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Monday, July 14, 2008
Ranbaxy, Infosys tumble
Stocks ended volatile session with losses for the second straight day on sustained selling in IT and select blue-chip stocks. Ranbaxy Labs suffered over 10% on high volumes. Fresh selling at day’s high in mid-afternoon trade derailed a sustained recovery from lower level witnessed earlier in the day. Volatility was high in the later half of day. The market breadth was weak.
IT pivotals tumbled hit by sharp fall in American depository receipts (ADRs) on the New York Stock Exchange (NYSE) on Friday, 11 July 2008.
European stocks surged, boosted by a US plan to rescue embattled mortgage finance companies Fannie Mae and Freddie Mac and by a fresh surge of acquisition activity. Key benchmark indices in UK, France and Germany rose by 1.22% and 1.77%.
The 30-share BSE Sensex was down 139.34 points or 1.03% at 13,330.51. The Sensex gained 89.51 points at day's high of 13,559.36 hit in mid-afternoon trade. At the day’s low of 13,269.62, the Sensex slipped 200.23 points in late trade.
The S&P CNX Nifty fell 9.03 points or 0.23% to 4039.70. Nifty July 2008 futures were at 4045, a premium of 5.3 points as compared to spot closing.
The BSE Sensex is down 6956.48 points or 34.29% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 7876.26 points or 37.14% away from its all-time high of 21,206.77 struck on 10 January 2008.
As per provisional data, foreign funds sold shares worth a net Rs 436.52 crore while domestic funds bought shares worth a net Rs 63.25 crore today, 14 July 2008.
The market breadth was weak. On BSE, 1587 shares declined, 983 advanced and 73 remained unchanged.
The BSE Mid-Cap index slipped 0.64% to 5,330.80 and the BSE Small-cap index fell 1.10% to 6,640.06
The total turnover on BSE amounted to Rs 4191 crore as compared to Rs 5,386.39 crore on Friday, 11 July 2008. Turnover in NSE’s futures and options segment amounted to Rs 40096.24 crore as compared to Rs 50149.82 crore on Friday, 11 July 2008
Sectoral indices on BSE displayed mixed trend. The BSE Power (down 0.20% to 2,339.28), BSE Realty index (down 0.78% at 4,762.53), BSE Metal index (up 1.46% to 12,897.19), BSE Auto (up 1.05% at 3,566.49), BSE Oil & Gas index (up 1.11% to 8,985.07), BSE PSU index (up 2.02% to 6,087.99), BSE Consumer Durables index (up 0.01% to 3,589.41), BSE Capital Goods index (down 0.32% at 10,740.01), outperformed the Sensex.
The BSE Bankex (down 1.36% at 5,970.52), BSE TecK index (down 3.83% to 2,886.11), BSE FMCG index (down 1.46% to 1,958.29), BSE Health Care index (down 1.21% at 4,079.92), and BSE IT index (down 5.94% to 3,675.59), underperformed the Sensex.
Political uncertainty will continue to weigh on the domestic bourses in the near term. The government is holding a two-day special session of parliament on 21 July 2008-22 July 2008 to seek vote of confidence after it was reduced to minority following withdrawal of support by Left parties on 8 July 2008. The government hopes to retain power due to backing from Samajwadi Party, a regional party in Uttar Pradesh
Oil, India's biggest import, was trading above $143 a barrel, but below a record high of $147.27 hit on Friday, 11 July 2008.
Among the 30-member Sensex pack, 15 advanced while the rest slipped.
India’s largest pharma company in terms of sales Ranbaxy Laboratories tumbled 10.83% to Rs 473.90 on 28.61 lakh shares. It was the top loser from Sensex pack. The stock was hammered on reports the US government has levelled serious allegations against the company. The US department of justice (DoJ) has said that there was evidence to suggest that Ranbaxy used active pharmaceutical ingredients (API) from unapproved sources, blended unapproved API with approved API, and used less-than-approved API at its Paonta Sahib (Himachal Pradesh) plant in its drugs, resulting in the sale of subpotent, super- potent or adulterated medicines in the US market.
In a statement, Ranbaxy strongly denied the allegations raised by the US Department of Justice (DOJ). The company also stated that its business in the US continues as normal. Ranbaxy also said the company's deal with Japanese drug maker Daiichi Sankyo is binding and final and remains on track.
IT stocks extended Friday’s losses after IT bellwether Infosys Technologies said on Friday, 11 July 2008, at the time of announcing Q1 June 2008 results that the business environment was tough. The stock plunged 6.95% to Rs 1559.90, after declining 7.18% on Friday, 11 July 2008. Infosys has a higher weightage of 4.7% in Sensex as compared to 3.66% in Nifty.
