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Monday, November 09, 2009
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Pre Session Commentary - Nov 9 2009
Today domestic markets are likely to open positive as majority of Asian markets have also opened in green. The fifth straight gain in US markets despite disappointing non-farm payrolls data has raised hopes of firmness across global markets. The positive comments last week from Central Bank of Australia about the country’s phenomenal growth prospects will weigh more on the investors confidence for a couple of weeks. Domestic markets are likely to trade range bound with positive bias during the day.
On Friday, the Indian stock market closed in green tracking the firm cues from the global markets. Heavy buying was witnessed during the trading session and the investors’ sentiments was boosted on the back of some favoring data like better than expected jobless claims data in US that recorded at 5,12,000 down 20,000 from the previous week and better than the expected 5,22,000. The continuing claims came in at 5.75 million, which was inline with the expectations and down from 5.82 million in the previous week. Moreover, the rally across the Asian markets after Australian Central bank increased its economic growth forecasts by more than tripled further boosted the sentiments. The Union Cabinet’s approval of listing the state run firms on the stock exchanges, which have a track record of profits in the past three years, also supported the sentiments. The government decided that the proceeds from the equity divestment in State run firms can be utilized for capital expenditure on social sector programmes instead of routing it through the National Investment fund. The BSE Sensex closed above the 16,150 mark while Nifty just above 4,790 mark. From the sectoral front, the PSU index (up 3.91%), Realty index (up 2.81%) and Metal index (up 2.03%) attracted the investors’ confidence as most buying was witnessed from this basket.
The BSE Sensex closed higher by 94.38 points or (0.59%) at 16,158.28 and NSE Nifty closed up by 30.60 points or (0.64%) at 4,796.15. The BSE Mid Caps closed higher by 138.92 points at 6,254.36 and the BSE Small Caps closed up by 157.09 points at 7,170.94. The BSE Sensex touched intraday high of 16,283.86 and intraday low of 16,075.19.
On Friday, the US stock market closed higher marking its fifth straight session gain. The opening was modest and traders were closing watching the non-farm payroll data that recorded job losses of 190,000 in the month of October slightly higher than the expected 175,000. The unemployment rate climbed a 25-year high at 10.2% as against the expected 9.9%. Another economic data was the wholesale report that indicated inventories fell 0.9% in September. There was lack of charm in the market and stocks spent most of its time in a choppy session. Industrial sector managed to lead the day’s gains on the back of analyst upgrades for General Electric. Financials were the laggard of the day, which ended with a loss of 0.5%. Despite positive earnings report from AIG, its shares witnessed immense selling pressure. US light crude oil futures for December delivery closed with a loss of 2.9 per cent at $77.35 per barrel, on the New York Mercantile Exchange.
The Dow Jones Industrial Average (DJIA) ended with gain of 17.46 points at 10,023.42. NASDAQ index surged 7.12 points to 2,112.44 and the S&P 500 (SPX) closed higher by 2.67 points at 1,069.30.
The Indian ADRs ended mixed on Friday. In the IT pack, Infosys was down 1.04%, Satyam was down 1.13%, while Wipro was up 0.95% and Patni was up 0.19%. In the telecom space, Tata Comm was up 0.39%, while MTNL was down 3.76%. In the banking space, ICICI Bank was down 0.19%, while HDFC Bank was up 1.21%. In the other sectors, Tata Motors was down 0.49%, Sterlite was up 0.18% and Dr Reddys was up 0.35%.
The FIIs on Friday stood as net buyers in equity and net sellers in debt. Gross equity purchased stood at Rs 2,035.50 Crore and gross debt purchased stood at Rs 1,059.40 Crore, while the gross equity sold stood at Rs 1,767.90 Crore and gross debt sold stood at Rs 314.90 Crore. Therefore, the net investment of equity and debt reported were Rs 267.60 Crore and Rs 744.50 Crore respectively.
