Wednesday, January 07, 2009
In possibly the biggest single day fall for a stock, Satyam Computer Services lost 77 per cent to end at Rs 40.25 on NSE. The stock’s woes began in December after the company’s promoters made a $1.6-billion bid for Maytas Properties and Maytas Infrastructure promoted by Chairman B. Ramalinga Raju's son.
However, adverse market reaction, which saw the company’s ADR take a knock of 54.5% to $5.70, made the company call off the proposed acquisition. At the time, Chairman Raju evinced surprise saying he was “surprised by the market reaction to this decision even though we were quite positive about
the merits of the acquisition.”
Raju, in fact, today (Jan 7, 2009) took the stock market and the business community by surprise, after he tendered his resignation and admitted in a letter to the board that Satyam’s balance sheet was cash and bank balances as on Sep 30, 2008 was inflated to the extent of Rs 5,040 crore (as against Rs 5,361 reflected in the books).
Further, Satyam’s balance sheet carries an accrued interest of Rs 376 crore which is non-existent, an understated liability of Rs 1,230 crore on account of funds arranged by Raju, and an over stated debtors position of Rs 490 crore (against Rs 2,651 crore in the books)
The letter goes on to state that Satyam reported a revenue of Rs 2,700 crore and an operating margin of Rs 649 crore (24% of revenues) for the second quarter ended Sep 30, 2008, as against the actual revenues of Rs 2,112 crore and actual OPM of Rs 61 crore (3% of revenues). This resulted in artificial cash and bank balances going up by Rs 588 crore in the second quarter alone.
If one goes by the actual revenue and OPM figures, taking others as true, Satyam would have posted a loss instead of the reported profit after tax of Rs 537 crore for the September quarter. If one deducts the financial expenses and depreciation/amortization from the actual OPM of Rs 61 crore, it gives you a loss of Rs 5.87 crore, which translates to a negative EPS of Rs 0.08.
Investment bank CLSA has said that the value of Satyam stock in current conditions is about Rs 25-30. However, some analysts feel the stock is worthless as the scale of fraud is not yet known.
“The real value of the company can’t be determined at this point of time as what other figures are inflated should be known.I don’t expect anybody will be interested acquiring the company. Hence, it is better one should exit or stay away,” said Ramesh Kumar, senior analyst at Global One.
In October of 2008, Satyam saw a high of Rs 325 and a low of Rs 220 and its market capitalization was Rs 20,534 crore. The MCap eroded significantly to Rs 11,465 crore by end December after Satyam announced the twin Maytas acquisition
“It is one of the worst days for Indian investors. It has shaken investor confidence--both domestic and global. The biggest dent that this Satyam episode could create is the ‘trust’ of investors towards companies, auditors, and reported numbers by companies,” said Hitesh Agrawal- Head -Research -Angel Broking.
“We have discontinued coverage on the stock with immediate effect and would advise current investors to exit the stock and nonexistent investors to stay away,” he added.
via Economic Times
A cursory look at Wednesday’s market would be enough to show how the Satyam Computer Services Ltdscam has hit India—companies that in the opinion of the market have a question mark over their governance standards have been pummelled. The realty sector, with its complicated land bank valuations and revenues generated by sales to group companies has been the worst hit, with the BSE Realty index falling 16.95%. Housing Development and Infrastructure Ltd(HDIL) and Indiabulls Real Estate Ltdfell by 21%, Unitech Ltdby 20%, DLF Ltdby 16%, on a day when the Sensex slid by 7.25%. Nor were realty companies the only ones to be affected. Other companies that lost substantially included Suzlon Energy Ltd(-23%), Aptech Ltd(-25%), Lanco Infratech Ltd (-25%), IVRCL Infrastructure and Projects Ltd(-27%) and Nagarjuna Construction Co. Ltd(-22%). But it wasn’t just negative perceptions on corporate governance that pulled down stocks on Wednesday—there were concerns that funds that had Satyam in their portfolios may also sell other stocks they held. Some of these firms are highly leveraged—which seems to be the reason Satyam’s promoter group has ended up like this. Needless to add, it was also a situation in which short-sellers revelled and rumours flew thick and fast. But companies such as Infosys Technologies Ltd, Wipro Ltd, Hindustan Unilever Ltd, and Maruti Suzuki India Ltdgained.
Corporate governance standards in India were supposed to have improved over the last few years, as the market rewarded those promoters who cleaned up their balance sheets and stopped siphoning off of money. But not much attention was paid to corporate governance during the easy money days of 2003-07. As Warren Buffetfamously put it, “It’s when the tide goes out that you realize who’s been swimming naked.” Corporate governance risk will increasingly be a factor that investors will pay heed to in future. Balance sheet risk in the form of derivatives and liabilities on account of foreign currency convertible bonds (FCCBs) is already weighing heavily on companies. The Satyam effect will add to that for companies whose promoters have a less-than-perfect reputation. The premium attached to good corporate governance should rise.
As an emerging market, India has already been suffering from risk aversion. The Satyam scam will add to that. According to a fund manager, the Satyam fraud has emerged at the worst possible time, when capital is scarce and investors are anyway pulling funds out of India. It has already scuttled the tentative rally that was taking place in the last few days.
Will the Satyam episode lead to tighter regulation and greater compliance costs, as happened in the US after Enron and WorldCom? With the elections so near, that may not happen. Moreover, the fraud at Satyam seems, at first sight, to be a very simple one—for instance, if, as B. Ramalinga Rajusays, the cash and bank balances of at least Rs5,000 crore were non-existent then all the auditor had to do was call for the bank statement and the deposit receipts to know that wasn’t true. Needless to add, the fraud brings under the spotlight the role played by auditors as also that of the so-called audit committee, which was headed by no less a person than professor M. Rammohan Rao, the dean of the Indian School of Business. In fact, one reason why trust has been so shaken is because Satyam was no fly-by-night operator, but one of India’s top IT companies, audited by a top auditing firm and having some of the best experts as independent directors.
But as one chartered accountant points out, “Satyam isn’t the only Indian company involved in fudging accounts.” Such cases abound—it’s just things haven’t come out into the open like this. For some reason that’s still not fully clear, Satyam’s promoter has felt compelled to spill the beans.
In hindsight, investors’ concern about Satyam’s corporate governance and relatively weak financial parameters should have been taken more seriously. Investors would do well to now apply these checks on other firms. Although Satyam has been among the top software firms in the country, its debt has been relatively high at about 90 days’ sales. Similarly, cash flow generation has been among the lowest as a percentage of sales. For these reasons, the Satyam stock has always quoted at a substantial discount to its peers. Normally, accounting irregularities show up in the cash flow statement, but the scale at which Satyam’s fraud has been done, even cash has been doctored with. Still, relatively low cash flow is certainly an alarm bill that investors shouldn’t ignore.
Satyam’s operating profit margins, too, were the lowest among the top firms. But Wednesday’s revelation that margins are actually at 3% and not the reported level of over 20% is a complete shocker. Even the smallest of IT firms have better margins in India and Satyam boasts of much larger clientele and would certainly bill these clients at higher rates compared to tier-II and tier-III firms. The assertion that the company’s cost structure is disproportionately large too doesn’t make sense. Firms such as HCL Technologies Ltdthat have a comparable size have an operating margin of 20% or more. An IT analyst with a domestic firm is in complete disbelief about the statement that the company has a profit margin of 3%.
This statement about low operating margin doesn’t quite seem to add up. Perhaps Raju is lying again—if he has been doing it for so many years, there’s no reason why we should accept his entire confessional statement as gospel truth. There is much more clarity that is needed, but meanwhile one of the theories that’s doing the rounds of the market is that Satyam indeed generated significant cash, which has been siphoned off to fund the promoter’s other business interests. Instead of disclosing this, Raju now says the cash was never there. There’s certainly much more to the Satyam saga that will unravel in the days to come.
