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Saturday, September 27, 2008
Weekly Newsletter - Sep 27 2008
At the time of writing this, world markets were still unsure whether the US government's US$700bn bailout plan will get cleared by the Congress. President Bush, however appeared confident of seeing the rescue plan through despite growing apprehensions, which sent global markets into a tizzy on Friday. The unease over Bush government's bailout package may vanish if the US Congress approves the plan to cleanse the American financial system. Monday's movement in the market will hinge a great deal on what transpires on Capitol Hill. If the deal is passed in some form or the other, global markets are sure to rally. On the flip side, any further delay will dent investors' confidence further, leading to more selling.
Market players will also keep an eye on what happens to the Indo-US nuclear deal. Any bad news on this front could add to the weak undertone. On the whole, the outcome of these two events will drive the market on Monday. From thereon, the trend would depend on fresh newsflow from the US as well as local markets. The forthcoming quarterly results will be another key development. SEBI's Board is to meet on Oct. 6 to take a comprehensive review of the investment regime for FIIs. This will also have a bearing on the market. Given the uncertain environment, one should remain on the sidelines and let the dust settle before taking any call on the market. Aggressive investments should be avoided, as the market is highly volatile.
Govt clears 27 new SEZs
The Board of Approval (BoA) on Special Economic Zones (SEZs) approved 27 proposals, with 17 getting the formal clearance and 10 others receiving in-principle green signal. The formally approved 17 SEZs, included an SEZ by Bharat Forge near Pune which would spread across 1,271 hectares and see investments of over Rs50bn. Another significant SEZ that was formally approved was a 1,804 hectares SEZ by Jindal's JSW Bengal Steel in Midnapur in West Bengal. This SEZ would see an investment of Rs153.21bn. Other 10 SEZs also received in-principle approvals from the Board of Approval. These include a heavy engineering SEZ of 467 hectares to be built by L&T Ship Building in Tamil Nadu. The project would see an investment of Rs16.65bn. One of the largest projects among these plans would involve an investment of Rs113.4bn. The multi-product EMPI Vittal Centre has got in-principle nod and will come up on an area of 1,100 hectares in Gujarat. The SEZ is being promoted by former Central Vigilance Commissioner N Vittal.
Why global markets are fluctuating
Ok, first let's talk about what really went wrong in an easy to understand layman's language
Financial Markets is all about confidence in the System and an underlying assumption that system will not fail. But, after the bankruptcy of Lehman Brothers in USA and Northern Rock in UK and the bailout of Fannie, Freddie and AIG investors world over have lost confidence and faith in the system. Infact some people have even started doubting if any system exists at all.
Their doubts are not unfounded as the tricky web of Credit Default Swaps (CDS) and Collateralized Debt Obligations (CDO), which are traded privately and no one, yes no one including SEC, FED or US Treasury regulate them.
And this is where the problem lies. It is an unregulated trillion dollar market which has no system in place to track follow and regulate the flow of deals and transactions. It all started with the boom in USA real estate market a decade back. The cheap credit fueled the real estate rally for almost a decade. The innovative Investment Bankers at Wall Street wanted a pie of the action and devised some new innovative instruments like mortgage backed securities and insured them with Credit Default Swaps.
HCL Tech makes counterbid for Axon
HCL Technologies announced on Friday that it was making a counter bid to acquire UK-based IT firm Axon Group. Under the terms of the offer, Axon shareholders would receive 650 pence in cash for each share, inclusive of the Interim Dividend. The offer price values the entire issued and to be issued share capital of Axon at approximately £441.1mn. The Infosys bid valued Axon at around £407mn. It may be recalled that earlier, HCL Tech had denied media reports of it making a counter offer for Axon.
The offer price represents a premium of 42.6% to the average closing price of 455.7 pence per Axon share for the three months ended August 22, being the last business day prior to the announcement of the offer by Infosys for Axon; 29.4% to the closing price of 502.5 pence per Axon share on August 22, being the last business day prior to the announcement of the offer by Infosys for Axon; and 8.3% to the Infosys offer of 600 pence per Axon share, inclusive of the Interim Dividend.
