India Strategy - General Elections
Monday, March 09, 2009
The Sensex ended lower on account of sustained selling pressure seen in index heavyweights-J P Associates, State Bank Of India and DLF. Realty, FMCG and realty sectors also led the declines.
BSE Midcap and Smallcap index declined 1.27% and 1.55% respectively.
BSE Realty underperformed all other sectors. The counter plunged by 3.21% followed by FMCG and Bankex, which was down by 2.78% each.
European stocks opened on a negative note and continues to trade in red on concerns of global slowdown. HSBC Holdings declined 12% in London. UK`s benchmark index FTSE 100 fell 31.25 points, or 0.89%, to trade at 3,499.48.French benchmark index CAC 40 declined 43.34 points, or 1.71%, to trade at 2,491.21. Germany`s benchmark index DAX dropped 37.17 points, or 1.01%, to trade at 3,629.24.
Indian stock market opened the day on a negative zone after a rise of 1.56% on the previous working day. The 30-share index, BSE Sensex opened with a loss of 66.60 points, at 8,259.22 on Monday.
The Sensex ended the day with a loss of 165.42 points, or 1.99% at 8,160.40 after touching a high of 8,259.22 and a low of 8,110.10. The broad-based NSE Nifty fell 47.00 points, or 1.79% at 2,573.15 after hitting a high of 2,621.25 and a low of 2,555.60.
Biggest gainers in the 30-share index were Housing Development Finance Corporation (2.65%), Maruti Suzuki India (0.25%), and Mahindra & Mahindra (0.22%).
On the other hand, Jaiprakash Associates (5.32%), State Bank Of India(4.68%), DLF (4.54%), Ranbaxy Laboratories (4.46%), Sun Pharmaceutical Industries (4.08%), and Reliance Communications (4.03%) were the biggest losers in the Sensex.
Overall market breadth was extremely negative. Out of the total 2470 stocks traded at BSE, 799 advanced, 1,583 declined while 88 remained unchanged.
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
9/3/2009 532919 ALLIED COMP SHREE BHIKSHU FIN.PVT LTD S 5945806 0.41
9/3/2009 533026 CHEMCEL REKHA BHANDARI B 179493 5.08
9/3/2009 530393 DB(INTR) STBR SADHNA RATHI S 20010 18.91
9/3/2009 530393 DB(INTR) STBR SAROJ RATHI S 19725 190.00
9/3/2009 533055 EDSERV SOFT OPG SECURITIES P LTD B 76148 48.94
9/3/2009 533055 EDSERV SOFT NIRMAN MANAGEMENT SERVICES PVT LTD B 250000 49.91
9/3/2009 533055 EDSERV SOFT HANOVER SQUARE CAPITAL UK LTD S 200000 50.00
9/3/2009 533055 EDSERV SOFT OPG SECURITIES P LTD S 66148 49.65
9/3/2009 533055 EDSERV SOFT MAVI BUSINESS VENTURE LTD. S 200000 50.00
9/3/2009 530407 EPIC ENERGY WALL STREET CAPITAL MARKET PRIVATE LTD B 41000 24.85
9/3/2009 530407 EPIC ENERGY RAJESH JOSHI S 45000 24.87
9/3/2009 502865 FORBES & CO SEEPRA SUMEET KABRA S 105000 330.00
9/3/2009 531137 GEMSTONE INV RAJESHPRAVINBHANUSHALI S 24000 23.71
9/3/2009 532388 INDIAN OVERS TCI CYPRUS HOLDING LIMITED S 12863437 36.50
9/3/2009 505840 JAIPAN INDUS SHIWAM KUMAR BHARTI S 37499 42.07
9/3/2009 511092 JMD TELEFILM JOHARPALSINGH S 6000 32.55
9/3/2009 531602 KOFF BR PICT NIDHI MAHENDRA SHAH B 393500 2.52
9/3/2009 511728 KZLEASING HARDIK M MITHANI B 18000 62.34
9/3/2009 511728 KZLEASING KARAN MAHESHKUMAR HADVANI B 30337 61.50
9/3/2009 511728 KZLEASING JYOTIKABEN MAHESHBHAI HADVANI B 16000 61.51
9/3/2009 511728 KZLEASING HARDIK M MITHANI S 18000 63.32
9/3/2009 511728 KZLEASING VISHAL V HINSU S 40100 61.87
9/3/2009 531595 MONEY MAT F GLADIOLUS PROPERTY INVESTMENTS PVT LTD B 851549 61.65
9/3/2009 531595 MONEY MAT F PUJIT AGARWAL S 425000 61.65
9/3/2009 531595 MONEY MAT F GUNJAN AGGARWAL S 425000 61.65
9/3/2009 532517 PATNI COMPUT SWISS FINANCE CORPORATION MAURITIUS LIMITED S 714978 105.65
9/3/2009 523523 RAINBOW PAPE ULTRATECH PAPER PVT. LTD B 70000 35.00
9/3/2009 530253 RAJAS TUBE M DEEPAK M. JAIN B 95924 7.60
9/3/2009 500366 ROLTA IND CREDIT SUISSE SINGAPORE LIMITED S 925000 44.46
9/3/2009 512048 SPLASH MEDIA SUNIL BHANDARI B 10000 90.01
9/3/2009 512048 SPLASH MEDIA KAMLESH NAHAR B 10000 89.95
9/3/2009 512048 SPLASH MEDIA REKHA BHANDARI B 10000 90.05
9/3/2009 532904 SUPREME INFR DAR S BUSINESS FINANCE PVT LTD B 175000 20.41
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
09-MAR-2009,EDSERV,Edserv Softsystems Limite,BP FINTRADE PRIVATE LIMITED,BUY,93106,47.84,-
09-MAR-2009,EDSERV,Edserv Softsystems Limite,MULTIPLIER S AND S ADV PVT LTD,BUY,92160,47.65,-
09-MAR-2009,EDSERV,Edserv Softsystems Limite,NIRMAN MANAGEMENT SERVICES,BUY,250000,50.04,-
09-MAR-2009,IBRETAILS,Indiabulls Retail Ser Ltd,VIMLA SURESJH JAJOO,BUY,244000,10.50,-
09-MAR-2009,IOB,Indian Overseas Bank,LIFE INSURANCE CORPORATION OF INDIA,BUY,15000000,36.50,-
09-MAR-2009,EDSERV,Edserv Softsystems Limite,BP FINTRADE PRIVATE LIMITED,SELL,97085,48.44,-
09-MAR-2009,EDSERV,Edserv Softsystems Limite,HS FII INVESTMENTS LIMITED,SELL,200000,50.00,-
09-MAR-2009,EDSERV,Edserv Softsystems Limite,MULTIPLIER S AND S ADV PVT LTD,SELL,83921,47.73,-
09-MAR-2009,EDSERV,Edserv Softsystems Limite,NIRMAN MANAGEMENT SERVICES,SELL,161324,46.10,-
09-MAR-2009,IBRETAILS,Indiabulls Retail Ser Ltd,SEEPRA SUMEET KABRA,SELL,244000,10.50,-
09-MAR-2009,IOB,Indian Overseas Bank,TCI CYPRUS HOLDING LIMITED,SELL,22500000,36.50,-
09-MAR-2009,ROLTA,Rolta India Ltd.,CREDIT SUISSE (SINGAPORE) LIMITED A/C CREDIT SUISSE (SINGAP,SELL,2075000,44.48,-
09-MAR-2009,ROLTA,Rolta India Ltd.,FIDELITY INVESTMENTS MANAGEMENT (HONG KONG) LTD A/C FID INV,SELL,1571000,44.67,-
Indian market extended its initial losses to close the day on red zone. Significant selling pressure throughout the trading session was led by negative European markets along with weak US index futures. Along with this, lower US jobless data also contributed to the downbeat reaction. Further negativity was also added due to sustained selling by foreign funds.
The domestic market tumbled since initial bell triggered by blood bath in Asian markets. Besides, the US stock markets on Friday ended in mixed after a sharp volatile session, as weak economic data weighed over the sentiments. The nonfarm payrolls in February fell 651,000, in-line with expectations and the unemployment climbed more than expected to a 25-year high of 8.1%. Extending its losses further, benchmark indices continued to trade on negative note on intense selling pressure observed in key stocks. Additionally, forthcoming local holidays also forced investors to trim their positions further. Finally, market ended with negative gap led by sharp fall over the ground. BSE Sensex ended below 8,200 mark and NSE Nifty below 2,600 level. From the sectoral front, most of the selling was seen in Reality, FMCG, Bank, Teck, IT, Capital Goods, Metal and Consumer PSU stocks. BSE Mid Cap and Small Cap stocks also remained out of favour. However, Auto stocks remained in limelight as observed most of the buying from this basket.
Among the Sensex pack 27 stocks ended in red territory and 3 in green. The market breadth indicating the overall health of the market remained negative as 1584 stocks closed in red while 798 stocks closed in green and 88 stocks remained unchanged in BSE.