On Friday, the partially convertible rupee ended at 46.81/82 per dollar, 0.42% stronger than previous closing at 47.01/02 per dollar. The local currency gained strength on the back of phenomenal surge in local stock markets.
On BSE, total number of shares traded were 42.29 Crore and total turnover stood at Rs 6,019.18 Crore. On NSE, total number of shares traded were 87.89 Crore and total turnover was Rs 16,857.41 Crore.
Top traded volumes on NSE Nifty – Suzlon Energy with total volume traded 77625285 shares, followed by Unitech with 45704656, Jaiprakash Asso with 16921007, Idea Cellular with 13794569 and DLF with 11350626 shares.
On NSE Future and Options, total number of contracts traded in index futures was 712632 with a total turnover of Rs 16,575.91 Crore. Along with this total number of contracts traded in stock futures were 594679 with a total turnover of Rs 19,259.90 crore. Total numbers of contracts for index options were 1645646 with a total turnover of Rs 39,631.55 Crore and total numbers of contracts for stock options were 60470 and notional turnover was Rs 1,928.51 Crore.
Today, Nifty would have a support at 4,819 and resistance at 4,864 and BSE Sensex has support at 16,198 and resistance at 16,332.
Daily News Roundup - Nov 9 2009
Reliance Industries is looking to acquire a part of the assets owned by LyondellBasell. (ET)
SBI has cut interest rates by 25-50bps on deposits up to five years duration. (BL)
BSNL has joined the ongoing mobile tariff war by announcing a slew of initiatives including a scheme based per second billing. (BL)
SAIL plans to build a 10mn metric tonne steel mill in expectation of beating ArcelorMittal for the rights to control the nation's biggest iron ore reserves at Chiria. (DNA)
Workers at Rico Auto Industries ended their about 50-day strike following an agreement with the management on reinstatement of some employees
Tata Steel says October sales rose 38% yoy. (DNA)
Patni Computer plans to spend US$200-400mn in acquiring an IT company that is into Enterprise Application Integration space and specializing in the insurance industry. (BL)
Mahindra & Mahindra is to set up an automobile plant at Cheyyar, about 100 km from Chennai. (BL)
ONGC may be allowed to sell gas from its marginal C-series field at the current market determined price of $4.75/mBtu. (BL)
BEML says it has received an Rs1.9bn order for supplying waste excavating bucket for Northern Coalfields. (BL)
Tata Power says it would raise up to US$300mn through FCCBs. (BL)
SBI has extended its special home loan scheme at 8% interest rate by over four months to March 31, 2010. (TOI)
Tata Motors to shut down manufacturing operations at its Pune’s commercial vehicle unit for three days. (BS)
NTPC plans to add 25,000MW to its capacity during the twelve five year plan. (BS)
Emami is diversifying into cement business and will invest Rs17.5bn to set up production units in the next three years. (FE)
IDBI Bank is planning to launch a follow-on public offer of shares in January. (DNA)
Jet Airways, Kingfisher raise fares on higher ATF prices. (FE)
MRPL plans to raise around Rs50bn by 2011 for setting up a polypropylene plant and to install a Single Buoy Mooring (SBM) at the port. (BS)
Sical Logistics receives LOA from the New Mangalore Port Trust for setting up an iron ore handling facility at the deep draft multi purpose berth on BOT basis at New Mangalore Port. (BS)
Workers at Rico Auto ended their about 50-day strike. (ET)
Jubilant Organosys plans to invest Rs2.5bn this fiscal. (BS)
Spice Group eyes takeovers for insurance and Mutual Fund foray. (BS)
Power Finance Corporation has decided to lend Rs500bn, over two-third of its total asset base, to fund various proposed power projects in the country. (BS)
IDBI Bank plans to open its first foreign branch in Dubai by the end of next month. (ET)
Dhanalakshmi Bank forays into merchant banking. (BS)
T Rowe to pay US$135mn for 26% in UTI AMC. (ET)
Foreign exchange reserves fell by US$1.1bn to US$284bn, for the week ended October 30. (BL)
Prime Minister says stimulus measures announced in the last fiscal to combat the economic slowdown would be wound down next year following recent signs of an upturn in the economy. (Mint)
IRDA has constituted a working group to examine the current status of annuity products and to come out with recommendations to strengthen the same. (BL)
Government staff pension funds to hike equity investments by this fiscal. (BL)
Government will award the first ultra mega road project in two months, says minister for Road Transport and Highways. (DNA)
Government may take spectrum refarming route for 3G. (FE)
No safety as yet!
