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Wednesday, June 02, 2010
Stocks set to begin on a flat note
Headlines for the day:
GVK PIL arm gets BOT project
Surya Pharma to raise Rs500 crore
Apollo Tyres marches into Europe with local brands
NTPC- Kaniha to import over 13 lakh tonne of coal in 2010-11
Events for the day:
Major corporate action
Ex-date for right issue of Comfort Intech
For more events, log on to Sharekhan.com
Pre-market report
Global signals
The European shares recovered from steep losses to close slightly higher on Tuesday (June 01, 2010), as strong US data helped to ease investors' worries about the global economic recovery, though British Petroleum fell heavily.
The US stocks fell on Tuesday as energy shares slid after the latest failed attempt to halt the oil spill in the Gulf of Mexico and the US government announced a criminal probe into the disaster.
In today's trade, the Asian markets were trading on a mixed note. At the time of writing this report, SGX Nifty was trading 19 points higher.
Indian Indices
Yesterday, the benchmark indices broke its four-day winning streak and ended session in red due to profit booking and heavy sell-off across the globe.
The Asian markets were trading mixed as Wall Street's losses weighed on overall sentiment. Better-than-expected readings on the US economy failed to cheer the main US indices.
The bulls may find some relief this morning as the market gets off to a flat start.
The India's exports rose 36% to $16.9 billion and the imports surged 43% to $27.3 billion in April 2010. Auto numbers have been very encouraging in May.
Commodity cues
In the commodity space, the crude oil prices fell after downbeat overseas manufacturing data raised concerns that global fuel demand will remain low, with the Nymex light crude oil for the July series declined by $1.39 per barrel, whereas in the metals space, the Comex Gold for the July series rose by $12.60 to a troy ounce and the Comex Silver for the July series was up by $0.13 to a troy ounce.
Daily trend of FII/MF investment in equities
On June 01, 2010, the foreign institutional investors (FIIs) were the net buyers of the Indian stocks to the tune of Rs800.60 crore, whereas the domestic mutual funds, on May 31, 2010, were the net sellers of the stocks to the tune of Rs6.10 crore.
Daily News Roundup - June 2 2010
Reliance Industries, freed from its non-compete agreement with the ADAG that barred it from investing in high-growth sectors, is likely to make its first big-ticket investment in coal-fired power plants. (ET)
After 19 months of announcing a relocation of the Nano plant from Singur in West Bengal to Sanand in Gujarat, Tata Motors is set to roll out the world's cheapest car from its new abode. (BL)
Japanese auto major Nissan Motor Company today said it may partner with Hinduja Group flagship firm Ashok Leyland for launching a global compact car in India. (ET)
Macquarie-SBI was in advanced negotiations with GMR Infra to invest US$100mn in the latter’s airports division. (BS)
NTPC’s Kaniha power plant is presently reeling under a super critical condition, with coal stock of about 0.2mt which would last for only three days. (BS)
Singareni Collieries Company Limited, which is setting up a 600MW in Jaipur mandal of Adilabad district, would place orders for the power plant equipment from BHEL in July. (BS)
Axis Bank has cut the interest rate on fixed deposits of two years to 30 months by 25 bps to 7.0% and on 30 months to three years maturity by 50 bps to 7.0%. (BS)
Bank of Ireland has shortlisted HCL Technologies and IBM for an outsourcing contract potentially worth over US$600mn, replacing incumbent vendor HP, which had signed a seven-year deal with the bank in 2004. (ET)
Reliance Infrastructure won Rs29.6bn project from the NHAI for the six-laning of the 180-km Delhi-Agra road. (ET)
Reliance Power plans to invest close to Rs100bn to ramp up the capacity of its 220-MW Samalkot project in East Godavari district of Andhra Pradesh to 2,400 MW. (BL)
Suzlon Energy plans to repay its debt by raising funds through rights issue of 2 equity shares for every 15 shares held at Rs63/share. (ET)
Unitech has ended its joint venture with its Mumbai partner Omkar Group for slum rehabilitation projects. (FE)
Etisalat DB, the joint venture between UAE's Etisalat Group and Indian real estate firm DB Group, announced the soft launch of its mobile services in 15 circles. (BL)
