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Thursday, December 11, 2008
Market seen mixed
Key benchmark indices may see ranged activity tracking mixed global cues with Asian markets declining today and those of the US advancing overnight.
Inflation data based on the wholesale price index in the year through 29 November 2008, to be released by the government today, 11 December 2008, will be closed watched. Inflation based on the wholesale price index rose 8.4% in the year through 22 November 2008, a six-month low and also lower than its previous week's 8.84% rise, data released by the government on 4 December 2008 showed.
Meanwhile, the country's economic growth may fall short of the Reserve Bank of India's projection of 7.5-8% for the current financial year ending March 2009 and more pain could be in store for the next fiscal 2009-10 in terms of growth. RBI governor D Subbarao on Wednesday, 10 December 2008 indicated that the forecast might be revised downwards when RBI reviews the annual policy for 2008-09 in January 2009.
Most Asian markets were trading lower today, 11 December 2008 on uncertainty over quick approval for US auto rescue plans. China's Shanghai Composite fell 0.65% or 13.61 points at 2,065.50, Hong Kong's Hang Seng was down 0.91% or 141.90 points at 15,435.84, Japan's Nikkei slipped 0.80% or 68.97 points at 8,591.27, Singapore's Straits Times plunged 1.34% or 24.39 points at 1,797.31, Taiwan's Taiwan Weighted declined 0.09% or 4.01 points at 4,654.86. However, South Korea's Seoul Composite was up 0.36% or 4.08 points at 1,149.9
US markets rose on Wednesday, 10 December 2008 as investors mulled progress on a 15-billion-dollar bailout plan being debated in Congress for troubled American automakers.
The Dow Jones industrial average rose 70.09 points, or 0.81%, to 8,761.42. The Standard & Poor's 500 Index gained 10.57 points, or 1.19%, to 899.24. The Nasdaq Composite Index was up 18.14 points, or 1.17%, at 1,565.48.
Back home, frenzied buying in index pivotals on speculation US lawmakers will approve a $15 billion bailout of American auto companies boosted the domestic bourses on Wednesday, 10 December 2008. The BSE 30-share Sensex surged 492.28 points or 5.37% to 9,654.90 and the S&P CNX Nifty advanced 144.25 points or 5.18% to 2928.25, on that day.
Foreign institutional investors (FIIs) were net buyers worth Rs 950.65 crore while mutual funds sold shares worth Rs 59.01 crore on Wednesday, 10 December 2008, according to provisional data on NSE.
US crude for January 2009 delivery was up 21 cents at $43.73 a barrel today, 11 December 2008 on signs that top oil exporter Saudi Arabia has slashed January supplies ahead of next week's organisation of petroleum exporting countries (OPEC) meeting.
FIIs step up buying
Inflow of Rs 460.30 crore on 8 December 2008
Foreign institutional investors (FIIs) purchased shares worth a net Rs 460.30 crore on Monday, 8 December 2008, much higher than Rs 51.20 crore on Friday, 5 December 2008.
FII inflow of Rs 460.30 crore on 8 December 2008 was a result of gross purchases Rs 1724.50 and gross sales Rs 1264.20 crore. The BSE Sensex gained 197.42 points or 2.2% to 9,162.62 on that day.
FII inflow in December 2008 totaled Rs 727 crore (till 8 December 2008). FII outflow reached Rs 54,010.20 crore in calendar 2008, so far, till 8 December 2008, as against an inflow of a huge Rs 69,430.50 crore in the corresponding period last year.
There are a total of 1587 foreign funds registered with the Securities & Exchange Board of India (Sebi).
Trading Calls - Dec 11 2008
Nifty (2928) Sup 2850 Res 2975
Buy NTPC (169) SL 166 Target 175, 177
Buy RCOM (228) SL 223 Target 238, 240
Buy Educomp (2168) SL 2145 Target 2210, 2225
Buy L&T (780) SL 773 Target 794, 798
Sell Cipla (188) SL 192 Target 180, 179
Daily News Roundup - Dec 11 2008
· ONGC plans hit, as Imperial does not renew its license to prospect oil in Kazakhstan. (ET)
· ONGC to raise Rs50bn from Indian banks to complete the acquisition of Imperial Energy. (BS)
· DLF led consortium emerges as the sole bidder for Gurgaon metro project. (BS)
· Reliance Industries to borrow US$400mn from JP Morgan Chase to purchase equipment from its US suppliers. (BS)
· DLF and Unitech may cut prices by 30% next year. (BS)
· Dr Reddy’s subsidiary may win eight drug supply contracts from AOK, Germany’s largest health insurance company. (BS)
· HCL Tech is set to conclude its £441mn acquisition of Axon Group on December 15, 2008. (ET)
· DLF to denotify IT SEZ and six other developers to cut size of their respective SEZs. (FE)
· Tata Steel to produce and sell more in the current year from its Indian operations. (FE)
· GMR Infra’s Andhra Pradesh plant starts electricity generation. (FE)
· Suzlon rejigs top management, CMD to steer company’s operations.
