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Monday, May 18, 2009
Nifty Circuit Limits today
Nifty Circuit Limits for today are :
10% 3973.75
15% 4124.80
20% 4275.85
Like circuit limits on individual stocks, there are restrictions on the movement of indices (Sensex and Nifty). There are 3 types of circuit limits 10%,15% and 20% limits. These circuit limits are applicable for the movement of the indices either in positive direction or in negative direction.
Trading in both the exchanges will come to halt if the movement exceeds the limits in any one of the exchanges.
If the 10% movement takes place before 1:00 p.m. then market will be halted for an hour and if it takes place at or after 1:00 p.m. but before 2:30 p.m. then market will be halted for half an hour. If the movement takes place after 2:30 p.m. then there won’t be any trading halt.
On resumption of trading after the halted period is elapsed, if the market hits 10% again there won’t be any halt in the trading. But if the market hits 15%, there shall be a halt of 2 hours if the movement happens before 1 p.m. If the 15% limit is breached at or after 1 p.m. but before 2 p.m. then there would be trading halt of 1 hour. If it happens after 2 p.m. then there won’t be further trading on that day.
On the resumption if the market hits 20% limit at any time during the trading hours, the trading will be suspended on that day.
These limits are put in place to stop excessive speculation and control the liquidity.
A point to be noted here is that the absolute values of these 10%, 15% and 20% limits are not based on the previous day’s close as in case of individual stocks circuit limits. These values are calculated and announced by the bourses (NSE and BSE) at the beginning of each quarter. The absolute points are calculated based on closing level of index on the last day of the trading in a quarter and rounded off to the nearest 10 points in case of Nifty. This limit is applicable for the entire quarter.
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Daily News Roundup - May 18 2009
Tatas, M&M, Maruti join hands for hybrid models. (BL)
Bharti Airtel says it is open to acquiring domestic telecom operators as part of its strategy to add another 100mn subscribers in three years.(BL)
MTNL launches 3G mobile services in Mumbai.(BL)
IDBI, ICICI Bank cut deposit rates.(BL)
Alcatel receives a five-year contract of about US$150mn from Unitech Wireless.(TOI)
MTNL looks at demerger of tower operations.(FE)
HCL Technologies plans to cancel hedging contracts worth US$600mn. (BS)
Bank of India, the largest promoter in its life venture company-Star Union Dai-ichi Life, may offload around 3% stake in favour of Union Bank of India.(DNA)
Tata Steel will pre-pay £200mn debt.(FE)
M&M may move production of key models out of Nashik. (BS)
Ashok Leyland Nissan JV to delay by six months due to the current economic slowdown and delay in land acquisition. (BS)
Maruti Suzuki to demonstrate 10 hybrid vehicles in Commonwealth Games. (BS)
Pantaloon Retail sales jump over 20% in April as against sales clocked in the same period last year. (BS)
Voltamp Transformers defers the construction work of its new manufacturing facility at Savli in Vadodara to save cost. (BS)
IOC, BPCL and HPCL raised the aviation turbine fuel price by Rs585 per kilolitre in Delhi to Rs32,199 with effect from midnight tonight. (BS)
BoB likely to start insurance business by March 2010. (BS)
GTL bags Rs3.2bn Maharashtra electricity deal.(BL)
Aegis BPO, the back office arm of the Essar Group, has entered into a definitive agreement to acquire Australian contact centre company UCMS Group for Rs2bn.(BL)
MTNL drops plan to acquire Sri Lankan telecom company Suntel. (BS)
Bharti Airtel crosses 100 mn customers. (BS)
Infosys Technologies receives the eBiz project of the Department of Industrial Policy and Promotion under the Union Commerce and Industry Ministry. (BS)
Tata Teleservices Maharashtra says it will spend over Rs10bn this year, mainly to launch its GSM network in Mumbai and Maharashtra.(DNA)
British government ready to guarantee loans to Tata group-owned Jaguar Land Rover. (ET)
