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Wednesday, November 21, 2007
Market to consolidate
The market is expected to consolidate before making any fresh upmove. Global cues were mixed.
Media reports that the government is considering raising the securities transaction tax (STT) to 0.5% may also impact market sentiment. Finance minister P Chidambaram could move an appropriate amendment to the Finance Act, 2007, in Parliament in the current winter session for raising STT, reports suggest.
Asian markets fell today, 21 November 2007. Hong Kong's Hang Seng (down 2.58% at 27,054.06), Japan's Nikkei (down 1.29% at 15,015.43), Singapore's Straits Times (down 1.29% at 3,393.75), Taiwan's Taiwan Weighted (down 0.38% at 8,647.61), South Korea's Seoul Composite (down 1.19% at 1,850.01), edged lower.
US markets recovered in late trade on speculation of possible rate cut on 11 December 2007. The Dow Jones industrial average gained 51.70 points, or 0.04%, to 13,010.14. The Standard & Poor's 500 index advanced 6.43 points, or 0.45%, to 1,439.70, and the Nasdaq Composite index surged 3.43 points, or 0.13%, to 2,596.81.
Oil prices resumed their march toward $100 a barrel. Light crude for January delivery surged $3.39 to settle at a record $98.03 a barrel on the New York Mercantile Exchange.
As per provisional data, FIIs sold shares worth a net Rs 1800.68 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 463.95 crore on Tuesday, 20 November 2007.
Market posted losses for fourth straight day on Tuesday, 20 November 2007. The 30-share BSE Sensex lost 352.56 points or 1.8% at 19,280.80. The S&P CNX Nifty ended down 126.75 points or 2.15% to 5,780.90 on that day.
Trading Calls
Nifty (5781) Sup 5714 Res 5845
Sell Nalco (372)
SL 377 Target 364, 361
Sell Tata Chem (312)
SL 317 Target 304, 301
Sell Amtek Auto (436)
SL 441 Target 424, 421
Buy Voltas (211)
SL 207 Target 221, 225
Buy Kotak Bk (1140)
SL 1128 Target 1170, 1175
IPO Listings
Religare will list on 21st Nov. 2007 (Wednesday)
Varun Industries will list on 22nd Nov. 2007 (Thursday)
Allied Computers will list on 23rd Nov. 2007 (Friday)
Stocks poised for a rocky start
Lack of clarity in the market, weak Asian indices and sharp intra-day volatility may hold the investors from taking any fresh position. US Federal policy makers lowered their growth forecast in October and worried about credit-market losses, despite the expected interest-rate cut. The market may remain under pressure owing to worries about subprime losses in the US and the Asian indices are also mirroring the trend by sailing in negative territory in the ongoing trades. Among the local indices, the Nifty could test 5748 on the downside while it may rise to 6000 in short-term. The Sensex has a likely support at 19500 and may face resistance at 20500.
US indices slipped in the afternoon on financial stocks and bearish Fed news, but recovered late in the session. While the Dow Jones gained by 52 points at 13010, the Nasdaq added three points to close at 2597.
Indian floats largely had a mixed outing on the US bourses. VSNL was the major gainer and rose 3.50% while Satyam, wipro, Tata Motors, ICICI Bank, HDFC Bank and Patni Computers ended with steady gains. Among the laggards Rediff and MTNL slumped over 3-4% each while Dr Reddy's and Infosys were down marginally.
Crude oil prices in the overseas market moved up marginally, with the Nymex light crude oil for January series gaining $3.39 to close at $98.03 a barrel. In the commodity space, the Comex gold for December delivery jumped by $13.40 to settle at $791.40 an ounce.
Soft open likely; nothing predictable
Those who have knowledge, don't predict. Those who predict, don't have knowledge.
No amount of knowledge helps in accurately predicting markets. Generally its really tough to predict day-to-day movement in the stock market. Even the most seasoned traders and investors cannot pull it off regularly. And, we are no exception to this norm. Having said that, yesterday's market movement was pretty similar to what we had predicted in the morning. But, we would like to add a word of caution: past performance may not get repeated. Still, we have and we will endeavour to provide you with the best possible insight into the market.
