Tuesday, October 06, 2009
Market seen open firm on positive global cues
Key benchmark indices are likely to see an upbeat start on the back of positive global cues. The S&P CNX Nifty futures traded on the Singapore stock exchange were up 12 points. Also strong outlook for India's economy by International Monetary Fund would boost sentiment.
Asian stocks were trading higher today, 6 October 2009 after US stocks rebounded from four sessions of declines, with resource producers such as Rio Tinto getting a boost from a jump in gold and other commodities, while exporters also advanced in Japan and South Korea. Key benchmark indices in South Korea, Japan, Taiwan, Hong Kong and Singapore were up by between 0.13% and 1.35%.
Chinese markets have been shut since 1 October 2009 for National day and Autumn festival celebrations. Trading will reume on 9 October 2009
US stocks rebounded on Monday, 5 October 2009 after two straight weeks of declines as investors used the recent sell-off as a chance to jump back into the market. A better-than-expected reading on the services sector of the US economy and strong demand for Treasury's first bond auction of the week bolstered the broad-based gains.
The Dow rose 112 points, or 1.2%. The S&P 500 index gained 15 points, or 1.5% and the Nasdaq rose 20 points, or 1%.
In economic data, the Institute for Supply Management's services sector index rose to 50.9 in September 2009 from 48.4 in August 2009. Economists thought it would rise to 50
Back home, the International Monetary Fund (IMF) may reportedly raise its 6.8% growth forecast for the 2010-2011 fiscal year as domestic demand and exports pick up. The IMF expects economic growth of 5.8% for 2009-10. India's growth slowed to 6.7% in 2008-09 as the global downturn hit harder than expected, after growing at 9% or more in the previous three years.
Meanwhile action is also likely to shift to primary market with India Inc raising Rs 55,000 crore from the domestic primary market for the quarter ended September 2009. The money raised for the corresponding quarter last year was around Rs 26,000 crore. As per reports, 30 companies have filed their draft red herring prospectuses in September 2009 with market regulator Sebi for raising funds through initial public offering.
But a section of the market is concerned that a glut in share sales may suck liquidity from the secondary market. The corporate sector has raised large sums of money through equity and equity related instruments in the past six months or so to either to retire high cost debt or to fund expansion. The supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary market.
As per one report, companies plan to raise at least Rs 40,000 crore through initial public offers (IPOs)/follow on public offers (FPOs) in the second half of the current financial year. Power companies such as GMR Energy, Indiabulls Power and JSW Energy and state-run Bharat Heavy Electricals and NTPC are likely to tap the primary market. A number of realty firms, too, are likely to tap the primary market in the coming months.
Reliance Infratel also announced on Tuesday, 22 September 2009, its intention to raise Rs 5,000 crore from the primary market. A number of companies are also in the fray to raise funds by way of qualified institutional placement (QIP), reports suggest.
Divestment of state-run firms by the government may also increase the supply of paper in the market. A decent debut of Oil India on the bourses on Wednesday, 30 September 2009, may boost government's divestment plan. As per recent reports, the government is planning to announce a blueprint for selling its stake in state-owned firms in the first week of October 2009. The policy is expected to suggest how the government will eventually bring down its stake in public sector companies to 75% over a period of time.
Some caution may prevail on the bourses ahead of assembly polls in three states viz. Maharashtra, Haryana and Arunachal Pradesh on 13 October 2009. The counting of votes will take place on 22 October 2009.
A section of the market is worried of hedge fund redemption after the one year moratorium on redemption ends this month. Buried under redemption pressure in the aftermath of the collapse of US investment bank Lehman Brothers, hedge funds took a moratorium period of one year in October last year.
India's economy is expected to grow between 5.2-5.8% in 2009-10, much lower than last year as the agriculture output is estimated to decline significantly because of drought in 276 districts of the country, an industry paper has said.
The GDP projections for the current fiscal made by the Federation of Indian Chambers of Commerce and Industry (Ficci) are far dismal than the estimates of 6% by the Reserve Bank of India and 6.3% by the Planning Commission.