The BSE Sensex closed lower by 165.42 points at 8,160.40 and NSE Nifty ended down by 47 points at 2,573.15. BSE Mid Caps and BSE Small Caps ended with losses of 32.81 points and 45.05 points at 2,553.49 and 2,866.68 respectively. The BSE Sensex touched intraday high of 8,259.22 and intraday low of 8,110.10.
Losers from the BSE Sensex pack are JP Associates (5.32%), SBI (4.68%), DLF Ltd (4.54%), Ranbaxy Lab (4.46%), Sun Pharma (4.20%), RCom (4.03%), ITC Ltd (4%), TCS Ltd (3.83%) and Hindalco (3.56%).
Gainers from the BSE Sensex pack are HDFC (2.65%), Maruti Suzuki (0.25%) and M&M Ltd (0.22%).
On the global markets front the Asian markets which opened before the Indian market, ended lower. Stocks tumbled on concerns that corporate earnings will worsen further as the World Bank predicted the global economy to shrink for the first time since World War II. Shanghai Composite, Hang Seng, Nikkei 225 and Straits Times index ended lower by 74.26, 576.94, 87.07 and 56.17 points at 2,118.75, 11,344.58, 7,076.03 and 1,456.95 respectively. However, Seoul Composite gained 16.7 points at 1,071.73.
European markets which opened after the Indian market are trading in red as banks slipped after the UK government increased its stake in Lloyds Banking Group. In London FTSE 100 is trading lower by 29.67 points at 3,501.06 and in Frankfurt the DAX index is trading down by 35.94 points at 3,630.47.
The BSE Reality stocks lost (3.21%) or 43.20 points to close at 1,303.63 on reports that falling rates have failed to motivate housing demand. Losers are Housing Development (6.90%), Unitech Ltd (4.98%), DLF Ltd (4.54%), Mahindra Life (4.54%) and Indiabull Real (3.90%).
The BSE FMCG index ended lower by (2.78%) or 51.54 points to close at 1,802.57 due to huge sales in key stocks. ITC Ltd (4.00%), United Brew (3.70%), HUL (3.33%), Britania In (3.25%) and Ruchi Soya (2.95%) ended in negative territory.
The BSE Bank index closed with decrease of (2.78%) or 103.86 points at 3,633.23 as banking industry has not transferred the benefits of recent rate cuts by RBI. Scrips that lost are Karnataka Bank (8.88%), Bank of India (7.84%), Indian Overseas Bank (6.46%), Bank of Baroda (5.27%) and Oriental Bank (5.17%).
The BSE Teck index also plunged (2.58%) or 43.26 points to close at 1,635.55. Tata Teleservices (15.95%), Rolta Ind (12%), Tanla (10.08%), IOL Netcom (9.94%) and Tel Eighteen (8.27%) ended in red.
The BSE IT index lost (2.27%) or 47.03 points at 2,025.09. Gainers are Rolta Ind (12%), TCS Ltd (3.83%), Wipro Ltd (3.49%), Patni Computer (3.11%) and Aptech Ltd (3.07%)
The BSE Auto index ended up by (0.07%) or 1.78 at 2,599.15 due to increase in auto sales to 10.4 lakh units in February 2009 over February 2008. Gainers are Amtek Auto (3.63%), Exide Indus (3.40%), Apollo Tyre (1.89%), Bajaj Auto (1.20%) and Herohonda Motor (0.40%).
Ranbaxy Laboratories dropped 4.46%. The company has received an approval from US Food and Drug Administration for its Abbreviated new drug application to market and manufacture Ramipril Capsules 5mg and 10mg.
Sterlite Industries fell 2.24% on acquisition of Asarco LLC, the US-based bankrupt copper miner for $1.7 billion, 35% lower than its previous bid.
Jindal Saw Ltd ended down by 1.48%. The Equity Shareholders & Creditors of the company at its Court Convened meeting held on March 07, 2009, have approved the Scheme of Amalgamation of Highgate Consultants Ltd. - Subsidiary of the Company.
BHEL dropped by 0.93% despite the announcement by the company that it has won a major contract worth Rs. 810 mn by Powergen Infrastructure for the manufacture and supply of generator transformers for the upcoming Tirora Thermal Power Project of Adani Power Maharashtra Ltd.
Satyam Computer surged 15.80% as the company has started it’s process to select a strategic investor. The bidders will have to register their Expression of Interest (EOI) in participating in the bidding by March 12, 2009 and also need to show Rs 1,500 crore to qualify. The bids will have to be submitted by March 12, 2009. There is no minimum floor price required for the bids.
Lupin Ltd ended up by 1.14%. Lupin Research Park, the R&D wing of the company has announced a tie up with Birla Institute of Technology and Sciences Pilani, Manipal University, Karnataka and Pune University whereby Lupins Research Park at Pune now stands recognized as a center for its employees to pursue their PhD program while working concurrently in Lupin.
Key benchmark indices dropped and the market breadth, indicating the overall health of the market, was weak as subdued-to-weak trend in global markets, a dismal US job data, a weak rupee and concerns of sustained outflow by foreign funds weighed on the domestic bourses. Nevertheless, the market cut losses in late trade as index heavyweight Reliance Industries (RIL) came off the lower level.
The BSE 30-share Sensex lost 165.42 points or down 1.99%, to settle at 8,160.40, its lowest closing in more than three years. The barometer index recovered 50.30 points from the day's low.
Volumes were low as day-traders and other short-term traders stayed away ahead of holidays. BSE clocked a turnover of Rs 2188 crore, much lower than Rs 3,338.61 crore on Friday, 6 March 2009. The market remains closed on Tuesday, 10 March 2009 and Wednesday, 11 March 2009, on account of public holidays on those two days.
Trading in US index futures showed the Dow could fall 106 points at the opening bell on Monday, 9 March 2009
After a weak opening triggered by subdued Asian stocks, the market extended losses in early afternoon trade. The Sensex cut losses soon after that. It weakened again later. The market once again recovered in afternoon trade. However, the recovery was derailed and the market slumped in mid-afternoon trade on lower start of European markets, which opened after the Indian market. The market once again cut losses in late trade.
Indian stocks dropped today, 9 March 2009, despite signs that the stimulus packages announced by the government since December 2008 and an aggressive rate cuts announced by the central bank since October 2008 have started having some positive impact - lower interest rate have helped automobile sales rebound in the past few months.
Further, a large government spending plan may help pump-prime the economy. The economy will also get another stimulus in the form of a huge spending by the political parties for the forthcoming Lok Sabha elections. As per reports, around Rs 6,000 crore would be pumped into the system as political parties and candidates splurge on their campaign and the Election Commission pays a huge bill for conducting the election. And the main beneficiary would be the services sector that often spurs growth.
Further, the forthcoming Indian Premier League (IPL) - the domestic cricket series - will result in a substantial business to the Indian advertising, media and entertainment industry
Another plus point is that prospects look bright for the Rabi harvest in contrast to the previous kharif harvest which saw coarse grains recording lower output. Agriculture remains the mainstay of the economy and if rabi output increases as has been projected, rural demand may rise in the coming months, though perhaps not as much as had been hoped.
According to Aditya Puri, Managing Director, HDFC Bank, Indian banks are flush with funds and interest rates have dropped drastically over the past few months. According to him, the regulators should allow Indian banks to raise long term funds without cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements for such funding. This in turn will enable banks to provide long-term lending to corporates and long-gestation infrastructure projects.
But the investor sentiments remains weak due to sustained selling by foreign funds. Foreign institutional investors (FIIs) have pressed heavy sales this year. FII outflow in February 2009 totaled Rs 2707 crore. FII outflow in calendar year 2009 totaled Rs 9128.30 crore (till 5 March 2009). Globally, investors are pulling out money from hedge funds, forcing hedge fund managers to dump assets.
At the same time, global banks and insurers are selling assets after amassing $1.2 trillion of credit losses and writedowns since the start of 2007. More recently, fears have intensified about the exposure of Western European banks and companies to deteriorating economic conditions in Eastern Europe.
Domestic institutional investors (DIIs) have been absorbing selling by foreign funds.
However, due to political uncertainty, investors are unlikely to build large positions with general election to be held in mid-April 2008 to mid-May 2009. More so at a time when it is highly unlikely that either Congress or BJP comes to power on its own i.e. without the support of other smaller/regional parties.
The market may recover if a coalition led either by Congress or BJP comes to power. But the recovery will be subject to BJP or Congress led coalition coming to power without a support from the Left front which is against key economic reforms. The market will then look for whether the new government which comes to power undertakes second generation reforms that could bring India back on a strong growth path witnessed in five years between 2003 and 2008.
Meanwhile, volatility in the rupee and global commodity prices have added to the woes of India Inc. The recent sharp slide in the rupee will increase in the cost of servicing overseas debt to the extent of the rupee's slide unless the company (which has overseas borrowings) has adopted an effective hedging strategy.
