Pre Session Commentary - May 25 2009

Today domestic markets are likely to open negative as there are mixed cues from the other Asian markets. In the domestic arena the swearing of the cabinet of the UPA government has been over. The cues of stable government could give an incentive for the domestic traders to retain their confidence at this level. However amidst lack of support from other markets there could be volatility creeping in during the day’s trade and a subdued opening could hamper the further movement.

On Friday, the domestic markets closed in green. After a subdued opening amidst weak global cues the domestic benchmark indices started drifting towards southward. However as the European markets bounced back after yesterday’s losses, domestic sentiments started building its way towards the northward. Heavyweights like ICICI Bank and Reliance Industries took the lead to guide rest of the benchmark indices stocks. Further public sector stocks like NMDC and IFCI gained momentum on government’s disinvestment policy. Besides Oil marketing companies also inclined on the back of news of fuel free pricing policy. CG, Bankex, and HC were the gainers of the day with respective gains of 2.90%, 1.80% and 1.77%. Small cap stocks snatched the charm of the day for the second day consecutive day recording a phenomenal gain of 3.19%. We expect the markets to be trading volatile.

The BSE Sensex closed high by 150.61 points at 13,887.15 and NSE Nifty ended with gain of 27.60 points at 4,238.50. BSE Mid Caps and Small Caps closed with phenomenal gains of 81.81 points and 170.63 points at 4,755.68 and 5,513.16 respectively. The BSE Sensex touched intraday high of 13,936.93 and intraday low of 13,611.30.

On Friday, the US stock markets closed in red. There was lack of any news from the corporate or macro economic data which left the traders cautious. Financial stocks were the laggard of the day as they finished the session with a loss of 1.2%. Banks were the primary laggard in the financial sector, diversified banks and regional banks closed with losses of 2.6% and 1.8% respectively. FDIC has further indicated that though the stress tests for banks are over, a further assessment is probable. The FDIC also expects a total loss of $70 billion in the deposit insurance fund over the next five years. The Automakers were under pressure as they tumbled by 2.9% on the back of news that the bond holders refused to take equity stake in General Motors. The company has further received much need support from the United Auto workers union and consequently the company is less likely to be declared bankrupt next week. US light crude oil futures for July closed higher by 0.8% at $61.63 per barrel on the New York Mercantile Exchange.

The Dow Jones Industrial Average (DJIA) declined by 14.81 points to close at 8,277.32. The NASDAQ Composite (RIXF) index fell by 3.24 points to close at 1,692.10 and the S&P 500 (SPX) closed low by 1.33 points at 887.00.

Today major stock markets in Asia are trading mixed. Hang Seng is trading low by 98.13 points at 16,964.39 followed by Shanghai Composite which is low by 31.88 points at 2,565.72. Japan''s Nikkei is up by 51.33 points at 9,277.64, Strait Times is up by 2.25 points at 2,247.52. Seoul Composite is low by 35.57 points at 1,368.18 respectively.

Indian ADRs ended up. In technology sector, Infosys ended higher by 0.22% along with Wipro by 0.83%. Further, Satyam gained 12.50% and Patni Computers advanced by 3.00%. In banking sector ICICI Bank and HDFC Bank increased by 5.32% and 2.22% respectively. In telecommunication sector Tata Communication increased by 1.54% whereas MTNL remained unchanged. Sterlite Industries increased by 1.67%.

The FIIs on Friday stood as net buyers in equity and net sellers in debt. Gross equity purchased stood at Rs 3,896.40 Crore and gross debt purchased stood at Rs 76.40 Crore, while the gross equity sold stood at Rs 3,749.50 Crore and gross debt sold stood at Rs. 409.90 Crore. Therefore, the net investment of equity and debt reported were Rs 146.90 Crore and Rs (333.50) Crore respectively.

On Friday, the partially convertible rupee ended at 47.11/12 per dollar, 0.55 percent stronger than previous close at 47.37/38. Rupee gained strength for the Sixth consecutive day as domestic banks sold dollars on fears of further drifting down due to weakness of dollar across the globe as against other currencies.

On BSE, total number of shares traded were 73.29 Crore and total turnover stood at Rs 7,130.73 Crore. On NSE, total number of shares traded was 130.96 Crore and total turnover was Rs 20,333.46 Crore.

