Friday, August 31, 2007
Strong manufacturing and services kept India's economy steaming ahead at a much faster pace than expected in the April-June quarter, but analysts said on Friday the tempo could slow slightly later in the year.
Tighter monetary policy, seen eroding domestic consumption, and global market turmoil stemming from U.S. subprime lending were expected to check Asia's third-largest economy in coming quarters, with further rate hikes seen unlikely at this stage.
The annual growth rate for India's fiscal first quarter was 9.3 percent, topping both a median forecast of 8.9 percent in a Reuters poll and growth of 9.1 percent the previous quarter.
The stock market extended its strong opening gains after the data, rising as much as 1.5 percent on the day. The rupee was strengthened slightly to around 41.00 per dollar, while the benchmark 10-year bond edged up 1 basis point to 7.92 percent.
"We expect growth to slow down to below 9 percent in the ensuing quarters as the consumption slowdown takes effect and export demand faces headwinds from turmoil in financial markets," said A. Prasanna, economist with ICICI Securities in Mumbai.
Analysts said, however, the Reserve Bank of India (RBI) was likely to remain vigilant about a build-up of price pressures, especially after it said on Thursday that such pressures could persist.
"There is no need to change the monetary stance, but there has to be a close monitoring," said Saumitra Chaudhuri, economic adviser at domestic ratings agency ICRA.
Separate data showed annual wholesale price inflation dropped below 4 percent for the first time since April 2006, to stand at 3.94 percent on Aug. 18 -- well below the central bank's target of around 5 percent for the fiscal year ending in March 2008.
Manufacturing, a key driver in four years of rapid GDP expansion, grew an annual 11.9 percent in the April-June quarter, slightly slower than 12.4 percent in the previous three months.
Services grew at an annual pace of 10.6 percent, while farming, which the government is trying to revive, expanded more than expected at 3.8 percent, matching the previous quarter.
India's gross domestic product (GDP) grew 9.4 percent in the fiscal year that ended March 2007, its fastest pace in 18 years and second only to China among major economies, and the central bank expects expansion of 8.5 percent this fiscal year.
India is now a $1 trillion economy, and this has given it increasing muscle in world trade talks and seen it invited to meetings of the world's leading industrialised economies.
The RBI said on Thursday the country was on the verge of a step-up in its growth trajectory but only if accompanied by vigilance on price and financial stability.
The RBI raised interest rates five times between June 2006 and March and increased banks' reserve requirements to cool the property market and calm inflation and loan demand.
Finance Minister Palaniappan Chidambaram told reporters that despite tighter monetary policy, authorities would ensure that credit flow to "productive sectors" remained strong.
NO LONGER SO INSULATED
Greater global integration has boosted exports and attracted billions in investment, but the central bank warned there could be some adverse impact from external influences, especially from financial markets.
"Further deterioration in subprime delinquencies could lead to reassessment of risk by investors across products and markets and retrenchment of capital from the emerging market economies," its annual report said.
However, economists see expansion averaging 7-8 percent for the next few years due to private sector growth and spending by India's swelling middle classes, which should help buttress the economy in the event of a slowdown in demand around the world.
The scorching pace has generated jobs but it has also put pressure on roads, ports and other infrastructure, and increased wage and price pressures.
India's economy in the April-June quarter grew a faster-than-expected 9.3 per cent from a year earlier, led by robust manufacturing and services, but analysts said the pace could moderate in coming quarters.
The annual growth rate for India's fiscal first quarter published on Friday topped both a median forecast of 8.9
percent in a poll and growth of 9.1 per cent the previous quarter.
The stock market extended its strong opening gains after the data. The rupee was little changed around 41.02
per dollar, and the benchmark 10-year bond edged up 1 basis point to 7.92 percent.
Analysts said the strong growth did not mean the central bank was likely to resume raising interest rates, but said it showed the need for vigilance against a build-up of price pressures.
"This number is good, but does not suggest any need for monetary tightening and we expect the current stance to
continue as inflation has come off substantially," said JP Morgan economist Rajeev Malik.
"We see moderation in growth in coming quarters."
Manufacturing grew an annual 11.9 percent in the April-June quarter, lower than the 12.4 percent in the previous three months.
Services grew at an annual pace of 10.6 percent, while farming, which the government is trying to revive, expanded by 3.8 per cent, matching the previous quarter's growth rate.
Asia's third-largest economy grew 9.4 percent in the fiscal year that ended March 2007, its fastest rate in 18 years, and the central bank expects expansion of 8.5 percent this fiscal year.
The central bank raised interest rates five times between June 2006 and March this year and has also increased banks' reserve requirements, measures that have cooled the property market and calmed inflation and loan demand.
"Growth will be about 9 percent in the coming quarters. There is no need to change the monetary stance, but there has to be a close monitoring," said Saumitra Chaudhuri, economic adviser at domestic ratings agency ICRA.
India is now a $1 trillion economy after a growth spurt in the past four years second only to China's hot pace of
expansion among major economies. This has given it increasing muscle in world trade talks and seen it invited to meetings of the world's leading industrialised economies.
The central bank said on Thursday India was on the verge of a step-up in its growth trajectory but only if accompanied by vigilance on price and financial stability.
Some economists see the economy averaging 7-8 percent for the next few years due to private sector expansion and rising demand from a growing middle class.
Analysts say this will buttress the domestic economy in the event of a slowdown in demand around the world due to problems in the US home loan market.
The scorching pace has generated jobs but it has also put pressure on roads, ports and other infrastructure, and increased wage and price pressures
After opening marginally (nine points) higher at 15,131, the Sensex zoomed to a high of 15,351 on the back of aggressive buying in NTPC, Tata Steel, Reliance and auto stocks.
The Sensex finally ended with a gain of 197 points at 15,319. The index thus gained over 6% (894 points) during the week.
The Auto, Healthcare and Metal indices rallied over 2% each to 4878, 3573 and 11,566, respectively.
The market breadth was fairly positive - out of 2,773 stocks traded, 1,640 advanced, 1,060 declined and 73 were unchanged.
Mahindra & Mahindra zoomed 5% to Rs 709. Maruti soared over 4% to Rs 868, and Tata Motors rallied 3% to Rs 702.
Tata Steel surged 5% to Rs 690. NTPC gained 4.3% at Rs 173.
Ranbaxy moved up 3.5% to Rs 391. Hindustan Unilever added 3% to Rs 209.
Reliance advanced 2.7% to Rs 1,960. ONGC and TCS were up over 2% each at Rs 858 and Rs 1,065, respectively.
SBI, Reliance Energy, BHEL and Reliance Communications gained around 1.7% each at Rs 1,600, Rs 780, Rs 1,889 and Rs 543, respectively.
ICICI Bank moved up 1.5% to Rs 885. Cipla and Wipro were up 1.3% each at Rs 167 and Rs 482, respectively.
VALUE & VOLUME TOPPERS
Reliance topped the value chart with a turnover of Rs 232.40 crore followed by Tata Steel (Rs 129 crore), Nagarjuna Fertilisers (Rs 117.60 crore), SBI (Rs 112 crore) and Puravankara (Rs 111.60 crore).
Nagarjuna Fertilisers led the volume chart with trades of around 3.04 crore shares followed by IKF Technologies (2.27 crore), Ispat Industries (1.66 crore), IFCI (1.52 crore) and Tata Teleservices (1.32 crore).
Market really had great week. Though global and political issues made market realize their presence but index managed to make it out of worries. Of course, the US fed provided a helping hand to recover and it helped, though once reacted badly on lack of support from fed. On political front India also had some relief and stability. Congress said that it would put Indo-US nuke deal on hold for now and that was some face saving formula. Market had a great bounce back in spite of F&O settlement week. Sensex and Nifty both gained by 6.5%. Probably this was back by short covering. However it is paired off 1.5% for August. August market was extremely volatile.
Political overview: The news flow from the political front may appear encouraging. At least polls have been averted for now. This is what we mentioned in our previous note that the crucial time will be in two months from now. Volatility may continue?really the time will tell us!
