Indian Stock News by Experts

India's fiscal deficit jumps on bank stake buy

<DIV> India's fiscal deficit surged in June to 1.12 trillion rupees ($27.8 billion) after the government bought the central bank's stake in the country's largest lender, official data showed on Tuesday. But analysts said the transaction was budget neutral and the jump in the deficit -- from 621.35 billion rupees in the April-May period -- was not a cause for concern. The deficit up to the end of June was 74.5 percent of the full-year target of 1.51 trillion rupees, the government statement said. During the same quarter last year, the deficit was 52.3 percent of the 2006/07 budget target. In June, the government paid 355.31 billion rupees in cash to the central bank for a 59.73 percent stake in State Bank of India. "This transaction will be neutralised by realising equal amount of receipts from Reserve Bank of India during the course of this financial year," the statement said. "After excluding this transaction, the fiscal deficit up to June is 768.73 billion rupees." "I don't think there is any reason for alarm now on the fiscal deficit front," said D.K. Joshi, principal economist at domestic credit rating agency Crisil. "The revenue situation is buoyant. The money spent on buying the SBI stake will get neutralised once the book entries are done later in the year." Total receipts were at 674.96 billion rupees of which taxes contributed 574.70 billion rupees, the statement said. The government's total expenditure, including that for the SBI stake buy, stood at 1.8 trillion rupees. Revenue deficit was at 686.46 billion rupees until June-end, which is 96 percent of the full-year target. </DIV>

India's fiscal deficit jumps on bank stake buy

India's fiscal deficit surged in June to 1.12 trillion rupees ($27.8 billion) after the government bought the central bank's stake in the country's largest lender, official…

31 Jul 2007

SBI: short-term rates may rise on central bank move

SBI: short-term rates may rise on central bank move

The chairman of country's largest lender, State Bank of India, O.P. Bhatt, said on Tuesday that short-term interest rates could go up after the central bank raised the cash …

31 Jul 2007

RBI raises reserve requirements, holds rates

<DIV> <TABLE align=left border=0> <TBODY> <TR> <TD> <CENTER><A href="http://in.biz.yahoo.com/070731/137/6iuhq.html"><img border="0" height="130" src="http://in.yimg.com/xp/reuters_ids_new/20070731/12/2222165702.jpg" width="88"></A> </CENTER></TD></TR> <TR> <TD> <CENTER><A href="http://in.biz.yahoo.com/070731/137/6iuhq.html">Click to enlarge photo</A> </CENTER></TD></TR></TBODY></TABLE> By V. Ramakrishnan and Charlotte Cooper The Reserve Bank of India moved on Tuesday to drain surplus cash from the banking system stemming from strong capital inflows, knocking bonds lower, but it left its key interest rates steady, as expected. The RBI, still sounding a fairly hawkish note after five rate increases since June last year, raised the proportion of cash banks have to keep with it on deposit to mop up funds that could fuel inflation. The central bank raised banks' cash reserve ratio (CRR) to 7.0 percent from 6.50 percent with effect from Aug. 4, the fourth increase since early December, taking it to its highest level since November 2001. "Monetary expansion has to be curbed," said Saumitra Chaudhuri, economic adviser at credit rating agency ICRA. Economists said the central bank was probably not done raising the CRR, with six out of 10 polled by Reuters expecting another increase by March at the latest. Tuesday's rise will drain nearly $4 billion from the system and the RBI also scrapped a 30 billion rupee limit on its daily money market operations to drain cash from the system, enabling banks to park more funds with it. The yield on the 10-year government bond ended 8 basis points up at 7.84 percent soon after the decision on worries these measures would leave less cash to buy bonds. The stock market briefly shed more than 1 percent, with banks and auto stocks hit particularly hard on concern that loan growth would fall, but later closed nearly 2 percent up. The partially convertible rupee inched towards last week's nine-year high of 40.20 per dollar after the decision. The RBI left its key repo rate unchanged at 7.75 percent and its reverse repo rate, at which it absorbs excess cash from banks, steady at 6.0 percent. The bank rate, used to price long-term loans, remained at 6.0 percent. OTHER STEPS India's move came a day after China, inundated with cash from its current account surplus, raised the level of deposits banks must hold in reserve for the ninth time in 13 months. India's banking system has been awash with cash in recent months due to robust capital inflows into Asia's third-largest economy, particularly into the record-breaking stock market. "Recent financial market developments in India and potential uncertainties in global markets warrant a higher priority in the policy hierarchy for managing appropriate liquidity conditions," the RBI said in a statement. It scrapped one of its two daily money market operations from Aug. 6, and said it could use variable or fixed rates in repo and reverse repo auctions and conduct longer-term operations. The RBI has been intervening to cap the rupee's gains, buying dollars in a policy that has generated excess cash in the money market. As a result, overnight call money rates have hovered near zero for weeks, complicating monetary policy. HSBC economist Robert Prior-Wandesforde said intervening to suppress the rupee while fighting inflation with firm interest rates was unsustainable, and he saw another reserve requirement increase later in the year along with more rupee gains. "If inflows continue the way they have been, we will be witnessing a similar situation a couple of months later," he said. The RBI said although headline inflation has eased below its 5 percent comfort ceiling, upward pressures persisted, with risks from high and volatile crude prices, demand-supply gaps and firm food prices. Governor Yaga Venugopal Reddy told a news conference asset prices had begun to moderate but the central bank warned financial institutions to be prepared for higher volatility than before in financial markets worldwide. However, domestic economic activity continued strong and the base appeared to be broadening, it said, and it retained its 8.5 percent growth forecast for 2007/08. </DIV>