Tremors continue to rattle Wall Street
After last week's startling events on Wall Street that sent shockwaves across the global markets, many would have thought the problems facing the US financial sector were over. However, that was not to be, as more tremors struck the world's premier financial market this week that added to the global gloom. What's worse, at the end of another tough week, there was no clarity on whether the US government will be able to arrest the slide. An unprecedented bailout package proposed by White House to pull the rotten financial sector out of the abyss was stuck in the crosshair of political gamesmanship. The failure of the Bush regime to convince the lawmakers on both sides about the massive rescue plan sent global markets into a tailspin on the last day of the week. The fire sale of Washington Mutual to JP Morgan also had an adverse effect on market sentiment. Shares of North Carolina's Wachovia Corp. nearly 30% in early trading on Friday following the failure of Washington Mutual.
The Federal Reserve gave America’s last two big investment banks, Goldman Sachs and Morgan Stanley, permission to change their status to bank holding firms. They will be subject to stiffer regulation, but allowed to take deposits. Goldman Sachs raised US $5bn to shore up its capital by selling shares to Berkshire Hathaway, the firm run by Warren Buffett, a celebrated investor. The next day, it raised US $5bn more from a share offering. Mitsubishi-UFJ, Japan’s largest bank, agreed to buy up to 20% of Morgan Stanley for US $8.4bn. The Federal Bureau of Investigation said it was looking into 26 cases of potential fraud related to the collapse of America’s mortgage industry. The financial institutions under investigation are said to include the now-defunct Lehman Brothers, as well as AIG, Fannie Mae and Freddie Mac. In a bid to attract more investment to America’s struggling financial sector, the Fed relaxed rules on bank ownership. Private-equity firms will now be allowed to own bigger stakes.
Friday, September 26, 2008
BSE Bulk Deals to Watch - Sep 26 2008
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
26/9/2008 515055 ANANT RAJ IN DEUTSCHE SECURITIES MAURITIUS LIMITED B 8541305 118.00
26/9/2008 515055 ANANT RAJ IN MORGAN STANLEY MAURITIUS COMPANY LIMITED S 8541305 118.00
26/9/2008 519532 ASIAN TEA EX VHM IMPEX PRIVATE LTD S 55983 109.02
26/9/2008 513059 G.S. AUTO HARDIK M MITHANI B 75200 80.85
26/9/2008 513059 G.S. AUTO SPJSTOCK B 112378 80.08
26/9/2008 513059 G.S. AUTO HARDIK M MITHANI S 25338 80.52
26/9/2008 513059 G.S. AUTO SPJSTOCK S 130439 80.61
26/9/2008 526727 GARNET CONST JAYSHREE JHAMATMAL PARIYANI B 45804 23.54
26/9/2008 531439 GOLDSTON TEC HEMANT MADHUSUDAN SHETH B 193000 114.83
26/9/2008 531439 GOLDSTON TEC BHAVESH PRAKASH PABARI S 100000 115.00
26/9/2008 532636 IND INFOLINE CITIGROUP GLOBAL MARKETS MAURITIUS PVT LTD B 500000 97.05
26/9/2008 512237 JAI CORP LIM DEUTSCHE SECURITIES MAURITIUS LIMITED B 5704919 288.95
26/9/2008 512237 JAI CORP LIM MORGAN STANLEY MAURITIUS COMPANY LIMITED S 5704919 288.95
26/9/2008 531602 KOFF BR PICT LAXMI CAP BROKING PVT LTD B 29065 38.38
26/9/2008 532629 MCNALLY BHA IDFC SMALL MIDCAP EQUITYSME FUND B 500000 102.00
26/9/2008 532629 MCNALLY BHA TEMPLETON MUTUAL FUND A C FRANK FUND 11624 S 224650 102.01
26/9/2008 532629 MCNALLY BHA TEMPLETON MUTUAL FUND A C FRANKLIN INDIA PRIMA FUND 4615 S 277749 102.01
26/9/2008 590060 MK EXIM NARENDRA VALLABHJI BAHUVA S 21194 30.60
26/9/2008 532045 NEXXOFT INFO MANOJ H.MEHTA B 27831 35.74
26/9/2008 532045 NEXXOFT INFO HARSHA HARESH CHHATBAR S 38000 35.75
26/9/2008 531996 ODYSSEY CORP UDAYKUMAR P. SHAH B 25000 33.85
26/9/2008 531996 ODYSSEY CORP KIRIT V DAVE B 25000 32.77
26/9/2008 531996 ODYSSEY CORP UDAYKUMAR P. SHAH S 25000 34.20
