Thursday, March 06, 2008
Buy Core projects & Technologies Ltd @196.95 for a target of 400+ in 12 months and 500+ levels in 18-24months. (Core projects & Technologies Ltd is an emerging player in IT education space. Its tie up with IL&FS for contracts under the Sarva Shiksha Abhiyan(SSA) and NASA's Centre of High Learning(CHL) for delivering education content internationally, would take the company to new highs post FY09. Further company has successfully acquired seven companies in the past two financial years. This has helped it triple revenues in FY07 with the acquired companies contributing 65% to the revenue and profits. Also it has posted better than expected Q3FY08 numbers).
By Uttam Saraf
Disclaimer: DP doesn't vouch for these recommendations and these are by a independent analyst
Mixed economic data and bond insurer’s news try to impart positive momentum
After five days of drop, US Market managed to close higher today, Wednesday, 05 March, 2008. A batch of favorable earnings reports and continued news that a bailout for the beleaguered bond insurer was imminent kept the momentum ongoing in the market. Despite that, indices slipped in the red during intra day trading and once again thorugh a late day recovery, market managed to finish with modest gains. Eight out of ten sectors ended in the green today, financials and healthcare being the only exceptions.
In other parts of the market, commodities hit a new high today as the dollar slipped to new lower levels against the euro. Crude oil closed up more than $5 up. Gold and silver prices too ended substantially higher.
At the end, The Dow Jones industrial Average ended the day with a gain of 41 points at 12,255. The Nasdaq Composite Index, finished higher by 12 points at 2,273. S&P 500 finished higher by 7 points at 1,333. Eighteen out of thirty Dow stocks ended in the green today led Chevron.
In the morning a batch of economic reports came out. The February Institute of Supply Management (ISM) Services reading came in at 49.3, which is above the 47.3 consensus. The reading is also above the prior month's reading of 44.6.
But there was some negative economic data too. The ADP Employment Report for February showed nonfarm private jobs fell by 23,000, as against a consensus that called for 18,000 jobs to be added. The results were the worst since 2003. Also, January factory orders were -2.5%, which is even with the -2.5% market was anticipating. December posted a revised 2% increase.
Much of the financial sector was today dictated by anticipation around a word that Ambac would likely be announcing a bailout after meeting with a consortium of banks. Trading of Ambac shares infact halted. But to everyone’s surprise the company just announced that it would be issuing common stock and equity units to raise capital. The stock re-opened sharply lower.
Crude prices shot up by more than $5/barrel today after Energy Department reported an unexpected drop in crude inventories last week. Prices were also fuelled by an all time low dollar against the euro and thirteen member Organization of Petroleum Exporting Countries (OPEC) cartel deciding to keep production quotas unchanged in today’s meeting. Crude-oil futures for light sweet crude for April delivery today closed at $104.52/barrel (higher by $5/barrel or 5%) on the New York Mercantile Exchange. Prices are 74% higher than a year ago. It touched a high of $104.95 today.
Volume on the New York Stock Exchange topped 1.6 billion, and advancing stocks outran those declining about 3 to 2. On the Nasdaq, 1 billion shares were exchanged, and advancing issues edged ahead of those declining, also by 3 to 3.
Tomorrow there are economic reports on the dock. February chain store sales data are scheduled for release tomorrow followed by weekly jobless claims before the market's opening. January's Pending Home Sales Index is in the midmorning hours.
Gold and silver prices rise sharply as crude prices soar by more than $5
Precious metal prices rose to all time highs, Wednesday, 5 March, 2008, after dollar fell to an all time low against the euro and crude prices surpassed $104/barrel. Prices rose as crude prices rallied increasing the commodities’ appeal against a hedge against inflation. Silver prices also gained substantially today.
Comex Gold for April delivery rose $22.2 (2.3%) to close at $988.5 an ounce on the New York Mercantile Exchange. Prices had touched a record $995.2/ounce during intra day trading today. This year, gold prices have gained 19% till date. In January, prices gained 11%, the highest monthly gain since April 2006. For February, it gained 6%. Last week, gold gained $27 (2.8%).
Comex Silver futures for May delivery rose by 94.5 cents (4.8%) to $20.785 an ounce. Silver has gained 33% in 2008. The metal had climbed 16% in FY 2007. The metal also has gained for seven straight years. In January this year itself, prices climbed 14%. In February, it gained another 15%.
The dollar has been dampened since last year, more since start of FY 2008 after interest rates were cut twice in January, 2008. Gold, as a dollar-denominated commodity, suffers from dollar strength. On the contrary, gold prices rise with falling dollar as inflationary concerns boosts the metal's appeal as an inflation hedge.
Since the past few days, the bullion metal prices have been on a roll after the Federal Reserve Chairman, Ben Bernanke hinted that Fed in all possibility will go for another soft landing in its next meeting thereby reducing interest rates by another 50 bps to avoid the US economy in all ways from slipping into a recession. With this, the dollar had slumped sharply against its rival currencies.
