Bajaj Auto, Sasken, SKumars Nationwide, TCS
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Nifty October 2007 futures were at 5,704.90, at a premium of 34.50 points as compared to spot closing of 5,670.40.
The NSE futures & options (F&O) segment turnover was Rs 76,830.02 crore, which was lower than Rs 90,419.66 crore on Friday, 12 October 2007.
Reliance Industries October 2007 futures were at premium, at 2,690, compared to the spot closing of Rs 2,666.35.
Tata Steel October 2007 futures were at premium, at 916, compared to the spot closing of Rs 912.
Punj Lloyd October 2007 futures were at discount, at 390.55, compared to the spot closing of Rs 393.
In the cash market, the S&P CNX Nifty surged 242.15 points or 4.46% at 5,670.40. Nifty recorded an all-time high of 5,682.65 today.
Crude-oil future prices for sweet light crude for November delivery which had ended at $81.22/bbl last week (05 October) finished $2.47 (3%) higher this week (12 October) at $83.69/bbl. Prices continued to stay above the $80/bbl mark throughout the whole week. Prices increased after Energy Department report showed unexpected drawdown in oil inventories.
As per this week’s inventory report by the Energy Dept, stockpiles fell 1.67 million barrels in the week ended 5 October. At 320.1 million barrels, U.S. crude-oil inventories are still above the upper end of the average range for this time of year. Refinery activity rose to 87.8% from 87.5% the previous week.
The data also showed motor gasoline inventories rose by 1.7 million barrels last week. Distillate fuel supplies (which include heating oil) fell by a larger-than-expected 600,000 barrels.
OPEC has said previously that a falling dollar justified higher prices because oil- producing countries sell crude oil in dollars and often buy goods in euros.
OPEC has planned to boost daily oil production by 500,000 barrels. OPEC's production target is 27.2 million barrels a day, beginning 1 Nov. OPEC, has decided to raise their daily output by 500,000 barrels per day, starting 1 November.
US Market posted decent gains for the week ended Friday, 12th October, 2007. But it was mainly Friday’s, 12 October’s, 2007 gains that helped the market close higher for the week. The most important event for the week was the release of the minutes of Federal Reserve’s 18 September meeting details on Tuesday, 9 October. Earnings season started with Alcoa declaring the first earnings report of the season.
Among major stories of the week, Google crossed the $600 mark for the first time and touched an closed at all time high of $ 637 on Friday. Boeing announced that it is delaying the delivery of its Dreamliner models and said that the delay might be beyond six months. Boeing shares did take a toll on the Dow Jones Industrial Average for a couple of days during the week.
Nevertheless, The Dow Jones Industrial Average gained 27.07 points for the week. Tech - heavy Nasdaq gained 25.37 points and S&P 500 gained 4.21 point.
The gain for the week mainly came due to Friday’s (12 October) gains. The indices rallied that day mainly based on the news that Oracle made a $6.7 billion all-cash offer to acquire BEA Systems. With this news, the tech sector resumed its leadership position and carried the broader market higher along with the materials and energy sectors. Dow, Nasdaq and S&P 500 gained 78, 34 and 8 points respectively.
The minutes of the 18 September meeting, where the Fed cut the interest rate from 6.25% to 5.75%, stated that in "their discussion of the economic situation and outlook, meeting participants focused on the potential for recent credit market developments to restrain aggregate demand in coming quarters." The minutes also added that “participants regarded the outlook for economic activity as characterized by particularly high uncertainty, with the risks skewed to the downside."
The middle of the week witnessed some sell-off. Dow plunged more than 100 points on Thursday, 11 October. The sell-off was reportedly prompted by some comments from the European Central Bank.
On the earnings side, Alcoa got third quarter reports off to a poor start, as profits were below expectations. General Electric reported in line with expectations. Costco and PepsiCo beat Wall Street forecasts. Wal-Mart and McDonald's provided upbeat outlooks.
Among other economic news hitting the market during the week, new claims for unemployment for the week ended 6 October dipped to 308,000 from 320,000 the prior week. Layoffs remain at low levels. The August trade balance dropped to $57.6 billion from $59.0 billion in July.