I write this mail to update you on some critical Board and Leadership level changes in our company, effective immediately. A series of extremely unfortunate events led to this, which I am sure you have seen covered in the media over the past few hours.
A SWAT team consisting of senior leaders has been formed. Many of them are Satyam veterans with a minimum of ten years experience in our company and more than twenty years in the industry. I have been requested to play the role of an Interim CEO and this team will support me, as we steer Satyam through this challenging phase. These are the leaders on the ground and have always had the final call on most customer and associate related matters in the company, so far. This team has committed to work together, to make it happen. The SWAT team represents all Customer Facing units, key Horizontal Competency Units and critical Support Units.
Over the past twenty one years, with your passion and commitment we have built significant customer assets, formidable service offerings, excellent delivery processes and scalable support systems. Satyam has been consistently acknowledged for our leadership bandwidth and has a demonstrated reputation for collaborative functioning. Our renowned Full Life Cycle (FLC) model encouraged Distributed and Empowered leadership and prepared us for all situations. This is the time when we have to apply it in real life. What we have been trained for, we will now put to work. Let us continue to handle our respective areas with total autonomy, freedom and control. This is as good a time, as any, to remind ourselves that we have been acknowledged as being amongst the top three Best Employers in India by Hewitt and Mercer in independent surveys in 2007 and American Society of Training & Development (ASTD) named us as the best globally, for our Learning practices - the first company outside USA to be ever awarded this honor. Satyam continues to have everything that is fundamentally required for its success - a strong customer base and a committed universe of approx 53,000 associates.
What we are confronted with is the challenge of continuing our business operations, seamlessly. We will need your involvement and ideas to make it happen. This might involve even more effort at every level, in the near term. This is the time to prove to the world that we are united and will succeed in overcoming the challenges.
This quarter will be tumultuous for us. Rumors will abound and it would be fair to assume that competition will try and leverage it to their advantage. As a proactive measure, we have formed fully empowered Cross Functional Teams, headed by seasoned leaders in the respective areas, to address pan-organizational issues like Delivery Excellence, Customer & Associate Retention, Pipeline Management, Cost Controls, Collections etc. You have helped to build Satyam to be what it is today - and we believe that this cannot be allowed to fail, at any cost. I am confident that I can count on your continued support as I commit to our customers that we will ensure deliverables and commitments are serviced.
On behalf of our new leadership team, I apologize to you for the uncertainty and inconvenience that this incident has caused to you and your families. I assure you that we will emerge stronger, because of this. Increased focus on transparency at all levels, integrity and ethical functioning will be ensured. I want you to stand confidently in front of your families and friends and say that we will now be a better company and that we shall soon be a successful case study of how organizations have turned over a new leaf.
We will be conducting U Speak (our Meet-the-Leadership sessions) in each city in India starting next week and will have numerous Webinars to address associates in various countries. We will be meeting many of our customers in person over the next two weeks and will meet those of you onsite, at that time. In these sessions, we will explain to you what happened and articulate the actions that are being taken to retain your confidence in our company.
Let us fight this battle together. I am confident that we will emerge stronger, TOGETHER.
Employees of Satyam Computer were in disarray following their Chairman B Ramalinga Raju's resignation after the firm admitted to financial wrong-doing, leaving the entire business world of the country shell-shocked.
Panic-stricken employees were seen in small groups outside the corporate office, discussing the issue.
However, they remained tight-lipped before the media. A team leader Raghu K said the resignations have not "surprised us," but the news attached to it is worrying.
He said the top management has not yet made any communication with the employees in this regard.
When asked about their (employees) reaction to Raju's resignation, he said, "There is panic among the employees. But daily work has not been affected."
"We (employees) are now worried about the jobs. We hope whoever takes over the company will put things right," he added.
Most of the employees are also worried about their financial commitments like payment loan dues.
C R Aravinda, a junior employee, said, "The only thing we can do is to work hard. We are serving clients as usual." He, however, said he was not aware about the developments.
B Ramalinga Raju, along with his brother Rama Raju, who is also MD of the company, resigned today following a two-week-long row over the Satyam-Maytas episode.
If you are a employee at Satyam - please let the other folks here know what the talk/gossip/rumour there is - What are the employees planning to do ? Are there mass resignations as reported by some ? Let us know any info that you can!
I know its very difficult for you folks out there - my sympathies are with you
Satyam Computer Service tanked 77.69% to close at Rs 39.95 as chairman Ramalinga Raju resigned after announcing the books of accounts were artificially inflated.
The company made the announcement at 11:34 IST today, 7 January 2009.
Around 47.30 crore shares or, 70.19% of Satyam's equity, was traded on the BSE and the NSE combined.
Meanwhile, the BSE Sensex was down 657.84 points, or 6.38%, to 9676.48.
The stock hit a low of Rs 30.70, also its 52-week low. It hit a high of Rs 188.70 so far during the day. The stock had a 52-week high of Rs 544 on 30 May 2008.
The stock had underperformed the market over the past one month till 6 January 2009, falling 20.19% as compared to the Sensex's 15.29% rise. It had also underperformed the market in the past one quarter, falling 39.14% as compared to the Sensex's fall of 12.42%.
India's fourth largest software exporter by sales has an equity capital of Rs 134.77 crore. Face value per share is Rs 2.
The current price of Rs 39.95 discounts its Q2 September 2008 annualised EPS of Rs 35.48, by a PE multiple of 1.12.
Raju while announcing his resignation confessed of reporting inflated figures in the accounts of the firm. As per the announcement, Satyam's balance sheet as on 30 September 2008 had inflated cash and bank balances of Rs 5040 crore, inflated debtors of Rs 490 crore and non-existent accrued interest of Rs 376 crore. Against this the liability was understated by Rs 1230 crore.
Raju said the Q2 September 2008 results had overstated operating revenues by Rs 588 crore, thereby overstating the operating profits and cash to that extent
The gap in the balance sheet has arisen purely on account of inflated profits over the period of last several years, Raju confessed adding that every attempt made to eliminate the gap failed. As the promoters held a small percentage of equity, the concern was the poor performance would result in a takeover, thereby exposing the gap, Raju said.
Raju said in the last 2 years a net amount of Rs 1230 crore was arranged to keep operations going. He said this was done by pledging all the promoter shares and raising funds from known sources by giving all kinds of assurances. Significant dividend payments, acquisitions, capital expenditure to provide for growth did not help matters. Every attempt was made to keep the wheel moving. The last straw was the selling of most of the pledged share by the lenders on account of margin triggers, Raju said.
The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones, Raju said. Maytas's investors were convinced that this is a good divestment opportunity and a strategic fit, he said.
Raju ended the statement with an apology to Satyam's staff and shareholders and said he was prepared to face the legal consequences.
Meanwhile, the stake owned by founders of Satyam Computer Services has fallen to 3.6% from 5.1% after institutional lenders sold the stock, the company said after trading hours on Tuesday, 6 January 2009. IL&FS Trust Company had sold 24.52 million shares in Satyam Computer Services that were pledged with it as trustee on behalf of several debenture holders and lenders.
Satyam Computers during trading hours on 18 December 2008 had said its board will meet on 29 December 2008 to consider buyback of shares. The announcement was aimed at soothing investor nerves after the Satyam stock slumped 30.22% on 17 December 2008. Investors had chucked the stock following the company's announcement after market hours on 16 December 2008 of a $1.6 billion deal to acquire Maytas Properties and Maytas Infrastructure, companies run by Raju's sons B Rama Raju and Teja Raju.
Satyam scrapped a $1.6 billion acquisition of companies connected to its chairman after the plan angered investors. The company's total disregard for corporate governance and shareholders was shocking - Satyam had no plan to take the proposal to minority shareholders.
