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Monday, November 30, 2009

SGX Nifty crosses 5000


5,005.0 +52.0

Sensex to open higher


Headlines for the day

Jay Shree Tea close to buying Uganda Firm - DNA Money

L&T, NPCIL to ink pact for Rs2k crore venture today - DNA Money

Spice Mobile to set up unit to make handsets - Business Line

ONGC close to big oil find - Business Standard

B K Birla firm close to buying tea estate in Africa - Business Standard

Events for the day

Major corporate action:

· Nil



Pre-market report



Global signals

· The European stocks that opened weak on Friday due to concerns over the Dubai debt closed with gains of over 1% as the banks leads the surge.

· The major US indices fell sharply by over 1.5% each on the back of Dubai’s debt default

· Today, the major Asian indices recovered part of its losses of Friday and opened green with the gains in the range of 0.70%-3.41% each. However Straits Times bucked the trend and fell by 1.87%. While at the time of writing this report, SGX Nifty was trading 47 points higher.



Indian markets

· The positive Asian cues will help the domestic indices to open with decent gains and trade higher, volatility to continue.

· Among the local indices, the Nifty could test the 5000-5050 range on the up side, while on the down side it could find support at 4920 and 4900. The Sensex is likely to get support at 16600 and may face resistance at 17000.

Indian ADR's

· Among the Indian ADRs trading on the US bourses, all the ADRs closed in the red with heavy losses in the range of 0.5%-7.53% each, except for VSNL that rose substantially by 2.47%.



Commodity cues

· In the commodity space, the Crude oil prices slipped sharply, with the Nymex light crude oil for January 2010 series falling by $3.06 to settle at $74.90 a barrel.

· In the metals space, the Comex Gold for February 2010 series declined by $12.60 to settle at $1176.00 a troy ounce, while Comex Silver for December series fell by $0.47 to settle at $18.34 to a troy ounce.



Daily trend of FII/MF investment in equities

· On November 27, 2009, FIIs were the net buyers of the Indian Stocks in the tune of Rs306.10 crore (with the gross purchase of Rs2935.20 crore and gross sales of Rs2629.10 crore).

· While the Domestic mutual funds mutual funds, on November 26, 2009, were the net sellers of the stocks in the tune of Rs257.50 crore (with gross purchase of Rs1015.40 crore and gross sales of Rs1272.90 crore).

Grey Market - MBL Infrastructures, Cox and Kings, JSW Energy


Company Name

Offer Price

(Rs.)

Premium

(Rs.)

Cox & Kings India

330

4 to 5

MBL Infra

165 to 180

5 to 5.50

JSW Energy Ltd.

--

2.50 to 3.00

Market seen advancing on recovery in Asian markets; GDP data eyed


The market is likely to end two day losses following recovery in Asian stocks and higher US index futures. Trading in US index futures showed the Dow could rise 58 points the opening bell today, 30 November 2009. The S&P CNX Nifty futures for December 2009 expiry were trading 47 points higher in Singapore. Gross domestic product (GDP) data for Q2 September 2009 to be announced by the government later in the day day will be closely watched. The economy grew at 6.1% annual rate in the June 2009 quarter

Most Asian stocks advanced today, 30 November 2009, ending a two-day slide, as concerns about Dubai debt default eased and the yen retreated from a 14-year high on the dollar. Key benchmark indices in China, Hong Kong, Japan, South Korea and Taiwan were up by between 1.50% to 3.45%. However Singapore's Straits Times index fell 1.90%

Meanwhile, the Dubai government announced a restructuring of Dubai World after the company shocked creditors by requesting a standstill on all financings to it and its subsidiary Nakheel, the "palm island" developer. Granting of the request would result in a technical default.

Dubai World, one of the emirate's main state holding companies, asked for a delay on maturities until at least 30 May 2010. The company has total debts of $59 billion, including $3.52 billion of Islamic bonds due 14 December 2009 from its property unit Nakheel.

The government's decision risks undermining investor confidence in Dubai, a Middle East financial hub. A decision is yet to be taken on how to deal with investors insisting on repayment in December.