U.S. retailers reported poorer-than expected September same-store sales. Target, JC Penny cut their forecasts. September retail sales rose a slightly stronger than expected 0.6%. September core PPI rose a modest 0.1%, bringing the year-over-year increase down to just 2%.
For the week, Nasdaq outperformed the other indices. DJIx was up by 0.19% and S&P 500 was up by 0.3%. Nasdaq was up by 0.91%. Apple, RIMM and Google supported Nasdaq. Crude oil prices closed the week at $83.69 a barrel after reaching a record high above $84. The yield on the 10-year note rose to 4.68% from 4.64% the previous week.
For the year, Dow is up by 13.1%, Nasdaq is up by 16.2% and S&P 500 is up by 10.1%.
The third quarter earnings season has kicked off. The major focus of the market in the coming weeks will remain on the fourth quarter earnings guidance.
Nifty (5428) Sup 5329 Res 5466
Buy Hero Honda (756) SL 750 Target 769, 772
Buy Bharat Forge (290) SL 285 Target 299, 301
Buy ACC (1251) SL 1238
Target 1278, 1283
Sell NDTV (365) SL 370
Target 357, 355
Sell Cummins (428) SL 433 Target 420, 418
After Friday’s fall, the bulls may have rested over the weekend hoping it was just an aberration. Bears too got an opportunity and are unlikely to easily give in to the bulls in the coming week. For the day, we see a positive opening on the back of encouraging signals from the US market as well as rest of the world. But the current choppiness is here to stay. Reliance may have not announced a split/bonus as many market participants would have wanted to. But, the results day may spring some surprise. So watch that counter closely.
What remains to be seen now is whether the bulls will resume their shopping spree this week as the pace of the result announcements accelerates. As has been the case over the course of the past two months or so, much will hinge on the liquidity factor. As long as the FIIs are pouring money into Indian stocks, the bulls will remain in complete command, barring an odd bad day in office like it was on Friday.
The rally will get renewed thrust with the Congress leadership now backing off from the potential confrontation with the Left parties over the Indo-US nuke deal, which now seems headed for the cold storage. On the flip side, the communists and other UPA allies could make life even more difficult for the Congress till the general election in 2009. So, tough reforms in key areas like insurance, banking, pension funds, retail, FDI, etc. will take a backseat. Still, the Indian economy is expected to clock 8-9% growth over the next few years, that's more than good news for the bulls.
What perhaps could play a spoilsport is the RBI's mid-term review on Oct. 30 and a pause by the Federal Reserve at its meeting the next day. With the rupee showing no signs of holding back versus the beleaguered dollar and the Finance Minister apparently hinting at the Government's discomfort over the relentless appreciation in the local currency and the "copious" foreign inflows, the central bank might just go for a CRR hike. So, those betting on lower rates may well have to wait for a while.
The strong IIP numbers for August will make the case for another liquidity tightening measure even stronger. If this indeed comes true, the market naturally will react, and we may see some correction/consolidation at that time. But, we will have to carefully interpret the tenor of the RBI's statement to determine the mood on the Mint Street. In the meantime though, the earnings and global trends will drive the market.
Results Today: Axis Bank, BOC India, IFCI, Indian Bank, Jaiprakash Associates, KLG Systel, Orbit Corp, Petronet LNG, Reliance Industrial Infrastructure, Sasken, TCS, UCO Bank, Vakrangee Software and Welspun Gujarat.
Shares of Consolidated Construction Consortium Ltd. will get listed on the bourses today. CCCL has announced an issue price of Rs510 per share after a fairly successful IPO. The stock could appreciate by at least Rs200 today.
Himatsingka Seide has announced the opening of the second international store for "Atmosphere", in Singapore, on October 12. The first overseas store of "Atmosphere" opened in Dubai in May. Sical Logistics' shareholders have approved the proposal for increasing the investment ceiling for FIIs, from 24% to 49%.