RBI raises reserve requirements, holds rates

Click to enlarge photo By V. Ramakrishnan and Charlotte Cooper The Reserve Bank of India moved on Tuesday to drain surplus cash fro…

31 Jul 2007

RBI keeps bank rate, repo and reverse repo rate unchanged

<DIV> Releasing the First Quarter Review of Annual Statement on Monetary Policy for the Year 2007-08, Reserve Bank of India Governor Y V Reddy today announced that Bank rate, reverse repo rate and repo rate will remain unchanged. However, the Cash Reserve Ratio (CRR) has been increased by 50 basis points to seven per cent with effect from the fortnight beginning August 4. The quarterly review has projected a Gross Domestic Product (GDP) growth of 8.5 per cent, barring domestic or external shocks. Commenting on inflation, Reddy said, "Holding inflation within five per cent in 2007-08 assumes priority in the policy hierarchy, while reinforcing the medium-term objective to condition policy and perceptions to reduce inflation to 4.0-4.5 per cent on a sustained basis." Inflation, measured by variations in the wholesale price index (WPI) on a year-on-year basis, declined from 5.9 per cent at end-March 2007 to 4.4 per cent as on July 14, he added. The review stated that while non-food credit growth has decelerated, the acceleration in money supply and reserve money warrants an appropriate response. On recent ups and downs in the stock markets, the review said: "Recent financial market developments in the country and potential uncertainties in global markets warrant a higher priority in the policy hierarchy for managing appropriate liquidity conditions at the current juncture." Real GDP growth during the quarter January-March 2007 is placed at 9.1 per cent as against 10.0 per cent in the corresponding quarter a year ago and real GDP growth for the year 2006-07 is revised upwards from 9.2 per cent to 9.4 per cent, a RBI release said. The review further added that the year-on-year increase in aggregate deposits of scheduled commercial banks (SCBs) was at 24.4 per cent that was at 20.9 per cent a year ago. "Banks had generally increased their deposit rates by about 25-50 basis points across various maturities between March and June, but reduced them during July, especially in the shorter maturities," the release said. The majority of public sector banks (PSBs) adjusted their deposit rates upwards by 10-25 basis points on maturities above one year, particularly at the longer end, it added.</DIV>

RBI keeps bank rate, repo and reverse repo rate unchanged

Releasing the First Quarter Review of Annual Statement on Monetary Policy for the Year 2007-08, Reserve Bank of India Governor Y V Reddy today announced that Bank rate, rev…

