India Equity Analysis, Reports, Recommendations, Stock Tips and more!
Search Now
Recommendations
Thursday, March 05, 2009
Sensex at 3-year closing low; RIL tumbles
A surprise cut in policy rates by the Reserve Bank of India (RBI) failed to lift spirits on the bourses with the Sensex tumbling to 3-year closing low. Sustained selling by foreign funds, weak rupee and weak European markets weighed on the sentiment. Bond prices gave up initial gains which also weighed on equities. The BSE 30-share Sensex was down 248.57 points, or 2.94%, off close to 340 points from the day's high.
Index heavyweight Reliance Industries (RIL) led the decline. FMCG, banking and capital goods stocks also declined.
After opening on a positive note on higher Asian stocks and the Reserve Bank of India's latest effort to boost liquidity, the market soon slipped into red as sustained selling by foreign funds and a weak rupee weighed on the sentiment. A sharp slide was witnessed in morning trade as some Asian markets came off the day's peak as there was no announcement of an additional stimulus package by China which the investors were expecting.
The market extended losses in early afternoon trade. It came off the day's low in afternoon trade. The market tanked to the fresh day's low in mid-afternoon trade as European shares dropped in early trade. A bout of volatility was witnessed in the last 40 minutes of trade as day trades squared positions.
Heavy selling by foreign funds has dampened investor sentiment. FII outflow in February 2009 totaled Rs 2707 crore. FII outflow in calendar year 2009 totaled Rs 8519.30 crore (till 4 March 2009). Globally, investors are pulling out money from hedge funds, forcing hedge fund managers to dump assets. At the same time, global banks and insurers are selling assets after amassing $1.2 trillion of credit losses and writedowns since the start of 2007. More recently, fears have intensified about the exposure of Western European banks and companies to deteriorating economic conditions in Eastern Europe.
Domestic institutional investors (DIIs) have been absorbing selling by foreign funds. Yet, at a time of sustained selling by foreign funds, a recovery or stability of the rupee is vital. A weak rupee will dissuade foreign funds from making aggressive buying of Indian shares.
The Instanex FII Index fell 2.83% to 184.20, its lowest level since 28 October 2005, marginally outperforming the Instanex DII 15 Portfolio which was down 2.97%. The Instanex FII Index tracks the price performance of the portfolio of listed Indian equity shares owned by FIIs. Instanex DII 15 Portfolio tracks the price performance of the portfolio of listed Indian equity shares owned by DIIs.
The rupee's recent sharp slide, meanwhile, has added to the woes of those Indian firms which have borrowed overseas. The slide in the rupee will increase in the cost of servicing overseas debt to the extent of the rupee's slide unless the company (which has overseas borrowings) has adopted an effective hedging strategy.
The Reserve Bank of India (RBI) after the market hours on 4 March 2009, announced cut in repo rate and reverse repo rate by 50 basis points each, with immediate effect. It is expected that the reduction in the policy interest rates will further encourage banks to provide credit for productive purposes at viable interest rates, RBI said in a release. RBI said it will continue to maintain ample liquidity in the system.
Meanwhile, the wholesale price index rose 3.03% in the 12 months to 21 February 2009 below the previous week's annual rise of 3.36% government data showed on Thursday.
According to a domestic brokerage, the latest RBI rate cut will set the ball rolling for lower interest rates in the economy and increase credit flow to individuals and the corporate sector. The latest rate cut brings the reverse repo to 3.5%, identical to the rate at which banks mobilize savings deposits. The lower repo rate in turn could dissuade banks from parking surplus funds with the RBI and increase lending, it notes. Banks have been parking large sums of money with RBI through the repo window.
European shares fell in early trade on Thursday ahead of interest rate decisions in Britain and the euro zone. The key benchmark indices in France, Germany and UK were down by between 1.99% to 2.52%. The European Central Bank and the Bank of England are holding policy meeting today.
The Bank of England may cut its benchmark interest rate by a half percentage point to 0.5% while European Central Bank will probably cut its rate by a half-point to 1.5%.
Asian stocks were mixed after China's Premier Wen Jiabao pledged to significantly increase investment in the world's third-largest economy and said 8% growth target for this year is within reach. Key benchmark indices in China, Japan and Taiwan rose by between 0.89% to 2.11%. But key benchmark indices in Hong Kong South Korea and Singapore fell by between 0.1% to 1.66%.
Trading in US index futures indicated the Dow could fall 87 points at the opening bell. Earlier, the futures were mildly higher.
US markets rebounded off 12-year lows on Wednesday after the Obama administration launched its mortgage-rescue plan to stem mortgage defaults. The market shrugged off a bleak beige-book report. According to the Fed's beige book, the Fed does not expect a significant economic recovery until late 2009 or early 2010. The Dow Jones industrial average gained 149.82 points, or 2.2%, to 6,875.84. The S&P 500 index rose 16.54 points, or 2.4%, to 712.87.
The BSE 30-share Sensex was down 248.57 points, or 2.94%, to 8,197.92, its lowest closing since 2 November 2005. At the day's low of 8,166.97, the Sensex lost 279.52 points in mid-afternoon trade. At the day's high of 8,535.03 Sensex rose 88.54 points in early trade.
