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Wednesday, January 20, 2010
Bullion metals add more glaze
Strong dollar limits gains
Precious metal prices ended higher on Tuesday, 19 January 2010 on anticipation of higher investment demand. However, strong dollar limited precious metal's gains. Comex trading was shut yesterday due to a holiday.
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 Tuesday, gold for February delivery ended at $1,140 an ounce, higher by $9.5 (0.8%) an ounce on the New York Mercantile Exchange. Last week, it ended higher by 0.4%. Year to date in FY 2010, gold has risen by almost 4.1%.
Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end.
On Tuesday, March Comex silver futures ended higher by 37.3 cents (2%) at $18.8 an ounce. Last week, silver ended higher by 0.5%. Year to date in FY 2010, silver has risen by almost 12.1%.
Silver futures had hit a low at $10.42 on 15 January 2009 and hit a high at $19.30 per ounce on 2 December 2009. Like gold, silver also ended lower than its all time high level.
In the currency market on Tuesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose by almost 0.8%.
Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.
At the MCX, gold prices for February delivery closed higher by Rs 99 (0.6%) at Rs 16,933 per ten grams. Prices rose to a high of Rs 16,944 per 10 grams and fell to a low of Rs 16,841 per 10 grams during the day's trading.
At the MCX, silver prices for March delivery closed Rs 217 (0.76%) higher at Rs 28,665/Kg. Prices opened at Rs 28,485/kg and rose to a high of Rs 28,680/Kg during the day's trading.
Crude rises for first time in six days
Prices rise in tandem with US stocks
Crude oil prices ended higher for the first time in six days on Tuesday, 19 January 2010. Prices rose in tandem with US stocks. Last week, it had ended lower on all the days of the week. However, strong dollar limited crude's gains. Nymex trading was shut yesterday due to a holiday.
On Tuesday, crude-oil futures for light sweet crude for February delivery closed at $79.02/barrel (higher by $1.02 or 1.3%). Crude ended last week lower by 5.7%. On a year to date basis till date, crude is lower by 2.1%.
Crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. It reached a high of $82 earlier in October 2009 and hit a low of $33.98 on 12 February 2009. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 46% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
In the latest report, the Organization of the Petroleum Exporting Countries said today that world oil demand is forecast to grow by 800,000 barrels a day this year to average 85.1 million barrels a day, representing no major change from last month's forecast.
Paris based, IEA, left its forecasts for global oil demand for 2010 virtually unchanged in its latest monthly report last week. It forecasts demand of 86.3 million barrels a day in 2010, up 1.7%, or 1.4 million barrels a day higher than 2009.
In the currency market on Tuesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose by almost 0.8%.
Among other energy products on Tuesday, February gasoline ended higher, up 1.4 cents, or 0.7%, at $2.0591 a gallon. Heating oil for February delivery closed nearly flat, at $2.0454 compared to $2.046 a gallon in the prior floor session.
Also on Tuesday, natural gas for February delivery sank 13 cents, or 2.4%, to $5.557 per million British thermal units.
At the MCX, crude oil for February delivery closed Rs 4 (0.11%) higher at Rs 3,610/barrel. Natural gas for January delivery closed higher by Rs 3.6 (1.4%) at Rs 259.4/mmbtu.
Sensex to open higher, Wipro eyes
Headlines for the day
BHEL eyes acquisition, JVs in US, Europe
Ranbaxy acquires Biovel, enters vaccine line
ONGC to lend Rs5,000 crore to MRPL for expansion
Hiring picks up across sectors
Cadbury accepts $19.7bn Kraft offer
Events for the day
Major corporate action:
Today’s Results: Dr Reddy, Four Soft, HDFC, HDIL, ICRA, JSW Steel, Kingfisher Airlines, Mahindra Lifespace, Polaris Software, Praj Industries, Raymond, Spice Communication, Sun TV, Triveni Engineering, TV 18, TVS Motor, Yes Bank and Wipro.
Jubilant Foodworks IPO closes today.
Pre-market report
Global signals
On Tuesday, the European shares hit 15 month closing high, FTSE 100 closed 0.34% higher at 5513.
US markets closed higher on Tuesday, as technology shares rises. Nasdaq closed 32 points higher at 2320.
In today's trade, All the Asian indices trading higher, except Hang Seng and Shanghai composite that trading lower by 1% each. At the time of writing this report SGX Nifty trading higher by 11 points.
Indian markets
The domestic indices are expected to open higher, and remain volatile following strong global markets.
Among the local indices, the Nifty could test the 5300-5325 range on the up side, while on the down side it could find support at 5180 and 5200. While the Sensex is likely to get support at 17300 and may face resistance at 17800.
Indian ADR's
Among the Indian ADRs trading on the US bourses, al the ADRs closed higher except Satyam and Dr Reddy. HDFC Bank surged the most with gain of 7.74% followed by ICICI Bank that advanced 5.39%.
Commodity cues
In the commodity space, wherein the Crude oil prices recorded marginal decline, with the Nymex light crude oil for February series down by $0.40 to settle at $78.63 a barrel.