Sensex zoomed 6.5% (894 Points) for the week. With Tisco among the biggest gainer up by18%, followed by Hindalco, MNM and RIL gaining 10% each. Losers for week were Cipla and Guj Ambuja down by over 1% each. topnew.gif (1104 bytes)
Auto Majors at their best; Eveready ready for more?..Zodiac super jump..
Auto stocks did rally this week. Bajaj Auto is set to launch its new fuel-efficient 125 cc bike that offers 109 km a litre. Named as? Exceed? and is slated to be launched in mid -September. The company is also launching a new-generation engine ahead of the rollout of bikes to educate people about the advantages of new technology that combines the features of fuel efficiency and performance. With Bajaj upgrading the platform from 100 cc to 125 cc with the new bike, the sales of 100 cc would further decrease which would impact Hero Honda. Hero Honda is the market leader in the 100 cc segment. Bajaj wants to make the bike to exceed the youth power. We expect trading upsides over the medium term. The Festival demand is what all 2 wheeler players are banking on and we too. Lower interest rates will be the trigger the markets will be looking for. MNM was also rallied ahead of its Sales numbers for the month of August is what we assume. Auto Majors will be coming out with their monthly sales number next which we expect to be good one.
McNally Bharat, it was surprising to note that the Rs 90 cr Mazgaon dock order was already an old one existing in the Rs 1100 cr order book indicated with the recent results. It?s just that the order copy was received. However, the negative which emerged was that the Rs 1000 cr orders may take their time to be announced given that the uncertainty in political environment has delayed their letters to be sent. May be, in the face of elections, the company may not be ready to accept for now given the uncertainty. There is no surety that a new government and new Minister may want to review the same. However this is our guess. All in all, this company is less expensive than many other engineering firms on an FY09 expectation.
Textile stocks performed mixed for the week. Star performer was Zodiac Clothing for the week. The branded business has continued to grow and has recorded a growth of nearly 24% by virtue of growth in every segment of the Indian business. In the export business the sales grew with a satisfactory increase in contribution due to the company reshuffling its portfolio of customers, eliminating those customers with low contribution. Profitability and growth has been sustained, despite a major challenge posed by the sudden and sharp appreciation of the rupee. With the festive season in India approaching, we look forward to sustained demand for the branded business which will grow the profitability overall. Zodiac ralied 17% for the day..
Esab India is another stock which has good prospects going ahead. The company had an open offer revised upward: 58.01 lakh shares (37.7%) from 30.78 lakh shares (20%) Price increased to Rs 505 from Rs 406 (CMP: Rs 490.85). We seem to be running into luck. We like this welding electrode business which will benefit from lower metal prices. The company has recently added new capacity and has also seen greater outsourcing to meet the demand in India. Charter PLC is the parent owning ESAB. It also has a group business called Howden which is into Gas Turbines. Howden has been looking to get into India as indicated in Howdens annual report and that could be through Esab though given the less than 50% holding gives reason to believe that its more likely to be a trading activity initially. The welding demand is more dependent on Ship building, Pipes Engineering, and Construction. Ship Building and Pipelines is where there is strong visibility for the next couple of years where the order books are full. Valuations at 17X FY 08 at Rs 490 the stock is certainly not cheap but the downsides are limited. With Charter probably owning over 51% post this offer. We believe that product introductions could accelerate. However for now the stock is likely to remain in the current range.
Eveready sold of the Mumbai land and our guess was on target. They sold the Mumbai land for Rs 115 cr that comes to Rs 14 per share. The company intends to raise money for business. Do they find the current prices attractive ?.. With Zinc at around $ 3000 per tonne, profitability certainly will be better.. and promoters have a 40% stake in the company. May be a good time to increase stake. There is also the issue of the FCCB issued 2 years ago with conversion at Rs 95. If the stock does not cross 95, that would mean cash outflow. More comment on that once we speak to the management.
Technically Speaking: Sensex closed above 15200 levels. Next Immediate target is at 15650. On the lower side 15170 and 15040 are the key supports. Volumes traded were good at over 5000 cr for the day.
All the talk of higher interest rates slowing down the Indian economy took a backseat after the Government released the GDP data for the first quarter ended June. Apart from the minor dip in the growth rate for Mining and Manufacturing, all other engines of the Indian economy remained in healthy condition. Overall, the GDP growth in the April-June quarter was 9.3% as against 9.6% in the same quarter last year. Compared with the previous quarter's (Q4 FY07) growth rate of 9.1%, economic growth in Q1 FY08 was slightly on the higher side. The data also beat all optimistic expectations by various economists, who had been looking for a growth rate of around 9%.
At 3.8%, agriculture growth rate was better than 2.8% in the year-ago level while mining output slid, from 3.7% to 3.2%. Growth rate of the manufacturing sector declined to 11.9% in the first quarter of the current fiscal year versus 12.3% last year. Output in Electricity and Construction sectors improved, to 8.3% and 10.7%, respectively, from 5.8% and 10.5% in the first quarter last year. Other sub-segments that registered significant growth in Q1 FY08 over the previous year included Trade, Hotels, Transport & Communications (12% vs 12.4%), and finance, insurance, real estate and business services (11% vs 10.8%).
Asia's fourth-largest economy grew by 9.4% in the fiscal year ended March 2007, its fastest rate in 18 years, and the central bank expects expansion of 8.5% this fiscal year. Finance Minister P. Chidambaram said the GDP growth of 9.3% in the April-June quarter was 'satisfactory', and that the Government would ensure investment and credit flows remained strong. "Despite compulsions of a tight monetary policy, we will ensure that credit flow to the productive sectors of the economy remains strong," Chidambaram told reporters in New Delhi.
The Reserve Bank of India (RBI) expects India's economic growth to accelerate further notwithstanding the threat of inflationary pressure and external shocks like the recent sub-prime crisis in the US. Though the central bank cautioned that the turmoil in the global credit markets could cause further outflow of capital from India, it remains hopeful that the Indian economy will remain resilient to global shocks. In its 2006-07 annual report, the RBI has asked commercial banks, financial institutions and corporates to be vigilant and well-prepared with appropriate risk mitigation strategies to deal with significantly higher volatility than before.
"Steady increases in the rate of gross domestic saving and investment, consumption demand, addition of new capacity as well as more intensive and efficient utilisation/capitalisation of existing capacity are expected to provide support to growth during 2007-08," the RBI said. The central bank's GDP growth estimate for FY08 stands at 8.5%. "There is growing evidence that the economy is on the threshold of a step-up in the growth trajectory, provided the vigil on price stability, including financial stability is intensified in a convincing manner," the RBI said.
But, the turmoil caused by the subprime mortgages in the US remains one of the biggest underlying concerns for the RBI. "Further deterioration in subprime delinquencies could lead to reassessment of risk by investors across products and markets and retrenchment of capital from the emerging market economies (EMEs), given the contagion and herd mentality," the RBI said. A higher volatility could also emanate from the behaviour of private equity funds, according to the central bank. Any further monetary tightening in major economies has the potential to accentuate volatility in global markets, feels the RBI.
Bulls finally found a week to rejoice. Value buying in index heavyweights like RIL, Tata Steel, Hindalco, BHEL and L&T enabled the Sensex post its longest winning streak this year. Also, lower inflation and impressive GDP growth figures spurred the sentiment, lifting the benchmark BSE Sensex higher by 6.2% or 894 points to close the week at 15319. The NSE Nifty ended higher by 6.5% or 274 points to close at 4464.
The current rally in the market was supported by gains in Metals, Banking, IT, Auto and Oil & Gas stocks. Interestingly, the activity was also seen in the mid-cap counters. On the political front, sentiment improved after the ruling coalition agreed to set up a panel for examining the implications of the Indo-US nuclear deal, putting to rest, the concerns of Communist parties pulling away from the Centre.
Bulls had more reason to cheer with India's economy growing at 9.3% in the three months to June 30 from a year earlier. Also, inflation declined to 3.94% in the week ended August 18, from 4.1% in the previous week, as prices of some manufactured products fell. It was the first time annual inflation fell below 4% since the end of April 2006.
