Monday, March 23, 2009
Bullion metals end mixed
Gold drops but silver manages to shine with the rebounding dollar
After rising for two straight days, bullion metals ended mixed with gold ending little lower on Friday, 20 March, 2009. The rebounding dollar was mainly the reason for this. The yellow metal, anyways, ended higher for the week after the dollar slumped earlier during the week after Fed said that it will buy long term treasuries thereby increasing the appeal of precious metals as a safe haven against alternatives. Fed's recent moves had sparked some good notions about the recovery from the recent recession in US.
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 Friday, Comex Gold for April delivery fell $2.6 (0.3%) to close at $956.2 an ounce on the New York Mercantile Exchange. For the week, the yellow metal ended higher by 2.8%. 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 15.5%.
On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (8.9%) since then.
On Friday, Comex silver futures for May delivery rose 32 cents (2.4%) to end at $13.84 an ounce. Last week, silver fell 0.8% In February, 2009, silver had rose 4.3% after climbing 14% in January. Year to date, silver has climbed 26% this year. For 2008, silver had lost 24%.
In the currency market on Friday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose for the second time only in last nine sessions. In 2009, year to date, the dollar index has climbed 2.5%.
Crude ends little lower
Oil prices end more than 10% higher for the week
Crude prices ended little lower on Friday, 20 March, 2009. The rebounding dollar was mainly the reason for this. Crude, anyways, ended substantially higher for the week after the dollar slumped earlier during the week after Fed said that it will buy long term treasuries. Fed's recent moves had sparked some good notions about the recovery from the recent recession in US.
On Friday, crude-oil futures for light sweet crude for April delivery closed at $51.05/barrel (lower by $0.55 or 1.1%) on the New York Mercantile Exchange. The April contract expired on Friday. The more active May contract rose slightly to settle at $52.07/barrel. For the week, crude ended higher by 10.4%. For the month of February, crude prices had ended higher by 1.5%.
Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 67% since then. Year to date, in 2009, crude prices are higher by 18.5%. On a yearly basis, crude prices are lower by 51%.
Last week, the Fed said it was committed to buying $300 billion in longer-term Treasurys to help the struggling American economy recover. In the currency market on Friday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose for the second time only in last nine sessions. In 2009, year to date, the dollar index has climbed 2.5%.
Last Wednesday, EIA reported that gasoline inventories rose by 3.2 million barrels in the week ended 13 March, 2009. The EIA also reported an increase of 2 million barrels in crude inventories. Market was expecting a decline in either case. The EIA also said distillate stockpiles, which include diesel and heating oil, rose by 100,000 barrels.
Earlier during the month, the IEA said in the monthly report that global oil supply in February is estimated at 83.9 million barrels a day, down 1 million barrels from a month ago and 3.4 million barrels from a year ago. The agency also lowered its forecast for this year's global oil demand to 84.4 million barrels a day, 1.5%, or 1.2 million barrels, lower than a year ago.
Also at the Nymex on Friday, April reformulated gasoline fell 1.4% to $1.457 a gallon and April heating oil dropped 2% to $1.3834 a gallon.
April natural-gas futures rose 1.3% to $4.227 per million British thermal units.
