Slide to continue

After registering the loss of over 385 points in yesterday's trades, the market is likely to exhibit weak trends on the back of a strong intra-day volatile moves. The meltdown in US markets as fears of a prolonged recession sent investors running for the exits and mixed Asian indices in morning trades likely to put pressure on the domestic indices. On the upside, the Nifty could test around the 2950 level and may witness support around the 2850 level. The Sensex has a likely support at 9600 and may test higher levels of 9850. US indices slumped for a second straight session Thursday, bringing the Dow's losses to 929 points since Election Day. The Dow Jones sliding over 443 points to close at 8696 while the Nasdaq slipping by 73 points at 1609. Except VSNL all the Indian stocks trading on the US bourses fell sharply. Infosys tumbled over 10.47% followe by Wipro & Satayam slipped over 7-8%, while Patni Computers, HDFC Bank, Tata Motors, ICICI Bank, MTNL, Rediff and DR Reddy's were down over 1-6% each. Crude oil prices in the global market slipped on Thursday. The Nymex light crude oil for December series slipped $4.53 at $60.77 per barrel. In the commodity segment, the Comex gold for December delivery moved down by $10.20 to settle at $732.20 an ounce.

Daily Technicals - Nov 7 2008

Daily Technicals - Nov 7 2008

Chambal Fertilizers - SELL

We recommend a sell in Chambal Fertilisers and Chemicals from a short-term perspective. It is evident from the charts that this stock has been trending downwards since June high of Rs 96 (52-week high), forming lower peaks and lower bottoms. However, in early October, the stock found support at around Rs 32, which is a key long-term support level and began to trend up. This uptrend of the stock was a corrective up move and it encountered resistance at Rs 54. Subsequently, shaping a bearish engulfing candlestick pattern, the stock resumed its downtrend. On November 6, the stock tumbled over 8 per cent penetrating the corrective up trendline, reinforcing the bearishness. The daily relative strength index (RSI) is declining in the neutral region towards the bearish zone and the weekly RSI is featuring in the bearish zone. We are bearish on the counter from a short-term horizon. We anticipate the stock’s decline to continue until it hits our price target of Rs 38.5 in the forthcoming trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 46.

via BL

Trading Calls - Nov 7 2008

Considering the unprecedented carnage in the global financial markets and uncertainty over the fate of the US and other major economies, we would like to refrain from giving any intra-day trading ideas. We continue to advise caution at this stage.

Investors should stay on the sidelines till the global selloff abates and markets stabilise. One should not get carried away if there is any kind of a relief rally, as further selling is expected. Any advance in Indian stocks can only be sustained if global markets recover.

Daily News Roundup - Nov 7 2008

Reliance Industries’ Jamnagar refinery to start next year.(Mint)
Ashok Leyland cuts work to three days a week as demand for heavy duty CVs has fallen.(Mint)
Tata Motors may shut its passenger vehicle unit in Pune for six days.(DNA)
Government asks NTPC to surrender Chhatrasal coal mine block due to limited coal supply for the Sasan power project in Madhya Pradesh.(Mint)
Bharat Forge plans JV with an Alstom unit.(BL)
NTPC to set up four fly-ash based cement plants across the country over the next few years.(DNA)
SBI warns that bank’s NPA levels may rise due to increased level of ‘stressed assets’.(TOI)
ONGC is planning an IPO for its subsidiary that is building the Rs136bn petrochemical project at Dahej in Gujarat.(BS).
Reliance Industries is said to be offering discounts of 5-10% to customers willing to accept two months supplies at one go.(ET)
Bharti Teletech is planning to list next year. (ET)
RBI has rejected Ranbaxy Laboratories’ application for early redemption of US$440mn zero coupon convertible bonds.(ET)
Mahindra & Mahindra has formed a JV with its existing Australian importer and distributor TMI Pacific for marketing, promotion and retailing of its vehicles in Australia. (ET)
Hindalco Industries has raised a five year loan of US$1bn to refinance its US3bn bridge loan to buy Novelis.(BS)
International Coal Ventures, a SPV formed by PSUs eyeing 10% equity in an Australian mining firm.(Mint)
Syndicate Bank may raise Rs3-5bn Tier-II capital during the current fiscal.(BL)
Vedanta Resources has decided to reduce its capex plans by US$5.1bn.(BS)
Escorts shuts down its tractor unit in United States.(TOI)
Glenmark Generics launches hypertension drug in UK.(DNA)
Garware Offshore Services signs contract for acquisition of a Multipurpose Platform Supply Vessel for US$55mn.(DNA)
Sun Pharma has received FDA approval for marketing generic versions of tablets used in the treatment of Parkinson’s disease. (ET)
Kingfisher and Jet Airways may lower fares by upto Rs1,000 on domestic routes. (ET)
State Bank of India has decided to reproduce it prime lending rates by 75bps. (BS)
Videocon has delayed the launch of its Direct-to-home venture. (ET)
Plethico Pharmaceuticals is picking up around 20% stake in a UAE based pharma retail chain.(ET)
Four nuclear equipment makers in the race to become technology partners for the JV between BHEL and NPCIL.(BS)