Fears of a possible Dubai debt default rippled through markets for a second day on Friday but the exodus from stocks and rush to the safe-haven U.S. dollar slowed as investors discounted contagion. The Dow Jones Industrial Average fell 154.48 points, or 1.48%, to 10,309.92. The Standard & Poor`s 500 Index slid 1.72% to 1,091.49 and the Nasdaq Composite index declined 37.61 points, or 1.73%, to end at 2,138.44.

Back home, auto majors Maruti Suzuki India and Mahindra & Mahindra may see action as they reportedly plan to raise prices in two phase next year as input costs have increased. State Bank of India may also be in action on its plans to open 23 branches overseas in the next four months. The bank plans to have 160 overseas branches by March 2010.

There are concerns that a glut in share sales may suck liquidity from the secondary market. A foreign brokerage firm expects Indian firms to raise roughly $70 billion through share sales over the next three years. The brokerage expects stake sales in state-run firms will account for $10-$15 billion of the total funds to be raised. The upcoming auction of third-generation mobile spectrum will also spur potentially billions of dollars in equity raising, although not necessarily from the public markets.

Indian companies have raised about $18 billion in equity thus far this year to repay high cost debt or to fund expansion plans. Last year, Indian firms raised $7.2 billion in equity.

The Reserve Bank of India (RBI) governor Duvvri Subbarao on Friday 27 November 2009 said an assessment of the impact of Dubai's debt problems was needed before deciding on a response. India's financial integration with the global economy is deeper than its trade integration, the central bank governor said.

Subbarao said that there was no benign policy option and that inflationary pressures were building up. The government on Thursday said it was concerned about rising prices, especially of food articles, and would take appropriate fiscal and monetary measures to contain them. "We are deeply concerned when prices go high," Finance Minister Pranab Mukherjee said on Thursday. "It will have to be done by us: control of monetary policy, control of credit policy, control of fiscal policy."

The six core industries grew 3.5% in October 2009 from a year earlier, slower than upwardly revised annual growth of 4.1% in September 2009, government data showed on Friday. During April-October, the first half of the 2009/10 fiscal year, output rose 4.7% from 3.3% in the same period in 2008/09. The infrastructure sector accounts for 26.7 percent of India's industrial output.

Key benchmark indices ended lower on Friday, 27 November 2009 despite a sharp rebound in second half of the day's trading session. The BSE Sensex fell 222.92 points or 1.32% to 16,632.01 and the S&P CNX Nifty was down 63.80 points or 1.27% to 4941.75.

The BSE Sensex had lost 566.94 points or 3.41% in the past two trading sessions on worries about Dubai's debt problems. Debt worries in Dubai sparked fears that the global financial markets have not healed properly since last year's crisis and that the Dubai problem could expose these weaknesses.

As per provisional data on NSE, foreign funds sold shares worth Rs 1057.18 crore and domestic funds bought shares worth Rs 698.67 crore on Friday, 27 November 2009.

Wall Street joins world in reacting to Dubai crisis


Early gains in the week help indices register little weekly losses

It was a holiday shortened week at Wall Street that ended on Friday, 27 November, 2009 with US market being closed on Thursday, 26 November, 2009 on account of Thanksgiving Holiday and half day closed the following the day. But due to weakness in the later part of the week, indices suffered little losses for the week, though market had managed a strong start on Monday, 23 November, 2009. But news of Dubai's debt crisis rattled Wall Street once again.

For the week, Dow ended lower by 8.24 points (0.1%) at 10,309.92. Nasdaq ended lower by 7.6 points (0.4%) at 2138.44. S&P 500 ended almost unchanged at 1091.49. Sector wise, financial led the pack of losers while healthcare and telecom led the pack of gainers.

Market made off to a good start on Monday, 23 November, 2009, following a weak dollar and better thane expected housing report. Market managed to cling to its gains for the following two days – Tuesday and Wednesday. Among economic reports expected for the week, the housing data showed that home sales in October rose 10.1% to 6.1 million homes, greatly outpacing expectations of 5.7 million as the first-time home buyers tax credit provided much of the incentive for the increase.

