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Monday, November 17, 2008

JPMorgan cuts India growth forecast, sees rate cuts

JPMorgan has cut its forecast for India's economic growth in 2008/09 and 2009/10, it said in a note on Monday, adding that it expects aggressive rate cuts by the Reserve Bank to support the growth momentum.

The Indian economy may grow 6.7 percent in the year ending March 2009, JPMorgan said, down from its earlier forecast of 7 percent. The economy may grow 6.2 percent in 2009/10, down from its previous estimate of 6.8 percent, the bank said.

"The moderation in exports, small business output, and real estate related activity could crimp urban consumer spending as employment and household income growth slackens," JPMorgan said in the note.

India's economy grew at an annual rate of 9 percent or more in the past three years, second only to China among the major economies. Last month, the Reserve Bank cut its estimate for FY09 growth to 7.5-8.0 percent, but analysts expect it to be lower.

Other global financial groups like Citigroup, Goldman Sachs, Morgan Stanley and Nomura have also lowered their estimates for India's GDP growth over the past one month.

"As global and domestic financial conditions are likely to ease in the rest of this fiscal year and over the course of next year, some recovery is on the cards... but it is unlikely to completely reverse the trend," JPMorgan said.

"Consequently, investment growth - the major driver of activity growth in India over the past five years - will likely moderate." The Reserve Bank could lower rates again if liquidity conditions do not ease sufficiently or signs of further economic slowdown emerge, JPMorgan said, adding that the drop in inflation to single-digit levels allows for easier monetary policy.

It expects the Reserve Bank to cut its repo rate, at which it lends funds to banks, by another 50 basis points and along with an identical reduction in reserve requirement by its January policy review.

"Alternatively, the RBI could cut the repo rate by 100 basis points - in which case the reverse repo would also be reduced 50 basis points in order to keep the gap between the repo and the reverse repo rates at 100 basis points," it said.

Over the past month, the Reserve Bank has reduced the repo rate by 150 basis points to 7.5 percent, the cash reserve ratio by 350 basis points to 5.5 percent, and the ratio of deposits banks must invest in bonds, by 100 basis points to 24 percent.

"If needed, there is also scope to reduce the SLR (statutory liquidity ratio) further by another 150-200 basis points, at least temporarily," it said.

Citigroup downgrades India's eco growth rate

Global financial major Citigroup has lowered India's economic growth rate projection to 6.8 per cent from 7.2 percent for this fiscal due to slowdown in consumption and investment.

"Incremental data both on the domestic and global front has been worse than this juncture, (economic) data points to a marked slowdown in consumption and investment," Citi said in a report.

It has also reduced its growth projection for the fiscal year 2009-10 to 5.5 percent from the earlier 6.6 percent.

In the last one month, the RBI has infused liquidity of Rs 2,70,000 crore by cutting the Cash Reserve Ratio (the amount banks must keep with the apex lender) by 350 basis points and Statutory Liquidity Ratio by 100 basis points.

RBI has also reduced the short term lending rate (repo) by 150 basis points to 7.5 percent from 9 percent last month.

Citi expects that RBI's monetary policy to boost liquidity will continue.

"Further, to boost liquidity, one could expect the possibility of further easing of the capital account norms, NRI deposit scheme, temporary dollar liquidity support from international institutions and some fertiliser/oil bonds becoming eligible for SLR requirements," it added.

Recently, financial services giant Goldman Sachs has revised downwards India's economic growth forecast to 6.7 per cent from 7.5 percent projected earlier for this fiscal.

Prime Minister Manmohan Singh at G-20 Summit in Washington said, "India's (economic) growth rate is expected to slowdown between 7 percent and 7.5 percent in the current financial year."

The GDP for the first quarter of the current fiscal was at 7.9 percent and the figure for the second quarter is expected later this month.

BSE Bulk Deals to Watch -Nov 17 2008

Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
17/11/2008 533029 ALKALI OPG SECURITIES P LTD B 91774 159.96
17/11/2008 533029 ALKALI OPG SECURITIES P LTD S 91774 159.87
17/11/2008 508860 DIAMANT INV SUMIT KUMAR AGARWAL S 7100 79.10
17/11/2008 504000 ELPRO INTERN KEDAR RAMESH VAZE S 28125 392.80
17/11/2008 513059 G.S. AUTO RAJU GHANSHYAMDAS SHAH B 50000 26.30
17/11/2008 532855 HARYA CAPFIN SAVITAJINDAL B 27000 23.06
17/11/2008 530955 KAILASH FICO DASH PHARMACEUTICALS PVT LTD B 200000 22.40
17/11/2008 511728 KZLEASING ANJALI YOGESH PANDYA B 17419 21.00
17/11/2008 511728 KZLEASING ANJALI YOGESH PANDYA S 17327 21.11
17/11/2008 531219 POONAM PHARM SWARN GANGA TRADING PVT. LTD. B 50000 2.05
17/11/2008 506618 PUNJAB CHEM SUPERLINE TRADING COMPANY LTD B 25053 147.67
17/11/2008 506618 PUNJAB CHEM VRM SHARE BROKING PVT. LTD. S 25000 147.44
17/11/2008 530585 SWASTIK INV RAJKUMAR JAIN B 27000 19.37
17/11/2008 530585 SWASTIK INV SHASHI JAIN S 27000 19.37
17/11/2008 532765 USHER AGRO SUPER VELOURS PVT LTD S 115000 149.75
17/11/2008 514470 WINSOME TEXT PARESH SANAT RACHH B 30000 14.90