The World Bank said on 23 December 2008 Satyam had been declared ineligible for direct contracts with it for eight years 'for providing improper benefits to Bank staff and for failing to maintain documentation to support fees charged for its subcontractors'.
Satyam Computer Services' net profit rose 3.70% to Rs 597.43 crore on 6.87% increase in net sales to Rs 2700.52 crore in Q2 September 2008 over Q1 June 2008.
Satyam Computer Services is a global business and information technology services company. It delivers consulting, systems integration and outsourcing solutions to clients.
The Indian market closed in deep red after going through strong blood bath during the trading session on shocking revelation that Satyam Computers founder and Chairman Ramalinga Raju had resigned from the Satyam board and admits big fraud of Rs 5,040 crore. His announcement that the balance sheet of the company was over stated on 30th Sept 2008, crash down the company’s stocks and shake the market.
The domestic market belled the day on positive note on firm cues from the global markets. Reports that state-run banks are likely cut lending rates further next month, also contributed to the firm trading in earlier session. Soon after, disclosure by Satyam chairman that the company had inflated its earnings over the past few years rattled the market. Further, stocks continued to trade in the southward direction without any sign of recovery on heavy selling pressure witnessed across board. Finally, continuous steep fall forced the market to end with huge losses. BSE Sensex ended below 9,600 mark and NSE Nifty below 3,000 level. From the sectoral front, investors off-loaded positions across the sectors and Reality stocks underperformed the benchmark indices as ended with deep cut of around 17%. Realty shares slumped on reports recent steps taken by the government to boost the housing sector are not enough to boost housing demand. Besides, Oil & Gas, IT, Bank, Teck, Capital Goods, Metal and Consumer Durables stocks contributed to the most of selling. Midcap and Smallcap stocks also remained under pressure.
Satyam Computer Services'' chairman and founder B. Ramalinga Raju resigned on Wednesday amid a scandal over inflated profit reporting. The balance sheet of Satyam has inflated, where in the cash balances of Rs 5040 crore as against Rs 5361 crore reflected in the books and accrued interest of Rs 376 crore is non-existent. Rs 1230 crore was arranged to Satyam and is not reflected in the books and as an over stated debtor position of Rs 490 crore as against Rs 2651 reflected in the books.
In BSE, Satyam Computer Services Ltd today opened at 179.10 and further touched the intraday high of 188.70 and intraday low of 30.70 during the trading session. Finally it closed at 39.95, which was 139.15 points or (77.69%) down as against the previous close of 179.10.
Among the Sensex pack 25 stocks ended in red territory and 5 in green. The market breadth remained extremely negative as 2111 stocks closed in red while 414 stocks closed in green and 57 stocks remained unchanged in BSE.
The BSE Sensex closed lower by 749.05 points at 9,586.88 and NSE Nifty ended down by 192.40 points at 2,920.40. The BSE Mid Caps and Small Caps ended with losses of 247.05 points and 246.03 points at 3,197.91 and 3,662.52 respectively. The BSE Sensex touched intraday high of 10,469.72 and intraday low of 9,510.15.
Losers from the BSE Sensex pack are Satyam Computers (77.69%), JP Associates (29.15%), Reliance Communication Ltd (17.02%), DLF Ltd (16.15%), Reliance Infra (13.14%), Reliance (12.52%), ICICI Bank (10.53%), L&T Ltd (8.60%), HDFC Bank (8.12%) and Ranbaxy Lab (7.04%).
Gainers from the BSE Sensex pack are HUL (1.95%), Infosys Tech (1.67%), Maruti Suzuki (0.53%), Wipro Ltd (0.23%) and Grasim Industries (0.13%).
The BSE Reality index ended lower by (16.95%) or 401 points at 1,965.20. Main losers are Housing Dev (21.45%), Indiabull Real (21.37%), Unitech Ltd (20.70%), Ansal Infra (17.73%), Orbit Co (16.81%) and DLF Ltd (16.15%).
The BSE Oil & Gas index tumbled (9.35%) or 613.42 points to close at 5,944.41 as Reliance Natural Resources (13.53%), Reliance (12.52%), Essar Oil Ltd (10.64%), Aban Offshore (9.99%), Reliance Petroleum (7.74%) and Gail India (5.74%) ended in red.
The BSE IT index lost (9.32%) or 218.66 points to close at 2,128.16 as Satyam Computers (77.69%), Aptech Ltd (24.56%), NIIT Ltd (17.45%), HCL Tech (15.09%), Tech Mahindra (14.57%) and Moser Bayer(13.91%) ended in negative territory.
The BSE Bank index plunged (8.06%) or 481.05 points at 5,489.24 Losers are Indus Ind bank (12.59%), ICICI Bank (10.53%), Yes Bank (9.98%), HDFC Bank (8.12%), PNB (7.80%) and IDBI Bank (7.36%).
The BSE Teck index ended down by (7.77%) or 154.60 points at 1,834.37. Major losers are Satyam Computers (77.69%), Aptech Ltd (24.56%), Tanla (19.98%), Adlabs Films (17.46%) and NIIT Ltd (17.45%).
The BSE Capital Goods index lost (6.72%) or 504.73 points to close at 7,008.77. Major losers are Suzlon Energy (22.95%), Punj Lloyd (14.29%), Praj Indus (12.70%), Gammon Indi (12.39%), Walchand In (12.10%) and Reliance Industrial Infra (11.74%).
A day after market had recovered from its previous losses, the news of fraud at Satyam and the resignation of its chairman, B Ramalinga Raju sent the index into a tailspin on the second last day of the trading week. Riding on the back of yesterday's smart recovery and an overnight gains in the US market, Sensex rallied past the 10,400 mark to commence at 10,424, up 89 points from its last close. Extended buying in most of the counters lifted the index to a new intra-day high of 10,470 in early trades. However the news from Satyam’s end pushed the index deep into the red by late morning trades. While the slide continued unabated, the index plunged further into the red to slip below the 9,600 mark and touch an intra-day low of 9,510 from the day's high. Sensex concluded the session with a sharp drop of 749 points at 9,587, while Nifty declined 192 points to close at 2,920.
In the broader market, losers outpaced gainers. Of the 2,582 stocks traded on the BSE, 2,111 stocks declined, whereas only 414 stocks advanced. Fifty seven stocks ended unchanged. BSE Realty was the worst hit among sectoral indices, losing 16.70% followed by BSE IT (down 9.29%), BSE Oil & Gas (down 9.27%), BSE Bankex (down 8.16%) and BSE Teck (down 7.85%).
Pulling the market, Satyam Computer Services (Satyam) tanked 77.16% at Rs40.90, JP Associates crashed 29.70% at Rs70.90, Reliance Communications shed 17.42% at Rs205.50, DLF declined 17.08% at Rs232, Reliance Infrastructure lost 13.25% at Rs561.20, Reliance Industries slipped 12.29% at Rs1,199.90 and ICICI Bank dropped 11.31% at Rs464. Among other major losers Larsen & Toubro dipped 9.49% at Rs768, Tata Motors slipped by 7.49% at Rs171.80 and Ranbaxy Laboratories was down 7.46% at Rs234.55. Mahindra & Mahindra, HDFC Bank, ACC, Hindalco Industries, State Bank of India, Tata Steel, ONGC and ITC were down 3.85% each. Select counters, however, bucked the downtrend. Hindustan Unilever advanced 1.44% at Rs250.20 while Infosys, Maruti Suzuki India and Wipro were up with steady gains.
Over 14.27 crore shares of Satyam changed hands on BSE followed by Suzlon Energy (3.08 crore shares), Unitech (2.87 crore shares), JP Associates (2.84 crore shares) and Reliance Natural Resources (1.92 crore shares).