Advanta India has have signed independent MOUs with TEAM and CALSA for the development of its Nutrisun healthy sunflower oil.
US technology shares jumped on Friday on fresh M&A news in the sector, while broader gains were limited. Oracle's bid for BEA Systems, McDonald's improved earnings forecast and GE's strong quarterly results highlighted the session's positive corporate news.
Wall Street also welcomed a strong report on retail sales and a mild reading on inflation. Those reports may have also dented hopes that the Federal Reserve will cut interest rates at its next policy meeting that ends Oct. 31, as was evident by rising Treasury bond yields.
However, concern that the world's largest economy might be at risk of accelerating too much were tempered by weaker-than-expected reports on business inventories and consumer sentiment.
The Dow Jones Industrial Average and the S&P 500 index both gained around 0.5%. Both major gauges hit all-time intra-day highs on Thursday. The Nasdaq Composite added 1.2%. The tech-heavy index hit a fresh 6-1/2 year high on Wednesday.
For the week, the Dow and S&P 500 ended barely higher, while the Nasdaq gained nearly 1%.
Market breadth was positive. On the New York Stock Exchange, winners topped losers 9 to 7 on volume of 1.10 billion shares. On the Nasdaq, advancers beat decliners 3 to 2 as 2.01 billion shares changed hands.
Crude oil prices settled at a record high Friday on news of dwindling stockpiles, potential trouble with Turkey and projections for a colder winter. US light crude oil for November closed at a record high of $83.69 per barrel. Oil briefly hit a record trading high of $84.05 during the session before pulling back.
Treasury prices slumped, raising the yield on the benchmark 10-year note to 4.68% from 4.63% late on Wednesday. In currency trading, the dollar gained versus the yen and euro. COMEX gold for December delivery fell $2.90 to $753.80 an ounce.
European shares reversed earlier losses to close slightly higher on Friday. The pan-European Dow Jones Stoxx 600 index inched 0.1% higher to 390.63. The UK's FTSE 100 closed 0.1% higher at 6,730.70 and the German DAX 30 added 0.1% as well at 8,041.26. The French CAC-40 closed down 0.3% at 5,843.95.
In the emerging markets, the Bovespa in Brazil fell by 1.2% to 62,456 while the IPC index in Mexico rose 1.5% to 32,473. The RTS index in Russia was down 0.5% at 2163 and the ISE National-30 index in Turkey gained 1.4% at 74,222.
Asian markets were trading mixed this morning. Stock benchmarks in Hong Kong, Shanghai set intra-day records while Japanese and other regional indexes retrenched from morning highs as investors booked profits.
Market to be choppy
After opening with a positive bias, markets witnessed selling pressure after comments from the Finance Minister; P. Chidambaram hampered the sentiments of the trades on the bourses. A four day wining streak was snapped as all round selling pressure in the scrips across the sectors dragged the key indices from the days high.
Finance Minister was quoted as saying that, expect key Sensex to ‘Cool Down’ after a while. Also, according to Chidambaram, Rupee is not in a comfort zone.
Finally, BSE 30-share benchmark Sensex ended 395 points lower or lost 2.1% to close at 18,419. NSE Nifty lost 96 points or 1.75% to close at 5,428.
The IPO of apparel retailer was subscribed 45.21 times and the company has set an issue price of Rs415 per share. It could open at a premium of over Rs100 at least.
Punj Lloyd slipped 1% to Rs353. The company announced that they would construct pipeline for
ONGC surged by over 2.5% to Rs1093 after the company announced that they are seeking stake in
Exide Industries dropped 2.5% to Rs67. The company announced its Q2 result with net profit at Rs622.4mn (up 42.2%) and net sales at Rs6.68bn (up 48.1%). The scrip touched an intra-day high of Rs74 and a low of Rs66 and recorded volumes of over 27,00,000 shares on NSE.
HDFC Bank dropped by 2% to Rs1432. The company announced its Q2 result with net profit at Rs3.65bn (up 39.9%). The scrip touched an intra-day high of Rs1461 and a low of Rs1420 and recorded volumes of over 4,00,000 shares on NSE.