At the time of announcing the Q1 results, Infosys revised earnings and revenue guidance upward for the year ending March 2009 (FY 2009). Infosys has forecast 24.4% to 26.6% growth in earnings per share as per Indian GAAP at between Rs 98.79 to Rs 100.51 in FY 2009 over the year ended March 2008 (FY 2008). It has forecast a between 27.5% to 29.5% growth in revenue at between Rs 21278 crore and Rs. 21622 crore in FY 2009 over FY 2008.
TCS (down 3.63% at Rs 770.10), Satyam Computer Services (down 7.60% at Rs 410.65), and Wipro (down 1.48% at Rs 406.20), slipped. The ADRs of Infosys (down 13.30%), Satyam Computer Services (down 9.17%) and Wipro (down 2.82%) slumped on the NYSE on Friday, 11 July 2008.
ITC (down 3.53% to Rs 168.30), HDFC Bank (down 3.23% to Rs 1033), and Hindalco Industries (down 2.90% to Rs 150.70) edged lower from the Sensex pack.
India’s top tractor maker in terms of sales Mahindra & Mahindra (M&M) surged 4.50% to Rs 554.90 on 25,411 shares. It was the top gainer from Sensex pack.
India’s largest state-run oil exploration company in terms of market capitalisation Oil and Natural Gas Corporation (ONGC) galloped 3.60% to Rs 879.85. The company is reportedly in talks with British firm Imperial Energy Corp to form an alliance which could include it buying an equity interest in the UK-based firm. If ONGC manages to strike a deal with Imperial Energy, it will strengthen the ONGC's overseas presence.
India’s largest private sector firm by market capitalization and oil refiner Reliance Industries rebounded from day’s low of Rs 1992.35. It was now up 2.11% at Rs 2059 on 12.03 lakh shares.
India's largest state-run bank by net profit State Bank of India vaulted 3.51% to Rs 1265.10 after touching a low of Rs 1205 in early trade. The bank is likely to report double-digit net profit growth in the Q1 June 2008, Chairman O.P. Bhatt told media reporters on Friday, 11 July 2008.
India's largest private sector bank by net profit ICICI Bank recovered from day’s low of 573.25. It settled with loss of 1.88% to Rs 580.40. Its American depository receipt (ADR) lost 7.4% on the New York Stock Exchange (NYSE) on Friday, 11 July 2008. ICICI bank has a higher weightage of 3.4% in Sensex as compared to 2.65% in Nifty.
World’s sixth largest steel producer in terms of annual capacity Tata Steel surged 3.11% to Rs 686.90 on reports the company is looking at acquiring an iron ore mine in Western Australia to supply iron ore to Corus' plants.
NTPC (up 3.71% to Rs 167.90) and Ambuja Cement (up 2.61% to Rs 82.60) edged higher from Sensex pack.
Larsen & Toubro (L&T), the country’s largest state-run engineering firm in terms of outstanding order book position advanced 2.19% to Rs 2408.80, after sliding to a low of Rs 2320.20. L&T has higher weightage of 3.69% in Sensex as compared to 2.87% in Nifty.
India’s largest state-run engineering firm in terms of outstanding order book position Bharat Heavy Electricals fell 3.35% to Rs 1470.40 despite reports of the company is looking to acquire a locomotive manufacturing facility in Europe.
Debutante KSK Energy Ventures settled at Rs 190.50 on BSE, a discount of 20.63% over the initial public offer price of Rs 240. The counter saw high volumes of 99.26 lakh shares on BSE. The stock debuted at Rs 220, a discount of 8.33% over the initial public offer (IPO) price. It hit a high of Rs 234.80 and a low of Rs 176 in the day.
Reliance Capital topped the turnover charts on BSE clocking turnover of Rs 306.25 crore followed by Reliance Industries (Rs 249 crore), NDTV (Rs 193 crore), KSK Energy (Rs 191.50 crore) and Infosys (Rs 145.20 crore), in that order.
IFCI led the volumes chart with volumes of 1.81 crore shares followed by Reliance Natural Resources (1.47 crore shares), Ispat Industries (1.23 crore shares), KSK Energy (99.25 lakh shares) and Chambal Fertilisers (85 lakh shares), in that order.
Among side counters, Selan Exploration (up 20% to Rs 216.80), Suzler India (up 13.81% to Rs 777.90), Saurashtra Cement (up 20% to Rs 32.85), surged
EIH Associates (down 12.22% to Rs 111), Sparsh BPO (down 11.67% to Rs 70), and EPC (down 10.50% to Rs 26), slumped.
Tata Sponge Iron rose 2.49% to Rs 224 after the company reported 77.4% rise in net profit to Rs 29.33 crore on 8.8% increase in sales to Rs 101.77 crore in Q1 June 2008 over Q1 June 2007.
