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Wednesday, August 08, 2007

Hopefully, a fine day!


The art of progress is to preserve order amid change and to preserve change amid order.

After a volatile start to the week, expect some order in the day as the Federal Reserve doesn't appear alarmed by what's going on in the American credit markets. The Fed still sees inflation as the big danger and hence has left its key interest rates static for the ninth consecutive meeting. Though Wall Street initially faltered on the Fed announcement, by the end of the day it bounced back to end slightly higher. Equity markets in Europe and Latin America too gained and Asian markets have rallied this morning. Expect a spurt at opening bell. But, given the recent turbulence across the globe and the reversal in FII inflows, don't forget, it pays to be cautious.

Great Offshore will be in the limelight, as a financial daily has reported that the Vijay Seth company is close to acquiring a Scandinavian offshore firm for around $500mn. IT companies could do well following the tightening of ECB norms, which will result in lesser dollar inflows. The Rupee has already lost some ground vs the US Dollar early this morning.

US stocks rose on the Federal Reserve's bullish economic outlook, helping the Standard & Poor's 500 Index post its best two-day gain since 2003. AIG and Citigroup rallied after the Fed said losses in credit markets won't hamper the economy's moderate expansion.

The S&P 500 Index rose 9.04 points, or 0.6%, to 1476.71. The Dow Jones Industrial Average increased 35.52 points, or 0.3%, to 13,504.3. The Nasdaq Composite Index climbed 14.27 points, or 0.6%, to 2561.6.

As expected, the Fed held interest rates steady at 5.25% for the ninth straight time at its policy meeting. The central bank acknowledged it was concerned about growing credit troubles, but stressed that inflation remains its primary concern.

US stocks initially declined before moving to the day's highs as investors realised that policymakers are not unduly concerned about the recent turmoil in the credit markets. At the same time, the statement suggested that the Fed would not cut interest rates any time soon.

Treasurys eased following the Fed decision, lifting the yield on the benchmark 10-year note to 4.78% from 4.74% late on Monday. The dollar gained against the euro and eased versus the yen. COMEX gold for December fell $1 to $682.30 an ounce.

After the closing bell, Cisco posted earnings and revenues that topped Wall Street estimate. Shares of the computer networking company climbed nearly 6% in after-hours trading.

Oil prices moved higher after tumbling more than $3 per barrel in Monday trade. US crude for September delivery rose 36 cents to $72.42 a barrel on the New York Mercantile Exchange. The front-month contract was quoting 19 cents down at $72.23 a barrel in extended trading in Asia.

European shares gained. The pan-European Dow Jones Stoxx 600 index rose 1.2% to 373.16. The UK's FTSE 100 closed up 1.9% at 6,308.80, while the German DAX 30 jumped 0.9% to 7,513.66 and the French CAC-40 advanced 1.6% to 5,620.40.

Latin American markets finished higher. Brazil's Bovespa rose 669 points, or 1.3%, for a close at 53,790.47. Mexico's IPC closed up 555 points, or 1.9%, to 30, 276.55. Chile's benchmark stock index, the IPSA, ended up 2 points at 3,253.35.

Most Asian markets are up this morning. The Nikkei was up nearly 100 points at 17,021 while the Hang Seng in Hong Kong surged 263 points at 22,171. The Kospi in Seoul advanced 34 points to 1893 while the Straits Times in Singapore added 74 points to 3376.

Markets ended with modest gains wiping almost all its gains towards the fag end as traders turned cautious and preferred to book profits. FMCG, Banking, Auto and Metal stocks led the down fall as the benchmark Sensex ended 200points and NSE Nifty closed 57 points off its days high.

On the other hand, shares of Oil & Gas were in demand as Oil Minister Murli Deora said he would meet his finance ministry counterpart P. Chidambaram soon to consider raising retail prices of gasoline and diesel. Finally, BSE 30-share Sensex gained 29 points to close at 14932. NSE-50 added 17 points to close at 4356.

RIL, Bharti, HDFC, Infosys and Reliance Energy were the leading movers. However, ICICI Bank, ITC, Tata Steel, Bajaj Auto and BHEL were the lagging movers in Sensex.

Reliance Industries gained by 1.7% to Rs1810. The Oil Minister Murli Deora said that a panel will be set up to examine dispute about Reliance's proposed pricing of natural gas. The scrip touched an intra-day high of Rs1821 and a low of Rs1792 and recorded volumes of over 30,00,000 shares on NSE.