India’s exports increased by 36.2% to US$16.8bn in April, the sixth consecutive month of growth. (ET)
As the government cut duties and stepped up public expenditure, its fiscal deficit rose by 24.9% to Rs4.1trn in 2009-10 compared to the year ago period. (ET)
The government has agreed to allow import of Chinese-made telecom gear, certified by international security audit firms such as Canadas Electronic Warfare Associates, US-based Infoguard and Israels ALTAL Security Consulting, till a dedicated certification centre and test lab is in place. (ET)
On the lines of the 3G spectrum auction, competition for BWA is hotting up, with the bid for pan-India licence touching Rs79.4bn on the seventh day of the auction. (ET)
The Delhi High Court has asked telecom companies to submit their account books to the Comptroller and Auditor General of India. (ET)
The power ministry plans to allow 15-year KG gas pact for new power plants. (ET)
The government is considering to provide greater autonomy to 12 top state-owned ports by converting them into corporates to help them compete better with international players. (FE)
With more SEZs becoming operational, the Centre will consider on June 8 framing rules that would allow migration of units from one SEZ to the other. (FE)
The government is considering to price domestic coal on par with global rates, a move which may increase the cost of the raw material and fuel rise in power tariff. (FE)
Freak Day...Nifty ends below 200DMA
It was a freak day for the Indian markets as an alleged trading error in index bellwether Reliance Industries spooked the sentiment in afternoon trade. Also undermining the mood was renewed weakness in global markets amid worries about China’s slowing economy and BP’s inability to plug the oil spill in the Gulf of Mexico.
Meanwhile, the euro re-tested a four year low against the dollar after the European Central Bank said yesterday there may be more bank losses as the credit crisis spreads.
"The NSE Nifty lost over 100 points in a single trading session after rising by close to 300 points in the last four sessions. The Nifty reversed sharply from its 100DMA and closed below its long term moving average (200DMA)" says Amar Ambani, Vice President Research IIFL.
In a bizarre turn of events, shares of Reliance Industries were seen hitting an intra-day low of Rs840 on the BSE, where nearly 0.5mn shares were offloaded in a freak trade. Finally, the BSE 30-share Sensex slipped 372 points at 16,572 and NSE Nifty fell 116 points at 4,970.
Markets in Asia ended in the red; the Nikkei in Japan fell by 0.6%, Australia's S&P/ASX slipped by 0.3% and while the Hang Seng index in Hong Kong fell 1.3%.
European indices were trading in the red as well, the DAX in Germany was down 1.7%, the CAC 40 index in France was down 2.5% and the FTSE in the UK was down 2.2%.
All the BSE sectoral indices ended in the negative terrain, BSE Metal index was the top loser, the index was down 4%, followed by BSE Realty index was down 3% and BSE Oil & Gas index was down 2.5%. Even the BSE Mid-Cap index ended loser by 1.3% and the Small-Cap index edged lower by 1%.
Outside the frontline indices, the big losers in the broader market were Fortis Healthcare, Century Tex, Bhushan Steel and Indian Bank. On the other hand, gainers included Chambal Fert, Container Corp, Renuka Sugars and Madras Cement.
Precious metals shine
Gold and silver gain as euro drops to four-year lows
Yellow metal prices ended higher for sixth straight day on Tuesday, 01 June 2010. Prices rose as problems in the euro zone lingered and the euro dropped to four-year low levels. Strong manufacturing data on the US front also perked up prices. Markets were closed yesterday in observance of Memorial Day.
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 August delivery ended at $1,226.9 an ounce, higher by $11.9 (1%) an ounce on the New York Mercantile Exchange. Gold for June delivery had 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 3.3%. Gold ended May higher by 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 11.7%.
On Tuesday, July Comex silver futures ended higher by 12.9 cents (0.7%) at $18.551 an ounce. Last week, silver ended higher by 4.3%. For May, silver shed 1.1%. 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 6.7%.