Top traded volumes on NSE Nifty – Unitech with 55572956 shares, Suzlon Energy with 32360482 shares, DLF with 20626714, ICICI Bank with 15076899 shares followed by Idea Cellular with 12540693 shares.

On NSE Future and Options, total number of contracts traded in index futures was 813106 with a total turnover of Rs 16,751.84 Crore. Along with this total number of contracts traded in stock futures were 543166 with a total turnover of Rs 27,613.79 Crore. Total numbers of contracts for index options were 1044561 with a total turnover of Rs 22,224.77 Crore and total numbers of contracts for stock options were 29734 and notional turnover was Rs 1,562.20 Crore.

Today, Nifty would have a support at 4,176 and resistance at 4,286 and BSE Sensex has support at 13,685 and resistance at 13,990.

Market may open lower

Key benchmark indices may open lower tracking weak global cues. While, volatility may remain high ahead of the expiry of May 2009 futures and options (F&O) contract next Thursday, 28 May 2009. However, newly sworn in finance Minister Pranab Mukherjee's affirmation that his administration will take steps to fire growth might support the market.

Asian stock markets fell today after North Korea said it conducted a nuclear test, erasing an earlier rally that was fueled by gains in mining and shipping companies. Key benchmark indices in China, Hong Kong, South Korea and Taiwan fell by between 0.28% to 3%. While key benchmark indices in Japan and Singapore rose by between 0.05% to 1.14%.

The US markets finished lower on Friday 22 May 2009 after a late sell-off erased the day's gains. Stocks struggled to hold on to gains for much of the day but worries about a possible downgrade of the US credit rating left the market on rocky ground.The Dow Jones industrial average slipped 14.81 points, or 0.18%, to 8,277.32. The S&P 500 Index was down 1.33 points, or 0.15%, to 887. The Nasdaq Composite Index dropped 3.24 points, or 0.19%, to 1,692.01.

Manmohan Singh on Friday 22 May 2009 sworn-in as Prime Minister for a second consecutive term. He is only the second Prime Minister after Jawaharlal Nehru to return to power after serving a full five-year term. Among others who took oath as Cabinet Ministers include Pranab Mukherjee, Sharad Pawar, A K Antony, P Chidambaram, Mamata Bannerjee, S M Krishna, Ghulam Nabi Azad, Sushil Kumar Shindae, S Jaipal Reddy, Vayalar Ravi, Meira Kumar, Ambika Soni.

Among the key portfolios, Mr Pranab Mukherjee will head Finance Ministry, Mr P Chidambaram- Home ministry, Mr A K Antony-defence ministry and Mr S M Krishna- foreign & external affairs ministry.

A day after the swearing-in of the UPA government on Friday 22 May 2009, the Union cabinet met under the chairmanship of Prime Minister Manmohan Singh decided to convene the Parliament session from 1 June to 9 June 2009. A meeting with leaders of various parties will be held in the first week of June for finalising the dates of the budget session, home minister P Chidambaram said after the cabinet meeting on Saturday. He said government is quite hopeful of passing the budget by 31 July 2009.

The first two days will be taken up by members of the 15th Lok Sabha taking oath of the rest of the cabinet ministers. The Speaker's election would be held on 3 June 2009 and President Pratibha Patil will address the joint sitting on 4 June, the day Rajya Sabha will also be convened. This will be followed by the debate on motion of thanks. Explaining the process of passing the general budget, Chidambaram said this has to be completed by 31 July 2009 failing which a vote-on-account will have to be approved.

The new finance Minister Pranab Mukherjee suggested that the his administration was all set to take legislative measures to put the economy back on track and will take steps to fire growth.

Meanwhile, after holding out for three days, DMK has finally relented on the power-sharing formula offered by Congress at the Centre, settling for seven ministerial berths, including three Cabinet and four minister of states (MoS) slots. The MoS slots will be filled by S S Palanimanickam, who was a minister in the previous government too, actor-turned-politician D Napoleon, educationist S Jagatratchagan and the relatively unknown MP from Namakkal, S Gandhiselvan, who is one of the three Vanniyar faces of DMK in the 15th Lok Sabha. Ms Kanimozhi, for whom a MoS post was being sought by the party, is believed to have opted out.