The S&P CNX Nifty was down 68.50 points, or 2.59%, to 2,576.70, its lowest closing since 20 November 2008.
The Sensex is down 1,449.39 points or 15.02% in calendar 2009 from its close of 9,647.31 on 31 December 2008. The S&P CNX Nifty is down 382.45 points or 12.92% in calendar 2009 from its close of 2,959.15 on 31 December 2008. The Instanex FII Index has fallen 16.56% in 2009 so far.
The BSE clocked a turnover of Rs 3416 crore, higher than Rs 2868.60 crore on Thursday, 4 March 2008.
Nifty March 2009 futures were at 2558, at a discount of 18.70 points as compared to the spot closing of 2576.70. Turnover in NSE's futures & options (F&O) segment increased Rs 46,285.97 crore from Rs 40,624.43 crore on Wednesday, 4 March 2009.
The market breadth, indicating the overall health of the market turned weak in contrast to a strong breadth earlier in the day. On BSE, 715 shares advanced as compared with 1,703 that declined. A total of 69 shares remained unchanged.
The BSE Mid-Cap index (down 1.71%) and BSE Small-Cap index (down 1.81%) outperformed the Sensex.
The BSE Consumer Durables index (up 0.52%), the BSE Realty index (down 0.84%), the BSE IT index (down 1.07%), the BSE Auto index (down 1.07%), the BSE TECk index (down 1.41%), the BSE Healthcare index (down 1.56%), the BSE Metal index (down 1.77%), the BSE PSU index (down 2%), the BSE Capital Goods index (down 2.63%), outperformed the Sensex.
The BSE Bankex (down 4.15%), the BSE Oil & Gas index (down 3.71%), the BSE Power index (down 3.26%), the BSE FMCG index (down 3.26%), underperfomed the Sensex.
From the 30 share Sensex pack, 25 stocks fell while rest gained.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 5% to Rs 1,149.10 after combined crude processing at its two export-focused plants at Jamnagar in Gujarat dived 12.1% to 6,68,450 barrels per day (bpd) in January 2009 over January 2008. Reliance commissioned its new 5,80,000 bpd plant in December 2008, turning Jamnagar into the world's biggest refining complex with capacity of 1.24 million bpd.
The board of Reliance Industries on Monday, 2 March 2009, approved the absorption of its unit Reliance Petroleum (RPL) and set a share swap ratio giving it direct control of the world's largest refinery complex. Reliance Industries said it would issue one share for every 16 held in RPL, which runs a refinery.
India's largest oil exploration firm by sales Oil & Natural Gas Corporation fell 1.9% after foreign brokerage Goldman Sachs said the government took $20 billion cash from the company without consulting minority shareholders.
Banking stocks extended recent sharp slide as fears of rising defaults in weakening economy offset hopes a further fall in interest rates may boost lending growth and gains in American Depository Receipts (ADRs) overnight. India's largest private sector bank by net profit ICICI Bank fell 5.17%. Its American Depository Receipts (ADR) rose 4.04% on Wednesday, 4 March 2009. India's second largest private sector bank by operating income HDFC Bank slipped 4.54%. Its ADR rose 3.86% overnight.
India's largest bank in terms of assets and branch network State Bank of India fell 2.4%. The bank has reduced deposit rates by 40 to 50 basis points across maturities. The new rates would be effective from 9 March 2009.
Despite a steep cut in policy rates by Reserve Bank of India (RBI) since October 2008, there has not been a commensurate reduction in lending rates by banks as fears of rising bad loans have made them cautious in increasing advances/lending. One reason why banks have not fully passed on the central bank rate cuts to customers is because higher bond yields are pushing up their funding costs. Bond yields and bond prices are inversely related.
Between 19 December 2008 and 13 February 2009, commercial banks lent only Rs 8091 crore to firms, one-tenth of the Rs 86978 crore lent in the same period a year earlier, as per the latest RBI data.
Nonetheless, lower interest rate have helped automobile sales rebound in the past few months. The stimulus packages announced by the government since December 2008 has started having some positive impact.
Meanwhile, bond yields recouped most of the initial losses triggered by the surprise RBI rate cut. The benchmark 10-year bond yield fell to an intraday low of 6.23%, but pared the fall to 6.42%, two basis points below Wednesday's close. The yields pulled back as investors positioned themselves for a $2.3 billion bond sale on Friday, 6 March 2009. A record government borrowing programme for the year staring 1 April 2009 is weighing on bond prices.
India's largest FMCG major by sales Hindustan Unilever slumped 4.5% after foreign brokerage JPMorgan Chase & Company cut its rating on the stock to 'underweight' from 'neutral', citing weakening growth and increasing competition. Other FMCG stocks, REI Agro, Britannia Industries, ITC, Tata Tea, Nestle India, fell by between 0.35% to 4.92%.
But Marico rose 1.29% as one of the promoters increased his stake in the company.
Capital goods stocks fell on worries a slowing economy will crimp orders. ABB, Larsen & Toubro, Bharat Heavy Electricals, Praj Industries, Thermax, Punj Lloyd fell by between 0.13% to 5.18%.