NSE Bulk Deals to Watch - Nov 17 2008

Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
17-NOV-2008,ALKALI,Alkali Metals Limited,CHOKHANI SECURITIES LTD,BUY,81082,158.35,-
17-NOV-2008,KESORAMIND,Kesoram Industries Ltd.,CENTURY TEXTILE & INDUSTRIES L,BUY,264142,124.94,-
17-NOV-2008,VARUN,Varun Industries Limited,UNITED CREDIT SECURITIES LTD,BUY,125000,28.32,-
17-NOV-2008,ALKALI,Alkali Metals Limited,CHOKHANI SECURITIES LTD,SELL,81082,158.20,-

Post Session Commentary - Nov 17 2008

The domestic market recovered smartly from the lower levels during final trading but still ended below the dotted line. The market opened on positive note but was not able to hold the momentum slipped soon after start. The benchmark indices tumbled in afternoon trade after Japan joined the list of economies in recession and world leaders failed to deliver specific measures to boost the global economy. The G-20 summit on Saturday and Sunday failed to come out with some concrete measures to steer the world out of the current slump. Further market moved deeper into red on intense selling pressure, though shown recovery during last trading hours. The BSE Sensex ended below 9,300 level and NSE Nifty closed around 2,800 mark. From the sectoral front, the Reality index underperformed the benchmark index as closed with decrease of more than 5%. Apart from that the Bank, Metal, Consumer Durables, FMCG, Auto, Capital Goods and Power index also followed the same path as witnessed most of the selling from these baskets. Midcap and Small cap stocks were also under bears'' control.

Among the Sensex pack 19 stocks ended in red territory and 10 in green and 1 remain unchanged. The market breadth was negative as 1800 stocks closed in red while 679 stocks closed in green and 60 stocks remained unchanged.

The BSE Sensex closed lower by 94.41 points at 9,291.01 and NSE Nifty ended marginally down by 10.80 points at 2,799.55. The BSE Mid Caps and Small Caps closed with losses of 82.72 points 3,133.36 and by 103.66 points at 3,661.39. The BSE Sensex touched intraday high of 9,435.89 and intraday low of 8,956.68.

The RBI on Saturday announced positive measures that include permission to housing finance firms to raise funds from overseas markets and raising the interest rate ceiling on foreign currency deposits. The bank has also given Rs 1000 crore loan to the National Housing Bank, a move that would “help the sagging real estate sector. Along with this the bank has effectively reduced the tax on lending to the real estate sector that means banks can now more freely lend funds to the sector.

Losers from the BSE Sensex pack are HDFC Bank (7.71%), Reliance Infra (6.23%), Tata Steel (4.01%), DLF Ltd (3.92), HDFC (3.84%), Satyam Computer (3.76%), Hindalco (3.36%), Tata Power (2.95%), Tata Power (9.64%), ITC Ltd (2.73%), M&M Ltd (2.63%) and ICICI Bank (2.25%).

Gainers from the BSE Sensex pack are Wipro Ltd (4.59%), ACC Ltd (4.29%), Tata Motors (2.56%), MAruti Suzuki (2.45%), Bharti Airtel (2.29%), NTPC Ltd (1.24%), Infosys Tech (1.22%), BHEL (1.03%), ONGC Ltd (0.97%) and HUL (0.11%).

The BSE Reality index dropped by (5.17%) or 104.02 points to close at 1,907.51. Losers are Sobah Dev (9.23%), Anant Raj (8.37%), Indiabull Real (7.54%), Unitech Ltd (6.56%), Ansal Infra (6.35%) and Omaxe Ltd (5.87%).

The BSE Bank index lost (3.87%) or 199.72 points to close at 4,956.04. Major losers are Kotak Bank (9.62%), Axis Bank (7.90%), HDFC Bank (7.71%), Union Bank (6.47%), Indian Overseas Bank (6.43%) and Canara Bank (5.75%).

The Consumer Durables index ended down by (3.26%) or 63.32 points at 1,877.08 as Gitanjali GE (8.92%), Rajesh Export (7.92%), Videocon Ind (3.90%), Titna Ind (3.01%) and Blue star L (0.05%) in negative territory.

The BSE Metal index ended lower by (3.08%) or 150.30 points at 4,723.10. Major losers are Jai Corp Ltd (12.42%), Jindal Saw (10.27%), JSW Steel (7.95%), NMDC Ltd (7.42%), Gujarat Nre C (7.16%) and SAIL (4.44%).

The BSE FMCG index ended lower by (1.90%) or 36.18 points to 1,870.50 as Ruchi Soya (12.04%), Nestle Ltd (5.57%), MArico Ltd (5.30%), Dabur India (3.34%), Tata Tea (2.03%) and United Brew (1.90%) ended in negative territory.

The BSE Auto index plunged (1.39%) or 33.90 points to close at 2,405.71. Losers are Amtek Auto (14.42%), Cummins Indi (6.09%), MRF Ltd (5.65%), Escorts Ltd (4.64%), Exide Indus (3.70%) and M&M Ltd (2.63%).

Post Market Commentary - Nov 17 2008

A day after the Sensex slipped over 150 points on all-round selling, the market opened on a positive note shrugging off worries about recession. However, the market was gloomy amid a range-bound trend during intra-day trades influenced by subdued international markets. The Sensex saw strong optimism vanish after adding 51 points to touch the day's high of 9,436. The market zigzagged between its positives and negatives thereafter, but eased in the afternoon on sustained selling in realty, banking and consumer durable stocks to touch the intra-day low below 9,000 at 8,957. Heavy buying in most of the index pivotal stocks helped the Sensex trim most of the losses towards the close and end the session at 9,291, down 94 points. Nifty closed with a loss of 11 points at 2,800.