India's monsoon rainfall running between June to September was the worst since 1972 with cumulative seasonal rainfall for the country as a whole being 23% below the Long Period Average (LPA), the India Meteorological Department (IMD) said on Thursday, 1 October 2009.
Considering district-wise rainfall during the period 1 June to 30 September, the rainfall was excess in 9%, normal in 32%, deficient in 51% districts and scanty in 8% of total districts of the country, the IMD release said. Monsoon has withdrawn from many parts of India and will gradually shift out of the country completely over the next few days.
For the stock markets, the next trigger for the stock market is Q2 September 2009 results of India Inc. Infosys kickstarts the reporting season on 9 October 2009. There is optimism about Q2 September 2009 results after advance tax collections registered a positive growth in the second quarter after witnessing a negative growth in the first quarter. Corporate advance tax and advance personal income-tax were up by 14.7% and 1.7%, respectively in the September 2009 quarter.
The BSE 30-share Sensex fell 268.14 points or 1.56% to 16,866.41 and the S&P CNX Nifty lost 80.20 points or 1.58% to 5003.20, on Monday, 5 October 2009 as stocks played a catch up with global cures after a long weekend.
As per the provisional figures on NSE, foreign funds sold shares worth Rs 310.01 crore and domestic funds sold shares worth Rs 567.75 crore on Monday, 5 October 2009.
Telecom stocks in action today
Telecom minister A Raja said the auction of airwaves to offer third-generation mobile services will be conducted by the end of the financial year, missing a 7 December 2009, deadline targetted earlier. The auctions would generate at least Rs 25000 crore of revenue for the government, he added.
The telecom regulatory authority of India (TRAI) is reportedly planning to make the per second billing a mandatory tariff option for all operators, a move that will benefit customers by potentially reducing call charges and adding transparency to their tariff plans.
Reliance Communications (RCom) said on Monday, 5 October 2009, it will offer a flat rate for all calls on its network at 50 paise a minute. The scheme will replace all existing schemes. Under the new scheme - 'Simply Reliance Plan' - RCom will charge a single rate of 50 every minute for all local, STD, incoming and outgoing roaming, and SMS'es. The call rates would be applicable for all calls made from its CDMA, GSM or its landline phones. The scheme, which opens for subscription on Tuesday, 6 October 2009 will be available for both CDMA and GSM services.
RCom's announcement was after trading hours on Monday. Telecom shares plunged ahead of the announcement that day on reports the auction of 3G telecom services by the government could be delayed. RCom dropped 5.6% to Rs 300.20 and Bharti Airtel tanked more than 8% to Rs 400.30.
The board of UltraTech Cement meets today, 6 October 2009, to a consider a proposal for merger of its cement business with a unit of Grasim Industries which is a part of a plan to consolidate the cement business of the Aditya Birla group under one roof.
Tech Mahindra has reportedly won an IT implementation contract from Saudi Telecom 7010.SE, valued between $40 million to $50 million. The Indian firm has won part of a contract from Saudi Telecom, which is rolling out GSM services in Bahrain.
Bajaj Auto is reportedly planning to set up an assembly plant in a free-trade zone in Brazil next financial year. The company is in the process of studying the site and working out financial details.
Parsvnath Developers is reportedly in talks with various private equity funds to raise around Rs 600 crore by the end of 2009/10 by selling sakes in its projects. A major chunk of the funds will go towards repaying debt.
Ashok Leyland is reported to be in talks with Argentina's Grupo Plaza to set up a joint venture to produce buses and trucks in that country.
NTPC will reportedly need to spend an additional almost half a billion dollars as part of its plans to acquire a South African coal mining firm.
Orbitech, part of the global financial giant Citibank NA, has reportedly sold close to 4% in mid-sized technology firm Polaris in tranches in the open market.