Coming to today's market, we see another choppy day in store. A piece of news that may have some bearing on the sentiment is a report in a financial daily that the Finance Ministry is contemplating hiking the rate at which the Securities Transaction Tax (STT) is being levied.
The world markets, starting with key Asian indices rebounded yesterday after a weak start. In India too, the trend was the same, but for the sudden late selling induced by the FIIs. Today, though US shares managed modest gains amid hope that the Federal Reserve will cut rates again in December, Asian markets are sharply down again. European markets closed higher but emerging markets were mostly down. Oil prices briefly crossed the all-time peak above $99 per barrel.
The end will hinge on how markets in Asia, and later in the afternoon, in Europe, behave. One also has to bear in mind the big selling by FIIs yesterday. The intensity of the selloff in the last one hour took most players by surprise and will surely keep euphoria in the small and mid-cap stocks in check.
On the whole, we would advise caution at this stage as the near-term trend is still not clear and volatility has escalated. Fresh buying should be restricted to quality stocks for a fairly long-term investment horizon. The big event to watch out for now will be the Fed meeting on Dec. 11.
US stocks ended marginally higher on Tuesday, rebounding from three-month lows struck in the previous session, after record oil prices boosted energy companies and Credit Suisse said shares of Google may reach $900 in the coming year.
Exxon Mobil climbed the most in five years. Google rallied after a bullish note from Credit Suisse.
US stocks swung throughout the day, with the Dow Jones Industrial Average falling to a seven-month low after the Fed lowered its 2008 growth outlook and rebounding when Countrywide Financial denied speculation that it faced a funding shortage.
The Standard & Poor's 500 Index added 6 points, or 0.5%, to 1,439.7. The Dow rose 52 points, or 0.4%, to 13,010.14. The Nasdaq Composite Index added 3 points, or 0.1%, to 2,596.81.
Slightly more than one stock gained for every one that fell on the New York Stock Exchange.
US financial markets are closed Thursday for the Thanksgiving holiday, and will be open for half day on Friday.
The Fed policy makers slashed their GDP growth forecast for the US in October and worried about credit-market losses, even as they described the interest-rate cut as a close call, according to minutes of the Federal Open Market Committee's Oct. 30-31 meeting.
The US central bank cut its forecast for next year from 2.5-2.75% to 1.8% to 2.5%. The Wall Street is now betting on another rate cut in December. Still, traders cut bets of a 25-basis-point rate cut to 4.25% at the December policy meeting. Odds fell to 84%, down from 96% yesterday.
Homebuilding permits in the US slumped in October to their lowest level since 1993 and construction of single-family homes dived, indicating that there is more pain left in the housing sector.
Freddie Mac shares tumbled 29%, the biggest decline since it went public in 1988, as the second-largest US mortgage-finance company posted a record loss, warning of a possible dividend cut and the need to raise capital.
Crude oil rose 3.6% to $98.03 a barrel in New York after the dollar declined to a record low against the euro, increasing demand for commodities.
Bond prices declined slightly, with the 10-year Treasury down 4/32 to yield 4.09%. In currency trading, the dollar gained versus the yen and fell against the euro. COMEX gold for December delivery rose $16.50 to $794.50 an ounce.
European stocks closed higher in a volatile session. The pan-European Dow Jones Stoxx 600 index finished with a gain of 1.1% at 358.65. The UK's FTSE 100 added 1.7% to 6,226.50, the German DAX 30 advanced 1.6% to 7,630.31 and the French CAC-40 rose 1.4% to 5,506.68.
In the emerging markets, the Bovespa in Brazil was down 3.5% at 62,336 while the IPC index in Mexico fell by nearly 2% to 29,050. The RTS index in Russia rose 0.7% to 2180 and the ISE National-30 index in Turkey advanced 0.7% to 67,853.
Most Asian markets were trading in the red. The MSCI Asia Pacific Index lost 0.8% to 156.80 at 11:10 a.m. in Tokyo, with seven of its 10 industry groups falling. Japan's Nikkei was down almost 200 points at 15,015 while the Hang Seng in Hong Kong slumped by 735 points to 27,035.