The world stock markets revisited last year's stock market crisis partly on Wednesday, 25 November, 2009 after news hit the wires that the Dubai government asked creditors, which reportedly include many European banks, particularly in the United Kingdom, to defer payments on some $20 billion in debt coming due over the next 18 months. Reportedly, Dubai World, the largest corporate entity in the Persian Gulf emirate, asked creditors last Wednesday for a six-month stay on repayment of $60 billion in debts. Indices across the world just plunged soon after the news.

Wall Street reacted a little late to the news with market being closed on Thursday, 26 November, 2009. In the US market on Friday, 27 November, sellers moved concertedly to pressure stocks amid news of credit troubles in Dubai. Their actions gave the stock market its worst single-session percentage drop of the month and caused volatility to spike.

On that day, The Dow Jones Industrial Average ended lower by 154.48 points at 10309.92. Nasdaq ended lower by 37.61 points at 2138.44. S&P 500 ended lower by 19.13 points at 1091.51. Losses were broad based, too. In fact, all 30 Dow components logged a loss. Broader market pressure and weakness among commodities took their toll on the materials sector and the energy sector. The two led declines for most of the session.

Crude prices fell at Nymex on Friday, 27 November, 2009. Prices fell as the debt concerns in Dubai further troubled investors. The rising dollar also pressured the crude oil prices.

On Friday, crude-oil futures for light sweet crude for January delivery closed at $76.05/barrel (lower by $1.91 or 2.4%). Earlier during the day, the contract dropped to a low of $72.39. For the week, crude ended lower by 1.8%.

Yellow metal prices ended their nine day consecutive winning streak and ended lower on Friday, 27 November, 2009. Prices fell as the debt concerns in Dubai further troubled investors. The rising dollar also pressured the precious metal prices. Silver prices also ended substantially lower.

On Friday, gold for December delivery ended at $1,174.2, lower by $12.8 (1.1%) an ounce on the New York Mercantile Exchange. Earlier during the day, it rose to a high of $1,195 and also fell to a low of $1,130. In the previous nine sessions, gold gained more than 7%. For the week, gold gained 2.6%. On a year to date basis, gold price is higher by 33%.

In the currency market on Friday, the dollar headed up against most of the major currencies. The dollar index, which measures the strength of dollar against basket of six other currencies, rose by almost 0.2%.

For the year, Dow, Nasdaq and S&P 500 are higher by 17.5%, 35.6% and 20.8% respectively.

Earnings season has ended for this season at Wall Street and there are no notably Treasury auctions for the coming week. But the economic calendar is full, with the ADP Employment change on Wednesday, 2 December, 2009 preceding the key Nonfarm Payrolls figure and Unemployment Rate on Friday, 4 December, 2009.

Daily News Roundup - Nov 30 2009


Suzlon Energy's subsidiary REpower Systems receives an order from Saint-Laurent √Čnergies, Canada, for supply of 954MW of wind turbines ;deal size is estimated at about US$1bn. (BL)

L&T is all set to ink a JV agreement with Nuclear Power Corp for setting up an Rs20bn project to make forgings for nuclear power plants. (BL)

ONGC finds traces of a new oil reserve in Gujarat which could increase the company’s total onshore oil production by about 20%. (BS)

Mahindra Satyam, Siemens and Patni Computers, are in the race for selection as IT implementing agencies for the government’s automation programme worth Rs100bn. (ET)

Wockhardt and DBS Bank have agreed to an out-of-court settlement of a dispute over loans the drug manufacturer had taken from the Singapore-based lender. (BS)

GMR Group is in talks with private equity funds 3i Investments and Macquarie-SBI Infrastructure to raise US$450mn in GMR Airport Holdings. (ET)

Barclays Capital and Calyon have petitioned the High Court to liquidate the assets of Wockhardt and distribute its proceeds to lenders. (BS)

Tatas, L&T in race for the 35-km high-speed rail transport between Bangalore International Airport at Devanahalli and the city centre. (BS)

The US drug regulator has commenced inspection of Lupin’s upcoming plant at Indore last week. (ET)

Gammon plans to make an yearly investment of up to Rs50bn for roads development projects and is looking to bid for 10 projects by fiscal end. (ET)