European markets were subdued today, 9 March 2009, as banks slipped after the UK government increased its stake in Lloyds Banking Group. Key benchmark indices in UK, Germany and France were down by between 1% and 2.25%.
Asian markets dropped on concerns corporate earnings will deteriorate further as the World Bank predicted the global economy to shrink for the first time since World War II. Key benchmark indices in China, Hong Kong, Singapore, and Taiwan were down by between 0.55% and 4.84%.
Japan's Nikkei 225 index fell 1.21% to 7,086.03, its lowest close since October 1982.
However, South Korea's Seoul Composite index rose 1.58% after reports quoting a Finance Ministry official indicated South Korea will allow local banks to roll over $720 million in loans maturing today, 9 March 2009 and inject an additional $50 million.
Meanwhile an Asian Development Bank report said the value of global financial assets including stocks, bonds and currencies, probably fell by more than $50 trillion in 2008, equivalent to a year of world gross domestic product. Global stock markets lost about $28.7 trillion in 2008, the report added. Adding to the gloomy picture, the World Bank said on 8 March 2009, the global economy is likely to shrink for the first time since World War II, and trade will decline by the most in 80 years.
US markets recovered in late trade to end on a mixed note, on Friday, 6 March 2009, on reports that Lloyds Banking Group reached an asset-protection deal with the UK government wherein the UK government will pick 77% stake in Lloyds Banking Group after agreeing a deal to underwrite $370 billion of risky assets. Meanwhile the US government said unemployment rate in February 2009 had risen to the highest in 25 years
The Dow Jones Industrial Average gained 32.50 points or 0.49% to 6,626.94 and the S&P 500 index rose 0.83 points or 0.12% to 683.38. However the Nasdaq Composite fell 5.74 points or 0.44% at 1293.85
The BSE 30-share Sensex lost 165.42 points or down 1.99%, to settle at 8,160.40, its lowest closing since 2 November 2005. Sensex opened 66.60 points lower at 8,259.22, also its day's high. At the day's low of 8,110.31, the Sensex lost 215.51 points in mid-afternoon trade.
The S&P CNX Nifty fell 47 points or 1.79% to 2573.15, its lowest closing since 20 November 2008. Nifty March 2009 futures were at 2545.50, at a discount of 27.65 points as compared to the spot closing. Turnover in NSE's futures & options (F&O) segment was Rs 37,897.25 crore, much lower than Rs 48,734.94 crore on Friday, 6 March 2009.
The Sensex is down 1486.91 points or 15.41% in calendar 2009 from its close of 9,647.31 on 31 December 2008. The S&P CNX Nifty is down 386 points or 13.04% in calendar 2009 from its close of 2,959.15 on 31 December 2008.
The market breadth, indicating the overall health of the market, was weak on BSE with 1577 shares declining as compared with 811 that advanced. A total of 89 shares remained unchanged.
The BSE Mid-Cap index (down 1.27%) and BSE Small-Cap index (down 1.55%) outperformed the Sensex.
The BSE Oil & Gas index (down 1.58%), BSE Capital Goods index (down 1.94%), the BSE Power index (down 1.34%), the BSE Metal index (down 1.90%), the BSE Consumer Durables index (down 1.61%), the BSE Auto index (up 0.07%), the BSE PSU index (down 1.71%), the BSE Healthcare index (down 1.03%), outperformed the Sensex.
The BSE IT index (down 2.27%), the BSE TECk index (down 2.58%), the BSE Bankex (down 2.78%), the BSE Realty index (down 3.21%), the BSE FMCG index (down 2.78%), underperfomed the Sensex
Among the 30-member Sensex pack, 26 slipped while only 4 of them rose.
Infrastructure stocks slipped after the government data on Friday, 6 March 2009 showed, that infrastructure sector output grew 1.4% in January 2009 from a year earlier, below an unrevised 2.3% in December 2008.
India's largest dam builder Jaiprakash Associates plunged 5.75% to Rs 65.55 and was the top loser from the Sensex pack.
Reliance Infrastructure (down 3.23%), GMR Infrastructure (down 1.87%), and GVK Power Infrastructure (down 2.73%), declined.
Infrastructure sector output had risen by 3.6% in January 2008, and in the 2007/08 fiscal year it rose 5.6% from a year earlier.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 0.65% to Rs 1163 on fears the worsening global economy will hit demand for petrochemicals. Nevertheless, the stock rebounded strongly from day's low of Rs 1140
India's largest state-run oil exploration firm by sales Oil and Natural Gas Corporation was down 0.88% to Rs 667.50 even as the company trashed a report by investment banking firm Goldman Sachs, saying Goldman's analysis of explorer was devoid of basic facts and was aimed at hurting the company's image. The Goldman report had on Friday, 6 March 2009 questioned corporate governance in ONGC because it was subsidising fuel prices under government orders.
Subsidy discounts to public sector oil marketing companies is a practice of the government since 2003-04, it said. Subsidy discounts are applicable to crude produced from nominated blocks only, where there is no production sharing or profit oil sharing with the government, it added.
Subsidy discounts to public sector oil marketing companies is a practice of the government since 2003-04, it said. â€œSubsidy discounts are applicable to crude produced from nominated blocks only, where there is no production sharing or profit oil sharing with the government, it added. ONGC said there will be no subsidy burden for ONGC in Q4 March 2009.
ONGC further said it acquired 43 overseas oil and gas assets in lands in just six years. It acquired properties abroad through its foreign arm ONGC Videsh (OVL). OVL had only one property in 2003. The percentage of overseas production to total production of ONGC group has moved from 7.23% in 2002-2003 to 15.42% in 2007-08. The company added 255.01 million tonne oil equivalent (MTOE) of reserves through acquisition of overseas properties since 2003-04, it said.
Pointing at the cash flow of its wholly-owned subsidiary, ONGC said OVL has already paid back a loan amount of Rs 11,820 crore. The parent company has extended total Rs 25,684 crore to OVL as loans.
India's largest private sector oil exploration firm by sales Cairn India gained 0.78% after the price of crude oil rose to its highest in about six weeks. Crude oil for April 2009 delivery rose 97 cents to $46.49 a barrel today, 9 March 2009 on the prospect of production cuts by organisation of petroleum exporting countries (OPEC).
State-run oil marketing firms declined after the price of crude oil rose to its highest in about six weeks. HPCL (down 6.81%), BPCL (down 7.22%), and IOC (down 5.89%), slipped.
Crude oil for April 2009 delivery rose 97 cents to $46.49 a barrel today, 9 March 2009 on the prospect of production cuts by organisation of petroleum exporting countries (OPEC). Oil marketing firms suffer under-recovery on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.
Banking shares declined as fears of rising defaults in a weakening economy offset firm American depository receipt (ADRs) on Friday, 6 March 2009.
India's largest private sector bank by net profit ICICI Bank fell 2.32% to Rs 263.05 despite its ADR rising 2.07% on Friday, 6 March 2009. India's second largest private sector bank by operating income HDFC Bank slipped 0.14% to Rs 800. Its ADR rose 2.10% on Friday, 6 March 2009.
India's largest bank in terms of assets and branch network State Bank of India shed 4.81% to Rs 895.60.
India's largest dedicated housing finance company by total income HDFC advanced 2.92% to Rs 1260.10 and was the top gainer from the Sensex pack. The stock had surged 6.4% on Friday, 6 March 2009 after foreign fund house Growth Fund of America Inc picked up 1.7% stake in HDFC worth Rs 560 crore through bulk deal. The name of the seller was not known.
Rate sensitive realty stocks fell on recent reports falling interest rates have failed to revive housing demand. India's largest real estate developer by sales DLF plunged 4.65% to Rs 138.55
Indiabulls Real Estate (down 3.84%), Housing Development & Infrastructure (down 7.41%), and Omaxe (down 2.44%) fell. Most of the realty deals including sale of commercial property and housing sales are driven by finance.
Auto shares outperformed the Sensex after Society of Indian Automobile Manufacturers (SIAM) data showed 10.61% rise in auto sales to 10.4 lakh units in February 2009 over February 2008.
India's top tractor maker by sales Mahindra & Mahindra rose 0.35% to Rs 318 on reports the company expects an improvement in sales witnessed last month to continue in March 2009. M&M had reported 1% rise in total vehicle sales to 19,894 units in February 2009 over February 2008.
India's largest small car maker by sales Maruti Suzuki India rose 0.06% to Rs 649.50.
However India's largest truck maker by sales Tata Motors slipped 1.08% to Rs 137. Reportedly the company is considering setting up a new assembly line for the Rs 1-lakh car Nano in Pune, on land leased till recently to Mercedes-Benz, to boost production.
India's largest FMCG major by sales Hindustan Unilever (HUL) fell 2.95% extending a fall of 8.44% in the previous three trading session triggered by foreign brokerage JPMorgan Chase & Company cutting its rating on the stock to 'underweight' from 'neutral', citing weakening growth and increasing competition.