The Kospi in Seoul dropped 25 points to 1846. All markets open for trading fell except New Zealand and Malaysia.
The yen rose against all of the world's 16 most-actively traded currencies as losses related to subprime mortgages widened, prompting investors to sell higher- yielding assets funded by loans made in Japan.
Can bulls bear weak Wednesday?
A see-saw trading session ended in negative territory marking its fourth straight session of losses. After hitting low of 19,714, benchmark index bounced back as buying at lower levels lifted the key indices in positive terrain in the afternoon trades. However, Late sell-off in the day dragged the markets to close in deep red.
Among the 30-scrips of Sensex Reliance Industries, ICICI Bank, Infosys, BHEL and ONGC are among the major laggards. However, Hindustan Unilever, Tata Motors and Ambuja Cement managed to hold on to their gains.
Among the non index losers Alok Industries dropped 8.5% to Rs73, Essar oil fell 8% to Rs187, Vijaya Bank slipped 6% to Rs78 and Triveni Engineering declined 6.5% to Rs149.
Finally, benchmark Sensex lost 352 points to close at 19,280. NSE Nifty closed 126 points lower at 5,780.
L&T slipped by 0.7% to Rs4334. The company entered in to MoU with Medium Multi Rile Combat Aircraft with Raythoen. The scrip touched an intra-day high of Rs4409 and a low of Rs4301 and recorded volumes of over 9,00,000 shares on NSE.
Dena Bank slipped 1.2% to close at Rs86, the scrip fell from a high of Rs94 after the company clarified on the news item that it had no discussion with SBI. The scrip touched an intra-day high of Rs94 and a low of Rs85 and recorded volumes of over 92,00,000 shares on NSE.
Bhagyanagar India gained 1.1% to Rs46 after the company announced that it has started Venture with IL&FS for Infrastructure. The scrip touched an intra-day high of Rs48 and a low of Rs44 and recorded volumes of over 83,000 shares on NSE.
GTL Infrastructure spurred by over 3% to Rs57 after the company declared that they have signed MoU with IDFC project equity and also announced that they may acquire
Star rallied by over 10% to Rs293 after the company announced that they have entered in to partnership with
Dewan Housing advanced 1% to Rs156 after the company announced that it approved buying 19.9% stake in Wadhawan Food Retail. The scrip touched an intra-day high of Rs164 and a low of Rs152 and recorded volumes of over 4,00,000 shares on NSE.
Maytas Infra dropped by over 9.5% to Rs971. The company announced that their group won Karnataka Airports Project. The scrip touched an intra-day high of Rs1121 and a low of Rs966 and recorded volumes of over 4,00,000 shares on NSE.
Gitanjali Gems lost shine, the scrip slipped 1.2% to Rs382. The company announced that they were entering in to Joint Venture with Armo. The scrip touched an intra-day high of Rs395 and a low of Rs377 and recorded volumes of over 3,00,000 shares on NSE.
Ashco Industries dropped 2.2% to Rs39. The company declared that they would merge with Niulab Equipment. The scrip touched an intra-day high of Rs42 and a low of Rs38 and recorded volumes of over 8,00,000 shares on NSE.
Stocks in News:
Mahindra Systems & Automotive Technology, M&M’s auto component division is in talks with S P Metal Forgings of South Africa, for an equity deal.
Tata Steel is launching a mega rights issue of Rs100bn to repay the bridge loans raised for funding the acquisition of Corus.
HPCL plans to spend US$4.5bn on exploration, gas marketing and petrochemicals by 2012.
Omaxe may tap West Asia as Indian real estate market cools.
Apollo Tyres plans new unit in Europe to expand its global footprint.
Chennai Petroleum seeks to set up a new wind power capacity.
Bisleri plans to launch an enhanced water product within a year.
JSW Steel has completed the land acquisition for its 10mn ton project at Midnapur in West Bengal.
Reliance Industries has signed production sharing agreements for two exploration blocks in Yemen.
ITC is likely to buy the confectionery business of Ravalgaon Sugar Farms.
French retail giant Carrefour has registered two companies in India. It has also decided to choose an Indian partner early next year and plans to launch a wholly-owned Indian cash-and-carry business in 2009.
