Market Strategy - Oct 1 2009
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Thursday, October 01, 2009
Pre Session Commentary - Oct 1 2009
Today domestic markets are likely to open negative as majority of Asian markets have opened in red. On the other hand US markets also closed will moderate losses as Chicago purchasing manager’s index dropped to 46.10 in the month of September as compared to 50 in August. The sentiments across the broader level looked strong during yesterday’s trade and therefore one could anticipate some consolidation happening at this level. The domestic markets are likely to trade range bound today.
On Wednesday, Indian market extended its initial gains to close sharply higher on sustained buying over the ground led by hopes that quarterly earnings would top expectations. The BSE Sensex hit its highest level in more than 16 months, as broke 17,000 level during the trading and ended above 17,100 level. Besides, NSE Nifty also touched its highest level in more than 16 months and closed above 5,050 mark. Stocks hit fresh high on rise in the index of six core sector industries that stood at 255.3 in August 2009, with a growth of 7.1% as compared to a growth of 2.1% in August 2008. The index of six sectors has a combined weight of 26.7% in the Index of Industrial Production (IIP). Further, stocks raised also on positive European markets and higher US index futures. However, volume on the exchange was low, as investors opted to remain on sidelines on shortened trading week. The market will remain close on Friday, 2 October 2009, on account of Gandhi Jayanti.
The BSE Sensex closed higher by 273.93 or (1.63%) points at 17,126.84 and NSE Nifty ended up by 77.10 points or (1.54%) at 5,083.95. BSE Mid Caps and Small Caps closed with gains of 59.36 and 70.45 points at 6,324.16 and 7,590.04 respectively. The BSE Sensex touched intraday high of 17,142.52 and intraday low of 16,868.46.
On Wednesday, the US stock market closed modestly lower backed by mixed economic data. A report that showed the Chicago purchasing-manager''s index dropped to 46.1 in September from 50 in August indicating a contraction, weighed on sentiments. Besides, a disappointing jobs report also contributed to downturn. Meanwhile, there was some positive news also, which helped stocks minimize losses. The economy constricted at a 0.7% rate in the second quarter, which was less than the expected decline of 1% plus. In addition, most recent batch of earnings proved better than expected. Consequently, Nike closed with gain of 4.61% and Jabil Circuit advanced by 1.13%. Materials stocks had provided headship as commodities prices soared and Tech stocks also supported the market. In economic news, ADP said private employers slashed 254,000 jobs from their payrolls in September, which is more than expected but less than the revised 277,000 loss recorded in August. US light crude oil futures for November delivery closed up by 5.7% at $70.49 per barrel, on the New York Mercantile Exchange.
The Dow Jones Industrial Average (DJIA) dropped by 29.92 points at 9,712.28. Going ahead, NASDAQ index slightly down by 1.62 points to 2,122.42 and the S&P 500 (SPX) closed marginally lower by 3.53 points at 1,057.08.
Indian ADRs ended in green on Wednesday. In the banking space, ICICI Bank was up 6.11% and HDFC Bank was up 3.06%. In the telecom space, Tata Communication was up 2.74% and MTNL was up 0.81%. In the IT space, Wipro was up 2.87%, Infosys was up 0.71%, Patni Computers was up 0.76%. However, Satyam Computers, which was the sole loser among the ADRs, was down 1.2%. In other sectors, Sterlite Industries was up 1.85%, Tata Motors was up 1.09% and Dr Reddy''s Labs was up 1.3%.
The FIIs on Wednesday stood as net buyers in equity and net sellers in debt. Gross equity purchased stood at Rs 3,702.90 Crore and gross debt purchased stood at Rs 298.90 Crore, while the gross equity sold stood at Rs 2,600.40 Crore and gross debt sold stood at Rs 352.40 Crore. Therefore, the net investment of equity and debt reported were Rs 1,102.50 Crore and Rs (53.50) Crore respectively.
On BSE, total number of shares traded were 48.31 Crore and total turnover stood at Rs 6,668.92 Crore. On NSE, total number of shares traded were 85.51 Crore and total turnover was Rs 20,178.57 Crore.
On NSE Future and Options, total number of contracts traded in index futures was 477912 with a total turnover of Rs 11,816.64 Crore. Along with this total number of contracts traded in stock futures were 505409 with a total turnover of Rs 17,587.48 crore. Total numbers of contracts for index options were 974698 with a total turnover of Rs 24,539.40 Crore and total numbers of contracts for stock options were 42106 and notional turnover was Rs 1,469.30 Crore.