Anyone who thinks there is safety in numbers hasn’t looked at the stock market pages.
Today we expect a flat to slightly higher start. Asian markets are mostly in the green. US stocks managed to overcome a grim jobs report. Volatility will persist. Immediate support is placed at around 4700. Below that support may kick in at 4640-4650. Resistance is expected around 4850-4900. Overall, near-term trading range is seen between 4500-5000.
The UPA is making renewed noises about disinvestment, financial sector and fiscal reforms, but whether it has the courage to execute them is questionable.
The quarterly numbers haven’t inspired as much confidence as one would have expected them to. Investment led growth is yet to materialise. Credit growth remains subdued. Inflation has started inching higher. Interest rates have bottomed out.
The bulls may have escaped a big scare but the danger is still lurking. The threat of a fresh correction still looms given the uncertainty over the shape of recovery. A measured ‘exit’ from the emergency stimulus measures is likely over the next few months. The market could again get withdrawal symptoms when the ‘exit’ begins.
FIIs were net buyers in the cash segment on Friday at Rs5.87bn on a provisional basis. The local funds were net buyers of Rs2.37bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs14.72bn. On Thursday, the foreign funds were net buyers of Rs2.67bn in the cash segment. FIIs' net investments in Indian stocks this year is above $14bn. Mutual Funds were net buyers in the cash segment at Rs343mn on Thursday.
US stocks ended with modest gains on Friday after a volatile session, as most market players chose to overlook a government report showing the unemployment rate jumping to a 26-year high. Analyst upgrades of General Electric Co. (GE), Macy’s and Amazon.com helped spur optimism that the world's largest economy is recovering.
The Dow Jones Industrial Average added 17 points, or 0.2%, to close at 10,023.43. The S&P 500 gained 3 points or 0.3%, to end at 1,069.30 and the Nasdaq Composite index rose 7 points, or 0.3%, to finish at 2,112.44.
US stocks had gained on Thursday, with the Dow reclaiming 10,000 after a series of better-than-expected economic reports. But trading was very choppy on Friday, with stocks slumping at the open and then fluctuating for most of the session, before closing higher.
All three major US benchmarks finished higher for the week, recovering most of what was lost in a two-week selloff. For the week, the Dow was up 3.2%, while the Nasdaq rose 3.3% and the S&P 500 added 3.2%.
Though the Dow has closed above 10,000 several times this fall, it has not finished a full week of trading above that level since the period ending Oct. 3, 2009.
US stocks, as represented by the broad S&P 500 index, had lost 5.6% through the week ended Nov. 30. Prior to that selloff, the S&P 500 had rallied 63% off the March bottom.
US companies cut 190,000 jobs from their payrolls in October, after cutting 219,000 in the previous month, according to a Labor Department report. That was worse than the 175,000 economists. The unemployment rate, generated by a separate survey, rose to a 26-year high of 10.2% from 9.8% in September. Economists thought the rate would rise to 9.9%.
While the unemployment rate jump was surprising, the number of non-farm payrolls cut suggest that the pace of layoffs is slowing. Also, the number of non-farm jobs lost in August and September was revised down. American companies cut 91,000 fewer jobs in August and September than originally reported.
