Weekly Wrap - Feb 6 2010
India Equity Analysis, Reports, Recommendations, Stock Tips and more!
Search Now
Recommendations
Saturday, February 06, 2010
Indian Telecoms Sector outlook in 2010 :Fitch
Fitch views the credit outlook for incumbents with stronger balance sheets and comfortable liquidity profiles as stable, while its outlook for new entrants and public sector telecoms operators is negative.
The revision in the Stable Outlook from 2009 is primarily due to stiff competition and a faster-than-expected decline in tariffs, which has had an impact on revenue and profitability.
Fitch notes that the credit profiles of all operators are subject to the event risk of 3G and broadband wireless access (BWA) auctions.
Wireless services are likely to remain the principle driver of industry growth, with penetration still moderate at 43.2% at end-November 2009.
Fitch expects this strong subscriber growth to be sustained at a compound annual growth rate (CAGR) of about 25%-30% over the next three years to CYE12, due to network roll-out by new operators and expansion by regional operators across different Indian circles.
However the agency notes that wireless pricing turned aggressive from September 2009, with the major operators reducing tariffs and/or switching to per second billing (from the previous per minute format).
Competitive pressures are expected to continue in 2010; consequently, Fitch expects revenue growth to decelerate in CY2010, which in turn will put pressure on EBITDA margins. However, average revenue per minute will decline at a lower rate in 2010, after declining at a faster than expected rate in 2009.
Weekly Stock Picks - Feb 6 2010
Buy Century Textile
Buy Essar Oil
Buy Bombay Dyeing
Buy Dabur India
Buy OFSS
Disinvestment in doldrums...NTPC FPO draws poor response
The Government's big bang disinvestment plans to curb spiraling fiscal deficit kicked off on a sour note with the NTPC follow-on-offering (FPO) failing to generate enough interest amid a carnage in global stocks. Several reasons were being speculated for the dismal performance of the NTPC issue, including low fees paid to the merchant bankers by the Government. But, chief among those reasons was said to be the high bid placed by state-run institutions - LIC and SBI. According to reports, the high bids quoted by LIC and SBI in the first ever French auction for a public issue in India managed to drive away potential investors of all categories.
The Rs83bn NTPC FPO managed to scrape through and was fully subscribed primarily due to the support from public sector banks and insurance monolith LIC. The issue was subscribed only 1.2 times. It received a little over 100,000 applications from the retail investors. It received bids for 49.36 crore shares against the 41.2 crore shares on offer. NTPC owns the country’s 20% power generation capacity.
While the QIB portion was fully subscribed the response from the Retail investors and HNIs was highly disappointing. Retail investors did not see much opportunity in the NTPC issue as the floor price of Rs 201 was not much higher than the current market price. The duration of the issue saw the scrip run up from Rs 205 to a high of Rs 211.65 and fall 3.4% since then.
The big worry is that the forthcoming public issues of Rural Electrification Corporation (REC) and NMDC could also suffer the similar fate, especially if the market sentiment doesn't improve materially. REC is set to open on February 19 while NMDC issue will open on March 10. What's worse, both these issues are also going to be done under the French auction route. These two issues are expected to raise a combined Rs185bn. Meanwhile, in another setback to the Government's efforts in curtailing the fiscal deficit, the Power Ministry has decided to postpone the IPO of Satluj Jal Vidyut Nigam Ltd. The issue is unlikely to hit the markets in the current fiscal years, according to reports.
Meanwhile, several smaller IPOs that preceded the NTPC FPO also saw lukewarm retail participation. In some of these, the institutional investor portion was also low. Non-institutional investors helped these issues to sail through. Of the six IPOs in the last one week, only DB Realty (issue size: Rs12.88bn) did well. The others just about managed to get fully subscribed.
European debt troubles pummel global equities
Stocks across the world sank amid growing concerns of a potential sovereign debt default in Europe, even as global markets were recovering from the recent turbulence owing to concerns on China and new bank regulations in the US. Portuguese bonds come under renewed pressure as fears of Greece’s debt problems spreading in the other parts of the eurozone persisted. Banking stocks from Portugal, Spain, Greece and Ireland slid further as worries about sovereign debt and its potential impact on the eurozone continued to spread. European Central Bank (ECB) President Jean-Claude Trichet said that the eurozone still faces major challenges but is heading in the right direction. He was speaking shortly after the ECB kept interest rates steady. Eurozone governments have borrowed a record €110bn from the markets so far this year, forcing up borrowing costs for those countries with the weakest public finances as they pay a heavy price for their ballooning debt levels.