Rate sensitive realty stocks dropped on reports falling interest rates have failed to revive housing demand .DLF, Indiabulls Real Estate and Unitech fell by between 0.17% to 5.04%. Most of the realty deals including sale of commercial property and housing sales is driven by finance.
Outsourcing focussed IT firms edged higher on a weaker rupee. India's third largest software services exporter Wipro rose 0.19%. Its ADR gained 7.09% on Wednesday. India's largest software services exporter by sales TCS rose 0.42%.
But India's second largest software services exporter Infosys Technologies fell 1.26% after its Chief Financial Officer V. Balakrishnan said in an interview to a news agency that the company is seeing a slowdown in getting new outsorcing contracts even though are no large-scale cancellations. Its ADR had gained 4.33% overnight.
The partially convertible rupee was at 51.77 per dollar, weaker than its previous close 51.53/55. The rupee has declined sharply in the past few days. A weak rupee boosts revenues of IT firms in rupee terms as IT companies earn a lion's share of revenue from exports.
But there have been concerns of cut back in technology spend by global firms amid a recession in the US economy and due to the global financial sector crisis. IT firms derive a lion's share of revenue from exports to US.
India's largest drug maker by sales Ranbaxy Laboratories slumped 9.27% on reports the Australian drug regulator is investigating allegations by US drug regulators that one of Ranbaxy's plants falsified data for drug approvals.
A recent investigation by the US food and drug administration had found that Ranbaxy Laboratories had falsified data and test results of medicines manufactured at its Himachal Pradesh facility in India to obtain marketing approval in the United States.
Other healthcare stocks, Dr Reddy's Laboratories, Pfizer, Biocon, Cipla, Wochardt fell by between 0.14% to 3.27%.
Metal stocks fell on profit taking after recent jump supported by China's plans to boost spending. Hindalco Industries, Steel Authority of India, Tata Steel, Sterlite Industries India fell by between 1.91% to 2.94%. China is the world's largest consumer of a number of industrial commodities. It is the world's biggest consumer of copper.
As per reports, China will boost spending in areas including infrastructure and manufacturing on top of the 4 trillion yuan stimulus package unveiled in November 2008.
Auto shares fell after recent gains due to jump in February 2009 vehicle sales. TVS Motor Company fell 1.71%. Its two wheeler sales rose 13% to 1,07,301 units in February 2009 over February 2008.
India's largest commercial vehicle maker by sales Tata Motors fell 2.66% As per recent reports the company plans to bring the Nano, the world's cheapest car, to Europe by 2011. Tata Motors will begin selling the Rs 1-lakh car Nano in India in April 2009.
Recently, Tata Motors reported improved vehicle sales. Tata Motors' total domestic sales for the month of February 2009 at 42,493 units, were the highest in the last 4 months. Domestic commercial vehicle sales at 23,454 units were the highest since September 2008 and domestic passenger vehicle sale at 19,039 units were was the highest since May 2008. The total domestic sales, however, declined 15% in February 2009 over February 2008.
But, India's largest car maker by sales Maruti Suzuki India fell 1.96%. Maruti during trading hours on Monday 2 February 2009 reported 24.1% rise in sales to 79190 units in February 2009 over February 2008.
India's largest tractor maker by sales Mahindra & Mahindra fell 1%. Recent reports said the company is looking to grow business from the defence sector through global partnerships. Recently, M&M recorded 10.8% growth in total volumes to 29,017 units in February 2009 over February 2008.
But India's largest motorcycle maker by sales Hero Honda Motors rose 0.99%. Hero Honda's sales rose 24% to 3,29,055 units in February 2009 over February 2008.
Tata Power Company tumbled 5.07% on reports the company may face difficulties repaying $850 million debt used to buy stakes in two Indonesian mines as coal prices decline.
Satyam Computer Services clocked the highest volume of 86.88 lakh shares on BSE. Unitech (78.05 lakh shares), ICICI Bank (77.83 lakh shares), Cals Refineries (70.55 lakh shares) and Jaiprakash Associates (68.36 lakh shares) were the other volume toppers in that order.
Reliance Industries clocked the highest turnover of Rs 316.40 crore on BSE. Akruti City (Rs 221.20 crore), ICICI Bank (Rs 216.14 crore), ICICI Bank (Rs 216.14 crore), HDFC (Rs 202.74 crore) and State Bank of India (Rs 162.47 crore) were the other turnover toppers in that order.
Market may start buoyant
The benchmark indices, Sensex and Nifty, are expected to commence on a firm note and witness significant rally during intra-day trades, as international markets backed by firm US and Asian indices may help the sentiment remain buoyant. On the technical front, the Nifty could test in the 2700-2750 range on the upside and has supports in the 2600 - 2550 range, while the Sensex has a likely support at 8295 and may face resistance at 8600.
US indices posted gains on Wednesday on a report that China's economy may be improving and as government officials unveiled details of the $75 billion foreclosure fix. while the Nasdaq added 33 points to close at 1354 and Dowjones gained 150 points at 6876.
All of the Indian ADRs except satyam traded firm on the US bourses. Tata Motors led the pack with gains of 9.88% while Wipro, Rediff, Patni Computers, Infosys, VSNL, MTNL, HDFC Bank and Dr Reddy gained around 2-7% each.