Just as the market was recovering somewhat, India's fourth largest IT firm Satyam Computer's explosive revelations send the Sensex on a southward spiral. Satyam shares plunged a whopping 77.69% as chairman Ramalinga Raju resigned after announcing during trading hours today, 7 January 2009, that the company's accounts were inflated artificially. The investors are indeed having a tough time. The BSE 30-share Sensex plunged 749.05 points, or 7.25%, shedding close to 880 points from the day's high.
As per the provisional data released by the stock exchanges after trading hours, foreign institutional investors (FIIs) today, 7 January 2009, dumped shares worth Rs 1,111.25 crore and domestic funds sold shares worth Rs 505.49 crore.
Heavy selling was witnessed in index heavyweights Reliance Industries, ICICI Bank and Larsen & Toubro. The Sensex fell below the psychological 10,000 mark and S&P CNX Nifty fell below the psychological 3,000 mark. All the sectoral indices on BSE were in the red. The market breadth was extremely weak.
Satyam tanked 77.69% to Rs 39.95 after Raju confessed of reporting inflated figures in the accounts of the firm. Around 47.30 crore shares or, 70.19% of Satyam's equity, was traded on the BSE and the NSE combined. Raju said the Q2 September 2008 results reported operating margin of about Rs 649 crore versus actual Rs 61 crore. He further said that the balance sheet as on 30 September 2008 included understated liability of Rs 1230 crore. He also said the balance sheet as on that day included inflated cash and bank balances of Rs 5040 crore.
No board member had any knowledge of the real situation of the books, Raju said. He further said the failed Maytas deal was a last attempt to fill fictitious assets with real ones. In mid-December 2008, Satyam had scrapped a deal to acquire Maytas Properties and Maytas Infrastructure, companies run by Raju's sons B Rama Raju and Teja Raju as the plan angered Satyam investors.
As per reports, the government will examine the role of Satyam's auditors and directors and the stock market regulator Securities & Exchange Board of India (Sebi) said it will take urgent action. Sebi chairman C B Bhave told a television channel that the market regulator was in touch with the Ministry of Corporate Affairs regarding action to be take against the IT firm.
The stock had surged 7.31% on Tuesday, 6 January 2009 after the company denied media reports that Tech Mahindra was considering an all-share merger deal with the company.
The BSE 30-share Sensex plunged 749.05 points, or 7.25%, to 9,586.88. The Sensex fell 825.78 points at the day's low of 9,510.15 in afternoon trade.
Earlier in the day and before the Satyam's revelation which hit the market in mid-morning trade, the broad market had surged on firm Asian stocks, reports that state-run banks are likely cut lending rates further next month and on reports of slowing pace of decline in exports. The Sensex rose 133.79 points at the day's high of 10,469.72 in early trade.
The S&P CNX Nifty fell 192.40 points, or 6.18%, to 2,920.40.
As per reports, the pace of decline in India's export is slowing. Exports are estimated to have fallen by a more modest 1.6% in December 2008 as against 12.1% for October 2008 and 9.9% for November 2008. As per reports, robust export growth in segments like pharma, engineering and agri commodities has offset dismal performance from sectors like textiles, gems & jewellery, handloom and chemicals.
The market breadth, indicating the overall health of the market, was weak in contrast a strong breadth earlier in the day. On BSE, 414 stocks advanced and 2,111 stocks fell. A total of 57 stocks remained unchanged.
The BSE clocked a turnover of Rs 5,817 crore, higher than Rs 4,700.98 on Tuesday 6 January 2008.
Nifty January 2009 futures were at 2911, at a discount of 9.40 points as compared to the spot closing of 2920.40. Turnover in NSE's futures & options (F&O) segment soared to Rs 59,555.20 crore, from Rs 39,420.34 crore on Tuesday, 6 January 2009.
The BSE Sensex had risen 1,007.01 points or 10.79% to 10,335.93 on 6 January 2009 from a recent low of 9,328.92 on 26 December 2008. The BSE Sensex had lost 52.45% in the calendar year 2008.
The BSE Mid-Cap index was down 7.17% while BSE Small-Cap index was down 6.29%. Both the indices outperformed the Sensex.
The BSE Realty index (down 16.95%), the BSE Oil & Gas index (down 9.35%), the BSE IT index (down 9.32%), the BSE Bankex (down 8.06%), the BSE Teck index (down 7.77%), underperformed the Sensex.
The BSE FMCG index (down 2.08%), the BSE Auto index (down 3.63%), the BSE HealthCare index (down 4.1%), the BSE PSU index (down 5.28%), the BSE Consumer Durables index (down 5.46%), the BSE Power index (down 5.5%), the BSE Metal index (down 6.38%), the BSE Capital Goods index (down 6.72%), outperformed the Sensex.
IT pivotals, other than Satyam Computer, cut intraday losses as investors shifted positions from Satyam in favour of other IT pivotals to maintain overall portfolio weightage to the sector. India's second largest IT exporter by sales Infosys rose 1.67% to Rs 1,187.10, recovering from the day's low of Rs 1,147. India's third largest IT exporter by sales Wipro was up 0.23% to Rs 243.30, off the day's low of Rs 228. India's largest IT exporter by sales Tata Consultancy Services was down 0.78% to Rs 503.70, off the day's low of Rs 466.20.
A weaker rupee further aided the recovery of IT stocks. The Indian rupee weakened from early trade levels on Wednesday due to dollar demand from foreign funds following a steep fall in the main stock index after Satyam said its profit had been inflated. The partially convertible rupee was at 48.75 per dollar, compared with Tuesday's close of 48.66/69. A weaker rupee benefits IT firms as they earn most of their revenues from exports.
Realty shares slumped on reports recent steps taken by the government to boost the housing sector are not enough to boost housing demand. DLF, Housing Development & Infrastructure, Indiabulls Real Estate and Unitech fell by between 16.15% to 21.45%.
In an effort to boost the cash-starved realty sector, the government on 2 January 2009 allowed the developers of integrated townships to borrow funds from overseas and also asked states to release land for low- and middle-income housing schemes. Earlier, as part of the first stimulus package announced last month, the public sector banks had lowered rates on home loans up to Rs 20 lakh.
Banking stocks fell on fears of rising defaults in a slowing economy. India's largest private sector bank by net profit ICICI Bank fell 10.53% even as its American depository receipt (ADR) gained 4.76% on Tuesday, 6 January 2009. The bank had recently cut its main lending rates by 50 basis points from Wednesday, 31 December 2008.
India's biggest bank in terms of total assets and branch network, State Bank of India fell 6.46%. India's second largest private sector bank by net profit HDFC Bank slipped 8.12%.
India's largest dedicated housing finance firm by operating income HDFC fell 3.33%.
Metal stocks fell on profit taking after a recent solid surge. Hindalco Industries, Steel Authority of India, National Aluminum Company and Sterlite Industries fell by between 4.33% to 7.93%. The BSE Metal index fell 6.38% to 5,605.24. From the recent low of 4950.22 on 26 December 2008, the BSE Metal index had risen 20.95% to 5,987.46 on 6 January 2009.
World's sixth largest steel maker Tata Steel fell 5.31% after the company's sales volume dipped by about 14% to 1.07 million tonnes in Q3 December 2008 over Q3 December 2007 due to the global economic slowdown.
Capital goods stocks fell on worries a slowing economy will crimp orders. Larsen & Toubro, Bharat Heavy Electricals, Praj Industries, Thermax, ABB fell by between 2.1% to 12.7%.
Auto stocks fell as high interest rates and sluggish consumer spending have dented demand. Tata Motors, Maruti Suzuki India, Hero Honda Motors, Mahindra & Mahindra fell by between 1.72% to 7.03%.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 12.52% to Rs 1,196.80 on worries fall in crude oil prices would dent operating margins of the firm.
Crude oil fell for a second day before a report which is forecast to show that crude inventories increased in the US as its economy contracted. Oil for February delivery declined as much as 97 cents, or 2 %, to $47.61 a barrel in electronic trading on the New York Mercantile Exchange. Oil has declined sharply from the record high of $147 per barrel hit in July 2008.
