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Monday, May 11, 2009
Market may remain volatile on political uncertainity
Political uncertainty may cause volatility on the bourses in the next few days. Investors may also resort to profit taking after a recent sharp surge in prices.
Political worries may cause volatility on the bourses in the next few days with polling underway for India's 15th Lok Sabha. The month-long a parliamentary elections that began on 16 April 2009 will conclude on 13 May 2009. Poll estimates point to a fractured mandate. Consumption and investment decisions will be significantly impacted by any signs that the new government is unstable. The counting of votes will take place on 16 May 2009. A party/alliance needs 272 seats in the 543-member parliament to claim power at the Centre.
Asian shares turned mixed after firm start today, 11 May 2009, amid weak corporate results and on a view that a swift recovery in the global economy is unlikely. Key benchmark indices in China, Hong Kong and Taiwan rose by between 0.37% to 0.59%. But key benchmark indices in Singapore and South Korea fell 0.81% and 0.16% respectively.
Japan's Nikkei average fell 0.65% on Monday, after earlier hitting its highest point in six months, as Toyota Motor Corp skidded after it reported a $7.7 billion quarterly loss and forecast another loss for the current fiscal year.
China's consumer prices fell for a third month on food and commodities, aiding government efforts to boost spending in the world's third-biggest economy. Prices dropped 1.5 % in April 2009 from a year earlier, after falling 1.2% in March 2009, the statistics bureau said today.
The US markets capped another strong week with a triple-digit rally on Friday 8 May 2009 as Wall Street breathed a sigh of relief after the Stress-Test results and banks soared. The Dow Jones Industrial Average was up 164.80 points, or 2%, to 8,574.65. The S&P 500 Index gained 21.84 points, or 2.4%, to 929.23, and the Nasdaq Composite rose 22.76 points, or 1.3%, to 1,739.
Payrolls in the US shrank in April 2009 by the least in six months as the worst recession in half a century started to ease and the federal government stepped up hiring for the country's next census. Payrolls fell by 539,000, fewer than economists forecast, after a 699,000 loss in March 2009, Labor Department figures showed in Washington. Still, the unemployment rate jumped to 8.9%, the highest level since 1983.
The Federal Reserve stress result announced on Thursday 7 May 2009 determined that 10 US banks need to raise a total of $74.6 billion in capital, a finding that Chairman Ben S. Bernanke said should reassure investors about the soundness of the financial system.
The results showed that losses at the banks under more adverse economic conditions than most economists anticipate could total $599.2 billion over two years. Mortgage losses present the biggest part of the risk, at $185.5 billion. Trading accounts were the second-largest vulnerability, with potential losses of $99.3 billion. The conclusion of the unprecedented probe of the health of the largest 19 lenders opens an exit for some of the firms from a tense partnership between Wall Street and the government. Others will have six months to fill their capital shortfalls and may be forced to accept expanded federal ownership that could prompt changes in their management.
Back home, recovery in the Indian economy triggered a solid rally on the domestic bourses recently. The rally was also a part of a sharp surge in global equities triggered by hopes the worst of the global economic recession may be over. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex jumped 3,716.03 points or 45.53% to 11,876.43 on Friday, 8 May 2009.
As per the provisional figures on NSE, the foreign funds sold shares worth Rs 100.89 crore on Friday, 8 May 2009 while domestic funds sold shares worth Rs 89.39 crore on Friday 8 May 2009.
Pre Session Commentary - May 11 2009
Today domestic markets are likely to have positive opening tracking the firm closing of the US markets last week after the government released the results of the stress test. The number of job losses slowed in April, which indicates the deceleration of the pace economic contraction and this gives a boost to the sentiments of the investors. of the as the US bank’s stress test results have jolted the markets in Asia. The stress test for 19 US banks are over and 10 such banks would run for more capital. On the domestic front, State bank of India, India’s largest bank, posted handsome growth in the quarter ended March 2009, which will further enhance the investors confidence. The Bank has posted a net profit of Rs 27423.10 million for the quarter ended March 31, 2009 as compared to Rs 18832.50 million for the quarter ended March 31, 2008. Total Income has increased from Rs 163939.30 million for the quarter ended March 31, 2008 to Rs 220606.10 million for the quarter ended March 31, 2009.
