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Monday, November 19, 2007
Edelweiss, Kolte Patil, Renaissance, Kaushalya Infra Grey Market Premium
Reliance Power -- 62 to 63
Edelweiss 725 to 825 825 to 850
Renaissance Jewellery 125 to 150 70 to 75
Kolte Patil 125 to 145 140 to 150
Kaushalya Infra 50 to 60 25 to 30
Jyothi Lab. 620 to 690 400 to 425
Mundra Port & Sez 440 580 to 590
Empee Distilleries 400 43 to 45
Varun Ind. 60 55 to 60
Religare Enterprises 185 350 to 360
Barak Valley Cement 42 25 to 30
Rathi Bars 35 +/- 3
Allied Computers 12 12 to 14
SVPCL 42 +/- 2
Market Close: Profit booking hits the gains...
Mid caps and small caps rocked the day with great action for the day. Auto, power, realty, cement and metal stocks also caught invetsors mood as all traded up. Banking stocks witnessed selling pressure at higher levels. Positive close from US market provided some support for Indian markets to open up, but Asian had not big encouraging which brought down the market sentiments down in India. Market gave up its early gains as the fronline counters went for profit booking. During the Mid session indices managed to trade in a narrow range but slipped into negative terrain with more profit booking at the final hours of trading. Europe started of in green but soon slipped into red and as of now its trading mixed.
Sensex ended down by 65 points at 19633.35. Weighing on the Sensex were losses in ITC (198.8,-3 percent), ICICI Bk (1186.85,-3 percent), HDFC Bk (1655.2,-2 percent), Satyam (422.65,-1 percent) and SBI (2304.8999,-1 percent). Losses were restricted by gains in ACC (1083.85,+4 percent), Cipla (186.85,+3 percent), Bajaj Auto (2426.2,+3 percent), TISCO (862.75,+2 percent) and Hero Honda (708.5,+2 percent).
Plywood and laminate maker Greenply Industries performed well in the market. The company has been successful in it endeavour to become a pioneer in the interior infrastructure company in spite of all odds. It has post good set of numbers with top line growth of 27% and operating margin surged up by 120%. Recently Greenply has picked up a controlling stake in two Gujarat-based plywood manufacturing companies "Galaxy Decor" and "Platinum Veneers". The board also cleared the company's proposal to set up a new laminate-producing unit in Himachal Pradesh as well as an MDF (medium densified fibre board) production line within the premises of its existing Uttarakhand plant. The acquisition will enhance the presence of Greenply in western India and help save logistical costs substantially. Following to this the two companies will become wholly-owned subsidiaries of Greenply Industries. Valuation at the current price appear reasonably attractive. We are positive on the business on longer term basis. Do read our detailed note to know more on the stock. Greenply rocked as it ended up by 14%.
AIA Engineering, a manufacturer of high chrome mill internals, which are used as both consumables and for new projects in the cement, mining and thermal power generation industry. Cement & Mining are key end-user in industries. The company has over 90% market share in India in the cement sector. It has posted decent number for the quarter September ended 2007. The Phase I of its expansion of 50,000 MT commenced production in this quarter. Valuations are very expensive at the current market price. But we are positive on the business environment. The company drives 70% of revenues from replacement market. AIA is one of niche player in this segment and second largest player in the country. The stock on light for the day and ended up 7.5%. Do read our detailed note to know our view on the stock.
Alok Industries was also on the limelight as the company has received a conversion notice from its Paying, Conversion and Transfer Agent for conversion of 9 FCCBs of USD 50000 each aggregating to USD 0.45 million into equity shares. Board of Directors issued and allotted 309112 equity shares of the face value of Rs 10 each for cash at a premium of Rs 61.58 per share as an outcome of conversion of above referred FCCBs. After the conversion the paid up equity share capital of the Company has increased from 17,37,87,514 equity shares of the face value of Rs 10/- each to 17,40,96,626 equity shares of the face value of Rs 10/- each. The stock was up 11% on the back of this announcement.
Technically Speaking: Markets traded in narrow range, with strong positive breadth. Sensex touched intraday high of 19971 and low of 19584. Over all market turnover was decent for the day at Rs 8081 Cr. Market breadth was in favor of Advances, where the Decliners stood at 636, Advances were stood at 2157. Sensex is near its crucial supports of 19450 and 19350 levels. If both are broken, we might go down upto 18000.