SGX Nifty in green
SGX Nifty March currently at 2,852.0 trading +44.0 points
SGX Nifty April currently at 2,845.0 trading +43.0 points
Daily News Roundup - March 23 2009
Reliance Industries is set to sign gas sale and purchase agreement with the identified urea plants sometime next week. (BL)
Power and fertilizer companies have expressed dissatisfaction over the revised gas sale and purchase agreement forwarded by the Reliance Industries for the supply of KG D6 gas. (FE)
Reliance Industries may get to use KG Basin gas as fuel for its captive power projects. (ET)
Infosys may bag IT project from government which would run on transaction based pricing model. (ET)
DLF to acquire DLF Asset Ltd for an enterprise value of around Rs70bn. (BS)
NTPC says it will import 12.5mn tons of coal in the next financial year to meet its fuel requirement.(FE)
ACC has put on hold its Rs6bn expansion plans for the ready-mix concrete business in 2009, citing low demand due to the global slowdown.(FE)
Wipro gets ESIC’s Rs11.8bn e-governance deal.(Mint)
iGate Corp pulled out of the bidding process for a controlling 31% stake in Satyam, citing a lack of updated financial and legal information on the company.(FE)
List of 5 final bidders for Satyam likely by March 25.(BL)
NTPC, Coal India impasse on fuel supply pact ends.(BL)
Telenor Group says it has completed the Unitech Wireless transaction and made the first investment of Rs12.5bn that gives it a stake of 33.5% in the telecom JV.(FE)
Coal India is eyeing one more block in Mozambique, this time through International Coal Ventures.(BL)
IOC may win contract for providing aircraft fuelling facility at Delhi Airport. (ET)
United Breweries is putting together a roadmap for the next fiscal which includes three new brand launches.(BL)
Essar Power has announced that it has raised Rs3.5bn from IDFC Project Equity for part-financing the equity for its ongoing projects.(BL)
Lanco Infratech abandons plans to set up wind turbine facilities.(Mint)
Shipping Ministry plans to seek around Rs10-15bn from the Defence Ministry for transferring the administrative control and assets of Hindustan Shipyard.(BL)
Videocon group promoted DTH venture has finalized a launch date-April 27-after many delays.(TOI)
IDBI Bank to syndicate USD 1-billion loan for Air India.(DNA)
Edible-oil producer Adani Wilmar, the 50:50 JV between the US$5bn Adani Group and Singapore-based Wilmar International, will invest Rs6bn next fiscal in greenfield and brownfield projects.(DNA)
IDBI Bank has joined other domestic and international banks to bid for the Indian retail operations of erstwhile ABN Amro.(FE)
Tata Tea is foraying into the Rs 100bn non-carbonated cold drinks market with the launch of T!ON.(DNA)
Oil Ministry seeks Election Commission's nod to hold a meeting of EGoM to decide on allocation of natural gas from Reliance Industries' eastern offshore KG-D6 fields to power plants.(BS)
Ruias of the Essar Group have decided to postpone the expansion plan for the Vadinar refinery-from the current 12.5mn tonne pa to 34 mn tonne pa in two phases-for at least for eight months due to various reasons.(FE)
SC issues notice to Moser Baer in tax matter.(ET)
Cairn India to be ready to pump out its first barrel of oil in 10 days.(ET)
S Kumars Nationwide to form a joint venture with DKNY. (ET)
Essar Power to align with Spain’s Union Fenosa to develop projects.(Mint)
Essar Steel sets up a steel processing facility, with a capacity of 0.25mn tonnes per annum, at Oragadam near Chennai.(ET)
The BSE is discussing a possible alliance with Multi Commodity Exchange of India.(Mint)
Forex reserves rose by US$1.4bn to US$249bn in the week ended March 13.(BL)
RBI is considering relaxing the group exposure norms that limit a scheduled commercials bank’s lending to a borrowing group.(FE)
RBI says it will buy dated government securities of Rs 100bn through auction-based open market operation on March 25.(FE)
TRAI has laid down more stringent standards of Quality of Service of Basic Telephone Service and Cellular Mobile Telephone.(BL)
Government has raised the coal import target for power generation by 15mn tonnes to 35mn tonnes in 2009-10.(TOI)
Merchandise exports to the US grew 2.65% in the first eight months up to November 2008.(BS)
State-run infrastructure financing company IIFCL on Friday said the World Bank will disburse US$1.2bn loan next month for its various infrastructure projects. (FE)
India’s total external financial assets declined by 5.21%.(BS)
Government is understood to have held back its decision to lower the license fee by about 33% with effect from April 1, for those telecom operators who have 95% or more coverage in a circle.(FE)
US announces additional measures for hiring of H-1B workers.(DNA)
FII equity investments down US$18.6bn in first half of 2008-09.(BL)
Toxic tonic thrills bulls
The only thrill worth while is the one that comes from making something out of yourself.
Good morning, as we look set for a bright start. Indices may be in green but make sure your investments too are safe. Asian indices are mostly higher. Obama regime is expected to announce a plan to buy banks’ soured assets. Nifty futures in Singapore and Dow futures are smartly up. But, there could be wild swings for sure ahead of F&O expiry. Also, some resistance is likely at higher levels as investors could turn cautious ahead of an eventful April. We will have to contend with earnings, elections and RBI policy next month.