M&M in advanced stages of talks with US-based Caterpillar for a 51:49 joint venture, which will make engines for the US firm’s tractor range. (ET)
Tata Steel to double its outlets to 1,000 in the next 2-3 years for sale of its branded products. (ET)
Ranbaxy Labs has chalked out plans to revamp its US business. (ET)
Piramal Life Sciences to invest Rs2bn in next two years for its ambitious programme to discover and develop new chemical entities and Novel Drug Delivery Systems. (ET)
Spice Group's mobile retailing arm HotSpot to spend Rs2bn on acquisitions and expansion of its operations across the country. (ET)
Captain Gopinath open to the idea of selling his 10% stake in Kingfisher Airlines. (ET)
Unitech plans to generate Rs9bn from the sale of two hotels in Gurgaon and a commercial office complex in Saket, New Delhi, by the end of June. (BS)
Shriram Transport Finance plans to set up a subsidiary for equipment finance for a proposed capital of around Rs1.5bn. (BS)
Tech Mahindra to set up BPO in Kolkata. (ET)
Promoters of Essar Shipping are considering delisting the company. (ET)
Congress wins a resounding victory in the elections to the 15th Lok Sabha, bagging as many as 206 seats, a sharp rise from 145 in the 14th Lok Sabha.(BS)
Government lifts ban on futures trading in wheat. (BL)
Foreign exchange reserves increased by US$4.2bn to US$255.9bn for the week ended May 8.(BL)
CERC to set new criteria of power generation, transmission. (ET)
MNC units abroad to come under drug regulator scanner.(BL)
Committee set up by the DoT to review the spectrum allocation policy suggest no operator should be allowed to own more than 25% of the total available spectrum in a circle.(BL)
Government is expected to issue bonds worth more than Rs 100bn before the end of this month.(DNA)
Gujarat Electricity Regulatory Authority has raised the limit of wind power purchase by distribution licensees. It has been increased to 6% for fiscal 2009-10 and 7% for financial years 2010-11 and 2011-12. (BS)
Pharma companies seek government to increase spending on healthcare from 1% to at least 3%. (ET)
Bulls to chant victory mantra
Victory has a thousand fathers, but defeat is an orphan.
Cong-ratulations to the UPA. Prepare for a major blast off today, notwithstanding the weakness in Asian markets. Nothing less than an upper circuit in the main indices is what we expect. If it doesn’t happen traders and investors will get more time to play around. The stunning triumph of the Congress in the Lok Sabha polls could not have come at a more opportune time. The economic turnaround could actually be accelerated now.
A lot of money that was waiting to be deployed will now make its way into the market. The icing on the cake is that we will have a much stronger, stable and cohesive regime which doesn’t have to bother about the pulls and pressures of coalition politics.
However, don’t lose sight of the global factors. Our own economy remains sluggish. Inflation at consumer level is still quite high, and the fiscal situation is in a mess. There could be a short-term rally in the run up to the budget. However, expectations will have to be realistic. There are bound to be some hiccups along the way including this week.
Key Results Today: Dr. Reddy's, Essar Oil, Essar Shipping, HT Media, Punj Lloyd and Sobha Developers.
FIIs were net buyers in the cash segment on Friday at Rs9.84bn while the local institutions poured in Rs4.32bn. In the F&O segment, the foreign funds were net sellers at Rs2.88bn. On Thursday, FIIs were net sellers at Rs3.46bn in the cash segment. Mutual Funds were net sellers at Rs598mn on the same day.
US stocks fell on Friday, as investors reacted to economic news and word of General Motors' dealership closings. The Dow Jones lost 63 points, or 0.8% to 8268.64 while the S&P 500 index shed 10 points, or 1.1% to 882.88. The Nasdaq Composite index dropped 9 points or 0.5% to 1680.14.
On the week though, all the three key US indices ended in the red. The Dow Jones fell 3.6%, its first weekly drop in three weeks. The S&P 500 lost 5%, also its first weekly loss in three weeks, and the Nasdaq dived 3.4%, representing its first weekly loss in 10 weeks.
