Friday, October 03, 2008
Market tumbles on US financial sector jitters
Stocks fell sharply last week amid uncertainty about the future of the US economy. Wary investors continued to unload shares across-the-board as uncertainty persisted over the $700 billion US financial sector bailout plan. The barometer index BSE Sensex hit 2-year low during the week.
The US Senate on Wednesday, 1 October 2008, passed the government's financial rescue plan after the House of Representatives rejected it in its original form. The House is expected to vote on the revised bill on Friday, 3 October 2008. Under the plan, the US Treasury would buy illiquid assets held by financial institutions, in the hope of restoring confidence and thawing credit markets vital to the wider economy.
The BSE 30-share Sensex fell 575.86 points or 4.40% to 12,526.32 in the week ended Friday, 3 October 2008. The S&P CNX Nifty fell 166.95 points or 4.18% to 3818.30. The BSE Mid-Cap index declined 5.32% at 4,677.80 and BSE Small-Cap index declined 6.76% at 5,465.40.
Stocks fell across the board on Monday, 29 September 2008, on persistent questions on the effectiveness of the US bailout package and on continued instability in the global banking sector. The BSE 30-share Sensex plunged 506.43 points or 3.87% to 12,595.75. The S&P CNX Nifty fell 135.20 points or 3.39% to 3,850.05.
The key benchmark indices snapped last three days losses to post decent gains on Tuesday, 30 September 2008. The BSE 30-share Sensex jumped 264.58 points or 2.1% to 12,860.43. The S&P CNX Nifty rose 71.15 points or 1.85% to 3,921.20.
The key benchmark indices extended previous session’s gains on Wednesday, 1 October 2008, as investors bet US lawmakers would approve a bailout package for the US financial sector. The BSE 30-share Sensex rose 195.24 points or 1.52% to 13,055.67. The S&P CNX Nifty rose 29.55 points or 0.75% to 3,950.75. The market remained shut on Thursday, 2 October 2008, on account of Gandhi Jayanti.
Stocks took a beating on Friday, 3 October 2008. Investors were jittery ahead of the US House of Representatives' vote on a revised $700 billion financial rescue package submitted by the Senate. The BSE 30-share Sensex lost 529.35 points or 4.05% to 12,526.32. The S&P CNX Nifty shed 132.45 points or 3.35% to 3818.30.
India’s second largest software exporter by sales Infosys Technologies slipped 3.92% to Rs 1390.95 on reports Axon, the British information technology company, has decided to accept the HCL Technologies’ counter offer of 650 pence a share
India's largest drug maker by sales Ranbaxy Laboratories fell 3.14% to Rs 263.85. As per reports, the US Department of Justice may withdraw the motion against the company next week in a local court in the US.
Diversified firm Videocon Industries fell 3.62% to Rs 206.20. A consortium that includes Videocon Industries and Bharat PetroResources has struck oil at a block in Brazil. Videocon, along with Bharat PetroResources, which is owned by state-run refiner Bharat Petroleum Corp, holds 25% interest in the offshore block, located in the Campos Basin in Brazil.
ICICI Bank, India’s largest private sector bank by market capitalisation, slumped 10.11% to Rs 504.50. The bank assured investors that it was well-capitalised after a number of ICICI Bank ATMs reported unusual increase in cash withdrawal between 29 - 30 September 2008 in some parts of the country.
Power plants developer KSK Energy Ventures spurted 3.62% to Rs 217.60. As per recent reports, the company has aggressive expansion plans of increasing the current operational capacity of 144 megawatt to 9,137 megawatt by 2013.
India's largest private firm in terms of market capitalization Reliance Industries fell 10.20% to Rs 1760.95. The company started production of crude oil at KG-D6 block of the Krishna Godavari basin on 17 September 2008. The field will initially produce about 5,000 barrels of crude per day and is expected to reach its peak production of 5,50,500 barrels of crude per day over the next six to eight quarters.
The Indo-US nuclear deal on Thursday, 2 October 2008 secured the approval of the US Senate which overwhelmingly voted a bill rejecting all the killer amendments and paving the way for its implementation.