Today, Nifty would have a support at 4,990 and resistance at 5,110 and BSE Sensex has support at 16,844 and resistance at 17,232.
Pipavav Shipyard Grey Market Premium
| Company Name | Offer Price (Rs.) | Premium (Rs.) |
| Pipavav Shipyard | 58 | 1.50 to 2 |
| Thinksoft Global | 115 to 125 | 1 to 1.50 |
| Euro Multi Vision | 70 to 75 | 4 to 5 |
All eyes on Bharti Airtel & Reliance Communications
The proposed $23-billion cash-and-share-swap deal between Bharti Airtel and South Africa's MTN has been called off. This is the second time in two years that talks between the two have failed. Bharti Airtel blamed the South African government for the latest breakdown in a deal which faced close scrutiny from regulators and politicians. The deal would have created the world's third-largest telecom company. A press release issued by Bharti said that the company would continue to explore international expansion opportunities.
Biocon will acquire the bulk pharmaceutical business undertaking of IDL Specialty Chemicals, located near Hyderabad. No other details were available.
Aksh Optifibre plans to raise up to $20 million on a private placement basis. The funds will be used to grow its internet protocol television and voice over internet businesses.
Mahindra & Mahindra may reportedly combine its two engine-making units, unlisted Powerol and Swaraj Engines, under one company to boost revenues from the businesses.
Oil & Natural Gas Corporation (ONGC) is replacing 30 offshore supply vessels. It has ordered 12 vessles and plans to replace the remaining 18 on a phased manner over the next three years.
United Spirits is reported to have got shareholder approval to raise funds. It will raise $300-$350 million, which would help it develerage its balance sheet.
Bajaj Auto is reportedly planning to expand capacity in two of its factories but did not disclose the quantum of investments.
Milestone Religare Investment Advisors, a private equity fund floated by Milestone Group and Religare is reportedly close to signing a deal to invest Rs 25-50 crore each in two south India-based hospitals.
Glenmark Generics, a unit of Glenmark Pharmaceuticals, has reportedly filed regulatory application with the market regulator to raise Rs 550-600 crore via an initial public offering (IPO).
MRF India is reportedly likely to take a Rs 700-800 crore hit on its topline this year due to labour unrest that disrupted schedules at two of its plants in India.
Swaraj Mazda, which is implementing a Rs 260 crore expansion programme, has entered into technical agreements with Malaysian and Chinese firms for production of buses, bus bodies and procuring some parts.
Reliance Communication's tower unit Reliance Infratel is reportedly talking to its existing shareholders - George Soros, HSBC, New Silk, Galleon, DA Capital and GLG Capital among others - to rope them in as anchor investors in its forthcoming initial public offering.
Shipping Corporation of India (SCI) is reportedly looking to raise nearly $300 million via debt by the end of this fiscal to buy vessels. The funds will be used for vessel acquisitions, reports suggested, adding banks are more willing to lend to shipping firms now compared to last year.
Indices seen snapping two-day gains on weak global cues
Local indices are likely to witness a subdued start, snapping two-day gains, following weak global cues. The SGX Nifty futures for October 2009 expiry was down 33 points in Singapore. Volatility may rise in the truncated trading week, in the absence of any major trigger for sharp movements either side. The government will today unveil data on headline inflation for the year through 22 September 2009. Also the proposed $24 billion merger deal call-off between India's largest mobile services provider by sales Bharti Airtel with South Africa's MTN late evening on 30 September 2009 after the South African government refused to soften its stance on the proposed deal structure may sour sentiment.
Another economic data to be watched out for today is the HSBC PMI data. Also the September 2009 monthly auto and cement sales will started kicking in from today.
Turnover on the bourses may remain low as traders may refrain from building large positions this week because this is a truncated trading week as the market remains closed on Friday, 2 October 2009, on account of Gandhi Jayanti.
The next trigger for the stock market is Q2 September 2009 results of India Inc next month. There is optimism about Q2 September 2009 results after advance tax collections registered a positive growth in the second quarter after witnessing a negative growth in the first quarter. Corporate advance tax and advance personal income-tax were up by 14.7% and 1.7%, respectively in the September 2009 quarter. Infosys kickstarts the reporting season on 9 October 2009.
Coming back to equities, a section of the market is concerned that a glut in share sales may suck liquidity from the secondary market. The corporate sector has raised large sums of money through equity and equity related instruments in the past six months or so to either to retire high cost debt or to fund expansion. The supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary market.