India plans to import 16mn tonnes of coal in current fiscal.(Mint)
Costlier primary items push up inflation rate to 10.72% for week ended October 25.(BL)
Direct tax collection growth slows down to below 30% in April-October period.(TOI)
Government is not considering a cut in fuel prices as state-run firms are still incurring losses.(FE)
DoT would increase spectrum usage charge on telecom operators by up to 2%. (FE)
Government may restore the duty entitlement passbook scheme for the steel industry. (BS)
Around 30 proposals involving Rs60bn through holding companies have been cleared by the Foreign Investment Promotion Board. (ET)
Guidelines for mobile virtual network operators to launch operations in India are set to be unveiled soon.(ET)

Inconvenience indeed!

An adventure is only an inconvenience rightly considered. An inconvenience is an adventure wrongly considered.

Even the most adventurous are being inconvenienced by the wild swings in the market. Another day and another round of bloodbath in stocks across the globe! The story is all-too familiar by now, and could even be getting a bit monotonous. The writing is on the wall is that we are staring at a global recession. The major worry is how long and severe it will be? Nations across the world have been doing their best to limit the fallout from the unprecedented financial crisis. Those efforts still continue, with central banks cutting rates aggressively to boost lending and pump-prime the contracting economies.

Last week, there was some relief for global equities. This week too started on a promising note. But, the past couple of days have seen resumption of a savage worldwide sell-off, that is threatening to take indices to new lows. It is really tough to make any prediction on the movement of the stock indices, as volatility has increased. This morning's trade in Asian markets is a case in point, with key indices witnessing wild swings. We expect yet another weak opening today. There may be some technical bounce. But, stay light for the weekend and come back to pick up few goodies at lower prices next week.

FIIs were net sellers of Rs5.1bn (provisional) in the cash segment on Thursday while local institutions pumped in Rs3.5bn. In the F&O segment, the foreign funds were net sellers at nearly Rs12bn. On Wednesday, FIIs were net buyers of Rs3.39mn in the cash segment.

US stocks extended the post-election slump into Thursday, as a fresh batch of poor corporate earnings and economic reports heightened fears of a prolonged recession in the world's largest economy.

Disappointing sales reported by retailers coupled with a struggling auto industry and a bleak forecast from Cisco Systems sparked further selling. What was surprising was that the selloff came despite stabilization in the credit markets and rate cuts by major European central banks.

The last two days have been the worst in the US stock market since 1987. In 48 hours, the Dow Jones Industrial Average has dropped nearly 1,000 points, and the Standard & Poor’s 500-stock index has lost nearly 10%.

Investors were also nervous ahead of Friday’s key monthly jobs report, which is also likely to pain a grim picture of the labour market. The report is expected to show that US companies cut hundreds of thousands of jobs in October.

The Dow closed at 8,695.79, down 443.48 points, or 4.9%, its lowest finish since Oct. 28, after swinging in a 518-point range. The S&P lost 47.89 points, or 5%, to 904.88, and the Nasdaq Composite index fell 72.94 points, or 4.3%, to 1,608.70.

The Russell 2000 Index of small US companies declined 3.7% to 495.84.

The two-session decline of 929 points, or 9.7%, in the Dow marked the biggest two-session point loss ever and the biggest two-session percentage decline in 21 years, according to Dow Jones.

The declines on Wall Street came despite sharp reductions in interest rates by leading European central banks seeking to further ease the tight credit markets.

The Bank of England (BOE) lowered its benchmark rate by 1.5%, much more than analysts had expected, and the European Central Bank (ECB) cut its benchmark rate by half a percentage point.

October retail sales at the nation's chain stores were pretty bad, with some discount operators like Wal-Mart managing to buck the trend. The housing market collapse, and the ensuing credit crunch and worsening labor market have hit consumer spending.

