India Equity Analysis, Reports, Recommendations, Stock Tips and more!
Search Now
Recommendations
Sunday, May 24, 2009
Inflation inches higher
The Wholesale Price Index (WPI) for the week ended May 9 rose by 0.2% to 232.0 from 231.6 for the previous week. The annual inflation, calculated on a point to point basis stood at 0.61% during the week under review compared to 0.48% in the week ended May 2. Inflation was at 8.57% during the comparable week of the previous year. The Government also revised inflation rate for the week ended March 14 to 0.71% from a preliminary forecast of 0.27%.
The index for Primary Articles rose by 0.5% to 256.0 from 254.7 in the previous week. The index for Manufactured Products rose by 0.1% to 203.3 from 203.0 in the previous week. The index for Food Products group rose by 0.4% to 231.4 and the index for Textiles group rose by 0.6% to 141.2 from 140.4. On the other hand, the index for Fuel, Power, Lights & Lubricants remained unchanged at its previous week's level of 323.7 and the index for Paper & Paper Products group declined by 0.2%.
Rupee rises 4.9% during current week
Rupee completed the biggest weekly gain in 13 years on hopes that Prime Minister Manmohan Singh, will revive efforts to sell public sector companies to attract foreign investment. The rupee advanced 4.9% this week, the most since March 1996, to close at 47.125 per dollar. The rally took gains this month to 6.5%, the best performance among the 10 most-active Asian currencies. The currency climbed to a 5 months high as Sensex this week rallied the most since 1992. The Government will sell stakes in companies as promised by the Congress party in its election manifesto, former finance minister Palaniappan Chidambaram, quoted as saying on May 18. The new administration, to be sworn in today, may start by resuming share sale plans for electricity producer NHPC Ltd., explorer Oil India Ltd. and fuel retailer Hindustan Petroleum Corp., according to Mumbai-based brokerage Religare Capital Markets Ltd. FIIs increased share purchases than they sold by US$1.1bn on May 19, the most since June 2007, taking the net this month to US$3bn. Sensex jumped 14.1% this week. India’s "modest" dependence on exports will help the economy weather the global recession and recover this year, reducing the need for further stimulus, central bank Governor Duvvuri Subbarao said today. Asia’s third-biggest economy expanded at the slowest pace since 2003 in the quarter ended Dec. 31. Offshore contracts indicate that the rupee will trade at 47.22 to the dollar in a month, compared with expectations for a rate of 49.70 at the end of last week. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than the rupee.
Manmohan Singh creates history
Dr. Manmohan Singh created history by becoming only the second Prime Minister of India to be sworn in for a second successive five-year term after completing the first one. In doing so, he emulated none other than Jawaharlal Nehru, independent India's first ever Prime Minister. Nehru led the Congress to victory in the 1951, 1957 and 1962 Lok Sabha elections.
Congress veteran Pranab Mukherjee may be named the new Finance Minister, a post he held in the 1980s. Kapil Sibal has been tipped by some media reports to be External Affairs Minister, while P. Chidambaram will likely retain the Home portfolio. The Congress party, which heads the UPA coalition with 206 Lok Sabha seats, will also retain some of the other key ministerial portfolios. Only 15-20 ministers were sworn-in along with Dr. Singh. All the ministers will hold a cabinet rank, although, their portfolios were not announced.
Dr. Singh took oath of office as the country's prime minister along with 19 cabinet members, the Prime Minister's Office (PMO) said in a statement. Rahul Gandhi was not inducted in the new Union Cabinet. Those who took the oath as cabinet ministers included Mukherjee and Chidambaram. The remaining cabinet members were Sharad Pawar, A.K. Antony, Mamata Banerjee, S.M. Krishna, Ghulam Nabi Azad, Sushil Kumar Shinde, M. Veerappa Moily, S. Jaipal Reddy, Kamal Nath, Vayalar Ravi, Meira Kumar, Murli Deora, Kapil Sibal, Ambika Soni, B.K. Handique, Anand Sharma and C.P. Joshi.
"This will be followed in the next few days by an expansion of the council of ministers, including other cabinet ministers, ministers of state with independent charge as well other ministers of state," the PMO said. "This expansion will give due representation to allied parties."
Meanwhile, the distribution of ministerial portfolios snowballed into a controversy, with the DMK refusing to accept the Congress formula and deciding to stay out of the administration. The DMK said it would offer its 18 MPs only as outside support to the coalition. DMK supremo and Tamil Nadu chief minister M Karunanidhi and his son and MP from Madurai, M Azhagiri, left for Chennai, probably in protest against Congress turning down its demands. Senior Congress leader Ghulam Nabi Azad was likely to visit Chennai to hold talks with Karunanidhi in a bid to break the deadlock.
But, notwithstanding the acrimony over ministerial berths, all DMK MPs attended the swearing-in ceremony. The Congress party claimed the support of 274 lawmakers before the DMK exit, two more than needed for a majority in the Lok Sabha. "We have support of 322 parliamentarians and we are not worried about falling short at all," Janardhan Dwivedi, a senior Congress leader, said.
Weekly Newsletter - May 24 2009
After a freezing start the market did melt some of its excesses. The coming week will see cabinet with many old faces with hopefully renewed vigour as the UPA-led government moves in office for the second term. Besides the global cues, the market will pay close attention to the GDP growth number which is expected to be around the 5% mark. The monsoon forecast will also have some temporary bearing on the sentiment.
The mid-cap and small cap counters are seeing a flurry of activity and retail as well as institution interest is building in. Stock-specific activity will continue. More than getting into the market, getting out at profits could be the near term goal. For the long term investors, making money in the short-term will do no harm.