As per one report, companies plan to raise at least Rs 40,000 crore through initial public offers (IPOs)/follow on public offers (FPOs) in the second half of the current financial year. Power companies such as GMR Energy, Indiabulls Power and JSW Energy and state-run Bharat Heavy Electricals and NTPC are likely to tap the primary market. Reliance Infratel also announced on Tuesday, 22 September 2009, its intention to raise Rs 5,000 crore from the primary market. A number of companies are also in the fray to raise funds by way of qualified institutional placement (QIP), reports suggest.
Meanwhile, the government is reportedly planning to announce a blueprint for selling its stake in state-owned firms in the first week of October 2009. The policy is expected to suggest how the government will eventually bring down its stake in public sector companies to 75% over a period of time.
US markets ended modestly lower on Wednesday, 30 September 2009 on the back of mixed economic data. The Dow Jones industrial average fell 29.92 points, or 0.3%, at 9,712.28. The S&P 500 index fell 3.53 points, or 0.3%, to 1,057.08. The Nasdaq Composite index fell 1.62 points, or 0.1%, to 2,122.42.
In economic data, the Chicago purchasing-manager's index fell to 46.1 in September 2009 from 50 in August 2009 indicating a contraction. Also the jobs data report disappointed. US private employers cut 254,000 jobs from their payrolls in September 2009, more than expected but less than the revised 277,000 loss recorded in August 2009. Meanwhile, the US economy contracted at a 0.7% rate in the second quarter, less than the 1% plus decline expected.
Asian markets were trading lower today, 1 October 2009 on profit booking after the recent rally. Key benchmark indices in South Korea, Japan, Hong Kong, Taiwan, and Singapore were down by between 0.17% and 2.30%. Chinese markets will be shut between 1 and 8 October 2009 for National day and Autumn festival celebrations.
Back home, key benchmark indices extended gains for second straight day on Wednesday, 30 September 2009 on optimism about Q2 September 2009 which will start trickling in from the second week of October 2009. The BSE 30-share Sensex rose 273.93 points or 1.63% to 17126.84, its highest closing since 21 May 2008. The S&P CNX Nifty rose 77.10 points or 1.54% to 5,083.95, its highest closing level since 21 May 2008.
As per the provisional figures on NSE, foreign funds bought shares worth Rs 1074.53 crore and domestic funds purchased shares worth Rs 159.75 crore on Wednesday, 30 September 2009.
Copper ends higher
Weak dollar helps red metal eke out gains
Copper prices gained considerably on Wednesday, 30 September, 2009 at Comex and LME. Prices rose today following the weak dollar.
At USA, copper futures for December delivery ended up by 9 cents (3.3%) to 2.819 a pound. Copper fell 1.6% last week. Copper ended September, 2009, higher by 0.4%.
On the London Metal Exchange, copper for delivery in three months ended higher by $194 (3.3%) at $6,169 a metric ton. On 3 July, 2008, prices had touched an all time intra day high of $8,940.
After September, it was the ninth straight monthly gain for copper. On a year to date basis, prices are higher by 89%.
The U.S. buys about 13% of the 17 million metric tons of copper sold annually and China buys about 20%.
In the currency market on Wednesday, Tuesday, the dollar slipped following upbeat economic data. The U.S. dollar remained lower after the government said U.S. real gross domestic product for the second quarter was revised to a decline of 0.7% annualized from the earlier estimate of a 1% drop. The dollar index, which measures the strength of dollar against a basket of other currencies, fell by almost 0.6%.
In FY 2008, copper prices dropped by 54%. Prior to 2008, copper prices ended FY 2007 with a gain of mere 5.5% after a whopping 44% gain in FY 2006. The price of copper gained every year since 2002 as global economic growth boosted demand for the metal used in pipes and wires.
At the MCX, copper for November delivery closed at Rs 297.1/Kg. The closing price was Rs 7.2/Kg (2.5%) higher than previous closing price. Prices rose to a high of Rs 298.65/ Kg and fell to a low of Rs 291.2/Kg during the day's trading.
Among other metals traded in the LME on Wednesday, lead rose 3% to $2,298 a ton and zinc rose 2.6% to end at $1,932 a ton. Nickel added 2.1% to end at $17,500. Aluminium rose 1.1% to $1,886 a ton.
DLF October 2009 futures at premium futures
Turnover rises
Nifty October 2009 futures were at 5073, at a discount of 10.95 points as compared to the spot closing of 5083.95. Turnover in NSE's futures & options (F&O) segment surged to Rs 55,412.81 crore from Rs 45,244.04 crore on Tuesday, 29 September 2009.
DLF October 2009 futures were at premium at 440.50 compared to the spot closing of 438.
Reliance Industries (RIL) October 2009 futures were at discount at 2186.10 compared to the spot closing of 2199.