Crude oil prices in the US market surged, with the Nymex light crude oil for April delivery raising by $3.72 to close at $45.38 per barrel . In the commodity segment, the Comex gold for April series lost $6.90 to settle at $906.70 a troy ounce.
Pre Session Commentary - March 5 2009
Today domestic markets are likely to open positive as the RBI has reduced the Repo and Reverse Repo rates by 50bps each to 5% and 3.5% from the previous 5.5% and 4% respectively. This rate cut would probably bring down the borrowing cost of commercial banks and simultaneously the banks may pass on the benefit to the final consumers by reducing their PLR. Besides, the phenomenal positive closing of the US markets is likely to spur positive sentiments in domestic arena. The Asian markets have however opened with less zeal, but in the domestic markets one could anticipate some fresh buying sentiments along with the essence of volatility.
On Wednesday, the domestic markets traded highly volatile but managed to close in green. Since the opening bell the investors were not sure of any movements as there was no specific news to support the trend. The sense of fear and anxiety was visible from the northward and southward movement of the benchmark indices. The Asian and European markets had similar kind of trade and therefore the global cues kept the investors dump. Sectors like Metal, Oil & Gas, HC and Auto were up by 2.80%, 1.15%, 1.05% and 0.92% respectively. On the other sectors like Bankex, CD, CG and Power closed with losses of 1.50%, 1.46%, 0.34% and 0.09% respectively. During the session we expect the markets to be trading positive with an essence of volatility.
The BSE Sensex closed high by 19.20 points at 8,446.49 and NSE Nifty ended up by 22.80 points at 2,645.20. The BSE Small cap and Mid Cap closed with losses of 8.77 points and 19.39 points at 2,648.36 and 2,990.17 respectively. The BSE Sensex touched intraday high of 8,501.46 and intraday low of 8,373.24.
On Wednesday, the US stock markets closed in green after snapping the fifth consecutive losing streak. Investors resorted to fresh buying and short covering as many stocks had fallen nearly 10% in the continuous five day southward trade. On the other hand the US investors responded positively to the news that China will add nearly $586 billion to its fiscal plan and industrial heavyweights would be the primary beneficiary. On the dark side, according to the latest ADP Employment Report, 697,000 jobs were lost in February. The consensus estimate called for 630,000 job losses. The ADP report isn''t always precise in counting job losses, but has been accurate in forecasting trends. US light crude oil for April delivery rose by $3.73 to settle at $45.38 a barrel on the New York Mercantile Exchange. The crude prices rose on the back of the government''s weekly supply report showed that crude stockpiles decreased by 700,000 barrels in the week ended Feb. 27, 2009.
The Dow Jones Industrial Average (DJIA) inclined by 149.82 points to close at 6,875.84 The NASDAQ Composite (RIXF) index inclined by 32.73 points to close at 1,353.74 and the S&P 500 (SPX) grew by 16.54 points to close at 712.87.
Today major stock markets in Asia are trading positive. Shanghai composite is up by 39.50 points to 2,237.61 along with Hang Seng that is trading higher by 14.81 points at 12,345.96 and South Korea''s Seoul Composite is up by 4.45 points at 1,063.71. Japan''s Nikkei is also up by 197.62 points at 7,488.58 and Singapore''s Straits Times is flat at 1,537.48.
Indian ADRs closed higher. In technology sector, Wipro ended up by 7.09% along with Infosys by 4.33%. Further, Satyam lost 1.50% while Patni Computers closed up by 5.57%. In banking sector ICICI Bank and HDFC Bank gained 4.04% and 3.86% respectively. In telecommunication sector, MTNL advanced by 4.12% and Tata Communication gained 3.85%. Sterlite Industries increased by 8.76%.
The FIIs on Wednesday stood as net sellers in equity and debt. Gross equity purchased stood at Rs 651.10 Crore and gross debt purchased stood at Rs 237.20 Crore, while the gross equity sold stood at Rs 1,297.40 Crore and gross debt sold stood at Rs. 426.30 Crore. Therefore, the net investment of equity and debt reported were Rs (646.30) Crore and Rs (189.20) Crore respectively.
On Wednesday, the Indian rupee closed at 51.53/55, 0.8% weaker than its previous close of 51.95/97. The concerns of falling stock markets and apprehensions about foreign money inflow pulled the rupee for the eight day session.
On BSE, total number of shares traded were 20.97 Crore and total turnover stood at Rs 2,550.79 Crore. On NSE, total number of shares traded were 46.47 Crore and total turnover was Rs 7,777.36 Crore.
Top traded volumes on NSE Nifty – ICICI Bank with 25291532, Unitech with 23795640 shares, SAIL with 20069928 shares, Suzlon with 14257423 shares followed by Tata Steel with 12273535 shares.
On NSE Future and Options, total number of contracts traded in index futures was 929572 with a total turnover of Rs 11,575.71 Crore. Along with this total number of contracts traded in stock futures were 411341 with a total turnover of Rs 11,030.52 Crore. Total numbers of contracts for index options were 1263218 with a total turnover of Rs 16,913.93 Crore and total numbers of contracts for stock options were 37197 and notional turnover was Rs 1,104.26 Crore.
Today, Nifty would have a support at 2,612 and resistance at 2,703 and BSE Sensex has support at 8,394 and resistance at 8,573.
