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Wednesday, May 05, 2010
Crude plunges below $83
Prices register steepest fall in three months
Crude oil ended substantially lower at Nymex on Tuesday, 04 May 2010. Prices fell in tandem with US equities. U.S. stocks fell sharply on Tuesday as concerns over Greece's bailout package and Europe's national debts weighed on sentiment and as dollar once again climbed up against the euro.
On Tuesday, crude-oil futures for light sweet crude for June delivery closed at $82.74/barrel (lower by $3.35 or 4%). It was biggest drop for crude in three months – both in dollar and percentage terms. Oil for July delivery fell $3.39 cents, or 3.9%, to $85.76 a barrel. Last week, crude ended higher by 1.2%. For the month of April, crude rose 2.8%. For the first quarter of this year, crude rose by 5.5%. Year to date, crude is higher by 4.4%.
Prices are still very much lower as compared to 3 July, 2008 settlement of $145.29 a barrel and an intraday high of $147.27 on 11 July, 2008, an all-time high. However, oil has also gained nearly 155% from a December 2008 nadir. That day prices settled at $33.87 a barrel following an intraday low of $32.40.
A bailout package worth some $146 billion for Greece was announced over the weekend, but it was not enough to restore investors' confidence about the euro-zone countries and the euro and investors again sought gold as a hedge against currency fears.
In the currency market on Tuesday, the dollar index, which measures the strength of the dollar against basket of six other currencies rose by 1.2%. The dollar is up some 6.7% for the year.
All eyes are now set on tomorrow's weekly inventory report by the energy department.
Natural gas futures rose for a second day in New York on Tuesday. Natural gas for June delivery rose 1.3 cents, or 0.3%, to settle at $4.013 per million British thermal units on the New York Mercantile Exchange.
Crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. It reached a high of $82 earlier in October 2009 and hit a low of $33.98 on 12 February 2009. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
At the MCX, crude oil for May delivery closed lower by Rs 124 (3.2%) at Rs 3,736/barrel. Natural gas for May delivery closed at Rs 180.9, higher by Rs 2 (1.1%).
Market may open sharply lower on weak global cues
Indian equities are likely to open negative on Wednesday, May.5, 2010. SGX Nifty is trading at 5,054.5. (7.44 am), 76.50 points lower than Tuesday closing of 5,131.
Asian stocks declined, extending a global rout, as concern grew that Europe`s government debt crisis will spread beyond Greece. Hong Kong`s Hang Seng index declined by 372.93 points, or 1.80%, at. 20,390.12.
US stocks plunged around the world Tuesday as fears spread that Europe`s attempt to contain Greece`s debt crisis would fail. The euro fell to its lowest point against the dollar in a year. The Dow fell 225.06 points, or 2.02%, to 10,926.77.
Among Indian ADRs, Dr Reddy`S Laboratories (1.1%), Tata Communications (3.54%), Infosys Technologies (3.56%), MTNL (3.74%), Satyam Computer (4.1%),were major loser.
European stocks plunged, amid concern that Greece`s debt crisis will spread through the region. UK`s benchmark index FTSE 100 declined 142.18 points, or 2.56%, to end at 5,411.11.
Oil prices tumbled below USD 83 a barrel Tuesday on a stronger dollar and a falling stock market as investors worried about the ongoing European financial crisis. After setting an 18-month high during trading Monday, benchmark crude for June delivery fell USD 3.45, or 4%, to settle at USD 82.74 on the New York Mercantile Exchange.