Firm metal prices on LME and strong demand from the domestic as well as overseas market boosted the metal stocks with Tata Steel, leading from the front. Tata Steel was the star performer over the week, advancing by 18% to Rs689 after Corus Group Plc's consolidated operations for the June quarter almost tripled. Operating profit climbed to Rs49.04bn. Revenue surged more than five-fold to Rs311.55bn. SAIL surged by over 15% to Rs168 and JSW Steel jumped by over 12% to Rs643.
Value buying emerged across the auto stocks on expectations that revenue will increase in the coming quarter after inflation fell below 4%. Expectations are that interest rates won't rise further. Hindustan Motors skyrocketed by over 29%, M&M raced ahead by 10% to Rs708, Maruti rose nearly by 10% to Rs867, Tata Motors surged nearly by 7% to Rs701 and Ashok Leyland added 8.5% to Rs38.
IT stocks staged smart recovery during the week. The rupee appears to have stabilized against the US$ around the $41 mark. Wipro surged nearly 6% to Rs482, TCS rose over 4.5% to Rs1065, Satyam gained 2.5% to Rs447 and Infosys added 1.7% to Rs1885. Financial Technologies was the star performer, advancing by over 20% to Rs2463.
Fertilizer stocks hogged the limelight during the week on expectations of sops & subsidy. Nagarjuna Fertilizer was the top gainer, rallying by over 21% to Rs40.3, Chambal Fertilizer surged by over 7% to Rs49.8 and Deepak Fertilizer rose over 4% to Rs105.
Banking stocks also gained momentum on hopes that interest rates wont be increased given the lower inflation rates. Axis Bank surged by over 11% to Rs635 as the scrip witnessed strong fund buying. Heavyweights also recorded smart gains. SBI rose over 9% to Rs1600, HDFC Bank was up by 6.7% to Rs1171 and ICICI Bank added .5% to Rs888.
Reliance Industries, India’s most valuable company and world’s third biggest refinery was among the leading gainers in the 30-share Sensex index. The scrip rose over 10% hitting 52-week high of Rs1970 finally closing at Rs1959.
Global cues to drive local mood
Friday's impressive and unexpected rally has left the bears wondering what struck them. The markets surged higher defying all negative cues and overcoming the volatility of F&O expiry. Could it be a one-week wonder or signs of things to come? In the absence of any major triggers, we expect some consolidation in the market before a further upmove kicks in. A lot will depend on the speech by Fed chief Ben Bernanke on housing and monetary policy. President Bush is also set to unveil a slew of steps aimed at addressing the problems facing the American housing sector. As always, global cues will again provide the much needed direction to the bulls. Action is likely to be stock specific with mid-cap stocks appearing to have got back into action. However, one needs to adopt a cautious approach. Stocks like IFCI and Escorts are expected to witness action in the coming week. Ranbaxy is another counter which can be considered for the medium to long term.
Tackling a rising home loan EMI with ease
The usually smiling Ravi Raman wasn't his usual self a few days ago. He was seen walking restlessly across his office. The IT company for which he was working informed him that his salary would be credited a little late into his account.
Mr Raman was worried since it meant his home loan cheque could probably bounce. In the past few years, the Ramans have been facing the arduous task of trying to eke out a living, thanks to rising EMIs (Equated monthly Installments).
This wasn't the case two years ago when he took the loan. Coping with higher EMIs for many is something but a bitter truth that one has to live with. ET takes you through smart measures to befriend higher EMIs.
Managing rising EMIs
There are two ways to cope with increasing home loan EMIs. One way could be to lower your consumption needs. Then you could cough up some funds to prepay the home loan. Explains certified financial planner and wealth advisor Gaurav Mashruwala,
"You have two variants in the expenses category, mandatory and voluntary. You have to spend on food but you can cut down on eating in restaurants and entertainment. The idea is to cut down on your lifestyle. Start buying a Cambridge shirt instead of a Tommy Hilfiger. There is always scope to tone down your lifestyle and expenses to accommodate the increase in EMIs. Another way to partly prepay your loan could be to liquidate your low-yielding assets.
All you need to evaluate is how much net return does your investment fetch you. If it's lower than the interest outgo on your home loan, it makes financial sense for you to liquidate that investment to repay a part of your housing loan.
"You can look to break your bank fixed deposits or liquidate some debt-based products. Touch your equity investments only if you are in dire need," advises Mr Mashruwala. Typically, equity earns more than 16% annually (more than home loan rates of 12% pa) and historically, has been the best performing asset.
You need not liquidate all your investments. You can liquidate around 30-50% of your low-yielding investments, which will also take care that you have a balanced portfolio of investments. However, you have to evaluate this option very carefully. You cannot liquidate those investments which have the ability to beat inflation in the long run.
Higher EMI or tenure?
Whenever a bank/HFC hikes lending rate, you either see a rise in your EMI or an extension in the tenure. Industry experts recommend increasing the EMI than tweaking the tenure of the loan. Approximately, when a bank/HFC hikes the lending rate by 0.5%, the tenure of your loan is increased by almost 25 months. If you take a housing loan at the age of 30, you would have planned to repay by the time you complete 50 years of age. The idea would have been to spend a debt-free retired life.
Now, if you postpone the termination of loan at 52 years of age, that would impact your personal finances even more, especially if you retire, says Akhilesh Tilotia, financial advisor and director of PARK Financial Advisors. Secondly, a series of rate hikes could further postpone the closure of your home loan. So it's better to take the EMI hit right now than postpone the impact of rate hike. The idea is you are able to realise the hike in interest rates upfront.
Even the compounding effect has huge impact on long-tenure loans. For example, if you take a Rs 30-lakh loan for a period of 15 years at 12%, then your EMI works to a tad above Rs 36,000. Essentially, you will be paying close to Rs 65 lakhs on your house, including your interest outgo. The longer you extend the tenure of the loan, this number will increase. In other words, your interest outgo is another party's income. Why do you want to earn for a third party? Settle the loan repayment at the committed tenure.
Facts you must know
Watch your EMI
Banks say they can lend up to 48 times your monthly salary. But you should see how much can you afford by looking at the EMI as percentage of your salary. EMIs should not increase beyond 35-40% of you take home salary for a housing loan. Any other loan EMI should not go beyond 25%. Banks may recommend an EMI up to 60% of your disposable income. But you have to provide for contingencies such as a job slow down, change of job or mere liquidity needs, Mr Tilotia adds.
Don't read too much into penalty
It's not wise to save on the 2% prepayment penalty on your housing loan. You are actually spending 12-14% on the same loan as interest cost. Even if you take into account the tax benefit, you cannot discount the forthcoming rate hikes in the years to come. Always get out of your debt as soon as possible.
Your first house is a consumption asset
You will never sell that for money. If you look at your salary as a pie, your ideal break should be 30% EMIs, 30% to the government in terms of taxes, 20% for consumption needs and the balance 20% should be savings.
Govt-Left smoke peace pipe for now
For the moment, it seems that the storm over the Indo-US nuclear deal has receded. In a last ditch attempt to save the fragile coalition in New Delhi, the Government and the Left parties agreed to set up a committee to address some of the apprehensions of the Left parties over the civilian nuclear cooperation between India and the US. As part of the truce, the Government will hold no negotiations with IAEA - the first of the three steps crucial for operationalising the deal - till the panel comes out with its findings. The committee will have 14 members - eight from UPA and six from the Left - with the likelihood of External Affairs Minister Pranab Mukherjee as its convenor. The temporary settlement will enable the Left Front to back off, for some time, from their brinkmanship that had put the Government’s survival in danger
RBI expresses caution on holding company
The Reserve Bank of India (RBI) has raised some uncomfortable questions about the proposed intermediate holding companies proposed by ICICI Bank and SBI. The RBI has made a strong case against intermediate holding companies. "It will be desirable to avoid intermediate holding company structures (a structure in which a bank owns a holding company for various non-bank businesses)," the banking sector regulator said in a discussion paper on holding companies in banking groups. Any clearance for foreign investment in such a holding company by other regulators could be subject to a legal review, the RBI said. The creation of an intermediary financial holding company may lead to a problem of regulation, it added. The announcement from the RBI comes notwithstanding the clearance granted by the Finance Ministry to ICICI Bank's proposal for setting up a holding company for its insurance and mutual fund business. SBI has also proposed a similar holding company for its insurance and mutual fund businesses.