Still, the S&P 500 index and the Dow are up 31% and 26%, respectively, from their 12-year lows set March 9.
In currency trading, the dollar gained versus the euro and fell against the yen.
US light crude oil for June delivery fell $2.28 to settle at US$56.34 a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery rose $2.90 to settle at $931.30 an ounce.
There was some relatively good news Friday. US industrial production and New York-area manufacturing activity contracted less than economists expected. And a Reuters/ University of Michigan index of consumer sentiment rose to an eight-month high this month. But traders saw in the data little reason to bid up stocks.
Not all the news was positive though. The Treasury Department agreed to extend billions in bailout funds to six big life insurers. The move is good for the insurers but also suggests their problems pose a serious risk to the financial system.
Hartford Financial Services Group said it was eligible for $3.4 billion from the Troubled Asset Relief Program, or TARP, and Lincoln National said it has been initially approved for a $2.5-billion injection. Shares of Hartford fell 1%, and Lincoln declined 0.7%.
GM dropped 5.2% after it began telling 1,100 dealers that their franchise pacts would not be renewed.
Energy stocks slumped as oil slid $2.28 to $56.34 a barrel. Schlumberger lost 3.5%. Devon Energy sank 5.7%.
A growing sense of economic optimism has lifted US shares since the March 9, multi-year lows that many market pros think represent a bear market bottom. But last week brought more bad news than good in the form of weaker-than-expected reports on retail sales, housing and weekly jobless claims.
In addition, Chrysler said it was cutting around 25% of its dealerships and GM announced that it was cutting the first 1,100 of what is expected to be a 40% cut of its dealerships. GM remains on the brink of bankruptcy as it struggles to gain concessions from creditors and its union by the end of the month.
The week ahead brings uncertainty as investors sort through reports on housing, leading economic indicators, jobless claims and a slew of profit reports from retailers.
Across the Atlantic, Barclays led the banking sector higher in Europe on Friday, though losses from drugmakers and food producers kept gains for the broader market in check. The pan-European Dow Jones Stoxx 600 index rose 0.6% to 202.89, with banks the strongest performers. But the index was still down about 3% for the week.
The French CAC-40 index gained 0.4% to 3,169.05. But the German DAX 30 index lost 0.2% to 4,731.50 and London's UK FTSE 100 index declined 0.3% to 4,348.11.
It was the second straight day of losses for the Indian markets. The sharp slide could be attributed to a sell off witnessed in the US and the Asian markets.
Finally, the Sensex slipped by 146 points or 1.2% to close at 11,872 after touching a high of 11,936 and a low of 11,695. The index had opened at 11,744 against the previous close of 12,020.
The NSE Nifty lost 42 points or 1% to shut shop at 3,593. On the other hand, the Small-Cap and Mid-Cap shares posted marginal gains with the corresponding BSE indices gaining by 0.7% and 0.38%, respectively.
Inflation again slipped lower, India’s Inflation for the week ended May 02, 2009 stood at 0.48% as compared to 0.7% for the previous week ended April 25, 2009 and 8.73% during the corresponding week May 03, 2008 of the previous year.
Shares of Maharashtra Seamless gained by 5% to Rs203. According to reports, the company has deferred its plans to set up two separate steel plants by almost two years. The scrip touched an intra-day high of Rs210 and a low of Rs187 and recorded volumes of over 0.1mn shares on BSE.
Shares of Godrej Consumer surged by over 4.5% to Rs147 after reports stated that the company may consider a price hike in September following strong demand. The scrip touched an intra-day high of Rs148 and a low of Rs139 and recorded volumes of over 63,000 shares on BSE.
Shares of Piramal Life Science edged lower by 0.7% to Rs51. The company announced that it received government approval for combination trail of Cancer. The scrip touched an intra-day high of Rs54 and a low of Rs51 and recorded volumes of over 10,000 shares on BSE.