Meanwhile, China’s government, seeking to stem property speculation, told banks to raise interest rates on third mortgages and demand bigger down payments for such loans. In addition, a senior policy adviser to China's central bank said that asset bubbles were a concern for the nations' policy makers, reflecting official unease about the rapid gains in real estate prices. Overseer of US$700bn government bank bailout program said that Fed policies could be creating US housing bubble similar to one that triggered the 2008 global financial crisis.
Risk premium escalated further amid mounting worries that last year's astonishing recovery could lose steam, particularly in the matured economies, notwithstanding the ultra-loose monetary policies and the unprecedented fiscal stimulus. Gains in the US dollar accelerated as investors and fund managers fled risky assets and sought refuge in the relative safety of the greenback. The US dollar rose to an eight-month high against the euro. The dollar gained amid discouraging signals in several European countries as well as a mixed US jobs report for January.
The cost to protect against a default on European sovereign debt exceeded that of US investment-grade companies for the first time. Bond prices rose, pushing the yields down, amid heightened fears about the fiscal stability of Greece, Spain and Portugal. The dollar’s climb reduced the appeal of commodities as an alternative investment. Crude oil tumbled to a seven-week low as the dollar surged on speculation that European efforts to reduce deficits will curb growth in that region. Crude oil futures posted their worst loss in six months on Feb. 4.
Asian currencies dropped for a fourth week, the longest run of losses since June, as concern that some European nations will struggle to contain and finance budget deficits eroded demand for emerging-market assets. The MSCI Asia-Pacific Index of regional shares slumped to a 10-week low. Emerging-market equity funds lost US$1.6bn in the week ended Feb. 3, the biggest outflow in 24 weeks, according to US-based research company EPFR Global.
The Dow Jones Industrial Average fell below 10,000 level for the first time since Nov. 6. The blue chip US benchmark recovered on the last trading day, albeit marginally, to end above the key level. All the three major US indexes touched three-month lows before recovering on Friday. A three-session rout had sent the US market to its lowest point since last fall. European stocks suffered the biggest weekly slump in 11 months. The Dow Jones Stoxx 600 Index retreated extended the measure’s fourth straight weekly decline to 3.9%.
Weekly Newsletter - Feb 6 2010
If it wasn't for strong rallies on Wednesday and Saturday's special session, the Indian market would have suffered more losses. So, to that extent the bulls should consider themselves lucky. However, fortunes may not be favourable to them all the time amid a spate of external concerns besides anxiety over the prospects for the Indian economy. If all goes well in Asian markets, we may extend the gains made in Saturday's special session on Monday. But, since we have already reacted to the US market's recovery, the advance could run out of gas. The sentiment might change for the better if a bailout of the troubled European economies is announced over the weekend. On the flip side, the market could slip anew in the absence of any concrete solution to the region's worsening fiscal issues.
The dismal show by the NTPC FPO and its fallout on the upcoming public issues is another cause for concern, as is the relentless selling by the FIIs. The overseas investors seem to be biding time given the escalated uncertainty and the fact that Budget is just round the corner. So, expect volatility to persist, though chances of a snap-back rally cannot be ruled out completely after the recent reversals. At the same time, one should not jump the gun and resume the buying binge as things might turn ugly again in case of further deterioration in the external environment. Next week will be a truncated one as markets will be shut on Feb. 12 on account of Mahashivratri. IIP data for December will be out next week and is likely to show continued improvement in the industrial sector. Industrial output grew by 11.7% in November.
Derivatives: Outlook appears bearish
Market appears oversold, but the mood has remains bearish in the absence of any positive trigger, index can correct further before consolidating; global cues remain a key factor
Extremely bleak global markets kept the domestic benchmark S&P CNX Nifty also at lower levels with significant correction witnessed all through out the week. Although the market was open on Saturday for around 90 minutes, the data till Friday 5th February is only taken as there would be only minor interest in the F&O segment on Saturday. For the week till Friday the market corrected 163.40 points to close at 4718.65. Although on Saturday the market marginally corrected upward by 38.6 points evidently due to some short covering.
Negative global markets and benign mood emanating from the major economies has been a major reason behind the week's mayhem. The trend continues to remain negative although one gets a feeling that it is currently oversold. All throughout the week there was significant short built-up both at the nifty and stock futures, while on the nifty options front also the trend indicated bearishness.
