Smart Invest and Smart Trade -Sep 3 2010
Friday, September 03, 2010
US manufacturing sector grows unexpectedly
Manufacturing sector growth in the United States accelerated in August. The US PMI grew faster than expected, offering a positive note amid worries about the state of the economic recovery. Economists had expected US manufacturing to slow further in August, but the closely watched figures from the Institute of Supply Management (ISM) pointed to an acceleration of output growth even as separate regional surveys painted a more downbeat picture. The US purchasing managers’ index rose to 56.3 from 55.5 in July. A reading above 50 indicates growth and a figure below it points to contraction. The US sector expanded for its 13th straight month in August, according to the ISM. Stock indexes surged across the globe after an unexpectedly strong US manufacturing survey further eased tensions about the global economic recovery. Across the world, the global manufacturing PMI indicated manufacturing activity continued to rise for the 15th month in a row although the data indicated that the most rapid phase of the recovery was over. The big question is whether the economic momentum can be sustained going ahead.
Food and Agriculture Minister Sharad Pawar has reportedly made a detailed presentation to the Prime Minister on the issue of deregulating the sugar sector. According to Pawar's plan, the Centre should buy sugar at prevailing market prices for the public distribution system (PDS) directly from the open market in the new sugar year starting October. At present, mills are obliged to sell 20% of their sugar produce to the Central Government for distribution under the PDS at almost half the market price. The Centre also directs each month how much sugar should be released for the open market sale. Under decontrol, this release mechanism will be discontinued and sugar mills will be free to sell their produce as they wish.
Food inflation in India inched higher in the third week of August as did inflation for the Fuel group and the Primary Articles group, data released by the Government showed. Inflation for the Food Articles group stood at 10.86% in the week ended August 21 as against 10.05% in the previous week, the Commerce & Industry Ministry data showed. It was at 14.86% in the comparable week last year. The index for Food Articles group rose by 1.8% to 303.3 in the week ended August 21. Inflation for the Primary Articles group also rose to 15.19% from 14.75% in the week ended August 14, the data revealed. It stood at 8.87% during the week ended Aug. 22, 2009. The index for the Primary Articles group rose by 1.4% to 312.5 in the week under review.
The Indian mutual fund industry had a better August with the average assets under management (AAUM) of the industry growing by a respectable 3.30%.
The AAUM of the Indian Mutual Fund industry increased to Rs6.87 lakh crores in August from Rs6.65 lakh crore in July, according to data published by the Association of Mutual Funds in India (Amfi).
With data showing improvement in the US macroeconomic numbers, especially in manufacturing and payrolls, the global risk aversion could subside further. Monday promises to be a good day for the bulls, as world markets are expected to rejoice a better than expected US jobs data. The overall lost jobs were lower than forecast and private hiring turned out to be higher than anticipated. But, the unemployment rate is still pretty high at 9.6%. Jobless rate is also pretty elevated in the debt-plagued euro-zone, which could see some slowdown due to the tough austerity measures.
India's economy grows by 8.8% in Q1 FY11 as against 8.6% expansion in the previous quarter (January-March), data released by the Government showed. This is the fastest pace of economic growth for the country in two-and-a-half years and might put further pressure on the Reserve Bank of India (RBI) to hike key interest rates to rein in inflation. India’s US$1.3 trillion economy may expand by 8.5% in the year ending on March 31, 2011, the most in three years, the RBI said on July 27. The benchmark wholesale-price inflation rate has hovered around or above 10% since January. 10-year government bond yields climbed last week to as much as 8.07%, near the highest level in four months, on concerns that the RBI may raise rates for the fifth time since mid-March to contain inflation. The RBI is scheduled to release its next monetary policy statement on Sept. 16. The RBI's repurchase rate is currently at 4.5% and the repurchase rate is at 5.75%.
During the week, caution and optimism went hand in hand. A rare error in Q1 GDP numbers was sorted out after a credible explanation from the Government. Overall, the GDP data only reinforced a growing view that economic fundamentals remain fairly robust. Having said that, PMI data on manufacturing and service sector activity and trade figures indicated that some softening could be underway and that growth may have peaked out. Also, inflation continues to hover near double digits, putting relentless pressure on the RBI to raise rates. The BSE Sensex and the NSE Nifty gained 1% each this week ending at 18,221 and 5,479 respectively but the broader market indices clearly outpaced the gains in the main indexes.