Axis Bank fell 4.68% to Rs 638.25 despite posting 88.67% rise in net profit to Rs 330.14 crore on 53.84% rise in total income to Rs 2891.24 crore in Q1 June 2008 over Q1 June 2007. The bank announced the result during market hours today, 14 July 2008.
Hindustan Zinc surged 8.63% to Rs 584.95 tracking surge in zinc futures in Shanghai. Shanghai zinc futures gained 1% on Monday, 14 July 2008, after rising by their 4% daily limit in the last session, following a weekend agreement by small-and medium-sized Chinese smelters to cut production by 10%.
NDTV rose 2.06% to Rs 405.35 after three block deals totaling 40.29 lakh shares at an average price of Rs 430.86 were executed on the counter on BSE in opening trade.
SpiceJet lost 13.27% to Rs 28.10 after its chief executive officer Siddhanta Sharma resigned over the weekend citing personal reasons.
HCL Technologies slumped 4.71% to Rs 227.80 after the company said on Friday, 11 July 2008 it may incur forex losses between $65-75 million in Q4 June 2008, owing to a sharp fall in rupee against the dollar.
IFCI lost 4.29% to Rs 37.90 after it reported 38.8% fall in net profit to Rs 151.07 crore on 18.1% increase in operating income to Rs 414.49 crore in Q1 June 2008 over Q1 June 2007. The company announced the result on Saturday, 12 July 2008.
Most Asian markets, which opened before Indian markets, were trading lower today, 14 July 2008. Key benchmark indices in Hong Kong, South Korea, Japan Taiwan and Singapore were down by between 0.23% and 1.21%. However China’s Shanghai Composite gained 0.76%
US markets ended volatile session on Friday, 11 July 2008, with the Dow Jones falling below the 11,000 level for the first time since August 2006. Growing concern about the health of Fannie Mae and Freddie Mac send bank shares to an 11-year low. The Dow Jones Industrial Average slumped 128.48 points to 11100.54 and the Nasdaq Composite shed 18.77 points at 2239.08. The Standard & Poor's 500 index dropped 13.90 points to 1,239.49.
India's industrial production rose 3.8% in May 2008, much lower than revised 6.2% growth in April 2008, the government data released on 11 July 2008 showed. Industrial production growth for April 2008 revised downwards to 6.2% from earlier 7%.
Inflation based on the wholesale price index surged to a fresh 13-year high 11.89% in 12 months to 28 June 2008, above the previous week's annual rise of 11.63%, government data released on 11 July 2008 showed. This is much higher than the Reserve Bank's tolerance limit of 5.5% set for the current fiscal.
Grey Market Discounts - Premiums
KSK Energy Ventures 240 Discount
Somi Conveyor Belting 35 4 to 5
Birla Cotsyn (India) 12 to 14 Discount
Tough day ahead
The market may correct further for the second straight session on inflation worries and dwindling foreign fund inflows in domestic markets. Nervousness in the market is likely to continue after the Sensex reported losses in Friday's trades. Weakness in the global indices could make the investors jittery from taking any fresh position. Among the key local indices, the Nifty could decline to 4010 or 3950 on the downside while on the upside there is a near term resistance at 4100. The Sensex has a likely support at 13350 and may face resistance at 13600.
US Indices tumbled on Friday as investors continued to worry about the credit market crisis and rise in the oil prices. While the Dow Jones slipped 128 points to close at 11101, the Nasdaq lost 19 points to close at 2239.
Except Dr Reddy & Tata Motors all the Indian floats had a lost heavily on the US bourses. Infosys tumbled 13.30%, Satyam slipped 9.17% and ICICI Bank lost 7.38% while, Rediff, Patni Computer, VSNL, HDFC Bank, Wipro and MTNL lost around 2-4% each. Among the gainers Dr Reddy rose 1.90%, while Tata Motors was up by 0.11%.
Crude oil prices in the US market gained sharply, with the Nymex light crude oil for August delivery up $3.43 to close at $145.05 a barrel. In the commodity space, the Comex gold for August series gained $18.60 to settle at $960.60 an ounce.
Equities seen range-bound on mixed cues
Local shares are likely to be witness range-bound activity today, 14 July 2008, tracking mixed cues from global shores. However crude oil hovering near record highs may dampen the sentiment.
Global investment banker Barclays Capital projecting inflation to surge to 17% by September 2008 on back of another round of hike in fuel prices in the same month may also play the spoilsport. The investment banker believes that wholesale price index inflation will remain in double-digit territory until May 2009.
Inflation based on the wholesale price index surged to a fresh 13-year high 11.89% in 12 months to 28 June 2008, above the previous week's annual rise of 11.63%, government data released on 11 July 2008 showed. This is much higher than the Reserve Bank's tolerance limit of 5.5% set for the current fiscal.
Crude oil for August delivery fell as much $1.01 to $144.07 a barrel in after-hours trading on the New York Mercantile Exchange on Friday, 11 July 2008.