All throughout the week the nifty future closed at a discount to the underlying and the average volume in the F&O space remained higher at Rs 76061.19 crore. For the full week under review, the nifty February future added 14.53 lakh shares in open interest to take the total OI on Friday to 3.14 crore shares. Most of the front-line stock futures also added OI evidently due to short built-up. For e.g. Reliance February futures added 8.66 lakh shares in OI while Tata Steel and Tata Motors added 31.11 lakh shares and 3.13 lakh shares in OI during the week ended 5th February 2010. Now in these situations when the market appears oversold, any positive news flow either domestically or globally may induce significant short covering, which may sharply pull back the underlying. In the absence of any positive news, the market appears bearish.
Overall the market wide OI on Friday stood at 189.74 crore shares, thus rising by 2.32 crore shares as compared to the previous day. Major activity was witnessed in the stock futures & options segment.
Extremely bearish scenarios were evident in the nifty option front where the most active strikes were the 4600 & 4700 calls besides 4400, 4800 and 4900 puts. Aggressive call writing was witnessed at the 4600 and up strikes, while puts were bought at the 4700 and below strikes. The surprising was the activity at the 4400 strike put which added significant buying. These are flat negative indicators suggesting further downward pull.
On Friday, 5th February 2010 the OI of 4600 and 4700 call increased by 5.75 lakh shares and 10.88 lakh shares respectively to take their total OI to 6.61 lakh shares and 20.03 lakh shares respectively. The 4700 strike put added 9.36 lakh shares in OI while the 4400 put witnessed addition of 12.47 lakh shares in OI on Friday
The market may seem oversold at this level but in the absence of any positive trigger, the mood remains bearish. It looks as though that there is further correction left before the index consolidated at some level. The mood in the global market will remain a key factor in the forthcoming weeks.
BSE Bulk Deals to Watch - Feb 6 2010
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
6/2/2010 532995 Avon Corp VINODAMRATLALNAAI B 387294 9.74
6/2/2010 505923 Ceekay Daikin RAJASTHAN GLOBAL SEC LTD B 32986 163.85
6/2/2010 504351 Empower Inds KIRAN MULJI SHAH HUF B 75000 24.22
6/2/2010 504351 Empower Inds JIGNESHCHANDRAKANTSHAH B 76000 24.94
6/2/2010 504351 Empower Inds JAYESH BHAGWANJI SHAH HUF S 69189 23.89
6/2/2010 530263 Global Capital VARSHAJAYANTKUMARJAIN S 130000 93.12
6/2/2010 505576 Goldcrest Fin PADMAKSHI COMMODITIES PVT LTD B 100000 32.00
6/2/2010 505576 Goldcrest Fin PADMAKSHI EDUCATION PVT LTD B 100000 31.94
6/2/2010 505576 Goldcrest Fin PADMAKSHI FINANCIAL SERVICES PVT. LTD. S 195000 32.00
6/2/2010 523467 Jai Mata Glass JITENDRARAMESHKUMARAGRAWAL B 93500 3.06
6/2/2010 523467 Jai Mata Glass MANSI MILAN CHOKSI B 114211 3.08
6/2/2010 523467 Jai Mata Glass MANSI MILAN CHOKSI S 75385 3.10
6/2/2010 523467 Jai Mata Glass DHEERAJLOHIA S 146799 3.07
6/2/2010 517554 Midpoint Soft NILESH DATTATRAYA JADHAV S 5273 38.58
6/2/2010 512097 Oregon Comm HALAN PROPERTIES PRIVATE LTD. B 7590 191.09
6/2/2010 512097 Oregon Comm HALAN PROPERTIES PRIVATE LTD. S 7590 193.30
6/2/2010 512097 Oregon Comm NARESH S RUPANI S 6000 180.33
6/2/2010 512097 Oregon Comm SELECT PRODUCTS PVT LTD S 6677 180.01
6/2/2010 512097 Oregon Comm JYOTINARESHRUPANI S 4800 180.86
6/2/2010 590077 Ranklin Sol OMPARKASHGUPTA B 29994 55.83
6/2/2010 590077 Ranklin Sol RAMESH KUMAR TUMMAPALA B 27644 55.17
6/2/2010 532311 Tutis Tech SHINGAR DYES AND CHEMICALS LTD B 89650 22.44
6/2/2010 531249 Well Pack Papers LAXMAN DHIRUBHAI PARMAR S 35000 422.80
NSE Bulk Deals to Watch - Feb 6 2010
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
06-FEB-2010,DECOLIGHT,Decolight Ceramics Limite,BLUE PEACOCK SECURITIES PVT LT,BUY,104586,12.82,-
06-FEB-2010,RMEDIA,Rel. Media World Ltd,KALASH SHARES & SECURITIES PRIVATE LIMITED,BUY,319758,89.35,-
06-FEB-2010,RMEDIA,Rel. Media World Ltd,SETU SECURITIES LTD,BUY,404155,92.23,-