Rolta surged by over 7.5% to Rs624 after the board of Directors of the company announced that they would meet on October 22 to mull Bonus issue. The scrip touched an intra-day high of Rs651 and a low of Rs591 and recorded volumes of over 23,00,000 shares on NSE.
Unity Infrastructure advanced 1.8% to Rs689 after the company announced that they have secured order worth Rs1.48bn. The scrip touched an intra-day high of Rs743 and a low of Rs646 and recorded volumes of over 2,00,000 shares on NSE.
Gitanjali Gems edged lower by 0.5% to Rs359. Reports stated that the company plans to buy another leading jewellery retailer having over 100 outlets across the country for around US $100mn. The scrip touched an intra-day high of Rs380 and a low of Rs350 and recorded volumes of over 3,00,000 shares on NSE.
Rajesh Exports slipped 1.8% to Rs91. The company announced that they have secured orders worth Rs7.43bn from Gold Star Jewellery. The scrip touched an intra-day high of Rs935 and a low of Rs880 and recorded volumes of over 2,00,000 shares on NSE.
IT stocks continued its downtrend as rupee further strengthens against the USD. Infosys was down by 2.4% to Rs1929, TCS slipped by 1% to Rs1063, Satyam Computer dropped 2% to Rs439 and Wipro edged lower by 0.3% to Rs293.
Stocks in News:
Reliance Industries to invest US$9bn in the next four years at its petrochemical and refining complex in Jamnagar, Gujarat
United Phosphorus to team up with a Japanese PE fund to bid for Arysta LifeScience Corp.
Cadila Pharma to buy an European specialist in neurology and opthamology medicines for US$80mn
Idea, HFCL and ByCell could be among the first to get spectrum as DoT continues with existing ‘first come-first served’ basis for allocation of radio frequency
Cairn India and ONGC are likely to submit a proposal for joint development of Ambe and North Tapti satellite fields in western offshore by end of this fiscal
L&T is planning to enter the nuclear power sector; may manufacture boilers and turbines of nuclear reactors
Reliance Industries plans to double its hydrocarbon reserves to over 10bn barrels of oil equivalents from current 4.4bn barrels
Reliance Industries has submitted a bid for Tuntex, an integrated producer of polyester with PTA production in Thailand.
DLF plans to invest Rs160bn over the next four years to develop about 20 large shopping malls across the country
Ashok Leyland has decided to set up a plant in AP with an initial capacity to make 0.1mn LCVs p.a.
JSW will invest Rs170bn to increase production capacity to 10mn tons by 2010
Bombay Dyeing has entered in a partnership with a Dubai-based luxury lifestyle retailer Rivoli Group
M&M plans to spend about US$1bn in the next four years to double automobile production capacity
Dishman Pharma has earmarked US$50mn to acquire US and European companies operating in the CRAMS space
BPCL ties up with Godrej Aadhaar to foray into the agri-retail segment
Bilcare to invest Rs1bn in clinical research training
The Index of Industrial Production rose 10.7% in August vs. 10.28% a year ago, reversing a fourth month trend
Inflation declines to 3.26% for week ended September 29th
Production from 40 wells with 80mn cubic feet of gas in K-G basin to begin from June 2008, according to DGH
The Government may allow 100% FDI in oil and marketing companies
Average shortage of power more than halved to 4.8% in September from 10.4% at start of current fiscal.
IFC to increase its exposure to infrastructure projects in India to US$500mn in the current year (July-June) from US$300mn in the previous one.
FIIs were net buyers of Rs3.15bn (provisional) in the cash segment on Friday while the local institutions pulled out Rs8.84bn. In the F&O segment, foreign funds were net buyers at Rs13.72bn.
FIIs were net buyers of Rs9.91bn in the cash segment on Thursday. With this, their net investment in the month has crossed US$4.3bn and year-to-date the same is US$16.54bn.
Major Bulk Deals:Reliance Capital has bought Emami while Sundaram MF has sold it; UBS has picked up Genus Power; Macquarie Bank has purchased JK Tyre but HDFC MF has sold the same.