Inflation based on the wholesale price index rose 12.14% in 12 months to 13 September 2008 government data released on 25 September 2008, showed.
Foreign institutional investors (FIIs) sold shares worth Rs 199.70 crore on 1 October 2008. They sold shares worth Rs 36,991.70 crore in the calendar year 2008 so far (till 1 October 2008). Mutual funds bought shares worth Rs 147.80 crore on 1 October 2008.
Sensex sheds 529 points ahead of US bailout vote
Bearish sentiment prevailed today as key benchmark indices snapped last two days' rally on weak global cues. Sensex fell close to 600 points at the day's lows hit in late trade. The barometer index had risen 459.92 points in the preceding two trading sessions. Index heavyweight Reliance Industries (RIL) hit 52-week low, falling more than 7.5%. Tata Steel fell more than 10% while Sterlite Industries fell more than 8.5%. Ranbaxy Laboratories rose more than 4.5%. The market breadth was weak.
Concerns about the effectiveness of the US bailout plan in averting a recession in the global recession weighed on investor sentiments. The US Senate on Wednesday, 1 October 2008, passed the government's financial rescue plan. On the same day, the Senate also approved the Indo-US nuclear deal.
US stock futures were trading higher. Nasdaq futures were up 8 points and Dow Jones futures gained 55 points. European markets which opened after Indian market were in green. France’s CAC 40, and UK’s FTSE 100 were down between 0.17% to 0.23%. However, Germany’s DAX was up 0.13%.
Asian stocks dropped today, 3 October 2008, on fears that the global economy will worsen even if the US Congress passes a $700 billion bank rescue bill. Key benchmark indices in Hong Kong, Japan, Singapore were down by between 1.39% to 2.9%. The key benchmark index in Taiwan rose 0.68% as state funds bought index heavyweights to boost the market. Stock markets in China and South Korea were closed.
The BSE 30-share Sensex plunged 529.35 points or 4.05% to 12,526.32, its lowest closing in 18 months. The index shed 583.06 points at the day's low of 12,472.61, hit in late trade. The Sensex fell 54.48 points at day’s high of 13,001.19, in early trade.
The S&P CNX Nifty ended down 132.45 points or 3.35% to 3,818.30.
BSE clocked a turnover of Rs 4,767 crore today as compared to a turnover of Rs 4,358.87 crore on 1 October 2008.
Nifty October 2008 futures were at 3851, at a premium of 32.70 points as compared to spot closing of 3818.30. NSE's futures & options (F&O) segment turnover was Rs 44,983.07 crore, which was lower than Rs 47,733.85 crore on Wednesday, 1 October 2008.
The BSE Sensex is down 7,760.67 points or 38.25% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 8,680.45 points or 40.93% below its all-time high of 21,206.77 struck on 10 January 2008.
The BSE Mid-Cap index was down 3.03% at 4,677.80 and the BSE Small-Cap index was down 2.52% at 5,465.40.
BSE Metal index (down 7.01% to 8,417.11), BSE Oil & Gas index (down 5.74% to 8,426.67), BSE Consumer Durbles index (down 4.24% to 2,887.66), underperformed Sensex.
BSE FMCG index (down 0.49% to 2,180.14), BSE Auto index (down 0.91% to 3,654.25), BSE HealthCare index (down 1.28% to 3,663.42), BSE PSU index (down 2.28% to 6,171.50), BSE Power index (down 2.5% to 2,227.68), BSE Realty index (down 2.84% to 3,329.85), BSE Capital Goods index (down 3.34% to 10,238.99), BSE IT index (down 3.34% to 3,110.28), BSE Teck index (down 3.39% to 2,523.49), BSE Bankex (down 3.88% to 6,428.95), outperformed Sensex.
The market breadth was weak on BSE with 669 shares advancing as compared to 1,924 that declined. 51 shares remained unchanged.
India’s largest private sector company by market capitalization and oil refiner Reliance Industries fell 7.67% to Rs 1,760.95. The stock hit a 52-week low of Rs 1,745.10 today.