On the political front, the heat is definitely on. The two main parties (Congress and BJP) so far have been the worst hit. While an internal row is taking toll on BJP, the Congress is facing a revolt of sorts from long-time allies like RJD. Even its alliance with in Uttar Pradesh (SP) and Maharashtra (NCP) are pretty fragile. Post the vote counting, the equations could swing either way. It is this uncertainty and unpredictability of polls that could potentially prove to be a spoilsport for the bulls.
FIIs were net buyers in the cash segment on Friday at Rs1.49bn while the local institutions were net sellers at Rs940.3mn. In the F&O segment, the foreign funds were net buyers at Rs955.5mn. On Thursday, FIIs were net buyers of Rs1.58bn. Mutual Funds were net sellers of Rs450mn on the same day.
US stocks tumbled on Friday, as investors locked in some gains after the recent rally. Banks and technology shares were among the leading losers.
The Dow Jones Industrial Average lost 122 points or 1.7%, to 7,278.38. However, it also managed slim gains for the week, rising for the second week in a row for the first time since last May.
The S&P 500 index fell 15 points, or 2%, to 768.54 while the Nasdaq Composite index fell 26 points or 1.8%, to 1,457.27.
Stocks had fallen on Thursday too after gaining for six of the prior seven sessions. During that run, the S&P 500 rose 17%, spurred on by better-than-expected reports on housing and retail sales and some signs of stabilization in the bank sector. Investors also welcomed news that the Federal Reserve is pumping another trillion into the economy to try to get credit flowing.
Those gains followed a 28% decline for the S&P 500 that left the benchmark index at a 12-1/2 year low. The S&P 500 topped 800 both on Wednesday and on Thursday and that will likely prove to be a key technical level to watch in the weeks ahead, according to some analysts.
Federal Reserve chairman Ben Bernanke, speaking before a group of community bankers in Phoenix, defended the need to bail out banks seen as too big to fail, such as AIG. However, he noted that it is an enormous problem that must be addressed.
Sheila Bair, chairman of the Federal Deposit Insurance Corp, also spoke before the same industry group. She said that more regulation is needed to solve the banking crisis.
Separately, the government reported that there were 2,769 mass layoffs in February, resulting in 295,477 job cuts. A mass layoff involve 50 or more job cuts at the same time. In January, there were 2,227 mass layoffs.
AIG remained in focus after the House of Representatives on Thursday voted to impose a steep tax on large employee bonuses at firms that accepted government bailout money. The legislation was created in response to the public outcry after AIG handed out over $165 million in bonuses to executives after it accepted more than $170 billion in federal bailout money.
In an interview with a leading media house on Thursday, treasury secretary Timothy Geithner said his department was responsible for a provision in the $787 billion stimulus package that allowed AIG and other companies to award bonuses.
Ericsson warned that it will post a loss in the first quarter due to weaker consumer demand for its phones amid the global financial crisis. Shares fell 10.6%. Also in the telecom space, Palm reported a wider quarterly loss and weaker sales late Thursday that missed analysts' estimates. Despite the loss, shares gained 2%.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.63% from 2.60% on Thursday.
Lending rates improved. The 3-month Libor rate fell to 1.22% from 1.23% Thursday, while the overnight Libor rate dipped to 0.28% from 0.3% Thursday. Libor is a bank-to-bank lending rate.
In currency trading, the dollar gained versus the euro and the yen.
US light crude oil for April delivery, which expires on Friday, settled down 55 cents to $51.06 a barrel on the New York Mercantile.
COMEX gold for April delivery fell $2.60 to settle at $956.20 an ounce.
The president of the European Central Bank (ECB) said in a Wall Street Journal interview that Europe doesn't need to boost spending further to combat the global financial crisis, throwing the bank's weight behind Europe's governments in their battle with the US over how to overcome the worst recession in a generation.
ECB leader Jean-Claude Trichet said that instead of pushing new measures, governments around the world should move faster on what they've already announced - referring in part to delays and difficulties in the US government's rescue of its troubled banks.
Separately, large corporations in Japan saw business conditions worsen during the January-to-March period, according to a survey released by the Japanese government today.
