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Tuesday, December 16, 2008
FIIs resume selling
Outflow of Rs 106.40 crore on 12 December 2008
Foreign institutional investors (FIIs) sold shares worth a net Rs 106.40 crore on Friday, 12 December 2008, as against an inflow of Rs 333.30 crore on Thursday, 11 December 2008.
FII outflow of Rs 106.40 crore on 12 December 2008 was a result of gross purchases Rs 1527 and gross sales Rs 1633.40 crore. The BSE Sensex gained 44.61 points and 0.46% to 9,690.07 on that day.
FII inflow in December 2008 totaled Rs 1942.30 crore (till 12 December 2008). FII outflow reached Rs 52,794.90 crore in calendar 2008, so far, till 12 December 2008, as against an inflow of a huge Rs 71,562.90 crore in the corresponding period last year.
There are a total of 1589 foreign funds registered with the Securities & Exchange Board of India (Sebi).
Trading Calls - Dec 16 2008
Nifty (2981) Sup 2931 Res 3050
Buy Divi’s Lab (1267) SL 1245 Target 1310, 1320
Buy Titan (902) SL 893 Target 920, 925
Sell Crompton Greaves (147) SL 150 Target 141, 139
Sell Maruti (509) SL 514 Target 499, 497
Daily News Roundup - Dec 16 2008
Areva has signed an agreement with Nuclear Power Corporation of India to supply ~300tons of uranium annually. (ET)
DLF would invest Rs150bn over the next three years to develop various residential projects across the country in the range of Rs1.5-4mn. (BS)
Indian Hotels has announced the opening of a hotel under a new brand name called ‘Vivanta’ at Whitefield, Bangalore. (BS)
IOC is planning to buy a sugar mill and set up a refinery in Brazil to produce ethanol. (FE)
Alok Industries is in talks with PE funds to sell stake in its retail arm and two of its Mumbai realty projects. (BS)
Maruti Suzuki India has launched Green Cabs for urban motoring on the Maruti 800 AC Duo powered by LPG. (BL)
Corus Group has denied reports of merger with Tata Steel. (ET)
Slump in the commercial vehicles industry has led to Omax Autos delaying its plan to produce chassis for Tata Motors commercial vehicles. (BL)
Bajaj Auto has decided to shut down production at its Waluj plant near Aurangabad for 10 days. (BL)
Apollo Hospitals is looking to foray into drug manufacturing and early-stage clinical trials. (ET)
HCL Technologies expects to sign US$1bn worth of orders in the current quarter. (BL)
HCL Technologies has completed the £440mn buyout of UK-based Axon Group. (BL)
Reliance ADAG is close to acquiring a 50% stake in a UK based currency exchange and money transfer firm for an undisclosed amount. (ET)
Edelweiss raises Rs10bn for Reliance Industries through placement of NCDs. (BL)
Corporation Bank has raised upper tier-II bonds (Series (I) (1)) for Rs3bn. (BL)
M&M has slashed 900 jobs worldwide in the current fiscal. (FE)
SRF Ltd has acquired engineering plastics business and industrial yarn business from its group company SRF Polymers for Rs1.5bn. (BL)
HPCL is keen on substantially increasing its stake in MRPL from the present level of 16.97%. (BL)
AstraZeneca has awarded Infosys Technologies a multi-year, multi-million dollar outsourcing deal that covers a wide range of application maintenance services. (BL)
PTC India is set to tie up with power generation companies in a bid to diversify its business. (BS)
Tata Teleservices will write off Rs16.48bn more as it goes ahead with the third leg of its capital restructuring programme. (Mint)
NTPC expects to settle dispute with Power Machines, a Russian company over the supply of turbines for a coal-fired power plant in Barh, Bihar. (Mint)
Redington India has entered into a distributor agreement with Research in Motion Singapore Pte Ltd, for distribution of their range of products in India. (FE)
McNally Bharat Engineering has bagged orders wroth ~Rs870mn from Essar Constructions (India). (FE)
Retail chain Subhiksha to slow down its planned expansion by 10-12% for the remaining part of FY09. (FE)
Max Healthcare plans to acquire a hospital for Rs1bn. (ET)
Japanese consumer electronics major Sony has decided to exit from the CRT TV segment in India. (ET)
Overseas firms may not require the Government’s approval to acquire stake in local companies through warrants. (ET)
The telecom ministry is set to reject a proposal to impose an 'administrative tax' on successful bidders of 3G wireless frequencies.