06-FEB-2010,RMEDIA,Rel. Media World Ltd,VIJIT SHARES AND COMMODITIES PVT.LTD.,BUY,316522,92.36,-
06-FEB-2010,SHREEASHTA,Shree Ashtavinayak Cine V,SUMAN,BUY,817335,26.91,-
06-FEB-2010,DECOLIGHT,Decolight Ceramics Limite,BLUE PEACOCK SECURITIES PVT LT,SELL,50000,12.97,-
06-FEB-2010,RMEDIA,Rel. Media World Ltd,KALASH SHARES & SECURITIES PRIVATE LIMITED,SELL,319758,89.35,-
06-FEB-2010,RMEDIA,Rel. Media World Ltd,SETU SECURITIES LTD,SELL,378641,92.15,-
06-FEB-2010,RMEDIA,Rel. Media World Ltd,VIJIT SHARES AND COMMODITIES PVT.LTD.,SELL,280240,92.34,-
06-FEB-2010,SHREEASHTA,Shree Ashtavinayak Cine V,SUMAN,SELL,816337,26.68,-
Sensex bounce back on special live trading
News Headlines
RIL looks at $2-billion acquisition in Canada
Dubai PE firm sells 13% stake in SpiceJet
NTPC clouds primary market prospects
Telcos set to go TO HC over 'illegal' towers
Markets currently
On Special live trading on Saturday Feb 06, 2010 for first time in history of domestic market, the Sensex resumes firm and opens above 15800. As day progressed on the back of buying in reality and Metal stocks helps Sensex to touch the intraday high of 15933. Currently the Sensex trading at 15919 up 127 points and Nifty is trading above 4750 mark at 4755 up 36 points.
Market Breadth
The market breadth on the BSE is strong. Out of 1776 stocks trading on thye BSE, there are 1289 advancing stocks as against 443 declines. The broader indices are trading up the BSE Mid cap index was up by 1.25% and BSE Small cap index is gains by 1.54%.
Stocks Screening
Major gainers in the 30-share index were Hindalco Industries (2.43%), D L F (2.25%), Sterlite Industries (India) (2.08%), Tata Steel (1.50%), Tata Motors (1.30%), and ACC (1.19%). On the other hand, and Hero Honda Motors (0.70%) were the biggest losers in the Sensex
Global Markets
The Asian market trades lower as exporters hurt by a stronger yen, while escalating sovereign debt problems in Europe dented investor confidence in riskier assets including equities.
Sensex rebounds as US stocks stage strong intraday recovery
The key benchmark indices jumped during the 90-minutes special trading session held today, 6 February 2010, tracking a strong intraday rebound of US stocks on Friday, 5 February 2010. The US unemployment rate surprisingly fell to a five-month low in January 2010, data showed on Friday. The BSE 30-share Sensex rose 124.72 points or 0.79%, off close to 35 points from the day's high and up close to 110 points from the day's low.
Index heavyweight Reliance Industries (RIL) edged higher. Metal, realty, infrastructure, IT, auto and banking stocks gained. All the sectoral indices on BSE were in the green. The market breadth was strong.
Indian stock tumbled over the past few weeks as stocks fell worldwide. From a recent high of 17686.24 on 5 January 2010, the Sensex tanked 1895.31 points or 10.71% to settle at 15790.93 on Friday, 5 February 2010.
The top two stock exchanges, the National Stock Exchange (NSE) and the BSE held a special 90-minute trading session today, 6 February 2010, to enable the National Stock Exchange test an upgraded trading system. The trading in the cash and futures market began at 11:00 IST and ended at 12:30 IST
Chairman of the prime minister's economic advisory council C. Rangarajan on Friday said the government is no hurry to roll back economic stimulus measures in one go. He also said that efforts will be made in the budget later this month to lower the fiscal deficit. It has been pointed out repeatedly that the process of exit must be gradual, coordinated and must not be sudden, should not disrupt the economy and efforts will be made to bring down the fiscal deficit in the coming budget, Rangarajan said.
India can gradually start raising interest rates as Asia's third-largest economy is among the first to recover after the global financial crisis, the International Monetary Fund (IMF) said in a report published on Thursday 4 February 2010 on its website. India's economy is one of the first in the world to recover and the central bank should take a gradual approach to ensure the recovery reaches its full potential, the IMF report said.