However, the market breadth was heavily tilted in favour of losers as 1,796 stocks declined, 682 stocks advanced and 61 stocks remained unchanged on the BSE. Most of sectoral indices closed with losses. BSE Realty, BSE Bankex, BSE CD and BSE Metal were the major losers and slipped over 3-5% each. However, BSE Teck soared 0.49% followed by BSE IT (up 0.02%).

Among the 30 Sensex stocks, 10 ended in the green. Attracting strong buying support Wipro surged by 4.59% at Rs251.95, ACC shot up by 4.29% at Rs436.55, Tata Motors jumped by 2.56% at Rs140.45, Maruti Suzuki advanced by 2.45% at Rs549.80, Bharti Airtel scaled up by 2.29% at Rs665.05, NTPC zoomed 1.24% at Rs151.10 and Infosys Technologies added 1.22% at Rs1,232.80. Among the laggards, HDFC Bank tumbled 7.71% at Rs933.60, Reliance Infrastructure slipped 6.23% at Rs484.40, Tata Steel fell 4.01% at Rs166.30, DLF was down 3.92% at Rs231.45 and HDFC lost 3.84% at Rs1,498.30.

Over 1.96 crore GVK Power & Infrastructure shares changed hands on BSE followed by Suzlon Energy (1.47 crore shares), Unitech (1.40 crore shares), Chambal chemicals & fertilisers (0.69 crore shares) and Tata Teleservices Maharashtra Ltd (0.64 crore shares)

ICICI Bank November 2008 futures at premium

Turnover declines

Nifty November 2008 futures were at 2795.35, at a discount of 4.20 points as compared to spot closing of 2799.55. Turnover in NSE's futures & options (F&O) segment was Rs 41,086.89 crore, which was lower than Rs 41,483.17 crore on Friday, 14 November 2008.

ICICI Bank November 2008 futures were at premium at 391 compared to the spot closing of 386.45.

Reliance Industries (RIL) November 2008 futures were near spot price at 1140.95 compared to the spot closing of 1141.40.

State Bank of India (SBI) November 2008 futures were at discount at 1163.10 compared to the spot closing of 1167.90.

In the cash market, the S&P CNX Nifty lost 10.80 points or 0.38% at 2799.55.

Market extends losses for fourth straight day

Key benchmark indices extended their downward journey for the fourth straight session today, 17 November 2008 despite staging a sharp pullback in late trade. The BSE Sensex recovered over 330 points in choppy trade to regain the psychological 9,000 level.

The BSE 30-share Sensex slipped 94.91 points, or 1.01%, to 9,291.01 after swinging 479.21 points in volatile trade between the day's low of 8.956.68 and high of 9,435.89

The S&P CNX Nifty fell 10.80 points, or 0.38%, to 2,799.55. Nifty November 2008 futures were at 2795.35, at a discount of 4.20 points as compared to spot closing of 2799.55.

The market declined for a fourth day in a row today, 17 November 2008. The BSE Sensex has declined 1,245.15 points or 11.81% in the last four trading sessions from 10536.16 on 10 November 2008.

The barometer index is down 10,995.98 points or 54.2% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11,915.76 points or 56.18% below its all-time high of 21,206.77 struck on 10 January 2008.

Measures announced by the Reserve Bank of India (RBI) during the weekend to shield the Indian economy from the global economic slowdown had triggered a firm start. However weak global cues dragged it lower. European shares extended losses in choppy trade, pushed further into the red by banks and by oil shares that reversed a brief rally. Key benchmark indices in France, UK and Germany rose by between 1.74% to 2.3%. Moreover, trading in US index futures which indicated the Dow could fall 65 points at the opening bell, also played the spoilsport.

Key benchmark indices in Hong Kong, Singapore, South Koera and Taiwan were down by between 0.29% to 0.91%. Japan slid into its first recession in seven years in the third quarter as the financial crisis curbed demand for Japanese exports. Despite the weak data, the the Nikkei rose 0.71% in a choppy trade, with buying by pension funds lifting the market. But in China, the Shanghai China rose 2.22%.

Leaders of the G20 nations agreed on an action plan on Saturday, 15 November 2008, to restore global growth and prevent future financial upheaval while promising new spending plans and a set of reforms. But the plan was light on detail and there was no reference to coordinated stimulus packages by governments -- an idea promoted by Britain.

Back home the RBI on Saturday, 15 November 2008, announced measures to improve money market liquidity and help exporters. The measures include extension of a special repurchase facility to provide liquidity for mutual funds and non-banking finance companies till March 2009, increase in the limit on export credit refinance available to banks, allowing housing finance companies to raise funds through short-term overseas borrowings, reduction in provisioning on standard assets of banks to a uniform level of 0.4%, and reduction in risk weights for banks on commercial real estate and on unrated claims on corporates.

The central bank also said it would consider proposals from local firms to buy back foreign currency convertible bonds early.

BSE clocked a turnover of Rs 3213 crore today as compared to a turnover of Rs 3,685.59 crore on 14 November 2008. Turnover in NSE's futures & options (F&O) segment was Rs 41,086.89 crore, which was lower than Rs 41,483.17 crore on Friday, 14 November 2008.

The market breadth, indicating the overall health of the market, was weak. On BSE, 679 shares rose as compared with 1800 that declined. 60 shares remained unchanged. Out of 30 Sensex stocks 19 stocks settled with losses while the rest gained.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) slipped 0.51% to Rs 1,142.65, on concerns a global slowdown would hit demand for petrochemicals. The stock recovered from the session's low of Rs 1,081.10. The government on Friday, 14 November 2008, said RIL cannot sell gas to anybody at a price less than $4.20 per British Thermal Units without its approving the pricing formula.

Reliance Infrastructure (down 6.23% to Rs 484.40), Tata Power Company (down 2.95% to Rs 724.35) and Hindalco Industries (down 3.36% to Rs 54.70) were the major losers from the Sensex pack.

