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Friday, September 04, 2009
Crude ends little lower
Prices witness another full day of volatile session
Crude prices ended little lower on Thursday, 03 September, 2009. Prices remained volatile for entire day as the initial claims report hit the wires today.
On Thursday, crude-oil futures for light sweet crude for October delivery closed at $67.96/barrel (lower by 9 cents or 0.1%). During intra day trading, crude touched a high of $69.40 but also fell to a low of $67.66. Last week, crude ended higher by 9.5%. It was the biggest weekly gain for crude in three months.
For the month of August, 2009, crude ended higher by a marginal 0.7%. For the second quarter, crude ended higher by 40%. Crude prices had rallied 11.3% in the first quarter of 2009.
Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 56% since then. Year to date, in 2009, crude prices are higher by 42%.
In the currency market on Thursday, the dollar index, which weighs the strength of dollar, against a basket of six other currencies ended slid by 0.7%. The dollar moved lower against the euro and the British pound but remained higher against the Japanese yen.
Among economic reports expected on Thursday, The Labor Department reported on Thursday, 03 September, 2009 that the number of people filing for state unemployment benefits for the first time fell by 4,000 to a seasonally adjusted 570,000 last week.
Initial claims have held in a fairly narrow range for the past seven weeks, down about 100,000 from the peak in March but still well above levels seen in a healthy economy.
EIA reported yesterday that crude inventories fell by 400,000 barrels during last week. Market had expected a decline of 1.9 million barrels. At 343.4 million barrels, crude inventories stand at a level above the upper boundary of the average range for this time of year. Utilization rate rose to 87.2% of capacity. Rising input was partly offset by another jump in crude imports. The U.S. imported 9.58 million barrels a day of crude last week, up 3.8% from a week ago.
EIA had also reported that gasoline inventories fell by 3 million barrels last week. Distillates, however, rose by 1.2 million barrels.
Also at the Nymex on Thursday, October reformulated gasoline fell 1.58 cents, or 0.9%, to $1.7928 a gallon. October heating oil lost 1.55 cents, or 0.9%, to $1.735 a gallon.
October natural gas fell 20.7 cents, or 7.6%, to $2.508 per million British thermal units. EIA reported today that U.S. natural gas inventories rose 65 billion cubic feet in the week ended 28 August, 2009. At 3,323 billion cubic feet, stocks were 489 billion cubic feet higher than last year at this time and 501 billion cubic feet above the five-year average.
Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
At the MCX, crude oil for September delivery closed higher by Rs 10 (0.3%) at Rs 3,340/barrel. Natural gas for September delivery closed lower by Rs 11 (8.1%) at Rs 125.3/mmbtu.
Precious metals at six month high
Drop in initial claims pushes dollar lower
Precious metal prices ended substantially higher once again on Thursday, 03 September, 2009. Prices rose as the dollar dropped following the initial claims report announced by the Labor Department today.
Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.
On Thursday, gold for December delivery ended at $997.7, higher by $19.2 (2%) an ounce on the New York Mercantile Exchange. It rose as high as $999.5 earlier. Last week, gold ended higher by almost 0.4%. Year to date, gold prices are higher by 13.4%.
Gold ended August, 2009 higher by 0.2%. Before this, for the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.
On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (3%) since then.
On Thursday, Comex silver futures for September delivery rose by 92.5 cents (6%) to $16.29 an ounce. Last week, silver ended higher by 4.3%.
Silver ended 7.1% higher for August, 2009. For second quarter, silver rose 4.5%. Year to date, silver has climbed 41.5% this year. For 2008, silver had lost 24%.
In the currency market on Thursday, the dollar index, which weighs the strength of dollar, against a basket of six other currencies ended slid by 0.7%. The dollar moved lower against the euro and the British pound but remained higher against the Japanese yen.
Among economic reports expected on Thursday, The Labor Department reported on Thursday, 03 September, 2009 that the number of people filing for state unemployment benefits for the first time fell by 4,000 to a seasonally adjusted 570,000 last week.
Initial claims have held in a fairly narrow range for the past seven weeks, down about 100,000 from the peak in March but still well above levels seen in a healthy economy.
In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.
At the MCX, gold prices for October delivery closed higher by Rs 252 (1.62%) at Rs 15,771 per 10 grams. Prices rose to a high of Rs 15,806 per 10 grams and fell to a low of Rs 15,464 per 10 grams during the day's trading.
At the MCX, silver prices for December delivery closed Rs 1,185 (4.74%) higher at Rs 26,138/Kg. Prices opened at Rs 24,968/kg and rose to a high of Rs 26,250/Kg during the day's trading.
