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Friday, November 06, 2009
Pre Session Commentary - Nov 6 2009
Today domestic markets are likely to open positive as all Asian markets have also opened with phenomenal gains on the back of overnight surge in US markets. US markets closed higher due to better results from Cisco and also enthusiastic economic reports. Further, Australia’s central bank has said that the country’s economy will expand at more than three times the pace forecast in August. The strong rally across the Asian markets paves way from northward trend in the domestic markets as well and therefore one could witness frontline as well as small and mid cap stocks surge to significant highs during the day’s session. Domestic markets are likely to trade firmly positive during the day.
On Thursday, domestic stock markets made a sharp turnaround to recover from the day’s low to close with decent gains on heavy buying across the sectoral indices in the final hours. Though the cues from the Asian markets and European markets are not supportive, the market staged smart recovery due to some favoring cues from the domestic arena. The government said that the income tax receipts during April-October 2009 surged 2.9% to Rs. 63,195 crore while the corporate tax receipts during the period grew by 4.6% to Rs. 1,10,000 crore and the direct tax receipts shot up by 3.9% to Rs. 1,73,000 crore. Besides this, the Union Cabinet gave the approval of listing the state run firms on the stock exchanges, which have a track record of profits in the past three years. The planning commission said in a report that the economy is expected to expand by 6.3% in the year to March 2010.
The BSE Sensex closed higher by 151.77 points or (0.95%) at 16,063.90 and NSE Nifty closed up by 54.75 points or (1.16%) at 4,765.55. The BSE Mid Caps closed higher by 121.04 points at 6,115.44 and the BSE Small Caps closed up by 125.32 points at 7,013.85. The BSE Sensex touched intraday high of 16,092.38 and intraday low of 15,564.89.
On Thursday, the US stock market closed higher on the back of strong quarterly report from Cisco and also better than expected jobless claims data. Cisco reported better than expected top and bottom line results. The maker of networking equipment has reported 19 per cent fall in its net income to $1.79 billion or 30 cents per share during the first quarter ended Oct 24 ’09. Besides, the latest initial jobless claims recorded at 512,000, down 20,000 from the previous week and better than the expected 522,000. Continuing claims came in at 5.75 million, which was inline with the expectations and down from 5.82 million in the previous week. The Dow Jones rose the most since July to mark phenomenal gains and crossed 10k mark after a long time. The another important news that traders would closely watch is the government''s official nonfarm jobs report, which will be released before the opening bell Friday morning. The consensus forecast is that the October unemployment will hit 9.9 per cent, which would be the highest level since 1982. US light crude oil futures for December delivery closed with a loss of 0.9 per cent at $79.66 per barrel, on the New York Mercantile Exchange.
The Dow Jones Industrial Average (DJIA) ended with gain of 203.82 points at 10,005.96. NASDAQ index surged 49.80 points to 2,105.32 and the S&P 500 (SPX) closed higher by 20.13 points at 1,066.63.
Indian ADRs ended in green on Thursday. In the telecom space, MTNL was up 6.33% and Tata Communication was up 3.39%. In the banking space, HDFC Bank was up 2.04% and ICICI Bank was up 1.66%. In the IT space, Infosys was up 1.05%, Wipro was up 1.36%, Satyam Computers was up 1.34% and Patni Computers was up 7.29%. In other sectors, Sterlite Industries was up 2.35%, Tata Motors was up 1.24% and Dr Reddy''s Labs was up 1.01%.
The FIIs on Thursday stood as net buyers in equity and net sellers in debt. Gross equity purchased stood at Rs 3,395.20 Crore and gross debt purchased stood at Rs 865.70 Crore, while the gross equity sold stood at Rs 3,381.40 Crore and gross debt sold stood at Rs 1,260.40 Crore. Therefore, the net investment of equity and debt reported were Rs 13.70 Crore and Rs (394.70) Crore respectively.