26/9/2008 531996 ODYSSEY CORP TAMMANSA D KATWA S 26500 34.79
26/9/2008 531996 ODYSSEY CORP KATWA KANCHANMALA T S 26500 34.56
26/9/2008 531769 PFL INFOTECH KAUSHAL ASHWINKUMAR KANSARA B 25000 12.17
26/9/2008 531769 PFL INFOTECH BABULAL RANARAM GHANCHY B 27576 12.37
26/9/2008 531769 PFL INFOTECH KETAN C DELAVALA B 25000 12.17
26/9/2008 531769 PFL INFOTECH VISHU ENTERPRISE S 34193 12.18
26/9/2008 531769 PFL INFOTECH KAUSHAL ASHWINKUMAR KANSARA S 25000 12.20
26/9/2008 531769 PFL INFOTECH BABULAL RANARAM GHANCHY S 44898 12.19
26/9/2008 531769 PFL INFOTECH KETAN C DELAVALA S 25000 12.17
26/9/2008 503100 PHOENIX MILL DEUTSCHE SECURITIES MAURITIUS LIMITED B 930159 146.00
26/9/2008 532486 POKARNA LTD MERRILL LYNCH CAPITAL MARKETS ESPANA SA SV S 296680 76.99
26/9/2008 503873 PRIYA SPIN L PRADEEP KUMAR AGARWAL B 83841 9.35
26/9/2008 503873 PRIYA SPIN L ARVIND KUMAR AGGARWAL S 83841 9.35
26/9/2008 520086 SICAL LOG THE ROYAL BANK OF SCOTLAND PLC AS TRST OF JUPITER INDIA FUND B 200000 65.00
26/9/2008 532669 SOUTHBIOTEC MACKERTICH CONSULTANCY SERVICES PVT. LTD. B 175000 17.35
26/9/2008 532669 SOUTHBIOTEC TRICOLOUR INDIA OPPORTUNITIES FUND S 177546 17.35
26/9/2008 521161 SRI LAKS SAR BALAJI INVESTMENT S 20000 16.14
26/9/2008 532619 UTV SOFTWARE ARROW WEBTEX LTD S 200000 765.00
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NSE Bulk Deals to Watch - Sep 26 2008
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
26-SEP-2008,KOHINOOR,Kohinoor Foods Limited,VENTURE BUSINESS ADVISORS PVT LTD,BUY,166214,125.63,-
26-SEP-2008,PSTL,Pyramid Saimira Theatre L,DKG SECURITIES PVT. LTD.,BUY,154769,110.50,-
26-SEP-2008,APTECHT,Aptech Limited,CREDIT SUISSE (SINGAPORE) LIMITED A/C CREDIT SUISSE (SINGAPO,SELL,321539,152.44,-
26-SEP-2008,PSTL,Pyramid Saimira Theatre L,DKG SECURITIES PVT. LTD.,SELL,130372,112.01,-
26-SEP-2008,SINTEX,Sintex Industries Ltd.,GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD,SELL,715000,275.00,-
Selling spree continues
The bear hammering continued unabated in the market, with the index crashing below the 13,000 level amid weakness in global indices, slump in the overseas commodities markets and continuing exodus of foreign institutional investment (FII) money from the domestic markets. Keeping with its southward journey, the Sensex started the day with a negative gap of 65 points at 13,482 and shed another 428 points to slip below the 13,000 level in the early trades to touch the day's low of 13,054. The market however moved above 13,200 for the better part of the session with a negative bias. Sustained selling pressure towards the close saw the Sensex slump below 13,100 and end 3.28% or 445 points lower at 13,102, while Nifty dropped 125 points at 3,985.
The breadth of the market was extremely negative. Of the 2,673 stocks traded on the BSE, 2,169 stocks declined, while only 445 stocks advance. 59 stocks remained unchanged. Among the sectoral indices, the BSE FMCG ended positive while other indices fell around 0.96% each. The BSE Realty was the major loser and crumbled by 6.33% followed by BSE Metal (down 4.76%), BSE Bankex (down 4.27%), BSE CG (down 4.10%), BSE Power (down 3.47%) and BSE IT (down 3.39%).
Barring State Bank of India, ITC, Hindustan Unilever and ACC, the remaining 27 Sensex stocks ended in a negative territory. Sliding sharply Ranbaxy Laboratories crumbled by 8.04% at Rs272.40, Sterlite industries plunged 6.28% at Rs447.20, ICICI Bank dropped 5.83% at Rs561.25, Grasim Industries slumped by 5.72% at Rs1760.50, Hindalco declined by 5.17% at Rs99.10, Mahindra & Mahindra shed 5.06% at Rs530.50, BHEL fell by 5.03% at Rs1538.20 and DLF lost 5.01% at Rs369.50. Other front-line stocks also bore the brunt of the selling pressure and declined around 2-3% each.