Axis Bank October 2009 futures were near spot price at 976.50 compared to the spot closing of 977.35.
In the cash market, the S&P CNX Nifty surged 77.10 points or 1.54% at 5083.95.
Crude shoots up
Prices rise on back of drop in gasoline inventory and weak dollar
Crude prices ended substantially higher at Nymex on Wednesday, 30 September, 2009. Prices rose as energy department reported unexpected drop in gasoline inventories for last week. The weak dollar also helped crude price go up. With today's gains, crude managed to eke out gains for the month and the quarter.
On Wednesday, crude-oil futures for light sweet crude for November delivery closed at $70.61/barrel (higher by $3.9 or 5.8%). Last week, crude ended lower by 8%.
For the month of September, 2009, crude ended higher by a marginal 0.9%. For the third quarter, crude ended higher by just 1%. Crude prices had rallied 40% and 11.3% in the second and first quarter of 2009 respectively.
Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 65% since then. Year to date, in 2009, crude prices are higher by 45%.
In today's weekly inventory report, the EIA reported an increase of 2.8 million barrels in crude inventories and a buildup of 300,000 in distillate stockpiles, which include diesel and heating oil. The changes were largely in line with expectations. Gasoline inventories fell by 1.6 million barrels in the week ended 25 September, 2009 as demand rose 3.8% to 9.13 million barrels a day.
The report also detailed that crude imports also fell, down 2.7% to 9.5 million barrels a day, but weak refinery utilization rates offset the drop in imports, resulting in a modest buildup in crude inventories. Gasoline imports fell to 851,000 barrels a day last week, down 17% from a week ago.
In the currency market on Wednesday, Tuesday, the dollar slipped following upbeat economic data. The U.S. dollar remained lower after the government said U.S. real gross domestic product for the second quarter was revised to a decline of 0.7% annualized from the earlier estimate of a 1% drop. The dollar index, which measures the strength of dollar against a basket of other currencies, fell by almost 0.6%.
Among other energy products on Wednesday, October gasoline futures gained 9.78 cents, or 6%, to $1.7259 a gallon, and October heating oil rose 9.54 cents, or 5.6%, to $1.796 a gallon. Both contracts expired on Wednesday.
Also on Wednesday, November natural-gas futures fell 3.4 cents, or 0.7%, to $4.841 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 October delivery closed higher by Rs 127 (3.9%) at Rs 3,337/barrel. Natural gas for October delivery closed lower by Rs 6.7 (2.8%) at Rs 231/mmbtu.
Market may remain uncertain
Market may remain uncertain owing to lack of clarity and may witness sideways movement on the back of sharp intra-day volatility. Fund inflows and global trend will be monitored for further direction. However, strong optimism amongst investors could help the sentiment turn positive. Among the local indices, the Nifty could test the 5102-5150 range on the upside while on the down side it could find support at 5045 and 4990. The Sensex is likey to get support at 16950 and may face resistance at 17200.
US indices ended inched lower on Wednesday, following weaker-than-expected readings on manufacturing and the labor market. But the declines were minimal at the end of an upbeat month and quarter on Wall Street. While the Dow Jones declined by 30 points to close at 9712, the Nasdaq also ended two point down at 2122.
Among the Indian ADRs trading on the US bourses, ICICI Bank led the upward move and gained 6% while Infosys, Wipro, Dr Reddy, Tata Motors, HDFC Bank and VSNL gained over 1-3% each, while only VSNL gained marginally. Rediff & Satyam however closed in negative territory with loss of 1-3%.
Crude oil prices advanced sharply, with the Nymex light crude oil for November series gained by $3.90 to close at $70.61 a barrel. In the commodity space, the Comex gold for December series advanced $14.90 to settle at $1009.30 a troy ounce.
Daily trend of FII/MF investment in equities
On September 29 2009, FIIs were net buyers of stocks to the tune of Rs1103 crore (purchases worth Rs3703 crore and sales of Rs2600 crore) while domestic mutual funds were net sellers of stocks to the tune of Rs107 crore (purchases worth Rs581 crore and sales of Rs688 crore.