TRAI in favour of more players per circle
In a bid to shore up competition and encourage mergers and acquisitions in the telecom sector, the Telecom Regulatory Authority of India (TRAI) suggested that the limit on the number of operators in a particular circle should go. It also recommended relaxation of stringent M&A norms, technology neutrality for telecom licences, besides suggesting that both GSM and CDMA players should pay an entry fee and higher spectrum fee additional 2G radio frequency allocation. The telecom regulator suggested a one-time fee from operators for allocation of spectrum beyond 10 MHz. At present, a company pays 1% of its revenue to the Government for additional spectrum, being allocated based on subscribers. On M&As, TRAI said the combined market share of the merged entities should not exceed 40%, either in terms of subscribers or revenue against 67% now. It proposed that an operator should be allowed to acquire up to 20% equity in the target licensee company in the same circle against the present cap of 10%.
SEZs...Govt allows purchase of 30% land
The Group of Ministers (GoM) set up to frame a rehabilitation and resettlement policy for those affected by industrial projects, including SEZs, suggested that state governments be given a discretion to acquire up to 30% of the land required for such projects provided the developer has acquired the balance land. The GoM recommendation would now go to the Cabinet for its approval. "The decision is not specific to SEZs but would apply to all industrial projects," Science & Technology Minister Kapil Sibal said after the GoM meeting. Separately, the Government cleared 20 new SEZs, including two IT and IT enabled service based SEZs of Tata Consultancy Services (TCS) and Cognizant Technology. It also gave in-principle approval to seven SEZs. In April, the Empowered Group of Ministers on SEZs headed by External Affairs Minister Pranab Mukherjee had imposed a ban on compulsory acquisition of land, while fixing an upper limit of 5,000 hectares for multi-product zones.
Bajaj family feud continues
Warring Bajaj brothers - Rahul and Shishir failed to reach a settlement on the division of the group within the time allotted by the Company Law Board (CLB). The two brothers sought some more time from the principal bench of the CLB. Counsels representing Rahul and Shishir told the bench they would carry on negotiations to settle the matter. CLB Chairman S. Balasubramanian adjourned the matter to the third week of October. The Shishir-Rahul feud erupted in March 2003, with the former approaching the CLB alleging there was a move by the Rahul camp to oust him from the chairmanship of Bajaj Sevashram, a key holding company of the Bajaj group. The battle intensified this year when the Shishir camp moved the CLB for a stay on the induction of Rahul Bajaj's son Sanjiv and cousin Neeraj in the boards of Bajaj Sevashram and Jamnalal Sons. Admitting the application by the Shishir faction, the principal bench of the CLB stayed all board meetings of the two holding companies Bajaj Sevashram and Jamnalal Sons.
Firstsource acquires MedAssist
Firstsource Solutions acquired MedAssist Holding, a leading provider of revenue cycle management in the healthcare industry in the US, for US$330mn. There would be no change in the management of MedAssist and all 1,400 employees would continue in their current jobs. MedAssist provides Eligibility Services, Receivables Management Services and Post-default Collections services for healthcare providers. The company has over 1,000 clients, including hospitals, large physician groups and alternate site providers. MedAssist's revenue for year ended December 31, 2006 was US$99mn. Firstsource's US subsidiary will raise US$275mn through debt for the deal while the balance will be funded through internal accruals, Managing Director and CEO, Ananda Mukerji said.
Puravankara Projects falls below issue price
Shares of Bangalore-based real estate major Puravankara Projects slipped below the issue price amid uncertainty about the growth prospects of the housing industry. The stock listed on the Bombay Stock Exchange (BSE) at Rs399, on Aug. 30, as against the issue price of Rs400. Soon it hit a low of Rs357 before ending the maiden trading day at Rs361. It gained about 3.9% on the next day to close the week at Rs375. Puravankara raised Rs8.6bn from its 21.5-million-share public offer, to part-fund land acquisition and to repay debt. The company had entered capital market with an IPO of 21,467,610 shares of Rs5 each in a price band of Rs400-450. The issue was subscribed 1.91 times despite the company cutting the price band, from 450-500 and extending the duration of the IPO.
Power Grid Corp IPO opens on Sept. 10
ndia’s principal power transmission company and Mini-Ratna Category- I public sector undertaking, Power Grid Corporation of India Limited ("the Company") is entering the capital markets with an Initial Public Offering (IPO) of 573,932,895 equity shares of Rs 10 each ("Equity Shares") for cash (the "Issue") at a price to be decided through a 100% book building process. The issue comprises a fresh issue of up to 382,621,930 equity shares by the Company and an Offer for sale of up to 191,310,965 equity shares by The President Of India acting through The Ministry Of Power, Government of India. The issue comprises a net issue to the public of up to 559,954,895 equity shares and a reservation of up to 13,978,000 equity shares for subscription by employees of the Company. The Issue shall constitute approximately 13.64% of the fully diluted post- issue capital of the Company. After the Issue, the Government of India, through the Ministry of Power will continue to hold 86.36% of the diluted post-Issue paid-up equity capital of the Company.
Nicholas Piramal to spin off R&D unit
Nicholas Piramal India Ltd. announced that its Board had approved the proposal to de-merge its New Chemical Entity (NCE) Research Unit into a separate company. The NCE pipeline has expanded from 5 compounds in 2002 to 13 compounds in 2007. Out of this, 4 are in clinical trials. Nicholas Piramal expects to have 8 compounds in clinical trials by end of the current financial year. It wishes to complete development upto proof-of-concept (end of Phase II) for all its compounds and bring to market certain niche ones on its own. Nicholas Piramal will hold equity capital of Rs45.5mn in the new NCE Research Unit. This move will facilitate induction of strategic or financial investors in future who may wish to invest directly in the NCE research program. The new company will issue fully paid up equity shares aggregating to Rs209mn to the shareholders of Nicholas Piramal in the ratio of 1:10. Post de-merger, Nicholas Piramal will hold 18% equity capital of the new company and the remaining 82% will be held by the shareholders of Nicholas Piramal. The new company will be listed on the BSE and NSE in the future.
Parsvnath Developers to foray into telecomReal estate major Parsvnath Developers plans to launch mobile services in the country. The company has expressed the intention to apply for licences in 22 out of 23 telecom circles in the country. It has identified two partners - one domestic investor and other a well known global telecom giant. Though the company has not yet declared any funding structure, it is likely to hold a minority stake of 26% in the proposed joint venture while the foreign players will hold around 51 per cent and the balance will be with the financial investors. "Despite increasing number of subscribers, the penetration of mobile telephony in India is still very low," Chairman Pradeep Jain told reporters in New Delhi. Parsvnath will set up a special purpose vehicle, a company that's being created for the proposed diversification
Bush bailout for subprime mess
After the central banks, it's now the turn of the US Government to come to the rescue of the crumbling housing sector. President George W. Bush, in his first response to the subprime mortgage crisis, plans to announce several steps aimed at helping Americans with credit difficulties to meet the rising cost of their housing loans, administration officials said. According to published reports, Bush will let the Federal Housing Administration (FHA), which insures mortgages for low- and middle-income borrowers, guarantee loans for delinquent borrowers, allowing them to avoid foreclosure and refinance at more favorable rates. FHA mortgage insurance program will be changed to allow more people to refinance with FHA insurance if they fall behind on adjustable-rate mortgages. The change would affect borrowers who are at least 90 days behind in payments and let them stay in their homes. Stocks in Europe and Asia rose, led by mining companies and exporters, before Bush's announcement. The yen fell against all of the world's 16 most-active currencies.
US economy picks up pace in Q2
The US economy grew at a much faster pace in the second quarter than previously estimated, but tepid consumer spending, slowing housing activity and credit-market turmoil suggested that growth will slow significantly into next year. America's Gross Domestic Product (GDP) expanded at a 4% annual rate in the second quarter, the Commerce Department said. That was up from a previous estimate of 3.4%, largely because exports and business investment during the period were stronger than previously thought. The GDP revised number was in line with Wall Street forecasts and far outstripped the first quarter's anemic 0.6% rate of expansion.