India's largest oil exploration firm by revenue ONGC fell 4.1% on reports its overseas unit ONGC Videsh (OVL) is raising about Rs 5250 crore from Citibank India to partly fund its recent $2.1 billion acquisition of UK's Imperial Energy, an oil exploration firm. OVL will issue one-year commercial paper, which will carry an interest of 8.15%.
India's largest FMCG major by sales Hindustan Unilever rose 1.95% on a defensive buying.
Telecom stocks extended recent losses on concerns of tighter profit margins due to stronger competition. India's second largest telecom services provider by sales Reliance Communication fell 17.02%. It recently announced a nationwide rollout of its GSM-based cellular services during trading hours on 30 December 2008.
India's largest telecom services provider by sales Bharti Airtel slipped 1.17% on fears the company may reduce tariffs to retain costumers following an aggressive nationwide rollover of the GSM-based cellular services by Reliance Communication (RCom).
PSU OMCs fell after oil minister Murli Deora today, 7 January 2009, said the government may cut fuel prices again to pass on the benefit of the fall in international crude oil prices to consumers. Hindustan Petroleum Corporation, Bharat Petroleum Corporation and Indian Oil Corporation fell by between 1.67% to 3.45%.
State-run oil firms are making profit on retail sale of petrol and diesel thanks to a fall in oil prices from a record high of above $147 a barrel in July 2008. They, however, continue to make losses on sale of kerosene and liquefied petroleum gas (LPG).
Satyam Computer Services clocked the highest volume of 14.3 crore shares on BSE. Suzlon Energy (30.85 lakh shares), Unitech (28.75 lakh shares), Jaiprakash Associates (28.54 lakh shares) and Reliance Natural Resources (19.29 lakh shares) were the other volume toppers in that order.
Satyam Computer Services clocked the highest turnover of Rs 916.58 crore on BSE. Reliance Industries (Rs 459.12 crore), Jaiprakash Associates (Rs 235.93 crore), ICICI Bank (Rs 228.74 crore) and Reliance Capital (Rs 191.59 crore) were the other turnover toppers in that order.
Asia-Pacific stocks were mostly higher on Wednesday, 7 January 2009, on hopes for a US economic stimulus package. Key benchmark indices in Japan, South Korea, Australia and Taiwan were up by between 1.32% to 1.74%. The key benchmark indices in China, Singapore and Singapore fell by between 0.68% to 3.37%.
But European shares declined on Wednesday, reversing a six-session rising trend, as oil shares slipped, tracking weaker oil prices, while banks were under pressure due to worries about a deep economic downturn. Key benchmark indices in Germany and UK were down by between 0.81% to 1.41%. While France's CAC 40 rose 0.08%.
US stocks gained on Tuesday, 6 January 2009, on the increased likelihood of a government stimulus package after the release of minutes from the last Federal Reserve policy meeting painted a dismal picture of the US economy. The Dow Jones industrial average was up 62.21 points, or 0.69%, to 9,015.10. The Standard & Poor's 500 Index gained 7.25 points, or 0.78%, to 934.70. The Nasdaq Composite Index added 24.35 points, or 1.5%, to 1,652.38.
US President-elect Barack Obama's proposed package of spending and tax-cut measures is estimated at nearly $775 billion over the next two years. Data released on Tuesday showed that pending sales of US homes dropped in November 2008 to their lowest level in at least seven years and that the country's services sector shrank for the third consecutive month in December 2008.
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
7/1/2009 505216 ALFRED HERBE JAIN INDUSTRIAL AND COMMERCIAL B 16251 97.92
7/1/2009 505216 ALFRED HERBE RAGHVENDRA MOHTA S 4114 97.90
7/1/2009 533026 CHEMCEL NEW PLANET TRADING CO PVT LTD S 300999 3.90
7/1/2009 532610 DWAR SUGAR V VAIDYANATHAN S 100000 49.00
7/1/2009 524522 LAFAN PETROC YASH SHARES AND STOCK PVT.LTD S 150000 12.00
7/1/2009 500313 OIL COUNTR T RAJENDER KUMAR B 240000 42.25
7/1/2009 500313 OIL COUNTR T KAMAL CHORDIA B 240000 42.13
7/1/2009 500313 OIL COUNTR T NAVMEE SEC. PVT. LTD S 391752 42.25
7/1/2009 531583 RAP MEDIA SANJAY JAGDISH PODDAR B 50213 29.30
7/1/2009 531324 ROSELABS FIN ASHWINI HI RISE AND FARMA PVT LTD B 110000 5.53
7/1/2009 531324 ROSELABS FIN SURVASHAYA FARMA AND DEVELOPERS PVT LTD B 97200 5.54
7/1/2009 531324 ROSELABS FIN S L TRADES AND FINANCE I PVT S 140000 5.54
7/1/2009 531324 ROSELABS FIN FALCON COMPLEX PVT LTD S 60000 5.52
7/1/2009 531898 SANGUINE MD COMFORT INTECH LIMITED S 75737 7.73
7/1/2009 500376 SATYAM COMP SWISS FINANCE CORP MAURITIUS LTD S 7786759 74.61
7/1/2009 500376 SATYAM COMP ABERDEEN INTERNATIONAL INDIA OPPORTUNITIES FUND MAURITIUS LTD S 9830811 43.41
7/1/2009 500376 SATYAM COMP ABERDEEN ASSET MANAGERS LTD ABERDEEN GLOBAL ASIA PACIFIC FUND S 4179064 43.41
7/1/2009 532765 USHER AGRO PRITESH ASHOK PATEL S 305555 65.15
7/1/2009 532765 USHER AGRO R U RAMCHANDANI S 631703 65.16
7/1/2009 514470 WINSOME TEXT KUMKUM STOCK BROKER PRIVATE LIMITED B 58611 31.90
7/1/2009 514470 WINSOME TEXT KUMKUM STOCK BROKER PRIVATE LIMITED S 71911 32.43
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
07-JAN-2009,OILCOUNTUB,Oil Country Tubular Ltd,SAROJ CHORDIA,BUY,240000,42.07,-
07-JAN-2009,OILCOUNTUB,Oil Country Tubular Ltd,SULOCHANA,BUY,240000,42.23,-
07-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,C D INTEGRATED SERVICES LTD,BUY,3955214,65.37,-
07-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,EAST INDIA SECURITIES LTD.,BUY,3528161,80.08,-
07-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,KAUSHIK SHAH SHARES & SECURITIES PVT LTD,BUY,9500164,57.27,-
07-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,P R B SECURITIES PRIVATE LTD,BUY,14725592,73.97,-
07-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,TRANSGLOBAL SECURITIES LTD.,BUY,4089712,67.05,-
07-JAN-2009,APTECHT,Aptech Limited,CITIGROUP GLOBAL MARKETS MAURITIUS P LTD DR CONV AC,SELL,330000,81.78,-
07-JAN-2009,HDIL,Housing Development and I,TCI CYPRUS HOLDING LIMITED,SELL,3495168,119.17,-
07-JAN-2009,IBREALEST,Indiabulls Real Estate Li,GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD,SELL,2407916,114.04,-
07-JAN-2009,IVRCLINFRA,IVRCL Infra & Proj Ltd,MERRILL LYNCH CAPITAL MARKETS ESPANA S.A. SVB,SELL,1275995,123.84,-
07-JAN-2009,OILCOUNTUB,Oil Country Tubular Ltd,NAVMEE SECURITIES PRIVATE LIMITED,SELL,378659,42.25,-
07-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,ABERDEEN ASSET MGRS LTD - ABERDEEN GLOBAL -ASIA PACIFIC FUND,SELL,6601436,41.82,-
07-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,ABERDEEN INTERNATIONAL INDIA OPPORTUNIES FUND(MAUR) LTD,SELL,15529189,41.82,-
07-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,C D INTEGRATED SERVICES LTD,SELL,3955214,65.68,-
07-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,EAST INDIA SECURITIES LTD.,SELL,3445559,85.02,-
07-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,FIDELITY MANAGEMENT AND RESEARCH COMPANY A/C FIDELITY INVES,SELL,4000000,108.96,-
07-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,KAUSHIK SHAH SHARES & SECURITIES PVT LTD,SELL,9503664,54.14,-
07-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,MORGAN STANLEY MAURITIUS COMPANY LTD,SELL,4771000,68.68,-
07-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,P R B SECURITIES PRIVATE LTD,SELL,14710855,74.81,-
07-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,SWISS FINANCE CORPORATION (MAURITIUS) LIMITED,SELL,5967199,85.57,-
07-JAN-2009,SATYAMCOMP,Satyam Computers Ltd,TRANSGLOBAL SECURITIES LTD.,SELL,4089111,63.07,-
The market may extend strong gains of the past few days on firm Asian stocks, resumption of buying by foreign funds and on reports that state-run banks are likely cut lending rates further next month. But concerns about Q3 results may keep a lid on prices.