India Votes 2009 - Congress ups and downs
UPS AND DOWNS
What the Congress achieved
Increased rural employment through NREGS
Transparency in governance through RTI Act
Better medicare in rural areas through national rural health mission
Slum clearance & urban development through urban renewal mission
Education for all through Sarva Shiksha Abhiyaan
Giving land rights back to tribals
Ending India's nuclear isolation through 123 Agreement with the US
What it did not achieve
33% reservation for women in central and state legislatures
Where the Congress hopes to gain seats
Kerala
Punjab
Rajasthan
Madhya Pradesh
West Bengal
Where the Congress is likely to lose seats
Andhra Pradesh
Tamil Nadu
Jharkhand
Assam
Haryana
Where Congress allies will lose seats
Bihar
Tamil Nadu
India Votes 2009 - Can't get closer than this
BJP only 3 votes ahead - Congress did a lot of catching up
Who do you support ? Vote now !
See the right top of this page
US stocks join the party
Wall Street takes cue from Asian stocks overnight
The new Chinese stimulus plan, gave a good boost to stocks at Wall Street today, Wednesday, 04 March, 2009 and US stocks ended with good gains today. The rally was induced by some sort of strength witnessed in the overseas market overnight. China's stimulus package to bolster its economy is perhaps being witnessed as a way to save the world from the ongoing recession. Economic reports disappointed as expected at Wall Street today. But stocks seem to have discounted these things already.
Market started the day in the green and remained quite strong for the day though ended off its session highs. The Dow Jones Industrial Average ended higher by 149 points at 6,875, the Nasdaq closed higher by 32 points at 1,353 and the S&P 500 closed higher by 17 points at 712. Indices would have fared better but for GE, whose shares tumbled 20%.
Eight of the ten sectors in the green led by materials and energy sectors. But financials, which had started the day on a strong note, ended in the red. With today's gain, market ended its five day losing streak.
Shares of GE plummeted today as investors panicked that the company may lack the capital to maintain its AAA credit rating despite lowering its dividend.
At Wall Street today, the ADP employment index reported that the U.S. labor market worsened in February, as private-sector firms cut 697,000 jobs in February,2009. The drop in ADP index was the largest ever, dating back to 2001. January's loss was revised sharply lower to 614,000 from 522,000 reported a month ago.
In a separate report, the Institute for Supply Management reported that U.S. nonmanufacturing sectors contracted at a faster pace in February as the global slowdown continued to take its toll. The ISM non-manufacturing index fell to 41.6% in February from 42.9% in January as survey respondents' comments reflected concern about financing and general weak economic conditions.
Federal Reserve's Beige Book garnered very less attention today. According to the Fed's Beige Book, the Fed does not expect a significant economic recovery until late 2009 or early 2010.
Weekly inventory report by the Energy Department and China's stimulus plan pushed crude prices higher for the second straight day on Wednesday, 04 March, 2009. Oil prices once again rose today in synchronization with stocks at Wall Street today. On Wednesday, crude-oil futures for light sweet crude for April delivery closed at $45.38/barrel (higher by $1.5 or 8.9%) on the New York Mercantile Exchange. Last week, crude ended higher by 12%. For the month of February, crude prices had ended higher by 1.5%.
The EIA reported today that U.S. crude inventories, excluding those in the Strategic Petroleum Reserve, fell by 700,000 barrels in the week ended 27 February, 2009. Market was expecting an increase of 2.2 million barrels. U.S. refiners operated at 83.1% of their operable capacity last week, up from the 81.4% a week ago.
Tomorrow there are quite a few economic reports scheduled. Economic data for tomorrow include revised fourth quarter productivity, weekly new unemployment claims and January factory orders. Other than that, retailers will be in focus as they report their February same-store sales results.
Daily News Roundup - March 5 2009
S&P cuts ICICI Bank commercial paper rating to A-1 from A-1+. (ET)
Moody’s lowers Tata Steel debt rating to Ba2. (ET)
NTPC to borrow 70% of the total Rs177bn needed for expansion during 2009-10. (BL)
Government seeks information from Tata Communications on end use of funds. (ET)
Fertilizer units object to Reliance Industries KG gas sales draft. (FE)
IBM leads the race to acquire Satyam Computers. (BS)
PTC moves to the Supreme Court against CERC over power trading. (BS)
HPCL is in talks with Reliance Industries to run its petrol pumps in India. (BS)
IOC plans to sell bonds to bring down borrowings. (ET)
Essar Oil approves merger of its wholly owned subsidiary Essar Oil Vadinar with itself. (ET)
Australian regulator TGA is reviewing 62 drugs sold by Ranbaxy in the country. (ET)
Kalpataru Power Transmission bags order worth Rs3.7bn from Power Grid. (BL)
BEML enters into a partnership with Sumber Mitra Jaya of Indonesia to bid for contract mining business in India. (BL)
Bajaj Auto Finance to buyback NCDs with face value of Rs500 from open market. (BS)
Hexaware cuts basic pay by 50% for 350 employees on bench and by 2%-10% for higher level employees. (BL)
BMC to withdraw notice sent to Bombay Dyeing asking the company to stop development work at its mills. (ET)
Mcleod Russel acquires Vietnam based Phu Ben Tea company for US$2mn. (ET)
Kingfisher Airlines is in talks with Arik Air to lease aircrafts. (BL)
RBI cuts repo and reverse repo rates by 50bps each. (ET)
Government may allow Indian companies to enter into share-swap deals with foreign firms to facilitate merger and acquisition activity. (ET)
Indian exports and imports for the month of February fell by 13% and 18% respectively. (ET)
Government has allowed companies located within SEZs to claim service tax refunds even for services consumed outside the tax free export zone. (BS)
Finance ministry says no relaxation of FBT norms for exporters. (BS)
Cement dealers in western region have raised retail prices by Rs5 per 50kg bag. (BL)
A Nasscom team has said the Indian IT industry would have to remain watchful for the next three to four weeks. (FE)
29 FDI proposals worth Rs6bn cleared by the government. (FE)
Temporary relief for bulls!