US consumer confidence dives
Consumer confidence in the US fell more sharply in August than in any month since the aftermath of Hurricane Katrina two years ago, according to the Conference Board. The GfK index of German consumer confidence also dropped, for the first time in six months. House prices in America fell by 3.2% in the year to the second quarter, according to the S&P/Case-Shiller national home-price index. It was the largest decrease in the period covered by the index, which runs back to 1987. On a month-by-month basis, in June metropolitan areas in California and the south-west continued to see some of the steepest declines in property prices. The housing market in the Pacific north-west, however, remained buoyant.
Home Depot sells unit at steep discount
Home Depot Inc. said it had closed the sale of HD Supply to three private-equity firms for about US$8.5bn, nearly US$2bn below the original offer for the unit. In June, Home Depot announced that it had agreed to sell its supply business to Bain Capital, Carlyle Group and Clayton Dubilier & Rice for US$10.3bn. Under the revised terms announced earlier this week, Atlanta-based Home Depot will pay US$325mn for a 12.5% equity interest in HD Supply and guarantee a US$1bn senior secured loan of HD Supply. The sale was one of the first big buyouts to be renegotiated because of the recent tightening of credit and problems in the housing market. Because the deal relies heavily on debt, investors and bankers have been watching closely for signs of how new stringent standards on credit could affect other large buyouts, collectively worth nearly US $400bn, that are pending.
Taiwan's Acer to buy Gateway for US $710mn
Taiwan PC maker Acer Inc., the world's fourth-largest computer supplier, said it would acquire Gateway Inc., the fourth-largest PC company in the US, for US$710mn. Acer will pay US$1.90 a share for Irvine, California-based Gateway. The price represents a 57% premium over Gateway's closing price of US$1.21 on Aug. 24. The deal has been unanimously approved by both Boards of Directors and should create pretax synergies of at least US$150mn. Separately, Gateway announced it intends to exercise its right of first refusal to acquire all of the shares of PB Holding, the parent company of European PC vendor Packard Bell BV. Gateway is also currently in discussions with a third party over the potential sale of its US-based professional business.
Buy Jet Airways at Rs808 with SL of Rs794 and Target of Rs840, 845
Buy Colgate at Rs387 with SL of Rs380 and Target of Rs405, 410
Buy Punj Lloyd at Rs280 with SL of Rs274 and Target of Rs295, 300
Buy TCS at Rs1064 with Sl of Rs1046 and Target of Rs1105, 1110
Buy AB Nuvo at Rs1390 with SL of Rs1360 and Target of Rs1450, 1460
It was a pull-back week for the Indian equity market. The bulls took the charge and the benchmarks Sensex and Nifty gained 6.5 per cent each to end the week at 15,318 and 4,464.
“We see fresh positions building next week. The market will consolidate with a positive bias,” said Lalit Thakkar, chairman & managing director, Angel Stock Broking. However, though fears of an early election here have subsided, the US sub-prime issue refuses to lie low.
Later on Friday, global markets will take cues from US Federal Reserve Chairman Ben Bernanke’s speech on housing and monetary policy.
“His statement will not be negative to the markets. They have given a commitment to bailout the industry out of sub prime woes,” Thakkar said. He said if the Fed reduces lending rate there will be a reaction globally and domestic market may face a knee jerk reaction.
He advises traders to take trading calls but entry levels should be carefully selected. “One can pick Maruti Udyog, ICICI Bank and Reliance Energy on declines,” he added.
The charts too look bullish for the next week. “We expect the Sensex and Nifty to touch 15,500-15,600 and 4530-4550 levels, respectively. There may be some profit booking after that,” said Sandeep Waghle, technical analyst, Angel Stock Broking.
He suggests traders be cautious and wait for declines before taking positions. The stocks that look bullish on charts are Ranbaxy, ICICI Bank, Bank of India and BHEL.
“There is still some upside left in auto stocks like Maruti Udyog and Mahindra & Mahindra, despite the run-up this week,” he said.
The market extended its longest winning streak for the sixth consecutive session on firm Asian indices, and the strong buying support from investors kept the sentiment bullish for the better part of the day. After registering over 950 points growth from last five sessions, the Sensex opened flat but swiftly moved past 15,300 mark in early trades to touch the intra-day high of 15,351. The market largely remained unchanged above 15,300 despite good GDP numbers and slide in inflation. However, buoyancy in heavyweight, metal, oil and auto stocks kept the Sensex upbeat. The Sensex finally ended the session with a gain of 197 points at 15,318, while the Nifty added 52 points to close at 4,464.
The breadth of the market was positive. Of the 2,773 stocks traded on the BSE, 1,640 stocks advanced, 1,060 stocks declined and 73 stocks ended unchanged. Among the sectoral indices the BSE Metal index jumped 2.38% at 11,566 followed by the BSE Oil & Gas index (up 2.30% at 8,160), the BSE Auto index (up 2.12% at 4,878), the BSE PSU index (up 2.11% at 7,095) and the BSE HC index (up 2.05% at 3,573).
Most of the heavyweights ended at higher levels. Among the blue chips, M&M shot up by 5.02% at Rs709, Tata Steel soared 4.92% at Rs690, NTPC surged 4.27% at Rs173, Maruti Udyog advanced by 4.13% at Rs868, Ranbaxy added 3.53% at Rs391, HLL moved up 3.09% at Rs209, Tata Motors scaled up 2.93% at Rs702 and Reliance Industries was up 2.73% at Rs1,960. Among the laggards, HDFC Bank at Rs1,171, Bajaj Auto at Rs2,345, HDFC at Rs1,976, Hindalco at Rs158, Grasim at Rs2,936 and Infosys at Rs1,855 closed marginally lower.
Metal stocks were in the limelight and closed with strong gains. Bhushan Steel jumped 15.12% at Rs760, Welspun Gujarat soared 5.50% at Rs247, Jindal Stainless surged 4.41% at Rs165, JSW Steel added 3.94% at Rs642, Hindustan Zinc gained 3% at Rs721 and Jindal Steel advanced by 2.99% at Rs3,941.
Over 3.03 crore Nagarjuna Fertilisers shares changed hands on the BSE followed by IKF Technologies (2.23 crore shares), Ispat Industries (1.65 crore shares), IFCI (1.52 crore shares) and Tata Teleservices (1.32 crore shares).
Reliance Industries clocked a turnover of Rs232 crore on the BSE followed by Tata Steel (Rs128 crore), Nagarjuna Fertilisers (Rs117 crore), SBI (Rs112 crore) and Purvankara Projects (Rs111 crore).
Strong US economic data, hopes that US Federal Reserve will cut the key interest rate and FII and mutual fund buying triggered a solid rebound on the domestic bourses last week. BSE Sensex rallied on all the 5 trading sessions this week.
BSE Sensex rose 893.73 points or 6.2% to 15,318.60 in the week ended 31 August 2007. S&P CNX Nifty rose 273.85 points or 6.53% to 4464 in the week.
Major sectoral indices such as BSE IT index (up 4.02% or 177.18 points to 4585.66), Capital Goods index (up 6.36% or 802.51 poits to 13,424.74), BSE Auto index (up 6.76% or 308.79 points to 4,878.05), BSE Midcap (up 417.97 points or 6.75% to 6608.42), BSE small cap (up 6.99% or 525.59 points to 8060.52), surged.
The Sensex surged 417.51 points or 2.89% at 14,842.38 on Monday, 27 August 2007. The momentum was derived from the rally on Wall Street on Friday, 24 August 2007, triggered by surprisingly strong data on US home sales and durable goods. Also short covering ahead of the expiry of derivatives contracts for August 2007 series aided the market's rise.
The BSE Sensex gained 76.81 points or 0.52% at 14,919.19 on Tuesday, 28 August 2007. The market settled with decent gains as buying emerged for index pivotals. IT pivotals led the rally along with index heavyweight Reliance Industries (RIL). Yet, weak global markets capped upside. On the flip side, value buying coupled with short covering provided support at lower level.
The BSE Sensex advanced 73.85 points or 0.50% at 14,993.04 on Wednesday, 29 August 2007. The market staged comeback from day’s low touched in early trade following drop in US stocks overnight driven by credit concerns. The market rebounded on value buying coupled with short covering in derivatives market.