Over 96.73 lakh shares of IFCI changed hands on the BSE followed by Reliance Natural Resources (87 lakh shares), Anant Raj Industries (85 lakh shares), Sesa Goa (82 lakh shares) and Idea Cellular (65 lakh shares).
Post Session Commentary - Sep 26 2008
Domestic markets witnessed sharp cut during final trading hours to close in deep red as there are large differences between Democrats and Republicans in US about the Bush Administration''s $700 billion rescue plan for the financial sector. Sentiments also dented by the failure of Washington Mutual Fund, which was acquired by JPMorgan Chase yesterday. JPMorgan Chase & Co. Inc. acquired the assets of Washington Mutual Inc.''s banking operations after federal regulators seized the ailing thrift. Under the terms of the deal, J.P. Morgan acquired all of the deposits and assets of Washington Mutual and its subsidiary Washington Mutual FSB, valued at $307 billion in assets and $188 billion in deposits.
The markets opened on down beat note and continued to exhibit weakness on the bourses. Further, Markets extended its losses to more than 3% as selling pressure intensified across the counters. Finally, US bailout delay pulled the market in extremely negative territory. BSE Sensex ended around 13,100 level and NSE Nifty closed below 4,000 mark. From the sectoral front, Reality index under performed the bench mark index as witnessed deep cut of more than 6%. Along with that, huge sell of was also witnessed in Metal, Capital Goods, Bank, Oil & Gas, Capital Goods and IT stocks. However, FMCG stocks were in limelight as witnessed buying form its baskets. The market breadth was extremely negative as 2172 stocks closed in red while 442 stocks closed in green and 59 stocks remained unchanged.
The BSE Sensex closed lower by 445.00 points at 13,102.18 and NSE Nifty ended down by 125.30 points at 3,985.25. The BSE Mid Caps and Small Caps closed with losses of 152.23 points at 4,940.82 and by 188.25 points at 5,861.78. The BSE Sensex touched intraday high of 13,486.20 and intraday low of 13,054.42.
WPI based inflation rate for the week ended 13th September 2008, was remain unchanged at 12.14% at the same level recorded a week earlier. Inflation remains unchanged even as the Finance Ministry said prices of essential items like cereals, pulses, sugar and edible oils declined on weekly basis.
Losers from the BSE are Ranbaxy Lab (8.04%), Ranbaxy Lab (4.70%), Sterlite Indus (6.28), ICICI Bank Ltd (5.83%), Grasim Indus (5.72%), Hindalco (5.17%), M&M Ltd (5.06%), BHEL (5.03%), DLF Ltd (5.01%), Tata Steel (4.88%) and Reliance Com Ltd (4.83%).
The BSE Metal index plunged 475.01 points to close at 9,502.09. Major losers are Gujarat NRE C (9.66%), Jindal Steel (7.25%), Sterlite Indus (6.28), Steel Authority (5.84%), Hincalco (5.17%) and Ispat Indus (5.06%).
The BSE Capital Goods index lost 461.94 points to close at 10,795.19. Major losers are Praj Indus (7.16%), Punj Lloyd (6.86%), Reliance Industrial Infra (6.47%), Siemens Ltd (6.33%), Usha Martin (5.84%) and Walchand In (5.12%).
The BSE Bank index dropped by 292.93 points to close at 6,570.54. As Indian Overseas Bank (7.72%), IDBI Bank Ltd (6.11%), ICICI Bank Ltd (5.83%), Canara Bank (4.32%), HDFC Bank Ltd (4.05%) and Punjab national Bank (4.03%) closed in negative territory.
The BSE Oil & Gas index ended down by 282.58 points at 9,081.43 as Aban Offshore (9.63%), Reliance Natural Resources (5.25%), Essar Oil Ltd (3.82%), ONGC Ltd (3.37%), Cairn India (2.69%) and Reliance Petr (2.45%) ended in negative territory.
The BSE Reality index closed lower by 243.23 points at 3,596.98. Losers are Akruti City (16.74%), Housing Development (8.47%), Unitech Ltd (8.03%), Anant Raj (7.95%), Orbit Co (7.77%) and Ansal Infra (7.47%).
The FMCG index gained 20.79 points to close at 2,189.07. As REI Agro Ltd (5.00%), Colgate Palm (2.41%), Dabur India Ltd (2.30%), ITC Ltd (2.04%) and HUL (1.18%) closed in positive territory.
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