Even the sharp fall in oil and gasoline prices has not had any positive impact on consumer spending.

Automakers were hit especially hard on continued worries about their ability to stay afloat without government help. GM slumped 13.7% and Ford lost 5.3%.

Cisco said late on Wednesday that it has stopped hiring and that revenue for the current quarter won't meet forecasts. That overshadowed the company's better-than-expected earnings report. Shares fell 2.6%.

Las Vegas Sands continued to plummet on worries that it may default on certain debt obligations and that it can't raise enough capital. The company operates the Venetian and Palazzo casinos and a pair of casinos in China.

The dollar rallied against the euro and the pound after monetary policy makers in Europe cut interest rates in response to growing economic weakness. However, the greenback edged lower versus the Japanese yen.

COMEX gold for December delivery fell 10.20 to settle at US$732.20 an ounce.

US light crude oil for December delivery fell to a 19-month low, sinking US$4.53 to settle at US$60.77 a barrel on the New York Mercantile Exchange.

Gasoline prices fell another 2.5 cents to a national average of US$2.34 a gallon. The decline marks the 50th consecutive day that prices have decreased. During that same time period, prices dropped by US$1.51 a gallon, or 39.2%.

The credit market continued to improve. The 3-month Libor fell to 2.39% from 2.51% on Wednesday, a nearly four-year low. Overnight Libor rose slightly to 0.33%, bouncing off an all-time low of 0.32% the previous day. Libor is a key interbank lending rate.

The yield on the 3-month Treasury bill, seen as the safest place to put money in the short term, fell to 0.30% from 0.39% on Wednesday. Last month, the 3-month yield reached a 68-year low around 0% as investor panic peaked.

Treasury prices were little changed, with the yield on the benchmark 10-year note at 3.70%.

European stocks ended sharply lower on Thursday, notwithstanding the rate relief from the ECB, the Swiss National Bank and a sharp one from the Bank of England. The pan-European Dow Jones Stoxx 600 index ended 5.6% lower to 215.48 as stocks in the basic resources sector took heavy falls.

All of the 15 Stoxx sector indexes traded lower. Across the exchanges of London, Paris, and Frankfurt, decliners outnumbered advancers by about a 3-to-1 ratio.

UK's FTSE 100 index dropped 5.7% to 4,272.41, slightly outperforming their euro-zone counterparts. Germany's DAX 30 index slid 6.8% to 4,813.57 and the French CAC 40 index slumped 6.4% to 3,387.25.

Overnight losses in the US and the Asian markets coupled with selling pressure in index pivotal dragged the key indices to open with a negative gap. Bulls although managed to stage a strong come back ahead of inflation announcement.

However, markets were unable to hold on to their gains and slipped sharply after India’s Inflation for the week ended Oct 25 rose to 10.72% missing market expectation of 10.49%. Government also announced that it revised inflation for the week ended to August 30 to 12.38% versus 1.1%

Finally, after a volatile session, Indian market fell on Thursday extending its fall to second straight trading session. The BSE benchmark Sensex fell 373 points or 3.7% to close 9,746 and the NSE Nifty index was down 102 points to close at 2,892.

Among the 30-components of Sensex, 24 stocks were in the negative terrain and 6 stocks ended in the green. Reliance Industries, Infosys, Bharti Airtel, HDFC and ICICI Bank were among the major losers. On the other hand, bucking the negative trend were, HUL, JP Associates, Ranbaxy and DLF were among the major gainers.

Shares of Hindustan Zinc slipped by 4% to Rs297 after the company announced that it has cut zinc prices by Rs5,000 per ton, stated reports. The scrip touched an intra-day high of Rs310 and a low of Rs292 and recorded volumes of over 19,000 shares on BSE.

Shares of KLG Systel snapped its rally erased all its gains and finally ended 3% lower at Rs110. The company announced that the Power System Solutions (PSS) Division of the company received orders of Rs1.32bn from Punjab State Electricity Board under Rajiv Gandhi Gramin Vidyutikaran Yojna for design, engineering, erection and commissioning of 11 KV lines, 25 KVA substations and release of around 1.48 lacs new connections to Below Poverty Line (BPL) households. The scrip touched an intra-day high of Rs125 and a low of Rs106 and recorded volumes of 72,000 over shares on BSE.

SBI announced that it would cut its lending rate by 75 basis points, following a reduction in the benchmark rate by the central bank and measures to free up cash in the system. The reduction would be effective from November 10. The stock ended down by 4.5% to Rs1215 hitting an intra-day high of Rs1265 and a low of Rs1201 and recorded volumes of over 14,00,000 shares on BSE.