Pre Market - Oct 6 2009
Indian markets ended sharply lower on Monday as investors resorted to profit booking at higher levels. Realty, metals and banks were the worst hit. Mid caps & Small caps too declined in line with the large caps. Today we expect the market to open firm on the back of positive Asian cues with profit booking expected to emerge at higher levels.
US Stocks rallied on Monday, with the Dow, S&P 500 and Nasdaq all gaining at least 1%, as investors used a two-week sell-off as an opportunity to jump back into the market. Both Dow Jones Industrial Average & Nasdaq were down 1.2% & 1.0% respectively.
Asian markets are also trading higher at this point in time with Hang Seng & Taiwan up 0.7% & 1.2% respectively. Indian ADRs too were up across the board with the exception of MTNL which was down marginally. Financials maintained their upward momentum with both HDFC Bank & ICICI Bank registering gains of 1.4% & 4.9% respectively. Tech ADR’s too surged with Wipro & Infosys up 4.2% & 3.0% respectively while Satyam ended up 3.5%. Tata Motors too was up 3.0%.
Daily News Roundup - Oct 6 2009
Rcom launches 50p/min rate for all telecom services. (BS)
Bajaj Auto plans to set up an assembly plant in a free trade zone in Manaus in Brazil in FY11. (BS)
TechM wins US$50m deal with Etisalat DB, the Indian arm of Emirates Telecom for rolling out GSM services in Bahrain (ET)
HCL Infosystems has bagged a 5-year IT outsourcing deal from Fortis Healthcare. (BL)
Lupin has out-licensed a new drug delivery system, developed in-house, to US-based drug major Salix Pharmaceuticals. (BS)
Daiichi signs marketing deal for Mexico with Ranbaxy, the third in recent months. (BS)
ArcelorMittal may exit Orissa & Jharkhand, and may begin a search for alternate sites for its US$20bn green-field steel projects in India. (BS)
Bharati Shipyard has hiked the open offer price to acquire stake in offshore service provider Great Offshore to Rs560 per share. (BS)
Dalmia Cement, the second-largest cement maker in south india has raised over Rs31bn in debt through a consortium of bankers (ET)
Radico Khaitan to seek shareholders approval to raise Rs3.8bn by share sale from domestic and international markets (ET)
Parsvnath to raise Rs6bn by selling stake in realty projects. (BS)
Ashok Leyland is in talks with Grupo Plaza of Argentina to set up a joint venture. (BL)
Madhucon Projects has secured a US$3.9mn order for a road project from the Government of Nepal. (BL)
ACC has raised Rs3bn through private placement of 3,000 secured non-convertible debentures. (BL)
MindTree has entered the mobile products business with the recent acquisition of Kyocera’s captive unit in Bangalore. (BL)
BSNL and MTNL have outlined their terms to buy stakes in Kuwait Zain Telecom group (ET)
Glenmark Generics Ltd, a unit of drug maker Glenmark Pharmaceuticals Ltd, plans to raise Rs 5.75 billion through an intial public offer (FE)
The government has asked SAIL to give a specific proposal for its proposed public offering (FE)
Ultratech board to meet today to consider the proposal from Samruddhi cement to merge the cement business (FE)
FM radio companies have threatened to shut shop soon due to no solution emerging in the legal battle between music companies and private FM radio operators over royalty rates. (BS)
The Supreme Court rejected the plea of Navi Mumbai SEZ Pvt Ltd seeking to restrain Maharashtra from demanding taxes in respect of land acquired for the special economic zone. (BS)
Trai is planning to make the one-second pulse a mandatory tariff option for all operators. (BS)
3G spectrum auction will be delayed further by 3 months as the foreign telecom companies have asked for more time since the auction dates clash with the Christmas break. (BL)
India’s foreign direct investments have increased to US$100bn through equity since 2000 up to July this year. (FE)
Tuesday’s turnaround tide!
No matter what side of the argument you are on, you always find people on your side that you wish were on the other.