HUL's sharp slide weighed on other FMCG stocks. ITC (down 4.19%), Britannia Industries (down 3.25%), Bata (down 1.53%), and Tata Tea (down 2.16%), declined.
India's largest pharma company by sales Ranbaxy Laboratories lost 4.81% to Rs 134.50, reversing early gains. The stock had risen as much as 3.18% to Rs 145.80 earlier in the day after it received final approval from the US Food and Drug Administration (USFDA) to market and manufacture Ramipril capsules in the strengths of 5 milligrams (mg) and 10 mg respectively. Ramipril helps to reduce the risk of myocardial infarction, stroke or death from cardiovascular causes.
On Friday, 6 March 2009, Ranbaxy received an approval from Australia's Therapeutic Goods Administration (TGA) to market its anti-fungal tablets Serbifin Terbinafine in that country.
India's largest pharma company by market capitalisation Sun Pharmaceuticals plunged 4.08% to Rs 979.60. After market hours on Friday, 6 March 2009, Sun Pharma said it extended its tender offer to Taro Pharmaceuticals till 20 March 2009. The extension was to comply with an order issued by the Supreme Court of Israel prohibiting the closing of the offer until the court decides on the appeal made by Taro's non-promoter directors against the offer.
Capital goods stocks fell on worries a slowing economy will crimp orders. ABB (down 1.65%), Bharat Heavy Electricals (down 0.94%), and Siemens (down 3.45%), slipped.
India's largest engineering & construction company by sales Larsen & Toubro shed 2.87% to Rs 563.50 after the company reportedly said it will go ahead with a bid for beleaguered software firm Satyam Computer Services. L&T is the single largest shareholder in Satyam with a 12% stake.
Meanwhile Satyam Computers jumped 14.96% after it said today it was commencing a competitive bidding process to sell a 51% stake
India's top private sector steel maker by sales Tata Steel fell 3.06% to Rs 152.05 despite the company recording a 47% rise in domestic sales in February 2009 over February 2008. Production of hot metal, crude steel and saleable steel in February 2009 rose 19%, 12% and 21%, respectively, over February 2008, the company said after market hours on Friday, 6 March 2009.
Outsourcing focussed IT firms declined on fears a weak global economy would cut the amount firms spent on technology. India's third largest software services exporter, Wipro fell 3.19% even as its ADR rose 0.54% on Friday, 6 March 2009. India's largest software services exporter by sales TCS lost 4.12%. India's second largest software services exporter Infosys Technologies declined 1.66% even as its ADR gained 1.22% on Friday, 6 March 2009. India's fifth largest IT major by sales HCL Technologies shed 3.62%.
KLG Systel jumped 20% to Rs 62.60 on bagging orders worth Rs 40 crore. The company announced the new orders on Saturday, 7 March 2009.
Indian rupee fell against the dollar today, 9 March 2009 on expectation of capital outflows owing to subdued global stock markets. The partially convertible rupee was at 51.81/83 per dollar, lower than previous close of 51.63/65.
A weak rupee boosts revenues of IT firms in rupee terms as IT companies earn a lion's share of revenue from exports.
Satyam Computer Services was the top traded counter on BSE with turnover Rs 168.51 crore followed by ICICI Bank (Rs 132.83 crore), Reliance Industries (Rs 131.53 crore), Akruti City (Rs 127.86 crore) and State Bank of India (Rs 99.19 crore).
Satyam Computer Services also topped volume charts on BSE clocking volumes of 3.52 crore shares followed by Indian Overseas Bank (1.29 crore), Rolta India (74.25 lakh), Cals Refineries (71.87 lakh) and Allied Computes (70.32 lakh).
SpiceJet soared 9.30% to Rs 13.40 on reports the company may either merge or acquire a controlling stake in Wadia group-owned unlisted budget airline GoAir.
Sun TV Network slumped 6.26% to Rs 146 after the company said a promoter has pledged 1.65 crore shares which is 4.19% of the equity capital of the company. The company made this announcement during trading hours today, 9 March 2009.
The National Stock Exchange had earlier said that trading would continue in the normal course from 5 March 2009 to 19 March 2009 despite Sun Outage between 11:45 IST to 12:25 IST. The exchange has advised members to use alternative mode of connectivity instead of VSAT during the above mentioned period for continuing trading without any disruptions on account of Sun outage.
Earlier on 25 February 2009, the Indian Space Research Organization (ISRO) had informed the NSE that there would be Sun Outage from 5 March 2009 to 19 March 2009 between 11:45 IST to 12:25 IST due to which trading members may face connectivity problems at different times on different dates based on geographical location during this period.
Today domestic markets are likely to open negative as the other Asian markets have opened with blood bath. The sentiment across the domestic arena has been fragile as the movements in Northward and Southward direction is frequent on every day''s trade. Investors are cautious on their holdings and fresh positions are doubtful in the midst of global economic meltdown, where global markets are heading towards southward. Domestic investors may today book profits on Friday''s gains, as such selling pressure is likely to pull markets into the southward zone in the early trading session.
On Friday, the domestic markets fell with a drastic negative gap however later managed to close in the green. Ignoring the trends of other markets, the domestic investors’ short covering helped the benchmark indices gain at the last trading hour. The European markets also traded positive on the back of 50bps rate cut announced by the Bank of England and European central bank to 0.50% and 1.5% respectively. The 0.50% rate of Bank of England is low at the level when the bank was founded in 1694. Sectors like IT, Teck, Oil & Gas and CG gained by 3.05%, 2.44%, 1.76% and 1.54% respectively. Whereas FMCG, Realty and Auto were the only sectors that conceded losses of 1.73%, 0.89% and 0.63% respectively. During the session we expect the markets to be trading volatile.
The BSE Sensex closed high by 127.90 points at 8,325.82 and NSE Nifty ended high by 43.45 points at 2,620.15. The BSE Small cap and Mid Cap closed with losses of 16.81 points and 24.28 points at 2,583.30 and 2,911.73 respectively. The BSE Sensex touched intraday high of 8,347.74 and intraday low of 8,047.11.
On Friday, the US stock markets closed mixed on the back of weak economic data. The initial gains were broad-based as participants began buying in the wake of the February jobs report, which indicated non-farm payrolls fell 651,000, in-line with expectations, and unemployment climbed more than expected to a 25-year high of 8.1%. The NASDAQ index fell to its six year low showing signs of fragile market trend. Sooner the financial stocks crumbled that led the other major indices loose grounds. US light crude oil for April delivery grew by $2.12 to settle at $45.73 a barrel on the New York Mercantile Exchange. The crude oil rose on the back of weak US economic data and on expectations that OPEC will further cut production.
The Dow Jones Industrial Average (DJIA) inclined by 32.50 points to close at 6,626.94 The NASDAQ Composite (RIXF) index fell by 5.74 points to close at 1,293.85 and the S&P 500 (SPX) grew by 0.83 points to close at 683.38.
Today major stock markets in Asia are trading negative. Shanghai composite is low by 22.86 points to 2,170.15 along with Hang Seng that is trading lower by 190.63 points at 11,730.89 and South Korea''s Seoul Composite is flat at 1,055.49. Japan''s Nikkei is also low by 113.56 points at 7,059.54 and Singapore''s Straits Times is low by 29.29 points at 1,483.83.
Indian ADRs ended up. In technology sector, Satyam ended higher by 13.53% along with Infosys by 1.66%. Further, Patni Computers gained 10.22% and Wipro closed up by 0.54%. In banking sector ICICI Bank and HDFC Bank gained 2.07% and 2.10% respectively. In telecommunication sector, MTNL dropped by 2.04% while Tata Communication advanced by 7.81%.
The FIIs on Friday stood as net sellers in equity and net buyers in debt. Gross equity purchased stood at Rs 1,495.20 Crore and gross debt purchased stood at Rs 197.80 Crore, while the gross equity sold stood at Rs 2,104.20 Crore and gross debt sold stood at Rs. 127.20 Crore. Therefore, the net investment of equity and debt reported were Rs (608.90) Crore and Rs 70.60 Crore respectively.
On Friday, the Indian rupee closed at 51.63/65, 0.25% stronger than its previous close of 51.76/78. The rupee gained after nine days of consecutive fall. The local stock markets closed positive and therefore the dollar inflow cues helped the rupee gain.
On BSE, total number of shares traded were 24.30 Crore and total turnover stood at Rs 3,338.61 Crore. On NSE, total number of shares traded were 56.38 Crore and total turnover was Rs 9,202.60 Crore.
Top traded volumes on NSE Nifty – ICICI Bank with 50409495, Unitech with 29635113 shares, Suzlon Energy with 20818055 shares, Reliance Capital with 13690683 shares followed by Reliance Petro with 10454323 shares.