Auto stocks recovered on the hopes government could come up with a policy initiative for the sector hit by declining demand due to high interest rates and fuel prices. India's largest car maker by sales, Maruti Suzuki India rose 2.45% to Rs 549.80, recovering from the day's low of Rs 521. India's largest commercial vehicle maker by sales Tata Motors rose 2.56% to Rs 140.45, off the day's low of Rs 130.25. But Mahindra & Mahindra and Hero Honda Motors fell by between 1.8% to 3.57%.

Realty shares fell on concerns banks may not raise lending to realty firms despite the latest Reserve Bank of India measures to ease banks' lending to the cash-stripped sector. DLF, Unitech, Indiabulls Real Estate, Housing Development & Infrastructure, Sobha Developers, Mahindra Lifespace Developers, and Omaxe were down 3.92% to 9.23%.

The Reserve Bank of India (RBI) on Saturday (15 November 2008) announced fresh steps to free up liquidity for the troubled realty sector. The RBI reduced the risk weightage on bank exposure to the real estate sector and non-deposit taking non-banking financial institutions (NBFCs) from 150% to 100% -- it means, banks will need less capital to give such loans. Additionally, standard provisioning requirements for commercial real estate sector has been reduced to a uniform level of 0.40%.

Despite the measures, it remains to be seen whether banks will raise lending to the realty sector given the severe slowdown and increasing risk of non performing assets (NPAs).

Banking stocks declined as weak American Depository Receipts (ADRs) and fears of rising delinquencies in a weakening economy offset Reserve Bank of India's steps to augment both rupee and dollar liquidity in the banking system. India's largest private sector bank by net profit ICICI Bank fell 2.25% to Rs 387.05 as ADR lost 6.56% on Friday, 14 November 2008. The stock recovered from the day's low of Rs 360.50. India's second largest private sector bank by net profit HDFC Bank fell 7.71% as ADR slumped 6.39% on Friday. India's largest commercial bank State Bank of India (SBI) lost 0.17% to Rs 1168.10.

IT stocks were mixed amid weak ADRs and a weaker rupee. India's third largest IT exporter by sales Satyam Computer Services fell 3.76% as its American depository receipt (ADR) fell 9.68% on Friday, 14 November 2008.

India's second largest IT exporter by sales Infosys rose 1.12% to Rs 1232.80, recovering from the day's low of Rs 1,172, after chief executive S. Gopalakrishnan today, 17 November 2008, said the company is on track to add 25,000 gross staff in the current fiscal year to March 2009 despite the financial sector turmoil. Gopalakrishnan said the currency movement will have an impact on revenue in Q3 December 2007 and that the company is seeing flat billing rates.

India's fourth largest IT exporter by sales Wipro rose 4.59% to Rs 251.95 off day's low of Rs 230.55 even as ADR slipped 13.36%. India's largest IT exporter by sales Tata Consultancy Services lost 2.52%.

The rupee fell 0.7% today on heavy buying demand following worries a stock market slide would accelerate foreign fund withdrawals. A weak rupee benefits IT firms which derive a lion's share of revenue in dollars.

Cement stocks slipped as concerns about slowdown in demand in a weakening economy offset government's export incentives. Grasim Industries, Ultratech Cement, Birla Corporation, Ambuja Cements fell between 0.33% to 3.85%. India's largest cement producer by sales ACC rose 4.29% to Rs 436.55 off the day's low of Rs 400.05.

Steel stocks fell as a possible slump in demand offset the government declaring export incentives for the sector. Among the steel makers, Tata Steel, Steel Authority of India, JSW Steel, Maharastra Seamless, and Bhushan Steel fell by 1.34% to 7.95%.

According to a government notification, exporters of cement and several steel items will be entitled for tax refunds through duty entitlement pass book scheme. The government also announced that the two sectors cement and steel have been included in the Focus Market Scheme which will enable these distressed industries to boost their exports to the third world.

Shares of the housing finance firms slipped as investors fretted a weakening economy would raise defaults. Housing Development Finance Corporation (HDFC), LIC Housing Finance, GIC Housing Finance, were down 1.22% to 3.84%. While, Dewan Housing Finance Corporation rose 0.43%.

The Reserve Bank of India (RBI) on Saturday (15 November 2008) allowed housing finance companies to raise short-term foreign-currency loans. This is a temporary step only available to companies registered with the National Housing Bank. The move will provide much-needed funds for non-deposit taking housing finance companies, though details of this measure are awaited.

Airline stocks rose after state-run oil companies slashed jet fuel prices. Spicejet rose 0.7%. Kingfisher Airlines surged 12.88% on reports of holding exploratory talks with international carriers for diluting up to 25% stake. State-run oil companies on Saturday, 15 November 2008 slashed jet fuel prices by over 12% to a 14 month low, the cut being the third one for the month and fifth one since August 2008. While, Jet Airways fell 1.1%.

GVK Power & Infrastructure clocked the highest volume of 1.96 crore shares on BSE. Suzlon Energy (1.47 crore shares), Unitech (1.4 crroe shares), Chambal Fertilisers and Chemicals (69.52 lakh shares), Tata Tele Maharashtra (64.81 lakh shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 291.26 crore on BSE. ICICI Bank (Rs 180.52 crore), Reliance Capital (Rs 144.82 crore), HDFC (Rs 135.71 crore) and State Bank of India (Rs 111.76 crore) were the other turnover toppers in that order.

UTV Software Communications slipped 5.44% on projecting a loss of up to Rs 25 crore for its broadcasting vertical in the year ending March 2010.

Elecon Engineering Company rose 2.01% on news of a promoter firm acquiring shares from the open market.

Godrej Consumer Products jumped 1.21% on BSE, on share buyback plan.