Daily News Roundup - Sep 4 2009
The court has deferred the Upaid-Satyam case hearing to January 2010 from September. (BS)
Neyveli Lignite plans to invest Rs100-120bn in setting up power projects. (BS)
SAIL achieved sales of 1.1mn tons during August in the domestic market, up by 20% yoy. (BL)
BHEL plans to invest close to Rs20bn to set up a 250MW solar photovoltaic production facility for processing silicon wafers, solar cells and PV modules. (BS)
M&M to enter US operations in the first quarter of 2010 with two new variants of SUV Scorpio, besides two vehicles in the Indian market over the next six months. (BS)
SBI has slashed interest rates for minor irrigation (like wells and pump sets) and crop loans above Rs0.3mn to support farmers hit by weak monsoon and drought. (BS)
TCS aims at 10% of its total revenue from government projects and plans to hire 25,000 people in FY10. (ET)
Sona Koyo to set up four manufacturing plants. (BS)
Pipavav Shipyard is re-negotiating price component in orders for eight vessels placed by its overseas customers. (BS)
Ranbaxy has entered into an agreement with Validus Pharmaceuticals LLC to market and distribute generic version of calcium drug Rocaltrol in the US. (BL)
The Fiat Group based in India plans to source auto components worth US$1bn (~Rs49bn) from domestic auto ancillaries in 2010. (BS)
MRF plans to invest about Rs4bn in expansion of its facilities at Andhra Pradesh. (BL)
LIC proposes to invest Rs1,000bn in equity market during the current fiscal year (ET)
PNB to reschedule 15-20% of its crop loan owing to drought like situation (BL)
Economy Snippets
The annual Wholesale Price Index-based inflation declined 0.21% during the week ended August 22. (BL)
The Employees Provident Fund Organisation (EPFO) has started looking for options to park 3-5% of its retirement fund in stock markets to earn better returns. (BS)
The food ministry has raised the levy price at which it buys sugar from mills to supply the public distribution system (PDS) by 50% in Maharashtra and 63% in Uttar Pradesh for the new sugar season starting next month. (BS)
The government has extended the implementation of mobile number portability to December 31. (BS)
Banks could have separate benchmark prime lending rates (BPLR) for corporate and retail borrowers. (BS)
Gathering courage in the pit stop!
The only courage that matters is the kind that gets you from one moment to the next.
The bulls seem to be gathering courage and saying this is not the finish line but only a pit stop - a la F1 style. The bulls are taking a breather after a great run since early March. Some fatigue appears to have set in after the main indices hit multi-month highs.
Today, we may see a higher opening on the back of the late turnaround on Wall Street. Things were a bit mixed in Europe. Similar is the case for Asian markets this morning. Given that the market has been subdued for most of the week, there is a case for a technical or rather sentimental rebound. Overall, the trend may continue to be indecisive and sideways for a few more days.
The monthly jobs report to be issued in the US later today will be keenly followed. The US markets will enjoy an extended weekend due to the Labour Day holiday on Monday.
The current insipid trend may continue until we get the next trigger(s) which could swing the market either way. Among the key catalysts will be the quarterly earnings and the half-yearly policy review by the RBI. The direction of fund flows will continue to have a bearing, and so will the global factors.
The ECB has kept interest rates steady at a record low of 1%. The central bankers for the 16-nation euro zone are still skeptical about “green shoots” of recovery. ECB president Jean-Claude Trichet says that while it is premature to declare the financial crisis over, Europe's central bank has an exit strategy in place.
His US counterpart, Treasury Secretary, Tim Geithner says that strengthening capital requirements is an essential part of a broader effort to modernise the regulatory framework so that the financial system is strong enough to withstand the failure of large, complex institutions.
The Organization for Economic Cooperation & Development (OECD) says that the worst global recession in several decades is likely to end sooner than expected, and could well be over, but the pace of economic activity will remain weak well into next year.
A two-day meeting of G20 finance ministers and central bankers will get underway later today in London. The G20 leaders are laying the groundwork for a summit meeting later this month in Pittsburgh, where leaders will discuss measures to overhaul supervision of the global financial system.
Global investors have started to look ahead and are trying to match current valuations to future prospects. In many cases they have struggled to make the connection between multi-month high equity markets and a tentative global economic recovery.
As a result, going into September, global investors once again pulled out cash from Money Market Funds and put them into fixed income funds rather than equity funds. Overall, for the week ending Sept. 2, investors committed $5.06bn to EPFR Global-tracked fixed income funds and pulled $4.95bn out of equity funds.
US stocks rallied in later trade on Thursday, as investors snapped up bank and technology shares following a three-day selloff.
The Dow Jones Industrial Average gained 64 points, or 0.7%, at 9,344.61. The S&P 500 index added 8 points, or 0.9%, to 1,003.24. The Nasdaq Composite index rose 16 points, or 0.8%, to 1,983.20.
US stocks were firm through most of the session as financials and other stocks that were hit earlier in the week bounced back. But the advance was limited by tepid back-to-school sales from the retailers and a troubling weekly jobless claims report, ahead of the bigger non-farm payrolls report on Friday.