SBI ended on a flat note at Rs1682. Reports stated that India's largest lender may split its stock as it sells shares to raise funds. The scrip touched an intra-day high of Rs1725 and a low of Rs1672 and recorded volumes of over 17,00,000 shares on NSE.

Hindalco Industries pared its gains it ended 0.8% lower to Rs156. The company announced that its Novelis Inc. unit won a $1bn contract to supply aluminum Rexam Plc, the world's largest maker of beverage cans. The scrip touched an intra-day high of Rs166 and a low of Rs156 and recorded volumes of over 15,00,000 shares on NSE.

Tata Steel fell down by 1.5% to Rs639. The company announced that it would issue additional $150mn of Securities. The scrip touched an intra-day high of Rs660 and a low of Rs637 and recorded volumes of over 16,00,000 shares on NSE.

Uttam Galva edged lower by 0.5%to Rs31.60. The steelmaker announced that it cut its galvanized steel price by as much Rs750 per ton to Rs49,200 a ton. The scrip touched an intra-day high of Rs32.40 and a low of Rs31 and recorded volumes of over 2,00,000 shares on NSE.

Stride Arcolab marginally slipped by 0.3%to Rs274. The company yesterday announced that it has purchased Diaspa’s Fermentation facility in Italy. The scrip touched an intra-day high of Rs282 and a low of Rs272 and recorded volumes of over 1,00,000 shares on NSE.

FMCG stocks were ended on the receiving end on back of profit booking. ITC fell over 3% to Rs166, Colgate was down by 1.8% to Rs400 and Dabur declined 1.5% to Rs101.

Pharma stocks were a mixed bag. Glenmark gained by 2.6% to Rs666 and Dr Reddy’s Lab gained by 1.4% to Rs635. However, Cadila was down by 1.6% to Rs355, and Ranbaxy edged lower 0.3% to Rs369.

Oil refinery stocks were in momentum as Oil Minister Murli Deora said he would meet his finance ministry counterpart P. Chidambaram soon to consider raising retail prices of gasoline and diesel. HPCL surged by over 2.5% to Rs257, BPCL was up by 1.8%t o Rs316 and IOC added 2% to Rs407.

Capital Good stocks continued its upward trend. Punj Lloyd surged by over 4% to Rs289 on reports that the company would raise $200mn through QIP. The company also yesterday secured order worth Rs5.90bn from Bharat Oman Refinery, ABB was up by 0.5% to Rs1110, BEML gained 1.2% to Rs1212 and Siemens added 0.3% to Rs1235.

IT stocks managed to end with gain despite rise in the Indian rupee against the USD. Infosys was up by 0.7% to Rs1878, TCS gained by 1% to Rs1109, Satyam Computer edged higher by 0.5% to Rs463. Moser Baer, HCL Infosys and Polaris were the major gainer among the Mid-Cap stocks.

Realty stocks also pared its gains on back of profit booking. Sobha edged lower 0.3% to Rs834, Akruti was down 0.5% to Rs516 and Parsvnath lost 0.7% to Rs330. The company won nod for Indore IT SEZ. However, DLF advanced by 1.4% to Rs588

Fund Activity:

FIIs were net sellers of Rs3.26bn (provisional) in the cash segment on Tuesday. At the same time, local institutions were net buyers of Rs1.16bn. In the F&O segment, FIIs were net sellers at Rs323.4mn.

On Monday, FIIs offloaded Rs11.67bn from the cash segment. Mutual Funds were net buyers of Rs483mn.

Insider Trades:

Hanung Toys and Textiles Limited: JM Financial Mutual Fund through its various schemes has purchased from open market 200000 equity shares of the company on 2nd August, 2007.

Lower Circuit:

Tanla, IOL Broadband, Murli Industries.

Upper Circuit:

ETC Network, Ganesh Forgings, RMCL, Silverline Technologies, Swan Mills, Jai Corp, Prakash Industries, Bank of Rajasthan, Diamond cables, BF Utilities.

Major News & Announcements:

Reliance Energy officially gets Sasan power plant

Bharti Airtel unit to start DTH operations by March 2008

Zensar Tech gets $7mn insurance deal

Tata Steel issues additional $150mn securities overseas

PSL wins order of Rs1.65bn from IOC

Nitin Fire to supply CNG gas cylinders to Iran

Punj Lloyd to raise $200mn – Reports.