Metal stocks dropped after commodity prices fell overnight on fears the global economic slowdown will hurt demand. Sterlite Industries (down 7.84% to Rs 395.75), Steel Authority of India (down 7.09% to Rs 114.65), National Aluminum Company (down 5.52% to Rs 349.20), Hindalco Industries (down 0.86% to Rs 97.70), Hindustan Zinc (down 6.91% to Rs 404.80), edged lower.
The world’s sixth largest steel maker Tata Steel fell 10.22% to Rs 393.80 and was the top loser from the Sensex pack. The company said on Wednesday, 1 October 2008 its Singapore-based unit has agreed to buy 19.9% stake in Canadian miner New Millenium Capital Corporation for $22.6 million (Rs 106 crore).
ICICI Bank (down 8.51% to Rs 504.50), Tata Power Company (down 6.13% to Rs 888.50), Reliance Infrastructure (down 5.15% to Rs 741.25), HDFC (down 5.57% to Rs 2,081.85), Bharti Airtel (down 4.25% to Rs 756.45), edged lower from the Sensex pack.
Hindustan Unilever (up 0.81% to Rs 256.15) and Mahindra & Mahindra (up 1.7% to Rs 515.15) edged higher from the Sensex pack.
India’s largest drug maker by sales Ranbaxy Laboratories surged 4.83% to Rs 263.85 on reports the US Department of Justice may withdraw the motion against the company next week in a local court in the US. It was the major gainer from Sensex pack.
India’s second largest IT services Infosys fell 4.33% to Rs 1,390.95. The stock recovered from session’s low of Rs 1,382. Axon raised the pressure on Indian outsourcer Infosys on Thursday, 2 October 2008, to raise its offer for the UK-based consultancy group by recommending the counter-bid of HCL Technologies to its shareholders.
HCL last week trumped Infosys’s 600 pence per share bid for Axon with a cash offer of 650 pence, which values Axon at £441m ($780m), 8.3 % higher than the Infosys bid.
India’s largest commercial vehicle maker by sales Tata Motors declined 2.52% to Rs 330.70. Tata Motors' sales rose 2.7% to 49,647 units in September 2008 over September 2007. Sales of commercial vehicles rose 6% to 28,648 units in September 2008 over September 2007. Sales of passenger vehicles declined 2.5% to 16,586 units in September 2008 over September 2007.
Cals Refineries clocked the highest volume of 1.23 crore shares on BSE. Reliance Natural Resources (1.04 crore shares), IFCI (67.50 lakh shares), Chambal Fertilisers and Chemicals (51.08 lakh shares) and Reliance Petroleum (49.2 lakh shares) were the other volume toppers in that order.
Reliance Industries clocked the highest turnover of Rs 649.31 crore on BSE. Reliance Capital (Rs 313.20 crore), Bharti Airtel (Rs 234.49 crore), ICICI Bank (Rs 207.31 crore) and Axis Bank (Rs 181.18 crore) were the other turnover toppers in that order.
The US Senate on Wednesday, 1 October 2008, passed the government's financial rescue plan after the House of Representatives rejected it in its original form. The House is expected to vote on the revised bill on Friday, 3 October 2008. Under the plan, the Treasury would buy illiquid assets held by financial institutions, in the hope of restoring confidence and thawing credit markets vital to the wider economy.
The Indo-US nuclear deal on Wednesday, 1 October 2008, secured the approval of the US Senate which overwhelmingly voted a bill rejecting all the killer amendments and paving the way for its implementation. The landmark civil nuclear cooperation agreement, entered into between Prime Minister Manmohan Singh and US President George W. Bush in 2005, secured 86 votes while 13 Senators voted against it. The legislation, which has already been cleared by the House of Representatives, will now head to the White House for Mr. Bush signing it into a law
Bear Market - 2008 - Part 2
Read Part 1 of this Commentary
Let's compare 2000-2002 period with current period of 2008 and what scenarios can play out of it's the exact repeat of 2000-2002 period.