Asian markets were trading firm today, 14 July 2008, led by advances in banking stocks after the US government unveiled measures to help the troubled home financing providers. Shanghai Composite rose 0.36% or 10.36 points at 2,866.99, Japan's Nikkei gained 1.12% or 146.21 points at 13,185.90, Hong Kong's Hang Seng advanced 0.51% or 113.57 points at 22,298.12, South Korea's Seoul Composite added 0.54% or 8.51 points at 1,576.02, Taiwan Weighted was down 0.21% or 14.91 points at 7,229.85 and Straits Times fell 0.53% or 15.52 points at 2,911.32
US markets ended volatile session on Friday, 11 July 2008, with the Dow Jones falling below the 11,000 level for the first time since August 2006. Growing concern about the health of Fannie Mae and Freddie Mac send bank shares to an 11-year low. The Dow Jones Industrial Average slumped 128.48 points to 11100.54 and the Nasdaq Composite shed 18.77 points at 2239.08. The Standard & Poor's 500 index dropped 13.90 points to 1,239.49.
Back home, the market slumped on Friday, 11 July 2008 as spiraling crude oil prices and weak economic data dampened investor sentiments. The 30-share BSE Sensex lost 456.39 points or 3.28% at 13,469.85 and the broader based S&P CNX Nifty was down 113.20 points or 2.72% at 4049, on that day.
The BSE Sensex rose 15.85 points or 0.12% to 13,469.86 in the week ended Friday, 11 July 2008. The S&P CNX Nifty edged up 33 points or 0.82% to 4,049 in the week.
From a record high of 21,206.77 hit on 10 January 2008, Sensex has lost 7736.92 points or 36.48%. It is down 6817.14 points or 33.60% in calendar year 2008 so far.
As per provisional data, foreign funds sold shares worth a net Rs 467.67 crore while domestic funds bought shares worth a net Rs 214.74 crore, on 11 July 2008.
Foreign institutional investors (FIIs) were net buyers of Rs 511.43 crore in the futures & options segment on 11 July 2008. They were net buyers of index futures to the tune of Rs 715.44 crore and sold index options worth Rs 221.49 crore. They were net sellers of stock futures to the tune of Rs 20.84 crore and purchased stock options worth Rs 38.31 crore.
Industrial production rose 3.8% in May 2008, much lower than revised 6.2% growth in April 2008, the government data released on 11 July 2008 showed. Industrial production growth for April 2008 revised downwards to 6.2% from earlier 7%.
Caution may prevail on the bourses in the near term due to political uncertainty as to whether the government will be able to win confidence vote in the parliament. Prime Minister Manmohan Singh is likely to seek a vote of confidence in parliament shortly following the Left’s withdrawal of support to the government over the India-US civil nuclear agreement. There is speculation that the government may choose a date around 22 July 2008 to call a special Lok Sabha session for the vote.
Morning Call - July 14 2008
Market Grape Wine :
In House :
Nifty at a support of 3995 and 3935 levels with resistance at 4115 and 4165 levels .
Buy : in F&O Tisco above 644 target 665 s/l fo 635
Sell : in F&O Centextile below 490 target 465 s/l of 505
Out House:
Markets at a support of 13456 & 13232 resistance at 13786 & 13636 levels .
Buy : Sail & Tsico
Buy : Sbin at dips
Buy : ITC at dips
Buy : Bhel & LT at dips
Buy : ACC
Buy : RIL
Buy : Titan at dips
Dark Horse : Sbin , LT , RIL , Suzlon & Tisco
Pre Session Commentary - July 14 2008
The Indian Market is expected to have positive opening on the back of favorable global cues as Asian markets are trading in green and crude oil prices dropped in Asian trade. It dropped $1.65 to $143 a barrel. The Indian market on Friday closed in deep red on inflation data, which stood at 11.89% for the week ended June 28 as against 11.63% in earlier week and IIP number for the month of May, which declined at 3.8% as against 10.6% in same period of last year. Indian market opened on positive note due to the mixed cues from the global markets but soon it slipped with giving up its initial gains. Further after showing some volatility it lost more grounds to close in extremely negative territory. From the sectoral front, all indices closed in red and major selling witnessed among the frontline indices mainly the Capital Goods, IT, Metal, Power and Oil & Gas stocks. IT index closed with deep cut of more than 6% and Capital Goods and Power indices slipped by more than 4%. The BSE Sensex closed lower by 456.39 points at 13,469.85 and NSE Nifty ended down by 113.20 points at 4,049. We expect that market may remain voaltile during the trading session.