Arguments and debates may continue on how genuine the turnaround has been. But what a difference a day makes! If Monday blues had the bulls running for cover, looks like Tuesday will witness a complete turnaround. We expect a higher start owing largely to the firm trend across global markets. The market could turn choppy though, as investors eagerly await the report card from India Inc. and Global Inc. The best strategy to beat the near-term blues would be to take each day as it comes, especially for companies announcing their results.
The underlying trend in the market is still positive despite some reversal in the last few sessions. The sentiment could be hurt by less than spectacular results and economic data. That is particularly the case after the kind of rally we have enjoyed over the past six and a half months. Other big event to watch will be the RBI’s half-yearly policy review. It is most likely to set the tone for the central bank’s moves on interest rates going ahead.
Monetary and economic management will be quite tough as the recovery is still nascent and fragile. Among the concerns for the RBI is the surge in liquidity. This could only add to the already heightened inflation woes. The erratic monsoon has not been helpful at all and could send food inflation spiraling out of control. A gaping fiscal deficit is another cause for worry. Among the positive aspects is an appreciating rupee, which could help the RBI contain imported inflation.
FIIs were net sellers of Rs3.1bn in the cash segment on Monday on a provisional basis. The local funds were net sellers of Rs5.67bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs7.03bn. On Thursday, FIIs were net buyers of Rs13.72bn in the cash segment. The net FII investments in Indian stocks this year have crossed $12.7bn.
US stocks rebounded on Monday after two straight weeks of declines. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all gaining at least 1%. Investors used the recent sell-off as a chance to jump back into the market.
A better-than-expected reading on the services sector of the US economy and strong demand for Treasury's first bond auction of the week bolstered the broad-based gains.
The Dow rose 112 points, or 1.2%. The S&P 500 index gained 15 points, or 1.5% and the Nasdaq rose 20 points, or 1%.
Of the 30 Dow components, 25 gained.
Bank stocks led the advance with the KBW Banking index adding 3.2%.
A roughly seven-month-long rally hit a roadblock at the end of September, with stocks falling for two straight weeks, and the major US indices losing around 5%. The declines were driven by a series of weaker-than-expected economic reports. This was in stark contrast to a period of steadily improving economic news.
Since bottoming at a 12-year low March 9, the S&P 500 has gained 51.2%, and the Dow has gained 45% as of Monday's close. After hitting a six-year low, the Nasdaq has gained nearly 61%.
In the third quarter alone, the S&P 500 index and the Dow both jumped 15%, the best quarterly performance in a decade. The Nasdaq jumped 15.7%, its best quarterly performance since 2003.
Among stock movers, Brocade Communications rallied 18.8% in unusually active trading on reports that it has put itself up for sale. Both Hewlett-Packard and Oracle were cited as potential buyers, according to the Wall Street Journal.
The Institute for Supply Management's services sector index rose to 50.9 in September from 48.4 in August. Economists thought it would rise to 50.0.
The dollar tumbled versus the euro and the yen, resuming its recent plunge against a basket of currencies.
US light crude oil for October delivery rose 46 cents to $70.41 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery rose $13.50 to settle at $1,017.80 an ounce. Gold closed at a record high of $1,020.20 two weeks ago.
Treasury prices fell late on Monday, with the yield on the 10-year note sticking at 3.22%. Treasury prices and yields move in opposite directions.
The government's sale of $7 billion in 10-year Treasury Inflation Protected Securities (TIPS) saw strong demand, a good sign at the start of a week that brings $78 billion in debt auctions.
The deluge of third-quarter earnings reports due in the week ahead will determine whether the selloff continues or proves to be an entry point for more buyers.
Alcoa unofficially begins the third-quarter reporting period in the US on Wednesday. The Dow aluminum maker is due to report a quarterly loss versus a profit a year ago, reflecting a weak materials sector. Overall, S&P 500 profits are expected to have dropped almost 25% from the third quarter of 2008.