On Friday, domestic markets closed in red as the profit booking took a lead. The Indian market gave up around 2% as intense selling pressure was witnessed in key indices. Rise in inflation to 0.70% for the week ended 25th April 25009, as against 0.57% the week before also depreciated the sentiments. The market opened on flat note tracking mixed cues from the global markets and soon turned volatile We expect the markets to be trading volatile. Finally, market closed with losses with BSE Sensex ended below 11,900 level and NSE Nifty closed lower than 3,650 mark. From sectoral indices, investors off-loaded positions across the sectors barring Consumer Durable index. Besides, Bank Metal, IT, Teck, Power, Realty, and Pharma stocks contributed to most of the selling pressure. We expect the market to remain volatile during the trading session.
The BSE Sensex closed low by 240.51 points at 11,876.43 and NSE Nifty ended with loss of 63.20 points at 3,620.70. BSE Mid Caps closed with a loss of 6.52 points at 3,770.42 and Small Caps closed with a gain of 13.66 points at 4,277.26. The BSE Sensex touched intraday high of 12,180.07 and intraday low of 11,765.06.
On Friday, the US stock markets closed in green tracing the US government released the results of its stress test due to which the major indices closed with strong gains. Also, the slowdown of the job losses in April also gave the confidence to the investors. The financilas stocks rallied as the US government instructed the 10 financial institutions to raise more capital by June 8. During the trading session, eight of the ten sectors reported gains. The energy sector reported strong rally, grew 4.2%, after the crude prices rose 3.1% to $58.47. Moreover, the defensive sectors underperformed, with telecom (-0.4%) falling into the red. US light crude oil futures for June inclined by 0.5% at $58.57 per barrel on the New York Mercantile Exchange.
The Dow Jones Industrial Average (DJIA) closed up by 164.8 points at 8,574.65 The NASDAQ Composite (RIXF) index inched up by 22.76 points to close at 1,739 and the S&P 500 (SPX) grew by 21.84 points to close at 929.23.
Today major stock markets in Asia are trading mixed. Hang Seng is trading higher by 108.95 points at 17,798.82 along with Shanghai Composite, which is up by 22.66 points at 2,648.30. However, Japan''s Nikkei which is down by 68.27 points at 9,364.56, Strait Times is low by 23.75 points at 2214.46. Seoul Composite is marginally down by 1.07 points at 1,411.06 respectively.
Indian ADRs ended higher. In technology sector, Infosys ended up by 0.55% along with Wipro by 1.86%. Further, Patni Computers gained 3.68% and Satyam remained unchanged. In banking sector ICICI Bank gained 4.96% and HDFC Bank advanced by 3.43%. In telecommunication sector Tata Communication dropped by 0.65% while MTNL increased by 5.05%. Sterlite Industries increased by 3.20%.
The FIIs on Friday stood as net buyers in equity and debt. Gross equity purchased stood at Rs 1,898.80 Crore and gross debt purchased stood at Rs 1993.30 Crore, while the gross equity sold stood at Rs 1,503.60 Crore and gross debt sold stood at Rs. 419.70 Crore. Therefore, the net investment of equity and debt reported were Rs 395.20 Crore and Rs 1,573.60 Crore respectively.
On Friday, the partially convertible rupee ended at 49.285/295 per dollar, unchanged as compared to previous close at 49.28/29. Rupee closed flat after a volatile session due to fall in the local stock markets.
On BSE, total number of shares traded were 51.58 Crore and total turnover stood at Rs 6,596.56 Crore. On NSE, total number of shares traded was 106.54 Crore and total turnover was Rs 15,764.22 Crore.
Top traded volumes on NSE Nifty – Unitech with total volume traded 43697018 shares, followed by Suzlon Energy with 39407723 shares, SAIL with 18685122 shares, Tata Steel with 18226785 shares and DLF with 17233889 shares respectively.