In the metals space, Comex Gold for February series rise by $10.00 to settle at $1140.50 to a troy ounce.
In the metals space, Comex Silver for March series rise by $0.37 to settle at $18.80 to a troy ounce.
Daily trend of FII/MF investment in equities
On January 19, 2010, FIIs were the net buyers of the Indian Stocks in the tune of Rs294.70 crore (with the gross purchase of Rs2619.90 crore and gross sales of Rs2325.20 crore).
While the Domestic mutual funds, on January 18, 2010, were the net seller of the stocks in the tune of Rs115.00 crore (with gross purchase of Rs506.50 crore and gross sales of Rs621.50 crore).
Daily News Roundup - Jan 20 2010
The underrecovery of ONGC from sale of gas at the government-fixed price is likely to exceed total revenues from its nominated fields in 2009-10. (BS)
BHEL is exploring opportunities for an acquisition or a joint venture partnership with companies from the US and Europe. (BS)
Ranbaxy has acquired Biovel Lifesciences, a Bangalore-based biotech company making typhoid and influenza vaccines, for an undisclosed sum. (BS)
Zee Entertainment has acquired an additional 45% in Taj TV, Mauritius, the owner of Ten Sports channel through its overseas subsidiary, Zee Sports International Ltd, Mauritius. (BS)
ONGC-Mittal consortium surrendered its offshore exploration block in the Caspian Sea in Turkmenistan. (BL)
The board of Cadbury Plc accepted the final takeover offer of Kraft Foods Inc at £11.9bn (US$19.7bn). (BS)
The government plans to raise upto Rs103bn by selling 5% stake in NTPC. The FPO may be priced between Rs245-Rs250. (ET)
NTPC is planning to invest Rs 80bn to set up another power plant at a site adjacent to the Dabhol unit. (ET)
Unitech has withdrawn its proposal to raise US$700m through FCCB. (ET)
Israeli drugmaker Teva Pharma has filed a patent infringement suit in the US against Lupin that prevents the Indian pharma company from selling the generic or copycat version of Teva’s birth control drug, LoSeasonique, for at least 30 months in a key market. (ET)
Usha Martin is in the process of raising Rs4.68bn through a qualified institutional placement (QIP). (ET)
Indian Oil (IOC) said it has raised US$500mn through issuance of bonds to meet its capital requirements. (ET)
Sebi allowed exchanges to introduce currency futures in three more currencies — euro, yen and pound. (BS)
The Maharashtra government has decided to increase floor space index (FSI) to 3 from the current 2.5 for buildings which have come up between 1940 and 1960. (BS)
The Government will prepare a new subsidy sharing mechanism for fuels that would help the public sector oil marketing companies (OMCs) and upstream companies such as ONGC, Oil India and GAIL (India). The mechanism is expected to be in place by the end of this fiscal. (BL)
Worth the risk!
Take calculated risks. That is quite different from being rash.
Optimism among global investors has returned to the pre-financial crisis levels, says a recent fund manager survey adding that investors are taking on above-average risk for the first time since 2006.
We expect a positive start today, thanks to the overnight rally on Wall Street. Things may turn sideways and lackluster as the day wears on. Taking a broad call on the market as of now is not warranted given the murky outlook and the fact that we are still in the middle of the earnings season.
Derivatives indicators are pointing to a slight weakness though a big crash is not on the cards. The near-term range for the Nifty could prevail at 5200-5300. However, there is no guarantee that 5180 will not be broken. A big positive move out of the current range will be possible, provided the global cues remain healthy and the RBI doesn’t spring a negative surprise.
Wipro's Q3 consolidated revenue have come in at Rs69.66bn while net profit is at Rs12.17bn. TVS topline is likely to rise 25% YoY. Yes Bank NII is likely to grow 48% YoY while PAT will rise 15% YoY.
Results Today: Dr. Reddy's, Gayatri Projects, HDFC, HDIL, ICRA, JK Tyre, JSW Steel, Kingfisher Airlines, Kirloskar Bros, KPIT Cummins, Mahindra Holidays, Mahindra Lifespaces, Mukand, Nitin Fire, Polaris, Praj Industries, Radico Khaitan, Raymond, Sun TV, Triveni Engineering, TV 18, TVS Motor, Wipro and Yes Bank.
Asian markets are trading mixed. US stock indices hit a new 15-month high, spurred by gains in healthcare shares. Both the Dow and the S&P 500 have established support at their 2009 peaks, suggesting bullish momentum is not waning just yet. European shares rose, buoyed by strength in Cadbury, pharma and telecom shares.
Meanwhile, UK CPI data raises the specter of inflation. Sterling was among the few currencies to rise against the dollar and the yen after UK inflation jumped in December.
IBM has issued a quarterly forecast and results that have surpassed Wall Street's expectations, but the stock is down in extended trading.
China’s flood of economic data due out on Thursday, including the latest GDP figures that are expected to be well above 10%, may offer clues as to when Beijing will begin hitting the brakes on its speeding economy.