The BSE Sensex rose 128.70 points or 0.86% at 15,121.74 on Thursday, 30 August 2007. The market settled with gains for the fourth straight session on continued buying demand for index pivotals. It saw volatile swings in fag session of day, after staying firm throughout the day.
The BSE Sensex surged 196.86 points or 1.3% to 15,318.60 on Friday, 31 August 2007. The market rallied for the fifth straight session, as investors flocked to index pivotals. Data showing robust GDP growth in the April-June 2007 quarter, declining inflation, easing of political worries and firm Asian & European markets boosted sentiment. All the sectoral indices on BSE posted gains.
State Bank of India (SBI) rose 9.09% to Rs 1599.50 in the week. It has started the consolidation process with its associate banks by deciding to merge its wholly-owned subsidiary State Bank of Saurashtra (SBS) with itself. SBS is the smallest of the seven associates banks. The boards of both SBI and SBS have given approval to the merger proposal on 25 August 2007.
India's largest thermal power generator by revenue NTPC was up 5.8% to Rs 173.70 in the week on reports the government plans to sell 4.75% holding in the firm through follow-on public issue. The proposed sale is aimed at increasing the free float of NTPC's shares in the market and help improve the company's valuation.
India's top truck maker, Tata Motors was up 6.72% to Rs 701.85 in the week after chairman Ratan Tata confirmed on Friday, 24 August 2007 that Tata Group is interested in acquiring Jaguar and Land Rover from their parent, Ford.
India's largest private sector steel manufacturer Tata Steel gained 18.43% to Rs 689.70 in the week on reports it is targeting to more than double production by 2015. Tata Steel recorded a consolidated net turnover of Rs 31,155 crore for Q1 June 2007, an increase of 442% over the same period last year, on the back of Corus acquisition.
Take Solutions debuted at Rs 876 on 27 August 2007, a premium of 20% over the IPO price of Rs 730. It settled at Rs 926.50 on the BSE, a premium of 26.91% over the IPO price of Rs 730
K P R Mill debuted at Rs 201.20, a discount of 10.57% over the IPO price of Rs 225 on 28 August 2007. It settled at Rs 173.50 on the BSE, a discount of 22.89% over IPO price of Rs 225.
Puravankara Projects debuted at Rs 399, a discount of 0.25% over the IPO price of Rs 400 on 30 August 2007. It ended at Rs 361.75 at 10:00 IST on BSE, a discount of 9.56% over the IPO price of Rs 400.
The Confederation of Indian Industry (CII) on 27 August 2007 appealed to Uttar Pradesh (UP) goverment to reconsider the decision to close the Reliance Fresh stores in the state. CII fears that it will be detrimental to the pace of inclusive growth of the country.
BSE decided to shift 197 stocks back to normal rolling settlement from trade-to-trade segment, effective from Friday, 31 August 2007. The stocks transferred back to normal rolling settlement from trade-to-trade segment include Adhunik Metaliks, Advani Hotels & Resorts, Andrew Yule & Company, Autolite (India), Bank of Rajasthan, Cable Corporation of India, Cinevistaas, FCI OEC Connectors, among others. A total of 276 scrips will remain in trade-to-trade segment on BSE, from 31 August 2007.
The Reserve Bank of India (RBI) posted a discussion paper on its web site on Monday (27 August 2007) to review aspects of bank and financial holding company structures and how suitable they are for India. The intermediary holding company, being a non-banking finance company, is not fully regulated by RBI. Therefore, RBI said, a proper legal framework needs to be created before such structures are floated to ensure that no unregulated entities are present within the structure.
Bombay Stock Exchange (BSE) acquired 5% stake in Calcutta Stock Exchange (CSE) on 29 August 2007 for Rs 60 crore as part of the corporatisation of the regional exchange. BSE bought stake at Rs 2000 per share. CSE has been valued at Rs 1200 crore based on the BSE purchase value.
The Indian government has decided to form a panel to study the Indo-US nuke deal, taking into account objections from communist parties. The announcement came after a meeting between senior government leaders and their communist allies, on Thursday 30 August 2007. The Communist Party of India (CPI) had demanded that the goverment must form a mechanism to address their concerns pertaining to the deal
India's gross domestic product (GDP) rose 9.3% in the quarter ended June 2007 (Q1 of FY 2008) as against 9.6% in Q1 of FY 2007.
Inflation dipped 3.94% in the week ending 18 August 2007 as against 4.10% in the week ending 11 August 2007.
The government on Thursday, 30 August 2007 approved an initial public offering of 10% of new equity in Oil India (OIL) and the preferential allotment of 10% of the exploration firm's current equity to three state-run refiners. The cabinet also approved the issue of 1% of shares to employees.
Global markets, FII inflow and developments on political front will dictate trend on the domestic bourses in the coming days.
Developments on the political fronts will be keenly watched as analysts feel that Congress, through the truce reached on Indo-US nuclear deal with Left leaders, may be just buying time. The government on Thursday, 30 August 2007, put on hold the operationalisation of the nuclear deal pending the findings of a committee constituted to go into the objections raised by the Left parties.
The committee would look into certain aspects of the agreement, the implications of Hyde Act on the 123 agreement and self-reliance in the nuclear sector, the implications of the nuclear agreement on foreign policy and security cooperation. The decision to set up a committee comes ahead of the debate on the nuclear issue in Parliament expected some time next week.
The Left Front's opposition to the nuclear deal with US had stoked concerns over the past few days that if the Communist allies of the ruling coalition government at the Centre decide to pull their support, the government will be reduced to a minority, triggering fresh elections.
Early next week, Asian markets react to comments from Fed Chairman Ben Bernanke on Friday, 31 August 2007. Bernanke speaks on housing and monetary policy. His comments will hold key coming at a time when global markets are hoping of cut in key interest rate in US Federal Reserve’s 18 September 2007 meeting. US markets will be closed on Monday, 3 September 2007, for the Labor Day holiday.
Asian markets have staged a solid rebound on expectations of a Fed cut after the Fed slashed a key bank lending rate on 17 August 2007 and as central banks around the world injected cash into banking systems to tackle a global credit squeeze triggered by the crisis in the US subprime mortgage market.
FIIs bought shares in 5 out 8 trading sessions from 20 August 2007 to 29 August 2007. They were net buyers of shares worth Rs 1535.10 crore in those 8 trading sessions, when the Indian market had bounced back from a steep fall.
Mutual funds, which are sitting on cash partly due to collections from new fund offers of past few months, deployed some of the cash into the market. Mutual funds were net buyers of shares to the tune of Rs 2012.50 crore in 9 trading sessions from 20 August 2007 to 30 August 2007.
A market-wide rollover of 82% of futures positions was witnessed from August 2007 derivatives contracts to September 2007 derivatives contracts. A 68% rollover was witnessed in Nifty futures. August 2007 F&O contracts expired on Thursday, 30 August 2007.
The market rallied for the fifth straight session, as investors flocked to index pivotals. Data showing robust GDP growth in the April-June 2007 quarter, declining inflation, easing of political worries and firm Asian & European markets boosted sentiment. All the sectoral indices on BSE posted gains.
The BSE 30-share Sensex 196.86 points or 1.30% at 15,318.60. It opened higher at 15,131.36 and advanced further to hit a high of 15,350.91 at 12:04 IST.
The BSE Sensex has surged 1155 points, or 8.15%, in five trading sessions, from 14,163.98 on 23 August 2007 to 15,318.60 on 31 August 2007
The S&P CNX Nifty gained 51.70 points or 1.17% at 4,464. The Nifty September 2007 futures settled at 4,420.70, a sharp discount of 43.30 points as compared to spot closing
The market breadth was strong on BSE, with 1,653 shares advancing as compared to 1,049 that declined, while 73 remained unchanged.
The BSE Mid-Cap Index rose 1.90% to 6,608.42, outperforming the broad market. The BSE Small-Cap Index gained 1.29% to 8,060.52.
The total turnover on BSE amounted to Rs 5,038 crore as compared to Rs 5,668 crore on Thursday, 30 August 2007
The NSE’s F&O turnover was Rs 45,012.59 crore as compared to Rs 71282.94 crore on Thursday, 30 August 2007.