Reliance Natural Resources fell 3.72% on BSE after the government said it will decide the selling price of natural gas produced from Reliance Industries' Krishna Godavari basin.

Ispat Industries slumped 4.31%on reports the company is planning for further 10% cut in production by December 2008.

Apollo Tyres gained 1.81% on reports it plans to invest Rs 3000 crore in the next five years for expansion.

Japan in recession

After Europe, it is the turn of Japan to fall in recession. The third quarter reading is lower, nudging Japan into recession for the first time in seven years. Next quarter reading of US will also show that it’s GDP has started contracting. Although we were skeptical from the beginning, markets had high hopes from G20, and the expectations are belied.

Our Volatility Index reached to an all time high level of 70.62% on Thursday indicating market players are very jittery and expecting high volatility to continue in the days to come. Index has formed a lower top and lower bottom formation, indicating continued bearish trends. Unless Sensex closed above 10570, the pattern hold true. Broader markets are not looking as weak as the benchmark indices and breadth could turn positive one of these days, even though indices are in red. The support for the sensex comes in at 9060 and for the nifty at 2700. RBI has taken slew of steps to ease the liquidity situation especially for real estate sector. We would look to cover shorts at lower levels.

Pre Session Commentary - Nov 17 2008

Today markets are likely to open positive. The Asian markets have opened mixed and the US markets closed in red on the week end. In Europe Germany has entered into recession in 12 years time and the country is likely to come out with a bail out plan for its automakers. In the G20 meet 20 nations delayed agreeing on specific measures to combat global crisis. Finance minister Mr. P. Chidambaram stated that the global crisis would impact sectors in India for a span of 6-9 months. The sentiments are weak as such investors would adopt a cautious approach.

On Friday, domestic markets opened with a huge negative gap however later it managed to recover its early losses. The other Asian markets were also trading in red on the weak global economic concerns. The positive trading of European markets had also helped back the sentiments in domestic markets. Sensex and Nifty fell by 1.58% and 1.34% respectively. CG, Auto and Metal were the worst hit as they fell by 4.22%, 4.04% and 3.34% respectively. During the trading session we expect the market to be trading volatile.

The BSE Sensex closed lower by 150.91 points at 9,385.42 and NSE Nifty ended lower by 38.10 points at 2,810.35. The BSE Mid Caps and Small Caps closed with losses of 65.19 points at 3,216.08 and by 48.33 points at 3,765.05. The BSE Sensex touched intraday high of 9,836.11 and intraday low of 9,267.49.

On Friday, US markets closed in red amidst concerns over the macro economic negative data. The advance October retail sales declined by 2.2% more than expected. This is the fourth straight fall of retail sales. Germany also entered its recession in 12 years. On the other hand, Nokia also stated that its fourth quarter industry volume would decline. Among the sectors, financial and energy stocks were hit hard. Crude oil futures for the December delivery fell by $1.44 to $55.60 a barrel on New York Mercantile Exchange. Iran, world’s second largest producer of oil has stated that it would cut the production by 1.5 million barrels a day.

The Dow Jones Industrial Average (DJIA) closed lower by 337.94 points at 8497.31 NASDAQ index lost 79.85 points at 1,516.85 and the S&P 500 (SPX) also closed lower by 38 points to close at 873.29 points.

Indian ADRs ended negative. In technology sector, Infosys fell by (5.68%) and Wipro ended low by (13.36%) followed by Satyam that ended low by (9.68%) and Patni Computers closing low by (8.21%). In banking sector ICICI Bank was low by (6.56%), while HDFC Bank fell (6.39%). In telecommunication sector, Tata Communication declined by (9.66%), while MTNL was low by (2.87%). Sterlite Industries was low by (13.11%).

Today the major stock markets in Asia opened mixed. The Shanghai Composite is trading high by 7.34 at 1,993.78. Hang Seng is high by 84.16 points at 13,626.82. Further Japan''s Nikkei is high by 98.80 points at 8,561.19. Straits Times is also trading high by 1.12 points at 1,760.26 and South Korea’s Seoul Composite is high by 9.97 points at 1,098.23.

The FIIs on Friday stood as net seller in equity and debt. The Gross equity purchased stood at Rs 1,045.00 Crore and gross debt purchased stood at Rs 3,93.90 Crore, while the gross equity sold stood at Rs 1,660.00 Crore and gross debt sold stood at Rs 1,082.30 Crore. Therefore, the net investment of equity and debt reported were (Rs 615.10) Crore and (Rs 688.40) Crore respectively.

On Friday, the partially convertible rupee ended at 49.01/03 per dollar, after touching intraday low of 49.49. On Wednesday the rupee had closed at 49.30/32. The rupee fell on outflow from stock markets.

On BSE, total number of shares traded was 28.79 Crore and total turnover stood at Rs 3,685.59 Crore. On NSE, total volume of shares traded was 62.98 Crore and total turnover was Rs 10,776.97 Crore.

On NSE Future and Options, total numbers of contracts traded in index futures were 1075675 with a total turnover of Rs 14,227.3 Crore. Along with this total number of contracts traded in stock futures were 906562 with a total turnover of Rs 9,613.92 Crore. Total numbers of contracts for index options were 1150165 and total turnover was Rs 17091.60 Crore and total numbers of contracts for stock options were 50013 and notional turnover was Rs 550.35 Crore.

Today, Nifty would have a support at 2,685 and resistance at 2,895 and BSE Sensex has support at 8,985 and resistance at 9,595.