The International Monetary Fund sees the Indian economy coming back to potential by 2010-11 to log 8% growth from the current year's 6.75 per cent. Still, the IMF's assessment of GDP growth for the current fiscal is in contrast to the government's projection of more than 7% and the RBI's latest forecast of 7.5%
Following rising prices of potato and pulses, food inflation rose to 17.56% in the week ended 23 January 2010 from 17.40% in the previous week, government data released on Thursday showed. The inflation for primary articles, which include food and non-food items, marginally eased to 14.56% in the reporting week from 14.66% in the previous week. The fuel price index rose 5.88%
Pronab Sen, the country's chief statistician, said on Wednesday the government should wait till May to roll back stimulus, as the strength of the demand recovery visible in available data may not be for real, pulling the finance minister, Pranab Mukherjee, away from a policy direction which the Reserve Bank of India (RBI) desires.
European stocks declined for a third day on Friday, 5 February 2010, extending the biggest weekly slump in 11 months, on concern efforts by Greece, Portugal and Spain to reduce their deficits will hurt the region's economic recovery. The key benchmark indices in France, Germany and UK fell by between 0.03% to 1.79%.
European Central Bank President Jean-Claude Trichet has struggled to convince investors the euro region shouldn't be punished for Greece's budget problems. As Greece tries to control a record deficit and stem a slide in its bonds, Trichet said the economy of the 16-nation euro area is solid and its budget shortfall will probably be smaller than those of the US and Japan this year.
US stocks rose on Friday, with the Dow Jones Industrial Average erasing a 167-point drop in the final hour of trading, on speculation the European Union may propose a solution for Greece's budget deficit. The Dow Jones Industrial Average gained 10.05 points, or 0.1%, to 10,012.23. The Nasdaq Composite Index was up 15.69 points, or 0.74%, to 2141.12. The Standard & Poor's 500 Index was up 3.08 points, or 0.29%, to 1066.19.
The US unemployment rate surprisingly fell to a five-month low of 9.7% in January 2010 and factory payrolls grew for the first time since 2007, hinting at a labour market recovery even though the economy lost 20,000 jobs.
Closer home, the BSE 30-share Sensex rose 124.72 points or 0.79% to 15,915.65. The index rose 16.82 points at the day's low of 15,807.75 in early trade. The Sensex rose 160.14 points at the day's high of 15,951.07 at the fag end of the trading session.
The S&P CNX Nifty rose 38.60 points or 0.82% to 4757.25.
The market breadth, indicating the overall health of the market was strong. On BSE, 1806 shares advanced as compared with 657 shares that declined. A total of 56 shares remained unchanged.
From the 30 share Sensex pack, 25 rose and one fell.
The BSE Mid-Cap index rose 1.59% and the BSE Small-Cap index rose 1.74%. Both the indices outperformed the Sensex. The BSE clocked a turnover of Rs 825 crore.
Index heavyweight Reliance Industries (RIL) rose 1.66% on bargain hunting after the stock fell 3.74% on Friday. As per reports, RIL has submitted a $2 billion expression of interest for Value Creation Inc, a Canada-based private firm which holds oil sands assets.
Infrastructure stocks rose on reports the government is considering new guidelines for private equity investment in infrastructure companies in an attempt to open new sources of equity funding for the sector. The move comes in the backdrop of the poor response from private companies and banks in financing projects, especially those in sectors like highways and urban transport and infrastructure. Larsen & Toubro, Bharat Heavy Electricals, Jaiprakash Associates, Era Infra Engineering rose by between 0.52% to 2.16%.
Simplex Infrastructures gained 0.29%, after the company said one of the promoter group companies revoked a substantial portion of pledged shares.
Auto stocks rose on strong vehicle sales in the month of January 2010. Tata Motors, Mahindra and Mahindra, Maruti Suzuki India, TVS Motor Company, Hero Honda Motors, Bajaj Auto rose by between 0.07% to 1.27%.
Banking stocks rose on bargain hunting. India's largest private sector bank by net profit ICICI Bank rose 0.85%. The bank's American depository receipt (ADR) slumped 3.54% on the New York Stock Exchange on Friday, 5 February 2010.
India's largest private sector bank by net profit HDFC Bank was flat at Rs 1573.10. The bank's American depository receipt (ADR) slumped 3.77% on the New York Stock Exchange on Friday, 5 February 2010.
India's largest bank by net profit and branch network State Bank of India rose 1.02%.
IT pivotals gained after a mixed US job data for January 2010. US is a key market for Indian IT firms. India's second largest IT exporter by sales Infosys rose 1.31%. Its ADR rose 0.57% on Friday.
India's third largest software services exporter Wipro rose 1.42%. Its ADR fell 1.11% on Friday. As per recent reports, Wipro Consumer Care and Lighting, the FMCG arm of Wipro, is in advanced talks to buy Nigeria-based skincare company, Tura International.