Dabur India has commissioned a toothpaste making facility in Nigeria with an investment of US$4mn.
Dabur Pharma is planning to set up subsidiaries in Italy and Germany.
Vipul to invest Rs130bn in the next five years to develop real estate.
Lanco Infratech plans to enter businesses such as development of ports, power transmission and airport in next 6-9 months.
Essar Steel is likely to shelve its plans to construct a US$1.9bn plant in Indonesia following an adverse ruling by the country’s anti-dumping authority.
The Government has sought parliament approval to spend an additional Rs332.9bn, including Rs112.6bn oil bonds, till March 2008.
The Government does not plan to impose more curbs on inflows of overseas capital.
The petroleum and gas regulator says that the proposed 1,600km gas pipeline from Kakinada to Dadri is prima facie feasible.
The Government will soon meet Pakistan officials over the Iran-Pakistan-India gas pipeline.
The finance ministry is considering raising the rate at which securities transaction tax is being levied.
Maharashtra Government has effected duty cuts on imported spirits and raised excise duty on imported wines to 200%.
FII Investment Trend:
FIIs were net sellers of Rs18bn (provisional) in the cash segment on Tuesday while the local institutions pumped in Rs4.64bn. In the F&O segment, FIIs were net sellers of Rs42bn.
Foreign funds were net sellers of Rs268mn in the cash segment on Monday.
Poll - By November End, Market will be at
> 20000 - 173 (45%)
> 21000 - 85 (22%)
< 19000 - 76 (20%)
Total Number of Votes - 375
Very short term, market participants seem to be extremely bullish
What will the Market do medium term ? - See our Poll Results here
Crude ends above $98
A low dollar send crude price spiraling up
Crude oil prices rose today above $98 a barrel in New York to a record close after the U.S. dollar declined to a new low against the euro.
For the day ending Tuesday, 20 November, 2007, crude-oil futures for light sweet crude for January delivery closed at $98.03/barrel (higher by $3.39/barrel or 3.6%) on the New York Mercantile Exchange. Prices are up 76% from a year ago.
Brent crude oil for December settlement rose $3.21 (3.5%) to $95.49 on the London-based ICE Futures Europe exchange.
In the currency market today, the dollar was lower across the board, hitting a new low against the euro and reversing earlier gains on the yen as stocks slumped after the Federal Reserve predicted slower economic growth next year. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, fell 0.7% at 75.22. The dollar dropped on speculation that the Federal Reserve will lower interest rates a third time this year
Last week, prices rose to $98.62/barrel during intra day trading on 7 November, 2007. Oil prices had rose 16% in October, 2007, the biggest one-month gain since September 2004.
Heating oil touches a new all time high
Natural gas in New York declined for a second day amid speculation U.S. inventories are ample for winter heating needs. Gas for December delivery fell 31.2 cents (4%) to $7.475 per million British thermal units.
Against this backdrop, December reformulated gasoline closed up 6.98 cents at $2.4515 a gallon. December heating oil ended up 8.59 cents at the strongest closing level of $2.6901 a gallon on the Nymex. It touched a new intraday high of $2.699 earlier.
Last week, OPEC reduced its fourth-quarter estimate of global oil demand growth to 1.97%, down from 2.1%, citing warmer winter weather in the Northern Hemisphere and the higher price of gasoline. The cartel also trimmed this year's world oil demand growth to 1.4% from 1.5%, but the cartel kept the first quarter of next year unchanged at 1.8%.
Attacks on oil facilities in Middle East and tight supplies from OPEC have bolstered crude prices this year. As per the U.S. Energy Information Administration, tight global energy supplies are expected to keep energy prices high through 2008.
At the MCX, crude oil for December delivery closed at Rs 3806/barrel, higher by Rs 116 (3.1%) against previous day’s close. Natural gas closed at Rs 297/mmtbu as against previous close of Rs 309.4/mmtbu, lower by Rs 12.4/ mmtbu.
The Energy Department will come out with the weekly inventory report on crude oil and fuel products for week ended Friday, 16 November tomorrow morning at Washington at 10.30 E.T.