On NSE Future and Options, total number of contracts traded in index futures was 947327 with a total turnover of Rs 16,404.99 Crore. Along with this total number of contracts traded in stock futures were 449384 with a total turnover of Rs 18,740.21 Crore. Total numbers of contracts for index options were 1039106 with a total turnover of Rs 19,538.32 Crore and total numbers of contracts for stock options were 34331 and notional turnover was Rs 1,552.85 Crore.
Today, Nifty would have a support at 3,561 and resistance at 3,692 and BSE Sensex has support at 11,634 and resistance at 12,119.
Daily Call - May 11 2009
There is confidence in the air. The NDA looks more cohesive and confident after the Ludhiana Rally. We sensed quite early in the week that UPA was fighting a losing battle. We take that confidence logically further and put out a case for the BJP emerging as the single largest party when the election commission sits down to count the votes. And we hope that the President will go by precedent and call the largest single party to form the Government.
With Crude continuing with its bullish ways, we expect the upstream oil companies to be first off the block. The banks will see some short covering. And with rise in the stock of NDA, PSUs should be on the front burner. We are likely to see the markets opening higher. How we perform thereafter will be a function of how the bulls, who were rooting for the UPA, behave. If they hang up their gloves in despair we are likely to come under pressure. But if they see our point of view, that NDA will be the eventual winner, then the losses in the market will only be to the extent of jitteriness of the international markets. Keep a stop loss at 3550 in the Nifty futures.
Daily News Roundup -May 11 2009
Reliance Industries and five others have envisaged interest in the erstwhile Dabhol project, now called Ratnagiri Gas & Power for leasing the liquefied natural gas terminal of RGPPL.(BL)
SBI Q4 net spurts 46% to Rs27.42bn, total income grew to Rs220.60bn. (ET)
Alcatel-Lucent and Huawei have bagged a US$400mn GSM equipment contract from Unitech Wireless.(FE)
Temasek, GIC stake rise in ICICI Bank under scrutiny. (BS)
ONGC may be asked to help in bailing out refiners.(BL)
GMR Infrastructure plans to raise up to US$1bn to fund growth. (BS)
Airtel DTH reduces prices of paid movie services by 33% and Big TV cuts prices by around 50%. (BS)
ESSEL Propack is exploring the option of picking up a controlling stake in UK’s tube maker Betts. (ET)
JSW Energy plans to invest Rs80bn in building two thermal power projects of a combined capacity of over 2,000 mw in Chhattisgarh and Orissa in the current fiscal year. (ET)
Hindustan Unilever Q4 net jumps 20% posted a net profit of Rs4.57bn, total income grew 5% to Rs39.88bn. (ET)
L&T to sell its 11.5% stake in UltraTech Cement by December, pegged at around Rs8bn. (ET)
IOC to shut down five out of its eight depots in Orissa. (BS)
NMDC may float JV company with South Africa's Kopano by July to scout minerals like iron ore and manganese in African nation. (ET)
Satyam offers US$10mn to settle Upaid’s US$1bn claim.(Mint)
Gujarat State Petroleum Corp may increase its business with Petronet LNG.(BL)
Tata Steel’s Corus unit in UK on verge of closure.(BL)
Peninsula Land defers its plans to build business hotels by at least six months to preserve cash. (BS)
PNB to infuse US$50mn more in UK subsidiary.(BL)
The government has sent a letter to Tata Power asking for details on US$437mn raised by the company overseas in 2007. (BS)
BHEL cuts prices by 5% to beat China competition.(Mint)
Tatas to raise Rs74bn for JLR by Sep’ 09.(TOI)
Maytas Infra board clears debt recast plan.(BL)
H-1B cap may affect business says Infosys Technologies.(TOI)
Godrej Properties plans IPO this fiscal.(BL)
Religare bids for AIG Investments.(Mint)
DBS Bank offloads entire stake in HDFC Bank.(BL)
HPCL’s Bhatinda refinery to be commissioned in 2011.(FE)
Petronet LNG has tied up 1.5mn tonnes a year of LNG imports from the Gorgon project in Australia for Kochi terminal.(BL)
SBI to review deposit rates by end-May; may raise Rs 200bn through rights, other options.(BL)
Ericsson, Huawei short listed for BSNL’s US$6bn GSM contract. (BL)
DoT has set a deadline of September 20 for mobile operators to upgrade their respective networks for implementing number portability. (ET)
DoT panel against 3-year equity lock-in for existing players.(BL)
Inflation rate rises to 0.70% on costlier food during the week ended April 25.(BL)
Telecom operators buying each other may have to pay 10-20% of the acquisition price to the government.(ET)
CEA clears Rs210bn bulk power equipment order.(FE)
Steel production rises 4% in April.(Mint)
Foreign exchange reserves fell by US$1.4bn to $251.7bn for the week ended May 1.(BL)
CERC to regulate power futures trading in MCX.(Mint)
The Pharma industry seeks an upward revision in drug prices by submitting a report on the increase in conversion and packaging costs to the Indian drug price regulator National Pharmaceutical Pricing Authority. (ET)
From vogue to vague!