Suzlon Energy announced that the New Zealand based TrustPower Ltd on November 02, 2008 did an official public opening of Stage 1 of its first Australian wind farm located at Snowtown 170 km north of Adelaide. The said wind farm comprises of 47 numbers of Suzlon S88 turbines. The stock gained 3% to Rs60 after hitting an intra-day high of Rs63 and a low of Rs52 and recorded volumes of over 2,00,00,000 shares on BSE.

Bulls might look to make a come back on Friday after sliding over atleast in the morning trades as in a surprising move major central banks in Europe cut interest rate. The Bank of England slashed its key interest rate by as much as 1.5 percentage points.

However, given the bleak economic background, both globally and locally, stocks are unlikely to rise too much. There may be some more room on the upside, but there will be selling after every spurt.

India Inflation Update

Inflation based on the wholesale price index (WPI) for the week ended October 25, 2008 increased to 10.72% as compared to 10.68% a week ago.

The Index for all commodities for the week increased to 238.50 as compared to 238.30 in the previous week. The increase in the WPI index is due to increase in the prices of primary articles. Fuel, power, light remains unchanged and manufactured products have decreased.

The wholesale price-based inflation was 3.11% during the corresponding week last year.

Sector Review

Sector Review

Shree Cements

Shree Cements

India Conference

India Conference

IMF - India to slowdown

The International Monetary Fund (IMF) on Thursday lowered India's
economic growth forecast for next year to 6.3 percent - 0.6 percent less than what it had projected last month - as the financial crisis envelops the world.

Growth in world economic output for next year is also likely to suffer, with the multilateral funding agency projecting it to fall by 0.8 percent at 2.2 percent.

The forecast was part of the World Economic Outlook Update the Fund released today.

Painting a scary picture of world trade, the IMF forecast suggests that the global growth in volume of trade in goods and services would slide from 7.2 percent to 4.6 percent in 2008 and dip to 2.1 percent next year.

The world economic growth is likely to slowdown from 5 percent in 2002 to 3.37 percent in 2008, while India's economic growth for this year is expected to dip by just 0.1 percent to 7.8 percent than what was forecast last month.

As per the IMF projections, India is likely to record an economic growth of 6.6 percent during October-December as against 8.9 percent in the corresponding period in 2007.

"The downward revisions to 2009 real GDP growth projections are somewhat larger in emerging economies, averaging one percent," the IMF said.

In line with the market development, IMF has revised petroleum price projection from 100 dollar a barrel to 68 dollar a barrel for 2009.

According to IMF projections, the UK will be the worst hit on account of the global crisis and may witness contraction of its economy by 1.3 percent in 2009.

In addition, the advanced countries which will witness negative growth in 2009 include the US, Germany, France, Italy, Spain and Japan.

Turnover surges

RIL November 2008 futures at premium

Nifty November 2008 futures were at 2883.30, at a discount of 9.35 points as compared to spot closing of 2892.65. NSE's futures & options (F&O) segment turnover was Rs 43,836.07 crore, which was higher than Rs 38,550.94 crore on Wednesday, 5 November 2008.

Reliance Industries (RIL) November 2008 futures were at premium at 1174 compared to the spot closing of 1170.55.

Bharti Airtel November 2008 futures were at discount at 636 compared to the spot closing of 639.40.

ICICI Bank November 2008 futures were at discount at 428.60 compared to the spot closing of 433.40.

In the cash market, the S&P CNX Nifty lost 102.30 points or 3.42% at 2892.65.

Eveninger - Nov 6 2008

Eveninger - Nov 6 2008

Bullion metals turn further pale

Firm dollar post interest rate cuts in Europe pressure bullion metals

Bullion metals ended lower today, Thursday, 06 November, 2008. Gold prices dropped as dollar firmed up today and also as investors once again began cautious about the weakness in the economy. Silver prices also dropped today.

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. Losses in equity markets had also forced traders to sell gold. Since past couple of weeks, precious metals, mainly gold, had dropped as traders tried to gain back some of the money that had lost in other markets.

On Thursday, Comex Gold for December delivery fell $10.2 (1.4%) to close at $732.2 an ounce on the New York Mercantile Exchange. Prices earlier rose to a high of $761. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (29.7%) since then. Last week, gold prices ended lower by 1.6%. For the month of October, gold ended lower by 18%. It was the biggest percentage loss for gold since February, 1983.