Retailers hit Wall Street hard

Curtailment of revenue and mounting job losses take faith on market away from investors

The second week of November, 2008 witnessed extreme volatility in Wall Street and huge swings between indices became a very common thing among investors. Though there were a couple of late rallies during the week, market, nevertheless, witnessed substantial losses for the week that ended on Friday, 14 November, 2008. Dour economic reports pointing their fingers towards a weak economic condition was the main reason for buyers to stay away. Retailers continued to curtail their revenue estimates as consumers tightened purse strings amid mounting job losses.

Uncertainty about the timing of an economic recovery and cautious guidance coming from most companies also unnerved the stock market once again. The three major indices ended the week with good losses. Though the market tried to remain a bit steady in the first half of the week, the last two sessions took market to great losses.

The Dow Jones Industrial Average lost 446.5 (5%) for the week to end at 8,479.31. Tech - heavy Nasdaq lost 130.55 points (7.9%) to end at 1,516.85. S&P 500 lost 57.7 points (6.2%) to end at 873.29.

Best Buy, the leading consumer electronics retailer, and Intel, the world's largest semiconductor company, were key contributors to the concerns as both companies reduced their forecasts. Best Buy slashed its earnings guidance for the fiscal year ending in February. As for Intel, it lowered its fourth quarter revenue outlook to $9 billion, plus or minus $300 million, from a prior range of $10.1 billion. Companies like Google, AIG and Wells Fargo all had their earnings estimates cut.

Lowered earnings guidance also came from several other retailers, including Wal-Mart, Kohl's, JC Penney and Nordstrom.

The Labor Department reported during the week that weekly jobless claims moved to a seven-year high. Claims for the week ended 8 November, 2008 totaled 516,000, up 32,000 week-over-week to top the consensus estimate of 480,000. The four-week moving average is up to 491,000 from 477,750.

During the week, government officials outlined a new mortgage modification plan for loans held by GSEs Fannie Mae and Freddie Mac. The program targets the highest risk borrower who has missed three payments or more, owns and occupies the property as a primary residence and has not filed for bankruptcy. The borrower's loan payment will then be modified to be affordable, which was defined as no more than 38% of total monthly gross income.

On Friday, 14 November, stocks at Wall Street ended with substantial losses. The losses came due to a weak batch of economic data mainly on the retail front. The weak economic environment in US also led to a number of retail companies to issue a downward guidance for sales in the coming months. The sell-off had started during the start of the day but just accelerated in the final hours of trading.

The Dow Jones Industrial Average ended lower by 337 points at 8,497. The Nasdaq Composite Index, ended lower by 80 points at 1,516. S&P 500 ended lower by 38 points at 873.

October total retail sales declined 2.8% and retail sales, excluding autos, declined 2.2%. Both were worse than expected and set a very poor foundation for the PCE component of fourth quarter GDP.

Also, retailers continued to curtail their revenue estimates as consumers tightened purse strings amid mounting job losses. It was reported that Citigroup and Sun Microsystems are laying off 5,000 and 10,000 people respectively.

Investors were reminded about the global economy's tenuous standing when leading handset company Nokia stated it expects fourth quarter industry volume to decline. The firm sees softer consumer spending amid weak economic conditions, while trade partners are challenged by credit conditions.

In other economic data on Friday, October import prices were up 6.7% year-over-year, missing the consensus of an 8.2% year-over-year increase. September business inventories were down 0.2%, which is below the consensus forecast of a 0.1% decline. The prior reading was revised lower to a 0.2% increase.

For the year, Dow, Nasdaq and S&P 500 are down by 35.9%, 42.8% and 40.5% respectively.

RBI measures to improve liquidity may lift market

More measures announced by the Reserve Bank of India (RBI) to shield the Indian economy from the global economic slowdown may lift the market from a recent steep fall. But stepping up of sales by foreign funds in the last two days may weigh on the sentiments. On the flip side, gains in Asian markets may support the domestic bourses. Asian markets rose even as there was no concrete move at a meeting of the G20 countries on Friday 14 November-Saturday-15 November 2008 to avert a looming global recession.

RBI on Saturday, 15 November 2008, announced measures to improve money market liquidity and help exporters. The measures include extension of a special repurchase facility to provide liquidity for mutual funds and non-banking finance companies till March 2009, increase in the limit on export credit refinance available to banks, allowing housing finance companies to raise funds through short-term overseas borrowings, reduction in provisioning on standard assets of banks to a uniform level of 0.4%, and reduction in risk weights for banks on commercial real estate and on unrated claims on corporates.

The central bank also said it would consider proposals from local firms to buy back foreign currency convertible bonds early.

Foreign funds have stepped up selling on the bourses. As per provisional data, foreign institutional investors (FIIs) dumped stocks worth a net Rs 811.52 crore on Friday, 14 November 2008. On Wednesday, 12 November 2008, FIIs had pressed sales worth a net Rs 615.10 crore, much higher than Rs 266.50 crore on the previous trading session. The market was closed on Thursday, 13 November 2008, for a public holiday.

Political uncertainty ahead of state elections, uncertainty about a US Treasury plan to forgo buying bad mortgage-related investments to buy stakes in US lenders and caution ahead of a meeting of G20 political leaders, pulled the market sharply lower in the past three trading sessions. The BSE Sensex has declined 1150.74 points or 10.92% to 9,385.42 on Friday, 14 November 2008, from 10536.16 on 10 November 2008.

Stocks were mixed in Asia. The Nikkei average rose 1.2% in thin trade as some investors rushed in to buy following an initial sell-off after data showed Japan's economy was in recession. Key benchmark indices in Hong Kong, South Koera, Singapore, Taiwan and China were up by between 0.23% to 1.3%.

The G20 political leaders agreed Saturday, 15 November 2008, to a host of fiscal and monetary steps to rescue the global economy but it was left to individual governments to tailor their response to their particular circumstances and troubled industries.