On Thursday, the partially convertible rupee ended at 47.01/02 per dollar, marginally stronger than previous closing at 47.05/06 per dollar. The local currency gained strength on the back of incredible rebound in local stock markets.
On BSE, total number of shares traded were 40 Crore and total turnover stood at Rs 5,972.13 Crore. On NSE, total number of shares traded were 88.31 Crore and total turnover was Rs 16,766.91 Crore.
Top traded volumes on NSE Nifty – Suzlon Energy with total volume traded 91644928 shares, followed by Unitech with 68581365, DLF with 16102671, Jaiprakash Associate with 15604183 and Reliance Comm with 13301781 shares.
On NSE Future and Options, total number of contracts traded in index futures was 1074123 with a total turnover of Rs 24,103.98 Crore. Along with this total number of contracts traded in stock futures were 702816 with a total turnover of Rs 21,408.33 crore. Total numbers of contracts for index options were 2043631 with a total turnover of Rs 48,720.91 Crore and total numbers of contracts for stock options were 73780 and notional turnover was Rs 2,265.29 Crore.
Today, Nifty would have a support at 4,799 and resistance at 4,854 and BSE Sensex has support at 16,178 and resistance at 16,412.
Pre Market - Nov 6 2009
Headlines for the day
Trai mulls fixing SMS termination charges - Business Standard
M&M to launch motorcycle next year - Business Standard
NTPC plans 100 Mega watts solar projects in Gujarat - Business Standard
Tea output, exports fall in September - Business Line
NALCO raises product price - Business Line
Reliance Comunications eyes Rs600 crore handset sales in FY10 - DNA Money
Events for the day
Major corporate action:
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Ex-date for interim dividend of Deccan Chronicle, Dolphin Offshore, Hindustan Unilever, Gabriel
Pre-market Commentary
Global signals
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The stocks in the European indices that started the day on a weak note following the weak Asian cues. However it recovered all losses and closed in green with marginal gains on the back of positive data of the US jobless claims.
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The Dow reclaimed 10000 on Thursday and the stocks in the US rose sharply owing to the bigger-than-expected drop in the jobless claims reported by the government, while the improved productivity reported by the retialers. The Dow surged with gains of over 200 points or 2% and closed at 10006. While S&P 500 and Nasdaq ended higher with gains of 1.92% and 2.42%.
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On the back of strong closing by the US and European market, all the major Asian markets were trading in the positive zone with gains in the range of 0.45%-1.95% each, wherein Hang Seng rose the most. Even SGX Nifty opened strong, while at the time of writing this report it was trading 48 points higher to its previous close.
Indian markets
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Looking at such strong and positive cues from the global indices, Sensex may continue its gaining streak for the third consecutive day and open gap-up with strong gains.
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Among the local indices, the Nifty could test the 4800- 4850 range on the up side, while on the down side it could find support at 4725 and 4700. While the Sensex is likely to get support at 15600 and may face resistance at 16400.
Indian ADR's
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Among the Indian ADRs trading on the US bourses, all ADR's closed in green for the second consecutive day with gains in the range of 1.01%- 6.33%, with MTNL gaining the most.
Commodity cues
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In the commodity space, Crude oil prices fell marginally after thre consecutive days of rise, with the Nymex light crude oil for December series declining by $0.78 to close at $79.62 a barrel.
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In the metals space, the Comex Gold for December series continued to surge and rose by $2.20 to settle at $1089.50 a troy ounce, while Comex Silver for December series fell by $0.01 to settle at $17.40 a troy ounce.
Daily trend of FII/MF investment in equities
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On November 04, 2009, FIIs were the net buyers of the Indian Stocks in the tune of Rs13.70 crore (with the gross purchase of Rs3395.20 crore and gross sales of Rs3381.40 crore).
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While the Domestic mutual funds mutual funds, on November 04, 2009, were also net buyer of the stocks in the tune of Rs386.30 crore (with gross purchase of Rs958.00 crore and gross sales of Rs571.70 crore).