Petroleum ministry is likely to seek an additional Rs300bn worth of oil bonds in FY09. (ET)
The Government is likely to announce a new package for rural roads by providing an additional Rs50bn under the government’s planned programme. (ET)
Vegetable oil imports increased 30% yoy in November 2008 as prices in the global market continued to decline. (BL)
Public sector oil companies have cut ATF prices by 11%. (BS)
Import of spot LNG declines on lower naphtha prices (BS)
India’s crude oil imports increased by over 71% yoy to US$60.34bn during Apr-Oct’08. (ET)
SEBI has hiked Mutual Fund’s borrowing limit to 40% of net assets. (ET)
RBI is in the process of forming a new technical committee for money and forex markets, consisting of representatives from various financial regulators. (ET)
India Advance Tax Numbers
Advance tax nos
| (Rs mn) | Q3 FY08 | Q3 FY09 | % change |
| SBI | 10,880 | 17,000 | 56.3 |
| BoI | 2,100 | 3,700 | 76.2 |
| BoB | 2,000 | 2,200 | 10.0 |
| Central Bank Of India | 730 | 1,630 | 123.3 |
| HDFC Bank | 2,800 | 2,500 | -10.7 |
| ICICI Bank | 5,000 | 4,700 | -6.0 |
| IndusInd Bank | 200 | 220 | 10.0 |
| HDFC | 2,150 | 2,790 | 29.8 |
| LIC Housing | 330 | 440 | 33.3 |
| Reliance Industries | 5,190 | 4,400 | -15.2 |
| L&T | 1,800 | 3,120 | 73.3 |
| Tata Chemicals | 570 | 830 | 45.6 |
| TCS | 1,080 | 1,290 | 19.4 |
| Tata Steel | 7,500 | 2,300 | -69.3 |
| Tata Sons | 1,450 | 400 | -72.4 |
| Tata Power | 250 | 280 | 12.0 |
| Ultratech | 1,400 | 650 | -53.6 |
| Mahindra & Mahindra | 600 | 40 | -93.3 |
Not better off...Markets are Mad off!
Truly great madness cannot be achieved without significant intelligence.
The madness in the market can never be explained. Of course, we always find reasons to coincide with our views. As if the woes in the market and the economy are not enough we now have individuals who could drive the most sane crazy. We are referring to Bernard Madoff, a former Nasdaq chairman who is now infamous for one of the largest swindle in Wall Street. A giant Ponzi scheme was in play where he took investments from clients, spend the money on himself, gave around little to look good and repaid clients out of other clients' accounts.
That's the real world if you please. Let's get back to our markets where the bulls may have regained some lost ground in the last couple of days. It remains to be seen whether the current momentum can be sustained, as the bulls still lack conviction.
For the day, we expect the market to open flat to weak. Global markets are mixed with no clear direction.
US markets fell amid worries about the automakers, questions about the Madoff scandal and anticipation of Tuesday's rate-cut decision from the Fed.
Meanwhile, back home, the advance tax numbers for a few top companies are out and as usual it’s a mixed bag. For now though, one may have to deal with lots of volatility in a narrow band. Investors should remain cautious. Fresh buying should be avoided. The market needs fresh impetus to move forward.
Among the major bulk deals, Credit Suisse sold over 0.5mn shares of Greenply Industries at an average price of Rs38. Goldman Sachs purchased over 6mn shares of IFCI at an average price of Rs23. Citigroup offloaded 2mn shares of S Kumars at an average price of Rs24.