Sensex pares early gains; down 65 points
The Sensex closed the session with a loss of 65 points. The market opened firm at 19,895 up 197 points and hit the day's high of 19,971 within few minutes of opening on selective buying in frontline stocks. However, the Sensex saw erosion of its early gains on the back of selling in banking, FMCG, and oil stocks. The market entered into negative territory by the afternoon. After gyrating over 387 points from the day's high, the Sensex finally closed the session with a loss of 65 points at 19,633, while the broader S&P CNX Nifty of the National Stock Exchange (NSE) closed marginally up at 5,908.
The broader market, however, continued to remain in the green. Of the 2,855 stocks traded on the Bombay Stock Exchange (BSE), 2,182 stocks advanced, 644 stocks declined and 29 stocks ended unchanged. Most of the sectoral indices ended in the green. The BSE CD was the biggest gainer and moved up by 3.04% at 5,360 followed by the BSE Auto index (up 2.45% at 5,413) and the BSE Realty index (up 2.15% at 10,748). However, the BSE bankex index, the BSE FMCG index, the BSE Oil & Gas index and the BSE PSU index closed in the red.
Among the laggards, ITC was down by 3.10% at Rs199, ICICI Bank declined by 2.67% at Rs1,187, HDFC Bank shed 1.89% at Rs1,655, Satyam Computer dropped 1.38% at Rs423, while, SBI, Reliance Industries, Bharti Airtel, Infosys, HDFC, and Wipro closed with marginal losses. However, select heavyweights attracted decent buying support. ACC surged 4.25% at Rs1,084, Cipla rose 3.43% at Rs187, Bajaj Auto jumped 3.32% at Rs2,426, Tata Steel added 2.32% at Rs863, M&M moved up by 2.19% at Rs749 and HLL gained 1.87% at Rs205.
Consumer durables stocks, however, were in the limelight. Videocon surged 8.99% at Rs438, Lloyd Electric jumped 4.46% at Rs176, Gitanjali Gems soared 3.36% at Rs388, Asian Star Company moved up by 2.46% at Rs1,322, Blue Star added 2.44% at Rs431 and Rajesh Exports closed with moderate gains.
Over 6.07 crore Tata Teleservices shares changed hands on the BSE followed by IFCI (2.30 crore shares), Essar Oil (1.48 crore shares), Reliance Petroleum (1.44 crore shares) and IDFC (1.11 crore shares).
Essar Oil topped the value list with a turnover of Rs312 crore on the BSE followed by Reliance Petroleum (Rs307 crore), Tata Teleservices (Rs293 crore), IDFC (Rs222 crore) and IFCI (Rs222 crore).
Post Market Commentary
The market closed the trading session on a negative note as BSE Sensex closed lower by 65 points at 19,633.36 while NSE Nifty closed marginally up by 0.8 points at 5,907.65. The Sensex opened on a strong note and manages to trade higher but finally lost the grip and fell to closed the session in the negative territory due to the selling pressures in the index heavy weights. Most buying is seen in BSE Reality, Metal, Capital goods, Consumer durables and Auto indices. The Sensex has touched an intraday high of 19,971.44 and low of 19,583.97 during the trading session. Overall, the market breadth was strong as 2,182 stocks are closed higher while only 644 are closed lower. Both the BSE Mid cap and Small cap closed higher by 218.44 point and 292.16 points at 8,730.82 and 10,672.89 respectively. BSE Metal index closed higher by 170.66 points at 17,668.86 as Jindal Steel (4.94%), Jindal Stainless (4.06%), Tata Steel (2.32%) and Hindalco Industries (0.81%) closed in green.
BSE Capital Goods index inclined by 162.71 points to closed at 20,806.42 as Elecon Eng.(8.16%), AIA Engineering (7.90%), Crompton Greaves (5.12%), Siemens (5.17%) closed higher.
BSE Power index grew by 61.30 points to close at 4,653.27. Pulling it up are GMR infra (8.66%), GVK power (8.05%), Siemens (5.17%), Crompton greaves (5.12%), Power Grid (3.88%).
BSE oil & gas index dropped by 12.06 points to close at 12,467.50. Pushing it down are HPCL by (4.49%), BPCL (4.42%), IOCL (3.07%) and RPL (2.61%).