Markets enter into a typical pre non-farm period of tranquility
Asian markets witnessed mostly listless trades ahead the non-farm payrolls, as investors were hesitant to enter into the markets on the heels of such a critical data. The economic indicators have improved in Asia and US over the last couple of sessions but the traders seemed reluctant to add to their recent longs given that a sharp downward bias in non farm is good enough to ruin off all the other positive economic endeavors. Moreover, with the US Labor Day holiday on Monday, the participants are not willing to take much of a risk. Select Asian stocks still eked out gains, buoyed by a late surge on Wall Street in the prior session.
Strong Q1 June 2010 GDP data and robust automobile sales for August 2010, helped the market gain upward momentum last week. Healthy manufacturing data in China and better-than-expected GDP figures from Australia also supported Asia-Pacific stocks last week. Data showing resumption of buying by foreign funds also underpinned sentiments on the domestic bourses.
The key benchmark indices edged lower in thin trade as profit taking emerged ahead of a crucial economic data in the US later in the global day. US is the world's biggest economy. The market snapped last two days' gains. The BSE 30-share Sensex was down 16.88 points or 0.09%, off close to 95 points from the day's high and up close to 15 points from the day's low. The S&P CNX Nifty fell below the psychological 5,500 mark, after crossing that level at the onset of the trading session. Metal stocks fell. But, fertilizer, hotel, realty and auto stocks rose. Index heavyweight Reliance Industries (RIL) edged lower.
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
3/9/2010 532975 Aishwarya Tele KALPESHBHAI VASUDEVBHAI PADHYA B 188084 35.41
3/9/2010 532975 Aishwarya Tele PRAKASH LALJIBHAI PATEL B 500000 37.46
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
03-SEP-2010,ATLASCYCLE,Atlas Cycles (Haryana) Lt,BLUE PEACOCK SECURITIES PVT LT,BUY,25245,279.53,-
03-SEP-2010,ATLASCYCLE,Atlas Cycles (Haryana) Lt,BP FINTRADE PRIVATE LIMITED,BUY,20681,286.24,-
The marketing agreement between GAIL and RIL to sell D6 gas stands inoperative due to a Government policy that does not allow RIL to sell gas independently. (BL)
DLF has put on hold its plan to sell its non-core assets including ultraluxury hotel chain Aman Resorts and wind energy business for the next three quarters. (ET)
The Sensex gained 32 points to close at 18,238, the index hit an intra-day high of 18,356 and an intra-day low of 18,215. While, NSE Nifty added 14 points to close at 5,486.
Among the BSE sectoral indices, the BSE Consumer Durables index was the top gainer the index was up 1.1%, followed by BSE FMCG index (up 0.8%) and BSE Bank index (up 0.8%) and BSE Auto index (up 0.6%).
The market may edge higher for the third straight day, tracking gains in Asian stocks. Trading of the S&P CNX Nifty futures on the Singapore stock exchange indicate that the Nifty could gain 21 points at the opening bell.
We recommend a buy in the stock of Texmaco from a short-term perspective. After finding support in the band between Rs 115 and Rs 120 in late May, the stock reversed higher. The long-term trend is up from its March 2009 low of Rs 35. In early August, the stock breached its 200-day moving average as well as significant intermediate-term resistance at Rs 140 and continued to trend up. The stock is hovering well above its 50- and 200-day moving average. On Thursday, the stock climbed 3.4 per cent, penetrating its near-term resistance level of Rs 155. We notice that there is an increase in volume over the past two trading sessions. The 14-day relative strength index has re-entered in to the bullish zone from the neutral region whereas the weekly RSI is featuring in the bullish zone. Both daily and weekly moving average convergence divergence oscillators are hovering in the positive territory implying upward momentum. Our short-term forecast on the stock is positive. We anticipate it to continue its up-move until it hits our price target of Rs 164 or Rs 169. Short-term traders can buy the stock while maintaining stop-loss at Rs 154.
Economic data checks in mixed in nature
US stocks finished with modest gains on Thursday, 02 September 2010. After a fierce rally yesterday and overnight rally in Asian markets, stocks started the day flat at the open but then gradually tried to pick up momentum in the course of the day. Stocks faltered at times and indices dropped in the red in between. Economic data dominated the day and the same that checked in were mixed in nature.
Prices glitter as economic data increase their appeal
Precious metals ended higher on Thursday, 02 September 2010 at Comex. Prices almost touched their record high as economic data once again increased the appeal of precious metals as an alternate investment.
Prices rise on output concerns
Crude prices ended substantially higher on Thursday, 03 September 2010 at Nymex. Prices ended higher as a fire at a Mexican oil platform raised concerns about output of crude. Certain economic data also helped crude climb up.