high of $104.95 today.
Volume on the New York Stock Exchange topped 1.6 billion, and advancing stocks outran those declining about 3 to 2. On the Nasdaq, 1 billion shares were exchanged, and advancing issues edged ahead of those declining, also by 3 to 3.
Tomorrow there are economic reports on the dock. February chain store sales data are scheduled for release tomorrow followed by weekly jobless claims before the market's opening. January's Pending Home Sales Index is in the midmorning hours.
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