India's largest IT exporter by sales Tata Consultancy Services rose 0.81%. Reportedly TCS' Passport Seva Project, which aims to issue passports in flat three days, is all set to be launched in a week or two.
The National Association of Software and Service Companies (Nasscom) has projected export revenue to grow 13% to 15% to $56-$57 billion in the year to March 2011, below the previous outlook for $60-$62 billion.
Realty stocks rose on bargain hunting. DLF, Unitech, Indiabulls Real Estate, Anat Raj Industries and Housing Development & Infrastructure rose by between 2.15% to 6.76%.
Metal stocks also rose on bargain hunting after a recent sharp fall. Sterlite Industries, Hindalco Industries, National Aluminium Company, Sesa Goa and Hindustan Zinc rose by between 1.16% to 2.82%.
Tata Steel the world's eighth-largest steel maker rose 2.03% after the company said on Friday steel sales from its Indian operations rose 9% in to 5,56,000 tonnes in January 2010 over January 2009. Crude steel output for the month rose 14% from a year ago to 5,96,000 tonnes.
The Indian operations account for about a quarter of the group's total annual capacity of 30 million tonnes, which includes unit Corus, Europe's second-largest steelmaker. Sales of long products, used in construction, rose 10 % in January from a year earlier, while sales of flat products, used in automobiles and consumer goods, increased 8 %, the company said in a statement.
McNally Bharat Engineering Company rose 1.11%, after the company bagged two orders aggregating Rs 56.64 crore from Hindalco for its smelter projects.
Indo Asian Finance was locked at 5% upper limit at Rs 27.35, after the company's board approved issue of bonus shares in the ratio of 2:1.
Friday, February 05, 2010
Asian Markets Feels European Pain
Taiex lead losers pack with 4% fall, Hang Seng, Kospi follows with 3% loss
Stock markets in Asian region fell further to near five month low on Friday, 5 February 2010, as investors dumped riskier assets after rising sovereign debt problems in the euro zone and poor jobs data sent US and European stocks tumbling.
On Wall Street, stocks nosedived and closed near their lows Thursday, pressured by global debt fears and labor market uncertainty ahead of Friday's government jobs report. The Dow Jones Industrial Average plunged 268 points, or 2.6%, to 10,002. The S&P 500 lost 34 points, or 3.1%, to 1063 and the Nasdaq stumbled by 65 points, or 3%, at 2125.
On the economic front, the Labor Department said initial jobless claims rose by 8,000 to 480,000 in the final week of January. In other economic news, the Labor Department also said U.S. nonfarm productivity in the fourth quarter rose at a swifter-than-expected pace of 6.2%. Unit labor costs, meanwhile, fell 4.4% in the fourth quarter. The figure, which is watched as a measure of inflation and profit margins, was expected to decline only 2.5%. In separate release from the Census Bureau showed the factory orders growing at 1% in December.
In the commodity market, crude oil traded near $73 a barrel after falling yesterday as an increase in U.S. jobless claims raised concern fuel consumption may be slow to recover and a stronger dollar reduced demand for commodities.
Crude oil for March delivery was at $73.46 a barrel, up 32 cents, in electronic trading on the New York Mercantile Exchange at 3:18 p.m. Singapore time. It earlier fell as much as 33 cents, or 0.5 percent, to $72.81 a barrel.
Brent oil for March settlement was at $72.26 a barrel, up 13 cents, on the London-based ICE Futures Europe exchange at 3:19 p.m. Singapore time. It earlier fell as much as 50 cents, or 0.7 percent, to $71.63 a barrel. The contract declined $3.79, or 5 percent, to settle at $72.13 a barrel yesterday.
Gold fell to a three-month low in London as the dollar’s rally cut bullion’s appeal as an alternative investment. Gold for immediate delivery fell as much as $14.13, or 1.3 percent, to $1,049.57 an ounce and traded at $1,056.22 at 9:42 a.m. London time.
In the currency market, the US dollar rose in Asian trading Friday ahead of a key U.S. jobs report later in the session, getting a lift from safety-seeking investors as Asian equities markets sold off.
The Japanese yen softened slightly in afternoon trade against its major counterparts after surging up yesterday on growing concerns over the global economy. The unexpected rise in U.S. jobless benefit claims and growing fears about the sovereign debt crisis in Greece and other parts of Europe pushed the yen up sharply yesterday. Japan’s currency yen was quoted at 89.49 against the greenback.
The Hong Kong dollar was trading at HK$ 7.7718 against the dollar. Actually the Hong Kong dollar is pegged at HK$ 7.8 to the U.S. dollar but can trade between HK$ 7.75 and HK$7.85 to the U.S. dollar.