DMK on Thursday 21 May 2009 said it has decided not join the the Congress-led UPA government but the party will provide support the government from outside. This after the talks between DMK and Congress over ministerial berth for DMK broke down over berth sharing.

Meanwhile, a comfortable victory for the Congress-led coalition government in election has raised expectations of a strong push for economic reforms by the government. Dr Manmohan Singh who will be sworn in as the Prime Minister today has reported prepared the broad contours of an economic revival plan to be taken up soon after the new government is formed, reports suggest. While recommendations to revive growth and ease the credit squeeze are likely to find a place in the plan, tax proposals are expected to be taken up as budget recommendations.

The telecom ministry has prioritised the much delayed auction of 3G airwaves and WiMAX spectrum. It has also prioritised introduction of a new spectrum policy.

The petroleum ministry has reportedly prepared a draft Cabinet note on a partial decontrol of petrol and diesel prices after which they will be linked to international movements.

The new government is also likely to pursue disinvestment of state-run undertakings, reports suggest. The disinvestment department under the finance ministry is reportedly working on expanding the list of companies in which the government could reduce its stake. Among these are Power Grid Corporation, Cochin Shipyard, and Rashtriya Ispat Nigam.

Financial sector reforms are likely to get a push in the coming days, which were relegated to the back seat due to persistent opposition from the Left parties.

The Congress party-led coalition has the support of 322 lawmakers, Prime Minister-elect Manmohan Singh said on Wednesday, 20 May 2009, giving it a clear majority in a new government. Congress said it has support of 274 members of the 15th Lok Sabha. In addition, the Bahujan Samaj Party, the Samajwadi Party and the Rashtriya Janata Dal sent letters of support for a Manmohan Singh-led government directly to the President, taking the support base to 322. Dr Singh was renominated as Congress Parliamentary Party leader on Tuesday (19 May 2009).

The Congress-led UPA defied predictions of a tight election and was only about 11 seats short of an majority from the 543 seats at stake in the recently concluded Lok Sabha election. Congress' alliance took 261 seats, sweeping aside its nearest rival, the bloc led by the Hindu-nationalist Bharatiya Janata Party (BJP), which won only 159 combined. Congress, which alone won 205 seats, needs a handful of partners to reach the 272 seats needed to take power, and is expected to seek the support of more smaller parties or independents.

SGX Nifty drops further on North Korea Nuke Tests

4,213.0 -37.0

Stock Watch - Reliance Infrastructure, Suzlon Energy

Promoters of wind turbine maker Suzlon Energy will reportedly sell 60 million shares, or 4% stake, in the company through block deals on today, 25 May 2009.

Reliance Infrastructure plans to raise Rs 4300 crore by issuing share warrants to its founders, as it gears up to bid for infrastructure contracts. Reliance Infrastructure will issue 4.29 crore warrants convertible into shares at Rs 1,000 each, a 10.8% discount to Friday's closing price, to founders' Anil Dhirubhai Ambani group. The founders' stake will rise to 48% from 38%.

The board of JSW Steel will meet on 28 May 2009, to consider raising funds through various means, including share sale to institutional buyers.

Parsvnath Developers reportedly plans to raise Rs 2500 crore via a qualified institutional placement of shares. It may also explore the option of issuing convertible and non-convertible debentures to raise a part of this fund.

The board Housing Development & Infrastructrure (HDIL) approved selling shares for up to $600 million to institutional investors. HDIL will seek shareholders approval for the share sale and a share warrants issue to founders on 17 June 2009.

Meanwhile, net profit of HDIL declined 91.26% to Rs 61.92 crore in the quarter ended March 2009 as against Rs 708.24 crore during the previous quarter ended March 2008. Sales declined 63.30% to Rs 357.86 crore in the quarter ended March 2009 as against Rs 975.08 crore during the previous quarter ended March 2008.

The new Congress-led coalition government reportedly plans to cap profits of crude oil producers such as Oil & Natural Gas Corporation, Reliance Industries and Cairn India as part of a transparent and sustainable subsidy-sharing system for the sector.

The commerce ministry has reportedly proposed a $5 billion trade finance facility, expected to roll out in the first 100 days of the new governments's rule, to augment resources for the export sector.

The new government will reportedly infuse about Rs 16000 crore fresh capital into 16 public sector banks in its first budget expected to be presented in July 2009.