After being in the positive zone till early afternoon, the bulls seemed to lose their grip on the proceedings after that. The sharp and swift slide was led by intense offloading in the Realty, IT and Telecom stocks. Weak cues from the European markets further dampened the sentiment in the second half.
However, stock specific action was seen across the board, especially in the PSU space on account of the disinvestment buzz. Hindustan Copper, ITI and NMDC were among the notables gainers among the PSUs.
Oil PSUs were also in the thick of things after the Finance Ministry disbursed ~Rs120bn in cash to the state owned oil marketing firms for selling fuel below the cost.
The BSE Sensex was down 155 points to end at 17,486 after touching a high of 17,664 and a low of 17,463. The Nifty was down 49 points to end at 5,226.
Equity markets in Asia ended mixed. The Nikkei in Japan was down 0.9%, while Australia's S&P/ASX ended lower by 1%. The Shanghai SE Composite was up 0.3% and Hang Seng index in Hong Kong ended higher by 1%.
In Europe, stocks were trading in the red. The DAX in Germany was down 0.9% and the CAC 40 index in France was down 0.9%. The FTSE in the UK fell 1%.
Coming back to India, among the BSE sectoral indices, the Realty index was the top loser, shedding 1.8%, followed by the IT index that was down 1.7% and the BSE Teck index was down 1.5%. The BSE Mid-Cap index ended lower by 0.6% while BSE Small-Cap index was down 0.6%.
Among the 30-components of Sensex, 23 stocks ended in the negative terrain and 7 ended in the green. ACC, Hindalco, TCS, Grasim, RCom and JP Associates were among the top losers.
Bucking the negative trend were, BHEL, SBI, HDFC Bank and Sterlite were among the top gainers.
Outside the frontline indices, the big losers in the broader market were PTC India, Renuka Sugar, Praj Ind and Apollo Hospitals. On the other hand, gainers included Hindustan Copper, RCF, NMDC, Jai Corp and Yes Bank.
Shares of Reliance Capital pared gains and ended in lower by 1% to end at Rs906. The stock hit an intra-day high of Rs929.25 after reports stated that the company plans to sell up to 20% in its Reliance Mutual Fund unit to a strategic overseas partner.
Reports also added that, Reliance Capital is likely to appoint investment banks JP Morgan Chase & Co. and UBS AG as advisors to the transaction.
The state owned refining companies hogged the limelight after media reports stated that the government has disbursed ~Rs120bn as cash subsidy to the companies for selling kerosene and cooking gas below cost for the nine months ended Dec. 31.
According to reports, IOC was disbursed Rs70bn, while HPCL and BPCL were compensated with a combined amount of Rs50bn.
Shares of IOC erased gains and ended lower by 2% to Rs318, HPCL also lost ground and ended lower by 3% to end at Rs376 and BPCL fell 2% to end at Rs605.
Shares of eClerx Services surged by over 2.5% to end at Rs494 after the company announced that board of directors will meet on January 28, 2010, to consider a proposal to form a subsidiary overseas. The scrip opened at Rs478 it touched an intra-day high of Rs508 and a low of Rs473 and recorded volumes of over 26,000 shares on BSE.
McNally Bharat announced that it signed an exclusive technical partnership agreement with Hiflux Ltd, Singapore for constructing Sea Water Desalination, Water and Waste Water Plant in Industrial, Municipal and Agricultural Sector within the geographical territory or India.
Shares of McNally Bharat advanced by 2.5% to end at Rs278. The scrip opened at Rs274 it touched an intra-day high of Rs289 and a low of Rs270 and recorded volumes of over 77,000 shares on BSE.
BGR Energy announced that the environmental engineering division of the company has secured a contract for Design, Engineering, Supply, Erection and Commissioning of large "Total Water System" from Adhunik Power & Natural Resources Ltd, Jharkhand, for its 2 x 270 MW Super Thermal Power Plant.
The stock ended lower by 2.5% to end at Rs530, the scrip opened at Rs549 it touched an intra-day high of Rs560 and a low of Rs527 and recorded volumes of over 0.13mn shares on BSE.
Bajaj Hindusthan
We recommend a sell in the stock of Bajaj Hindusthan from a short-term perspective. It is apparent from the charts that after taking support at around Rs 40 in March 2009, the stock began to trend upwards. However, it encountered significant long-term resistance at around Rs 240 in October 2009 and started moving sideways. Though the stock re-tested this resistance level in early January, it failed to break through. Since then, it has been on a short-term downtrend. This downtrend got accelerated as the stock tumbled 6 per cent on January 19, penetrating the intermediate-term up trendline and 50-day moving average. The daily moving average convergence and divergence indicator has signalled a sell and is slipping towards negative territory. The daily relative strength index (RSI) is on the verge of entering into the bearish zone from the neutral region. We are bearish on the stock from a short-term perspective. We expect its decline to continue until it hits our price target of Rs 190. Traders with short-term perspective can consider selling the stock while maintaining stop-loss at Rs 222.
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