The Fed has cut the federal funds rate to 3% this year from 5.25% in mid-September, 2007. January 2008 itself saw two rate cuts in a gap of ten days.
In the energy market today, crude-oil futures rose by almost $5 and closed above $104/barrel after OPEC members decided to keep production unchanged at its meeting at Vienna today. Prices also rose after Energy Department reported a drop in crude inventories for last week.
In the currency market today, the dollar tumbled to a new record low against the euro as surging oil prices gave the European unit a lift. But the dollar held the line on maintaining most of its earlier gains against Japan's yen, which it marked after a gauge of U.S. non-manufacturing activity came in not as bad as expected. The dollar index, which tracks the performance of the greenback against other major currencies, dropped 0.3% to 73.49.
Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.
Gold witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. The Fed reduced federal funds rate three times in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
At the MCX, gold prices for April delivery closed higher by Rs 331 (2.7%) at Rs 12,768 per 10 grams. Prices rose to a high of Rs 12,871 per 10 grams and fell to a low of Rs 12,383 per 10 grams during the day’s trading.
At the MCX, silver prices for March delivery closed Rs 775 (3.1%) lower at Rs 24,114/Kg. Prices opened at Rs 24,650/kg and went to a high of Rs 26,382/Kg during the day’s trading.
Price settles above $104 as last week’s inventories drop unexpectedly
Crude prices shot up by more than $5/barrel today after Energy Department reported an unexpected drop in crude inventories last week. Prices were also fuelled by an all time low dollar against the euro and thirteen member The Organization of Petroleum Exporting OPEC cartel deciding to keep production quotas unchanged in today’s meeting.
Crude-oil futures for light sweet crude for April delivery today closed at $104.52/barrel (higher by $5/barrel or 5%) on the New York Mercantile Exchange. Prices are 74% higher than a year ago. It touched a high of $104.95 today.
In the currency market today, the dollar index, which tracks the performance of the greenback against other major currencies, dropped 0.3% to 73.49.
EIA reported today that crude inventories fell for the first time in eight weeks, dropping 3.1 million barrels to stand at 305.4 million barrels for the week ended 29 February. Inventories had gained about 25 million barrels this year. U.S. refineries operated at 85.9% of their operable capacity last week, up from the previous week's 84.7%.
Also, The Organization of Petroleum Exporting Countries agreed to hold production steady at a meeting in Vienna.
The Energy Department's EIA also reported U.S. gasoline supplies rose by 1.7 million barrels to 234.3 million barrels in the week ended 29 February, the highest since January 1994. Distillate supplies, which include heating oil and diesel, fell by 2.7 million barrels.
Brent crude oil for April settlement today rose $4.12 (4.2%) to $101.64 on the London-based ICE Futures Europe exchange. The London benchmark rose 54% in FY 2007, the most since 1999 when prices more than doubled.
Heating oil closes at highest ever front month contract
Natural gas surged as crude oil climbed to a record after OPEC reached a production agreement and U.S. inventories unexpectedly fell. Gas for April delivery rose 38.8 cents (4.2%) to settle at $9.741 per million British thermal units. Gas has risen 30% this year.
Against this backdrop, April reformulated gasoline gained 11.3 cents to $2.6421 a gallon and April heating oil rallied 15.13 cents to $2.9431 a gallon, the highest closing level a front-month contract has ever seen.
In a monthly report released earlier this month, EIA said the world oil market is poised to ease over the next two years with production increases offsetting moderate growth in oil demand.
Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.
At the MCX, crude oil for March delivery closed at Rs 4,167/barrel, higher by Rs 137(3.4%) against previous day’s close. Natural gas for March delivery closed at Rs 391.9/mmtbu, higher by Rs 11.5/mmtbu (3%).
Foreign institutional investors (FIIs) sold shares worth net Rs 472.80 crore on Tuesday, 4 March 2008, compared to their selling of Rs 683.50 crore on Monday, 3 March 2008.
FII outflow of Rs 472.80 crore on 4 March 2008 was a result of gross purchases Rs 3551.10 crore and gross sales Rs 4023.90 crore. The 30-share BSE Sensex lost 337.99 points or 2.03% at 16,339.89 on that day.
FII outflow in calendar year 2008 totaled Rs 12,702.90 crore (till 4 March 2008).
There are a total of 1,303 FIIs registered with the Securities & Exchange Board of India (Sebi).
1. Warren Buffett
2. Carlos Slim Helu
3. William Gates III
4. Lakshmi Mittal
5. Mukesh Ambani
6. Anil Ambani
7. Ingvar Kamprad
8. KP Singh
9. Oleg Deripaska
10. Karl Albrecht
11. Li Ka-shing
12. Sheldon Adelson
13. Bernard Arnault
14. Lawrence Ellison
15. Roman Abramovich
16. Theo Albrecht
17. Liliane Bettencourt
18. Alexei Mordashov
19. Prince Alwaleed
20. Mikhail Fridman