North Korea conducts nuclear test

North Korea said it successfully conducted a nuclear test on Monday, a move certain to further isolate the impoverished state which argues it has no choice but to build an atomic arsenal to protect itself in a hostile world.

"(North Korea) successfully conducted one more underground nuclear test on May 25 as part of the measures to bolster up its nuclear deterrent for self-defense in every way," the North's official KCNA news agency said.

More here

Daily News Roundup - May 25 2009

Areva T&D has won an order worth Rs1.1bn from the West Bengal State Electricity Transmission Company.(BL)

Crompton Greaves eyes overseas acquisition.(BL)

Cairn India will begin commercial production of oil from the Rajasthan fields by mid-2009 for which sales talks are going on.(BL)

JSL has shelved its US$1.2bn JV project with Indonesia’s PT Antam TBK in the southeast Asian country.(TOI)

Bharti Airtel launches low-cost PC.(FE)

Welspun Power and Steel, which had signed the agreement to buy Vikram Ispat 11 months ago completes the takeover of the sponge iron business from Grasim Industries.(TOI)

Satyam has 10,000 excess staff, says Tech Mahindra.(TOI)

HDIL to raise $600m via QIPs.(FE)

Tata Group to invest Rs2k-cr in logistics parks.(FE)

Reliance Capital to offload 26% in its life insurance subsidiary.(FE)

Essar Energy plans to raise a debt of Rs4bn to fund its project to produce gas found on coal beds in its Raniganj block in West Bengal. (BS)

Parsvnath to raise up to Rs25bn through issuance of securities, including Qualified Institutional Placements. (BS)

Era Infra bagged a Rs810mn contract from the Central Public Works Department for development of flats in New Delhi. (BS)

Matrix Laboratories has assigned its right to purchase 1% equity in Astrix Laboratories to Mylan Luxembourg, another subsidiary of Mylan. (BS)

Reliance Retail to add 1mn sq. ft of space; will invest Rs5bn.(Mint)

Ranbaxy Laboratories Chairman, CEO and MD Malvinder Mohan Singh stepped down, within a year of its acquisition by Japanese giant Daiichi Sankyo.(DNA)

BHEL cancels all its overseas acquisitions plans.(Mint)

Tata Housing Development Company has partnered with Micro Housing Finance Corporation to provide easy housing finance to the lower income group for its housing initiative. (BS)

Reliance Infrastructure to raise up to Rs43bn through issuance of 42.9mn equity shares to its promoters. (BS)

I-T authorities have slapped a tax liability of Rs3-4bn on DLF for understatement of income and fund diversion by the company. (BS)

Unitech sells more than a quarter of its launched projects in the first two months of the financial year. (BS)

Aurobindo Pharma expands its partnership with Pfizer Inc for supply agreements of solid dosage and sterile products for a number of emerging markets. (BS)

IOC plans to set up 40 retail outlets and 25 Kisan Seva Kendras in Orissa in 2009-10. (BS)

ONGC approaches the Directorate General of Hydrocarbons seeking permission to retain the Ambe field block, located off the Gujarat coast. (BS)

Dabur to foray into premium skin care. (ET)

ONGC to help fix price of Cairn’s crude from Barmer oilfield. (ET)

Reliance Industries and Essar Oil may not buy crude oil that Cairn India will start pumping from Rajasthan in the next few weeks. (ET)

Jharkhand government grants a prospecting licence to Tata Steel for the Ankua iron ore mines. (ET)

Apollo Hospitals received a notice from the Mumbai Enforcement Directorate seeking explanation on the end-use of the GDR issue. (ET)

Sobha Developers to hive off non-realty businesses.(DNA)

CESC to invest Rs80bn in two 1000MW plants.(DNA)

GMR Infrastructure plans to raise US$1bn to fund the next phase of its growth.(DNA)

Foreign exchange reserves fell by US$1.7bn to US$254bn for the week ended May 15.(BL)

Government announce portfolios for six of its Council of Ministers; Pranab Mukherjee retains finance portfolio.(BL)

RBI Governor has cautioned the new government that another fiscal stimulus package would exert pressure on the rising fiscal deficit.(BL)

DoT and the Ministry of Defence have finally signed the memorandum of understanding for vacating spectrum.(BL)