Market may extend last two days gains on firm global stocks
The market may extend last two days gains on firm Asian markets and overnight surge in US stocks after a positive economic data in US. The government's plan to divest stakes in public sector units will further support the market.
The government on Thursday mandated more sales of shares by state-run firms and changed the rules on how it can use the proceeds, as it seeks to boost revenues and rein in a widening budget deficit.
The government also said it was looking at tax changes as it tried to cut a budget shortfall forecast to hit a 16-year of 6.8 % of gross domestic product in 2009/10 (April/March).The government said all profitable, listed state-run firms must have at least 10 % of their shares in public hands, and unlisted firms that had a positive net worth, no accumulated losses and a net profit over the past three years should list.
The government said the funds from the listings would be spent on social schemes for three years. Currently, proceeds are put in a National Investment Fund and only its dividends are used for funding social security schemes.The government also said it was debating the need for changes in tax laws including on saving schemes, capital gains for non-residents and tax pacts with other nations, as part of reforms to boost revenues. The government has said it will maintain fiscal stimulus until the recovery is secure.
On Thursday, data showed food inflation remained firm at 13.39 % for the 12 months to 24 October 2009. The government said today it will release monthly wholesale price index (WPI) for October 2009 on 12 November 2009 and there will be no more weekly headline inflation data.
Asian stocks rose on Friday paring a weekly loss, after Australia's central bank more than tripled its economic-growth forecast and reports showed U.S. unemployment claims and worker productivity beat estimates. The key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan rose by between 0.44% to 1.91%.
U.S. stocks rose sharply on Thursday, with the S&P 500 up four straight days and the Dow closing above 10,000, after a rise in business productivity and a drop in jobless claims boosted confidence in the economy, while strong results from Cisco bolstered tech stocks.
The Dow Jones industrial average was up 203.82 points, or 2.08 % to end at 10,005.96. The Standard & Poor's 500 Index was up 20.13 points, or 1.92 %, at 1,066.63. The Nasdaq Composite Index was up 49.80 points, or 2.42 % at 2,105.32.
Driving the gains in US markets was the day's economic news, non-farm productivity rose 9.5% in its preliminary report, the fastest pace in six years. The latest initial jobless claims total came in 512,000, down 20,000 from the previous week. Continuing claims came in at 5.75 million lower than the previous week.
Back home, the key benchmark indices reversed steep intraday losses and ended firm on Thursday after the US Federal Reserve on Wednesday, 4 November 2009, promised again to keep interest rates exceptionally low for an extended period because it expects only a weak recovery. The BSE 30-share Sensex rose 151.77 points or 0.95% to 16063.90 on that day.
As per provisional data on NSE, foreign funds bought shares worth Rs 126.94 crore and domestic funds bought shares worth Rs 199.50 crore on Thursday.
The supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary equity market. As per reports, Indian firms have garnered about $9 billion (Rs 32,400 crore at the current exchange rates) through sale of shares and convertible bonds to institutional buyers since April 2009. Indian companies are taking advantage of a surge in liquidity to recapitalize and fund capital expenditure after being starved of cash last year.
