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Wednesday, October 01, 2008
Trading Calls - Oct 1 2008
Nifty (3921) Sup 3830 Res 4010
Buy ABB (789)
SL 781 Target 805, 808
Buy Reliance Infra (790)
SL 782 Target 806, 810
Buy NTPC (172)
SL 169 Target 178, 179
Sell Fed Bank (206)
SL 210 Target 198, 196
Sell CESC (275)
SL 279 Target 267, 265
Intra-day volatility still exist
Intra-day volatility may see the market swing both ways and hold back the local players from taking fresh positions. The market may open positive following overnight gain in the US markets and mixed Asian indices in morning trades. As the overall sentiment remains bearish, the market may not slip from positive to negative. The Nifty may witness resistance at 3950 on the upside while the near-term support at 3900 is seen on the downside. The Sensex has a likely support at 12600 and could witness resistance at 13000.
US indices finished on a positive side on Tuesday. While the Dow Jones ended in positive at 10851 advanced by 485 points, the Nasdaq up by 99 points at 2082.
Among the Indian ADRs on the US bourses. Except Rediff rest of all were performing in positive territory, from which VANL was leading by 19.24%, followed by Infosys advanced 13.49%, HDFC Bank gain 11.57%, Satyam moved up by 9.79% and Wipro gains 9.46% at Rs9.72. While, ICICI Bank, Patni Computer, MTNL, Tata Motors and Dr Reddy closed with the gain of about 3-5% each.
In the commodity segment, the Comex gold for the December declined $13.60 to settle at $880.80 an ounce. The Nymex light crude oil for October delivery gained $4.27 to close at $100.64 a barrel.
Bullion metals fall with strong dollar
Gold registers first quarterly drop in almost a year
Bullion metals ended considerably lower on Tuesday, 30 September, 2008 after dollar rallied against the euro and other major currencies reducing the precious metal’s appeal as a hedge against inflation. Silver prices also declined. With today’s fall, gold also registered the first quarterly drop in price in almost a year.
On Tuesday, Comex Gold for December delivery fell $13.6 (1.5%) to close at $880.8 an ounce on the New York Mercantile Exchange. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly since then.
Gold prices ended 5.5% higher this month of September, 08. Prior to this, gold had lost 8.8% in August, 2008. In July, 2008, it ended lower by $11 (1.1%). For the year, gold has gained 6.3% till date in FY 2008.
For the third quarter that ended today, gold prices ended lower by 5.1%. It was the first quarterly loss for the yellow metal since the second quarter in FY 2007. Prior to that, the yellow metal ended second quarter with a marginal gain of 0.7%. For first quarter prices gained 10.7%.
On Tuesday, Comex silver futures for December delivery fell 75 cents (5.8%) to $12.275 an ounce. Silver ended month and quarter of September 2008 with a loss of 10%. It ended August with a loss of 2.4% and July 2008 with a gain of 3%. For the second quarter, it had gained a paltry 1.4%. Silver had gained 16% in Q1. Till date, silver has gained 7.4% this year. The metal also had gained for seven straight years.
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. 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 and vice versa.
At the currency markets on Tuesday, the dollar climbed the most ever against the 15-nation European currency as France and Belgium led a state-backed rescue of Dexia SA, the world's biggest lender to local governments. Major U.S. equity indexes rebounded from the worst plunge since October 1987 after lawmakers sought to repair a $700 billion financial rescue plan voted down yesterday.
Earlier this year, the weakening dollar and higher global demand for raw materials had led to records this year for commodities including gold. Gold reached a record in March as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. The Federal Reserve halted cuts to its target bank lending rate in April, after slicing it in seven steps to 2% from 5.25% in September.
Gold had 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. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
At the MCX, gold prices for December delivery closed lower by Rs 288 (2.1%) at Rs 13,272 per 10 grams. Prices rose to a high of Rs 13,690 per 10 grams and fell to a low of Rs 13,235 per 10 grams during the day’s trading.
At the MCX, silver prices for December delivery closed Rs 847 (4.04%) lower at Rs 20,109/Kg. Prices opened at Rs 21,000/kg and fell to a low of Rs 20,019/Kg during the day’s trading.
Crude manages to climb back to $100
Prices drop by more than 28% during the third quarter
Crude oil prices managed to climb back to the $100 level on Tuesday, 30 September, 2008 but registered substantial losses for the third quarter that ended today. Prices rose today after U.S. lawmakers said they intend to salvage a $700 billion bank-rescue package that may avert an economic slowdown.
Crude-oil futures for light sweet crude for November delivery closed at $100.64/barrel (higher by $4.27 or 4.4%) on the New York Mercantile Exchange. Prices fell to a low of $97.8 during intra day trading. Yesterday, prices had slipped by almost $11 on overall global meltdown. Prices reached a high of $147 on 11 July but have dropped 32% since then.
For the third quarter of the year that ended today, crude prices ended lower by 28%. This was the biggest quarterly drop since 1991. Prior to today, crude prices had gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. For the month of September, prices registered drop of 13%. For the year, prices are still up by 5.2%.
Investors are concerned that a prolonged credit crisis would further undermine an already waning demand for energy as global growth slows down.
At the currency markets on Tuesday, the dollar climbed the most ever against the 15-nation European currency as France and Belgium led a state-backed rescue of Dexia SA, the world's biggest lender to local governments. Major U.S. equity indexes rebounded from the worst plunge since October 1987 after lawmakers sought to repair a $700 billion financial rescue plan voted down yesterday.