This year, gold prices have lost 11.9% till date. The dollar index has gained 10.6% this year. For the third quarter ended September, 2008, 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 Thursday, Comex silver futures for December delivery rose by 38 cents (3.8%) to $10.055 an ounce. Last week, silver fell 1.9%. For the month of October, silver slipped by 20%. Till date, silver has lost 32% this year. Silver had ended month and quarter of September 2008 with a loss of 10%. For the second quarter, it had gained a paltry 1.4%. Silver had gained 16% in Q1. 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.

At the currency market today, the dollar gained as much as 1.6% against a weighted basket of six major currencies after the Bank of England and the European Central Bank slashed benchmark interest rates to stimulate slumping economies. The Bank of England took drastic action earlier Thursday, slashing its key interest rate to 3% from 4.5% previously. The European Central Bank, which sets monetary policy for the 15-nation euro zone, and the Swiss National Bank also moved to cut rates by smaller amounts.

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. In the latest move, the Federal Reserve has cuts its target bank lending rate to 1% from 5.25% in September, 2007. The Fed did it in eight steps.

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 181 (1.5%) at Rs 11,559 per 10 grams. Prices rose to a high of Rs 11,778 per 10 grams and fell to a low of Rs 11,471per 10 grams during the day’s trading.

At the MCX, silver prices for December delivery closed Rs 232 (1.4%) higher at Rs 17,165/Kg. Prices opened at Rs 16,931/kg and rose to a high of Rs 17,249/Kg during the day’s trading.

Crude back at $60

Prices drop by almost $5 for second consecutive day

Crude prices dropped by a huge amount on Thursday, 06 November, 2008. Economic concerns and weak economic report were the main reasons for this drop. Also yesterday’s weekly inventory report stating that motor gasoline inventories witnessed unexpected jump pressured crude prices.

On Thursday, crude-oil futures for light sweet crude for December delivery closed at $60.77/barrel (lower by $4.53 or 7%) on the New York Mercantile Exchange. Prices reached a low of $60.2 during intra day trading. Prices reached a high of $147 on 11 July but have dropped almost 63% since then. Last week, prices rose by 5.7%. On a yearly basis, crude price is lower by 37%. For this year in 2008, crude prices have dropped 38%.

For the month of October, 2008, crude prices ended lower by 32.6%, the biggest monthly drop since 1983.

At the currency market today, the dollar gained as much as 1.6% against a weighted basket of six major currencies after the Bank of England and the European Central Bank slashed benchmark interest rates to stimulate slumping economies. The Bank of England took drastic action earlier Thursday, slashing its key interest rate to 3% from 4.5% previously. The European Central Bank, which sets monetary policy for the 15-nation euro zone, and the Swiss National Bank also moved to cut rates by smaller amounts.

The Labor Department reported today that the number of U.S. residents collecting state unemployment benefits reached the highest level in 25 years, rising by 122,000 to a seasonally adjusted 3.84 million in the week ending 25October, 2008.

Meanwhile, the number of first-time applications for benefits fell by 4,000 to 481,000 in the week ending 1 November, 2008. The jobless claims report shows businesses are laying off workers at a rapid pace, while finding a replacement job is ever harder.

Separately, another report showed that nonfarm business productivity rose at a 1.1% annual rate in the third quarter. This was generally in-line with expectations.

The EIA reported yesterday that crude supplies were unchanged last week and remained at 311.9 million barrels for the week ended 31 October, 2008. Data show that crude stocks had climbed nearly 22 million barrels over the last six weeks. But motor gasoline supplies climbed unexpectedly, up by 1.1 million barrels in the latest week to 196.1 million. Supplies of distillates, which include heating oil, rose 1.2 million to 127.8 million.

OPEC officials decided last month at its meeting at Vienna that OPEC will pare production by 1.5 million barrels a day w.e.f 1 November, 2008. The official production quota is currently 28.8 million barrels, and it cut by 1.5 million in November.

Last month, the Centre for Global Energy Studies said that global oil demand may fall for the first time in 15 years in 2008 and stagnate next year.

For the third quarter of the year crude prices ended lower by 28%. This was the biggest quarterly drop since 1991. Before that, 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%.

Against this background, December reformulated gasoline fell 8 cents to $1.34 a gallon and December heating oil dropped 11 cents to end at $1.94 a gallon.

December natural-gas futures dropped 27 cents to $6.98 per million British thermal units. EIA reported today that natural-gas inventories rose by 12 billion cubic feet for the week ended 31 October, 2008.