· Petronet LNG signs one year LNG supply agreement beginning January 2009. (DNA)
· Heineken may pay a multi year commercial fee of US$100mn to United Breweries for handling distribution and bottling of its beer brands in India. (ET)
· Ranbaxy gets reprieve in UK cartel case along with other five generic companies. (ET)
· Bombay High Court grants an injunction against Cipla to Roche over the latter’s patent of Valganciclovir. (ET)
· Credit Suisse plans to cut down outsourcing to Wipro. (ET)
· Bajaj Holding buys an additional 5% stake in Bajaj Finserve through the creeping acquisition route. (ET)
· Madras Aluminum suspends production at its aluminum plant with immediate effect. (ET)
· HCC’s Lavasa project on track despite meltdown. (BL)
· Infotech Enterprises is gearing up to tap big contracts in defense sector. (BL)
· Gujarat NRE Coke plans DVS-rights issue at 1:450. (BS)
· Future Group plans expansion of 600,000 square feet in east India over the next one year. (ET)
· Future Group to cut prices of its private labels across all product categories. (BS)
· Oil India plans to foray into the telecom sector. (ET)
· Elder Pharma to ink two more nutraceutical deals. (BL)
· State owned Banks are planning to cut rates on small ticket loans by up to 300bps. (ET)
· TRAI plans administrative charges for 3G bids at the rate of 2% of the highest bid amount. (ET)
· Subbarao says RBI might further lower growth forecasts for FY09. (ET)
· Government plans to give tax-free status to equity returns from private PFs and superannuation funds. (ET)
· Government issues Rs100bn bonds to 23 fertilizer companies. (BS)
Car-ry on carefully!
Don't drive as if you owned the road. Drive as if you owned the car
The bulls appeared to be on overdrive on Wednesday. Today’s start again promises to be good given the developments in the US market. Use the gains to lighten position because the rally could run out of gas sooner than expected. The US House of Representatives approved a $14 billion federal loan package for the struggling big three automakers on a 231-170 vote late on Wednesday. Its fate in the Senate remains uncertain. On the flip side, the $14bn is slightly less than discussed earlier and almost half the amount sought by automakers.
The weekly inflation figures have lost their charm with the government and RBI more keen about growth. Meanwhile, RBI Governor indicated that the growth forecast might be revised downwards when the central bank reviews the annual policy in January 2009. The IIP numbers to be announced later on Friday would be anxiously awaited.
RCom could see action as global telecom companies are in talks to acquire around 20-26% stake in the company. Reliance Capital too could see some fund buying today.
Lafarge, CRH and Italcementi are reportedly in the race to acquire Andhra Cements.
Reports state that Infotech Enterprises is gearing up to tap big contracts in defense sector.
State owned banks are planning to cut rates on small ticket loans by up to 300bps.
TRAI plans administrative charges for 3G bids at the rate of 2% of the highest bid amount.
US stocks rallied on Wednesday following reports that Congress and the White House have struck a deal to provide a $14 billion bailout to the auto industry.
The Dow Jones added 0.8%. The Standard & Poor's 500 (SPX) index gained 1.2% and the Nasdaq was up 1.2%.
The bailout package, which has to get clearance from the Senate would enable GM and Chrysler to avoid filing for bankruptcy through at least the end of March.
The dollar gained versus the euro and fell against the yen. U.S. light crude oil for January delivery rose $1.45 to close at $43.52 a barrel on the New York Mercantile Exchange following a mixed weekly crude inventories report. COMEX gold for February delivery jumped $34.60 to $808.80 an ounce.
Among the major bulk deals; Lotus Global Investments has purchased 0.5mn equity shares of Ankit Metal at an average price of Rs17.
Insider trades:
3iInfotech: V. Srinivasan, MD & CEO has purchased 24,000 equity shares of the company on December 8, 2008.
House of Pearl Fashion: Deepak Seth, Chairman has purchased 22,519 equity shares of the company on December 8,2008.
Aurobindo Pharma: Trident Chemphar Limited (Promoter group) has purchased 515,000 equity shares of the company on 4th and 5th December.
Shree Ashtavinayak: Dhilin Mehta, CMD has purchased 2,000 equity shares of the company on December 8, 2008.
Indian markets ended at day's high in a rally propelled by heavy buying in the index pivotal like Reliance Industries, DLF and Tata Steel. Buying was witnessed across the board with the realty, metals and oil & gas stocks among the major gainers.