On NSE Future and Options, total number of contracts traded in index futures was 1072707 with a total turnover of Rs 13,304.64 Crore. Along with this total number of contracts traded in stock futures were 490165 with a total turnover of Rs 11,897.77 Crore. Total numbers of contracts for index options were 1677878 with a total turnover of Rs 22,138.81 Crore and total numbers of contracts for stock options were 51876 and notional turnover was Rs 1,393.71 Crore.
Today, Nifty would have a support at 2,571 and resistance at 2,659 and BSE Sensex has support at 8,174 and resistance at 8,415.
The presense of a sharp intra-day volatile trend due to lack of clarity may see the market remain edgy and move on the either side of the zone. US markets end flat coupled with a negative Asian indices trend in the present trades could drag down the local indices in early trades. The Nifty could test higher levels at 2660 and may find supports at 2580 or 2540, while the Sensex has a likely support at 8175 and may face resistance at 8475.
Major US indices finished flat on Friday, the Dow Jones advanced by 33 points at 6627, the Nasdaq moved down by 6 points to close at 1294.
All the Indian ADRs traded firm on the US bourses except MTNL. Satyam led the pack with gains of over 13.53% followed by Patni Computers with the gain of 10.22% while, VSNL, Rediff, HDFC Bank, ICICI Bank, Dr Reddy's, Infosys jumped over 1-7% and Tata Motors and Wipro closed with the marginal gains.
Crude oil prices in the overseas market gained, with the Nymex light crude oil for April series sliding by $1.91 to close at $45.52 a barrel and in the commodity space, the Comex gold for April delivery rised by $14.90 to settle at $942.70 an ounce.
Key benchmark indices are likely to see a flat start on mixed global cues. The worsening global economic crisis may keep investors nervous in this truncated trading week, with stock markets remaining shut on 10 and 11 March 2009 on account of local holidays.
Asian markets were trading mixed today, 9 March 2009. China's Shanghai Composite gained 0.51% or 11.13 points at 2,204.13, South Korea's Seoul Composite was up 0.11% or 1.21 points at 1,056.24. However, Hong Kong's Hang Seng declined 1.20% or 143.55 points at 11,777.97, Japan's Nikkei slipped 0.81% or 57.91 points at 7,115.19, Singapore's Straits Times fell 1.84% or 27.80 points at 1,485.32 and Taiwan's Taiwan Weighted lost 0.97% or 45.05 points at 4,608.58
US markets recovered in late trade to end on mixed note, on Friday, 6 March 2009, on reports that Lloyds Banking Group reached an asset-protection deal with the UK government wherein the UK government will pick 77% stake in Lloyds Banking Group after agreeing a deal to underwrite $370 billion of risky assets. Meanwhile the US said unemployment rate in February 2009 had risen to the highest in 25 years
The Dow Jones Industrial Average gained 32.5 points or 0.49% to 6,626.94 and the S&P 500 index rose 0.83 points or 0.12% to 683.38. However the Nasdaq Composite fell 5.74 points or 0.44% at 1293.85
Back home, key benchmark indices slumped in the week ended 6 March 2009 with the BSE Sensex sliding to 3-year low as grim economic data pulled world stocks to six-year low and heavy selling by foreign institutional investors (FIIs). The 30-share BSE Sensex lost 565.79 points or 6.36% to 8,325.82 and the 50-unit S&P Nifty lost 143.50 points or 5.19% to 2620.15 in the week ended 6 March 2009.
According to provisional data on NSE, Foreign institutional investors (FIIs) were net sellers worth Rs 274.68 crore while mutual funds bought shares worth Rs 298.94 crore on Friday, 6 March 2009.
However FIIs were net buyers of index futures to the tune of Rs 678.57 crore and bought index options worth Rs 1.41 crore on Friday, 6 March 2009. They were net sellers of stock futures to the tune of Rs 96.69 crore while bought stock options worth Rs 11.63 crore.
S&P 500 trades at its lowest level in 12 years
Wall Street tried showing some resilience during the week that ended on Friday, 06 March, 2009 but still the major indices closed substantially down for the week. Stocks initially fell on growing pessimism about the banking industry and a weaker than expected home sales report. The US government also gave the market some reassurance by confirming that it will buy preferred shares from the banks that can be converted to common shares. Investors also found some solace once Federal Reserve Chairman, Ben Bernanke said for the second time that banks will not be nationalized. An in line job report tried to hold stocks in the last day but failed to compensate for the weekly loss.
The Dow Jones Industrial Average lost 436 points (6.2%) for the week to end at 6,626. Tech - heavy Nasdaq lost 84 (6.1%) to end at 1,293. S&P 500 lost 52 (7%) to end at 683. Slew of negative economic data and continued concerns over the state of financials weighed on investor sentiment during the week. In the end, all three of the major indices fell to multi-year lows with the S&P 500 trading at its lowest level in 12 years. Selling pressure was broad-based, although financials saw the brunt of the decline.
On Monday, 02 March, 2009, stocks began the session in negative territory as investors reacted negatively to AIG's earning report. AIG posted a fourth quarter loss exceeding $60 billion. Reports indicated that it is the largest quarterly loss in U.S. corporate history.
Traders also focused their attention on famous investor Warren Buffet. Investor Warren Buffett stated to his shareholders in a letter that he believes the economy is in shambles, and that it will likely remain that way beyond 2009.
On Tuesday, 03 March, Fed Chairman Bernanke Fed Chairman Bernanke and Treasury Secretary testified in front of the Senate Budget Committee and House Ways and Means Committee respectively. In their respective testimonies, while Geithner stated that long-term debt reduction is crucial for the economy, Bernanke stated that though the near-term outlook for the economy remains weak, a number of factors should promote the return of solid gains in economic activity in the context of low and stable inflation. Bernanke also indicated that the effectiveness of actions in restoring financial stability will be critical determinants of the timing and strength of a recovery.
On Wednesday, 04 March, the ADP employment index reported that the U.S. labor market worsened in February, as private-sector firms cut 697,000 jobs in February,2009. The drop in ADP index was the largest ever, dating back to 2001. January's loss was revised sharply lower to 614,000 from 522,000 reported a month ago.
In the US market on Friday, 06 March, 2009 stocks lingered in the red for the full day. But the broader market turned in a modest gain, thanks to a late rally effort that overcame steep losses. The Dow Jones Industrial Average ended higher by 32 points at 6,626, the Nasdaq closed lower by 6 points at 1,293 and the S&P 500 closed higher by 0.83 points at 683.
On Friday, the February jobs report checked in, which indicated that nonfarm payrolls fell 651,000, in-line with expectations, and unemployment climbed more than expected to a 25-year high of 8.1%. The financial sector played a spoilsport on Friday. But Wells Fargo was one of the few financial players to log a gain. The company announced it will cut its quarterly dividend to $0.05 per share from $0.34 per share in order to preserve capital and repay government funds as quickly as possible.
With Friday's close, though the Nasdaq finished lower for the 13th time in 15 sessions, the Dow and S&P 500 were each able to close modestly higher. The Dow has finished four of the last 15 sessions higher. The S&P 500 has finished three of the last 15 sessions higher.
Economic news added to concerns of the state of the U.S. economy. Among total auto sales for February, GM and Ford reportedly registered 53% and 48% drop in auto sales in February.
The National Association of Realtors reported during the week that the number of new sales contracts on existing homes fell a seasonally adjusted 7.7% in January amid job losses and weak consumer confidence. The index is now down 6.4% from a year earlier.
A large number of retailers reported poor same-store sales for February - all reported double-digit declines. But there was one exception. Wal-Mart same-store sales rose 5.1% and also increased its dividend.
For the year 2009, Dow, Nasdaq and S&P 500 are down by 24.5%, 18% and 24.3% respectively.