Dow component GE surged 6.2% after analysts at both Bernstein and Oppenheimer upgraded the stock to "outperform," according to reports. The GE-owned business television network CNBC reported that its parent is near a deal to sell its 80% stake in NBC Universal to Comcast. Comcast shares were up 2.8%.
Amazon.com climbed after Bernstein upgraded it to "outperform" from "market perform," and also lifted its 12-month target price on the stock.
AIG reported its second straight quarterly profit after seven quarters of losses. Results were better than expected, but the company's main insurance businesses posted weaker revenue, sending shares tumbling by almost 10% Friday. AIG stock had rallied on Thursday ahead of the results.
Starbucks posted weaker quarterly results that beat expectations in a report released late on Thursday. The coffee retailer also boosted its outlook for 2010 profit, after having cut costs and shuttered hundreds of stores in the last year. Shares gained 7.2%.
Fannie Mae reported an almost US$19 billion quarterly loss on bad loans. The biggest US mortgage lender also said that it would need more help from the Treasury. Shares fell 7.1%.
The dollar fell against the euro on speculation that the Federal Reserve will keep borrowing costs near zero into next year after the US unemployment rate exceeded 10 percent for the first time since 1983. The dollar fell versus the yen.
US light crude oil for December delivery fell US$2.19 to US$77.43 a barrel on the New York Mercantile Exchange, a decline of more than 3%.
COMEX gold for December delivery climbed US$6.40 to settle at US$1,095.70 an ounce after hitting an all-time high of US$1101.90 during the session.
Treasury prices rose, lowering the yield on the 10-year note to 3.51% from 3.52% on Thursday.
European shares finished the week on an upbeat note, overcoming weak US jobs data to close slightly higher. The pan-European Dow Jones Stoxx 600 index rose 0.2% to close at 241.06. On the week, the Stoxx 600 added 1.7%. The index recovered after temporarily losing ground early in the afternoon.
The UK's FTSE 100 index rose 0.3% to settle at 5,142.72, while the German DAX index finished nearly flat at 5,488.25. The French CAC-40 index posted a virtually flat finish, slipping 1.44 points to close at 3,707.29.
After a solid bounce back on Wednesday, the Indian markets managed to extend gains to second straight trading session. The upswing was seen despite weak cues from the Asian and the European markets. The BSE Sensex regained the 16,000 mark led by the Metals, Realty and the Power stock. Even the Mid-Cap and the Small-Cap stocks were in demand. Technically, the 4,720 levels which acted as a strong resistance for the Nifty in the past failed to act as a resistance.
In the US, The Federal Reserve on Wednesday indicated yet again that it is no hurry to raise interest rates, saying that the US economy remains weak even though the worst recession in decades appears to be winding down. The American central bank reiterated its long-standing stance to keep interest rates exceptionally low for an extended period because it expects only a weak recovery.
The BSE Sensex gained 151 points at 16,063 after touching a high of 16,092 and a low of 15,564. The index opened at 16,926 against the previous close of 16,912. The NSE Nifty advanced 54 points to shut shop at 4,765.
In Asia, the Nikkei in Japan was down 1.3%, while Australia's S&P/ASX ended lower by 0.7% at 4,508. Shanghai SE Composite gained 0.5% and Hang Seng index in Hong Kong fell 0.6%.
In Europe, stocks were in the negative terrain. The FTSE in the UK was down 0.7%, The DAX in Germany was down 0.5% and the CAC 40 index in France was down 0.6%.
Coming back to India, among the BSE sectoral indices, the Metal index was the top gainer, adding 3%, followed by the Realty index that was down 2.5% and the BSE Power index was down 2.5%.
The BSE Mid-Cap index gained 2% and the BSE Small-Cap index was up 2%.
Among the 30-components of Sensex, 23 stocks ended in the red and 7 ended in the positive terrain. Reliance Infra, RCom, Hindalco, Bharti and Tata Steel were among the major gainers.
On the other hand, among the major losers were SBI, ITC, ACC, Infosys and TCS.