The Dow Jones lost 0.8%. The Standard & Poor's 500 index fell 1.3%, and the Nasdaq composite slid 2.1%.
Investors are also focused on the automakers since the Bush administration said last week that it might offer General Motors (GM, Fortune 500) and Chrysler bridge loans from the $700 billion bailout fund Congress set aside for Wall Street.
The Fed's policy-setting committee is meeting to discuss interest rates, with a decision due at late this evening. The central bank is widely expected to cut the fed funds rate by at least a half-percentage point to 0.5%.
The New York Empire State index, a regional manufacturing report, slipped to minus 25.8 in December from minus 25.4 in the previous month.
The Federal Reserve reported capacity utilization was 75.4% for November, down from a revised 76% in the previous month. Another report showed that homebuilders' confidence stayed at an all-time low in December due to the weak economy.
The dollar fell to an 8-week low versus the euro and hovered near a 13-year low against the yen.
US light crude oil for January delivery fell $1.77 to settle at $44.51. It hit a high as $50.05 in the morning.
Expectations are that OPEC will lower output when it meets in Algeria this week.
COMEX gold for February delivery gained $16 to settle at $836.50 an ounce.
A highly volatile session ended with smart gains as bulls managed to extend gains on Monday. The smart upswing was led by the realty, metals and oil & gas stocks. Also the broader indices were in demand, the mid-cap and the small-cap indices added over 3.5% each.
Finally, the BSE benchmark Sensex ended at 9,832 adding 142 points and the NSE Nifty index ended 2,981 adding 60 points.
Market breath was positive, 1,921 stocks advanced against 569 declines, while, 80 stocks remained unchanged.
Among the BSE Sectoral indices, barring the BSE IT index all the other major indices ended with gains. The BSE Realty index led from the front, up 5.5%. Even the Mid-Cap and the Small-Cap indices added over 3.5% each.
Gitanjali Gems rallied over 7% to Rs73 after the company announced that the Board of Directors of the Company would meet on December 19, 2008, to consider the proposal of buy back of equity shares of the Company. The scrip touched an intra-day high of Rs78 and a low of Rs69 and recorded volumes of over 4,00,000 shares on BSE.
Shares of ICICI Bank surged by over 2% to Rs418 after the company announced that it may lower its interest rates over the next two to three weeks, stated reports. The scrip touched an intra-day high of Rs434 and a low of Rs413 and recorded volumes of over 24,00,000 shares on BSE.
Kamat Hotels’ gained by over 5% to Rs44 after 4.8% of equity changed hands in a single transaction. The scrip touched an intra-day high of Rs46.5 and a low of Rs42 and recorded volumes of over 6,00,000 shares on BSE.
Shares of Nava Bharat Ventures advanced by 2% to Rs125 after the company announced that it approved the buyback of equity shares from the existing shareholders from the open market; price cap has been pegged at Rs170 a share. The scrip touched an intra-day high of Rs131 and a low of Rs119 and recorded volumes of over 1,00,000 shares on BSE.
Hindustan Zinc announced that it has further reduced the price of zinc by 1.7%.The price of zinc was lowered to Rs63,700 per metric ton. Lead prices were kept unchanged at Rs70,500 per ton.
The stock ended at Rs332 up by 2.5%. The scrip touched an intra-day high of Rs335 and a low of Rs325 and recorded volumes of over 28,000 shares on BSE.
With the FOMC meet and the IIP and manufacturing data to be released, market players back home would keep a close track of the events unfolding in the US. So, remain guarded even though the ongoing rally may prompt traders to reckon that the worst is near an end.