Everything is vague to a degree you do not realize till you have tried to make it precise.
Winning ways may not be in vogue for the market as the global cues and election expectations makes the outlook vague for some time. We expect a marginally positive opening for Indian markets and a choppy day. Most players will prefer to stay cautious due to uncertainty over the outcome of elections. Technically, 3720 is seen as a key resistance for the Nifty while support is expected at around 3600.
One should brace for a sideways trading week without any definite moves on either side due to anxiety about the election results. Some experts are suggesting caution as valuations have run up too fast without a significant change in fundamentals. Though the overall sentiment is upbeat, one should not get complacent as some correction is likely to set in after the stupendous gains of the past couple of months.
Asian markets are flat after opening high.
Dewan Housing Finance, Electrosteel Castings, Mahindra Forgings, Motilal Oswal and Tata Teleservices will announce their results today.
FIIs were net sellers in the cash segment on Friday at Rs1bn while the local institutions too pulled out Rs893.9mn. In the F&O segment, the foreign funds were net sellers at Rs1.53bn. On Thursday, the foreign funds were net buyers at Rs3.95bn in the cash segment.
US stocks jumped on Friday after a better-than-expected jobs report and the result of the much-awaited stress tests reinforced a growing view that the worst for the economy and the financial sector may be over.
The Dow Jones Industrial Average gained 165 points, or 2%, to 8,574.65, ending at the highest point since Jan. 9. The S&P 500 index rose 22 points or 2.4%, to 929.23, ending at the highest point since Jan. 6. The Nasdaq Composite index advanced 23 points, or 1.3%, to 1,739.00.
All the three major indices ended higher for the week as well. The Nasdaq has now ended higher for nine consecutive weeks. The Dow and S&P 500 have risen for eight of the last nine weeks. The S&P has surged 36% since hitting a more than 12-year low on March 9.
This was the biggest weekly advance for the Dow since the week ended March 27. The S&P 500 finished within a hair's breadth of its highest mark of the year. The S&P 500 is now up 2.9% for the year, and is within 6 points of the closing peak of 935.
US companies cut 539,000 jobs in April, the Labor Department reported, surprising economists who were anticipating job cuts of around 600,000. Employers cut a revised 699,000 jobs from their payrolls in March.
It was the smallest number of job cuts since last October, when the US economy lost 380,000 jobs. However, it brings the total numbers of jobs lost to 5.7mn since January 2008. The US recession is thought to have started in December 2007.
The unemployment rate, generated by a separate survey, rose to 8.9%, as expected, from 8.5% in March, the worst reading since September 1983.
Although the jobs report was not positive markets took heart from the slow pace of decline in non-farm payrolls vis-a-vis previous months. However, the report was helped partly by short-term factors such as a big increase in government jobs added to conduct the 2010 census.
The overall employment picture is still bad. So, one has to wait for the May report now to ascertain the conditions in the labour market.
In the day's other economic news, wholesale inventories shrank for the seventh consecutive month in March, falling to US$411.7bn, the lowest level in 16 months.