Stocks with Positive bias : Kotak Bank (s/l 769),M&M ( s/l 870),Grasim, Icici Bank
Stocks for short-term delivery: IDBI Bank, Elecon Engineering
Daily News Roundup - Oct 1 2009
Bharti Airtel and MTN have called off talks after the South African government refused to soften its stance on the proposed deal structure. (ET)
ONGC-Hinduja Group alliance lost the rights to develop Iran’s South Azadegan oilfield to CNPC of China. (FE)
Government may allow GAIL to charge marketing margin on APM gas. (FE)
With a warchest of US$2bn, Oil India plans to acquire crude oil producing assets or oil companies in Australia, South East Asia, Africa, Russia and South America. (FE)
Tata Power willing to use Reliance meters for supply to Mumbai. (BL)
Dr Reddy’s is recalling four of its drugs used to treat ailments such as allergy, depression and high cholesterol from the US market. (ET)
HCC ties up with UK based AMEC to jointly provide consultancy for execution of nuclear power plants in India and is eyeing an annual revenue of Rs50bn. (FE)
1st phase of Durgapur Steel Plant of SAIL will go onstream in October 2011. (BS)
ArcelorMittal to change location within Jharkhand for its 12mn ton capacity plant. (BS)
United Spirits expects to raise up to US$350mn either through private equity or qualified institutional placement to pre-pay debt related to acquisition of Whyte & Mackay. (BL)
Top three food companies, ITC, Britannia and Parle Products, plan to increase their presence in the Rs90bn branded biscuits market. (FE)
BHEL has expanded its presence in the CIS region by bagging its first export contract from the Republic of Belarus worth Rs2.7bn. (ET)
TCS has signed a two year multi million dollar deal with Singapore based People’s Association for application management services. (ET)
Siemens won two orders worth Rs3.6bn from Power Grid for setting up substations at Gaya in Bihar and Ranchi in Jharkhand. (FE)
Torrent Power to foray into wind, solar power generation with a capacity addition of 9,500MW in next 5-7 yrs. (BS)
Maruti Suzuki’s R&D center is close to developing a dual fuel engine, running on petrol and CNG. (ET)
Maruti Suzuki expects its September sales to jump by 30% due to robust demand during the festive season. (FE)
USFDA’s decision to defer approval of Cervarix, GlaxoSmithKline’s vaccine for cervical cancer may affect the vaccine’s sales in India. (FE)
Israeli drug firm Taro Pharmaceuticals has filed a lawsuit in the US district court against Sun Pharmaceutical alleging violation of non-disclosure agreement and misleading shareholders. (ET)
Reliance Communications announced its partnership with Microsoft for offering Windows Mobile solutions on its wireless networks. (FE)
Opto Circuits’ subsidiary, Criticare Systems, entered into an agreement with US based company to provide anesthetic gas monitoring technology. (FE)
MindTree launched its new multi-channel commerce solutions designed to help retailers adopt a more customer centric strategy. (FE)
Parsvnath has joined hands with private equity players to finance three of their projects. (FE)
Orchid Chemicals targets to become US$1bn in next 3 years (BS)
Dhabol has started to buy natural gas from Reliance Industries to cut electricity generation cost. (FE)
ICSA eyes 60% revenues from infrastructure services. (BS)
Harrisons Malayalam turns to engineering, construction to diversify its operations. (BL)
Reliance Infratel is talking to its existing shareholders in an attempt to rope them in as anchor investors in their forthcoming IPO. (ET)
Tata Teleservices and BSNL signed a 15 year infrastructure sharing deal across the country. (ET)
DB Realty has submitted the prospectus with SEBI to raise Rs15bn by selling 10% stake through an IPO. (ET)
Glenmark Generics, the generics arm of Glenmark Pharmaceuticals, filed the draft prospectus with SEBI to raise Rs5.5-6bn from the primary market. (ET)
Emaar MGF and Sahara Prime City too have applied to SEBI for raising funds from the market, taking the total amount to be raised by realty companies to Rs110bn. (ET)
The government has consented to 10% divestment in MMTC, which can fetch it Rs170bn, and also plans follow on public offer of either NTPC or REC. (FE)
Satyam has sought time till March to restate its financial statements. (FE)
Shipping Corporation of India said it has put its plans to acquire vessels on hold. (FE)
CMPDIL, a subsidiary of Coal India, will invest over Rs1bn for acquiring advanced drilling equipments in the next two years. (FE)
Mr. H. M. Nerurkar will take charge of Tata Steel from Mr. B. Muthuraman. (ET)
Gee Kay Finance & Leasing buys Sigrun Realities for Rs3.4bn. (BS)
Marg gets board's nod to raise Rs30bn. (BS)
Air India pilots called off their strike after reaching a compromise with the management over a cut in incentives. (ET)
India’s balance of payment position improved considerably at the end of the first quarter as a slowdown in imports narrowed the current account deficit. (ET)
India’s fiscal deficit rose 35% in the first five months of the fiscal as the government continued tax cuts and increased public spending. (ET)
India’s external debt rose marginally by US$3.7bn during Q1 FY10 to US$227.7bn. (ET)
The government introduced an interest rate subsidy scheme that could help a home loan borrower save upto Rs10,000 in monthly payments. (ET)
State owned oil firms have slashed jet fuel prices by 2.1% in line with softening international rates. (ET)
India and Russia have decided to encourage high level bilateral investments in sectors such as pharmaceuticals, energy, IT, high technology co-operation, agro processing and gems and jewellery. (ET)
The Forwards Market Commission has taken strong objection to the introduction of term ahead contracts by IEX and PXI. (FE)
Despite strong demand and infrastructure spend, cement prices have fallen Rs60 per 50kg bag in some regions. (FE)
Government has increased the time frame for commodity exchanges to comply with the restriction of 5% stake by a foreign individual investor till March ’10. (FE)
Inflated estimates push down cost overruns for infra projects. (BS)
The CBDT has given effect to the budget declaration to tax all gifts in kind above Rs50,000 from October 1. (ET)
A Mahatma rally!