31 Jul 2007

India shares end up 1.9 percent after policy review

<DIV> Indian shares rose 1.9 percent on Tuesday, recovering strongly from a fall into negative territory after the Reserve Bank of India tightened policy, with gains led by Larsen & Toubro Ltd. and Reliance Industries Ltd. The RBI raised the cash reserve requirement - the proportion of cash banks have to keep with it on deposit - by 50 basis points, a move it said would drain 160 billion rupees out of the banking system. That initially knocked bank and auto stocks down sharply on concerns that loan demand and their profitability would fall, but the RBI's decision to hold interest rates steady helped restore market confidence. "The market has reacted positively because the uncertainties over interest rate hikes is over," said Amitabh Chakraborty, president for equities at Religare Securities. "The buzz in the market is that this cash reserve ratio hike may not lead to a rise in interest rates," he said. The benchmark BSE 30-share index closed 290.08 points higher at 15,550.99 points, with 24 stocks gaining. The index, which hit a record high of 15,868.85 last week, rose 6.15 percent over July. Leading capital goods company Larsen & Toubro rose 6.6 percent to 2,606.50 rupees, taking its gains for the year to more than 80 percent, as investors bet on the need for growing investment in India's creaky infrastructure. While initially unsettled by the reserve hike, traders said the fact interest rates were held steady eased concerns of a slowdown in housing demand. Top mortgage firm Housing Development Corp. Ltd. rose 5.7 percent to 2,016 rupees. But auto makers fell on concerns of slower vehicle sales if banks had less money to lend, as nearly all commercial vehicles in India and more than 80 percent of passenger vehicles are bought with loans and finance options. Mahindra & Mahindra fell 3.1 percent to 729.15 rupees and top vehicle maker Tata Motors ended down 1.1 percent at 699.30 rupees. Top private firm Reliance Industries Ltd. rose 2.4 percent to 1,892.30 rupees. Shares in second-ranked mobile firm Reliance Communications Ltd. rose 3.35 percent to 558.80 rupees after its June quarter net profit more than doubled on higher usage in the world's fastest-growing mobile market. In the broader market, gainers led losers 1,699 to 946 in a total volume of more than 289 million shares. The 50-share NSE index ended 2.00 percent higher at 4,528.85. Elsewhere in the region, Karachi's 100-Share index rose 0.77 percent to 13,739.53 and Colombo's All-Share index inched up 0.03 percent to 2,442.11 points. STOCKS THAT MOVED: * Shares in Bharat Heavy Electricals rose 5.3 percent to 1,731.70 rupees after it posted a 22 percent rise in June quarter net profit. * Budget airline SpiceJet Ltd. rose 5.2 percent to 59.05 rupees after the company reported a June quarter profit of 185.4 million rupees. * Aditya Birla Nuvo rose 7.3 percent to 1,475.35 rupees after it reported a 50 percent rise in April-June net profit at 998 million rupees. MAIN TOP THREE BY VOLUME * Reliance Natural Resources on 13.1 million shares * IFCI Ltd. on 8.4 million shares * Suryachakra Power Corp. on 5.2 million shares </DIV>

India shares end up 1.9 percent after policy review

Indian shares rose 1.9 percent on Tuesday, recovering strongly from a fall into negative territory after the Reserve Bank of India tightened policy, with gains led by Larse…

31 Jul 2007

Reliance Comm Q1 net jumps, beats forecast

<DIV>Reliance Communications, India's second-largest mobile firm, said on Tuesday its June quarter net profit more than doubled, beating forecasts, as it added more users in the world's fastest-growing mobile market. Reliance Communications, which had more than 32 million mobile users at end-June, said net profit for the June quarter rose to Rs 12.21 billion, from 5.13 billion reported a year earlier. Revenue rose 32 per cent to Rs 43.04 billion from 32.50 billion reported a year earlier. The firm gets more than 65 per cent of its revenue from wireless subscribers. A Reuters poll of ten brokerages had forecast a rise in net profit to Rs 11.11 billion on revenue of 42.56 billion. Larger rival Bharti Airtel last week reported that its quarterly net profit had doubled to Rs 15.12 billion. Shares in Reliance Communications, India's fifth-most valuable firm, gained 23.1 per cent during April and June, outperformimg a 12.1 per cent rise in the benchmark index.</DIV>

Reliance Comm Q1 net jumps, beats forecast

Reliance Communications, India's second-largest mobile firm, said on Tuesday its June quarter net profit more than doubled, beating forecasts, as it added more users in the …