BSE FMCG index fell by 5.83 points to close at 2,224.86. Leading the loss are Glaxismith (3.19%), ITC (3.10%) and REI Agro (1.09%) closed lower.
BSE bankex index fell by 82.38 points to close at 10,920.67. Pulling it down are Federal bank (22.41%), ICICI bank (2.67%), HDFC bank (1.89%) and SBI (0.89%) closed lower.
BSE IT index closed marginally higher by 1.76 points at 4,160.88 as Aptech (13.61%), Tech Mahindra (4.27%), I Flex (2.68%) closed higher while Satyam (1.38%), Infosys (0.23%) and Wipro (0.20%) closed lower.
Sensex sheds 64 points; side counters continue to gain value
The market lost ground in late trade as index heavyweight Reliance Industries dropped and ITC slipped. The market was in the green for a better part of the day though it had pared gains after an initial surge. Banking majors plunged. IT pivotals pared gains. Consumer durable, auto, realty moved higher. BSE Mid-Cap and Small-Cap indices outperformed Sensex. The market breadth was strong. 2 out of 3 key European markets were in the red. Key Asian markets ended in the red.
The 30-share BSE Sensex lost 64.53 points or 0.33% at 19,633.36. It had hit a low of 19,583.97 in late trade. At the day's low, Sensex lost 114.39 points. Sensex hit a high of 19,971.44 at the onset of the trading session. At day’s high of 19,971.44, the Sensex had gained 273.08 points.
The broader CNX S&P Nifty was up 0.8 points or 0.01% at 5,907.65.
The market breadth was strong. On BSE, 2,148 stocks advanced, 635 stocks declined and 27 stocks were unchanged. 18 out of 30 stocks from the Sensex pack were in green.
BSE clocked a turnover of Rs 8081 crore compared to Friday (16 November 2007)'s Rs 8,885.97 crore.
Nifty November 2007 futures were at Rs 5918, at a premium of 10.35 points as compared to spot closing of 5907.65.
NSE’s futures & options (F&O) segment turnover was Rs 51,841.62 crore, which was lower than Rs 61,505.32 crore on Friday, 16 November 2007.
The BSE Mid-Cap index rose 2.57% to 8,730.82 and the BSE Small-Cap index rose 2.81% to 10,672.89. Both these indices outperformed Sensex for a third day in a row.
BSE Auto index (up 2.45% to 5,413.24),BSE Capital Goods index (up 0.79% to 20,806.42), BSE Consumer Durables index (up 3.04% to 5,360.26), Health Care index (up 1.66% to 3,949.53), BSE Metal index (up 0.98% to 17,668.86), BSE Power index (up 1.33% to 4,653.27) and BSE Realty index (up 2.15% to 10,748.03) outperformed Sensex.
BSE Bankex (down 0.75% to 10,920.67), Oil & Gas index (down 0.1% to 12,467.20) and BSE IT index (up 0.04% to 4,160.88) underperformed Sensex.
Banking majors declined. HDFC Bank (down 1.89% to Rs 1,655.20), ICICI Bank (down 2.67% to Rs 1,186.85), and State Bank of India (down 0.89% to Rs 2,304.90) edged lower.
Index heavyweight and India’s largest private sector firm by market capitalisation Reliance Industries declined 0.81% to Rs 2,852.50.
IT stocks declined. Satyam Computer Services (down 1.52% to Rs 422.05), Infosys (down 0.23% to Rs 1,619.70), Wipro (down 0.2% to Rs 457.40) edged lower.Tata Consultancy Services rose 0.61% to Rs 988.15.
Consumer durables stocks surged and BSE Consumer Durable index was the major gainer from BSE's sectoral indices. Videocon Industries (up 8.99% to Rs 438.25), and Rajesh Exports (up 0.18% to Rs 856.55) edged higher.
Gitanjali Gems rose 3.36% to Rs 387.90 after it acquired US jewellery retail chain Rogers for an undisclosed sum, a move that will boost the company’s retail presence in India and abroad.
Larsen & Toubro (L&T) declined 0.18% to Rs 4,368.15. The company announced during market hours today it in association with Shanghai Urban Construction (Group) Corporation has secured a design & build contract valued at Rs 275 crore from Delhi Metro Railway Corporation (DMRC).