Shriram EPC has signed a MoU with North West Electric Power Design Institute of China to form a consortium to undertake EPC contracts for thermal power projects in India. (BL)

Marico and Godrej Consumer Products are in the race to buy British skincare brand Simple, one of the largest beauty product brands in the UK. (FE)

TCS has said that it will recruit about 25,000 people in 2010-11. (BL)

Bajaj Auto to launch sub-150 cc Pulsar. (BL)

Reliance Capital plans to acquire a controlling stake in Quant Capital. (BS)

Reliance Communications cuts SMS charges, further heating up the ongoing tariff war in the Indian mobile telephony market. (BL)

Aditya Birla Retail is considering an IPO and will time it as soon as the company starts spinning profits. (DNA)

ABG Shipyard said its open offer for 32.1% stake in Great Offshore will now commence on December 3. (FE)

Jay Shree Tea is close to announcing its first overseas acquisition, in Uganda. (BS)

Spice Group plans to enter mutual funds, stock broking and distribution and micro-finance businesses by March 2010. (BS)

Spice Mobile plans to start a manufacturing unit for mobile devices in the country by next year, with an initial investment of Rs1bn. (BS)

Foreign exchange reserves fell by US$1bn to US$285bn, for the week ended November 20. (BL)

Sufficient room for banks to cut lending rates further, says RBI governor. (BL)

Six core infrastructure industries see 3.5% yoy growth in October, compared to 4.1% and 7.8% levels of the preceding two months and the 2% for Oct’ 08. (BL)

The 46 operational airports in the country handled 42mn domestic passengers during April-Sept’ 2009-10, which is about the same as the numbers handled in 2007. (BL)

FDI into India declined 11% yoy to US$15bn in the first six months of fiscal 2009-10. (DNA)

Exports dip 6.6% yoy in October. (TOI)

Finance Ministry says no to income tax holiday for first 7 NELP rounds. (FE)

The government is assessing the needs of major export-oriented sectors hit by the economic slowdown to provide support for their fast recovery. (BS)

India’s drug retail market grew by 29.24% in value terms in October this year over the year-ago period. (ET)

Government plans ultra mega steel projects, to identify five locations adjacent to mining sites for developing UMSPS. (ET)

The Perfect Storm!


There is bound to come some pain, surely as there are storms and falling rain; just believe that the one who holds the storms will bring the sun.

The bears seem to have found the perfect storm in the desert. For long they have been scouting for a reason to break the range-bound trade and the Dubai-debt issues seem to have done the trick. UAE authorities seem to be coming up with a solution; albeit temporary, and this could at least limit the collateral damage.

We expect a bounce back at start today. Some amount of domestic buying, especially in the large caps is likely after they were randomly beaten down last week. Investors too may have pondered enough over the weekend and decide that the situation is not that bad after all for the time being. The Asian markets are staging a comeback recording decent gains.

The GDP numbers expected later in the day could add to the sentiment if above expectations. Some surveys suggest the India’s economy grew at the fastest pace in a year thanks to record-low interest rates and government stimulus measures.

The primary fears include that a bailout in Dubai may feed further bubbles. Beijing says it plans to continue its stimulus measures. Back home, the RBI says it is watching the situation closely. The event could delay the central bank’s exit measures for some time.

Japanese benchmark moved higher on expectations that the Dubai issue would be limited; moreover the yen’s appreciation halted. For the sake of the world, Dubai World will hope to live up to its tagline of "The sun never sets on Dubai World."

Finance Minister Pranab Mukherjee had said attempt was being made to balance the need to create jobs against inflation concerns. Food inflation meanwhile has climbed to 15.58% and remains a major concern.

Meanwhile Federal Reserve Chairman Ben Bernanke, has written a strong article in a newspaper warning Congress that actions limiting the Fed’s independence could prove detrimental to the causes of financial reform and economic recovery. "The government's actions to avoid financial collapse last fall -- as distasteful and unfair as some undoubtedly were -- were unfortunately necessary to prevent a global economic catastrophe that could have rivaled the Great Depression in length and severity, with profound consequences for our economy and society," he wrote.

