India Equity Analysis, Reports, Recommendations, Stock Tips and more!
Search Now
Recommendations
Tuesday, June 02, 2009
Precious metals continue to shine
Gold and silver continue to glitter on encouraging economic reports
Precious metals kicked off June 2009 on a strong note. Bullion metals ended higher once again on Monday, 01 June, 2009 as the dollar continued to sink further. Prices also ended higher as encouraging economic report increased inflation concerns thereby increasing the appeal of precious metals.
Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.
On Monday, Comex Gold for June delivery rose $4.75 (0.5%) to close at $983.55 an ounce on the New York Mercantile Exchange. Last week, gold ended higher by 2%. Year to date, gold prices are higher by 13%.
Gold had ended the month of May higher by 9.8%. It was the highest monthly gain registered by gold in six months. Before this, gold had suffered losses in prior two months. For the month of April and March, 2009, gold had lost 3.7% and 2.1% respectively. But the metal gained 4.3% in the first quarter of this year.
On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (5.4%) since then.
On Monday, Comex silver futures for July delivery rose 27 cents (0.9%) at $15.88 an ounce. Last week, silver ended higher by 6.2%. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades. Year to date, silver has climbed 38% this year. For 2008, silver had lost 24%.
The Commerce Department reported today that U.S., the personal-savings rate jumped to a 14-year high of 5.7% in April as after-tax incomes were boosted by provisions of the economic stimulus plan.
Also, on the economic front, China's manufacturing PMI came in at 53.1 in May, slightly below April's 53.5 but stayed above 50 for the third consecutive month, suggesting that the manufacturing sector is maintaining its modest pace of expansion.
In the currency market on Monday, the U.S. Dollar Index, a gauge of the greenback against six major currencies, slid as much as 0.7%, following a 6.1% drop in May. The index lost 1% in April and 2.9% in March.
In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.
Last year, the weakening dollar and higher global demand for raw materials had led to records for commodities including gold. Gold reached a record in March 2008 as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the last move, the Federal Reserve has cuts its target bank lending rate to 0.25% from 5.25% in September, 2007. The Fed did it in nine steps.
Prior to 2008, gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
At the MCX, gold prices for August delivery closed lower by Rs 76 (0.5%) at Rs 14,808 per 10 grams. Prices rose to a high of Rs 14,970 per 10 grams and fell to a low of Rs 14,770 per 10 grams during the day's trading.
At the MCX, silver prices for July delivery closed Rs 147 (0.6%) lower at Rs 24,048/Kg. Prices opened at Rs 24,209/kg and fell to a low of Rs 23,857/Kg during the day's trading.
Crude take a giant leap
Prices rise sharply on hopes of quick economic recovery
After an astounding finish for May, 2009, crude prices kicked off June 2009 on a sharp note with oil prices rising for the sixth consecutive session on Monday, 01 June, 2009. Prices rose as China's economy continued to witness moderate expansion and also as the dollar slid further.
On Monday, crude-oil futures for light sweet crude for June delivery closed at $68.58/barrel (higher by $2.27 or 3.4%). Last week, crude ended higher by 7.5%.
Crude ended the month of May, 2009, higher by 30%. This was the largest month gain for crude in almost a decade. Prior to May, crude ended April and March, 2009 higher by 2.9% and 10.9% respectively. It rallied 11.3% in the first quarter. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 52% since then. Year to date, in 2009, crude prices are higher by 38.3%.
The Commerce Department reported today that U.S., the personal-savings rate jumped to a 14-year high of 5.7% in April as after-tax incomes were boosted by provisions of the economic stimulus plan.
Also, on the economic front, China's manufacturing PMI came in at 53.1 in May, slightly below April's 53.5 but stayed above 50 for the third consecutive month, suggesting that the manufacturing sector is maintaining its modest pace of expansion.
In the currency market on Monday, the U.S. Dollar Index, a gauge of the greenback against six major currencies, slid as much as 0.7%, following a 6.1% drop in May. The index lost 1% in April and 2.9% in March.
OPEC, in its latest meeting, decided to keep production quotas unchanged, in line with expectations. The cartel, which accounts for about one-third of the world's oil production, decided to leave production levels unchanged at today's meeting in Vienna on Thursday, 28 May, 2009.
Also at the Nymex on Monday, July reformulated gasoline gained 2.9 cents, or 1.5%, to $1.9243 a gallon and July heating oil futures rose 9.89 cents, or 5.9%, to $1.7765 a gallon.
Natural gas for July delivery surged 41.4 cents, or 10.8%, to $4.249 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 3,190/barrel, higher by Rs 66 (2.1%) against previous day's close. Natural gas for June delivery closed at Rs 192.4/mmbtu, higher by Rs 7.6/mmbtu (4.1%).
Ambuja Cements
We recommend a buy in Ambuja Cements from a short-term perspective. It is evident from the charts of Ambuja Cements that it has been on an intermediate-term up-trend, forming higher peaks and higher bottoms since its October 2007 low of Rs 43. This low is also its 52-week low. In early April the stock emphatically penetrated its 200-day moving average and is currently trading way above this average. On May 20, the stock surged 7 per cent with good volume breaking through a long-term resistance level of Rs 90. Besides, the stock reinforced the up-trend by gaining 7 per cent on June 1. We observe that there is an increase in volumes over the past three trading sessions. Both daily and weekly relative strength indices (RSI) are featuring in the bullish zone. The weekly moving average convergence and divergence has entered the positive territory. The intermediate-term up-trendline is intact. Though the stock is facing minor resistance at Rs 100, we are bullish on the stock and expect it to surpass this resistance in the near future. Traders with short-term trading perspective can buy the stock while maintaining a stop-loss at Rs 93 and with target of Rs 109.
via BL
Subscribe to:
Posts (Atom)