In the spot market, the Dollar Index increased 0.319% to 83.56. It touched a high of 83.65 and a low of 83.39 after opening at 83.48. (22:01 ET)
Daily News Roundup - May 5 2010
The government has asked Reliance Industries to cut gas output from its eastern offshore KGD6 fields so that imported fuel stocks can be cleared. (ET)
The government said it is in the process of granting the Maharatna status to four state-run firms -ONGC, SAIL, NTPC and IOC. (ET)
L&T and UK-based Howden Global have signed a JV to design, engineer, manufacture and supply axial fans and air pre-heaters to Indian thermal power plants ranging between 100 MW and 1,200 MW. (BL)
HCL Technologies has signed a US$500mn strategic pact with pharmaceutical major MSD (also known as Merck & Co) for a period of five years. (BS)
Oil India and Indian Oil Corp has pulled out of the race to acquire Gulfsands Petroleum after the UK-listed firm refused the Indian firms’ request for due diligence before making a firm offer. (ET)
NMDC and MMTC are likely to finalise the iron ore export contracts with Japan and Korea by this month-end or early next month. (BL)
NMDC is keen to enter into coal mining with Coal India Ltd as a partner. (FE)
Ashok Leyland has reported sales of 6,500 vehicles for the month of April, compared with 1,750 in the same month last year. (BL)
Apollo Tyres will hike prices of its finished rubber products by 4.5%–5% across segments in June. (FE)
Videocon Industries has moved a petition to the World Bank seeking to revoke a three-year ban for misrepresenting information in a tender document in 2003. (ET)
Welspun-Gujarat Stahl Rohren will acquire majority stake in Saudi Arab-based pipe facility and a pipe coating facility. (BS)
Jet Airways is understood to have asked the MMRDA for six more months to pay for the 1.47-acre Bandra-Kurla Complex plot it bought for Rs8.3bn in 2008. (FE)
Glenmark Pharmaceuticals issued exclusive marketing rights for cholesterol control ezetimibe to another generic company Par Pharmaceutical Companies in an effort to strengthen its patent challenge case against Merck. (ET)
Sterlite Technologies will set up an LCD factory in Maharashtra at an investment of Rs96bn. (BS)
NDTV has terminated its agreement with Scripps Networks Interactive Inc, which it had entered into, to introduce lifestyle channels in India. (BS)
Adani Enterprises said it plans to raise up to Rs40bn through the issue of securities in global or domestic markets. (ET)
McNally Bharat said that it had bagged orders worth Rs1.1bn from Vedanta Group firm to provide engineering related works in Zambia. (FE)
The bid price for 3G spectrum continues to rise as it touched Rs107.5bn for pan-India operations on the 21st day of auction, assuring the government of Rs433.7bn in terms of revenue. (ET)
India is trying to mobilise opinion against the proposed international standard on corporate social responsibility that could give legal sanction to developed countries to reject exports from developing countries like India. (ET)
Parliament passed the budget 2010-11 with the finance minister remaining firm and turning down all pleas for a rollback of increase in duties on fuel. (ET)
The department of disinvestment (DoD) will move a proposal this week for divesting a 10% stake in Coal India through an IPO to cash in on the positive sentiment created by the recently closed issue of Satluj Jal Vidyut Nigam. (ET)
The finance ministry has rejected the petroleum ministry's demand for giving a seven-year income tax holiday to those who win sedimentary blocks for natural gas and coal bed methane (CBM) exploration in the next round of auctions later this year. (FE)
The corporate India Inc has raised US$4.32bn in March 2010 up by 300% over US$ 1.1bn mobilized in March 2009. (FE)
Government mulls sugar decontrol as the move has received a strong push from the Commission for Agricultural Costs and Price. (BS)
The government extended the deadline for implementing cleaner emission norms for two-wheelers across the country till July 1, 2010. (BS)
SEBI has widened the scope of index-based options by allowing exchanges to offer option contracts based on Sensex and Nifty with a tenure of up to five years. (BS)
Under margin pressure due to the rising prices of natural rubber, the end-user industries have asked the Government for duty-free import of two lakh tonnes of rubber through a Government agency, besides a ban on exports. (BL)
Worldly worries
Better be despised for too anxious apprehensions, than ruined by too confident security. -Edmund Burke.
Confidence goes for a toss when the world comes tumbling down. Despite less leverage, fear may overtake temptation while attempting to pick stocks as the sentiment swings wilder by the day. Interestingly, the Japanese market has escaped the global carnage as it has been shut for 3-4 days. May be it will react when it resumes trading. South Korea’s market is also closed today.
No such luck for India, as the market is all set to witness deeper cuts. All round selling dragged the NSE Nifty below 50day DMA which it had managed to hang on to for over a month. Most technical and derivative indicators are showing further weakness and the Nifty is set to test 5050. The best tactic in such turbulent times is to stay away and wait for stability to return.
US stocks suffered their steepest drop in three months, as risk tolerance collapsed amid mounting concerns over the European debt crisis. The S&P 500 index has dropped to its fourth test of support at the March peak of 1,180. A close below this level would likely signal a near-term downtrend, according to technical analysts.
Spanish stocks led losses on European equities indices as mounting doubts over Greece’s bail-out and fears of contagion to other eurozone periphery countries haunt investors. The dollar benefited from safe haven status while the euro suffered as investors continued their lukewarm reception to the Greek rescue package.
The cost of insuring Spanish and Portuguese government debt against default soared. Also, hung parliament risks loomed for Great Britan as the general election nears. The top priority for the ultimate winner in the UK election will be to convince ratings agencies that the high budget deficit will be fixed soon.
Oil futures also had their worst one-day drop since early February. Gold prices backtracked from five-month highs. Commodities weakened as worries over an economic slowdown in China added to nagging concerns over the eurozone’s sovereign debt crisis. Base metals plunged.
Wall Street's key index of volatility hit its highest level in more than two months. The VIX (VIX), which gauges fear in the market, surged more than 18% to close at 23.84 on Tuesday. That's the highest reading since the middle of February and up 53% since early April, when the VIX was trading at a three-year low.
Results Today: Alembic, Allcargo Global, Brigade, Elder Pharma, Granules India, JB Chemicals, Lupin, Mid-Day, NIIT Tech, Prism Cement, TN Petro and UB.