India's wholesale price index rose 3.94% in the 12 months to 18 August 2007, lower than the previous week's 4.10% due to a decline in some manufactured product prices, government data showed. It is the first time when annual inflation has fallen below 4% since the end of April 2006. The annual inflation rate was 5.12% in the corresponding week of the previous year.
India's economy in the April-June 2007 quarter grew at 9.3% from a year earlier, led by robust manufacturing and services. Manufacturing grew an annual 11.9% in the April-June 2007 quarter, lower than the 12.4% in the previous quarter. Services grew at an annual pace of 10.6%, while farming expanded by 3.8%.
The economic growth of 9.4% in the fiscal year that ended March 2007 was its fastest rate in 18 years. The central bank has set a target of 8.5% growth this fiscal.
The GDP data was released by the government at about 11:00 IST today, 31 August 2007.
Meanwhile, the UPA and the Left on Thursday, 30 August 2007 agreed on a compromise formula and also agreed on the formation of a committee to look at Left objections to the 123 agreement. The committee will look into certain aspects of the bilateral agreement including the implication of the Hyde Act on the 123 agreement, self-reliance in the nuclear sector and the implication of nuclear agreement on foreign policy and security cooperation.
All the sectoral indices on BSE posted gains. The BSE Auto Index (up 2.12% at 4,878.05), BSE Health Care Index (up 2.05% at 3,572.82), BSE Bankex (up 1.38% at 7,858.79), BSE Metal Index (up 2.38% at 11,565.81), BSE Realty index (up 1.76% to 7,241.65), BSE Oil and Gas Index (up 2.30% at 8,160.13) and BSE PSU index (up 2.11% to 7,095.44) outperformed the Sensex.
However, BSE Capital Goods Index (up 0.89% at 13,424.74), BSE FMCG Index (up 1.26% at 1,973.93), BSE IT Index (up 0.73% at 4,585.66), BSE Consumer Durables index (up 0.64% to 4,299.00) and BSE TecK index (up 0.94% to 3,626.58) were underperformers.
From the 30-member Sensex pack, 24 advanced while the rest declined.
Tata Steel, the world's sixth largest steel manufacturer soared 4.51% to Rs 687 on 18.92 lakh shares. The stock had spurted on Wednesday, 29 August 2007, after it recorded a surge in net profit in Q1 June 2007 over Q1 June 2006 based on consolidated financial performance taking into Corus' results. The results were unveiled during trading hours on 29 August 2007.
Auto stocks gained on momentum buying in the wake of possible merger & acquisition (M&A) activity. Also receding fears of hike in petrol prices triggered further buying.
Mahindra & Mahindra, the country’s top tractor maker by sales, rallied 4.50% to Rs 705.55, off its day’s high of Rs 722.15. In the past seven trading sessions till 30 August 2007, the stock had soared 10.30% to Rs 675.15, riding on reports that it is conducting due diligence on Jaguar and Land Rover, put up for sale by Ford. Other potential bidders include private equity groups TPG Capital, Cerberus Capital Management, Ripplewood Holdings, One Equity Partners and Tata Motors.
Tata Motors (up 2.80% to Rs 701) and Maruti Udyog (up 4.05% to Rs 867.50) were the other gainers from the auto pack.
However India’s second largest bike maker, Bajaj Auto lost 0.74% to Rs 2347, off sharply from its day’s high of Rs 2400.
NTPC, the country’s largest power generation company, surged 4.06% to Rs 172.95. The stock rose after both NTPC and Reliance Industries (RIL), involved in a legal battle in the Bombay High Court over supply of natural gas, yesterday, 30 August 2007, sought an early hearing and a final decision on the petition filed by NTPC.
NTPC had earlier argued that RIL agreed to supply gas to it from its new gas finds in Krishna Godavari basin, and the agreement was finalised. However, RIL is disputing the claim, saying that agreement was not yet final and was subject to negotiations on some points.
India’s largest private sector entity in terms of market capitalisation and oil refiner Reliance Industries galloped to an all-time high of Rs 1969.90 displacing its previous all-time high of Rs 1948 struck on 26 July 2007. It rose 2.50% to Rs 1955 on 11.88 lakh shares. RIL has gained 12.20% from the recent low of Rs 1742.60 on 23 August 2007.
India’s largest bank in terms of net profit, State Bank of India was up 1.56% to Rs 1596.90 after three block deals totaling 2.45 lakh shares were struck at an average price of Rs 1886.75 on the BSE. At the strike price of Rs 1886.75, the aggregate value of all deals work out to Rs 46.29 crore.
India’s third largest IT services provider Wipro rose 1.21% to Rs 482.45 on reports it plans to buy US analytics services provider marketRx, whose valuation is pegged at close to $160 million.
India’s second largest software services exporter Infosys Technologies is also in the race to acquire marketRx. It’s shares were, up 0.09% to Rs 1860.
Hindalco Industries, the country’s biggest aluminium producer slipped 0.93% to Rs 157 on 12.63 lakh shares. It was the top loser from Sensex pack.
HDFC Bank (down 0.77% to Rs 1173) and HDFC (down 0.69% to Rs 1972.30) were the losers from the Sensex pack
Sugar shares, which had surged in the previous two sessions on reports that a group of ministers (GoM) had recommended mandatory blending of 10% ethanol with petrol by October 2008 to deal with the massive oversupply of sugar, declined on profit booking.
Dwarikesh Sugar (down 4% to Rs 54), Sakthi Sugar (down 5.76% to Rs 74.50), Triveni Sugar & Industries (down 3.20% to Rs 79.25), Balrampur Chini Mills (down 3.66% to Rs 59.15), Shree Renuka Sugars (down 2.20% to Rs 526.20), Dhampur Sugar Mills (down 8.35% to Rs 50.50) and Bajaj Hindustan (down 2.2% to Rs 134.45) slipped.
Hindustan Zinc was up 3.14% to Rs 722 on reports that Sterlite Industries is planning to buy out the government’s 29.54% holding in the company. After the buyout of government holdings, Sterlite’s stake will go up to 94.47%, which is much beyond the minimum threshold level of 90% needed for de-listing a company.
GMR Infrastructure rose 0.17% to Rs 806 after fixing 8 October 2007 as record date for the purpose of split of equity shares from Rs 10 each into 5 equity shares of Re 2 each.
Nicholas Piramal India soared 6.47% to Rs 266.60 after its board approved the spinning off its novel drug discovery research operations into a separate company as part of restructuring its research activities. Nicholas Piramal shareholders will get one share in the new company for every 10 held.
Essar Oil rose 1.2% to Rs 52.10 on its plans to raise up to $750 million by way of issue of convertible bonds, Global Depositary Receipts, American Depositary Receipts and other instruments overseas.
GE Capital Transportation Financial Services rose 5.87% to Rs 100 after it said its board will meet on 7 September 2007 to consider rights issue to meet the capital to risk weighted assets of 10%, as prescribed by the Reserve Bank of India.
Paramount Communications surged 5.57% to Rs 28.45 on reports that it plans to buy UK-based AEI Cables, an unit of TT Electronics, for about Rs 260 crore. AEI Cables is a provider of cabling solutions to the industries like construction, defence, industrial, fire protection, mining, oil and gas, power and rail.
IT People (India) plunged 10% to Rs 31 after it withdrew its follow-on public offer (FPO) due to poor subscription. The FPO, subscribed a mere 0.30 times till 30 August 2007, was scheduled to close on 31 August 2007.
TVS Motors galloped 7.80% to Rs 65.75. It has reportedly entered into the executive segment of motorcycles with a brand new product. It has also forayed into the three-wheeler market and is pioneering the development of hybrid two-wheelers and a bike that will run on CNG.
United Phosphorus was up 2.89% to Rs 329.20, after a block deal of 1.30 lakh shares was struck on the counter at Rs 320 per share on the BSE by 10:00 IST.
Ahluwalia Contracts (India) advanced 5.61% to Rs 671 after it fixed 17 September 2007 as the record date for the purpose of splitting of equity shares of Rs 10 per share of the company into 5 shares of Rs 2 each.