| 2000-2002 Bear Market | 2008 bear market |
| Nifty peaked in Feb 2000 | Nifty peaked in Jan 2008 |
| It took 8 months for the market to slide to 200 week moving average (Feb 2000 to October 2000) | Nifty is about to touch 200 week ma and it's already 9 months (Jan 2008 - Sep 2008) |
| Price correction to 200 week ma from peak = 36% | Price correction to 200 week ma from peak = 42% (not reached to 200 week ma) |
| There was 20% bounce after market touched 200 week ma and it happened during Oct-Feb which is goo d p eriod of equities. | May Happen ...It means market may bounce from 3650 to 4500 levels in next 3-4 months...pre- election/ seasonal rally |
| The market then tumbled below 200 week moving average in March 2001. | The next wave of correction may come in Feb-March 2009 just before elections and market can slip below 200 week ma |
| The market sharply tumbled 30% on break below 200 week moving average. | Quite possible during elections - Nifty can tumble 20 to 30% below 200 week ma |
| Time Correction - It took 29 months for market to recover once market slipped below 200 week ma. It was a painful slow recovery. | The real bear market painful period may come in 2009-2010 period and bull market may resume in 2011. |
| The bull market resumed when market finally broke out above 200 week ma | 200 week ma can be a pivot point for next bull run |
It means we may see a strong bounce in next 3-4 months before we see another sharp correction.
Courtesy:Bear Market - 2008 - Part 1
Global markets are in midst of a severe sell off. We are in a terrible bear market, and the question we need to ask - Is this the repeat of bear market of 2000-2002?
The answer is may be YES.
There is amazing similarity you can spot on charts between what is happening now and what happened in 2000-2002. The image below is the Nifty weekly chart of 2000-2002 period -
As you can see in the chart above, the 2000-2002 bear market was not only painful in terms of price correction but also time correction. Here are some facts -
* Nifty peaked in Feb 2000
* It then took 8 months for the market to slide to 200 week moving average. The price correction was 36% and it happened between Feb 2000 and October 2000.
* The market then bounced back from 200 week moving average - 20% bounce. This was Oct-Feb period - generally goo d p eriod of equities
* The market then tumbled below 200 week moving average in March 2001.
* The market sharply tumbled 30% on break below 200 week moving average.
* Time Correction - It took 29 months for market to recover once market slipped below 200 week ma. It was a painful slow recovery.
* Every rally below 200 week ma got arrested at 200 week ma during those 29 months of recovery.
* The bull market resumed when market finally broke out above 200 week ma in August 2003.
Ironically now, a similar story is getting played out in 2008. FYI - 200 week moving average = 3648. This level also coincides with 50% retracement of bull run from 920 to 6300.
Courtesy:
Video - Interview with Warren Buffet
Watch the complete interview of Warren Buffet with Charlie Rose
Warren Buffet talks about the current financial crisis and whether US Senate is doing the right thing. He calls the current crisis as the economic Pearl Harbor
Alchemist - BUY
We recommend a buy in Alchemist from a short-term trading perspective. It is apparent from the charts of Alchemist that it was on a medium-term downtrend from its early August high of Rs 105 to September low of Rs 71.
However, after taking support at around Rs 70 recently, the stock bounced up sharply. On October 1, the stock surged 6 per cent, breaking through the medium-term down trendline. Moreover, the stock’s surge has also penetrated the 21-, 50-, 200-day moving averages compression conclusively. We notice very high volume over the past 6 weeks.
The daily relative strength index is on the verge of entering in to the bullish zone from the bearish region. The moving average convergence and divergence is signalling a buy. We are bullish on the stock from a short-term perspective and expect it to move up until it hits our price target of Rs 100 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 84.
Market may resume weak
The market may exhibit cautious trend after taking a strong dip on Thursday. Also major Asian gauges like the Hang Seng index, the Kospi index, Straits Times and the Jakarta index have declined in current trades and may drag down the indices in early trades. Among the local indices, the Nifty has an intra-day support at 3900 and on a break below 3900 the next support is at 3850. On the upside there is a resistance at 4000. The Sensex has a likely support at 12900 and may face resistance at 13150.
US indices declined on Thursday, as frozen credit markets and weak economic reports amplified jitters ahead of the House vote on the $700 billion bank rescue plan. The Dowjones lost 348 points to close at 10483 while the Nasdaq ended 93 points lower at 1977.