Government may extend duty-free white sugar import till Oct’ 09.(FE)

Petroleum ministry proposes a reduction in the customs duty on denatured alcohol and molasses. (BS)

Commerce Ministry has proposed a US$5bn trade finance facility to augment resources for the export sector.(BL)

Commerce ministry officials recommend removing the export ban on all agricultural commodities as surplus production keeps domestic prices under check. (BS)

Government to consider deregulating petrol and diesel prices, as also increasing rates of natural gas sold by state firms. (BS)

Finance ministry plans softening of FBT.(FE)

The outstanding credit-deposit ratio of scheduled commercial banks has dropped below 70%-the first time in almost three years.(BL)

The new UPA government plans to cap profits of crude oil producers such as ONGC, Oil India, RIL and Cairn India. (ET)

Civil aviation ministry has revived a proposal to allow foreign carriers to invest in domestic airlines by putting it on its new list of reforms. (ET)

Jitters at start!

The world has achieved brilliance without wisdom, power without conscience. Ours is a world of nuclear giants and ethical infants.

There could be some jitters at the outset, with North Korea reportedly having conducted a nuclear test. The Kospi in Seoul tumbled in the wake of the news, but has since recovered. Other Asian stock indices, barring the Nikkei are also mostly down. We expect a flat to slightly negative opening and a sideways day of trading. US markets are shut today for Memorial Day.

The fact that the euphoria was overdone leaves scope for some more softening. But, there is no need to panic, as the downside appears to be limited. Overall, the intermediate trend remains up and in the medium term too things should improve substantially. The return of the UPA with a much better numerical strength raises hope of better times ahead for the Indian economy. The fact that the stand-off between Congress and the DMK has been resolved also augers well.

Investors should look for more concrete signs of recovery. If no such signs emerge, the market could fall. But if the outlook brightens up further, a painful selloff may be avoided. Volatility might pick up ahead of Thursday's F&O expiry. Market players will also have to keep an eye on the GDP numbers that will be announced on Friday. Developments in the global markets and trend in FII flows continue to have a bearing on the market sentiment.

Key Results Today: Dishman Pharma, Jet Airways, Karnataka Bank, Omnitech InfoSolutions and REC.

US stocks slumped on Friday, ending the week little changed, as investors went into a holiday weekend with lingering concerns about the economy.

The Dow Jones Industrial Average lost 15 points, or 0.18%, to close at 8277.3. It was the Dow's fourth straight loss, but it still managed to end the week with a slight gain. The S&P 500 index slipped 0.15% to 887 but was up 0.5% for the week. The Nasdaq Composite index slid about 0.2%.

Stocks seesawed in early trading before heading higher in the afternoon as concerns about the US credit rating abated. But the market sold off near the closing bell. Analysts said that the market lacked conviction because many investors were absent ahead of the Memorial Day holiday on Monday.

Shares of financial services companies were under pressure after BankUnited FSB went bankrupt on Thursday, becoming the largest bank failure of the year.

Sears Holdings, the parent company of retailers Sears and Kmart, reported earnings that beat analysts' expectations and amended its credit facility to provide additional funding. Shares rose 11%.

Gap said that it earned 31 cents per share in the first quarter, down from 34 cents a year earlier, but slightly better than the 30-cent profit analysts had expected. Shares rose nearly 3%.

Another apparel retailer, Aeropostale reported better-than-expected first-quarter results and issued an upbeat profit forecast. The stock gained about 4%.

The US government said on Thursday that it invested $7.5bn in GMAC, the main source of financing for General Motors (GM) customers, and the main lender for Chrysler.

Treasury prices fell, raising the yield on the benchmark 10-year note to 3.46% from 3.36% on Thursday. The 10-year yield has not been this high since late December.

In currency trading, the dollar continued to fall against major international currencies. The euro rose 0.95% against the buck to $1.4022.

Oil for July delivery rose 62 cents to settle at $61.67 a barrel.

COMEX gold for June delivery rose $7.70 to settle at $958.90 an ounce.

A key home price index, durable goods orders and a revision of first-quarter GDP are all on tap for next week. Additionally, GM will be in focus. GM bondholders face a Tuesday deadline to make concessions under the troubled automaker's restructuring plans. GM could face bankruptcy if it fails to make the turnaround required by the government by the end of the month.