In Sydney trades, the Aussie dollar fell to multi-month lows today as investors fretted about sovereign debt problems in Europe amid concerns strained budgets could force fiscal retrenchment in many developed nations. The Aussie hit a 4-month low at $0.8639, shedding two US cents overnight as risk appetite collapsed on worries about the health of the global economy. At the local close, the dollar was buying $0.867 US cents. The 2.1% drop against the US dollar was the biggest daily slide in over seven months.
In Wellington trades, the New Zealand dollar had a volatile session reacting to offshore markets after taking a pounding yesterday from worse-than-expected unemployment statistics. Investors were increasingly worried about the levels of sovereign, or government debt, in Europe. They were seen dumping shares and non-US dollar currencies. Non-farm payroll data due in the US tonight adds another uncertainty to the mix. The NZ dollar was US 69.01 cents at 5 pm from US68.83c at 8 am and US 69.80 cents at 5 pm yesterday. It fell to a five-month low of US 68.45 cents on Thursday night and spent today's session between around US 69 cents and US 68.58 cents.
The South Korean won declined 1.62% against the U.S. dollar Friday as fears about ballooning budget deficits in the euro-zone sparked a flight to safer assets. The South Korean won ended at 1,169.90 won to the greenback, down 19 won from Thursday’s close after the global concerns sent investors to flee to the safety of the U.S. currency. The Korean unit fell to as low as 1,177.50 won at one point, but its losses were trimmed later due to exporters' sale of the greenback.
The Taiwan dollar weakened against the greenback. The Taiwan dollar was trading lower against the US dollar at NT$ 32.0670, 0.0470 down from Thursday’s close of NT$32.0200
In equities, Asian equity markets tumbled Friday as heavy losses on Wall Street and heightened concerns over European sovereign debt prompted a sell-off across sectors.
In Japan, the share market tumbled to 7-week low, barely clinging to the 10,000 line, suffered by steep losses in Wall Street overnight on disappointing US jobs figures, escalating debt jitters in Europe, and a sharply strengthening yen. The Nikkei index stumbled 1.38% or 140.95 points in a week. At the closing bell, the Nikkei 225 Stock Average index was at 10,057.09, tumbled 298.89 points or 2.89%, after touching an intraday low of 10,036.33. The broader Topix of all First Section issues on the Tokyo Stock Exchange slumped 19.31 points, or 2.12%, to 891.78.
In Mainland China, the stock market tumbled with key indices breached the 3,000 line fist time since 30 October 2009, as investors abandoned riskier assets in a wake of triple digit slumps in Wall Street overnight on disappointing US jobs data and escalating debt jitters in Europe.
The benchmark Shanghai index registered weekly decline of 1.7% or 49.9 points. At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, tumbled 55.91 points, or 1.87%, to 2,939.40, while the Shenzhen Component Index on the smaller Shenzhen Stock Exchange slipped 252.34 points, or 2.07%, to 11,917.14. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, sank 2.04%, to 3,153.09.
On the economic front, China’s current-account surplus, the broadest measure of its trade balance, fell sharply in 2009, according to preliminary estimates by the State Administration of Foreign Exchange. The current-account surplus dropped to $284.1 billion, as compared surplus of $426.1 billion for 2008. The Ministry of Commerce Friday imposed preliminary duties of as much as 105.4% on US chicken products, saying the imports are hurting the domestic poultry industry.
In Hong Kong, the key benchmark indices fell on Friday, joining a global stock market rout, as broad based selling across the sector amid risk aversion after global markets plunged overnight on renewed concerns over global economic uncertainties. Selling was also intensified after unexpected rise in US jobless claims, cautious over Greece and other European nation’s debts, and sharp fall in commodity prices. The Hang Seng Index tumbled 676.56 points, or 3.33%, to 19,655.08, while the Hang Seng China Enterprise, which tracks the overall performance of 43 Mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, shrank 474.10 points, or 4.08%, to 11,131.78.
In Australia, the index fell sharply, ending a fourth consecutive week of losses on heavy selling across the sectors, hurt by falls in offshore markets and weaker commodity prices. Market participants pulling out money from risky asset after European and US share-markets plunged into the red overnight on concerns about the financial health of the Euro zone and unexpected rise in US jobless claim. The All Ordinaries registered weekly declines of 1.4% or 64.40 points. At the closing bell, the benchmark S&P/ASX200 index fell 107.50 points, or 2.33%, to 4,514.10, meanwhile the broader All Ordinaries shrank 111.60 points, or 2.4%, to 4,532.50.