It's better to do nothing with your money than something you don't understand.
The banks will have to do something with the money they hold. The RBI has finally blinked and cut short-term rates by 50 bps in its continuing bid to nudge banks to lower borrowing costs.
Policy rates have already been slashed considerably since October. Banks too have done their bit, especially the nationalised ones. Private banks have been a little reluctant in cutting rates. The moot point is whether banks are willing to give up lazy banking and start lending again in a big way. A reverse repo rate below 4% should discourage banks from parking funds with the RBI.
But, the real issue is not with supply (liquidity), but the sluggish demand. Customers and banks continue to be risk averse. It is the crisis of confidence which is plaguing the markets, not only in India but across the world. Unless there is a reversal in this trend, we are unlikely to see a sustained advance in stocks.
Coming to today’s market, the key indices are primed for further gains on the back of RBI’s latest monetary offensive and a rebound in global equities. The advance may be temporary though, given the multitude of headwinds confronting us.
FIIs were net sellers in the cash segment on Wednesday at Rs4.94bn, while the local institutions pumped in Rs1.19bn. In the F&O segment, the foreign funds were net buyers at Rs7.93bn. On Tuesday, FIIs were net sellers in the cash segment at Rs6.46bn. Mutual Funds were net sellers of Rs1.04bn.
US indices rebounded on Wednesday after five straight days of losses, thanks largely to industrial and commodity shares, on hope of more stimulus spending from the Chinese government. The market opened higher and for once it managed to hold on to the momentum following reports that China's economy may be improving. The sentiment also took some heart from the details of the US$75bn foreclosure plan.
The Dow Jones Industrial Average jumped 150 points, or 2.2%, to end at 6,875.84. Earlier in the session, the Dow had been up more than 250 points. The broader S&P 500 index rose 16.5 points, or 2.4%, to close at 712.87. The tech-heavy Nasdaq Composite index surged 33 points, or 2.5%, to finish at 1,353.74.
On Tuesday, the Dow and S&P 500 ended at fresh 12-year lows. It was the fifth straight loss for the three major indexes. The S&P 500 and Dow industrials are both more than 50% off their all-time highs from October 2007.
Traders bought shares of heavy-equipment, metals and oil companies on bets that Beijing will step up its attempts to stimulate China's economy. Aluminum major Alcoa and construction machinery manufacturer Caterpillar led the Dow advance, both up about 13%.
But, General Electric (GE) was down almost 5%, as investors feared that the conglomerate with a legendary AAA credit rating may face a downgrade that could push it into a cash shortage and funding problems.
China said on Wednesday that its manufacturing activity increased for the third straight month. Asian markets were also supported by reports that the Beijing government will add to its US$585bn stimulus program. The Shanghai Composite Index surged 6.1%. Japan's Nikkei ended up nearly 1%.
Federal officials announced details of the President Barack Obama's US$75bn foreclosure prevention plan and the program opened for business on Wednesday. The foreclosure fix aims to modify home loans so monthly payments are no more than 31% of monthly gross income. The plan will offer incentives to borrowers and loan service providers and investors to help struggling homeowners make their payments.
Job market data released showed continued weakness, but a mixed message about whether there's an improvement underway. Payroll-processing company Automatic Data Processing said the private sector lost 697,000 jobs in February - more than the 630,000 jobs economists were expecting.
Meanwhile, the number of planned job cuts announced in February fell for the first time since December, according to a report from outplacement firm Challenger, Gray & Christmas Inc. US employers announced 186,350 job cuts, down 23% from January's 241,749 cuts, according to Challenger.
Investors were bracing for the government's reading on the labor market which is due on Friday. The Labor Department report is expected to show that the economy shed 650,000 jobs in February, more than the 598,000 reported for January, according to a consensus estimate of economists. The unemployment rate is expected to rise to 7.9% from 7.6%.
A report released early in the morning showed further contraction in the service sector in February. The Institute for Supply Management's non-manufacturing index fell 1.3% to 41.6 in February from the month prior. The drop was not as steep as economists were predicting, however.
As global equities rallied, government debt prices fell. The benchmark 10-year note was down, sending its yield higher to 2.98%. Bond prices and yields move in different directions.