The key fundamental change investors are looking for is continuous improvement in the jobs market, and the weekly jobless claims numbers weren't very positive.
The August report from the Labor Department is due before the start of trading on Friday. Employers are expected to have cut 225,000 jobs from their payrolls in August. Employers cut 247,000 jobs in July. The unemployment rate, generated by a separate survey, is expected to have risen to 9.5% from 9.4% in July.
Also on Friday, Treasury Secretary Timothy Geithner meets with the G-20 Finance ministers in London.
Trading volume is likely to be light and markets could be particularly volatile ahead of the three-day Labor Day holiday.
US stocks slid in the past three sessions, after ending last week at 2009 highs. The S&P 500 and Nasdaq both ended last week at levels not seen since just after the collapse of Lehman Bros. last September.
But this week has brought persistent selling on worries that the rally has run way ahead of times. That weakness has been compounded by lighter-than-usual trading ahead of the Labor Day holiday weekend.
Financial shares were charging ahead again. The KBW Bank index gained 2.5%.
Fannie Mae and Freddie Mac both continued their recent surge. The stocks got an extra boost after the New York Federal Reserve Bank said it bought $3.779 billion of US agency debt, bringing its total to $122.4 billion in the last 9 months. The Fed has said it will buy $200 billion in debt from Fannie, Freddie and the Federal Loan Bank System as part of its efforts to keep mortgage rates low and help the economy recover.
A worse-than-expected jobless claims report and a mix of retail sales added to concerns about the health of the consumer. With consumer spending traditionally fueling two-thirds of economic growth, investors are looking for signs that spending could be picking up.
The number of Americans filing new claims for unemployment last week stood at 570,000, a decline from the previous week's 574,000, but only because the previous week's numbers were revised higher. Economists were expecting 564,000 new claims.
Additionally, continuing claims, a measure of people who have been filing claims for a week or more, rose 92,000 to 6.23 million, topping forecasts for a rise to 6.12 million.
The Institute for Supply Management's (ISM) services sector index for August rose to 48.4 from 46.4 previously. Economists thought it would rise to 48. Any number below 50 implies the sector is continuing to weaken.
Back-to-school sales for the nation's retailers were weaker than a year ago, but results still topped analysts' forecasts. August same-store sales, or sales at stores open a year or more, fell 2.9% versus a year ago. Analysts expected sales to drop 3.8%.
Discounters did the best, including clothing retailer Aeropostale which said sales rose 9% versus forecasts for a jump of 7.1%. Target said sales fell 2.9%, versus analysts' bets that sales would drop 5.1%. Costco and Limited Brands, which owns Bath & Body Works, reported weaker sales that surpassed forecasts.
Abercrombie & Fitch said sales plunged 29% versus a year ago.
Dainippon Sumitomo Pharma of Japan is buying US drugmaker Sepracor for about 2.6 billion, the companies said Thursday, confirming earlier reports.
US light crude oil for October delivery fell 9 cents to settle at $67.96 a barrel on the New York Mercantile Exchange. Oil prices have been slipping since hitting a 10-month high just below $75 a barrel late last month.
Gold continues its advance, extending a three-month high, as risk averse investors turn to the precious metal following recent weakness on equity markets. COMEX gold for December delivery rose $19.20 to settle at $997.70 an ounce, inching closer to the psychologically significant $1,000 level.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.32% from 3.30% late on Wednesday.
In currency trading, the dollar fell versus the euro and the Japanese yen.
European shares finished flat even as gold rose sharply and the ECB kept its key interest rate unchanged. The pan-European Dow Jones Stoxx 600 index pared earlier gains to virtually unchanged at 230.66. The index lost 2.9% over the previous three sessions.
The UK's FTSE 100 index fell 0.4% to 4,796.75, the German DAX index lost 0.4% to 5,301.42 and the French CAC-40 index slipped 0.6% to 3,553.51.The BSE Sensex extended its losing streak to the fifth straight trading session led by the selling witnessed in the Oil & Gas, Pharma and the Capital Goods stocks. With stock valuations not cheap and uncertainty in global markets, markets are finding it tough to move higher. The Sensex has now lost nearly 3.3% or 524 points in the past five days.
Technically, The 20 Day moving average seems to be a strong support for the Nifty index which is placed at around the 4550-4560 levels. A drop below this levels would be
Inflation continued to remain in the negative terrain, the Wholesale Price Index (WPI) for 'All Commodities' for the week ended August 22, 2009 rose by 0.8% to 240.7 from 238.8 for the previous week. The annual rate of inflation stood at -0.21% for the week ended August 22, 2009 as compared to -0.95% for the previous week August 15, 2009 and 12.76% during the corresponding week August 23, 2008 of the previous year.The government announced that it revised the inflation for June 27 week to -1.09% from -1.55%.