On the economic front, the RBA issued its quarterly Monetary Policy Statement Friday in Sydney, saying that if the forecasts materialize, more interest rate hikes are possible. The RBA predicted modest increases in inflation and gross domestic product, along with a moderation in joblessness. The central bank forecasts underlying inflation will ease from about 3.25% through 2009 to 3% by mid 2010 and 2.5% by the end of 2010 before rising to 2.75% by the end of 2011 and into 2012. The bank previously forecast 2.25% inflation by the end of 2010.Gross domestic product is forecast to rise by 3.25% through 2010 and 3.5% through 2011.
In New Zealand, equities ended deep in the negative region on the last trading day of the week after inching up slightly yesterday despite loses in international markets. New Zealand benchmark index dipped sharply on Friday by almost 1.5%, reaching close to 3100; near its mid December 2009 lows after achieving a level close to 3300, early this year. NZ shares remained dull throughout the week except for edging forward yesterday. At the closing today, the NZX 50 lost 1.40% or 43.95 points to 3104.99. Meanwhile, the NZX 15 declined 1.69% or 96.04 points to close at 5592.69.
In South Korea, stocks closed lower as snowballing sovereign debt woes in Europe prompted skepticism over a fledgling global economic recovery. In a broad-based slump, the Korea Composite Stock Price Index (KOSPI) gave up 49.30 points or 3.05% to end at 1,567.12. Today’s steep losses pushed the key index back to the lowest level since it ended at 1,555.70 on 30 November 2009, after foreigners sold a net $293 billion in shares following three days of buying.
In Singapore, the key stock index tanked, driving the index to a fourth straight weekly losses on concerns the global recovery may falter on weak cues from Asian and European bourses and Wall Street overnight triggered by concerns over sovereign debt problems in Europe and U.S. unemployment. At the closing bell, the blue chip Straits Times Index was at 2,683.56, dropped 61.42 points or 2.24%. The gauge tumbled 2.1% or 58.2 points this week, its fourth week of decline.
In Taiwan, stock market flunked to five month low, by posting the biggest single day loss since 22 January 2008, as investors step up the selling activity following Wall Street losses on rising debt problems in Europe. All sectoral indices registered broad base losses. The benchmark Taiex share index followed the global cues by extending the losses for the fourth session, finishing the day lower by 324.21 points or 4.30% at 7217.83 – the biggest single day fall since 22 January 2008 when market tanked 528.54 points. It is also the lowest closing since 4 September 2009 when market finished the day at 7153.13.
On the economic front, Taiwan’s industrial production index jumped 47.34% year-on-year to reach 114.51 points in December last year, a historical high, thanks to the relatively low comparison base and the widely-reported economic recovery globally,.
According to statistics compiled by the statistics department under the Ministry of Economic Affairs (MOEA), the production index for the manufacturing industry also hit a historic-high record with an annual growth of 50.16% in the same month.
In Philippines, cautiousness and risk aversion once more ruled the Philippines stock market, with PSEi plummeting more than 2% following a two-day rebound. Market players remained jittery following the razor sharp losses on Wall Street overnight. Aside from that, investors remained pessimistic over the monetary board’s moves over the interest rates. Though the CPI figures released today, slightly eased for the first time in five months in January, it is still holding near an eight months high level, supporting the central bank's view that current policy settings were appropriate. At the final bell, the benchmark index PSEi plummeted 2.03% or 59.23 points to 2,855.64, while the All Shares index declined 1.68% or 31.22 points to 1,822.56.
In India, sustained selling pressure kept key benchmark indices suppressed throughout the day. World stocks fell as Europe’s sovereign debt, indications of weak US jobs data and a crash in commodity and energy prices raised fresh concerns over global economic recovery. The barometer index slipped below the psychological 16,000 mark. The BSE 30-share Sensex was down 434.02 points or 2.68% to 15,790.93. The S&P CNX Nifty was down 126.70 points or 2.61% to 4718.65.
Elsewhere, Malaysia’s Kula Lumpur Composite index finished slightly lower at 1247.90 while stock markets in Indonesia’s Jakarta Composite index gave up by 74.24 points ending the day lower at 2518.98.
In other regional market, European shares fell for the third straight day on Friday, as investors continued to fret about the health of Greek, Portuguese and Spanish finances ahead of the release of U.S. jobs data. The major European regional markets held up a bit better, with the German DAX index down 1.3% or 74.31 points at 5,459, the French CAC-40 index lost 2.4% or 89.29 points to 3,600 and the U.K. FTSE 100 index down 1.7% or 87.32 points to 5,052.
Subscribe to:
Posts (Atom)