Among other news in the media:

Foreign exchange reserves fell by US$1bn to US$285bn, for the week ended November 20.

Six core infrastructure industries see 3.5% yoy growth in October, compared to 4.1% and 7.8% levels of the preceding two months and the 2% for Oct’ 08.

The 46 operational airports in the country handled 42mn domestic passengers during April-Sept’ 2009-10, which is about the same as the numbers handled in 2007.

FDI into India declined 11% yoy to US$15bn in the first six months of fiscal 2009-10.

Exports dip 6.6% yoy in October. The government is assessing the needs of major export-oriented sectors hit by the economic slowdown to provide support for their fast recovery.

Finance Ministry says no to income tax holiday for first 7 NELP rounds.

India’s drug retail market grew by 29.24% in value terms in October this year over the year-ago period.

Government plans ultra mega steel projects, to identify five locations adjacent to mining sites for developing UMSPS.

It seems like fatigue and F&O expiry took its toll on the bulls today. The key indices were attempting to break out of a range where the correction had set-in last month. Lack of any events in the near term, which could trigger a big push towards new highs brought the indices lower.

Also, weakness in European markets following a sharp decline in Chinese stocks triggered a sell-off on Dalal Street in the afternoon trades.

The BSE Sensex lost 344 points to end at 16,854 after touching a high of 17,202.51. The NSE Nifty lost 103 points to close at 5,006.

Among the BSE sectoral indices, banking (2.64%), oil&gas (2.3%), consumer goods (2.24%), realty (2.11%) and IT (1.97%) stocks were the major losers respectively.

The BSE Mid-Cap index ended lower by 1.45% while the BSE Small-Cap index was down by 0.98%. Among the 30-components of Sensex, Hindustan Unilever, Sun Pharma, ACC, Hero Honda were among the top gainers. Top losers in Sensex were Reliance Industries, ICICI Bank, Tata Steel, M&M and SBI.

Indian stock market breadth was extremely negative and pared early morning gains as traders squared off positions on the settlement day of November series.

Private banking stocks declined sharply despite of government planning to move a bill early next year to amend a banking law for allowing foreign investors in private banks to have voting rights in proportion to their shareholdings. ICICI Bank dropped by 4%. HDFC Bank slipped by 2% and Axis Bank slipped by 2% to Rs997.

Tata Steel lost over 3% after it reported a consolidated net loss of Rs2,707cr in Q2 September 2009. Net sales fell 42.8% to Rs2,5270cr in Q2 September 2009.

Auto stocks fell on account of profit booking. Maruti, Mahindra & Mahindra and Tata Motosr were among the top losers.

Profit booking was seen in shares of Uttar Pradesh-based sugar companies, which rose on Wednesday. State's sugar mill association signed an agreement with the sugarcane farmers on the price for the ongoing season (October-September 2009-10). Balrampur Chini, Bajaj Hind and Dhampur Sugar have lost in the range of 2-3%.

In Asia, Australia's S&P/ASX ended lower by 0.29 % at 4708.60, Shanghai Index in China lost 3.6% and Hang Seng index in Hong Kong was down 1.78%.

In Europe, DAX in Germany was down by 1.85% and the CAC 40 index of France dipped 1.97%.

Asian stocks open in positive


Asian stocks may extend their best annual rally in 16 years, with a regional index poised to gain 20% in 2010 as foreign fund flows into the region`s equities increase, BNP Paribas said.

Japanese benchmark index Nikkei 225 rose 225.49 points, or 2.48%, to trade at 9,307.01.

Hong Kong`s Hang Seng is rose 553.19 points, or 2.62%, at 21,687.69.

China`s Shanghai Composite increased 72.84 points, or 0.99% to trade at 7,432.88.

Taiwan`s Taiex index was rose 90.47 points, or 1.21%, to trade at 7,581.38.

South Korea`s Kospi index increased 38.26 points, or 2.51% to trade at 1,562.76.