However, Indian ADRs were largely weak on the US bourses. Infosys dropped over 5% while MTNL, Rediff, Satyam, Wipro, VSNL, Dr Reddy's, Tata Motors, ICICI Bank, Patni Computer and HDFC Bank were down around 1-4% each. ICICI Bank and VSNL, however, ended with modest gains.
Crude oil prices in the global market moved down, with the Nymex light crude oil for November series sliding by $4.56 at $93.97 a barrel. In the commodity segment, the Comex gold for December delivery lost $43 to settle at $844.30 an ounce.
Daily Call - Oct 3 2008
The US Senate did pass the bail out package on Wednesday, as expected. But the bill now needs to be passed by the House of Representatives before President Bush can sign this. Chances of this bill being passed are brighter than last time, but never the less, uncertain. If the bill is not passed, there could be deep gashes in the indices and the credit markets will further squeeze and Gold could make a comeback.
The US markets closed in the red and the Asian ones have followed suit. The weakness is not so much a comment on the chances of the package being cleared but on the very weak economic data that showed de-growth in manufacturing and rise in unemployment claims. There is going to be severe curtailment in the Q3 GDP from the 2.8% seen in Q2 and recession is almost knocking on the doors in the US. Those who are fully invested should buy the 3800 Put for October, while those who are sitting on cash can consider buying a call in the Nift
Trading Calls - Oct 3 2008
Nifty (3951) Sup 3850 Res 4030
Buy NTPC (169-175) SL 167
Tgt 181, 183
Buy ITC (190-193) SL 188
Tgt 198, 200
Buy SBI (1492-1505) SL 1475
Tgt 1535, 1545
Sell JSW Steel (451-456) SL 460 Tgt 443, 440
Sell Mah Seamless (272-276) SL 279 Tgt 265, 263
Daily News Roundup - Oct 3 2008
Tata Steel to buy 20% stake in Canadian iron-ore firm. (BS)
Axon board to recommend HCL Tech buy-out offer of 441.1mn pounds to its shareholders. (ET)
Tata Sons has offered to buy or make arrangements to buy any unsold ordinary shares in Tata Motors' ongoing rights issue. (Mint)
SEC’s decision to suspend mark-to-market accounting for hard-to-sell assets of banks will have a positive rub-off on Indian banks listed abroad, including ICICI Bank, HDFC Bank and State Bank of India. (FE)
L&T has been awarded a construction contract worth Rs5.5bn by Hyderabad-based property developer PBEL Property Development (India) Pvt. Ltd. (Mint)
ONGC to invest Rs50bn in next four years to revamp its three main assets and one sub-asset. (BL)
Daimler to retain its 6.64% stake in Tata Motors. (ET)
JSW Steel to cut prices of its product’s for the second time in recent months. (FE)
The US Department of Justice may withdraw the motion against Ranbaxy next week in a local court in the US. (ET)
Tata Tea is hiking its ad budget by 15% to promote both its tea and mineral water brands this fiscal. (FE)
Ten major IT companies including Wipro, Tech M and HCL Tech among others to bid for Rs40bn BSNL project. (BL)
Footmart Retail, JV between Pantaloon Retail and Liberty Shoes, is on shaky grounds due to few operational issues. (ET)
Pantaloon Retail says malls are waiving rents and offering to pay for interior decoration as excess supply and slowing economic growth has eroded demand. (BS)
Hindalco Industries’ rights offer is likely to sail through as the issue has received commitment from merchant bankers and financial institutions and the GDR entitlement has also been fully subscribed. (FE)
HCL expects entry of third bidder for Axon. (ET)
Gremach Infrastructure is in talks to sell 5-10% of its equity stake in a Mozambique coal JV, where it owns about 75% stake. (ET)
According to data from market research firm AC Nielsen, HUL is now just 100bps behind Tata Tea in terms of market share in volumes. (Mint)
Welspun India has put on hold its overseas acquisition plans. (Mint)
NDTV's board has approved the proposal to demerge the news and entertainment businesses of the firm. (Mint)
WWIL plans to foray into broadband services. (ET)
Elder Pharma hikes stake in its Nepalese JV to 49%. (ET)
Sun Pharma to extend its tender offer for Taro Pharma which expires on October 3, 2008. (ET)
ONGC-Mittal JV’s combined oil block in Nigeria under scrutiny for alleged irregularities in its allotment. (ET)
LIC hikes stake in Siemens, PTC India, Tata Power and Cipla. (ET)