Television Eighteen India
We recommend a buy in Television Eighteen India (TV18) from a short-term trading perspective. It is clearly visible from the charts of TV18 that after encountering significant resistance around Rs 250 in august, it resumed its long-term downtrend and declined sharply. However, the stock found support at Rs 53, recording a 52-week low in November and reversed direction. A prolonged positive divergence in the daily relative strength index (RSI) supported this trend reversal. The stock has been on a short-term up trend from its 52-week low. While trending up, it breached its 21-day moving average recently. On December 15, the stock jumped by 8 per cent accompanied with heavy volume. The daily RSI is on the verge of entering the bullish zone and weekly RSI is recovering from the oversold territory. We are bullish on the stock from a short-term horizon. We expect the stock’s current rally to prolong until it hits our price target of Rs 92. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 77.
Precious metals continue to shine
Gold and silver rise as dollar index sheds 1.6%
After dropping on last Friday, bullion metal prices rose on Monday, 15 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 Monday, Comex Gold for February delivery rose $16 (2%) to close at $836.5 an ounce on the New York Mercantile Exchange. Earlier in the day, it reached a high of $843.7. Last week, gold gained 9%. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (19.1%) since then.
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 0.2% till date. Futures have averaged $878 in 2008. The dollar index has gained 8% 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 Monday, Comex silver futures for December delivery rose 39 cents (3.8%) to $10.62 an ounce. Last week, silver gained 80 cents (9%). For the month of November, silver prices had gained 5%. Till date, silver has lost 29% 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 Monday, the dollar fell 1.6% today against a weighted basket of six major currencies. Last week, the greenback tumbled 4%, the most since September 1985.
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.
Market is anticipating that Fed will cut down the fed fund rate to 0.5% in tomorrow's meeting.
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 91 (0.71%) at Rs 12,891 per 10 grams. Prices rose to a high of Rs 12,995 per 10 grams and fell to a low of Rs 12,761 per 10 grams during the day's trading.
At the MCX, silver prices for March delivery closed Rs 272 (1.6%) higher at Rs 17,396/Kg. Prices opened at Rs 17,142/kg and rose to a high of Rs 17,570/Kg during the day's trading
Crude gives up earlier gains
Prices fall by more than a dollar after rising 8% earlier
Crude prices gave up earlier gains and finally closed more than a dollar lower on Monday, 15 December, 2008. Prices fell as traders anticipated that forthcoming production cut to be announced by OPEC will be insufficient to boost crude prices. Today's economic data once again reassured the fact that US economy is well into recession.
On Monday, crude-oil futures for light sweet crude for January delivery closed at $44.51/barrel (lower by $1.77 or 3.8%) on the New York Mercantile Exchange. Earlier in the day, prices touched a high of $50.05. Prices reached a high of $147 on 11 July but have dropped almost 69.7% since then. On 5 Dec, 2008, prices touched a low of $40.5. Last week, prices ended higher by almost 13%. Prior to that, prices coughed up 25% in the week before that. That was the largest weekly loss for crude in past twenty five years. For this year in 2008, crude prices have dropped 47%.
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 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.
he Federal Reserve reported on Monday, 15 December, 2008 that the output of the USA's factories, mines and utilities fell 0.6% in November on broad-based weakness across manufacturing industries. Output fell in all the major manufacturing sectors - autos, computers, machinery and metals.
As per the report, industrial output in US has fallen 5.5% in the past year, while factory output is down 7.3% compared with November 2007, the steepest year-over-year decline since 1980. In November, capacity utilization in industry fell to a five-year low of 75.4% from a revised 76%. For manufacturing, capacity utilization fell to a six-year low of 72.3% from 73.4%.
At the currency market on Monday, the dollar fell 1.6% today against a weighted basket of six major currencies. Last week, the greenback tumbled 4%, the most since September 1985.
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 fell 3.8% to $1.0369 a gallon, and January heating oil slid 2.2% to $1.4601 a gallon.
January natural-gas futures rose 2% to $5.595 per million British thermal units.
At the MCX, crude oil for January delivery closed at Rs 2,340/barrel, lower by Rs 76 (3.1%) against previous day's close. Natural gas for December delivery closed at Rs 271.1/mmbtu, higher by Rs 3.5/mmbtu (1.3%).
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