DLF announced that it plans to raise about Rs100bn in over 2-3 years selling its non-core businesses and some land parcels.
The company also said that it plans to list DLF Assets Pvt over 18-24 months and halve its debt by end of fiscal year in March. The stock was ended at Rs249 gaining over 7% after hitting an intra-day high of Rs252 and a low of Rs222 and recorded volumes of over 9.2nm shares on BSE.
Shares of the shipping companies ended with smart gains as the Baltic dry freight index surged 3.7% hitting 2009 high of 2,332 points.
Stocks like SCI surged by over 2.6% to Rs95, GE Shipping rose over 6% to Rs245, ABG Shipyard rallied over 7% to Rs154, MLL advanced by 7% to Rs43 and Bharti shipyard surged over 10% to Rs114.
Shares of Britannia advanced by 2% to Rs1600 after reports stated that the company has taken full control of the Bangalore based bakery foods retailer Daily Bread. The scrip touched an intra-day high of Rs1622 and a low of Rs1564 and recorded volumes of over 2,000 shares on BSE.
All eyes would be on the election results s drama is what we expect on the political front. With the grueling month-long election over, political parties have kicked off post-poll efforts to lure potential partners in crime. This will give rise to speculation, uncertainty and of course increased volatility in the markets.
Oscillating US stocks end in the red
Indices witnesses their first weekly loss in a long time
US stocks ended lower for the week that ended on Friday, 15 May, 2009. While earning season is approaching to an end, economic reports dominated the week. But after almost eight consecutive weeks of gains, it was Dow's first weekly loss in two month's time. All the ten sectors ended in the red led by the financial sectors. The other sectors that led the declines were industrials, consumer discretionary and energy sectors.
The Dow Jones Industrial Average lost 306.01 points (3.6%) for the week to end at 8,268.64. Tech - heavy Nasdaq lost 58.86 (3.4%) to end at 1,680.14. S&P 500 lost 46.35 (5%) to end at 882.88.
The indices registered losses during the three alternate days of the week – Monday, 11 May, Wednesday, 13 May and Friday, 15 May.
Among earning news for the week, retailers dominated the headlines. Kohl's posted better-than-expected first quarter earnings and in-line guidance for the second quarter. Kohl's also raised its outlook for fiscal 2010, but the company's forecast still falls short of the consensus forecast. Also, retail giant Wal-Mart reported in-line quarterly earnings and in-line outlook.
The Commerce Department reported on Tuesday, 12 May, 2009, that the U.S. trade gap with the rest of the world increased in March for the first time in eight months, as exports declined faster than imports. The trade deficit, the difference between exports and imports, increased by 5.5% to $27.6 billion in March from a nine-year low of $26.1 billion in February as the global recession tightened in major U.S. trading partners in North America, Europe and Asia.
On Wednesday, 13 May, the Commerce Department reported in USA that U.S. retail sales dropped a seasonally adjusted 0.4% in April, the eighth decline in the past 10 months. Markets on average had expected a slight increase. The Commerce Department's retail sales data measure revenues at stores selling durable and nondurable goods. Consumer spending accounts for about 70% of the U.S. economy and is a key element in economic growth.
A separate report showed that business inventories for March decreased 1%, which is on par with the 1.1% decline that was widely forecast, and not as bad as the 1.4% decrease seen in February.
Stocks managed to rebound back on Thursday, 14 May, 2009.
Finally, on Friday, 15 May, 2009, stocks oscillated between red and green for the entire day but ultimately ended the day with modest losses. The Dow Jones Industrial Average ended lower by 62.68 points at 8,268.64. The Nasdaq Composite Index, ended lower by 9 points at 1,680. S&P 500 ended lower by 10 points at 882. Dow was up by 47 points at one time. As a result, stocks logged a weekly loss of 5%, which is its worst in two months.
Market started on a strong note on news on Friday that the Treasury will offer $22 billion in TARP funds for certain life insurers. However, there has been some recent concern that the TARP funds may not help the ratings of certain companies.