Daily News Roundup - Nov 6 2009
Wipro’s subsidiary, Wipro Consumer Care & Lighting, has acquired the rights of premium brand Yardley across several regions for US$45.5mn. (ET)
Axis Bank has cut first-year home loan rates to 8% and has also extended maturity of loans to 25 years. (ET)
IOC has proposed to double its investment on R&D. (FE)
M&M and US-based Navistar JV to start its production at Chakan plant from this month-end. (FE)
Jindal Steel to compete with Chinese firms for a stake in Australian coal explorer Rocklands. (FE)
GVK Power picks up 12% stake in Bangalore International Airport for Rs4.8bn. (ET)
Patni Computers promoters to take a call on stake sale in January 2010. (BS)
M&M to launch motorcycle next year. (BS)
Government shortlists three advisors for IFCI stake sale. (FE)
TTML to increase its capex in the fourth quarter from Rs10bn earlier planned. (FE)
Kajaria Ceramics has entered into a pact with GAIL India to shift from propane as a fuel for its Rajasthan unit to LNG. (BS)
Maytas Infra has bagged an order worth Rs7.9bn. (ET)
Prime minister approves a plan to sell shares in PSUs which may help government to raise Rs600bn. (ET)
TRAI mulls fixing SMS termination charge. (BS)
Government targets fiscal deficit at 5.5% in FY11. (ET)
Primary articles inflation rose to 8.94% and food inflation inched-up to 13.4% for the week-ended October 24th. (ET)
Centre to consider a proposal to allow foreign airlines to pick up 49% equity in Indian carriers. (FE)
Government may tweak SEZ rules after Navi Mumbai plea. (ET)
Government has announced an increase in procurement price of wheat, barley, gram and safflower. (ET)
Direct tax collection up 6% yoy in October 2009. (BL)
SEZ exports have doubled yoy in the period April-September 2009 to Rs890bn. (BS)
CERC has taken a slew of initiatives to promote renewable energy in India. (FE)
Gujarat is likely to get 2nd UMPP from the centre. (FE)
Friday fight to the finish!
Genius begins great works; labor alone finishes them.
The Dow Jones has reclaimed the 10,000 mark. A spectacular innings by the cricket genius Tendulkar saw him cross the milestone of 17,000 runs, though it failed to get India past the finishing line. Back to the market, the bulls managed to labor enough to end the indices in the green.
There is no finishing line in the stock market one should set realistic targets; which must be reviewed and altered at periodic intervals. After having bounced back from the bear market lows, the market is going through consolidation. That explains the recent spurt in volatility. The trend might continue in the near term as the market figures out a future sans stimulus. Today, the bulls are likely to have a strong opening and hopefully a similar close, thanks to firm global markets.
US stocks rallied, buoyed by Cisco’s upbeat results, RIM’s buyback and encouraging economic reports on jobless claims and productivity. US retailers posted better-than-expected October sales. Starbucks posted improved earnings and JDS Uniphase unveiled a strong sales forecast. The big monthly jobs report is due out in the US later today. European shares rebounded even as the Bank of England expanded its debt purchase program. Both, the BOE and the ECB held their rates unchanged without giving any clues on withdrawal steps.
FIIs were net buyers in the cash segment on Thursday at Rs1.27bn on a provisional basis. The local funds were net buyers of Rs1.99bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs1.39bn. On Wednesday, the foreign funds were net buyers of Rs137mn in the cash segment. FIIs' net investments in Indian stocks this year is above $14bn.
US stocks jumped on Thursday, with the Dow Jones Industrial Average topping 10,000, after the government reported a bigger-than-expected drop in jobless claims, and a number of retailers reported improved October sales.
The Dow gained 205 points, or 2.1%, closing at 10,005.96. The Nasdaq Composite index climbed nearly 50 points, or 2.4%, to 2,105.32. Both the Dow and Nasdaq saw the biggest one-day percentage gains since July 23. The S&P 500 rose 20 points, or 1.9%, at 1,066.63.
Gains were broad based, with all 30 Dow components rising.
Stocks have been volatile over the past three weeks, with the S&P 500 losing 5% through Wednesday's close on worries that the rally is out of sync with the ongoing recovery. Between March 9 and the peak on Oct. 19, the S&P 500 gained 63%.
Stocks ended mixed on Wednesday after the Federal Reserve held interest rates steady at historic lows near zero and said it will keep them low for an extended period.
The government's weekly jobless claims report and third-quarter productivity report showed that the pace of layoffs is slowing, but employers are still not creating jobs.
The number of Americans filing new claims for unemployment fell to 512,000 last week from 532,000 the previous week, the lowest level since January. Economists expected 522,000 claims, on average.
Continuing claims, a measure of Americans who have been receiving benefits for a week or more, fell to 5.749 million from 5.817 million the week before. Economists thought it would fall to 5.750 million. It was the eighth decline in nine weeks. Although the decline could mean people are running out of benefits.