ICICI and Kotak Bank to consider a 100bps hike in car loan rates. (ET)
Provogue India to spend Rs900mn for expansion. (ET)
HCL-Infosystems sets up ticket vending machines for railways at 390 locations across the country. (BL)
Maytas Infra plans to enter the power sector, lines up four plants. (DNA)
Future group drops plans to hive-off its hyper market division Big Bazaar into a separate company. (ET)
TDSAT refuses to stay TRAI order on renewal of ADC (access deficit charge) to BSNL. (ET)
FIPB has denied approval for a stake sale by JSW Infrastructure Ltd to a Mauritius-based firm more than two years back, citing lack of information on the investor’s source of funds. (Mint)
India’s trade deficit widened to US$14bn in August this year, rising by 94% yoy. (BL)
The textiles ministry has moved a Cabinet note advocating 2% increase in duty drawback to the textiles sector. (FE)
Japan Tabacco Inc has submitted a proposal to increase its stake in Camel and Winston cigarettes brands. (BS)
RBI unlikely to cut CRR. (BL)
Major steel companies are considering a cut in their output to counter slowing demand and falling international prices. (ET)
Trai has sought data from all telcos in a bid to review the mobile termination charges. (ET)
The government is framing a new policy for test marketing by foreign retailers to prevent these companies from circumventing curbs on FDI in retail trade. (ET)
Government may consider removing the cap of 51% in single brand retail. (ET)
RBI has asked banks to disclose their exposure in AIG, Lehman Brothers, Fortis, Washington Mutual and Wachovia Bank. (ET)
Petroleum Minister may announce a dual pricing policy for fuel. (ET)
Sugar mills come under government scanner for alleged excise duty evasion. (ET)
Ministry of communication to meet telecom companies to resolve disputes pertaining to dual technology for mobile services. (BS)
A difference in opinion!
Honest differences are often a healthy sign of progress – Mahatma Gandhi.
After two days of strong gains and a welcome break, (thanks to Gandhi Jayanthi) the bulls would love to walk ahead if not run. But, like the Mumbai climate this morning, everything seems pretty hazy. The newsflow is quite mixed. While the US Senate has done its bit by passing both, the nuke deal and the $700bn bank bailout plan, the overnight crash on Wall Street and weakness in other global markets could play spoilsport.
Should one invest now or wait for sharper dips. There is a clear difference in opinion all around. However, we can’t progress much debating on the same. Revisiting bear periods of the past may make one believe that the markets could see some upsurge this month and thereafter further pain before finding its bottom. But leave the future aside because we have to worry first for today.
We expect our market to soften at the opening bell. The key indices may turn choppy later in the day, as the global cues will continue to determine the overall market trend. The sentiment will remain jittery due to the uncertainty surrounding the US and other key global economies. What might add to the nervousness will be the inflation numbers and anxiety over the latest quarterly numbers.
Despite the US Senate passing the sweetened financial rescue package, there are concerns as to whether the Bush government's much-hyped measure will be able to avert a recession. With weekly jobless claims soaring to a 7-year high, and factory orders slumping to a 2-year low, the concerns seem to be legitimate. What's worse, some key industrialised economies in Europe and Japan too are staring at a recession. We also have to deal with the choked credit markets. As far as India is concerned, the macro picture remains far from pretty.
In Asian markets, Japan's benchmark Nikkei index sank below the 11,000 level for the first time three years, as export-related stocks and resource shares take a beating. Markets in China and South Korea closed for national holidays.
US stocks tumbled on Thursday, as rising jobless claims and slumping factory orders revived recession fears amid heightened concerns over the frozen credit markets and the fate of the $700bn bank bailout plan.
The S&P 500 Index fell 46.78 points, or 4%, to 1,114.28. The Dow Jones Industrial Average declined 348.22 points, or 3.2%, to 10,482.85. The Nasdaq Composite Index slipped 92 points or 4.5% to 1,976.72.