ICICI Bank has cut the interest rates on floating home loans for new borrowers by 25-50 basis points, with immediate effect.(BL)
Coal India has been awarded two exploratory coal mining blocks A1 and A2 by the Mozambique Government.(BL)
Infosys Technologies is scouting for acquisitions in the consulting and BPO space in Germany, France, and Japan.(FE)
Vishal Retail plans to venture into the shop-in-shop format and to have around 40 such corners in its large format stores within the next three months.(BS)
Aban Offshore may have to reschedule some portion of the $3.1 billion of debt that is due to mature this year and the next.(Mint)
Tata Motors is considering setting up a new assembly line for the Nano in Pune, seeking to scale up production to meet anticipated demand.(Mint)
SBI raises Rs40bn via tier-II capital.(BS)
TCS has decided to hand over pink slips to around 1,300 employees or 1% of its global workforce this year.(TOI)
ONGC acquires 43 overseas oil and gas assets in lands in six years. (ET)
Essar Oil will take a planned shut-down of its refinery at Vadinar, in Gujarat, from April 13, for 18 days for maintenance.(BL)
Sterlite Industries says it has signed an agreement to acquire America's third largest copper producer Asarco Llc for US$1.7bn.(DNA)
Tata Steel says it has posted a 47% rise in sales at 0.58mn tonnes in February, compared with 0.39mn tonnes a year ago.(BL)
HCC group’s company Lavasa Corporation defers its plans to launch an IPO.(ET)
HCL Technologies has emerged as the lowest bidder with a quote of Rs2.3bn for the ERP project of BSNL.(BL)
Titan Industries plans to add nearly 40 Titan stores by March 2010.(BS)
Bolivia plans to take 600 acres of private land that contains part of the El Mutun iron ore deposit and deliver it to Jindal Steel & Power.(TOI)
Power Grid Corp of India plans to invest Rs12bn over the next three years in its telecom business.(DNA)
Kotak Mahindra Bank may be the first Indian bank to join the race along with the other international suitors to buy out the Indian operations of the Royal Bank of Scotland.(FE)
SREI Infra-Sadbhav inks JV for Rs15.7bn project.(ET)
Gujarat government allots GMDC Naini coal block in Orissa, to Adani and Torrent groups.(BS)
Coal India is targeting import of 6mn tonnes of coal in the next financial year.(DNA)
Four global spirits makers including Diageo have shown interest in acquiring stake in United Spirits.(ET)
IOC plans maintenance work at its key plants during April-September, including a full shutdown from late June of its 160,000 bpd Mathura refinery for about a month.(ET)
SpiceJet is in talks with the Wadia group-owned GoAir for a merger or to acquire a controlling stake.(BS)
Ranbaxy Laboratories says it has received approval from Australia’s drug regulator to sell generic terbinafine tablets.(BL)
Acting upon the directions of the Intelligence Bureau, DoT asks BSNL and MTNL to stop providing 3G services till call monitoring services are made available to the intelligence agencies.(FE)
Tata Metaliks shelves Rs8bn diversification plan in West Bengal.(BL)
The sale process of Satyam Computer Services has moved a step forward with SEBI approving the global competitive bidding process. (FE)
The Lavasa hill station project of HCC is set for a private equity injection.(DNA)
Aditya Birla Retail plans to open 8-10 hypermarkets across the country during the next financial year.(BS)
LIC hikes stake to 7.1% in HDFC Bank after purchasing shares in the open market.(FE)
M&M launched new models of its SUV Scorpio and cut its price ranging from Rs 34,000-70,000.(TOI)
Dalmia Cement commences commercial production at its 2.5mn ton greenfield cement plant in Kadapa district of Andhra Pradesh.(BS)
Forex reserves fell by US$249mn to US$249bn in the week ended February 27.(BL)
Growth in the six infrastructure industries slowed to 1.4% in January compared with 3.6% last year.(BL)
The next bid round for oil and gas acreage is likely to be adversely impacted due to lack of an income tax break on gas production, says the Petroleum Minister.(FE)
DoT wants 3G services put on hold, until the security agencies put up the infrastructure to track these high-end services.(ET)
DoT invites bids for rural broadband service.(ET)
RBI is considering a proposal to allow companies another six months to buy back or prepay their FCCBs.(BS)
TRAI will consider tariff regulation in the DTH sector.(BL)
We go through life pulling on doors marked Push.
Hitting glass ceilings are things of the past. Any door of opportunity just seems to swing back, knocking down bulls harder each time. Bulls may have hoped for less losses at start due to the surprising resistance on Wall Street despite another grim jobs report. However, the key indices are expected to come under renewed selling pressure sooner than later.
Asian benchmarks are mostly down this morning. European indices too ended lower on Friday amid nagging worries over the deteriorating health of the banks. Moreover, local traders and investors would prefer to stay light ahead of holidays on Tuesday and Wednesday.
Overall, we continue to advise caution, as the key indices closing in on October’s intra-day lows. The CNX Mid-Cap actually made new bear market lows last week. The Sensex and the Nifty might follow suit shortly due to worsening global environment and growing worries over the domestic outlook.
A bearish outlook on the rupee is likely to make matters worse, as FIIs may accelerate their selling binge. The overseas funds have already pulled out $2bn so far this year from Indian equities.
FIIs were net sellers in the cash segment on Friday at Rs2.75bn, while the local institutions pumped in Rs2.99bn. In the F&O segment, the foreign funds were net buyers at Rs5.95bn. On Thursday, FIIs were net sellers in the cash segment at Rs6.09bn. Mutual Funds were net sellers of Rs2.19bn on the same day.
US blue chip stocks ended slightly higher on Friday, led by banks and energy firms, as investors shrugged off another grim jobs report. The Dow Jones Industrial Average rallied more than 150 points in the final 35 minutes of trading, paced by gains in GE.
GE shares jumped 6%, halting a five-day 17% fall, as analysts at Sanford C. Bernstein & Co. and Merrill Lynch said the finance unit has adequate funding. Chevron and Exxon Mobil advanced 2.9% as oil prices surged.
The Dow erased a 124-point drop that followed a morning advanced spurred by a slower rate of job cuts in February.
The Dow rose 32 points, or 0.5%, to 6,626.94. During the session, the Dow briefly touched 6469.95, the lowest intraday level since April 15, 1997. The Dow has fallen in 14 of the last 19 sessions.
The S&P 500 index finished nearly unchanged, up 0.1%, at 683.38. Earlier, the S&P fell to 666.79, its lowest point during a session since Sept. 11, 1996.
The Nasdaq Composite index lost 5 points, or 0.4%, to 1,293.85. The tech-laced index briefly touched 1268.54, breaking through its November lows, before closing above that level.
Stocks slipped through most of the session, but the losses were pretty slim. In the last hour of trade, stocks staged a recovery, with the blue chips ending with gains.
The fact that stocks didn't see a bigger selloff on the dismal jobs report could be a positive indication, according to some analysts. But, that doesn't mean that a so-called bottom is forming, they added.
Since closing at all-time highs on Oct. 9, 2007, the Dow has lost nearly 53% and the S&P 500 has lost 56%. Year-to-date, both the Dow and the S&P 500 are down nearly 25%.
During the last week, the Dow average lost 6.2%, matching its worst retreat since October, while the S&P 500’s 7% drop was the steepest in 14 weeks.
Treasury prices fell, raising the yield on the benchmark 10-year note to 2.87% from 2.81% on Thursday.
Lending rates were little changed. The 3-month Libor rate rose to 1.29% from 1.28% on Thursday, while the overnight Libor rate held steady at 0.32%. Libor is a bank-to-bank lending rate.
In currency trading, the dollar fell versus the euro and rose against the yen.
US light crude oil for April delivery rose US$1.91 to settle at US$45.52 a barrel on the New York Mercantile Exchange.
COMEX gold for April delivery settled up US$14.90 to settle at US$942.70 an ounce.
US employers cut 651,000 jobs from their payrolls in February, roughly in line with forecasts for cuts of 650,000, the government reported. January's losses were revised higher to 655,000. December's losses were revised up to 681,000, the most in any month since 1949.
However, Wall Street had been expecting a much bigger loss in non-farm payrolls, and had already sold off leading up to the report.
The unemployment rate, generated by a separate survey, rose to 8.1% from 7.6% in January, its highest level in 25 years. Economists had forecast an unemployment rate of 7.9%.
Wells Fargo said it will slash its quarterly dividend 85% to 5 cents from 34 cents in an attempt to save US$5 billion a year. Shares gained 6%.
But other financial stocks continued to struggle after the previous session's selloff. Dow component Citigroup again struggled around the US$1 per share mark. It has lost 31% on the week on growing worries over banks' worsening financial health.
Fellow Dow stock General Motors (GM) plunged another 22%, after touching a 75-year low earlier in the session. The auto maker said that it still aims to restructure its business without recourse to bankruptcy courts.
GE managed to bounce back from 18-year lows hit earlier in the week. The stock has been sliding on worries that the company's management hasn't fully accounted for losses in the financial division, which has been plagued by the same issues as the rest of the financial sector.
Apple led the tech losers after JPMorgan Chase downgraded the stock.
Genentech surged 11% and advanced 6.2% on the week. Swiss drug maker Roche Holding boosted its takeover offer for the slice of the 56% of the biotechnology giant it doesn't already own to US$93 a share.
Rohm & Haas jumped 18% and gained 23% on the week. The specialty paint maker and Dow Chemical confirmed they are in discussions about their proposed US$15.3bn merger and the pending lawsuit related to the deal.
European shares closed in the red on Friday, with insurers and banks pacing the retreat. The pan-European Dow Jones Stoxx 600 index ended 1.3% lower to 159.51 bringing week-to-date losses to about 8%.
Germany's DAX 30 index fell 0.8% to 3,666.41, while the UK's FTSE 100 index closed a fraction of a percentage point higher to 3,530.73 and the French CAC-40 index slid 1.4% to 2,534.45.
Indian markets ended with gains on Friday, driving the benchmark index to its biggest gain in three weeks. The rally was led by the IT stocks followed by the telecom, oil & gas and capital goods stocks. The BSE Sensex surged 127 points to close at 8,325 and the NSE Nifty rose 43 at 2,620.