Singapore`s Straits Times index declined 7.37 points, or to 0.27% trade at 2,754.85. (7.42 a.m., IST)

Weekly Newsletter - Nov 30 2009


Weekly Newsletter - Nov 30 2009

Tata Communications


We recommend a buy in the stock of Tata Communications from a short-term perspective. It is apparent from the charts that the stock has been on a medium-term downtrend from its May high of Rs 651 (a 52-week high). In late October, the stock broke through the significant support level at Rs 450 by experiencing high selling interest. Subsequently, the stock tumbled sharply and found support at around Rs 350 in early November, a long-term support. Since then the stock had been on sideways movement just above this support. On November 27, the stock gained almost 6 per cent accompanied with high volume, crossing over the 2-day moving average. With this gain the stock has formed a bullish engulfing candlestick pattern signalling short-term strength. The daily relative strength index (RSI) had entered the neutral region from the bearish zone and weekly RSI is recovering from the oversold territory. The daily moving average convergence and divergence indicator has signalled a buy. We are bullish on the stock from a short-term perspective. We anticipate it to move up until it hits our price target of Rs 420. Trader with a short-term horizon can buy the stock while maintaining a stop-loss at Rs 364.

via BL

ITC Ltd


ITC Ltd

Idea Cellular


Idea Cellular

NIIT


NIIT

Polaris Software


Polaris Software

KPIT Cummins


KPIT Cummins

Natco Pharma, Balrampur Chini, Sugar Sector


Natco Pharma, Balrampur Chini, Sugar Sector

Oil India Ltd


Oil India Ltd

Ashok Leyland


Ashok Leyland

Balrampur Chini Mills


Balrampur Chini Mills

Grasim Industries


Grasim Industries

Analysis - MBL Infrastructures IPO


Analysis - MBL Infrastructures IPO

Siemens


Siemens

Bajaj Auto


Bajaj Auto

Redington India


Redington India

Weekly Watch - Nov 30 2009


Weekly Watch - Nov 30 2009

End of gold's winning streak


Yellow metal price drops after nine consecutive sessions of rally

Yellow metal prices ended their nine day consecutive winning streak and ended lower on Friday, 27 November, 2009. Prices fell as the debt concerns in Dubai further troubled investors. The rising dollar also pressured the precious metal prices. Silver prices also ended substantially lower.

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, gold for December delivery ended at $1,174.2, lower by $12.8 (1.1%) an ounce on the New York Mercantile Exchange. Earlier during the day, it rose to a high of $1,195 and also fell to a low of $1,130. In the previous nine sessions, gold gained more than 7%. For the week, gold gained 2.6%. On a year to date basis, gold price is higher by 33%.

On Friday, December Comex silver futures ended lower by 46.6 cents (2.5%) at $18.302 an ounce. Silver posted a marginal weekly loss.

In the currency market on Friday, the dollar headed up against most of the major currencies. The dollar index, which measures the strength of dollar against basket of six other currencies, rose by almost 0.2%.

Dubai World, the largest corporate entity in the Persian Gulf emirate, asked creditors last Wednesday for a six-month stay on repayment of $60 billion in debts.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

Crude registers sharp drop


Prices drop due to Dubai's debt concerns

Crude prices fell at Nymex on Friday, 27 November, 2009. Prices fell as the debt concerns in Dubai further troubled investors. The rising dollar also pressured the crude oil prices.

On Friday, crude-oil futures for light sweet crude for January delivery closed at $76.05/barrel (lower by $1.91 or 2.4%). Earlier during the day, the contract dropped to a low of $72.39. For the week, crude ended lower by 1.8%.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 55% since then.

In the currency market on Friday, the dollar headed up against most of the major currencies. The dollar index, which measures the strength of dollar against basket of six other currencies, rose by almost 0.2%.

Dubai World, the largest corporate entity in the Persian Gulf emirate, asked creditors last Wednesday for a six-month stay on repayment of $60 billion in debts.

Among other energy products, December gasoline lost 3.6% to $1.9262 a gallon, and December heating oil fell 1.4% to $1.9622 a gallon.

Also on Friday, natural gas for January delivery ended up 3 cents, or 0.6%, at $5.192 per million British thermal units. It ended the week 9% higher.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

SGX Nifty Live Update - Nov 30 2009


4,994.5 +41.5