31 Jul 2007

RBI raises reserve requirements, holds rates

<DIV>The Reserve Bank of India took steps on Tuesday to drain surplus cash from the banking system stemming from strong capital inflows, knocking bonds and stocks lower, but it left its key interest rates steady, as expected. The Reserve Bank of India (RBI), still sounding a fairly hawkish note after five rate increases since June last year, raised the proportion of cash banks have to keep with it on deposit to mop up funds that could fuel inflation. "Monetary expansion has to be curbed," said Saumitra Chaudhuri, economic adviser at credit rating agency ICRA. The central bank raised banks' cash reserve ratio (CRR) to 7% from 6.50% with effect from August 4, the fourth increase announced since early December, taking it to its highest level since November 2001. It also scrapped a Rs30-billion ($740 million) limit on its daily money market operations to drain cash from the system, enabling banks to park more funds with it. The yield on the 10-year government bond spiked up 12 basis points to 7.87% soon after the decision on worries these measures would leave less cash to buy bonds. The stock market shed its 1 percent gain in a few minutes after the decision, with banks and auto stocks hit particularly hard on concern that loan growth would fall, but the market rebounded strongly in afternoon trade. The partially convertible rupee inched towards last week's nine-year high of 40.20 per dollar after the decision. The RBI left its key lending rate, the repo rate, unchanged at 7.75% and its reverse repo rate, at which it absorbs excess cash from banks, steady at 6%. The bank rate, used to price long-term loans, remained at 6%. Other Steps India's move came a day after China, inundated with cash from its current account surplus, raised the level of deposits banks must hold in reserve for the ninth time in 13 months. India's banking system has been awash with cash in recent months due to robust capital inflows into Asia's third-largest economy, particularly into the record-breaking stock market. "Recent financial market developments in India and potential uncertainties in global markets warrant a higher priority in the policy hierarchy for managing appropriate liquidity conditions," the RBI said in a statement. It scrapped one of its two daily money market operations from Aug. 6, and said it could use variable or fixed rates in repo and reverse repo auctions and conduct longer-term operations. The central bank has been intervening to cap the rupee's gains, buying dollars in a policy that has generated excess cash in the money market. As a result, overnight call money rates have hovered near zero for weeks, complicating monetary policy. HSBC economist Robert Prior-Wandesforde said intervening to suppress the rupee while fighting inflation with firm interest rates was unsustainable, and he saw another reserve requirement increase later in the year along with more rupee gains. "If inflows continue the way they have been, we will be witnessing a similar situation a couple of months later," he said. The central bank said although headline inflation, which has eased below its 5% comfort ceiling, had slowed, upward pressures persisted, with risks from high and volatile crude prices, demand-supply gaps and firm food prices. It warned banks and financial institutions to be prepared for higher volatility than before in financial markets worldwide. But it said domestic economic activity continued strong and the base appeared to be broadening, and it retained its 8.5% growth forecast for 2007-08.</DIV>

RBI raises reserve requirements, holds rates

The Reserve Bank of India took steps on Tuesday to drain surplus cash from the banking system stemming from strong capital inflows, knocking bonds and stocks lower, but it l…

31 Jul 2007

Result Updates - July 31 2007

<DIV> BHEL: Misses expectations led by sharp yoy margins decline Indian Oil Corporation: Good 1QFY08 results despite nil oil bonds; Retain IL Mahindra & Mahindra: 1QFY08 net profit declines 6% yoy Sun TV: Strong 1QFY08 results; fine-tuned estimates; Retain U on rich valuations Jindal Steel & Power: Volumes drive earnings; maintain OP Asian Paints: Robust growth in domestic as well as international operations, retain In Line Great Eastern Shipping Company: Strong operating performance; raise target price, maintain In-line rating Maharashtra Seamless: 1QFY08 results: Feeling the rupee brunt; maintain rating, raise TP Andhra Bank: NII disappoints, lower provisions and higher non-interest income drive profits Kalpataru Power Transmission: 1QFY08 result update: Inline with estimates; maintain rating, raise TP Educomp Solutions: Better-than-expected results; raise target to Rs2,650 Nagarjuna Construction: Strong operating margin expansion possibly led by shift of execution towards more profitable segments helps meet expectations Motherson Sumi Systems: 1QFY08 net profit declines 11% yoy Monnet Ispat: 1QFY08 results: Strong growth in revenue and earnings; maintain OP, raise TP Jyoti Structures: 1QFY08 result update: Inline with estimates; raise TP Updates Bank of Baroda: Solid operational performance</DIV>