Auto stocks were in demand.Mahindra & Mahindra (up 2.19% to Rs 749), Hero Honda Motors (up 2.03% to Rs 708.50), Tata Motors (up 0.64% to Rs 702.60) and Maruti Suzuki India (up 0.39% to Rs 1,053.50) edged higher.
Bajaj Auto rose 3.32% to Rs 2,426.20. UBS raised its 12-month price target on the stock to Rs 3,033 from Rs 2,440, saying the company was on a recovery path with its two-wheeler business improving and competition seen easing.
Tata Steel (up 2.32% to Rs 862.75), Cipla (up 3.43% to Rs 186.85) and ACC (up 4.25% to Rs 1,083.85) edged higher.
India's largest cigarette major by revenue, ITC (down 3.1% to Rs 198.80), edged lower.
Realty stocks gained. India's largest real estate firm by market capitalisation DLF rose 1.21% to Rs 947.85. It replaced Dr. Reddy’s Laboratories in Sensex today. Indiabulls Real Estate rose 3.32% to Rs 659.
Unitech rose 2.22% to Rs 398.40. As per reports Unitech plans a non-banking financial corporation (NBFC) to sell home loans.
Nirma rose 27.49% to Rs 211.50 and was the top gainer from A group. Apollo Tyres (up 19.62% to Rs 43.90), Essel Propack (up 16.37% to Rs 61.50), Vijaya Bank (up 13.98% to Rs 84), Dabur India (up 13.86% to Rs 125.70) and were other major gainers from A group.
Tata Teleservices Maharashtra rose 16.28% to Rs 50.70 and clocked the highest volume of 6.07 crore on BSE. IFCI rose 9.26% to Rs 98.55 and was the second biggest volume grosser with 2.3 crore shares. Essar Oil clocked the third highest volume of 1.48 crore and rose 6.24% to Rs 204.35. Reliance Petroleum declined 2.61% to Rs 208.85 and clocked fourth highest volume of 1.44 crore shares. Infrastructure Development Finance Company rose 1.31% to Rs 196.90 and clocked the fifth highest volume of 1.11 crore shares.
Essar clocked the highest turnover of 312.08 crore on BSE. Reliance Petroleum (Rs 307.53 crore), Tata Teleservices Maharashtra (Rs 2.93 crore), Infrastructure Development Finance Company (Rs 222.88 crore ) and IFCI (Rs 222.35 crore) were other turnover toppers on BSE.
Side counters, Maestros Mediline Systems (up 20% to Rs 42.30), Tokyo Plast International (up 20% to Rs 13.32) and Borax Morarji (up 20% to Rs 80.40) edged higher.
Federal Bank (down 22.41% to Rs 368.15), Alufluoride (down 9.87% to Rs 31.95) , VTM (down 10.62% to Rs 133) and Manali Petrochemicals (down 10% to Rs 21.21) edged lower.
Most of the European markets were in red. France’s CAC 40 (down 0.47% to 5,498.93), Germany’s DAX (down 0.3% to Rs 7,590) and UK’s FTSE 100 (down 0.72% to 6,246.30) edged lower.
Key Asian markets ended in red. Hong Kong's Hang Seng (down 0.56% at 27,460.17), Japan's Nikkei (down 0.74% at 15,042.76), Singapore's Straits Times (down 0.85% at 3,411.72), South Korea's Seoul Composite (down 1.7% to 1,893.47) and Taiwan Weighted (down 0.96% at 8,680.71) edged lower.
Volatility forced investors across the world to pull out five billion dollars from emerging market equity funds in the second week of November 2007, including over two billion dollars from funds focused on four BRIC markets viz. Brazil, Russia, India and China.
China accounted for more than half of the total outflow from BRIC funds, while India, Russia and Brazil together shared the remainder, according to international fund tracking firm EPFR Global.
During the second week of November this year, emerging market equity funds reported a net outflow of $5.58 billion, while those focused on developed markets saw an outflow of $5.07 billion. According to EPFR, the money market funds recorded a net inflow of $10.1 billion in the week, taking their total inflow since the beginning of August 2007 to $100 billion.