RIIL, Evinix, Deep Industries, Tourism Finance, Usher Agro, IID Forgings, Jai Corp and Assam Company
Malu Paper, Goldstone Tele and Rei Agro
|Support levels for Nifty are 5350 and 5250. Extent of correction depends on FII fund flow.|
|Three very bullish sessions were sandwiched in-between two corrections. The Nifty hit highs of 5549 before easing off to 5428 points for a week-on-week gain of 4.67 per cent.|
|The Defty was up 4.89 per cent as the rupee closed at 39.33 versus USD. The Sensex blinked only after it had hit a high of 18845 and closed up 3.63 per cent at 18419 points. The Junior was up 2.6 per cent at just above 10020.|
|While volumes were excellent, breadth was less bullish. The BSE 500 was up only 3.03 per cent and smaller stocks less fancied. The Advances to Declines ratio was marginally positive for the week and very negative on Friday. The reason was clear.|
|The FIIs have poured money into the top 200-odd stocks. Indian funds have been net sellers for 15 sessions. Operator interest is concentrated on big stocks and retail investors have stayed out or booked profits.|
|Outlook: The correction could continue. Key support levels are Nifty 5350 (Sensex 18250) and 5250 (Sensex 17950). The market looked distinctly nervous by Friday evening. The depth of correction will, to a great extent, depend on FII attitude.|
|Rationale: In the past 7 weeks since August 24, the Nifty has climbed from 4100 levels without significant correction. That intermediate trend could last another 4-5 weeks in theory but every momentum indicator is overbought and breadth was negative on Friday. Also, volumes rose while prices fell, indicating that supply increased as traders fought to book profits.|
|Counter-view: The rally has come on the back of FII purchases driven by rupee strength coupled to an US Fed rate cut. Through October, Indian funds have been net sellers. If the FIIs stay positive, they have deep enough pockets to force the markets up. If they change attitude, there could be a significant correction.|
|Bulls & Bears: Breadth was exceedingly negative through Friday’s trading. The worst affected were finance and banking stocks with bellwethers SBI and Infosys taking a hammering and the other stocks in the two sectors following in their wake.|
|Among financial stocks, only Bank of India held out while Rolta was among the few gainers in the IT sector. Another erstwhile favourite, telecom major RComm also faced heavy selling.|
|There were isolated winners everywhere but the advance:decline ratio was 1:4 or worse across most market segments. Gail and ONGC were among the best performers. Powergrid continued to register gains through its second week of listing. Hind Unilever, Hindalco, IPCL, Mahindra and Mahindra and Reliance Energy were among the few big stocks that showed strength.|
Current Price: 1929
Target Price: 2000
|Since it declared Q2 results, Infy has been sold down from a high of 2140 to a low of 1903 in three sessions. It has excellent support at current levels and may be due for a technical recovery till the 2000 level. Keep a stop at 1900 and go long.|
|MAHINDRA & MAHINDRA|
Current Price: 828
Target Price: 900
|M&M appears to have managed a high volume, upwards breakout despite the poor overall market trend. The projected target with this formation would be about 900. Keep a stop at 815 and go long.|
Current Price: 1094
Target Price: 1150
|The stock seems to have performed a classic uptrending breakout on high volumes. Depending on your chart interpretation, it has a target of between 1150 and 1225. Keep a stop at 1070 and go long. Book partial profits above 1130.|
Current Price: 718
Target Price: 700
|The stock saw a burst of selling on Friday after testing highs of around 750. It has good support between 700-710 but it is likely to test those supports again before it makes another upmove. Keep a stop at 730 and go short. If the stock closes below 700, repeat the short position with a stop at 710.|
Current Price: 1862
Target Price: 1800
|The stock has seen selling that pushed it back to support at 1850 before a small recovery. If that support is broken, the next reliable support is at about 1800. There is clear resistance at 1880. Keep a stop at 1880 and go short. Increase the short position if the stock drops below 1850.|