On Friday, the US market was closed in red on concern about the health of U.S. mortgage lenders Fannie Mae and Freddie Mac, which send bank shares to an 11-year low. U.S. These two large US mortgage financing companies slumped on Friday on fears for their financial stability. The Dow Jones Industrial Average (DJIA) closed lower by 128.48 points at 11,100.54 along with NASDAQ ended down by 18.77 points at 2,239.08 and S&P 500 index closed down by 13.90 points at 1,239.49.
Indian ADRs ended down. In technology sector, Infosys ended down by (13.30%) along with Satyam by (9.17%), Patni Computers by (4.74%) and Wipro dropped by (2.82%). In banking sector, ICICI bank and HDFC bank lost (7.38%) and (3.43%) respectively. In telecommunication sector, Tata Communication and MTNL ended down by (3.89%) and (2.46%)). Sterlite industries increased by (0.07%).
Today the major stock markets in Asia are trading firm. Japan’s Nikkei is trading higher by 146.21 points at 13,185.90, Hang Seng index is trading up by 113.57 points at 22,298.12 and Taiwan Weighted trading at 7,229.85 gained 14.91 points.
The FIIs on Friday stood as net seller in equity and in debt. The gross equity purchased was Rs1,988.40 Crore and the gross debt purchased was Rs28.60 Crore while the gross equity sold stood at Rs2,334.40 Crore and gross debt sold stood at Rs31.10 Crore. Therefore, the net investment of equity reported was (Rs345.90) Crore and net debt was (2.50) Crore.
Today, Nifty has support at 3,979 and resistance at 4,137 and BSE Sensex has support at 13,222 and resistance at 13,740.
Trading Calls - July 14 2008
Nifty (4049) Sup 3960 Res 4095
Sell Tata Power (976) SL 985 Target 950, 945
Sell HCL Tech (239) SL 244 Target 230, 225
Sell TCS (799) SL 806
Target 784, 778
Sell Kotak Bank (507) SL 514 Target 494, 491
Buy Sterlite (661) SL 654
Target 680, 685
Of Soros and sorrows!
There are people who are always anticipating trouble, and in this way they manage to enjoy many sorrows that never really happen to them.
Global investor George Soros has done some Quantum buying associating himself with those who are temporarily losing their Power and glory. Betting against the British pound in 1992 made him famous and richer. Will be able to extract his pound of flesh from the Indian market only time will tell.
The string of sorrows on Friday saw an overreaction. We expect a rebound at the opening bell after Friday's weak show. Some more short-covering-led rallies are not ruled out. Don’t get fooled by such pull-backs as there is no dearth of perceived bad news.
The trend this week will hinge on a slew of variables, such as the global markets, crude oil, macro-economic data, FII flows, results and of course the political situation. The Dow Jones Industrial Average managed to bounce back on Friday after sliding under the 11,000 mark in early trades. Crude oil too has cooled off after hitting a new record above $147 on Friday. Asian markets are mixed, with the Nikkei is up over 1%, while the Straits Times and Taiex are down 0.2-5%.
In a rare development, the key indices actually managed to post modest gains for the week, mainly on account of short-covering in the F&O segment. The Nifty, which hit a low of 3848 on July 2 has not breached that bottom ever since. This may provide some comfort to the bulls, though there is every danger that the level will also be taken out if the current string of bad news persists.
One thing is pretty difficult to attain in stock market i.e. timing of entry and exit. Last week's resilience notwithstanding, we still can't say whether a temporary bottom was reached on July 2. It’s too tough to ascertain the market's direction at this juncture.
Results Today: Axis Bank, CMC, Everonn Systems, Tanla and Tata Sponge.
Silverline Animation Technologies Ltd. and KSK Energy Ventures Ltd. will get listed today.
Ranbaxy may be under pressure as the US government has sued Ranbaxy for concealing and forging crucial data to get a favourable judgment in an ongoing investigation.
HCL Tech is another stock that will face investors' ire after announcing that it may incur forex losses of about US$65-75mn for the quarter ended June 30, owing to a weak rupee.
The US Securities and Exchange Commission (SEC) says it is examining ways to prevent stock-price manipulation by short sellers and others amid amid worries about the financial health of mortgage giants Fannie Mae and Freddie Mac as well as Lehman Brothers.
In Asian markets, the Nikkei is up 1.1% while the Hang Seng has turned flat after being up nearly 200 points. the Kospi in Seoul is up 0.2% while the Straits Times in Singapore is down 0.65%. The Shanghai Composite in China is up 1.3% and the Taiex in Taiwan was down 0.4%.
US stocks fell on Friday, but closed off their lows, as fears that Fannie Mae and Freddie Mac would collapse eased amid reports that the Bush administration will rescue the mortgage financiers and talk that the Federal Reserve would open up its discount window.
The Dow dropped below the 11,000 level for the first time since August 2006. But, the blue-chip index settled at 11,100.54, down 128.48 points, or 1.1%. For the week, the Dow lost 1.6%.