Lending rates were nearly unchanged. The 3-month Libor rate rose to 1.28% from 1.27% on Tuesday while the overnight Libor rate eased to 0.31% from 0.32%. Libor, the London Interbank Offered Rate, is a daily average of rates that 16 different banks charge each other to lend money in London.
Meanwhile, oil prices settled up US$3.73, or almost 9%, to US$45.38 a barrel. The government's weekly supply report showed that crude stockpiles decreased by 700,000 barrels in the week ended Feb. 27, while analysts expected an increase of 2.2 million barrels.
The dollar lost ground against the euro and the British pound, but rose against the yen.
COMEX gold for April delivery fell US$5.80 to US$907.80 an ounce.
The weekly jobless claims report will be released on Thursday. The number of Americans who filed for unemployment for the first time was expected to decrease to 650,000 from 667,000 the prior week, according to a consensus estimate of economists.
Also, factory orders for January are expected to have fallen 3.5% after having fallen 3.9% in the previous month.
In Washington, Federal Reserve Vice Chairman Donald Kohn is scheduled to testify at a Senate Banking Committee hearing on what happened with insurance giant American International Group.
European markets ended higher with companies exposed to China performing particularly well after government data raised hopes for a recovery in economic activity in that country.
The pan-European Dow Jones Stoxx 600 index climbed 3.9% to 167.61 on Wednesday, taking back some of the nearly 7% in losses made in the first two trading sessions of the week.
National equity markets finished in the black, with the UK's FTSE 100 index up 3.8% to 3,645.87, while Germany's DAX 30 index was up 5.4% at 3,890.94 and the French CAC-40 index gained 4.7% to 2,675.68.
Amid high volatility, Indian market ended on a flat but a slight positive note on Wednesday. After three days of losses, bulls finally had an upper hand as the discount in the Nifty March futures dropped to mere 10 points indicating short covering.
The Nifty managed to hold above the 2,600 level throughout the day, however on the higher side, sell on every rise was witnessed. The Nifty saw selling pressure every time the index went past the 2,650 levels.
Alternate bouts of buying and selling often tossed the benchmark index in positive and negative terrain. Even a positive start to equity markets across Europe had a minimal impact on the sentiments today.
The metal’s, oil & gas, Pharma and auto stocks were in demand. However, the banking along with capital goods stocks suffered the most.
The BSE Sensex marginally gained 19 points to close at 8,446 and the NSE Nifty was up 22 at 2,645.
Among the 30-components of Sensex, 22 stocks ended in positive terrain and only 8 stocks ended in the red. Reliance Infra, Grasim, TCS, JP Associates, Hindalco, Sterlite and Wipro were among the major gainers. Among the major laggards were, ICICI Bank HDFC, BHEL, SBI and RCom.
Among the major BSE Sectoral indices BSE Metal index was the top gainer, the index rose 3%. Among the other major gainer were BSE Oil & Gas index (up 1.1%), BSE Pharma index (up 1%) and BSE Auto index (up 1%).
However, the BSE Mid-cap and the BSE Small-cap index slipped 0.5% each.
Market breath was negative, 1,438 stocks declined against 997 advances, while, 100 stocks remained unchanged.
Shares of Aurobindo Pharma surge by over 3% to Rs160 after the company announced that it received tentative approval for Escitalopram Oxalate Tablets 5mg, 10mg and 20mg from the US Food & Drug Administration (USFDA). The scrip touched an intra-day high of Rs164.7 and a low of Rs158 and recorded volumes of over 0.2mn shares on BSE.
Shares of HDFC slipped to a new 52-week low of Rs1128 losing over 3%. The stock has plunged by over 140% from its peak of Rs2950.
Towards the end the stock slightly bounced back to end at Rs1161. The scrip touched an intra-day high of Rs1230 and a low of Rs1228 and recorded volumes of over 0.7mn shares on BSE.
Shares of Himatsingka Seide surged by over 8% to Rs20 after almost 940,000 equity shares changed hands in 2 transactions. The scrip touched an intra-day high of Rs20.3 and a low of Rs18.5 and recorded volumes of over 0.4mn shares on BSE.
Shares of Kotak Bank slipped by 1.2% to Rs233 after ~1.39mn shares of the company changed hands in a single block on BSE. The scrip touched an intra-day high of Rs242 and a low of Rs230 and recorded volumes of over 1.6mn shares on BSE.
Shares of Ashok Leyland slipped by 2% to Rs16.2. The company announced that its February sales dropped 56% at 3,245 units against 7,501 units in the same period previous year. The scrip touched an intra-day high of Rs16.4 and a low of Rs15.8 and recorded volumes of over 1.4mn shares on BSE.
Shares of M&M gained by 1% to Rs314 after report stated that the company was in talks with Lockheed Martin and BAE for a naval JV. The scrip touched an intra-day high of Rs319 and a low of Rs310 and recorded volumes of over 0.2mn shares on BSE.
Shares of Pfizer gained by 4.7% to Rs536 the company announced that it would license 50 generics from Aurobindo. The scrip touched an intra-day high of Rs536 and a low of Rs506 and recorded volumes of over 10,000 shares on BSE.