On a day, when the market plummeted, FIIs were net sellers of only Rs296.8mn in the cash segment on Tuesday on a provisional basis, according to NSE web site. Local institutions were net sellers of Rs4.38bn. In the F&O segment, the foreign funds were net buyers of Rs2.34bn. FIIs were net sellers of Rs2.36bn in the cash segment on Monday, as per the SEBI data.
The Indian markets got derailed even as citizens in Mumbai continue to struggle without its lifeline - the suburban local trains. "Market sentiment were hit badly amid concerns that the People's Bank of China will go for more monetary tightening. In addition, lingering concerns regarding Sovereign debt problems further fueled a sell-off on Dalal-Street", says Amar Ambani Vice President IIFL.
Tuesdays are often infamous to start one way and end the other way. After starting off with modest gains, markets were unable to hold on and slipped sharply after all round selling across the sector dragged the NSE Nifty below its 50day DMA which it managed to hold for more than a month.
Finally, the BSE Sensex lost 249 points to end at 17,137 and NSE Nifty fell 74 points to close at 5,149. Among the 30 components of Sensex, 28 ended in the negative terrain and only HDFC and Hero Honda ended in the green.
Markets in Asia ended in the red; the Nikkei in Japan was closed in a second day in a row, Australia's S&P/ASX was down 1%, the Hang Seng index in Hong Kong was down 0.3% and Shanghai SE Composite also was closed.
On the other hand, European indices were trading in the red, the DAX in Germany was down 0.8%, the CAC 40 index in France was down 1.5% and the FTSE in the UK was down 1%.
All the other sectoral indices ended in the red. The BSE Metal index was top loser; the index lost 3.9%, followed by BSE Realty index down 2.7% and BSE Capital Goods index down 1.69%. Even the Mid-Cap and the Small-cap index lost 1.75% each.
Ambuja Cements
We recommend a sell in the stock of Ambuja Cements from a short-term trading perspective. It is apparent from the charts that the stock has been on an intermediate-term uptrend since November 2009 low of Rs 82. However, the stock encountered significant long-term resistance in the band between Rs 120 and Rs 125 in late March 2010 and started to lose its bullish momentum. Moreover, the stock reversed direction forming a evening star candlestick pattern last week. A negative divergence in daily moving average convergence and divergence and also in weekly relative strength index confirms that the stock has reversed direction.
On May 4, the stock tumbled almost 4 per cent penetrating the medium-term uptrend-line, which was in place since February 2010, and the 21-day moving average. Daily RSI is on the brink of entering the bearish zone form the neutral region and weekly RSI has entered the neutral region from the bullish, implying reinforcement of bearishness. The stock could fall to Rs 109 in the forthcoming sessions. Short-term traders can sell the stock with stop-loss at Rs 120.
via BL
Gold drops from highest levels in five months
Precious metals pare early gains and end sharply lower
Precious metals pared all their gains and ended sharply lower at Comex on Tuesday, 04 May 2010. Prices fell in tandem with US equities. U.S. stocks fell sharply on Tuesday as concerns over Greece's bailout package and Europe's national debts weighed on sentiment and as dollar once again climbed up against the euro.
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 Tuesday, gold for June delivery ended at $1,169.2 an ounce, lower by $14.1 (1.2%) an ounce on the New York Mercantile Exchange. Earlier in the day, it had hit an intra day high of $1,192.4. Yesterday, gold had witnessed the highest level in five months. Gold for June delivery settled above $1,200 in early December, only to pull back to $1,172 area and dip as much as the $1,050 vicinity in early February. Last week, gold ended higher by 2.3%. For the month of April, gold ended higher by 6%. For the first quarter of this year, gold rose by 1.7%, its sixth quarterly rise. On a year to date basis, gold is higher by 6.7%.
On Tuesday, July Comex silver futures ended lower by $1 cents (5.3%) at $17.84 an ounce. Last week, silver ended higher by 2.4%. For the month of April, silver ended higher by 4.1%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 2.8%.
A bailout package worth some $146 billion for Greece was announced over the weekend, but it was not enough to restore investors' confidence about the euro-zone countries and the euro and investors again sought gold as a hedge against currency fears.
In the currency market on Tuesday, the dollar index, which measures the strength of the dollar against basket of six other currencies rose by 1.2%. The dollar is up some 6.7% for the year.
Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.
Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end. Silver futures had hit a low at $10.42 on 15 January 2009 and hit a high at $19.30 per ounce on 2 December 2009. Like gold, silver also ended lower than its all time high level.
At the MCX, gold prices for June delivery closed higher by Rs 2 (0.01%) at Rs 17,188 per ten grams. Prices rose to a high of Rs 17,362 per 10 grams and fell to a low of Rs 17,125 per 10 grams during the day's trading.
At the MCX, silver prices for July delivery closed Rs 931 (3.3%) lower at Rs 27,605/Kg. Prices opened at Rs 28,461/kg and fell to a low of Rs 27,450/Kg during the day's trading.
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