The BSE Sensex fell by 69 points or 0.5% at 15,398 after touching a high of 15,598 and a low of 15,356. The index opened at 15,539 against the previous close of 15,467. The NSE Nifty was down by 15 points to shut shop at 4,593.
In Asia, the Nikkei in Japan slipped by 0.6% at 10,214 while Australia's S&P/ASX ended lower by 0.2% at 4,429. The Hang Seng index in Hong Kong was up 1.2% at 19,761. Shanghai index in China was up by 4.7% at 2,845.
In Europe, stocks were mixed. The FTSE in the UK was flat, The DAX in Germany was up 0.2% and the CAC 40 index in France was down 0.2%.
Coming back to India, among the BSE sectoral indices, the Oil & Gas index was the top loser, shedding 1.1%, followed by the Pharma index that was down 0.7%. The BSE Capital Goods index down 0.7% and the BSE Power index was down 0.5%.
The BSE Mid-Cap index gained 0.3% and the BSE Small-Cap index gained by 0.8%.
Among the 30-components of Sensex, 21 stocks ended in the green and 8 ended in the negative terrain. Among the major losers were Reliance Industries, Bharti, L&T, ONGC and ITC.
On the other hand bucking the negative trend were, Infosys, RCom, SBI, Sterlite and Tata Steel.
Outside the frontline indices, the big gainers in the broader market were Cadila, EKC, Pantaloon, Chennai Petro, Torrent Power and Mphasis. On the other hand, losers included Renuka, IVRCL, GVK Power, BEML and Jubilant.
BPCL plans to partially shut its crude-oil processing plant in Mumbai in October for nearly 2 months to upgrade equipment that produces cleaner-burning fuels.
The company plans to close a unit that reduces sulfur content in gasoline and diesel for an upgrade to produce fuels that meet Euro III and Euro IV specifications, the director for refineries R.K. Singh, was quoted as saying.
"It will be mandatory to sell Euro III and Euro IV fuels from April 1 and this shutdown is part of that process," Singh added.
The stock gained by 2.5% to Rs554. The stock opened at Rs545 and made an intra-day high of Rs561 and a low of Rs543. Total traded volumes stood at 0.19mn shares.
Shares of Parsvnath surged by over 2.5% to Rs120 after the company plans to sell as much as US$100mn of shares and a stake in a real estate project in an attempt to trim its debt to a third by March, Pradeep Jain the company's Chairman said was quoted as saying.
The company aims to sell shares to institutional investors by the end of October, and the stake in a housing project this month to a PE fund, Jain added. In June, the company got 900 million rupees ($18.4 million) from private equity firm Red Fort Capital for a stake in a New Delhi housing project.
Shares of Maytas Infra were locked at 5% upper circuit to end at Rs130.5 after about 2.67mn equity shares or 4.5% of its equity, change hands in eight transactions. The stock opened at Rs130.5 and made an intra-day high of Rs130.5 and a low of Rs124. Total traded volumes stood at 2.3mn shares.
Shares of Aban Offshore gained by 2.2% to Rs1570 after media reports stated that the company has deployed two more rigs in Iran. The stock opened at Rs1591 and made an intra-day high of Rs1616 and a low of Rs1541. Total traded volumes stood at 1.3mn shares.
Shares of Wall Street Finance were locked at 10% upper circuit at Rs55.85 after the Anil Ambani Group sold its entire stake in the company.
We have decided to exit our investment in Wall Street Finance as the business conflicts with Reliance Money Express," Sudip Bandyopadhyay, MD said.
It had acquired the shares at around Rs36-38 against the current market price of Rs51. Reliance Money made a neat profit of Rs60-70mn.
Shares of Moser Baer shot up by over 3% to Rs90.65 after the company got a contract to build 1 mega watt Solar Power Plant. The stock opened at Rs89 and made an intra-day high of Rs91.60 and a low of Rs88. Total traded volumes stood at 0.8mn shares.
Bajaj Auto Finance
We recommend a buy in Bajaj Auto Finance from a short-term horizon. It is evident from the charts that the stock has been on an intermediate-term uptrend, forming higher peaks and troughs since March low of Rs 43. In mid-July, the stock took support around Rs 140 and resumed its uptrend. It is trading well above 21- and 50-day moving averages. On September 1, the stock jumped 8 per cent accompanied with good volume, penetrating the short-term resistance at Rs 215. This break through has reinforced the stock’s bullish momentum. Both the daily as well as weekly relative strength indices are featuring in the bullish zone. The daily moving average convergence and divergence is signalling a buy. Our short-term outlook is bullish on the stock. We anticipate the uptrend to continue until it hits our price target of Rs 247. Traders with a short-term perspective can buy the stock while maintaining a stop-loss at Rs 212.
via BL
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