The market will also have to contend with lingering concerns about the credit ratings of some major economies. Last week, ratings agency Standard & Poor's (S&P) lowered its outlook for the United Kingdom (UK).

European stocks fell on Friday as Swiss investors returned from a holiday in a downbeat mood and drugmakers lost ground. The pan-European Dow Jones Stoxx 600 index declined 0.7% to 206.23, in what could be the second straight session of losses for the index.

The Swiss SMI index fell 1.9% to 5,401.59 as investors returned from the Ascension Day holiday to play catch-up with the rest of the European equity market which fell sharply on Thursday after S&P cut the UK's credit outlook.

Germany's DAX 30 index declined 0.4% to 4,881.71, while the French CAC-40 index slipped 0.3% to 3,208.03 and the UK's FTSE 100 index traded flat at 4,343.77.

Indian market ended with smart gains on Friday after declining for two straight trading sessions. Bulls’ partially recovered previous day’s losses as few hours from now Dr. Manmohan Singh will create 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. Dr. Singh will be sworn in by President Pratibha Patil around 6:30 p.m. (1200 GMT) at the Rashtrapati Bhavan.

The Capital Goods, Banking and Pharma stocks were in demand. The Mid-Cap and the Small-Cap stocks continued their run; however saw offloading in some pockets.

Finally, the BSE Sensex advanced 150 points or 1.1% to close at 13,887 after touching a high of 13,937 and a low of 13,611. The index had opened at 13,663 against the previous close of 13,736. The NSE Nifty gained 22 points or 0.5% to shut shop at 4,233.

Among the BSE Sectoral indices BSE Capital Goods index was the top gainer adding 2.7%, followed by the BSE Pharma index up 2%, BSE Bankex index up 1.7%, BSE Oil & Gas index up 1.2% and BSE IT index up 1%.

On the other hand, the BSE Consumer Durable index was the top loser down 1.5% and BSE Auto index down 1%.

In the Sensex, L&T, ICICI Bank, Reliance Industries, NTPC, Sun Pharma, Infosys, SBI, HDFC and Tata Power ended in the green today. However, among the major losers were Sterlite, M&M, ONGC, Tata Motors, ACC, DLF and Hindalco.

Outside the frontline indices, the top gainers included Religare, Fortis Healthcare, Tech Mahindra, Praj Industries, SCI, Moser Baer, Mphasis, IFCI and Financial Tech.

Among the big losers in the broader market were Federal Bank, Tata Chemicals, Cummins India, Gail, Titan, Sun TV and Ultratech Cement.

North Korea Nuclear Test - SGX Nifty drops

4,230.0 -20.0

Tata Tea

We recommend a sell in Tata Tea stock from a short-term trading perspective. It is apparent from the charts of Tata Tea that it has been trending up since November 2008 low of Rs 430. However, the stock encountered significant resistance around Rs 750 recently and reversed direction. This reversal was triggered by a negative divergence displayed in the daily relative strength index (RSI). On May 19, the stock tumbled 5 per cent losing its bullish momentum. We notice formation of bearish engulfing candlestick pattern both in daily and weekly charts that indicates short-term reversal. The price rate of change (ROC) indicator has entered the negative territory, signalling selling interest. The daily and weekly RSI had entered the neutral region from the bullish zone. Our short-term outlook on this stock is bearish. We expect its decline to prolong until it hits our price target of Rs 620 in the forthcoming trading sessions. Traders with short-term trading perspective can sell the stock while maintaining a stop-loss at Rs 721.

via BL

Weekly Watch - May 25 2009

Weekly Watch - May 25 2009

US stocks end almost flat

Rally in the earlier part of the week fizzles out at the end

US stocks ended almost flat for the week that ended on Friday, 22 May, 2009. Though stocks had made a strong start during the beginning of the week, gains fizzled out in the later part of the week. The economic reports that checked in were not so exciting. But the earning reports from a couple of important home improvement retailers tried to give market a strong boost. Six of the ten sectors advanced during the week led by the materials sector. The telecom sector was the sole laggard.

The Dow Jones Industrial Average gained 8.68 points (0.1%) for the week to end at 8,277. Tech - heavy Nasdaq gained 11.87 (0.7%) to end at 1,692.14. S&P 500 gained 4.12 (0.5%) to end at 887.88.