The government released the results of the stress tests late on Thursday, saying that 10 of the 19 banks tested will need to raise almost US$75bn in anticipation of a deeper recession. Leading the list was Bank of America, which needs to raise nearly US$34bn. Wells Fargo needs US$13.7bn and Citigroup needs US$5bn.
JPMorgan Chase, American Express and Goldman Sachs were among the banks that won't need to raise any additional money. Financial stocks rallied as investors breathed a sigh of relief that the results weren't worse. The KBW Bank sector index added 12.1%.
Fannie Mae reported a loss of US$23.2bn in the first quarter, or US$4.09 per share, worse than a year ago. The mortgage finance company also said that it needs an additional US$19bn from the government.
After the close on Thursday, AIG reported a quarterly loss of 97 cents per share versus a loss of US$1.41 a year ago. Analysts had forecast a loss of 6 cents per share. Shares of the insurance major inched higher on Friday.
Warren Buffett's Berkshire Hathaway reported a steep drop in first-quarter profit that beat forecasts on a per-share basis.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.28% from 3.32% on Thursday.
The cost of borrowing dollars among banks in London capped its biggest weekly drop since March as US government's stress tests showed that American financial institutions may be able to withstand the economic slump.
The three-month Libor rate fell two basis points to an all-time low of 0.94% from 0.96% on Thursday, according to the British Bankers’ Association. The overnight Libor rate fell to 0.23% from 0.24%. Libor is a worldwide benchmark for bank lending.
Friday's fall in Libor brought its decline in the week to seven basis points, the most since the five days through March 20. Libor fell to below 1% this week as reports on employment and home sales added to evidence the worst of the recession is over.
Result of the stress tests released yesterday showed that US banks need to raise a total of US$74.6bn in capital, which Federal Reserve Chairman Ben S. Bernanke said should reassure investors about the soundness of the American financial system.
The Libor-OIS spread, a barometer of the banks' willingness to lend, fell to the lowest level in more than nine months. The Libor-OIS spread, the difference between three-month dollar Libor and the overnight index swap rate, narrowed two basis points to 73 basis points, the lowest level since Aug. 1.
The TED spread, the difference between what the US Treasury and banks pay to borrow for three months, also narrowed two basis points, to 76 basis points, the lowest since May 27. Libor surged as high as 4.82% in October following the failure of Lehman Brothers. The Libor-OIS spread ballooned to 364 basis points.
In currency trading, the dollar fell versus the euro and the yen. The dollar declined to a six-week low against the euro as the jobs report reduced demand for relative safety. The yen slid versus all but two of the 16 most actively traded currencies. The Japanese currency touched a seven-month low against Australia’s dollar this week as optimism surrounding an impending economic recovery spurred demand for risky but high-yielding assets.
Crude oil rose to the highest level since November and gained 10% last week. US light crude oil for June delivery rose US$1.92 to settle at US$58.63 a barrel on the New York Mercantile Exchange. Futures had the largest weekly gain since the week ended March 20.
COMEX gold for June delivery fell 60 cents to settle at US$914.90 an ounce.
The MSCI World Index added 2.1%, extending its weekly gain to 6.4%. The benchmark index of 23 developed countries has surged 38 since March 9. European stocks climbed for a second week. The Dow Jones Stoxx 600 Index added 4.6% to a four-month high of 209.51. The measure has surged 33% since March 9, erasing its 2009 decline.
National indexes rose in all 18 western European markets. Germany’s DAX Index climbed 3%, while France’s CAC 40 added 4.8%. The UK's FTSE 100, which was closed for a holiday on May 4, advanced 5.2%.
Indian market ended in the red on Friday as traders and investors preferred to book some profit at higher levels. After trading in a range in the first half, key indices slipped sharply as selling in the banking and IT stocks dragged the markets lower. The metal stocks which were in demand in the previous trading session also witnessed some offloading.
However, the NSE Nifty after hitting an intra-day low of 3,582, the index found strong support at around 3,610 levels. Finally, the BSE Sensex slipped 240 points to close at 11,876 and the NSE Nifty fell 63 points to close at 3,620.7.