Mineral extractors and telecoms helped European shares to advance for the first time in four sessions. In a session where the pan-European Dow Jones Stoxx 600 index was pretty volatile, the benchmark finished the session up 0.8% to 235.93, with every sector index also closing higher.
The UK's FTSE 100 index recaptured the 5,000 mark, rising 0.7% to 5,024.33. The German DAX index advanced 0.8% to 5,508.85 and the French CAC-40 index rose 0.7% to 3,675.01.
Indian market ended in the red snapping a three-day winning streak on Monday. Like the unexpected stormy weather which wrecked havoc in South and West India, a cold wave of selling in index heavyweights like Bharti Airtel, Reliance Industries and SBI dragged BSE Sensex to end below the 17,000 mark.
Selling was not only seen in India but also in the US and Asia after renowned economist Nouriel Roubini said commodities and stocks may drop in coming months as the gradual pace of the economic recovery disappoints investors. The real economy is barely recovering while markets are soaring, Roubini said.
The Realty, telecom and metals stocks were among the major losers. Even the Mid-Cap and the Small-Cap stocks witnessed some offloading dragging the markets in the last hour of the trading session.
The BSE Sensex slipped 268 points or 1.6% to end at 16,866 after touching a high of 17,062 and a low of 16,835. The index opened at 17,062 against the previous close of 17,134. The NSE Nifty fell 80 points or 1.6% to shut shop at 5,003.
In Asia, the Nikkei in Japan was down 0.6%, while Australia's S&P/ASX ended lower by 0.7% at 4,573. Shanghai SE Composite in China was closed on account of holiday However, Hang Seng index in Hong Kong were gained 0.3%.
In Europe, stocks were in the green. The FTSE in the UK was up 0.3%, 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 Realty index was the top loser, shedding 3.5%, followed by the Teck index that was down 2.7% and the BSE Metal index was down 2.3%. Even the BSE Mid-Cap index fell 1.6% and the BSE Small-Cap index was down 2.1%.
BSE FMCG index was the only gainer, adding 1.5% during the week.
Among the 30-components of Sensex, 23 stocks ended in the re and 7 ended in the positive terrain. Among the major laggards were Bharti Airtel, Grasim, Hindalco, RCom and DLF.
On the other hand, ITC, Sun Pharma, Reliance Infra and M&M were among the major gainers.
Outside the frontline indices, the big losers in the broader market were TTML, Aditya Birla, GTL Infra, Federal Bank and Andhra Bank. On the other hand, gainers included Koutons Retail, Jet Airways, BEL, IRB and Voltas.
Shares of Grasim Industries sank by over 7% to end at Rs2509 after the company announced that its cement business will be transferred to a subsidiary, Samruddhi Cement Ltd.
Shareholders in Grasim will get one share with a nominal value of Rs5 in the unlisted subsidiary for each share they hold. Samruddhi will propose merging with UltraTech Cement Ltd., which is a part of Aditya Birla.
While, shares of Ultratech Cement slipped by 5% to Rs804 after the company announced that its board will meet on Tuesday, October 6, 2009, to consider a merger with the cement unit of Grasim Industries.
Shares of Jet Airways shot up by over 13% to Rs377 as the company plans to invite global expressions of interest to lease out seven aircraft, the airline's private counterpart Jet Airways has initiated discussions with foreign carriers to lease out two of its wide-body airplanes, stated reports.
"We are in discussions with Oman Air and Etihad for leasing out two of our Boeing 777 aircraft," reports added.
Pratibha Industries secured a contract worth Rs247.2mn for "Supply of API Grade Pipes" from GAIL (India) Ltd. The contract involves 'Manufacture and Supply of 50 km. of Line Pipe of 24 inch diameter as per specification - API 5L, Gr X-70, PSL-2 for its Bawana Nangal Pipeline Project.
Shares of Pratibha Industries gained by 0.8% to Rs211. The stock opened at Rs210 and made an intra-day high of Rs220 and a low of Rs205. Total traded volumes stood at 39,000 shares.