Arvind Mills rose 3.56% to Rs 48 on reports it is planning to undertake a major restructuring exercise. The group will merge its strategic business units (SBUs) into two main divisions: apparels and textiles.
Stocks which will be included in derivatives segment were in demand. 3i Infotech (up 7.82% to Rs 148.30),Aptech (up 4.10% to Rs 299.95), Bhushan Steel (up 16% to Rs 766), Biocon (up 5% to Rs 455), CMC (up 6.88% to Rs 1046), Havell’s India (up 10.38% to Rs 510), Lakshmi Machine Works (up 5.05% to Rs 2890), NIIT Technologies (up 9.41% to Rs 308.80), Nucleus Software (up 3.33% to Rs 347.45), Sasken Communications (up 6.51% to Rs 342), Tech Mahindra (up 7.80% to Rs 1292.25), Tulip IT Services (up 6.52% to Rs 832), Yes Bank (up 10.58% to Rs 185.50) and Welspun Gujarat Stahl Rhoren (up 5.12% to Rs 246.65), surged. NSE said after trading hours on Thursday, 30 August 2007, it will include 14 additional stocks to futures & options to be effective from 6 September 2007.
All the European markets, which opened after the Indian markets, were trading higher. Key benchmark indices in United Kingdom (up 0.52% to 6,244.38), Germany (up 0.38% to 7,548.33), and France (up 0.72% to 5,632.79), gained.
All the Asian markets settled higher today, 31 August 2007. Japan's Nikkei (up 2.57% at 16,569.09), Taiwan's Taiwan Weighted (up 2.41% at 8,982.16), Hong Kong's Hang Seng (up 2.13% at 23,984.14), Shanghai Composite (up 0.99% to 5,218.82), Singapore's Straits Times (up 2.16% at 3,392.91), and South Korea's Seoul Composite (up 1.71% at 1,873.24), all edged higher.
US stocks fell yesterday, 30 August 2007, on mounting concerns that credit market upheaval will erode profits and hold back consumer spending. The Dow Jones industrial average lost 50.56 points, or 0.38%, to 13,238.73. The Standard & Poor's 500 Index was down 6.12 points, or 0.42%, to 1,457.64. The Nasdaq Composite Index was up 2.14 points, or 0.08%, to 2,565.30.
As per reports, the marketwide rollover of positions from August 2007 series to September 2007 series stood at 82.3%, while Nifty rollover was 70%. The high open interest positions indicates a bullish undertone. Liquidation of outstanding positions would have signalled a dim outlook on the future course of the market. The August 2007 futures & options (F&O) contracts expired on Thursday, 30 August 2007.
Crude oil prices steadied on Friday, 31 August 2007, as concerns over low oil stocks in the United States were compounded by a possible tropical storm forming in the Atlantic. US crude rose 24 cents to $73.60 a barrel while London Brent was up 21 cents at $72.11 a barrel.
3I INFOTECH LTD.
BHUSHAN STEEL & STRIPS LT
HAVELLS INDIA LIMITED
LAKSHMI MACHINES LTD
NIIT TECHNOLOGIES LTD.
NUCLEUS SOFTWARE EXPORTS
SASKEN COMMU TECHNO LTD
TECH MAHINDRA LIMITED
TULIP IT SERVICES LTD
WELSPUN GUJ ST. RO. LTD.
YES BANK LIMITED
The market is expected to stay subdued on political concerns. The BSE 30-share Sensex rose 128.70 points or 0.86% at 15,121.74, on Thursday, 30 August 2007. The S&P CNX Nifty rose 53 points or 1.22% at 4,412.30, on Thursday, 30 August 2007.
August 2007 futures & options (F&O) contracts expired today. As per reports, the marketwide rollover of positions from August 2007 series to September 2007 series stood at 82.3%, while Nifty rollover was 70%
The Left Front's opposition to the nuclear deal with US had stoked concerns over the past few days that if the Communist allies of the ruling coalition government at the Centre decide to pull their support, the government will be reduced to a minority, triggering fresh elections.
Wholesale price index (WPI) data for the week ending 18 August 2007 is due today, 31 August 2007. Annual inflation was up 4.10% in the week ending 11 August 2007. The rise was due to high prices of fruits, vegetables and pulses.
Also data on gross domestic product (GDP) growth for the April-June 2007 (Q1 of FY 2008) quarter is expected today, 31 August 2007. GDP expanded 9.1% in the January-March 2007 quarter (Q4 of FY 2007) compared with the corresponding period last year. Manufacturing and services sectors contributed to the healthy growth in this quarter.
Japan's Nikkei (up 1.12% at 16,335.23), Taiwan's Taiwan Weighted (up 1.01% at 8,859.57), Hong Kong's Hang Seng (up 0.29% at 23,553.70), Singapore's Straits Times (up 1.30% at 3,364.33), and South Korea's Seoul Composite (up 0.70% at 1,854.59).
US stocks fell yesterday, 30 August 2007, on mounting concerns that credit market upheaval will erode profits and hold back consumer spending. The Dow Jones industrial average lost 50.56 points, or 0.38%, at 13,238.73. The Standard & Poor's 500 Index was down 6.12 points, or 0.42%, at 1,457.64. The Nasdaq Composite Index was up 2.14 points, or 0.08%, at 2,565.30.
As per provisional data, foreign institutional investors (FIIs) sold shares worth a net Rs 563.66 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 352.96 crore on Thursday, 30 August 2007.
Crude oil prices steadied on Friday, 31 August 2007, as concerns over low oil stocks in the United States were compounded by a possible tropical storm forming in the Atlantic. US crude rose 24 cents to $73.60 a barrel while London Brent was up 21 cents at $72.11 a barrel.
The BSE Sensex has now surged 957 points in four trading sessions, from its close of 14,163.98 on 23 August 2007.
Financial sector offsets good momentum in Technology stocks
After a full day of choppy trading, US market closed mixed today. Technology sector, after remaining in the green for most part of the day, gave up most of its gain at the day’s close. Still, Nasdaq was the only index which managed to end in the green today.
The Dow Jones industrial Average was down nearly 51 points, to 13,239. The Nasdaq Composite Index, finished up 2 points at 2,565. S&P 500 was down 6 points to 1,458.
Twenty-four out of thirty Dow stocks closed in the red today. Wal-Mart led the team of Dow laggards. Home-Depot was the main Dow winner today. Wal-Mart shares dropped more than 2% today after Merrill Lynch downgraded the stock to sell.
Financial stocks came under tremendous pressure after Lehman Brothers lowered their forecasts for the second half of this year and 2008 for Bear Stearns, Goldman Sachs, Merrill Lynch and Morgan Stanley.
Among expected economic data, the Commerce Department said second-quarter gross domestic product rose 4% - its fastest pace in more than a year but the gain was slightly lower than many anticipated. Also, the Labor Department said U.S. jobless claims rose last week to the highest level since April.
What will Ben Bernanke speak tomorrow?
Technology, was the day's only sector in positive territory. That was mainly because tech is thought by many to be the most immune among the 10 economic sectors to the lingering credit concerns. Dell was among the sector's best performers ahead of its earnings report after the bell.
Among Indian ADRs, other than VSNL and Patni Computers, all the stocks ended in red. VSNL and Patni shares rose by 4.5% each. HDFC Bank and ICICI Bank registered loss of 1.8% and 2.7% respectively.
Crude-oil futures closed slightly lower today as traders locked in some of the previous session's gains. But a slowdown in imports from Mexico following Hurricane Dean and seasonally thin gasoline supplies checked losses. October crude futures on the New York Mercantile Exchange closed with a 15 cent loss at $73.36 a barrel.
More than 1.2 billion shares exchanged hands on the New York Stock Exchange, with decliners outpacing gainers by 19 to 13. On the Nasdaq, 1.8 billion shares were traded, with decliners outpacing gainers 16 to 12.
For tomorrow, traders’ attention will be focused on Ben Bernanke's speech at an economic symposium. Several economic reports are also scheduled to be released tomorrow. The Personal Income & Outlay survey and the University of Michigan Consumer Sentiment survey are the major ones. They should offer insight into consumer health and spending as well as household financial conditions and attitudes toward the economy.