The indices rallied on Monday, 18 May, after Bank of America rallied after being added to Goldman Sachs' Conviction Buy List. The Indian stock market also acted as a good booster after India's BSE Sensex struck the upper circuit twice on that day following an unexpected thumping victory by the Congress led UPA and its alliances.

Among earning news for the week, home improvement retailer, Lowe's announced better-than-expected earnings and upbeat forecast. Lowe's report much less than expected drop in first quarter profit. This also boosted market sentiments on Monday.

But grim economic data did not allow the rally to continue for long. The housing report showed that housing starts and building permits fell to record laws. Starts fell -12.8% from March to an annualized rate of 458,000 units (consensus 520,000) while permits dropped -3.3% to an annualized rate of 494,000 (consensus 530,000).

Also, initial unemployment claims for the week ended 16 May totaled 631,000 (consensus 625,000), which was down from an upwardly revised reading of 643,000 (from 637,000) in the prior week. Continuing claims jumped by 75,000 to a record 6.662 million, which brought the four-week moving average for this series to 6.48 million from 6.35 million. The report reflected a strained U.S. labor market.

On Wednesday, 20 May, the Fed released the minutes from the April FOMC meeting, which didn't bring much in terms of surprises. The Fed lowered its real GDP projections for 2009, 2010, and 2011. The Fed specified that the committee members believe the near-term economic outlook has weakened relative to the projections made in January. However, a recovery in sales and production is still expected to begin in the second half of this year.

Finally, on Friday, 22 May, 2009, stocks ended the day with modest losses. The Dow Jones Industrial Average ended lower by 15 points at 8,277.64. The Nasdaq Composite Index, ended lower by 3 points at 1,692. S&P 500 ended lower by 1 point at 887. It was a low volume session trading in positive territory, but some late selling pressure led stocks to close with a modest loss.

Banks were the primary drag on the financial sector on Friday. Though banks have been looking to raise capital in the wake of the government's bank stress tests, an official from the FDIC indicated during the week that additional assessments on banks are probable. There were also reports that the FDIC expects losses in its deposit insurance fund to total $70 billion during the next five years.

Among other earning reports that checked in during the week, it was mainly retailers that dominated. Target, Home Depot, Sears and Gap – all beat estimates. Among non – retailers, Hewlett-Packard reported in-line earnings, while Deere beat but provided downside guidance.

Crude oil prices ended substantially higher on Friday, 22 May, 2009 after the dollar dropped to its lowest level of the year. Credit rating concerns over US increased the pressure on dollar after Standard & Poor's Ratings Service warned Britain that it may lose its triple-A rating. Prices also rose as energy department's weekly inventory report showed earlier during the week that there was more than expected drop in crude inventories for last week. On Friday, crude-oil futures for light sweet crude for June delivery closed at $61.67/barrel (higher by $0.62 or 1%) on the For the week, crude ended higher by 8.2%.

In the currency market on Friday, the U.S. dollar index, fell 0.9%. The greenback fell to the lowest level this year against the euro as worries increased that the U.S. could lose its triple-A credit rating.

The U.S. stock and bond markets are closed on Monday, 25 May, in observance of Memorial Day.

Bullion metals add more glaze

Prices rise as dollar drops further on credit rating concerns

Precious metals ended higher on Friday, 22 May, 2009 at Comex. The subdued dollar increased the appeal of precious metals as a safe haven for alternative investment thereby taking them higher. The dollar fell further on US's credit rating worries.

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 June delivery gained $7.7 (0.8%) to close at $958.9 an ounce on the New York Mercantile Exchange. Earlier during the day, it rose to a high of $963.1. For the week, gold ended higher by 3%. Year to date, gold prices are higher by 10.3%.

For the month of April, gold had lost 3.7%, the second consecutive monthly drop. For the month of March, gold fell 2.1%, down for the first month in five. But the metal gained 4.3% in the first quarter. Before March, for the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (8%) since then.

On Friday, Comex silver futures for July delivery gained 25 cents (1.7%) at $14.695 an ounce. Year to date, silver has climbed 29% this year. For 2008, silver had lost 24%.

In the currency market on Friday, the U.S. dollar index, fell 0.9%. The greenback fell to the lowest level this year against the euro as worries increased that the U.S. could lose its triple-A credit rating.