Among the 30-components of Sensex, 22 stocks ended in positive terrain and only 8 stocks ended in the red. HDFC, Infosys, Reliance Industries, ONGC, Bharti and L&T were among the major gainers. Among the major losers were, ITC, Hindustan Unilever, Maruti and Ranbaxy.
Shares of Satyam have surged by over 19% to Rs42 after the company announced that it received approval from market regulator SEBI to facilitate a global competitive bidding process which, subject to receipt of all approvals, contemplates the selection of an investor to acquire a 51% interest in the company. The scrip touched an intra-day high of Rs42 and a low of Rs35 and recorded volumes of over 20mn shares on BSE.
Shares of Mphasis surged by over 8% to Rs183 after ~7.5mn equity shares of the company changed hands in a single block.
It accounted for almost 3.6% of the company’s equity and the transaction was at an average price of Rs170/ share on NSE. The scrip touched an intra-day high of Rs191 and a low of Rs167 and recorded volumes of over 0.4mn shares on BSE.
Shares of Marico gained by a percent to Rs59.2 after ~1.5mn shares of the company changed hands in single trade. The scrip touched an intra-day high of Rs60 and a low of Rs58 and recorded volumes of over 1.8mn shares on BSE.
Shares of Wall Street Finance rallied by over 17% to Rs55.9 after reports stated that Reliance Money, a wholly owned subsidiary of Reliance Capital, is set to acquire majority stake in the company.
The ADAG group entity, which already holds 36.55% in Wall Street Finance through its subsidiary, is looking to inject more capital through a preferential allotment. The scrip touched an intra-day high of Rs57 and a low of Rs49.5 and recorded volumes of over 64,000 shares on BSE.
Shares of BRFL surged by over 21% to Rs104 on the back of huge volumes. The scrip touched an intra-day high of Rs106 and a low of Rs83 and recorded volumes of over 1.6mn shares on BSE.
Among key data to be announced next week include IIP numbers. Contraction in industrial production is expected to continue and remain in negative zone. The overall auto sales numbers for the month of February will also be announced. Some healthy growth will be seen here. Inflation is likely to dip below the 3% mark next week but markets could hardly care about this.
The way global markets swing will determine our market's movement in the three-day trading week.
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Silver manages weekly gain though gold remains unchanged
After eight days of drop, bullion metals prices rose for second straight day on Friday, 06 March, 2009. Prices rose as stock prices remained suppressed due to the job report from the Labor Department increasing the appeal of the precious metals.
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 Friday, Comex Gold for April delivery rose $14.9 (1.6%) to close at $942.7 an ounce on the New York Mercantile Exchange. For the week, the yellow metal remained almost nchanged. For the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%. Year to date, gold prices are higher by 6.4%.
On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (8.9%) since then.
On Friday, Comex silver futures for March delivery rose 21.3 cents (1.6%) to end at $13.333 an ounce. For the week, silver rose 1.7%. In February, 2009, silver had rose 4.3% after climbing 14% in January. Year to date, silver has climbed 20.3% this year. For 2008, silver had lost 24%.
US stocks managed to stay somewhat steady on Friday even after Labor Department announced that the number of jobs lost totaled 651,000 in February, which matched expectations, but previous months were revised downward to show sharper losses. The unemployment rate, however, rose to 8.1% from 7.6%, which was worse than the expected reading of 7.9%.
In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.
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 April delivery closed higher by Rs 406 (2.7%) at Rs 15,397 per 10 grams. Prices rose to a high of Rs 15,429 per 10 grams and fell to a low of Rs 15,008 per 10 grams during the day's trading.
At the MCX, silver prices for May delivery closed Rs 572 (2.6%) higher at Rs 22,424/Kg. Prices opened at Rs 22,051/kg and rose to a high of Rs 22,488/Kg during the day's trading.
Prices rose due to weak dollar
Crude prices rose on Friday, 06 March, 2009 as the dollar weakened and traders continued to mull over further announcements of output cuts by OPEC this month.
On Friday, crude-oil futures for light sweet crude for April delivery closed at $45.52/barrel (higher by $1.91 or 4.4%) on the New York Mercantile Exchange. For the week, crude ended higher by 1.7%. For the month of February, crude prices had ended higher by 1.5%.
Prices reached a high of $147 on 11 July, 2008 but have dropped almost 69% since then. Year to date, in 2009, crude prices are higher by 7.1%. On a yearly basis, crude prices are lower by 62%. In the currency market on Friday, the dollar weakened relatively in comparison with its competitors pushing up crude prices.
US stocks managed to stay somewhat steady on Friday even after Labor Department announced that the number of jobs lost totaled 651,000 in February, which matched expectations, but previous months were revised downward to show sharper losses. The unemployment rate, however, rose to 8.1% from 7.6%, which was worse than the expected reading of 7.9%.
The EIA had reported earlier during the week that U.S. crude inventories, excluding those in the Strategic Petroleum Reserve, fell by 700,000 barrels in the week ended 27 February, 2009. Market was expecting an increase of 2.2 million barrels. U.S. refiners operated at 83.1% of their operable capacity last week, up from the 81.4% a week ago. The EIA also reported gasoline inventories rose by 200,000 barrels, and distillate stockpiles, which include diesel and heating oil, rose 1.7 million barrels.
Prices had been sliding since past couple of months after fear gripped the US economy that US banks might be nationalized.
OPEC has been trying to cut production consistently in order to step up prices from their current low levels. There has been conflicting reports in the market regarding the fact that OPEC is likely to reduce output in March, 2009. OPEC has already agreed to cut cartel quotas by 4.2 million barrels a day since September, equivalent to about 5% of global oil demand. The cartel is supposed to meet on 15 March at Vienna.
Also at the Nymex on Friday, April reformulated gasoline rose 1.5% to $1.3322 a gallon and April heating oil jumped 6% to $1.2294 a gallon.
April natural-gas futures fell 3.5% to $3.945 per million British thermal units.
Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
Investors with a two-year horizon can consider accumulating the shares of Zee News (Zee), a news and regional entertainment broadcaster, considering the leading viewer-ship position for several of its channels and strength in subscription-driven revenues.
At Rs 29, the stock trades at about 12 times its likely 2009-10 per share earnings. The current valuation may make the stock appear pricey. But since its independent existence from 2006, the company has seen triple-digit compounded annual growth in revenues and profits. The fact that it is among the few broadcasters that are profitable enables the company to command higher valuations.
Even in the recent December quarter, when broadcasters had revenue declines over the previous year, Zee was able to achieve 45.4 per cent growth in revenues and 18.4 per cent growth in net profits.
A strong regional language general entertainment offering, with either leadership or strong positions in most of this genre continues to help the company unstring purses of regional and national advertisers.
The company derives over 75 per cent of its revenues from advertising. This has actually grown by 10 per cent sequentially even in the most turbulent December quarter. But with the current economic slowdown, advertising budgets of companies are likely to remain under pressure in the medium term.
A recent study by FICCI-KPMG indicates that television advertising revenues are likely to grow from Rs 8250 crore currently, at a compounded annual rate of 13.5 per cent over the next four years to Rs 15,550 crore. There are, however, some near-term triggers.
With the general elections scheduled in April-May, political parties may step up spending on campaigns for better reach.
Regional GEC leadership
Zee has a combination of national news and regional general entertainment channels in its bouquet. Zee Business, its Hindi news channel, commands a 40 per cent viewership share (the rest is taken by CNBC Awaaz).
Zee Marathi and Zee Bangla channels are market leaders in Maharashtra and West Bengal respectively. This position has been maintained despite Star’s launch of channels such as Star Jalsha (Bengali) and Star Pravah(Marathi). Zee, in both these markets, enjoys three-four programmes among the top five viewed, according to TAM and exchange4media ratings.
Even in the south market, which is dominated by the Sun group, Zee has made significant inroads in viewership.
Zee Telugu is now second behind Gemini TV, and has two in the top five viewed programmes. Zee Kanada is in the third position after Udaya TV and ETV Kannada.
These are positives for Zee on many counts.
One, it shows that by adopting the innovative programming route, its channels have been able to penetrate markets that have one or more dominant players.
Two, unlike several broadcasters that are focussed on English News or Hindi general entertainment category, Zee has a wider reach through its regional channels, which would help it garner advertisement revenues from regional companies in addition to ones of national prominence.
Three, there is no dependence on any one channel for advertisement revenues, as five of its channels are in a position to monetise prominent positioning in their respective markets.
The company has also been quick to take unviable channels off air quickly.
A case in point being that the company would shut down Zee Gujarathi from April this year.
There are a slew of channel launches in regional entertainment and 24-hour news categories. These new channels are expected to result in a loss of Rs 70 crore this fiscal.
Digital subscription revenues for Zee contribute over 17 per cent to its overall revenues. Over the last one year, subscription revenues have grown by over 45 per cent. This may further ease revenue dependence on advertising alone.