Result Updates - July 31 2007

BHEL: Misses expectations led by sharp yoy margins declineIndian Oil Corporation: Good 1QFY08 results despite nil oil bonds; Retain ILMahindra & Mahindra: 1QFY08 net profit…

31 Jul 2007

Bulls back in action in a volatile US Market

<DIV>Boeing and General Motors together with financial stocks help in turning around investor sentiments US Market succeeded in getting back some of its confidence today, Monday, 30 July, 2007 after suffering its worst weekly loss in four years last week. Bulls were back in action today after Financial sector, which was worst hit last week, provided bulk of support today. The Dow, S&P 500, and Nasdaq had plunged 4.6% on average last week on problems related to credit crunch and housing sector. A sense that such a sizable sell-off was overdone last week prompted some bargain-hunting interest today. But after some volatility and initial few hiccups, a surprise upgrade on Morgan Stanley�s credit rating, was the initial catalyst restoring confidence on Wall Street. The Dow Jones Industrials Average today rose by 92.84 points to close at 13358.31. Tech heavy Nasdaq rose 21.04 points to close at 2583.28. S&P 500 added 14.96 points to its kitty to close at 1473.91. Twenty-four out of the thirty Dow stocks closed in green today. General Motors, Home Depot, Boeing and Caterpillar headed the list of the Dow winners. Verizon and IBM were a couple of the Dow laggards. Boeing was up almost 2% today after the company raised its estimate of the potential for airliner sales in India and said it sees India orders reaching $86 bln over the next 20 years. It accounted for almost 17 points in Dow�s gains. All investment banking stocks close higher After opening modestly higher across the board, stocks turned negative as investors thought that a possible credit crunch will substantially slow the record pace of M&A activity. The absence of leadership from the next two most influential sectors - Technology and Health Care also contributed to the market's lack of direction. But Standard & Poor's upgrade of Morgan Stanley helped investment banking stocks considerably today. Morgan Stanley, together with competitors Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns closed higher today. A turnaround in the Financial sector, despite a modest increase in bond yield, had the most noticeable impact on the market's improved stance today. JP Morgan and Citigroup also closed higher. GM, the main Dow winner today, to announce earnings tomorrow Crude oil futures registered modest loss today and closed below $77/bbl after crossing $77/bbl during intra day trading hours. Prices fell on speculation that U.S. fuel stockpiles increased last week. Crude-oil futures for light sweet crude for September delivery closed at $76.83/barrel (lower by $0.19/barrel or 0.25%) on the New York Mercantile Exchange. On the NYSE, advancing issues topped those declining by nearly 2 to 1, and 17 to 13 on the Nasdaq. More than 2 billion shares were traded on the NYSE, while 2.3 billion were exchanged on the Nasdaq. A host of economic data will set the tone of trading for tomorrow. Personal Income, Spending, and the Core PCE Price Index are to be released tomorrow. Also garnering notable attention will be the Q2 Employment Cost Index. That will be followed by Chicago PMI at 9:45 ET and Construction Spending and Consumer Confidence at 10:00 ET. Among earnings reports expected tomorrow, Dow component General Motors is the most important name among a host of other names.</DIV>

Bulls back in action in a volatile US Market

Boeing and General Motors together with financial stocks help in turning around investor sentimentsUS Market succeeded in getting back some of its confidence today, Monday, …