Among the 30-components of Sensex, 26 ended in the negative terrain and 4 ended in the green. Top losers were Wipro, ICICI Bank, Reliance Infra, Tata Steel, HDFC and RCom.
Among the major gainers were JP Associates, Hindustan Unilever, L&T and Grasim.
Among the BSE Sectoral indices BSE Bankex index was the top loser, the index lost 3%. The other major losers were BSE Metal index (down 2.3%), BSE IT index (down 2.3%) and BSE Teck index (down 2%).
Market breath was almost even, 1,262 advanced against 1,268 declines, while, 91 remained unchanged.
Subsidiaries of Exxon Mobil Corporation and Petronet LNG Ltd announced agreement has been reached on intent to supply LNG from the proposed Gorgon LNG project in Australia for the Kochi terminal in India.
The parties said they would continue working on binding agreements to conclude the purchase and sale in June. The agreement will provide for ExxonMobil's subsidiaries Mobil Australia Resources Company Pty Ltd and Mobil Exploration & Producing Australia Pty Ltd to supply approximately 1.5 MTA (million tons annually) of LNG with the potential for additional supply, for a 20-year term.
Petronet LNG MD Prasad Dasgupta said "Petronet LNG looks forward to finalizing the agreements and moving forward with the LNG infrastructure needed to supply natural gas consumers in the Kerala region."
ExxonMobils Luke Musgrave, Vice President LNG -Australia. said "We are pleased to move forward with Petronet LNG on securing LNG sates from the Gorgon Project."
Shares of Petronet LNG were up 2.5% to Rs53 after hitting an intra-day high of Rs53.5 and a low of Rs51 recording volumes of over 1.2mn shares on BSE.
Strong gains at Wall Street
Job Losses for April check in less than expected boosting sentiments
The financial sector led US stocks for a strong end to the week that ended on Friday, 08 May, 2009. Economic and earning reports continued to check in during the course of the week. The other main event that dictated market momentum during the week was the bank stress results. But it was mainly positive economic reports that helped market register very good gains for the week. The financial and energy sectors led the pack of winners. With this week's gains, it is only the Dow that is still in the red on a year to date basis.
The Dow Jones Industrial Average gained 362.24 points (4.4%) for the week to end at 8,574.65. Tech - heavy Nasdaq gained 19.8 (1.2%) to end at 1,739.20. S&P 500 gained 51.7 (5.9%) to end at 929.23.
Stocks kicked off the week on Monday, 04 May, on a strong mode. It was pending home sales data that came in at a better-than-expected at 3.2% in March (consensus 0.0%), while Construction Spending came in at a better-than-expected 0.3% in March. On Wednesday, 06 May, the ADP Employment change for the month of April was a better-than-expected -491,000 (consensus -645,000).
During the middle of the week, the bank stress results were declared. The stress results showed 10 of the 19 banks tested need to raise capital in the amount of $74.6 billion. The big banks came in as expected. Wells Fargo announced an $8.6 billion stock offering, Morgan Stanley announced an $8 billion stock and debt offering and Citigroup expanded its previously announced public exchange offer by $5.5 billion, which equals its capital needs.
Finally, on Friday, 08 May, 2009, stocks started and ended the day in the green. Nasdaq had slipped in the red for a brief period of time but recovered soon. The Dow Jones Industrial Average ended higher by 165 points at 8,574. The Nasdaq Composite Index, ended higher by 23 points at 1,739. S&P 500 ended higher by 21.9 points at 929.8. The financial and energy sectors led the gains on Friday.
Among major economic reports for the day, the April employment report was released at 8:30 ET on Friday. The April decline in payrolls of 539,000 was better than the expected decline of 600,000, but still represented bad economic news. Part of the smaller decline is explained by a 72,000 jump in government payrolls, compared to the sharp drop in the private sector, including a 149,000 decline in manufacturing and 110,000 in construction. Also on the negative side, several prior months were revised lower, and the unemployment rate jumped to 8.9% from 8.5%, as expected.