Earlier during the week, the World Gold Council reported that gold investment demand in the first quarter more than tripled from a year ago to a record level as investors piled into gold exchange-traded funds to hedge against the global economic downturn.

The report detailed that investment demand totaled 595.9 metric tons in the first three months of the year, up from 171.3 metric tons a year ago. Total gold demand, however, marked a more modest increase, as jewelry and industrial consumption declined. Overall, gold consumption hit 1,015.5 metric tons in the first quarter, up 38% from a year ago.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

Crude continues to go up

Prices end week more than 8% higher

Crude oil prices ended substantially higher on Friday, 22 May, 2009 after the dollar dropped to its lowest level of the year. Credit rating concerns over US increased the pressure on dollar after Standard & Poor's Ratings Service warned Britain that it may lose its triple-A rating. Prices also rose as energy department's weekly inventory report showed earlier during the week that there was more than expected drop in crude inventories for last week.

On Friday, crude-oil futures for light sweet crude for June delivery closed at $61.67/barrel (higher by $0.62 or 1%) on the For the week, crude ended higher by 8.2%.

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 57% since then. Year to date, in 2009, crude prices are higher by 28.6%. On a yearly basis, crude prices are lower by 51%.

In the currency market on Friday, the U.S. dollar index, fell 0.9%. The greenback fell to the lowest level this year against the euro as worries increased that the U.S. could lose its triple-A credit rating.

EIA reported on Wednesday, 20 May, that crude inventories decreased by 2.1 million barrels in the week ended 15 May, 2009. Market was expecting a decline of 1.5 million barrels. Despite the decline, crude inventories, at 368.5 million barrels, were still above the upper boundary of the average range for this time of year. Refineries, meanwhile, operated at 81.8% of their operable capacity last week, slightly higher than a week ago.

Lower refinery production pushed gasoline inventories down by 4.3 million barrels to 204 million barrels, falling below the lower limit of the average range. The EIA also reported distillate stockpiles rose by 600,000 barrels. Motor gasoline demand had averaged about 9.1 million barrels per day over the past four weeks, down by 1.2% from the same period last year. Demand for distillate fuels, which include heating oil and diesel, fell 12%, and jet fuel consumption dropped 9%.

Last week, the International Energy Agency reported 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. This perhaps kept further rise in crude prices from check.

Also at the Nymex on Friday, June-reformulated gasoline rose 4.11 cents, or 2.3%, to $1.8408 a barrel, and June heating oil gained slightly to $1.538 a gallon.

Natural gas for June delivery fell 8.8 cents, or 2.4%, to $3.515 per million British thermal units.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

SGX Nifty Live Updat - May 25 2009

4,285.0 +35.0

Satyam may sack 7,500-8,000 non-billable staff from June

Satyam Computer is likely to sack most of its non-billable staff of up to 8,000 working in marketing, HR and administration wings

A Satyam official said there is no doubt that there will be large-scale sacking mostly of the support and non-billable staff (other than hardcore software engineers) once Tech Mahindra (the new owner of the company) directors come on board from June 1.

The surplus staff is about 10,000-12,000 and the 'least painful' ways of sacking is asking the bench, non-billable and support staff to go.

The company spokesperson, when contacted, said that at the moment these are mere speculations.

Sources also said the outsourcer may opt for "virtual pool" sacking method whereby the company would ask some of the staff to take 75 per cent of its salary and take one-year off and look for a job elsewhere with the fragile assurance that they would be recalled, if required.

Tech Mahindra CEO Vineet Nayyar, who will also come on board of Satyam from June after it acquired fraud hit company last month, had said last week that Satyam has about 10,000 surplus staff and "we are looking at the least painful ways to tackle the problem."

Satyam has already called back most of its onsite staff to avoid further costs and most of them may be asked to quit, said the official.

About 3,000 people are on the bench and there is a surplus manpower even in the R&D and engineering units, sources said.


Dwindling revenues are the primary reasons for Tech Mahindra to opt for such a cost-cutting measure, Tech Mahindra official said.

Kiran Karnik, chairman of Government-appointed board of Satyam, said revenues are falling and cost-cutting measures have to be taken up. But he had ruled out lay-offs.


via ET