The broader market also participated in the rally with the BSE mid-cap index BSE small-cap Index adding over 2% each. Finally, the BSE benchmark Sensex surged 492 points to close at 9,654 and the NSE Nifty index was up 144 points ending at 2,928.
Market breath was positive, 1,530 stocks advanced against 800 declines, while, 116 stocks remained unchanged.
Among the 30-components of Sensex, 29 stocks ended in the green and only 1 stock ended in the negative terrain, the big gainers were DLF (22%), M&M (17%), Grasim (14.3%) and Tata Steel (13%). Ranbaxy was the only loser, down 1%.
Shares of Unitech surged by over 6% to Rs35 after reports stated that the company plans to invest Rs25bn to develop 35 hotels over the next seven years. The scrip touched an intra-day high of Rs35.9 and a low of Rs33.2 and recorded volumes of over 32,00,00,000 shares on BSE.
Shares of Wockhardt surged by over 3% to Rs99 after reports stated that the company was in talks to raise US$100mn for clearing FCCB dues. The scrip touched an intra-day high of Rs101 and a low of Rs98 and recorded volumes of over 21,000 shares on BSE.
Apollo Tyres declined by a percent to Rs20.2. According to reports, the company has slashed their product prices to pass on the 4% excise duty cut benefit to customers. The scrip touched an intra-day high of Rs21 and a low of Rs19 and recorded volumes of over 1,00,000 shares on BSE.
Shares of Jet Airways gained after reports said that the company plans to lease five aircraft to Gulf Air Co. and Turkish Airlines Inc. to cut costs. Jet Airways will lease two Airbus SAS A330 aircraft to Gulf Air for four months. Three Boeing Co. 777 planes will be leased to Turkish Airlines for six months.
The stock was up by a 1.5% to Rs135 after hitting an intra-day high of Rs138 and a low of Rs134 and recorded volumes of over 49,000 shares on BSE.
Shares of MTNL advanced after reports stated that the company would launch mobile video surveillance with uniting its 3G services with conventional closed-circuit TV.
The 3G services would be launched on December 11 in Delhi. The services are expected to be launched in Mumbai too soon. The launch will put the country on the global 3G map a month ahead of the process to offer private firms 3G licenses. The stock was up by 3% to Rs75 after hitting an intra-day high of Rs76.9 and a low of Rs73 and recorded volumes of over 1,00,000 shares on BSE.
Shares of Kalpataru Power advanced by 3% to Rs233 after reports stated that the company won a gas pipeline contract from GAIL valued at Rs2.4bn. The scrip touched an intra-day high of Rs239 and a low of Rs230 and recorded volumes of over 81,000 shares on BSE.
Asian stocks open negative
Asian stocks fell for the first time this week after a USD 14 billion US automaker bailout ran into opposition in the Congress, raising concern the recession will deepen in the world`s biggest economy.
Toyota Motor which makes more than a third of its sales in North America slid more than 1.5% and Hyundai Motor dropped 2% as Senate Republicans yesterday voiced opposition to a rescue for General Motors Corp. and Chrysler LLC.
Japanese benchmark index Nikkei decreased 68.97 points, or 0.80%, to trade at 8,591.27.
Hong Kong`s Hang Seng index slipped 165.40 points, or 1.06%, to trade at 15,412.34.
China`s Shanghai Composite declined 6.40 points, or 0.31%, to trade at 2,072.72.
Taiwan`s Taiex index slid 1.38 points, or 0.03%, to trade at 4,657.49.
South Korea`s Kospi index climbed 5.05 points, or 0.44%, to trade at 1,150.92.
Singapore`s Straits Times fell 22.40 points, or 1.23%, to trade at 1,799.30. (8.08 a.m., IST)
Precious metals turn brighter
Gold and silver shine as dollar weakens
With a weak dollar, gold and silver prices once again rose today, Wednesday, 10 December, 2008. Bullion metals rose due to the falling dollar. 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 and also vice versa.
On Wednesday, Comex Gold for February delivery rose $34.6 (4.5%) to close at $808.8 an ounce on the New York Mercantile Exchange. The metal is already up 7.5% this week. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (22%) since then. Last week, gold prices ended lower by 8.2%.
For the month of November, gold prices ended higher by 14%. Prior to this, for the month of October, gold had ended lower by 18%. It was the biggest percentage loss for gold since February, 1983.
This year, gold prices have lost 3.3% till date. Futures have averaged $878 in 2008. The dollar index has gained 10% 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 Wednesday, Comex silver futures for December delivery rose 35 cents (3.6%) to $10.2 an ounce. Last week, silver lost 7.7%. For the month of November, silver prices had gained 5%. Till date, silver has lost 30.6% this year.
For the month of October, silver had slipped by 20%. 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.