Analysts widely expect dismal Q3 December 2008 results due to a sharp fall in demand, slowing economic growth and recession in major economies such as the United States, eurozone and Japan. The earnings parade will be kicked off by private sector lender Axis Bank on Friday, 9 January 2009, followed by IT bellwether Infosys Technologies on 13 January 2009.
Asia-Pacific stocks extended recent gains on Wednesday, 7 January 2009, on hopes for a US economic stimulus package. Key benchmark indices in Japan, Hong Kong, Singapore, South Korea, Australia and Taiwan were up by between 0.07% to 1.89%
US stocks gained on Tuesday, 6 January 2009, on the increased likelihood of a government stimulus package after the release of minutes from the last Federal Reserve policy meeting painted a dismal picture of the US economy. The Dow Jones industrial average was up 62.21 points, or 0.69%, to 9,015.10. The Standard & Poor's 500 Index gained 7.25 points, or 0.78%, to 934.70. The Nasdaq Composite Index added 24.35 points, or 1.5%, to 1,652.38.
US President-elect Barack Obama's proposed package of spending and tax-cut measures is estimated at nearly $775 billion over the next two years. Data released on Tuesday showed that pending sales of US homes dropped in November 2008 to their lowest level in at least seven years and that the country's services sector shrank for the third consecutive month in December 2008
Closer home, foreign institutional investors (FIIs) have resumed buying. As per provisional data released by the stock exchanges after trading hours, foreign funds on Tuesday, 6 January 2009, bought shares worth a net Rs 374.02 crore. Foreign funds had bought shares worth a net Rs 530 crore in three trading sessions from 1 January 2009 to 5 January 2009. After a sustained inflows earlier in the month in December 2008, FIIs had turned sellers towards end of that month.
Coordinated policy measures from the central bank and the government to boost sagging growth has boosted the bourses. The BSE Sensex jumped 1,007.01 points or 10.79% to 10,335.93 on 6 January 2009 from a recent low of 9,328.92 on 26 December 2008.
The Reserve Bank of India (RBI) on Friday, 2 January 2009, cut the repo rate and the reverse repo rate by 100 basis points each, with immediate effect. Repo rate is the rate at which RBI lends to commercial banks and reverse repo rate is the rate at which RBI accepts deposits from banks. After the latest cuts, the repo rate is now at 5.5% and the reverse repo is now at 4%, the lowest ever.
The RBI also announced a cut in cash reserve ratio, the proportion of deposits banks must keep with the central bank, by 50 basis points to 5% with effect from 17 January 2009. Lower interest rates may revive the domestic economy which has been slowing faster than expected due to high interest rates and the global financial crisis.
Complementing monetary easing by the RBI, the government enhanced the spending power of states with specific measures to boost credit availability in the second fiscal stimulus package. It offered additional sops to exporters and the small-scale sector, besides raising the level of protection for cement and steel sectors a tad. It has also incentivised purchase of commercial vehicles. Both the RBI and the government measures were announced after trading hours on Friday, 2 January 2009.
The rupee gained on Wednesday with a rise in regional stock markets offset by the dollar's strength against major currencies. At 9:10 IST, the partially convertible rupee was 48.48/49 per dollar, compared with Tuesday's close of 48.66/69.
Oil was steady under $49 on Wednesday, after weak US economic data sparked a bout of profit-taking overnight, outweighing escalating tensions in the Middle East and widening supply cuts from the Russian gas row. US crude for February 2009 delivery was up 6 cents at $48.64 a barrel Oil prices have risen nearly 50% since the intraday low of $32.40 reached on 19 December 2008, boosted by worries over supply disruptions from Israel's deepening incursion into Gaza, Russia's gas row with Ukraine, and mounting evidence of the Orgainsation of Petroleum Exporting Countries (Opec)â€™s compliance with production cuts.
We recommend a buy in BGR Energy Systems from a short-term trading perspective.
It is clearly visible from the charts of the stock that after recording an all-time low of Rs 115 on December 2, it began to trend upward. This trend reversal was triggered by the stock’s prolonged positive divergence displayed in the weekly relative strength index (RSI). Since then, the stock has been on a medium-term uptrend. While trending up, it breached its 21- and 50-day moving averages recently.
Furthermore, the stock is trading well above these averages. Reinforcing the bullish momentum, the stock jumped by 10 per cent on January 6. We notice that there is an increase in volume over the past three trading sessions. The daily RSI has entered the bullish zone and the weekly RSI is on the verge of entering the neutral region from the bearish zone. Our short-term forecast for the stock is positive. We expect the stock’s uptrend to prolong until it hits our price target of Rs 202 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 172.
The stake owned by founders of Satyam Computer Services has fallen to 3.6% from 5.1% after institutional lenders sold the stock. Satyam had said earlier the founders' stake might have been diluted as institutional lenders to whom they had pledged their shares exercised options to cover margin calls.
IL&FS Trust Company had sold 24.52 million shares in Satyam Computer Services that were pledged with it as trustee on behalf of several debenture holders and lenders. The shares had been sold since 23 December 2008, IL&FS said in a statement. The shares constitute 3.6% of Satyam's shares on issue as at 20 October 2008.
Nifty (3,113) SUP: 3,068
Buy ICICI Bank (523) SL 517
Target 534, 538
Buy Reliance Capital (603) SL 596 Target 615, 618
Buy Jindal Steel (1044) SL 1030 Target 1070, 1080
Buy Infosys (1168) SL 1150
Target 1197, 1203
Sell IOC (435) SL 440
Target 425, 423
After yesterday's pullback the market bias remains positive. The overnight gains in US markets and the major Asian indices like NIkkei, Hang Sang, Kospi, Straits Times and Jakarta Composite are trading with gains at nearly 1-2% each. The investors should remain cautious as intra-day volatility can not be ruled out. Among the domestic indices, the Nifty could test higher levels of 3160 and may dip to 3060 on the downside. The Sensex has a likely support at 10200 and may face resistance at 10500.
US indices jumped on Tuesday in a broad-based rally as investors looked beyond the Federal Reserve's dour outlook on the economy and instead scooped up shares hit in last year's big sell off. While the Dow Jones was up by 62 points at 9015, the Nasdaq ended 24 points up at 1652.
Except few all the Indian floats ended with gains on the US bourses. Rediff rose over 9% while Tata Motors, Satyam, ICICI Bank and Dr Reddy gained over 4-6% each and Infosys, HDFC Bank and Wipro gained over 1-2% each. However, Patni Computers, VSNL and MTNL lost marginally.
Crude oil prices slipped marginally with the Nymex light crude oil for February delivery slipped by 23 cents at $48.58 a barrel. In the commodity space, the Comex gold for Gold series moved up by $8.20 to settle at $866 a troy.