The market may remain volatile

The market may witness cautious trend as US indices ended down on Friday and Asian indices are exhibiting mix trends in the morning trades. Investors should maintain caution as profit taking at higher levels may pull down the market. Among the local indices the Nifty could test 2750 and 2700 on the downside while on the upper side it may move up to 2850. The Sensex has a likely support at 9250 and may face resistance at 9550.

Stocks slipped on Friday, with the Dow Jones ended in a negative at 8497 declined by 338 points, the Nasdaq down by 80 points at 1517.

All the Indian ADRs fell in tune with the broader market. Wipro led the slump and tumbled 13.36% followed by VSNL (down 9.66%), Satyam (down 9.68%) and Patni Computers (down 8.21%). while Infosys, Rediff, Dr Reddy's, Tata Motors, ICICI Bank, HDFC Bank and MTNL slipped by over 2-6% each.

U.S. crude declined further on Friday with the Nymex light crude oil for December delivery down $1.20 to close at $57.04 a barrel. In the commodity space, the Comex gold for December series gained $37.50 to settle at $742.50.

Trading Calls - Nov 17 2008

Nifty (2810) Sup 2750 Res 2860

Buy Indiabulls Real Estate (110) SL 106 Target 118, 122

Buy HUL (235) SL 231
Target 242, 244

Sell BPCL (314) SL 319
Target 304, 302

Sell HDFC (1559) SL 1579
Target 1525, 1515

Sell Punj Lloyd (183) SL 179
Target 191, 193

Daily News Roundup - Nov 17 2008

Apollo Tyres plans to invest Rs30bn in next five years to set up greenfield plants and abroad as well as expanding its existing facilities.(BL)

- BHEL in talks with Areva T&D form a JV for manufacturing nuclear reactors.(BL)

- Temasek yet to take a final decision on whether to exit Tata Teleservices, but is likely to stay invested.(BL)

- Mastek is in the process of closing down its BPO practice.(BL)

- GMR, GVK seek to raise airport fees by 10%.(TOI)

- Kingfisher Airlines plans 25% stake sale.(ET)

- Tata Chemicals is buying 600 acres of land for soda ash unit expansion.(BS)

- Wipro, Infosys and TCS eye IT captive units in Germany.(ET)

- L&T in talks with Antwerp Port Authority of Belgium to build new port.(ET)

- Hyundai, GM may enter 800cc segment in India.(ET)

- Infrastructure projects may get loan relief.(Mint)

- Iran says it has scrapped a US$22bn deal to sell 5mtpa LNG to India due to a dispute over prices and lack of required approvals. (Mint)

- Projects worth US$18bn shelved in six months due to slowdown. (TOI).

Global News This Morning

Japan's economy, the world's second largest, unexpectedly shrank in the third quarter, entering the first recession since 2001 as companies cut spending.

Japan's GDP fell an annualized 0.4 percent in the three months ended Sept. 30, the Cabinet Office said today in Tokyo. Economists predicted the economy would grow 0.1 percent after contracting a revised 3.7 percent in the previous period.

Meanwhile, the yen and the dollar rose against the euro after the Group of 20 nations failed to agree on specific measures to combat a global financial crisis, prompting investors to sell higher-yielding assets funded in Japan.

Markets remain indecisive!

A weak man has doubts before a decision, a strong man has them afterwards.

Well, the outcome of the much hyped G-20 summit over the weekend was a bit of a damp squib. Leaders of the world's leading nations (advanced and emerging) failed to announce any major breakthrough initiatives, except for a symbolic appeal for a coordinated global action to tide over the unprecedented crisis. However, India can take some solace from the fact that the G-20 summit unanimously decided to shun protectionism and give more say to developing economic powers like China and India in managing the global financial architecture.

Back home, the RBI decided to take few more steps to limit the damage on the Indian economy. It has announced measures to boost dollar inflows by raising interest rates on NRI deposits. It has also decided to ease the liquidity pressure on Real Estate and NBFCs by lowering the provisioning and risk weight on loans to these battered sectors. The central bank will consider proposals for buy back of FCCBs, besides allowing registered housing finance companies to raise short-term loans overseas and extending the special repo for MFs and NBFCs.

The latest attempt by the RBI to ease the credit crunch is not a surprise given the extraordinary situation facing the Indian economy. It may at best bring some relief to the beleaguered financial markets, but is unlikely to lift the key stock indices beyond a few hundred points. The case in point is last week's trade, when the improved data on industrial production and a surprisingly sharp drop in inflation failed to perk up the markets. The fear is that the macro-economic numbers for the coming months may be even worse. The one bright spot could be further fall in inflation, could allow the RBI to announce more rate cuts.

Having said that, the recent past has shown that any measures announced by governments and financial regulators have had only a temporary effect on markets. The same trend may play out again today. The key indices might gain some ground after last week's rout (Sensex and Nifty down over 5% in four sessions!). But, one must be ready to see more red than green on screens, as the global economy is in dire straits, and may well remain bogged down for several months to come. For India, another factor could play spoilsport with markets; the slew of state polls in Nov-Dec and the general elections next year.

JSW Steel could see some action as it announces the formation of a joint-venture later in the day.

US stocks slumped on Friday, as the worst retail sales on record ignited fears of a long recession.

US stocks crumbled through the early afternoon as investors considered the bleak outlook for consumer spending. Selling pressure eased up in the middle of the afternoon and then returned near the close.

The Dow Jones Industrial Average fell 338 points, or 3.8%. Earlier, the blue-chip indicator had lost as much as 363 points and gained as much as 88 points. The Standard & Poor's 500 index skidded 4.1% and the Nasdaq Composite index shed 5%.

All three major stock indices slid on the week as well, with the Dow losing 5%, the S&P down 6.2% and the Nasdaq down 7.9%.