Outside the frontline indices, the big gainers in the broader market were Spicetele, IFCI, RCF, Hind Copper and Mundra Port. On the other hand, losers included India Cement, Container Corp, Madras Cement and Power Fin.
Shares of Suzlon surged for the first time in 11 days. After sliding over 34% in the past 10 days, shares of Suzlon shot up by over 13% to end at Rs62.5 on the back bargain hunting witnessed at lower levels.
According to a release on the Bombay stock exchange, Suzlon, the constructor of large wind parks has pledged 1.79% equity shares with Indiabulls Financial Services Ltd.
The stock opened at Rs55.5 and made an intra-day high of Rs63 and a low of Rs55. Total traded volumes stood at 20.9mn shares.
The stock hit 52-week high of Rs145.85 on June 5, 2009 and 52-week low of Rs33.05 on March 12, 2009.
Shares of Maytas Infra were locked at 5% upper circuit at Rs149.45 after the company secured the Pune-Sholapur road contract worth Rs7.9bn from IL&FS Transportation Networks Limited (ITNL). ITNL was awarded the work of 4 laning of Pune-Sholapur section of NH-9 from km. 144.40 to km. 249.00 (104.60 kms) in the state of Maharashtra on a DBFOT (Design, Build, Finance, Operate & Transfer) basis by National Highways Authority of India (NHAI). This project is to be completed in a period of 20 month.
Shares of IFCI surged by over 14% to Rs49.95 after media reports stated that the government has hired a consultant to advise it on future of the company. The consultant will advise the government on its role in IFCI.
Reports also stated that IFCI could be merged with another state-owned financial institution
The stock opened at Rs44 and made an intra-day high of Rs50 and a low of Rs43.5. Total traded volumes stood at 20.4mn shares.
Shares of Aban Offshore erased early losses and ended higher by 4% to Rs1244. The stock slipped sharply from day’s high after media reports stated that the company’s US$200mn QIP may be delayed as the promoters are not willing to dilute their stake at the current market price.
The company needs to pay US$410mn debt by December 2009. Reports also added that the promoters are also weighing other option to raise fund, would also consider selling rigs.
Gvk Power & Infrastructure announced that the Board of directors approved the acquisition of 40.6mn shares being 12% of paid up equity share capital of Bangalore International Airport Limited (BIAL) at a total cost of Rs.4.84bn from Flughafen Zuerich AG through GVK Airport Developers Pvt. Ltd.
The stock ended lower by 2% to Rs47.25, it opened at Rs48 and made an intra-day high of Rs48.8 and a low of Rs45.4. Total traded volumes stood at 5.4mn shares.
Shares of RCF shot up by over 12% to Rs65.9 after reports stated that the company plans to foray in to cement distribution. The company is aggressively negotiating with seven cement manufacturers to enhance the portfolio of its dealers, the company’s Chairman and MD, Mr U. S. Jha was quoted as saying.
RCF posted a net profit of Rs561.2mn for the quarter ended September 30, 2009 as compared to Rs843.7mn for the quarter ended September 30, 2008. Total Income has decreased from Rs26.25bn for the quarter ended September 30, 2008 to Rs18.03bn for the quarter ended September 30, 2009.
Market may extend recent gains on positive Asia; RIL eyed
The market may extend last three days gains on positive Asia. Hopes of a pick-up in the pace of economic reforms may also support market.
The long-stalled reforms to its financial sector gained momentum on Sunday after Prime Minister Manmohan Singh said he would push through legislative changes, including the insurance sector which foreign players are eyeing he told the World Economic Forum in Delhi. Singh also said his government would take steps in the 2010/2011 fiscal year to wind down economic stimulus measures for Asia's third largest economy. He said there is a need to develop long-term debt markets, deepen corporate bond markets, strengthen the insurance and pensions sectors, improve futures markets for better price discovery and regulation. He also said the government would accelerate the sale of stakes in state-run companies.