Shree Renuka Sugars
We recommend a buy on Shree Renuka Sugars stock from a short-term trading perspective. It is clearly visible from the charts of Shree Renuka Sugars that it has been on an intermediate-term uptrend from its 52-week low of Rs 41, recorded in late October. From this low, the stock has been forming higher peaks and higher toughs. In December, the stock conclusively breached its 21- and 50-day moving averages. Recently, the stock found support at Rs 77. On March 4, the stock resumed its intermediate-term uptrend by gaining 6 per cent with high volume. Daily and weekly relative strength indexes are rising in the neutral region towards the bullish zone. Considering that the intermediate-term up trendline is still in place; we are bullish on the stock from a short-term perspective. We anticipate the stock’s up move to continue until it hits our price target of Rs 92 in the upcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 78.
Bullion metals end mixed
Gold ends lower for eighth straight day but silver shines
Gold prices ended lower for the eighth straight day on Wednesday, 04 March, 2009. Prices continued to fall as traders turned their attention to equity today reducing the appeal of the precious metals.
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 April delivery fell $6.9 (0.8%) to close at $906.7 an ounce on the New York Mercantile Exchange. Last week, gold ended lower by 6%. For the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%. Year to date, gold prices are higher by 2.5%.
On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (12.3%) since then.
On Wednesday, Comex silver futures for March delivery rose 18.5 cents (1.6%) to end at $12.9 an ounce. Prices fell to $12.43 earlier during the day. In February, 2009, silver had rose 4.3% after climbing 14% in January. Year to date, silver has climbed 17.1% this year. For 2008, silver had lost 24%.
In the currency market today, the dollar remained a bit weak against its counterparts. The dollar index ended lower by 0.6%.
In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.
US stocks started and ended the day on a strong note on Tuesday, 04 March, 2009, though it was off its session highs. The rally was induced by some sort of strength witnessed in the overseas market overnight. China's stimulus package to bolster its economy is perhaps being witnessed as a way to save the world from the ongoing recession. Economic reports disappointed as expected at Wall Street today. But stocks seem to have discounted these things already.
Last year, the weakening dollar and higher global demand for raw materials had led to records for commodities including gold. Gold reached a record in March 2008 as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the last move, the Federal Reserve has cuts its target bank lending rate to 0.25% from 5.25% in September, 2007. The Fed did it in nine steps.
Prior to 2008, 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 April delivery closed lower by Rs 277 (1.8%) at Rs 14,991 per 10 grams. Prices rose to a high of Rs 15,285 per 10 grams and fell to a low of Rs 14,966 per 10 grams during the day's trading.
At the MCX, silver prices for May delivery closed Rs 70 (0.3%) lower at Rs 21,852/Kg. Prices opened at Rs 21,976/kg and fell to a low of Rs 21,737/Kg during the day's trading.
Crude shoots up again
Prices rise almost 9% as crude supplies drop
Weekly inventory report by the Energy Department and China's stimulus plan pushed crude prices higher for the second straight day on Wednesday, 04 March, 2009. Oil prices once again rose today in synchronization with stocks at Wall Street today.
On Wednesday, crude-oil futures for light sweet crude for April delivery closed at $45.38/barrel (higher by $1.5 or 8.9%) on the New York Mercantile Exchange. Last week, crude ended higher by 12%. For the month of February, crude prices had ended higher by 1.5%.
Prices reached a high of $147 on 11 July, 2008 but have dropped almost 69% since then. Year to date, in 2009, crude prices are higher by 6.6%. On a yearly basis, crude prices are lower by 67%.
The EIA reported today that U.S. crude inventories, excluding those in the Strategic Petroleum Reserve, fell by 700,000 barrels in the week ended 27 February, 2009. Market was expecting an increase of 2.2 million barrels. U.S. refiners operated at 83.1% of their operable capacity last week, up from the 81.4% a week ago.
The EIA also reported gasoline inventories rose by 200,000 barrels, and distillate stockpiles, which include diesel and heating oil, rose 1.7 million barrels.
Total products supplied over the past four-week period have averaged 19.5 million barrels per day, down by 1.3% compared with the similar period last year. Among them, motor gasoline demand has averaged 9 million barrels per day, up by 2.2% from the same period last year.
The possibility of additional Chinese stimulus also boosted oil prices today. As per reports in the market today, Chinese Premier Wen Jiabao is considering new stimulus measures, adding to a $585 billion spending plan to revive the country's economy.
Prices had been sliding since past couple of months after fear gripped the US economy that US banks might be nationalized.
OPEC has been trying to cut production consistently in order to step up prices from their current low levels. There has been conflicting reports in the market regarding the fact that OPEC is likely to reduce output in March, 2009. OPEC has already agreed to cut cartel quotas by 4.2 million barrels a day since September, equivalent to about 5% of global oil demand. The cartel is supposed to meet on 15 March at Vienna.
April reformulated gasoline rose 4.7% to $1.3816 a gallon, and April heating oil gained 2.5% to $1.1796 a gallon.
April natural-gas futures rose 0.7% to $4.31 per million British thermal units.
Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
At the MCX, crude oil for March delivery closed at Rs 2,277/barrel, higher by Rs 170 (8.1%) against previous day's close. Natural gas for February delivery closed at Rs 218.5/mmbtu, lower by Rs 1.3/mmbtu (0.6%).
Subscribe to:
Posts (Atom)