Poll results propel Dalal Street into new orbit
If the outcome of the Lok Sabha elections was unbelievable and stunning, then what happened on the Indian bourses was even better. May 18th was a momentous occasion in the history of India, both in terms of politics and capital markets. While the decisive verdict that the Indian voters delivered in the just concluded Lok Sabha polls was the best that Indian parliamentary democracy has got in a long, long time, then the reaction of the stock market was unimaginable. It may not be repeated ever again. For the first time ever, the key Indian stock indices hit an upper circuit - not once, but twice. Trading was first halted for a couple of hours within just a few seconds of opening bell, when the Nifty soared by over 17% upper circuit. When trading resumed at 11:55 am, it took just a few seconds for the market to freeze again, this time for the rest of the day. There was some buzz that the largest life insurance company may step in with basket selling, which could have kept the trading going. However, that was not to be.
The BSE Sensex rocketed by 2,110 points or 17.24 % to 14,284 while the NSE Nifty shot up 651 points or 17.35% to 4,323. However, neither the brokers nor the exchanges benefited from the frenzied buying. Total trade turnover in the market was Rs3,103 crores Cash + F&O. Only 842 stocks were traded on the BSE while 202 stocks witnessed action on the NSE.
PSU stocks were on a roll on hopes that the new Government may revive the disinvestment programme given that there is no Left to put up a stiff resistance to any such proposals. The Government badly needs to undertake some sort of disinvestment and raise money to partially offset the ballooning fiscal deficit, which is likely to cross double digits for a second year in a row in FY10. Shares of Neyveli Lignite, SCI, MMTC and PFC were among the prominent gainers. Infrastructure shares too jumped on expectations that the mush stronger UPA will boost spending on roads, bridges, power plants and metro rails to sustain a high growth rate in the coming years. L&T, JP Associates, BHEL, Gammon India, Punj Lloyd, GMR Infra and IVRCL Infra were some of the stocks that rose. Shares of insurance companies rallied on hope that the Government may hike the FDI limit in the sector, from the current 26% to 74%.
However, the market gave up some of the Monday's gains in the following days as traders booked profits amid persistent concern over the health of the Indian and global economy. Mid-Cap and Small-Cap shares, a space that missed out the magical gains of May 18, surged in a catch-up rally. Meanwhile, key global stock markets weakened amid renewed bad news about developed economies and the US housing market. While Japan reported a record drop in its GDP for the January-March quarter, the Federal Reserve said that it will take 5-6 years for the US economy to fully recover from the current recession. US housing starts and building permits hit record lows in April. S&P cut UK's AAA rating outlook to negative from stable.
Saturday, May 23, 2009
Sensex rises most in a week in 17 years
Manmohan Singh was sworn in as the prime minister for a second term, along with his new cabinet and the outlook for the market would depend on how quickly they are able to push asset sales in state firms, ease rules for foreign investment and boost sagging growth.
Some analysts believe the market is overbought after it leapt more than 17 per cent at the start of the week following the unexpectedly easy election win. The BSE index has risen 73 per cent from a 2009 low in early March and has climbed for 11 weeks in a row in the longest winning streak in four years.
"Valuations have become high, but people are buying because they may be left out otherwise," D.D. Sharma, vice president at Anand Rathi Securities, said.
The BSE index ended up 150.61 points at 13,887.15, with gainers and losers evenly matched. Trading was choppy with the index falling 0.9 per cent at one stage.
Brokerages and investment houses polled by Reuters expected the benchmark to reach 15,750 by the end of December, gaining another 13 per cent.
"There are so many desperate buyers because nobody is betting on the market going down. You will see people buying at every dip from now," Sharma said.
Energy giant Reliance Industries, private-sector lender ICICI Bank and infrastructure firm Larsen & Toubro led the market higher after a lower start.
Reliance, which has the biggest weight in the main index, rose 3.1 per cent to 2,183.10 rupees, while private-sector lender ICICI gained 4.5 per cent to 702.80 rupees.
Larsen & Toubro climbed 4.7 per cent to 1,301.40 rupees.
The market has largely been powered by foreign funds, which have pumped about $5 billion into the market in the past two months, including more than $1 billion in this week.
Outsourcers Tata Consultancy and Wipro, which get most of their revenue from overseas, fell about 2 per cent as the rupee climbed past 47 to a dollar to its highest since December.
The rupee is set to extend its gains in the remainder of 2009 after rising sharply this week following the ruling Congress-led coalition's decisive victory in the elections, a Reuters poll showed.
Asian shares eased after a drop on Wall Street overnight on fears the United States, with its increasing budget deficit and weakened economy could lose its AAA rating.
Japan's Nikkei dropped 0.4 per cent, while MSCI's measure of other Asian markets edged down 0.02 per cent.
European shares were higher after falling more than 2 per cent in the previous session. The FTSEurofirst 300 index of top European shares was up 0.4 per cent at 1117 GMT.
Turnover declines
RIL, Reliance Capital May 2009 futures at premium
Nifty May 2009 futures were at 4248, at a premium of 9.50 points over the spot closing of 4238.50. Turnover in NSE's futures & options (F&O) segment declined to Rs 68152.6 crore from Rs 71702.09 crore on Thursday, 21 May 2009.
Reliance Industries (RIL) May 2009 futures were at a premium at Rs 2191.30 compared to the spot closing of Rs 2185.75.
Reliance Capital May 2009 futures were at premium at Rs 905.10 compared to the spot closing of Rs 903.30.
ICICI Bank May 2009 futures were at a discount at Rs 701.90 compared to the spot closing of Rs 702.65.
In the cash market, the S&P CNX Nifty rose 27.60 points or 0.66% at 4238.50.
Subscribe to:
Posts (Atom)