Reliance Industries has decided to stop gasoline supplies to Iran after fulfilling all contractual obligations. (BS)
ONGC Videsh raises Rs50bn to fund Imperial buy. (ET)
ICICI Bank reviews its used car financing business model. (ET)
Tata Steel’s Q3 sales stood at 1.07m tons, lower by 14% yoy. (FE)
HUL plans to transfer business of Ayush and Lakme Beauty to subsidiary Lakme Lever. (ET)
Taro rejects Sun Pharmaceuticals revised offer. (ET)
HCC plans to set up a high end township project near Sanand at a cost of Rs300bn. (ET)
Indiabulls Financial Services released Akruti City’s 3% equity after the real estate firm paid back a major part of the loan amount. (ET)
IDBI Bank and SIDBI shortlisted to float SPV for funding NBFCs. (ET)
Satyam promoters’ stake falls to 3.6%. (ET)
Future Group targets sales of Rs9bn from its shopping fair. (ET)
Supreme Court has dismissed a petition by Glaxo SmithKline seeking to restrain the government from taking coercive action against it. (ET)
KKR has approached Wipro, TCS and Tech Mahindra for a possible sale of its stake in Aricent (formerly known as Flextronics Software Systems). (ET)
Air India to cut basic fares between 45-60% in February. (ET)
Peugot, French auto major, is mapping a re-entry into the Indian markets. (ET)
Income Tax department attached Pyramid Saimira’s bank accounts to recover an outstanding amount of Rs266m. (ET)
MMTC floats export bids for 15,000 tons of sugar. (ET)
Coastal power projects may have to import 30% of their coal needs. (ET)
IIFC arm has sanctioned US$200m loan to Tata Power’s Mundra Project and US$70m to ADAG’s Mumbai Metro rail project. (ET)
Maytas Infra bags Rs1.1bn project from southern railways. (FE)
GMDC has invited bids for valuing its mineral ore reserves at Ambaji, Gujarat. (FE)
Government accuses Airtel, Idea and Vodafone for hoarding spectrum. (FE)
Syndicate Bank raises Rs3.4bn via private placement of bonds. (Mint)
IOC scraps oil bond issue. (Mint)
L&T bagged orders worth Rs11bn. (BL)
Aurobindo Pharma received approval from the Canadian regulator for its new epilepsy drug. (BL)
Reliance Communications has moved TDSAT against DoT for withdrawing an approval to offer both GSM and CDMA services in six circles. (BL)
NTPC Executives’ Federation of India (NEFI) plans an indefinite strike from February 25 demanding better pay packages. (BL)
Tata Power plans to divest its stake in group companies Tata Teleservices Ltd and Tata Teleservices (Maharashtra) Ltd to raise about Rs20bn for ongoing projects. (BS)
Airtel and Research In Motion (RIM) launched Blackberry Pearl Flip 8220 smartphone in India on Tuesday. (BS)
Punj Lloyd bagged a contract for civil works for Rs2.6bn from Airports Authority of India. (BS)
Growth in exports for December is estimated to decline by 1.6%, lower than that in October and November. (ET)
National Security Council has put the liberal telecom FDI norms under scanner. (ET)
Government plans reservation policy for ships. (ET)
Government targets US$175bn exports this fiscal. (ET)
Centre plans to raise Rs500bn in January and February, taking its total borrowing to nearly Rs2trn for the fiscal. (FE)
Power tariff norms to be announced by 15th January. (FE)
Truck sales plunged 73.5 per cent to 6,221 units in December 2008 against 24,222 units logged in the same month the previous year. (BL)
A pessimist is one who feels bad when he feels good for fear he'll feel worse when he feels better.
The bulls took a bit of a breather on Tuesday after last week’s gains. Most players are likely to play safe in the run up to the quarterly earnings. The bias remains positive though, given the firm global markets and some pick up in institutional investments. Investors are hoping that the aggressive monetary easing by the RBI and the fiscal stimulus will soon start bearing fruits. In the US too, there is growing hope that the new regime, led by president-elect Barack Obama will be able to engineer a swift turnaround.
The current rebound can be attributed to a growing belief that most bad news is reflected in stock prices. So, one has to look beyond the first few months of the New Year and build a base for the anticipated recovery in the second half. Having said that, the jury is still out on whether the market saw a bottom in October. Experts are divided over whether those lows will be hit again. As a result, the best strategy is to take each day as it comes rather than look too far ahead.
Today, we expect the market to open firm in line with the global trend. Thereafter, the key indices’ move will hinge on how the institutions behave. Indian markets will be shut on Thursday for Moharam. So, we do not rule out some softening later in the day. Satyam will continue to hog the limelight ahead of the company's Board meeting on January 10.
Foreign funds were net buyers in the cash segment on Tuesday at Rs3.74bn (provisional) while the local institutions pulled out a modest Rs118mn. In the F&O segment, FIIs were net buyers of Rs3.85bn. Foreign funds were net buyers of Rs3.16bn in the cash segment on Monday. Mutual Funds were net buyers of Rs1.86bn on the same day.
US stocks advanced on Tuesday on growing optimism that President-elect Barack Obama's new multi-billion-dollar stimulus package will revive the sagging fortunes of the world's largest economy. Investors chose to looked beyond the Federal Reserve's grim outlook on the economy and instead snapped up shares hit hard in last year's historic crash.
Financials, IT and energy shares fronted the market's gains, while health care, consumer staples and utilities proved the laggards.
Up more than 100 points shortly after the opening bell, the Dow Jones Industrial Average dipped briefly into the red and then resumed its climb in afternoon trade. At the close, the blue-chip index was up 62.21 points at 9,015.1, with 19 of its 30 components closing higher.
The Standard & Poor’s 500 Index rose 0.8% to 934.70, rebounding from Monday’s 0.5% drop and climbing to the highest since Nov. 5. The index is up 3.5% in 2009 after sliding 38% in 2008, its worst yearly loss since 1937. The S&P 500 now up over 8% in the last two weeks in a classic "Santa Claus" rally.
The Nasdaq Composite index rose 24.35 points or 1.5% to 1,652.38. IBM, Intel, Hewlett-Packard and Cisco Systems were the tech sector's big gainers.
The FOMC minutes for the Dec. 15-16 meeting showed that the monetary policymakers see increased risk of depression and deflation. The central bankers said GDP growth will decline in 2009, and that even by using non-traditional methods to try to help the economy stabilize, the outlook will remain weak for some time. The report also showed that Fed policymakers think unemployment will rise significantly into 2010.
Meanwhile, economic stimulus appeared to be the top priority as a new, more Democrat-heavy Congress was sworn in to office.
In the third trading session of 2009, trading remained light, topping 1.3 billion on the New York Stock Exchange, and 787 million shares on the Nasdaq. Market breadth was positive. Advancers overtook declines nearly 4 to 1 on the NYSE and by almost 3 to 1 on the Nasdaq.
The number of homes under contract to be sold fell 4% in November, according to the National Society of Realtors. Pending home sales index fell to 82.3 in November, worse than expected and the lowest level since the group began tracking the index in 2001.
The government's November factory orders report showed activity declined by 4.6% after dropping 6% in the previous month. Economists thought orders would drop 2.3%.
On the upside, the services sector of the economy showed some improvement in December, although activity remained weak. The Institute for Supply Management's services sector index rose to 40.6 from 37.3 in November. Economists had forecast a reading of 36.
On the corporate front, Dow Chemical Co. said that it would pursue legal action against Kuwait's Petrochemical Industries Inc. over the unraveling of a joint venture. Shares of Dow Chemical rose 6.6%.
Switzerland's Logitech International SA withdrew its financial targets for the year, and said it would cut its workforce by 15%. The maker of computer mice also warned of a worsening economic climate ahead.