At the currency market on Wednesday, the U.S. dollar fell against most major currencies, but rose against the Japanese yen, as progress toward a $15-billion federal bailout for the nation's auto industry buoyed risk appetite among investors. The dollar index, a measure of the greenback against a trade-weighted basket of six currencies, fell 0.5% to 85.36
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.
It was reported yesterday that gold production in South Africa fell by 14% year-on-year in October. The country's total mining production, however, rose by 3.5% year-on-year in October, with non-gold output rising 6.5%.
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 February delivery closed higher by Rs 367 (2.9%) at Rs 12,718 per 10 grams. Prices rose to a high of Rs 12,769 per 10 grams and fell to a low of Rs 12,338 per 10 grams during the day's trading.
At the MCX, silver prices for March delivery closed Rs 344 (2.4%) higher at Rs 17,167/Kg. Prices opened at Rs 16,850/kg and rose to a high of Rs 17,260/Kg during the day's trading.
Crude shoots up
Prices rise more than 3% as traders anticipate modest energy demand due to auto bailout
After slipping yesterday, crude prices went higher once again on Wednesday, 10 December, 2008. Prices rose after energy department's weekly inventory report showed that crude supplies rose less than expected in the last week. Crude also rose on anticipation that Washington's bailout plan foe the three biggies will spur energy demand in the coming months.
On Wednesday, crude-oil futures for light sweet crude for January delivery closed at $43.52/barrel (higher by $1.45 or 3.4%) on the New York Mercantile Exchange. Earlier in the day, prices touched a high of $46.17. Prices reached a high of $147 on 11 July but have dropped almost 71% since then. On 5 Dec, 2008, prices touched a low of $40.5. Last week, prices coughed up 25%. That was the largest weekly loss for crude in past twenty five years. For this year in 2008, crude prices have dropped 50%.
For the month of November, crude prices ended lower by 19.7%. Before this, for the month of October, 2008, crude prices had ended lower by 32.6%, the biggest monthly drop since 1983.
The EIA reported in its weekly inventory report that U.S. crude oil inventories rose by 400,000 barrels during the week ended 5 December, 2008 to stand at 320.8 million barrels. Market had expected a buildup of 2.7 million barrels in crude-oil stocks for the week.
The report also detailed that total motor gasoline inventories increased by 3.8 million barrels last week, and distillate fuel inventories increased by 5.6 million barrels.
EIA reported yesterday in its monthly short-term energy outlook that the current global economic slowdown is now projected to be more severe and longer than it expected last month, leading to further reductions of global energy demand and additional declines in oil and other energy prices. The EIA is now expecting world GDP growth to slow to 0.5% in 2009, down from an expectation of 1.8% in last month's outlook.
The White House confirmed today that it has reached an agreement with congressional Democrats on a $15 billion aid package for U.S. automakers. It's been reported that General Motors and Chrysler will be receiving the initial aid, as Ford is currently in a better financial position.
At the currency market on Wednesday, the U.S. dollar fell against most major currencies, but rose against the Japanese yen, as progress toward a $15-billion federal bailout for the nation's auto industry buoyed risk appetite among investors. The dollar index, a measure of the greenback against a trade-weighted basket of six currencies, fell 0.5% to 85.36.
The Organization of Petroleum Exporting Countries ended meeting in Cairo last month without any decision on a production cut to restore crude prices. OPEC President and Algerian Oil Minister Chakib Khelil said he expects oil demand to decline from a month ago, and said the group would take necessary action on 17 December when it meets in Oran, Algeria.
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, January reformulated gasoline rose 3 cents to end at 97 cents a gallon, while January heating oil fell 4 cents to end at $1.40 a gallon.
Natural gas for January delivery gained 11 cents to $5.69 per million British thermal units.
At the MCX, crude oil for December delivery closed at Rs 2,203/barrel, higher by Rs 72 (3.4%) against previous day's close. Natural gas for December delivery closed at Rs 276.9/mmbtu, higher by Rs 1.2/mmbtu (0.4%).
ING Vysya Bank
We recommend a buy in ING Vysya Bank from a short-term horizon. It is apparent from the charts that its medium-term downtrend, which commenced from September high of Rs 275, found support at Rs 113 that was almost the stock’s 52-week low. It reversed direction from here triggered by bullish divergence in the daily relative strength index (RSI). Since then the stock has been on a short-term up trend. The stock breached its medium-term downtrend line as well as 21-day moving average recently. Moreover, on December 10, the stock gained 8 per cent, reinforcing its bullish momentum. The daily RSI is likely to enter the bullish zone from the neutral region and weekly RSI is on the verge of entering the neutral region from the bearish zone. The significant resistance for the stock is at Rs 200. Our short-term outlook for the stock is bullish. We expect the stock’s up move to continue until it hits our price target of Rs 170 in the approaching trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 147.
via BL
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