"Earth provides enough to satisfy every man's need, but not every man's greed." – Mahatma Gandhi.
Whether one should be greedy at this stage is a BIG question after such a stunning rally. We’ve come a long way in a year. The journey from the brink of Great Depression has been spectacular. The moot point is where do we go from here?
The fact that so many people have missed the rally could ensure that the bulls maintain an upper hand. They will be aided by the flaring risk appetite and ample liquidity. But, can the earnings catch up with the bull run?
The real test will be when the stimulus is reversed. Inflation could be another party pooper. Valuations are definitely not cheap, though historic peak is still some way away. The question is whether one should wait for that long to realise one’s folly.
Today, we expect a soft opening as world markets are not particularly gung-ho. A long weekend is ahead of us before earnings start to roll in. There might be some consolidation and any fall is not likely to be too big.
We feel the market needs to pause to reflect the ground reality, which is that earnings growth may not be able to match the performance on the bourses. The economic recovery will be painfully slow. Though overall data points from across the globe have been encouraging, the real growth driven by increasing demand is yet to materialise.
Use the six and a half month rally to cleanse your portfolios. Get out of weak stocks and hold on to the ones with sound fundamentals. One could also consider locking in some profits and then waiting for some correction to resume purchases.
A word on the Bharti-MTN deal now. The land where India's father of the nation Mahatma Gandhi began his long and arduous political journey has dealt a blow to Bharti Airtel’s ambition of creating a mega telecom titan. The multi-billion-dollar cross border deal has been laid low by South African government's insistence on a dual listing for the merged entity, something which the Indian government could not facilitate.
Whether a dead deal is good for Bharti Airtel or no only time will tell. It could zero in on some other inorganic growth opportunity in some other corner of the world or it might altogether drop the idea of M&As. Right now its wait and watch. One also needs to see whether the Indian government is willing to amend its rules and laws to enable an increasingly ambitious India Inc. to realise its global dream.
Auto and cement stocks will be in the limelight as they release their monthly sales numbers. Both are expected to have maintained the recent scorching pace.
FIIs were net buyers of Rs10.75bn in the cash segment on Wednesday on a provisional basis. The local funds were net buyers of Rs1.59bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs3.04bn. On Tuesday, FIIs were net buyers of Rs11.02bn in the cash segment. The net FII investments in Indian stocks this year have crossed $12bn.
US stocks closed lower for a second successive day on Wednesday, as weaker-than-expected reports on manufacturing and the jobs market prompted investors to lock in some gains. But the key US stock indices ended the month and the quarter on an upbeat note.
The Dow Jones Industrial Average fell 30 points, or 0.3%, to 9,712.28. The S&P 500 index lost 3 points, or 0.3%, to 1,057.08. The Nasdaq Composite index lost just over 1 point, or 0.1%, to 2,122.42.
US stocks were volatile throughout the session as investors considered the economic news, a weaker dollar and a 6% spike in oil prices. End-of-quarter portfolio rebalancing may have also contributed to the choppiness.
Wednesday was the last day of the third quarter, during which the Dow, S&P 500 and Nasdaq all gained just over 15%. US stocks had slipped on Tuesday after a drop in consumer confidence added to worries about the sustainability of an economic recovery.
Since bottoming at a 12-year low March 9, the S&P 500 has gained just shy of 57%, and the Dow has gained around 49% (as of Tuesday's close). After hitting a six-year low, the Nasdaq has gained nearly 68%.
Bank of America said after the close that CEO and president Ken Lewis is retiring on Dec. 31 after 40 years with the company.