Market may remain choppy
The south-bound trend in the market is likely to continue on the back of a weak global indices. Most of the Asian indices have paired their early gains and currently treading in the red which may further dampen the investors' sentiment. On the positive front FIIs remained net buyers of stocks for last few sessions. Among the key domestic indices, the Nifty may test 5800 on the downside while on the upside the index could test higher levels of 6000. The Sensex has a likely support at 19500 and may face resistance at 20500.
US indices staged a late rally to finish higher on Friday, as investors closely eyed corporate earnings and attempted to gauge the Federal Reserve's next step. The Dow Jones rose to 13177, up 67 points, while the Nasdaq moved up by 19 points to close at 2637.
Most of the Indian ADRs had a field day on the US bourses. VSNL was the major gainer and surged over 8% while MTNL, Wipro, Dr Reddy's, Tata Motors, Infosys, Satyam and HDFC Bank gained over 1-6% each.
International crude oil prices gained marginally, with the Nymex light crude oil for December delivery moved up by $1.67 to close at $95.10 per barrel. In the commodity space, the Comex gold for December series slipped by 30 cents to settle at $787 a troy ounce.
Pre Market Watch
Indian market is likely to have a positive opening as the global cues are in favor. On the domestic front, the formal clearance by the Left party to hold negotiations with International Atomic Energy Agency over the INDO-US nuclear deal. On Friday, the Indian markets ended on a negative note as BSE Sensex fell by 86.53 points to close at 19,698.36 while Nifty dropped by 5.25 points to close at 5,906.85. We expect the market to trade higher during the trading session.
On Friday, the US market closed in positive territory. The Dow Jones Industrial Average (DJIA) grew by 65.52 points to close at 13,175.57. The S&P 500 (SPX) index increased by 7.59 points to close at 1,458.74 and the NASDAQ Composite (RIXF) inched up by 18.73 points to close at 2,637.24.
Indian ADRs ended in green. In technology sector, Satyam grew by 2.91% along with Wipro by 2.78% and Infosys by 2.21%. In banking sector, HDFC bank and ICICI bank grew by (3.46%) and (2.18%) respectively. VSNL and MTNL advanced by (8.13%) and (6.98%) respectively.
The major stock markets in Asia are trading strong. Japan''s Nikkei is trading higher by 43.21 points at 15,197.82. Hang Seng index is trading up by 117.39 points at 27,731.82. Taiwan weighted grew by 25.83 points to trade at 8,790.65. Seoul Composite is trading flat at 1,925.39.
Yesterday, the FIIS stood as the net buyer as the gross equity purchased was Rs.4,464.30 (in crores) and the gross debt purchased was Rs0.00 (in crores). The gross equity sold was Rs3,675.90 (in crores), and the gross debt sold was Rs0.00 (in crores). The net investment of equity was Rs788.40 (in crores) and the net debt investment was Rs0.00 (in crores).
Today, Nifty has support at 5,861 and resistance at 6,011 and BSE Sensex has support at 19,603 and resistance at 19,997.
Market to head higher
The market is expected to rally after the Left front after market hours on Friday, 16 November 2007, formally allowed the Centre to go to International Atomic Energy Agency (IAEA) for talks on India-specific safeguards, triggering fresh optimism in the government about the US nuclear deal becoming a reality at last. This was announced after a meeting of a panel set up by the government to look into Left front's concerns over the nuclear deal. The Left, however, insisted that the shift in stand on whether government can go to IAEA would not result in the operationalisation of the deal. No timeline has been set for the next meeting of the committee. National security adviser M K Narayanan agreed that March 2008 may be set as the outer limit for the US Congress to endorse the deal.
Most Asian markets rose today, 19 November 2007. Hong Kong's Hang Seng (up 0.43% at 27,731.82), Japan's Nikkei (up 0.29% at 15,197.82), Taiwan Weighted (up 0.29% at 8,790.65), Straits Times (up 0.44% at 3,455.97) edged higher. However South Korea's Seoul Composite declined 0.23% to 1921.68
US markets closed higher on Friday, 16 November 2007 as investors ignored some credit concerns and the health of the overall economy. The Dow Jones industrial average rose 66.74, or 0.51%, to 13,176.79. Broader stock indicators also posted gains. The S&P 500 index rose 7.59, or 0.52%, to 1,458.74. The Nasdaq Composite index gained 18.73, or 0.72%, to 2,637.24
The 30-share BSE Sensex slipped 86.53 points or 0.44% at 19,698.36, on Friday, 16 November 2007. The broader CNX S&P Nifty ended down 5.25 points or 0.09% at 5906.85, on that day.