Market breadth was negative. Almost 14 stocks retreated for each that rose on the New York Stock Exchange.
News of rising weekly jobless claims ahead of Friday's key monthly employment report suggests that the world's biggest economy is now on a slippery road toward a consumer-led recession, said some analysts.
There are still concerns about whether or not the House will pass the financial rescue bill and, even if it does, whether it will be effective. A vote on the bill is expected on Friday. The House shot down the original version on Monday.
Billionaire investor Warren Buffett said that it is crucial to the global economy that the US bailout plan gets cleared by the Congress and added that the $700bn plan may not be enough.
Credit markets remained tight, with two closely watched measures of bank lending jitters at record highs. Treasury prices jumped, lowering the corresponding yields, as investors sought less risky places to put their money.
Weekly jobless claims soared to a seven-year high, alarming investors ahead of Friday's big monthly report. And factory orders slumped to a two-year low.
GE shares slid after the company sold $12bn in common stock Thursday at $22.25 per share, a 9% discount to Wednesday's closing price. The stock failed to benefit from late Wednesday news that Warren Buffett's Berkshire Hathaway will buy $3bn in preferred stock.
Oil prices continued to retreat on bets that slower global growth will keep hitting demand for oil. US light crude oil for November delivery fell $4.56 per barrel to settle at $93.97 a barrel on the New York Mercantile Exchange.
Gasoline prices fell for the 15th day in a row, according to a nationwide survey of credit card activity. COMEX gold for December delivery fell $43 to settle at $844.30 an ounce. In currency trading, the dollar gained against the euro and fell against the yen.
Stocks in Europe ended lower on Thursday. The pan-European Stoxx 600 index, after early gains, ended the session with a 1.4% loss to 254.24. UK's FTSE 100 dropped 1.8% to 4,870.34, while the French CAC-40 shed 2.3% to 3,963.28 and Germany's DAX 30 traded down 2.5% at 5,660.63.
The European Central Bank (ECB), as expected, left its key interest rate unchanged at 4.25% on Thursday.
US Republicans decision of considering a new version of bailout package and buying in the IT, banking, FMCG and select telecom stocks coupled with firm cues from the European markets lifted the BSE benchmark Sensex to close above the 13k mark. The BSE benchmark Sensex gained 205 points to close at 13,065 and the NSE Nifty index gained 29 points to close at 3,950.
Among the 30 components of the Sensex, 24 stocks ended in the green and 6 stock ended with negative bias. Infosys, HDFC Bank, ICICI Bank and HDFC were among the major gainers. However, among the top losers were, Reliance Industries, L&T and DLF.
Among the BSE Sectoral indices, BSE IT index (up 4%), BSE Bankex index (up 3.2%), BSE Consumer Durables index (up 3%) and BSE FMCG index (up 1.5%).
Gremach Infra was locked at 10% upper circuit at Rs54.8 after the company announced that it has found coal in Mozambique. The scrip touched an intra-day high of Rs54.8 and a low of Rs50.1 and recorded volumes of over 65,000 shares on BSE.
Omaxe fell from its high, on the back of profit booking, The stock fell 3% to close at Rs93. The company announced that M/s. Omaxe Infrastructure and Construction Pvt. Ltd, a subsidiary of the company secured a contract for development and construction of township for the new zinc smelter plant at Dariba, Udaipur of Hindustan Zinc Ltd.
Total Built-up Area for the township is 4,50,000 Sq.Fit in a 12.5 Acre Plot and the total Contract Value is Rs907.1mn.
The scrip touched an intra-day high of Rs99 and a low of Rs90 and recorded volumes of over 99, 000 shares on BSE.
Shares of XL Telecom surged by over 12% at Rs141 after 1.9% of its equity traded in a single transaction.
~358,370 shares were sold at Rs136.5 per piece on the BSE. The scrip touched an intra-day high of Rs143 and a low of Rs126 and recorded volumes of over 4,00,000 shares on BSE.
Shares of Alfa Laval surged by over 3% to Rs745 after the company announced that it won an order worth 150mn Swedish Krona (SEK) for three thermal evaporation systems from Vedanta Aluminum Ltd for their expansion project in India. The scrip touched an intra-day high of Rs755 and a low of Rs731 and recorded volumes of over 2,000 shares on BSE.