The prime minister said growth in the next fiscal year, assuming a normal monsoon season, was expected to be more than 7.0 % compared with a 6.5 % forecast for the 2009/2010 fiscal year. The government has a medium-term target of 9 % growth per annum, needed to help reduce widespread poverty.Singh said the Indian economy grew 6.7 %t in 2008/2009 with the help of an economic stimulus package.
The timing of the withdrawal of stimulus steps for India's economy will be decided when it becomes clear the economy is recovering, but there will be no fresh stimulus, Finance Minister Pranab Mukherjee said on Sunday.
Last month, while announcing the monetary policy the Reserve Bank of India signalled an interest rate hike was imminent, citing inflationary pressures. It also started tightening some bank credit.
Meanwhile, energy major Reliance Industries (RIL) will be in action on reports firm is close to announcing a major overseas acquisition. The likely target is a part of the assets owned by troubled petrochemical major LyondellBasell, which is undergoing reorganisation under the protection of a US court report said.
State Bank of India may see action as bank said on Monday it had entered into an agreement with T. Rowe Price to sell a 6.5 % holding each in UTI Asset Management Company and UTI Trustee Company.State Bank currently holds 25 % in each of the companies and after the sale its holding would be reduced to 18.5 % it said in a statement.
SBI announced after market hours on Friday 6 November 2009 that the bank has revised downwards deposit rates by 25-50 bps for a few maturities effective from 9 November 2009.
Asian stocks climbed on Monday led by financial companies after a takeover bid in Australia's insurance industry. The key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan rose by between 0.01% to 1.35%.
U.S. stocks barely budged in a choppy trading session on Friday, lifted by several broker upgrades that offset disappointing data showing the unemployment rate rose to its highest in more than 26 years. The Dow Jones industrial average gained 2.04 points, or 0.02 % to 10,008.00. The Standard & Poor's 500 Index .SPX added 0.78 of a point, or 0.07 % to 1,067.41. The Nasdaq Composite Index rose 2.28 points, or 0.11 %, to 2,107.60.
The economic data came in worse than expected. The labour department said employers cut 1,90,000 jobs in October 2009 and the unemployment rate jumped to 10.2% its highest level in more than 26 years in October. In other data, wholesale inventories fell 0.9% in September 2009 and consumer borrowing fell by $ 14.8 billion in September.
Group of 20 finance ministers and central bankers pledged on Saturday 7 November 2009 to prepare strategies to end emergency support for their economies, but to keep the aid flowing until recovery was assured.
Back home, the key benchmark indices extended for the third day in a row on Friday 6 November 2009 as the US dollar fell against a basket of major currencies. But intraday volatility was high. The BSE 30-share Sensex rose 94.36 points or 0.59% to 16158.28 on that day.
As per provisional data on NSE, foreign funds bought shares worth Rs 587.02 crore and domestic funds bought shares worth Rs 236.62 crore on Friday.
Tata Power
We recommend a sell in the stock of Tata Power Company from a short-term perspective. It is evident from the charts of the stock that its intermediate-term uptrend that commenced in March low of Rs 602 was arrested at Rs 1,487 in late October. The stock has a significant long-term resistance in the band between Rs 1,450 and Rs 1,500 level. Triggered by the negative divergence in the weekly relative strength index and moving average convergence and divergence indicator the stock reversed its direction. Since late October, it has been on a short-term downtrend. On October 30, the counter tumbled 4 per cent penetrating its intermediate-term up trendline. Moreover, it declined 4 per cent with good volume on November 6, reinforcing the downtrend. The stock is trading well below its 21- and 50-day moving averages. The daily momentum indicator has entered the bearish zone. Our short-term outlook on the stock is bearish. We anticipate its decline to continue until it hits our price target of Rs 1,145. Traders with a short-term perception can sell the stock while maintaining stop-loss at Rs 1335.
via BL
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