31 Jul 2007

Foreign investors line up with big money

<DIV>Foreign investors are once again queuing up to pour money into India's red hot property market, with the government relaxing some of the norms. At least half-a-dozen deals worth $1billion are being finalised by Citigroup, Deutsche Bank, The Carlyle Group and Blackstone, among others, with unlisted real estate companies, as pre-initial public offering (IPO) placement. A clarification issued by the department of industrial policy & promotion (DIPP), under the ministry of commerce and industry, has cleared the air for investments by foreign institutional investors (FIIs), foreign venture capital funds (VCFs) and private equity players. FII investments in companies pre-IPO will be treated as foreign direct investment (FDI), as per the clarification, and the investment will have to be channelled for FDI-compliant greenfield projects only. This has settled the differences arising from views aired by the finance and commerce ministries, and financial sector regulators. Now foreign investors will have to wait three years before exiting the company completely. DIPP has clarified that the investor will have to lock in a minimum of $5 million, in case of a joint venture with an Indian real estate player, or $10 million, in case of a wholly-owned subsidiary of a foreign investor. The existing rules for foreign investors regarding the lock-in period is applicable for real estate sector as well. Hence, investments by FIIs, foreign VCFs and PE investors will have a minimum lock-in period of one year, if the investment occurred during the preceding 12 months before the IPO date. This has paved way for a large number of foreign investments at the entity level. This is a complete departure from the past, when equity investments used to be all project-specific. Industry officials said leading property players are sewing up equity deals at the entity level, with greater clarity in foreign investments in the sector. A majority of real estate companies planning an IPO are currently in talks with foreign investors. The leading players planning an IPO are Hiranandanis, Lodha Developers, Runwal group, Kolte Patil Developers and Paranjpe Schemes (Construction). "There used to be some kind of confusion in the market as far as FIIs' pre-IPO investments in real estate companies are concerned. With the clarification issued by the government, foreign VCFs and PE funds can now invest in the real estate firms with a lock-in period of minimum one year. It will definitely boost investments in the sector," said Akhil Hirani, managing partner of Majmudar & Co. According to investment bankers, the change in rules would pre-empt any further speculation in the real estate market, and that FIIs would not be allowed to cash in immediately in the IPO. Earlier, DIPP and the stock market regulator Sebi were not in favour of a lock-in period and had instead suggested pre-IPO placements by FIIs be considered as portfolio investments. However, the recommendation was not accepted by the finance ministry, which, in turn, asked Sebi to put in place the lock-in on FII investments in real estate. Leading real estate players, eager to cash in on investors' appetite for realty stocks, were seeking FDI status for their pre-offer placement since many of their existing projects were not meeting the tough FDI norms. For instance, a project needs to be at least 25 acres to be notified FDI-compliant.</DIV>

Foreign investors line up with big money

Foreign investors are once again queuing up to pour money into India's red hot property market, with the government relaxing some of the norms. At least half-a-dozen deals w…

31 Jul 2007

Insanity out, anxiety in

<DIV>The International Monetary Fund (IMF) updated its forecast for global growth this year and next. It projects growth at 5.2% for both these years. This is an impressive number and hence runs the risk of being spectacularly wrong, particularly for 2008. Further, financial market action last week suggests that the forecast upgrade could not have been more ill-timed. Stocks in the US declined by 2-3% on Thursday and most Asian markets, including India, responded in sympathy on Friday. Many expected US stocks to recover on Friday. They did not. That would have caused some nerves to fray. The questions are how long will this run and how deep would the correction be. Investors might find it injurious to their financial health to draw solace from the sunny answers of most investment strategists on Wall Street. They did not warn us on the spillover from US mortgage borrowers, lenders, brokers to securitized products, to leveraged buyouts, to credit markets and to Wall Street banks and brokers. Investors would look for clues in fundamentals to decide if this would last or prove to be shortlived. They would then turn to forecasts such as the one that IMF made recently, the strength of corporate balance sheets, growth rates in most emerging economies, and to what they see as reasonable valuations in many stock markets. In doing so, they would be committing a mistake. The rally of the last five years was not about fundamentals, but about a rose-tinted view of the economic fundamentals of most countries in the world and abundance of liquidity provided by banks to hedge funds, hedge funds to private equity managers, banks to private equity managers and now sovereign wealth funds—funds set up to manage the foreign exchange reserves - investing in risky assets. A friend who co-manages a hedge fund incubator, while demurring at my sober outlook for global asset markets in the coming years, did admit that banks were ready to provide leverage to the extent of 49 times and, in some cases, even 99 times to start-up hedge funds with no track record either in investment performance or in risk management. That sums up the problems with global finance. It has been all about returns, nothing about risk. Some segments of this assembly line of liquidity are now shutting down. Readers should appreciate that this assembly line was lubricated with multiple layers of leverage. A hedge fund uses leverage as mentioned above to buy assets. Securities packaged out of mortgages are leveraged and they are repackaged further. Hedge funds buy the lower-rated tranches of these double-packaged debt securities. Some hedge fund investors, too, are leveraged. Hence, a decline in asset value is like a spark that runs through the wires to the final explosive quickly. Here, the leveraged funds explode rather quickly and that hurts a lot of investors because they have used debt and quickly face margin calls. Credit tightens or seizes up at many levels. That is the difference between 2006 summer and now. The correction then was triggered by cyclical tightening concerns. Now, it is the bursting of the credit bubble and, repeat, not just housing finance. Therefore, its path would be relatively more volatile, unpredictable, prolonged and punctuated by large rallies and false dawns over the next few years. Optimists will point out that sovereign wealth funds would step in to provide stability to markets. It is possible. However, in doing so, they would be playing the role of Greenspan who always stepped in to help stabilize financial markets with interest rate reductions. That spawned bubbles in Internet and technology stocks and in housing finance. But that did not prevent the technology bubble from bursting. It probably made the bubble bigger. That is what sovereign wealth funds would be doing if they prop up markets. They might be able to delay the inevitable, not make it disappear. Into this mix, one must throw the volatility that the price of crude oil would cause to economies, to the inflation outlook and asset prices, particularly in Asia. Asian economies have only been superficially strong. Now that the tide of liquidity has withdrawn, the rising price of oil would reveal that many Asian economies and markets were swimming naked. Mohammed El-Erian, the president and chief executive of Harvard Management Co. and a faculty member of the Harvard Business School, in an excellent article in the Financial Times on Thursday succinctly observed that we may be exiting the world in which "individual investors' performance was essentially a function of the degree of their exposure to the most illiquid and leveraged asset classes". In the coming years, however, investors' performance would be a function of the degree of their composure.</DIV>