Edelweiss IPO Subscription
Qualified Institutional Buyers (QIBs) - 153.1465 times
Non Institutional Investors - 164.3048 times
Retail Individual Investors (RIIs) - 17.2171 times
Employee Reservation - 10.1774 times
OVERALL - 110.96 times
Market Savvy employees :). Retail applicants who applied for 1 Lakh will stand a good chance to get 1 lot of allotment
Ashis Behera Daily Picks - Nov 21 2007
Long Calls
COLGATE
DIVISLAB
JET
JINDAL STAINLESS
short calls -
NIL
( Buy around previous closing price with a stoploss at 2% . Allocate equal amt to each.)
MED TERM TRADING PICK -
PYRAMID SAIMIRA THEATRE
NSE CODE :PSTL
( targeting 430-450)
FIIs in selling mode
Outflow of Rs 79.10 crore on 16 November 2007
Foreign institutional investors (FIIs) sold shares worth net Rs 79.10 crore on Friday, 16 November 2007, compared to their buying of Rs 788.40 crore on Thursday, 15 November 2007.
FIIs outflow of Rs 79.10 crore on 16 November 2007 was a result of gross purchases of Rs 3508.90 crore and gross sales Rs 3588 crore. The 30-share BSE Sensex ended down 86.53 points or 0.44% at 19,698.36 on that day.
FII outflow in November 2007 totaled Rs 290.20 crore (till 16 November 2007). FII inflow in calendar year 2007 totaled Rs 71,466.90 crore (till 16 November 2007).
There are a total of 1,162 FIIs registered with the Securities & Exchange Board of India (Sebi).
$25b coming to real estate sector
Global real estate majors such as Dubai World, Trump Organisation of US, Smart City of Dubai, Kishimoto Gordon Dalaya, Khuyool Investments, Bonyan Holding, Plus Properties, ABG Group and Al Fara’s Properties are descending on the Indian real estate market with an investment of around $20-25 billion in the next 12-18 months.
Top-level management teams of around 50 global developers are currently in India scouting for joint venture partners and tie-ups with various state governments to enter one of the booming property market in the world.
Officials close to the developments said that over 200 meetings were held between the representatives of foreign real estate firms and Indian companies and over a dozen JVs are in the final stages.
DAMC Holding (a Dubai-based leading real estate firm ) chairman and founder Hussain Sajwani said they have firmed up plans to invest around $3-5 billion in the Indian market. “We are in negotiations with various Indian developers for a possible joint venture, and hope to enter the market in the next 12 months,” he said.
Trump Organisation executive vice-president (development and acquisition) Donald Trump Jr is euphoric about India. “Now is the time to come to India. We hope to strike the deal in the next 12-18 months, though we will be eager to do it much before,” he said. He, however, declined to divulge the amount of investment.
Industry officials said a global real estate exhibition organised by Cityscape, currently going on in Mumbai, provided a platform for their discussions.
The Indian real estate industry is estimated to grow by 33% to $50 billion by 2010 and India is looking to remain an appealing investment option for both domestic and foreign investors.
Gulf Finance House (GFH) has decided to invest over $2 billion in a greenfield site close to Navi Mumbai, near to the commercial capital’s airport. GFH has already raised $630 million towards the initial development and infrastructure requirements of the project.
GFH has signed a wide ranging MoU with the government of Maharashtra towards the development of Energy City India, and the project details are now at an advanced stage.
Similarly, the Dubai Internet City has picked up Kochi to set up a Smart City project, and IT and media hub. The initial investment for the Smart City, being executed by the DIC management will be over $400 million. The Smart City would come up in a vast, 1,000 acres of land on the outskirts of Kochi.
Plus Properties CEO Georges Chehwane said currently India offers huge business opportunities and the firm will be entering India in a year’s time. According to the Asian Development Bank, some 10 million housing units alone will be required by 2030 and with current central bank restrictions on domestic real estate lending, inward flows of overseas capital will be essential to fill the financing void.
It is estimated that an additional 16.8 million people annually adding to the surging demand for infrastructure, housing, schools, hospitals, retail as well as hospitality and commercial property. According to property consultants, with many property markets around the world already on the cusp of recession, India offers ideal investment opportunities.
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