Among other reports for the day, wholesale inventories dropped 1.6% in March, after falling 1.7% in February. The decline was worse than the consensus estimate that called for a 1.0% decline. The major indices gave up some gains after the release but still Dow and S&P 500 near closed near the best level of the session.
Among other major corporate news, McDonald's rose reported that April same-store sales rose 6.9%, the 72nd consecutive monthly increase.
Crude oil ended higher little higher for third consecutive day on Friday, 08 May, 2009. Prices rose today as job losses in April, 2009 were reported much less than expected. The report increased the chances of faster economic recovery. Prices also rose due to the weak dollar.
On Friday, crude-oil futures for light sweet crude for June delivery closed at $58.63/barrel (higher by $1.92 or 3.4%) on the New York Mercantile Exchange. For the week, crude ended higher by 10.2%.
For the year 2009, Dow is down by 2.3%. Nasdaq and S&P 500 are up by 10.3% and 2.9% respectively.
Crude rises for third straight day
Prices rise as job losses check in less than expected
Crude oil ended higher little higher for third consecutive day on Friday, 08 May, 2009. Prices rose today as job losses in April, 2009 were reported much less than expected. The report increased the chances of faster economic recovery. Prices also rose due to the weak dollar.
On Friday, crude-oil futures for light sweet crude for June delivery closed at $58.63/barrel (higher by $1.92 or 3.4%) on the New York Mercantile Exchange. For the week, crude ended higher by 10.2%.
Crude ended April higher by 2.9%. Previously, March trading ended up 10.9%. It rallied 11.3% in the first quarter. For the month of February, crude prices had ended higher by 1.5%.
Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 61% since then. Year to date, in 2009, crude prices are higher by 23.8%. On a yearly basis, crude prices are lower by 40%.
The April employment report was released at 8:30 ET on Friday. The April decline in payrolls of 539,000 was better than the expected decline of 600,000, but still represented bad economic news. Part of the smaller decline is explained by a 72,000 jump in government payrolls, compared to the sharp drop in the private sector, including a 149,000 decline in manufacturing and 110,000 in construction. Also on the negative side, several prior months were revised lower, and the unemployment rate jumped to 8.9% from 8.5%, as expected.
Earlier during the week, EIA had reported that crude inventories increased by 600,000 barrels in the week ended 1 May, 2009. Gasoline inventories fell by 200,000 barrels. Market was expecting a buildup of more than 2 million barrels in crude inventories and a 750,000 increase in gasoline inventories. Crude inventories, meanwhile, still remained at the highest level since September 1990.
The report also showed that total petroleum demand over the past four weeks was 7.9% lower than a year ago. EIA also reported U.S. refineries increased their capacity utilization of 85.3%, up from 82.7% a week ago.
Also at the Nymex on Friday, June reformulated gasoline rose 4 cent, or 2.4%, to $1.7055 a gallon and June heating oil added 3.32 cents, or 2.2%, to $1.5184 a gallon.
Natural gas for June delivery rose 23 cents, or 5.6%, to $4.311 per million British thermal units. Natural gas ended the week up 21.6%.
Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
ABG Shipyard
We recommend a buy on ABG Shipyard from a short-term trading perspective. It is evident from the charts of ABG Shipyard that it has been trending upwards from its 52-week low of Rs 62 recorded in early February. Since this low, the stock has been forming higher peaks and higher troughs. Moreover, we notice that the stock has formed an inverse head and shoulders pattern, a bottom reversal pattern signalling major trend reversal.
This pattern was formed between November 2008 and early May 2009, with neckline at Rs 140. On May 8, the stock decisively broke out of this pattern’s neckline by jumping 13 per cent, accompanied with extraordinary volume. It is trading well above it 21- and 50-day moving averages.
The daily relative strength index (RSI) has re-entered the bullish zone from the neutral region and the weekly RSI is rising towards the bullish zone. Our short-term forecast is bullish for the stock. We expect it to rally further until it hits our price target of Rs 167. Traders with short-term trading perspective can buy the stock while maintaining a stop-loss at Rs 143.
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