Also after the close, General Motors (GM) said that it is shutting down its Saturn division after a deal to sell it to Penske Automotive Group fell apart.
The Chicago PMI fell to 46.1 in September from 50 in August. Economists thought it would rise to 52. A reading below 50 signifies contraction in the manufacturing sector.
Another report showed that employers in the private sector cut 254,000 jobs from their payrolls in September after cutting a revised 277,000 jobs in August. Economists expected 200,000 job cuts.
The report, from payroll services firm ADP, is a lead up to Thursday's reading on announced jobs cuts and Friday's bigger government employment report.
Another report showed that the GDP shrank at a 0.7% annual rate in the second quarter versus the initially reported 1% and the 1.2% rate forecast by economists.
CIT Group sank 45% on worries that it may not be able to avoid bankruptcy after all. The lender's shares had rallied on Tuesday on reports that it was negotiating a new credit facility that could total $10 billion.
On Wednesday, the Wall Street Journal said that CIT was negotiating a deal with its creditors that would give control of the company to bondholders and wipe out common shareholders. That sent shares tumbling.
Among other movers, shares of Discovery Laboratories surged 22.5% on renewed hopes that its treatment for certain respiratory illnesses affecting premature infants might get approval. The drug, Surfaxin, has already been rejected four times by the FDA. But on Wednesday, Discovery said that the FDA has agreed to its proposed plan for addressing those concerns.
The dollar fell versus the euro and yen, resuming the selloff that has pushed the US currency to one-year lows against a basket of currencies over the last few weeks.
US light crude oil for October delivery rose $3.90 to settle at $70.61 a barrel on the New York Mercantile Exchange after the government reported a surprise drop in inventories.
COMEX gold for December delivery rose $14.90 to settle at $1009.30 an ounce. Gold closed at a record high of $1,020.20 two weeks ago.
Treasury prices slumped, raising the yield on the benchmark 10-year note to 3.30% from 3.29% late on Tuesday.
Earnings and economic news helped European stocks post one of their best quarters for years in the third quarter of 2009. Overall, the pan-European Dow Jones Stoxx 600 index climbed 17.7% in the quarter, marking the best three-month performance in percentage terms for almost ten years. Only 2.7% of that gain was made in September.
Indian markets ended in the green extending gains for second straight trading session. The strong upswing was seen despite overnight losses on Wall Street and weak cues from the Asian markets.
The opening moments of today’s session was indeed dominated more by Oil Indias listing. However, as the day progressed the buying spree spread all over Dalal-Street. Bulls were on a roll led by the banking, Auto, Capital Goods and Metal stocks. Even the Mid-Cap and the Small-Cap stocks were in demand.
However, the FMCG and select Consumer Durables stocks were under selling pressure.
Heavyweights like SBI, ICICI Bank, Maruti and M&M lifted the Sensex and Nifty to end at new 52-week high.
The BSE Sensex surged 274 points or 1.6% at 17,126 after touching a high of 17,143 and a low of 16,868. The index opened at 16,868 against the previous close of 16,853. The NSE Nifty added 77 points to shut shop at 5,084.
In Asia, the Nikkei in Japan was up 0.3%, while Australia's S&P/ASX ended lower by 0.2% at 4,743. Shanghai SE Composite in China was up by 0.9% at 2,779. However, the Hang Seng index in Hong Kong ended lower by 0.3% at 20,955.
In Europe, stocks were in the green. The FTSE in the UK was up 0.6%, The DAX in Germany was up 0.5% and the CAC 40 index in France added 0.6%.
Coming back to India, among the BSE sectoral indices, the Bankex index was the top gainer, adding 3.7%, followed by the Auto index that was up 2% and the BSE Capital Goods index was up 1.8%.
Among the major losers were, BSE FMCG index down 0.5% and BSE Consumer Durable index marginally down 0.3%.
The BSE Mid-Cap index gained 1% and the BSE Small-Cap index was up 1%.
Among the 30-components of Sensex, 26 stocks ended in the green and 4 ended in the negative terrain. Among the major gainers were SBI, ICICI Bank, Maruti, M&M, Sterlite and Wipro.
On the other hand, ONGC, ITC, Grasim and Bharti Airtel were among the major laggards.
Outside the frontline indices, the big gainers in the broader market were Central Bank, Bhushan Steel, BEL, OBC, IOB and UCO Bank. On the other hand, losers included REI Agro, Marico, GSPL, MRPL and Dabur.