US sales in October posted the worst monthly decline since the Commerce Department initiated the current measurement standard in 1992.

The corporate news too was just as bad. Freddie Mac posted a big quarterly loss. Sun Microsystems announced massive job cuts and Citigroup is reportedly getting ready to announce layoffs.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by almost four to one on volume of 1.45 billion shares. On the Nasdaq, decliners topped advancers by more than three to one on volume of 2.31 billion shares.

After the close, Fidelity said it was cutting an additional 1,700 jobs in the first quarter of 2009 as part of an ongoing cost-cutting effort. A week ago the company said it was cutting 1,300 jobs.

Retailers J.C. Penney and Abercrombie & Fitch both reported lower quarterly earnings and issued bleak forecasts for the critical fourth quarter. Nokia said fourth-quarter sales for the broad mobile handset industry will decline, citing poor credit conditions and the weak economy.

A separate report showed a slight improvement in consumer sentiment, according to the latest survey from the University of Michigan. Sentiment rose to 57.9 in November from 57.6 in late October, versus forecasts for a decline to 57.

Investors were also gearing up for the Group of 20 meeting in Washington, which gathers leaders from around the world to address the global financial crisis. It kicks off with a White House dinner Friday.

The European economy is officially in a recession. Germany has already said it is in a recession. Hong Kong is also in a recession. And many economists think the US is in a recession, despite a lack of official declaration.

Federal Reserve chairman Ben Bernanke said that financial markets remain under severe strain. He pledged to continue working with central banks around the world and seemed to indicate the Fed could cut interest rates again at the December meeting.

The dollar gained against the euro, but fell versus the yen. COMEX gold for December delivery rallied $42.50 to settle at $742.50 an ounce.

US light crude oil for December delivery fell $1.20 to settle at $57.04 a barrel on the New York Mercantile Exchange.

Gasoline prices dipped another 2.6 cents to a national average of $2.152 a gallon. The decline marks the 58th consecutive day that prices have decreased. During that time, prices dropped by $1.70 a gallon, or 44.2%.

The cost of borrowing rose modestly, but remained near recently improved levels.

The 3-month Libor rose to 2.24% from 2.15% Thursday. Overnight Libor rose to 0.56% from 0.4% Thursday, and up modestly from an all-time low of 0.32% last week. Libor is a key inter-bank lending rate.

The yield on the 3-month Treasury bill, seen as the safest place to put money in the short term, fell to 0.11% from 0.19% Thursday, with investors preferring to take a small return on their money than risk the stock market. In September, the 3-month yield reached a 68-year low around 0% as investor panic peaked.

Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.72% from 3.86% on Thursday.

European shares gained ground on Friday, as oil producers put in a strong performance, although data showing that the euro zone tumbled into recession and a warning from Nokia served to underline the still-gloomy economic backdrop.

The pan-European Dow Jones Stoxx 600 index rose 0.8% to 205.76, paring losses over the past 12 months to roughly 45%.

The French CAC-40 index climbed 0.7% to 3,291.47, while Germany's DAX 30 index rose 1.3% to 4,710.24 and the UK's FTSE 100 index added 1.5% to 4,232.97.

Indian stocks ended lower for a third consecutive session on Friday, dragged down by sustained selling in index heavyweights, as investors ignored the surprising drop in inflation amid nagging worries over slowing economic growth.

The drop in Indian stocks was in contrast to gains across other Asian markets and a strong start to European indices following the rebound on Wall Street, though US stock futures were indicating a lower opening.

The key indices remained volatile due to growing pessimism over India's macro-economic fundamentals in the face of a global gloom.

At the 3:30 pm close in Mumbai, the BSE Sensex was at 9,385.42, down 150 points or 1.6% over the last close, after having rallied to a high of 9,836. It had touched an intra-day low of 9,267. The NSE Nifty closed at 2,810, down 1.3% over the last close. It had earlier been as high as 2,938, and as low as 2,778.

The BSE Small-Cap and Mid-Cap indices were down 1.3% and nearly 2%, respectively. Market breadth was highly negative, as 931 stocks advanced and 1,588 stocks declined on the BSE.

Within the Sensex, ACC was the top loser. The stock was down 8.9% at Rs418. Tata Motors was another big loser. The stock fell 8.5% to Rs136 after being as high as Rs159. Tata Steel, HDFC, Jaiprakash Associates, Reliance Infrastructure, L&T, BHEL, Sterlite and Maruti were down 4-6.5%.

M&M, Infosys, Wipro, ONGC, Grasim, DLF, Satyam and Reliance were down 1.3.5%.

Among the notable gainers included Bharti Airtel (3%), Tata Power (2%) and RCOM (1.9%). HDFC Bank, Hindustan Unilever, ITC and Hindalco finished almost unchanged.

Barring FMCG, all the BSE sectoral indices closed in the red. Capital Goods, Auto, Metals and Consumer Durables lost between 3.-4.5%. Power, IT, Real Estate, Pharma and Oil & Gas fell 1.-2.5%. The BSE Banking index was down 0.6%.

Outside the main indices, the top losers included Jai Corp, IVRCL Infra, Lanco Infra, GVK Power, Crompton Greaves, Oracle Financial, Mercator Lines, Zee, Praj Industries and LIC housing Finance.

Tata Tele (Maharashtra), HDIL, CESC, FT, HPCL, Tata Comm, MTNL, Idea and Cairn were the prominent gainers.

Weekly Technicals - Nov 17 2008

Weekly Technicals - Nov 17 2008

Morning Note - Nov 17 2008

Morning Note - Nov 17 2008

SGX Nifty Update - Nov 17 2008

SGX Nifty currently trading -28.0 at 2,799.0 points