Conditional access system or viewing satellite channels through set-top boxes may continue to grow over the next few years. The Telecom Regulatory Authority of India has made conditional access mandatory in 55 cities across the country by 2011.
This will mean better reporting of revenues by cable operators and, in turn, a better share of revenue for broadcasters such as Zee. The FICCI-KPMG study indicates that there would be 35 million digital cable houses, apart from 55 million analogue ones by 2013.
Besides, the steady headway of DTH as a delivery platform is also a positive for Zee. By end-2008, the country had as many as 10 million subscribers on this platform; this is estimated to go up to 16 million by 2009.
Apart from Dish TV and Tata Sky which are established players in DTH, new entrants such as Reliance-Big TV and others such as Sun Direct and Bharti Airtel may help expand the overall DTH pie.
All these ensure a larger opportunity for the company to garner higher subscription revenues.
Investors with an over three-year perspective can consider accumulating the stock of Suzlon Energy. While there is no denying that Suzlon is the least decoupled from the global slowdown and is also plagued by internal challenges such as the defective blade issue and funding for acquisition, its current valuations have clearly factored in more negatives than perhaps exist now.
The huge potential for renewable energy in the long term and the company’s sound business strategy to tap global opportunities strengthens the case for buying the stock at rock-bottom valuations. At the current market price of Rs 35, the stock trades at four times its expected earnings for FY-10. Investors may, however, have to be prepared for a sedate performance in FY-09. The high volatility in the stock warrants buying it in small quantities on declines.
Why the poor results
A good part of Suzlon’s recent stock decline occurred after the company’s December quarter results, when it posted losses mainly on account of exceptional items. On a consolidated basis, the company made losses of Rs 34.9 crore mainly on account of notional forex losses and a provision for blade retrofit also amounted to Rs 449 crore.
The defective blade issue: While the first is an accounting treatment to comply with accounting standards, the other expense amounting to Rs 233 crore was incurred as part of its retrofit programme for a particular version (S88 V2) of blades that were found to be defective. The provision made was on account of higher cost of replacement as a result of longer period to find the root cause before rectification.
The company has stated that most of the provisioning is done with and nothing significant may have to be provided for in the coming months. Further, as the company has already moved ahead to the next version (V3) and installed the same without any reported cases of defect over the past one year, we believe this provisioning is unlikely to extend much in to the future.
Acquisition-related debt: High interest costs, mostly on account of acquisition-related debt, have also resulted in a strain on profits. However, the company is likely to retire about Rs 250 crore of the acquisition debt in 2009 and one more tranche by June and September. The company intends to repay these amounts partly through the recent stake sale in its subsidiary, Hansen Transmission, which resulted in cash inflows of Rs 550 crore. With this, we expect the debt-equity ratio to reduce to at least 0.8:1 from 1:1 at present.
Leaving alone these two factors, the company’s operations have remained fairly healthy. The Suzlon group alone witnessed a good 53 per cent increase in operating profits for the December 2008 quarter compared to a year ago numbers.
Operating profit margins too expanded by a marginal 30 basis points to 12.8 per cent for the same group (the fully consolidated numbers are not comparable as a result of REpower’s inclusion in the December 08 quarter).
Working capital: Suzlon has accumulated huge inventories this quarter, further dragging its working-capital cycle. The build-up can be partly explained by the US slowdown and perhaps the quality concern overhang resulting from the blade defect issue.
Of its current order book of close to 2,200 MW, at least 800 MW is executable in the last quarter of FY09. Such an execution is likely to ease the working capital strain by way of inventory liquidation. The company may also resort to lower advance purchases of components given the global slowdown and reduced demand. Such a move too can improve working capital.
Another near-term concern that has been dragging the stock of Suzlon is the means of funding to pay €205 million (Rs 1,332 crore), for Martifer’s stake in REpower over April and May 2009. For now, the company has a three-pronged strategy for the same. One, it hopes to generate part of the amount through funds released from reduced working-capital requirements. Two, a further stake sale in Hansen (but retaining control) is an option. Three, external borrowings may be resorted to.
Plan 1 appears plausible given that reduced inventory and lower commodity prices could well be a reality in the fourth quarter. A stake sale in Hansen is also not impossible given that it can sell up to 10 per cent and yet maintain a 51 per cent stake. A similar stake sale recently brought in about £73 million (Rs 530 crore). Such a strategy would also not materially affect the earnings picture for Suzlon shareholders. The third strategy though may once again bring the debt to less comfortable levels.
That the company has strategies lined up to address the funding concern provides comfort to its ability to tackle adversity. More importantly, the persistence shown by the company in this acquisition, its success in negotiating for a longer payment period with Martifer and its willingness to carry the burden of low-profit margin foreign associates also suggests its seriousness in gaining a foothold in the robust EU wind market.
These moves, though beset with short-term risks, if overcome, could well generate high returns on integration. These are also clear indicators for an investor that the company is pursuing an aggressive growth model and is a high-risk high-return proposition.
Suzlon has seen a revival in order flows with the recent projects bagged in Australia and China. The company expects to receive at least 1,000 MW of the 2,000 MW of projects that are currently in its pipeline. While markets outside of the US may hold better opportunities in 2009, the US market, once there appears a revival, could yet hold huge potential given the extension of the production tax credits unto 2012 passed by the US Senate. Other incentives include a $7-billion renewable energy loan guarantee programme, an additional year of bonus depreciation and incentives for small wind investments.
The potential in the Indian market too appears enhanced what with a few states offering higher tariffs for captive investment in wind energy. Further, a number of public sector companies such as ONGC, HPCL are starting to invest in renewable energy to meet the Central target.
Weighing the fortunes of the renewable energy based on price of crude oil alone, as the market appears to be doing now, therefore, appears short-sighted. Regulations, incentives and the planned wind energy programmes for various economies in the context of the slowdown, should instead be the deciding factors for assessing the prospects of the wind energy market.
Investments with a one-, two-year horizon may be made in the shares of Bharti Airtel. The company’s continuing leadership in the mobile division, increasing strength of its enterprise carrier division and improvement in the tenancy in its towers suggest that it is well placed to sustain strong earnings growth.
At Rs 602, the stock trades at 11-12 times its likely 2009-10 per share earnings, a steep discount to its historic valuations. Despite a subscriber addition pace of over 2.5 million a month, especially in rural areas, at lower ARPUs (average revenue per user), the company has been able to maintain its EBITDA (earnings before interest, taxes, depreciation and amortisation) margin above 40 per cent.
The company has joined the competition and launched life-time prepaid recharges at Rs 99, which is further expected to augment subscriber additions. Simultaneously, it has rationalised tariffs across the country and removed/reduced free minutes of usage. This has resulted in stabilising realisations per minute at 64-paise levels, though ARPUs are still declining (they remain the highest in the country).
Realisation per minute may be a better metric as it blends minutes of use and revenues generated on an average. Bharti’s mobile subscriber market share has increased by more than a percentage point over the last one year to 24.7 per cent.
The mobile services division may receive a further fillip with the launch of 2G and 3.5G services in Sri Lanka. It remains to be seen if the low-cost model of India is replicated there, but the company rationalised tariffs and made incoming calls free there, which is expected to boost subscriber growth.
This also opens up provisions for increasing ARPUs through value-added services. Bharti’s enterprise carrier division that carries national and international voice and data traffic has been increasing contribution to the company’s revenues (18 per cent currently up from 16 per cent a year ago) and has seen EBITDA margins expand steeply to 45.4 per cent for the latest quarter (up from 32.2 per cent last year). This has been possible due to the fact that the company carries the traffic for several operators, in addition to its own.
The company’s passive infrastructure business is also witnessing increasing action. Tenancy in its towers has over the last three quarters increased from 1.22 to 1.34, as have rentals. Both these divisions have significant opportunities in the form of the entry of several new players entering the fray and incumbent players acquiring a pan-India presence, who will need new towers and require a network to carry voice and data traffic nationally and internationally. The DTH rollout by Bharti, where it adds about one lakh subscribers a month, is another area to watch out. Though this may post losses in initial years, it may be a source of long-term growth.
We recommend a buy in Geodesic from a short-term trading perspective. It is evident from the charts of Geodesic that it was on a medium-term downtrend from its December 2008 high of Rs 95 to late January 2009 low of Rs 38. This low is apparently a 52-week low of the stock. It reversed direction from here and has been on a medium-term uptrend.
On March 6, the stock jumped by 15 per cent, conclusively penetrating its medium-term down trendline. The volume was above average during this jump. Moreover, the stock crossed its 21-day moving average, reinforcing the bullish momentum.
The daily relative strength index (RSI) is rising in the neutral region towards the bullish zone. We notice prolonged positive divergence displayed in weekly RSI. Moving average convergence and divergence indicator is signalling a buy. We are bullish on the stock from a shortterm perspective.
We expect the stock to move up further until it hits our price target of Rs 58 in the upcoming trading sessions.
Traders with short-term perspective can consider buying the stock while maintaining a stop-loss at Rs 49.