Sensex surged 790.76 points or 4.18% to 19,698.36 in the week ended Friday, 16 November 2007. S&P CNX Nifty rose 243.6 points or 4.3% to 5,906.85 in the week.
The BSE Sensex is now 539.80 points away from its all time high of 20238.16 hit on 30 October 2007.
India's wholesale price index rose 3.11% in the 12 months to 3 November 2007, above the previous week's rise of 2.97%, government data released on Friday, 16 November 2007 showed. The annual inflation rate was 5.45% during the corresponding week of the previous year.
Crude oil prices advanced on Monday, 19 November 2007 as the dollar fell and some Organization of the Petroleum Exporting Countries (OPEC) members pushed for action to stem their declining purchasing power. US light crude for January delivery rose 71 cents to $94.55 a barrel. London Brent crude rose 67 cents to $92.29 a barrel.
As per provisional data, FIIs sold shares worth a net Rs 363.14 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 239.72 crore on Friday, 16 November 2007.
Morning Call
Market Grape Wine :
In House :
Nifty at a supp of 5855 and 5810 with resis at 5950 and 6016
Positive opening likely.
Intra Day: Sell RCOM below 704 with a TGT of 688 and a SL of 713
Buy IDBI above 173.25 with a TGT of 185 and a SL of 164
F&O: Buy Vijaya bank above 75 with a TGT of 85 and a SL of 71.50
Buy Tatatea above 811 with a TGT of 840 and a SL of 796
Out House :
Markets at a support of 19494 & 19339 levels with resistance at 19898 & 20112 levels .
Maintain strict stop loss for your trades as markets to be very choppy and volatile .
Buy : RIL
Buy : REL
Buy : JpAsso & JpHydro bullet
Buy : Centextile
Buy : SKumar bullet
Buy : IBUlls
Buy : MRPL , Noida , Neyvelli
Buy : MRPL , Neyvelli , Petronet & EssarOil
Dark Horse : Petronet , EssarOil , Aban , REL , IBulls , RIL , Centextile , JPASSO & SBIN
Bullet : Kotak & JpAsso with strict stop loss .
Crude ends $1 lower for the week
Mixed comments from OPEC affect crude prices
Crude-oil future prices for sweet light crude for December delivery which had ended at $96.3/bbl last week (09 November) finished $1.03 lower this week (16 November) at $95.1/bbl. Price had dipped to $90/barrel during the first three days of the week but then perked up. Mixed comments from OPEC affected prices.
On Friday, 16 November, crude oil for December delivery rose $1.67 to end at $95.10 a barrel on the New York Mercantile Exchange. The December contract expired on Friday, with crude for January delivery becoming the new front-month contract.
Prices initially fell at the start of the week after OPEC said that it might consider increasing output in its forthcoming meeting, either this month or the one in December. The price further fell after The International Energy Agency cut its forecast for global demand through 2008 as record prices could curb fuel use. Then Energy Department reported unexpected build up in crude inventories further softening prices. Finally, price rose once it was reported that an OPEC official has stated that increase in production is not necessary immediately.
As per the weekly inventory report by the Energy Department, U.S. crude inventories rose by 2.8 million barrels to 314.7 million in the week ending 9 November. This was the first build up in five weeks. U.S. refineries operated at 87.7% of their operable capacity last week, the highest in five weeks.
The report also stated that gasoline supplies rose by 700,000 barrels to 195 million barrels in the latest week, while distillate fuel stocks decreased by 2 million barrels to 133.4 million barrels.
The Paris-based IEA cut its estimate for fourth-quarter demand by 500,000 barrels a day as record prices reduced energy consumption. The IEA also said next year's demand is forecast at 87.69 million barrels a day, or 300,000 barrels a day less than a previous estimate. It was due to higher prices and weaker-than-expected economic data from the U.S. and the former Soviet Union.
The IEA has cut its fourth-quarter forecast three times since August on expectations higher gasoline prices and an economic slowdown in the U.S. will restrain demand.