Weakness in the financial and energy sectors acted as a hindrance for market's hindrance. The technology sector got some support from big names like RIMM, Microsoft and Google.
Among economic reports for the day, the Labor Department reported on Friday, 15 May, 2009, that falling energy prices offset another big jump in cigarette prices in April, leaving the U.S. consumer price index flat for the month. With energy prices down 20% since April 2008, the CPI has fallen 0.7% in the past 12 months, the largest decline since 1955.
However, core inflation - which excludes volatile food and energy prices - has not declined and in fact has accelerated in the past four months, rising 0.3% in April, the biggest increase since July. The core CPI was boosted in April by a 9.3% increase in tobacco prices as a new federal excise tax to pay for children's health care kicked in.
Crude oil prices ended lower on Friday, 15 May, 2009. With Friday's losses, crude suffered its first weekly loss in a month's time. Prices ended lower as traders remained a bit pessimist about hopes of quick global recovery from the current recession. International Energy Agency reducing its crude demand forecast in the latest monthly report and the movement of dollar also affected the crude prices.
On Friday, crude-oil futures for light sweet crude for June delivery closed at $56.34/barrel (lower by $2.28 or 3.9%) on the New York Mercantile Exchange. For the week, crude ended lower by 3.9%.
Executive Summary
For the week, indices registered good losses at Wall Street. The financial sector led the pack of decliners after surging last week following the stress test results by banks. This week's loss marked the first weekly loss for Dow after almost eight consecutive weeks of gains. Economic reports and earning reports from retailers dominated the headlines.
In percentage terms, Dow lost 3.6%, Nasdaq lost 3.4% and S&P 500 lost 5% during the week.
For the year 2009, Dow, Nasdaq and S&P 500 are down by 5.6%, 3% and 5.9% respectively.
The following week will look forward to earning reports from H-P and Home Depot. Other than that, there will be a couple of economic reports.
Crude slips again
Crude suffers its first weekly loss in a month
Crude oil prices ended lower on Friday, 15 May, 2009. With Friday's losses, crude suffered its first weekly loss in a month's time. Prices ended lower as traders remained a bit pessimist about hopes of quick global recovery from the current recession. International Energy Agency reducing its crude demand forecast in the latest monthly report and the movement of dollar also affected the crude prices.
On Friday, crude-oil futures for light sweet crude for June delivery closed at $56.34/barrel (lower by $2.28 or 3.9%) on the New York Mercantile Exchange. For the week, crude ended lower by 3.9%.
Crude ended April higher by 2.9%. Previously, March trading ended up 10.9%. It rallied 11.3% in the first quarter. 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 61% since then. Year to date, in 2009, crude prices are higher by 20%. On a yearly basis, crude prices are lower by 42%.
Earlier during the week, the International Energy Agency reported on Thursday that it now expects demand to fall 2.6 million barrels a day from 2008 levels. This is 200,000 barrels more than the IEA had projected a month ago.
In the currency market on Friday, the greenback tumbled against the yen but gained against the euro. The dollar index, which weighs the strength of dollar against the basket of six other currencies ended higher by 0.6%.
Among economic reports for the day, the Labor Department reported on Friday, 15 May, 2009, that falling energy prices offset another big jump in cigarette prices in April, leaving the U.S. consumer price index flat for the month. With energy prices down 20% since April 2008, the CPI has fallen 0.7% in the past 12 months, the largest decline since 1955.
The EIA had reported on Wednesday, 13 May, that U.S. crude inventories excluding those in the Strategic Petroleum Reserve decreased by 4.7 million barrels in the week ended 8 May, 2009. Market was expecting a gain of more than 1 million barrels. The drop in the inventories level was helped by weak imports. Oil imports averaged 8.7 million barrels per day last week, down 1.2 million barrels per day from the previous week.