The S&P 500 Index shed 13.89 points, or 1.1%, to 1,239.50, giving it a weekly loss of 1.8%. The Nasdaq Composite Index skidded 18.77 points, or 0.8%, to 2,239.08, giving the technology-laden index a 0.3% weekly loss.
Fannie Mae and Freddie Mac both fell by close to 50% in early trading amid fears about their bankruptcy and speculation of a government bailout.
But shares trimmed losses as the day wore on, recovering after Treasury Secretary Henry Paulson and Sen. Christopher Dodd, D-Conn., made comments that sought to assuage some fears. Freddie ended 3% lower and Fannie ended 22% lower.
For the financial sector and for the stock market, there's more pain to come before a bottom is reached, according to some Wall Street analysts.
US light crude oil for August delivery gained $3.43 to settle at $145.08 a barrel on the New York Mercantile Exchange, after hitting a trading record of $147.27 earlier.
The national average price for a gallon of regular unleaded gas fell Friday to $4.096 from $4.104 Thursday, according to AAA.
In currency trading, the dollar fell versus the euro and the yen. In the bond market, Treasury prices tumbled, raising the yield on the benchmark 10-year note to 3.95% from 3.80% late on Thursday. COMEX gold for September delivery rose $18.70 to settle at $963.20 an ounce.
Lehman Brothers lost another 16.6%, amid continued uncertainty about the brokerage's financials since it reported a nearly $3bn second-quarter loss last month. Citigroup managed to close with just modest losses, after the company said it is selling its German retail banking unit to France's Credit Mutuel for $7.7bn.
GE reported weaker earnings that met forecasts on higher sales that beat estimates. The company reiterated that it would earn $2.20 to $2.30 per share for the full year versus analysts' estimates of $2.22 per share. GE also said it will sell its Japanese consumer finance business for $5.4bn. GE shares ended nearly unchanged, after rising a bit in the morning.
Over the weekend, Anheuser-Busch accepted Dutch brewer InBev's sweetened bid of $70 a share, according to media reports. Anheuser-Busch stock gained more than 8% in regular trading.
The US trade deficit narrowed in May by more than expected, as the record demand for exports - due to the weak dollar - overshadowed the record demand for imports, including crude oil.
The University of Michigan's July consumer sentiment index inched up to 56.6 from 56.4, versus forecasts for a drop to 55.5. However, the index's expectation component, which relates to consumer spending, fell to a 28-year low.
European shares ended around three-year lows on Friday due to a spike in crude oil futures and fresh concerns over the financial sector. The pan-European Dow Jones Stoxx 600 index tumbled 2.7% to 270.36, taking year-to-date losses to nearly 26%.
Germany's DAX 30 fell 2.4% to 6,153.30, while the French CAC-40 dropped 3.1% to 4,100.64 and the UK's FTSE 100 fell back into bear market territory after it lost 2.7% to 5,261.60.
Last trading session of the week ended with a sharp cut. Markets started off with a positive gap but immediately slipped into red on back of disappointing guidance from IT bellwether Infosys. Sentiments were further hit after India’s industrial production tumbled in May, to 3.8% from 10.6% in the same month last year. What's even worse was that April's growth has been trimmed to 6.2% from 7%.
Inflation figures were also another dampener. India’s Inflation accelerated to the fastest pace since 1995. Inflation rose to 11.89% in the week to June 28 against 11.63% in the previous week
Finally the Sensex lost 456 points to close at 13,469 and the Nifty lost 113 points from to close flat at 4,049.
Bharti Airtel gained by half a percent to Rs745 after the company announced that it adds 2.56mn subscribers in June according to industry data. The scrip touched an intra-day high of Rs798 and a low of Rs737 and recorded volumes of over 9,00,000 shares on BSE.
Sterlite Industries gained by 1.7% to Rs661 after the company along with its unions representing the workers of US based Asarco agreed to acquire all the assets of the bankrupt copper producer. The scrip touched an intra-day high of Rs680 and a low of Rs652 and recorded volumes of over 4,00,000 shares on BSE.
Shree Ashtavinayak advanced by 1% to Rs562 following reports that the company is planning to invest ~Rs9bn in its forthcoming movies. The scrip touched an intra-day high of Rs583 and a low of Rs540 and recorded volumes of over 50,000 shares on BSE.
Max India advanced by 1.6% to Rs158 after the company announced that it would spend Rs1bn along with Bupa Finance for setting up an Insurance company. The scrip touched an intra-day high of Rs167 and a low of Rs155 and recorded volumes of over 54,000 shares on BSE.
Welspun-Gujarat Stahl slipped by 2.5% to Rs304. The company announced that it won order worth Rs30bn and also said that it has total orders worth Rs77bn. The scrip touched an intra-day high of Rs315 and a low of Rs300 and recorded volumes of over 1,00,000 shares on BSE.