Shares of Oil India which began trading on the Indian bourses at Rs1,105 per share finally ended recording healthy gains. The stock surged to end at Rs1140 translating into a premium of 8.5%
The initial public offer of Oil India had received robust response, it got subscribed nearly 31 times, generating demand for shares worth over Rs855.76bn.
The portion reserved for qualified institutional buyers got subscribed 54 times, while the non-institutional and retail investors bid for 9.77 times and 114 times respectively of the shares on offer.
Shares of Wockhordt Pharma shot up by over 7.5% to Rs194 after the company received tentative approval from the US FDA for marketing the 0.4mg capsules of Tamsulosin Hydrochloride, which is used for treating Benign Prostatic Hyperplasia (BPH or non-cancerous enlargement of prostate).
Tamsulosin is the generic name for the brand Flomax, marketed in the United States by Boehringer Ingeiheirn. The patent on this product will expire on April 27. 2010 and Wockhardt will launch the product immediately thereafter.
The stock opened at Rs184 and made an intra-day high of Rs197 and a low of Rs183. Total traded volumes stood at 0.3mn shares.
BHEL won an order worth Rs2.7bn for a 120 MW Cogeneration Power Plant, to be set up at Grodno in Belarus, has been received from Grodnoenergo, which is a state enterprise of Republic of Belarus.
Shares of BHEL gained by 2.3% to Rs2325. The stock opened at Rs2279 and made an intra-day high of Rs2334 and a low of Rs2279. Total traded volumes stood at 0.14mn shares.
Shares of L&T gained by 2.2% to Rs1683 after reports stated that the company was planning to raise US$600mn from institutions through equity issuance. Reports also stated that the company has developed expertise to manufacture nuclear power plants of 3,000-4,000MW says Chairman, AM Naik.
Reliance Communications & Microsoft have entered into a strategic partnership to offer Windows Mobile Solution on Reliance’s wireless networks.
According to this agreement, Microsoft will offer its productivity solutions to Reliance customers including push email support, chat, photo-sharing, content back-up and other applications.
Shares of RCom gained 3% to end at Rs308. The stock opened at Rs300 and made an intra-day high of Rs310 and a low of Rs299. Total traded volumes stood at 2.4mn shares.
Siemens bagged two orders from Power Grid Corporation of India Ltd amounting to Rs3.6bn for turnkey 756KV substations each at Gaya in Bihar and Ranchi in Jharkhand. The projects will be commissioned in 27 months.
Shares of Siemens edged higher by 0.5% to Rs557. The stock opened at Rs555 and made an intra-day high of Rs561 and a low of Rs550. Total traded volumes stood at 0.14mn shares.
HCC signed a MoU with the international engineering and project management company AMEC plc (AMEC) to jointly explore the application of consulting and EPC services for the establishment of nuclear power plants in India.
The stock gained 1% to end at Rs131.5, it opened at Rs131 and made an intra-day high of Rs133 and a low of Rs128. Total traded volumes stood at 1.7mn shares.
Precious metals end more shine
Gold and silver register good gains for September
Precious metal prices ended higher on Wednesday, 30 September, 2009. Prices rose today following the greenback's weakness and rising crude price.
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 Wednesday, gold for December delivery ended at $1,009.3, higher by $14.9 (1.5%) an ounce on the New York Mercantile Exchange. Earlier during the day, it rose to a high of $1,010.8. Last week, gold ended lower by 1.9%. Year to date, gold prices are higher by 14.5%.
Gold ended September, 2009 higher by 5.9%. For the third quarter it ended higher by 8.7%. Before this, for the second quarter, gold ended higher by 0.5%. The metal had 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 (4%) since then.
On Wednesday, Comex silver futures for December delivery rose 48 cents (3%) to $16.658 an ounce.
Silver ended 11.8% higher for September, 2009. Year to date, silver has climbed 48% this year. For 2008, silver had lost 24%.
In the currency market on Wednesday, Tuesday, the dollar slipped following upbeat economic data. The U.S. dollar remained lower after the government said U.S. real gross domestic product for the second quarter was revised to a decline of 0.7% annualized from the earlier estimate of a 1% drop. The dollar index, which measures the strength of dollar against a basket of other currencies, fell by almost 0.6%.
In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.
At the MCX, gold prices for October delivery closed higher by Rs 146 (0.94%) at Rs 15,668 per 10 grams. Prices rose to a high of Rs 15,679 per 10 grams and fell to a low of Rs 15,513 per 10 grams during the day's trading.
At the MCX, silver prices for December delivery closed Rs 487 (1.9%) higher at Rs 26,486/Kg. Prices opened at Rs 26,085/kg and rose to a high of Rs 26,525/Kg during the day's trading.
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