Separately, the Senate and House both voted on Wednesday to extend unemployment benefits by up to 20 weeks - and extend the homebuyer tax credit. President Obama is expected to sign the bill into law on Friday.
Another economic report showed that worker productivity is up, a good sign for corporate profits, but also further evidence that companies aren't hiring. Third-quarter productivity rose by 9.5% after rising 6.6% in the previous quarter. Economists thought it would fall to 6.5%.
All eyes are on the October unemployment report from the Labor Department, due on Friday. Employers are expected to have cut 175,000 jobs from their payrolls after eliminating 263,000 in the prior month. The unemployment rate, generated by a separate survey, is expected to rise to 9.9% from 9.8% in September.
American consumers remained cautious with their spending last month, with discounters and warehouse clubs seeing the best October retail sales.
After the close on Wednesday, Cisco Systems reported weaker quarterly earnings and revenue that beat estimates. The company's CEO, John Chambers, said current-quarter revenue would top estimates and that business conditions had bottomed at least six months ago. Cisco shares gained 2.8%.
Toyota reported a surprise quarterly profit Thursday and cut its annual loss forecast by over 50%.
Shares of CVS Caremark slumped 21% in active trading after the company warned that 2010 profits at Caremark, its pharmacy benefits management division, are likely to slump by 10% to 12%. The company also said Caremark's CEO is stepping down. Drugstore CVS bought Caremark in March 2007. The news overshadowed the company's bigger-than-expected jump in quarterly profit.
The dollar fell versus the euro and gained against the yen.
US light crude oil for December delivery fell 62 cents to settle at $79.78 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery climbed $2 to settle at $1,089.30 an ounce.
Treasury prices fell, raising the yield on the 10-year note to 3.53% from 3.52% on Wednesday.
European shares closed with modest gains. After hitting an intraday low of 235.48, the pan-European Dow Jones Stoxx 600 index rose 0.6% to close at 240.52. The index gained 1.8% on Wednesday.
Germany's DAX index gained 0.7% to settle at 5,480.92, while the French CAC-40 index was up 1% at 3,708.73 and the UK's FTSE 100 index advanced 0.3% to end at 5,125.64.
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.
Nifty November 2009 futures at premium
Nifty November 2009 futures at premium
Nifty November 2009 futures were at 4,777, at a premium of 11.45 points as compared to the spot closing of 4,765.55. Turnover in NSE's futures & options (F&O) segment surged to Rs 96,498.50 crore from Rs 72,239.34 crore on Wednesday, 4 November 2009.
ICICI Bank November 2009 futures were at premium at 848 compared to the spot closing of 845.75.
DLF November 2009 futures were at premium at 373 compared to the spot closing of 372.
Reliance Industries November 2009 futures were at a slight premium at 1949.30 compared to the spot closing of 1947.50.
In the cash market, the S&P CNX Nifty jumped 54.75 points or 1.16% at 4,765.55.
Bharat Forge
We recommend a buy in Bharat Forge stock from a short-term perspective. It is perceptible from the charts of the stock that after recording a multi-year low of Rs 69 in January, it began to trend upwards. Since then it has been on an intermediate-term uptrend, forming higher peaks and troughs. While trending up, the stock conclusively broke through key resistance levels at Rs 195 and Rs 240 which subsequently turned in to key support levels. Following a short-term pull-back from Rs 307, the stock found support around Rs 240 and resumed its uptrend. On November 4, the stock gained 7 per cent with above average volume, reinforcing the uptrend. The daily relative strength index (RSI) bounced up from 40 level and is heading towards the bullish zone. Moreover, weekly RSI has entering in to the bullish zone. Our short-term forecast for the stock is bullish. We anticipate it to rally further until it hits our price target of Rs 293 in the approaching trading sessions. Traders with a short-term perspective can buy the stock while maintaining stop-loss at Rs 252.
via BL
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