Shares of Infosys Technologies plunged by over 7% at Rs1676 erasing early gains as the company didn’t increase guidance for FY09 on back of continuation of challenging business outlook. The stock had hit an intra-day high of Rs1876. However, went on to hit an intra-day low of Rs1,641 recording volumes of over 20,00,000 shares on BSE.
Infosys Technologies reported a net profit of Rs13.02bn in the quarter ended June 30, 2008 as against Rs12.49bn in the previous quarter. This translates into a sequential growth of 4.2%. This is better than expectations of a slight dip Quarter on Quarter (QoQ).
Infosys Technologies hiked its revenue and earnings per share (EPS) guidance for the fiscal year 2008-09 as per Indian GAAP. The company expects net sales to be between Rs212.78-216.22bn for the year ending March 2009. The EPS for the current fiscal year is expected to be in a range of Rs99.34-101.06. The company has taken a conversion rate of 1 US$ = Rs.43.04.
Allied Digital gained by 1.2% to Rs906 after the company announced that it acquired 80.5% stake in US based EnPointe Global Services for US$30mn. The scrip touched an intra-day high of Rs932 and a low of Rs880 and recorded volumes of over 4,000 shares on BSE.
BHEL declined by 2.6% to Rs1521. The company announced that it won order worth Rs21.75bn from Tamil Nadu Electricity Board. The scrip touched an intra-day high of Rs1588 and a low of Rs1493 and recorded volumes of over 5,00,000 shares on BSE US government files suit against Ranbaxy Laboratories for concealing and forging crucial data to get a favourable judgment in an ongoing investigation.(BS)
HCL Technologies may incur forex losses of about US$65-75mn for quarter ended June 30, owing to a weak rupee. (BS)
BHEL receives Rs22bn contract for setting up a 600MW thermal power generating unit in Tamil Nadu.(FE)
ADAG group on look out for acquisitions to start its cement business much before it completes its 4,000MW mega power project at Sasan, Madhya Pradesh.(BS)
JSW Steel looking to acquire US-based United Coal Company. (ET)
Athena Energy Venture, a JV between Power Trading Corp and IDFC to set up a 1,320MW coal-fired power plant in Andhra Pradesh. (DNA)
ONGC may offer joint operatorship of a KG block to British Gas in exchange for rig support to complete drilling in 2009.(BL)
Swan Telecom in negotiations with BSNL for a strategic alliance under which the former will utilise the network of the state-owned company to roll out its operations.(BS)
SAIL-Tata Steel JV company wants five coal blocks to cut imports.(FE)
JSW Steel will explore the possibility of importing iron ore from its mine in Chile and sell it in the local market.(BS)
Maxis Communications would not sell Aircel stake to any third party.(TOI)
Tata Steel is looking at acquiring an iron ore mine in Western Australia to supply ore to Corus’ plants.(Mint)
Jindal Stainless is close to acquiring chrome ore and manganese mines in West Asia to cater to its project in Orissa.(BS)
Welspun Gujarat Stahl secures orders worth Rs30bn from Indian as well as overseas companies. (DNA)
Wipro’s Asian unit looking to secure deals worth US$100mn from India and Middle-East.(FE)
Ansal API announces the launch of its hi-tech city spread over 2,500 acres adjoining Greater Noida.(Mint)
Commerce ministry examining possibilities of stripping RPL refinery of its 100% export oriented unit status. (ET)
Healthcare services provider Max India board approves its JV with UK-based Bupa Finance Plc for setting up a health insurance company.(FE)
Siemens India secures order from Tata BlueScope Steel to supply equipments to the company’s new processing lines at Jamshedpur.(DNA)
Maytas Properties to develop three IT SEZs.(BL)
Drug maker Abbott India to buy back shares at Rs630 each.(BL)
Reliance Industries, Essar Oil, GAIL, Videocon may bid for five exploration blocks in Australia.(ET)
ONGC Videsh in talks to form an alliance with UK based Imperial Energy with oil producing assets in Western Siberia.(TOI)
M&M reduces ownership interest in subsidiary companies by 6-7%, brings forgings unit under Mahindra Forgings.(ET)
Spice Energy plans a GDR issue of US$300mn by August; proceeds to be used to set up 1,000MW thermal power plant in Tamil Nadu.(DNA)
ICICI, HDFC AMCs among 20 companies in race for managing Employees Provident Fund Organization’s funds.(ET)
Reliance Logistics looking to acquire mid-sized logistics firm operating in third party logistics field. (DNA)
Phoenix Mills, Adlabs in pact for India’s largest multiplex cinema. (ET)
Economic Front Page
Government may cut duty on major petrochemical feedstock building blocks. (ET)
Benchmark ten year bond yield rises to seven year high of 9.55% on rising inflation.(BS)
DoT dilutes the proposed pricing of excess spectrum held beyond contracted limit by mobile operators.(Mint)
Service Sector growth slips from 14.7% to 10.5% in Q4 2008. (ET)
TRAI proposes to raise the base price for operators participating in the auction for 3G and broadband wireless spectrum (BL)
Domestic airlines witnessed a 17% decline in passenger traffic in June as compared to earlier month.(FE)
Kingfisher-Deccan may be dragged to Supreme Court by government.(Mint)
Civil aviation minister directs Bangalore International Airport Limited to increase its capacity to handle passengers.(BS)
Exchange traded currency futures likely to be launched by mid August.(BL)
Government planning to raise FDI ceiling in defense production to 49% from the current 26%. (ET)
RBI eases rules governing external commercial borrowing. (ET)
National Bio-fuel policy may be unveiled by September.(DNA)
Prices of plastic products have become costlier by 35% according to its manufacturers.(BL)
Mining minister approaches Prime minister for the review of iron ore export duty. (ET)
Be afraid ! Inflation may rise to 17%
Global investment banker Barclays Capital has projected that inflation may surge to 17 percent by September on back of another round of hike in fuel prices in the same month.