The business sentiment index for corporations with capital of 1 billion yen or more was at negative 51.3 in the first quarter of this year, below the negative 35.7 seen in October-to-December 2008, according to the survey, which is conducted jointly by the Ministry of Finance and Cabinet Office.
Indian markets ended on a flat note on Friday amid wild swings. After closing above the crucial 9k and 2,800 levels on Thursday, key indices were unable to build on as weak global cues coupled with profit taking at higher levels kept the sentiments mixed on Dalal Street. The BSE Sensex finally gained 25 points to close at 9,001 and the NSE Nifty was up 12 at 2,807.
Among the 30-components of Sensex, 13 stocks ended in positive terrain and 17 stocks ended in the red. Hindalco, ONGC, Sun Pharma, HDFC and Tata Steel were among the major gainers. ON the other hand, Tata Motors, ICICI Bank, L&T, Maruti and BHEL were among the major losers.
Among the BSE Sectoral indices BSE Realty index was the top loser, the index fell 4%. Among the other major losers were BSE Capital Goods index (down 2.5%), BSE Bankex (down 2%) and BSE Auto index (down 1.2%).
Market breath was positive, 1,242 stocks advanced against 1,223 declines, while, 99 stocks remained unchanged.
Shares of Dr. Reddy's Lab declined by over 3% to Rs421. The company is reportedly realigned its Global Generics finished dosages strategy to focus on certain key geographies and would exit some of the very small distributor driven markets.
The markets it was withdrawing from contributed less than one percent of its total annual revenues, the Hyderabad-based drugmaker said in a statement on Thursday. The move appears to be the company’s renewed attempt to consolidate and grow in its key geographies.
The scrip touched an intra-day high of Rs431 and a low of Rs415 and recorded volumes of over 56,000 shares on BSE.
The bizarre run in Akruti shares finally came to an end as the stock has plunged by over 28% after the NSE announced that it would remove Akruti City Ltd from its derivatives segment.
Trading in futures and options would be stopped after March 26, 2009 the day contracts for April and May expire. Outstanding contracts in the April-May series will expire on March 26, the last day of the current settlement cycle. The NSE has also placed the stock in the Trade to trade segment effective from March 27.
The stock had rallied over 137% in the last six trading sessions and has surged 147% from its 52-wek low of Rs550 hit on January 1, 2009.
The stock has been constantly outperforming the real estate sector as well as major equity indices despite sliding real estate prices.
Of the company’s equity base of 66.7mn shares, promoters own 90%, around 6% is held by corporate bodies and the rest by the public.
Shares of NDTV surged by over 2.5% to Rs82.2 after reports stated the NDTV consortium is also in the race to acquire broadcast rights for the upcoming T20 tournament. This consists of NDTV, Malaysian broadcaster Astro and PE fund Providence Capital. In addition, Multi screen Media (MSM) and ESPN Star sports are also in the fray for the same.
MSM had dragged BCCI to Bombay HC last weekend, seeking injunction over the cricket board attempting to negotiate a fresh contract for IPL’s broadcast rights. However, MSM, (earlier Sony Entertainment) is close to resolving the legal dispute with the BCCI, reports added.
The stock had hit a 52-week high of Rs482 on June 18, 2008 and hit a 52-week low of Rs69 on December 2, 2008.
Jet Airways India
We recommend a sell in Jet Airways from a short-term trading perspective. It is apparent from the charts of Jet Airways that after recording a 52-low at Rs 115 on March 12, the stock bounced up.
It gained almost 65 per cent in a short span of five trading session and encountered resistance in the band between Rs 180 to Rs 190.
At this resistance, the stock formed a shooting star candlestick pattern, which is a top reversal pattern. However, subsequently, it resumed its medium as well as long-term down trend.
On March 20, the stock plummeted by 10 per cent confirming the reversal pattern. The daily relative strength index has entered into the neutral region from the bullish zone signalling loss of bullish momentum.
We are bearish on the stock from a short-term perspective.
We expect it to decline further until it hits our price target of Rs 144 in the approaching sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 168.
My Portfolio - March 23 2009
Nothing much has changed - maybe trimmed a little of losses. 93% down is PSTL
SGX Nifty Live Update - March 23 2009
SGX Nifty March Futures at 2,841.0 trading at +33.0 points
SGX Nifty April Futures at 2,838.0 trading at +36.0 points
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