OPEC, also reduced its fourth-quarter estimate of global oil demand growth to 1.97%, down from 2.1%, citing warmer winter weather in the Northern Hemisphere and the higher price of gasoline. The cartel also trimmed this year's world oil demand growth to 1.4% from 1.5%, but the cartel kept the first quarter of next year unchanged at 1.8%.
An unsteady US Market ekes out gain for the week
Wal-Mart earning report and Technology sector fight hard to keep credit turmoil away
US Market ended the week with modest gains on Friday, 16 November, 2007. Indices registered substantial gains on Tuesday, 13 November and Friday, 16 November. Other days, market slipped. Ongoing concerns about the health of the financial sector and the overall economy continued. A profit warning from Fed-Ex dampened the outlook sentiment on the economy.
But amid that, couple of good earning reports, a dillydallying crude price and mainly the technology sector, helped market eke out some gains. The Dow Jones Industrial Average gained 134 points for the week. Tech - heavy Nasdaq gained 9 points. S&P 500 gained 5 points.
Market started off on a shaky note on Monday, 12 November mainly because of E*Trade Financial. There were reports in the market that company could face bankruptcy. E*Trade gave up almost 60% of its share price on that day. On the week, prior to that, the company announced it had observed continued declines in the fair value of its $3 billion asset-backed securities portfolio. The company stated that it expected the declines in fair value to result in further securities write-downs in the fourth quarter.
On Tuesday, 13 November, all ten economic sectors posted gains, headed by Financials and Technology sectors. Reassuring words from Goldman Sachs' chief executive that the investment bank won't be announcing a write-down like many of its peers, also added further fuel to the rally. Dow gained 320 points on that day.
On that day, Apple shares were up more than 10% on news that the company has almost finalized a deal to sell iPhon in China.
On Wednesday, a late hour sell-off triggered by some bad news in the financial sector sent stocks down and Dow closed 92 points lower for the day. Bear Stearns said it will write-down $1.2 billion of subprime-related assets in the fourth quarter and report a loss for the period. The write-down amount, though, was less than the market expected.
On Thursday, 15 November, above-expectation economic reports were overshadowed by the credit concerns in the market and market ended once again lower for the day. The financial sector came under pressure today after London - based Barclays disclosed net charges and write-downs of $2.67 billion. But the amount was far less than what was expected.
But on Friday, 16 November, it was all Cisco Systems. The company announced that its board had authorized an additional $10 billion for stock repurchases, bringing the total authorization for the buyback plan to a whopping $62 billion. This news provided a boost to Cisco's stock that contributed to the relative outperformance of the Nasdaq, as well as the technology sector.
Among major news in the merger and acquisitions sector, IBM announced a $5 billion all-cash offer to acquire Canadian software company Cognos. It was also reported that the nation's second and third largest airlines, United Airlines and Delta Airlines are in talks regarding a possible merger.
On the earnings front, Wal-Mart reported third quarter results ahead of analysts' expectations on improved performance in the U.S. The company also raised its projected earnings for the year as it heads into the important holiday selling season. On the other hand, Dow component Home Depot reported disappointing earnings.
Among major economic news hitting the market during the week, the government reported a 0.3% increase in the consumer-price index in October, with a 1.4% gain in energy prices fueling the rise. The core CPI, which excludes food and energy costs, gained 0.2% in October. The data were in line with economists' expectations. Data showed no sign of significant inflationary pressure.
New claims for unemployment for the week ended 10 November which rose to 339,000 from 319,000 the week before remained at levels well below recessionary trends. Economists were expecting a reading of 325,000.
Other than the above, two regional manufacturing surveys were released, the Empire State Index and the Philadelphia Fed, both topping economists expectations.
Federal Reserve reported on Friday, 16 November, that industrial production fell 0.5% last month, due in part to continued problems in automotive and housing-related industries. That was much weaker than the 0.1% gain that had been expected.
Executive Summary
For the week, indices registered gains. DJIx closed up by 1.02% and S&P 500 closed up by 0.3%. Nasdaq too gained a paltry 0.4%. A profit warning from Fed-Ex dampened the outlook sentiment on the economy. Worrying news from Financial sector continued.
Good news from Wal-Mart regarding its earnings report and a strong news from Cisco Systems at the end of the week, helped market register the gains for the week.
For the year, Dow is up by 5.7%, Nasdaq is up by 9.2% and S&P 500 is up by 2.9%.
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