EIA also reported that demand still remained weak. Total petroleum demand over the past four weeks averaged 18.2 million barrels a day, down by 7.9% from a year ago. In individual petroleum products, gasoline demand fell 1.2% from a year ago, distillate fuel, which include diesel and heating oil, dropped 14.1%, while jet fuel consumption declined 10.3%.
Also at the Nymex on Friday, June-reformulated gasoline skidded 4.31 cents, or 2.5%, to $1.6806 a gallon, and June heating oil lost 7.59 cents, or 5.1% to $1.4188 a gallon
Natural gas for June delivery also dropped, giving up 19.4 cents, or 4.5%, to $4.098 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 June delivery closed at Rs 2,828/barrel, lower by Rs 25 (0.87%) against previous day's close. Natural gas for May delivery closed at Rs 203.5/mmbtu, lower by Rs 1.7/mmbtu (0.82%).
Indiainfoline
We recommend a buy in India Infoline from a short-term trading perspective. It is apparent from the charts of India Infoline that in early March of this year it took support at Rs 40, a significant long-term support level. Subsequently, the stock changed trend and began to rally, breaching the 21- and 50-day moving averages. Since March low, the stock has been on a medium-term uptrend. It conclusively penetrated the long-term moving average (200-day) in early May and is trading well above this average. We notice that this medium-term uptrend is backed by good volume. The daily relative strength index (RSI) is featuring in the bullish zone and the weekly RSI has entered this zone. Taking into consideration that the medium-term uptrend line is intact, we are bullish on the stock from a short-term perspective. We anticipate the stock to move up until it hits our price target of Rs 105 during the approaching trading session. Traders with short-term trading perspective can buy the stock while maintaining a stop-loss at Rs 89.
FII deluge ?
Foreign institutional investors are expected to raise a toast to the Indian equity market in the coming week as they see the political stability and continuity in policies to give a fillip to the domestic economy.
“One can expect a deluge of FII inflow next week. Investors in the Far East and the UK have been keenly following the Indian elections. With this win, money will come in from all across the globe,” said Mr Saurabh Mukherjea, Head of Indian Equities, Noble Group.
Global Investment bank Goldman Sachs said the election results may help India “decouple” further from the global economy by giving a fillip to domestic demand. “There are now upside risks to our GDP growth forecast of 5.8 per cent for FY10.”
Market players agree that India will be back on the FII radar in a big way as an attractive investment destination as the new Government is expected to press ahead with the much delayed economic and financial reforms agenda.
“Long-only FIIs, who have been waiting on the sidelines for the event risk to pass, would also come in. Global emerging market funds are 2.5 per cent in cash and Asia dedicated funds are 3.5 per cent in cash which needs to be deployed,” said Mr Amitabh Chakarborty, President-Equity, Religare Capital Markets.
“Liquidity in global markets is reasonably strong, local mutual funds have been in cash for some time and internationally, the risk appetite has increased significantly. The volatility index, commonly seen as the ‘fear index’ doesn’t look quite as fearful as it used to. Further, India continues to enjoy a competitive advantage among emerging economies,” said ICICI Securities Managing Director and CEO Madhabi Puri Buch.
As the newly elected Government has won the mandate for “good Governance”, one can expect five years of stability in the economy and the capital markets, said Mr Motilal Oswal, Chairman and Managing Director of Motilal Oswal Securities.
“With this win, India has become an even more attractive investment destination. So one can expect a lot of FII money to come in.”
Since the beginning of the new financial year, FIIs have been net buyers of equities. “FIIs will view the election outcome positively. They will draw comfort from the fact that there will be no roll back or changes in the present policies and framework. So we could see a lot more inflows from them.” said Mr C.J. George, Managing Director at Geojit BNP Paribas Financial Services.
“FDI/FII investment prospects for India are very bright considering the inherent advantages that the country has and its huge potential to absorb capital for its development and growth. As far as investing through P-Notes route is concerned, further liberalisation cannot be ruled out,” said Mr Dinesh Thakkar, Chairman and Managing Director at Angel Broking.
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