Toyota Motor said it will halt production at its Japanese plants for 11 days in February and March in an effort to move inventory. On Monday, Toyota had reported a 37% year-over-year drop in December auto sales.
After the close, aluminum giant Alcoa said that it will cut at least 13,500 jobs, or 13% of the company's worldwide workforce by the end of the year, as a means of cutting costs. Alcoa stock was volatile in extended-hours trading.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 2.45% from 2.48% late on Monday. Yields on the 2-year, 10-year and 30-year Treasurys all hit record lows last month.
Lending rates were mixed. The 3-month Libor rate slipped to 1.41% from 1.42% on Monday, a 4 1/2-year low. Overnight Libor edged up to 0.13% from 0.12% Monday. Libor is a key bank lending rate.
The dollar gained versus the euro and yen. COMEX gold for February delivery rose $8.20 to settle at $866 an ounce.
US light crude oil for February delivery fell 23 cents to settle at $48.58 a barrel on the New York Mercantile Exchange. Gasoline prices rose 1.6 cents to a national average of $1.688 a gallon.
European markets managed to keep the year's winning streak alive, led by gains in pharmaceuticals, auto and metal stocks. The pan-European Dow Jones Stoxx 600 index rose 2% to 212.87.
The UK's FTSE 100 index closed up 1.3% at 4,638.92, while Germany's DAX 30 index rose 0.9% to 5,026.31 and the French CAC-40 index climbed 1.1% to 3,396.22.
Northward journey may continue
Indian markets rose for fourth straight trading session on Tuesday. After starting off the day on a subdued note, key indices turned highly volatile which saw the BSE benchmark Sensex hitting an intra-day low of 10,150 in the mid-afternoon trades.
However, from there on markets sharply bounced back led by gains in the metals’, banking and auto stocks. Finally, the BSE benchmark Sensex ended at 10,335 surging 60 points and the NSE Nifty index ended flat at 3,112.
Among the BSE Sectoral indices BSE Metal index (up 2%), BSE Bankex index (up 1.6%) and BSE Auto index (up 1.5%). On the other hand BSE Realty index slipped 4% and the BSE Teck index dropped 1.5%.
Market breath was positive, 1,252 stocks advanced against 1,262 declines, while, 91 stocks remained unchanged.
Dewan Housing declined by 2% to Rs86, the company announced that the board of directors of the company would meet on January 8, 2009 to consider acquisition. The scrip touched an intra-day high of Rs91 and a low of Rs84 and recorded volumes of over 33,000 shares on BSE.
Shares of Nagarjuna Construction stood firm throughout the trading session. The stock was up by over 6% to Rs91 touching an intra-day high of Rs95 and a low of Rs84 recording volumes of over 8,00,000 shares on BSE.
Shares of BGR Energy rallied by over 10% to Rs182 after the company announced that it raised Rs21.05bn for working capital expenses from a consortium led by SBI, stated reports. The scrip touched an intra-day high of Rs185 and a low of Rs165 and recorded volumes of over 7,00,000 shares on BSE.
Shares of L&T bounced back sharply and ended flat at Rs848 after the company announced that it won order worth Rs11bn in the building & factories segment. The scrip touched an intra-day high of Rs867 and a low of Rs832 and recorded volumes of over 11,00,000 shares on BSE.
Shares of IVRCL Infra advanced by over 3% to Rs167 after the company yesterday announced that it has bagged orders worth Rs2.6bn from Bangalore Metro Rail Corporation, IOC and Karnataka water supply board.
The scrip touched an intra-day high of Rs169 and a low of Rs159 and recorded volumes of over 11,00,000 shares on BSE.
Shares of Tech Mahindra rallied by over 4% to Rs295 after reports stated that M&M Group of companies has approached Satyam for an all-share merger.
However, media reports stated that Tech Mahindra denied, saying that it isn’t looking at bid for Satyam unit Satyam’s board meeting on January 10, 2009.
Tech Mahindra hit an intra-day high of Rs325 and a low of Rs287 and recorded volumes of over 5,00,000 shares on BSE.
Satyam also ended higher by over 7% at Rs179 and recorded volumes of over 93,00,000 shares on BSE.
Gold and silver prices rise for the first time in 2009
After three sessions of fall, bullion metal prices ended higher on Tuesday, 06 January, 2009 due to the weaker dollar. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.
On Tuesday, Comex Gold for February delivery rose $8.2 (1%) to close at $866.8 an ounce on the New York Mercantile Exchange. It fell to a low of $838.8 during intra day trading. Last week, gold prices gained 1%. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (15%) since then.
In 2008, gold prices ended higher by 5.5%. The dollar index has gained 12% that year. In the last quarter, gold prices ended marginally higher by 0.6%. For the third quarter ended September, 2008, gold prices ended lower by 5.1%. It was the first quarterly loss for the yellow metal since the second quarter in FY 2007. Prior to that, the yellow metal ended second quarter with a marginal gain of 0.7%. For first quarter prices gained 10.7%.
On Tuesday, Comex silver futures for March delivery rose 15.5 cents (1.6%) to $11.445 an ounce. Last week, silver has gained 9%. For 2008, silver lost 24%.
At the currency market on Tuesday, the dollar was down against most major counterparts but up against the euro. The dollar index lost 0.4%.
In the crude market on Tuesday, crude futures went lower. Crude for February delivery ended down $0.23 or 0.5%, at $48.58 a barrel on the New York Mercantile Exchange.
Last year, the weakening dollar and higher global demand for raw materials had led to records for commodities including gold. Gold reached a record in March 2008 as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the last move, the Federal Reserve has cuts its target bank lending rate to 0.25% from 5.25% in September, 2007. The Fed did it in nine steps.
Prior to 2008, gold had 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. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
At the MCX, gold prices for February delivery closed higher by Rs 46 (0.34%) at Rs 13,375 per 10 grams. Prices rose to a high of Rs 13,435 per 10 grams and fell to a low of Rs 13,094 per 10 grams during the day's trading.
At the MCX, silver prices for March delivery closed Rs 120 (0.65%) higher at Rs 18,482/Kg. Prices opened at Rs 18,401/kg and went to a high of Rs 18,625/Kg during the day's trading.
Prices cross $50 during mid day trading but ends lower
After rallying for four previous sessions, crude oil prices ended lower today on Tuesday, 06 January, 2009. Though prices had climbed up earlier in the session and had crossed the $50 mark after a long time, prices dropped at the end. Prices ended lower today due to dour economic data.
On Tuesday, crude-oil futures for light sweet crude for February delivery closed at $48.58/barrel (lower by $0.23 or 0.5%) on the New York Mercantile Exchange. During intra day trading, prices touched a high of $50.47. Prices reached a high of $147 on 11 July but have dropped almost 63% since then. Year to date, in 2009, crude prices have shot up by 8.7%.
Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
The Commerce Department reported today that shipments from U.S. factories plunged a record 5.3% in November, 2008. Lower demand and falling prices were the reasons for this.
In line with the above report, in another separate report, The Institute for Supply Management reported today that nonmanufacturing sectors in the U.S. economy contracted in December.
As per the report, the ISM nonmanufacturing index rose to 40.6% in December from a record low of 37.3% in November. Readings below 50% indicate that more firms are contracting than expanding. In December, only one industry reported growth - retail trade.
Against this background, February reformulated gasoline rose 0.6% to $1.1892 a barrel and February heating oil gained 3.2% to $1.6263 a gallon. Year to date, gasoline is up 11.7% and heating oil is up 12.3%.
Natural gas for February delivery was down 1.5% at $5.983 per million British thermal units.
At the MCX, crude oil for January delivery closed at Rs 2,387/barrel, higher by Rs 71 (3.1%) against previous day's close. Natural gas for January delivery closed at Rs 290.3/mmbtu, higher by Rs 1.6/mmbtu (0.55%).