Shares of ACC slipped by 1.6% to Rs814 after the company announced that sales of cement fell 2.4% last month. The company sold 1.63mn tons in the month of September, compared with 1.67mn tons a year earlier.
The stock opened at Rs820 and made an intra-day high of Rs820 and a low of Rs803. Total traded volumes stood at 59,000 shares.
Shares of Reliance Infrastructure have gained by 1% to Rs1216 after the company announced that it may sell shares in its power distribution and metro project units to the public and strategic partners.
Of the six subsidiaries formed as part of a demerger scheme, yet to be approved by the Bombay HC, the company plans to list at least the power distribution companies, Reliance Energy and Reliance Power Transmission, in addition to its Metro projects, stated reports.
The stock opened at Rs1190 and made an intra-day high of Rs1222 and a low of Rs1185. Total traded volumes stood at 0.28mn shares.
Shares of BHEL erased early gains and ended in the red. The stock was down 0.5% to end at Rs2339. The stock hit an intra-day high of Rs2389 after reports stated that the company plans to float a separate subsidiary company for power generation projects.
The company had committed 26% equity participation in multiple supercritical thermal power projects in Tamil Nadu, Karnataka and Maharashtra and is planning similar stakes for projects in Gujarat and MP.
Shares of Arvind Limited surged by over 3% to Rs40.10 after reports stated that the company plans to consolidate other verticals like garments and real estate. Sanjay Lalbhai, chairman and MD was quoted as saying that the company expects government clearances for its real estate projects in next four months.
The company is planning low cost as well as mid priced housing in Khatraj, Jetlaj, Santej and Ahmedabad. "We have around 2 million sq yards of properties coming up in areas like Santej, Khatraj, and Jetlaj, and another 3.5 lakh in Ahmedabad city.
At today's prices, we have a land bank of Rs 600-700 crore," Lalbhai added. By next year, Arvind Ltd. plans to expand its denim fabric manufacturing capacity by 10% to take it to 100mn metres by next year.
Markets likely to open positive on global cues
Indian equities are likely to open positive on global cues. Today SGX Nifty is trading at 5,048 (8.03 a.m.), 35 points higher than Monday`s closing of 5,013.
Asian stocks rose for the first time in four days, led by companies reliant on overseas sales, after US service industries returned to growth following 11 months of contraction and commodity prices gained. Nissan Motor gained 2.5%. Mazda Motor jumped 6% after narrowing its full-year loss forecast. Japanese benchmark index Nikkei 225 gained 10.11 points, or 0.10%, to trade at 9,684.60. Hong Kong`s Hang Seng index rose 80.57 points, or 0.39%, to trade at 20,509.64. China`s Shanghai Composite increased 24.89 points, or 0.90% to trade at 2,779.43. (7.42 a.m., IST)
European stocks gained for the first time in four days after the region`s manufacturing and service industries grew more than initially estimated and US service businesses expanded for the first time in a year. UK`s benchmark index FTSE 100 gained 35.63 points, or 0.71%, to settle at 5,024.33. French benchmark index CAC 40 increased 25.11 points, or 0.69%, to end 3,675.01. Germany`s benchmark index DAX rose 40.95 points, or 0.75%, to close at 5,508.85.
US stocks rebounded on Monday as upbeat service data and report of large banks being upgraded boosted market sentiment. The Dow Jones Industrial average gained 112.08 points, or 1.18%, to settle at 9,599.75. The Standard & Poor`s 500 index rose 15.25 points, or 1.49%, to end at 1,040.46. The NASDAQ composite index increased 20.04 points, or 0.98%, to close at 2,068.15.
Oil prices pushed through early losses to settle above USD 70 a barrel on Monday on the coattails of strong equity markets and weakness in the US dollar. Light sweet crude for November delivery rose 46 cents to settle at USD 70.41 a barrel on the New York Mercantile Exchange. In London, Brent prices lost 3 cents to settle at USD 68.04 a barrel on the ICE Futures exchange.
via IRIS
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