"We believe WPI inflation will remain in double-digit territory until May 2009. We expect WPI inflation of 17 percent by September 2008," the report said.
For the week-ended June 28, wholesale prices-based inflation touched a new 13-year high of 11.89 percent much higher than the Reserve Bank's tolerance limit of 5.5 percent for the current fiscal.
According to the report, the government is likely to hike fuel prices between 10 and 20 percent again as early as September to limit fiscal risks.
Rise in the price of the Indian crude oil basket to USD 145-150 per barrel from the current USD 132 per barrel could be the trigger for another round of increase in fuel prices, it said.
The government last revised retail petroleum prices with effect from June 5, when petrol prices was increased by Rs 5 a litre, diesel by Rs 3 per litre and cooking gas by Rs 50 per cylinder.
This resulted in inflation touching a double-digit figure of 11.05 percent for the week ended June 7.
Last week, even Finance Minister P Chidambaram's adviser Shubhashis Gangopadhyay predicted that double digit inflation will continue throughout the year 2008 and could impact the economic growth negatively.
Gold rises as crude rises
Missile tests by Iran and surging crude price makes gold a bet for safe haven
The weak US dollar and the rising oil price pushed bullion metals higher on Friday, 11 July, 2008. Prices rose as tension once again mounted at Middle East and the also rose on reports of more missile tests by Iran. Gold is typically seen as a safe-haven investment and its appeal increases during times of heightened geopolitical tensions. The increase in energy costs also generally increase demand for the precious metal as a hedge against inflation. Silver prices gained for the day.
Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies.
Comex Gold for August delivery rose $18.6 (1.97%) to close at $960.6 ounce on the New York Mercantile Exchange. Prices climbed to a high of $967 during intra day trading. For the week, it ended higher by $27 (2.8%). On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped since then.
It was reported on Friday that Iran test fired more missiles on Thursday, after testing missiles the day before that could reach Israel. Iran is the world's fourth-largest exporter of crude oil.
At the currency markets on Friday, the dollar lost ground against other major currencies on rising geopolitical risk and renewed credit worries. The dollar index which tracks the greenback against a basket of major currencies, fell 0.6% to stand lately at 72.03.
In the crude market on Friday, prices fell initially amid a rising dollar but leaped right back on speculation that Israel may be nearer to launching an attack on Iran and on worries that supplies in Nigeria and Brazil may be disrupted. Crude for August delivery closed up $3.43 or 2.4%, at $145.08 a barrel on the New York Mercantile Exchange.
The weakening dollar and higher global demand for raw materials have led to records this year for commodities including gold. 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.
Gold prices ended June, 2008 with a gain of 4.1%. The yellow metal ended second quarter with a marginal gain of 0.7%. In May, it ended with a gain of higher by $22.5 (2.5%). Before May, for April, prices closed lower by 6.3%.
This year, gold prices have gained 13.5% till date against a 5.6% drop for the dollar against the euro. For first quarter prices gained 10.7%. In January, prices gained 11%, the highest monthly gain since April 2006. For February, it gained 6%. But in March, prices succumbed and fell by 5.5%.
On Friday, Comex silver futures for September delivery gained 50 cents (2.7%) to $18.82 an ounce. Silver has gained 25% in 2008 till date. For the second quarter, it gained a paltry 1.4%.
Silver prices ended the month of May 2008 with a gain of 2.7%. For April, it closed lower by 5.5%. Silver had gained 16% in Q1. In January this year itself, prices climbed 14%. In February, it gained another 15%. For March, it ended lower by 13%. The metal had climbed 16% in FY 2007. The metal also has gained for seven straight years.
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