Against this background, November reformulated gasoline rose 9.6 cents to finish at $2.4577 a gallon, but it was 18.4% lower for the month. November heating oil gained 10.6 cents to end at $2.8947 a gallon, losing 9% for the month.
Natural gas futures advanced on speculation U.S. lawmakers will pass a $700 billion government bailout plan for the financial industry, preventing a further weakening of the economy and preserving energy demand. Natural gas for November delivery gained 21.7 cents (3%) to settle at $7.438 per million British thermal units. It was 6.4% lower for the month. Gas fell 44% in the third quarter, the first decline since the second quarter of 2007 and the biggest quarterly drop since the three months ended March 2001.
At the MCX, crude oil for September delivery closed at Rs 4,744/barrel, higher by Rs 106 (2.3%) against previous day’s close. Natural gas for October delivery closed at Rs 354.5/mmbtu, higher by Rs 10.2/mmbtu (2.9%).
US Markets gain
Market sentiments improve on increased optimism about the government relief plan
US market gained back part of its losses on Tuesday, 30 September, 2008 after it incurred huge losses a day before after the $700 billion bailout plan had got rejected. The Dow had suffered its worst one day loss in twenty-one years yesterday. Market registered gains today on increased optimism that the government will reach an agreement on a financial relief plan before the end of the week. Couple of better than expected economic reports also helped stocks made a U turn today at Wall Street. All ten sectors ended in the green led by the financials and the energy sector.
The Dow Jones industrial Average ended the day with a gain of 485 points at 10,850. The Nasdaq Composite Index, finished higher by 98.6 points at 2,082.3. S&P 500 finished higher by 58.3 points at 1,164.74.
Among economic news of the day at Wall Street, the Conference Board reported on Tuesday, 30 September, 2008 that U.S. consumer confidence rose in September for the third straight month, even as consumers' assessment of the current economy plunged to the lowest level in 15 years. Lower energy prices were responsible for most of the improvement in the confidence index in September.
As per the report, the September consumer confidence index rose to 59.8 from a revised August reading of 58.5.The present situation index fell to 58.8 from 65.0 in August. That's the lowest since 1993. The expectations index rose to 60.5 from 54.1 in August.
It was also reported today that manufacturing in the Chicago region continued to expand in September. Regional manufacturing survey, Chicago PMI fell 1.2 to 56.7, which was better than the forecast of 53. A reading above 50 is intended to represent growth.
In another report, home prices retreated in major metro areas in the month of July, marking the 25th consecutive month of price declines. According to the S&P/Case-Shiller 20-City Composite, July prices were down 16.3% compared to last year and fell 0.9% from June.
At the crude market on Tuesday, crude oil prices managed to climb back to the $100 level but registered substantial losses for the third quarter that ended today. Prices rose today after U.S. lawmakers said they intend to salvage a $700 billion bank-rescue package that may avert an economic slowdown. Crude-oil futures for light sweet crude for November delivery closed at $100.64/barrel (higher by $4.27 or 4.4%) on the New York Mercantile Exchange. Prices fell to a low of $97.8 during intra day trading. For the third quarter of the year that ended today, crude prices ended lower by 28%. This was the biggest quarterly drop since 1991.
At the currency markets on Tuesday, the dollar climbed the most ever against the 15-nation European currency as France and Belgium led a state-backed rescue of Dexia SA, the world's biggest lender to local governments. Major U.S. equity indexes rebounded from the worst plunge since October 1987 after lawmakers sought to repair a $700 billion financial rescue plan voted down yesterday.
For tomorrow, economic data will take center stage. September auto sales are expected to flow across the wires tomorrow. Providing a precursor for the government's official nonfarm payroll report, which is due later in the week, the September ADP employment report is due before market opens. Construction spending data for August and the September ISM Index are due simultaneously as soon as market opens followed by the crude inventories report.
Adani Enterprises - SELL
We recommend a sell in Adani Enterprises from a short-term perspective. It is evident from the charts that the stock has been in a long-term downtrend from its January high of Rs 1,335.
On September 29, the stock tumbled more then 9 per cent and found support around Rs 500 level, which is also the March trough. However, this halt proved to be temporary. The stock conclusively broke through this support level by declining 6 per cent with high volume on September 30, reinforcing the bearishness.
The counter is trading well below its 21 and 50-day moving averages. The daily and weekly relative strength indices are featuring in the bearish zone. Moreover, the daily and weekly moving average convergence and divergence are featuring in the negative territory. The long-term down trend line is intact and is still in place.
Our short-term forecast for the stock is negative. We expect the stock’s downtrend to prolong until it hits our price target of Rs 420 in the upcoming trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 490.
via BL
Tuesday, September 30, 2008
Inflows will be affected
With markets abroad tumbling as the fate of US bailout package hangs in balance, a key Finance Ministry official on Tuesday said that the global financial crisis will hurt capital inflows in India.
"The situation is staring on the face of huge mind-boggling crisis in the western world, especially the US. There will be shortage of money in the country, that is the financial crisis is to hurt capital inflows in India," Economic Affairs Secretary Ashok Chawla said in a seminar here.
At the same seminar, stock market regulator C B Bhave said once the crisis is over, India will come stronger and the balance would be in the country's favour. He also said in the future, there will be more open market in the recently-launched currency futures.
Former chairman of PM economic advisory panel C Rangarajan said, "We are going through an international crisis which we cannot ignore."
Yesterday, the US House of Representatives had rejected around USD 700 billion bailout package, sending stock markets around the world into a tailspin.
After coming into major selling pressure yesterday and in the early morning trade today, Indian markets recovered after Bhave's statement that there is no panic and no settlement issues in the markets.
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