Aftek gained by 1.5% to Rs33 after reports stated that the board of directors of the company would consider spinning off real estate and infrastructure business. The scrip touched an intra-day high of Rs34 and a low of Rs33 and recorded volumes of over 2,00,000 shares on BSE.
Shares of Moser Baer rallied by over 3% to Rs112 after the company announced that secured customer sales orders worth US$500mn for solar modules. The scrip touched an intra-day high of Rs117.9 and a low of Rs109 and recorded volumes of over 19,00,000 shares on BSE.
Shares of Panacea Biotec gained by 2% to Rs244 after the company announced that that it entered into a strategic alliance with PharmAthene, Inc., Annapolis, MD, US, that includes a strategic equity investment by the company through its wholly-owned subsidiary, Kelisia Holdings Ltd., of US$13.1mn in exchange for the purchase of common stock and warrants in PharmAthene.
The company’s subsidiary has agreed to purchase ~3.73mn shares of PharmAthene common stock at a negotiated price of US$3.50/share. The scrip touched an intra-day high of Rs246 and a low of Rs230 and recorded volumes of over 11,000 shares on BSE.
Market may drift lower on weakness in Asian stocks
The market may edge lower tracking weakness in global markets. Caution may prevail ahead of the release of the weekly inflation data by the government after trading hours. US Senate’s nod for the Indo-US nuclear deal may lift shares of equipment makers for nuclear power plants.
Asian stocks dropped today, 3 October 2008, on fears that the global economy will worsen even if the US Congress passes a $700 billion bank rescue bill. Key benchmark indices in Hong Kong, Japan, Singapore and Taiwan were down by between 0.5% to 2.1%. Stock markets in China and South Korea were closed.
US stocks plunged on Thursday, 2 October 2008, as the number of people filing for unemployment benefits hit a seven-year high and another report showed steep drop in factory orders in August 2008.
European Central Bank President Jean-Claude Trichet said on Thursday, 2 October 2008, that Europe's economy was weakening.
The US Senate on Wednesday, 1 October 2008, passed the government's financial rescue plan after the House of Representatives rejected it in its original form. The House is expected to vote on the revised bill on Friday, 3 October 2008.
Meanwhile, the India-US nuclear deal on Wednesday, 1 October 2008, secured the approval of the US Senate which overwhelmingly voted a bill rejecting all the killer amendments and paving the way for its implementation. The landmark civil nuclear cooperation agreement, entered into between Prime Minister Manmohan Singh and US President George W. Bush in 2005, secured 86 votes while 13 Senators voted against it. The legislation, which has already been cleared by the House of Representatives, will now head to the White House for Mr. Bush signing it into a law.
The Indian government will today, 3 October 2008, release the weekly inflation data after trading hours. Inflation based on the whole price index rose 12.14% in year through 13 September 2008. Last month, central bank governor Duvvuri Subbarao said inflation was showing signs of moderating but it was too early to conclude whether this was a trend.
As per provisional data released by the stock exchanges, foreign funds sold shares worth a net Rs 274.90 crore on Wednesday, 1 October 2008. Domestic funds bought shares worth a net Rs 48.65 crore.
Foreign institutional investors (FIIs) have been pulling out their investments from India and other emerging markets to shore up resources to beat the global liquidity crunch. In India, FIIs sold shares worth a net Rs 8278.10 crore last month. The outflow has reached Rs 36707.50 crore in calendar year 2008.
With the end of third quarter of the calendar year 2008 on Tuesday, 30 September 2008, hedge fund are bracing for heavy redemption amid US financial sector crisis which has already spread to Europe. Investors in hedge funds are usually allowed to exit funds only on the final day of the financial quarter. Large-scale investor redemption in hedge funds may trigger further selling by foreign funds in India. Hedge funds mainly operate through the participatory notes route in India. However, there is not data available on the quantum of hedge funds’ investment in India.
The next major trigger for the market is Q2 September 2008 results. IT bellwether Infosys kickstarts the reporting season on 10 October 2008
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