In the currency market on Tuesday, the euro shed almost 2% against the dollar and fell to its lowest levels in more than four years on concerns that the euro zone problems will slow down the overall recovery of that region.
Among economic reports for the day, it was seen that activity in U.S. manufacturing slowed a bit in May after hitting a six-year high in April but still showed considerable momentum. The Institute for Supply Management index fell to 59.7% in May from 60.4% in April. This was above the 59% reading expected. Readings over 50% in the ISM diffusion index indicate that more firms are growing than contracting. The ISM tracks the breadth of growth across firms, asking purchasing managers if business is better this month than last.
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 August delivery closed higher by Rs 318 (1.72%) at Rs 18,716 per ten grams. Prices rose to a high of Rs 18,815 per 10 grams and fell to a low of Rs 18,434 per 10 grams during the day's trading.
At the MCX, silver prices for July delivery closed Rs 311 (1.06%) higher at Rs 29,603/Kg. Prices opened at Rs 29,320/kg and rose to a high of Rs 29,755/Kg during the day's trading.
Crude continues to glide down
Demand concerns weigh on crude prices
Crude oil prices ended lower at Nymex on Tuesday, 01 June 2010. Though prices had started the day lower, it inched up higher during the course of the day but the rise was short lived and prices fell again. Prices dropped due to demand concerns for energy across the globe.
On Tuesday, crude-oil futures for light sweet crude for July delivery closed at $72.58/barrel (lower by $1.39 or 1.9%). Last week, crude gained 5.6%.
For the month of May, crude shed 14%. It was the biggest monthly drop for crude since December 2008. 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 3.1%.
In the currency market on Tuesday, the euro shed almost 2% against the dollar and fell to its lowest levels in more than four years on concerns that the euro zone problems will slow down the overall recovery of that region.
Among economic reports for the day, it was seen that activity in U.S. manufacturing slowed a bit in May after hitting a six-year high in April but still showed considerable momentum. The Institute for Supply Management index fell to 59.7% in May from 60.4% in April. This was above the 59% reading expected. Readings over 50% in the ISM diffusion index indicate that more firms are growing than contracting. The ISM tracks the breadth of growth across firms, asking purchasing managers if business is better this month than last.
Separately, the Commerce Department in US showed that construction spending increased 2.7% in April, the biggest gain in nearly 10 years.
Fitch Ratings on last Friday downgraded Spain's debt to AA+ from AAA, citing concerns about the country's level of debt relative to its gross domestic product.
Among other energy products on Tuesday, reformulated gasoline for July delivery lost 4 cents, or 2.2%, to settle at $1.98 a gallon on Nymex.
Natural gas for July delivery declined 9 cents, or 2.1%, to $4.24 per million British thermal units.
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 June delivery closed higher by Rs 23 (0.66%) at Rs 3,487/barrel. Natural gas for June delivery closed at Rs 202.3, lower by Rs 1.5 (0.73%).
MRPL
Investors with short-term trading perspective can consider selling the stock of Mangalore Refinery and Petrochemicals Ltd (MRPL). Since June 2009 high of Rs 102, the stock has been on an intermediate-term downtrend. In April 2010, the stock encountered significant resistance around Rs 84 and its downtrend accelerated thereafter. It has been on a medium-term downtrend too since April. The stock conclusively broke through its important long-term support level of Rs 70 during the third week of May by tumbling almost six per cent. At present, this support level has turned into a key resistance level for the stock. It is trading well below its 21 and 50-day moving averages. The daily relative strength index has re-entered into the bearish zone from the neutral region, whereas the weekly RSI is featuring in the bearish zone. Both daily and weekly moving average convergence and divergence indicators are hovering in the negative territory. These facts reinforce bearish sentiment on the stock. Our short-term forecast is bearish. We expect the stock to decline further until it hits our price target of Rs 63 in the upcoming sessions. Short-term traders can, hence, sell the stock with the stop at Rs 69.
via BL
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