Insanity out, anxiety in

The International Monetary Fund (IMF) updated its forecast for global growth this year and next. It projects growth at 5.2% for both these years. This is an impressive numbe…

31 Jul 2007

Big money pumps out few barrels of oil

<DIV>The world's three largest fully publicly traded oil firms are investing billions of dollars more this year and the extra spending has yet to result in higher production. Exxon Mobil, Royal Dutch Shell and BP posted falling second-quarter output, even though they plan up to a total of $61 billion in 2007 capital spending, up 5.5% from 2006. "We're in a transition for the super majors where they are spending an awful lot to reinvigorate their portfolios," said Jason Kenney, Euro-pean oil analyst at ING in Edinburgh. "It takes time." The drop in supply reflects declining output from fields in mature oil regions like the North Sea, violence by militants in Nigeria that has cut output for some companies and slow access to big sources of new reserves. Oil firms get some production from countries in the Organisation of the Petroleum Exporting Countries (OPEC), but top exporter Saudi Arabia keeps its oil fields off-limits to foreign investors. OPEC's members, whose oil industries are run by national oil compa-nies, sit on three-quarters of the world's proven reserves and 10 of the 12 members pump crude at agreed levels to bolster prices. Besides disruptions in Nigeria, which have trimmed output for Shell and other companies, Venezuela and Russia are grabbing more cash and control from firms that work their oil and gas fields. Resources are increasingly located where extraction is technically harder, such as beneath seas that ice over in winter off Russia's Sakhalin Island, or in politically volatile regions like the Middle East. "Access to easy oil and easy gas... there's less access and less of those hydrocarbons around," said Shell chief executive Jeroen van der Veer when the company reported earnings last week. "The new supplies will come out of more complex projects — far away, very cold, different political regimes. They're usually large-scale projects, with risks." Shell last week posted a 2% drop in oil and gas output to 3.178 million barrels of oil equivalent (boepd) in Q2. Exxon, the only one of the three to raise output last year, had a 1% fall in production to 4.12 million boepd and BP's supply fell by 5% to 3.8 million boepd. Exxon said supply fell because of declines at mature oil fields, OPEC produc-tion cuts and lower European demand for natural gas. Shell lowered its sights for full-year production, saying it would be at the lower end of a previously given range of 3.3-3.5 million boepd this year.BP expects full-year output to fall. New chief executive Tony Hayward is working to turn the company around, saying last week its current operational performance is "not good enough". Companies are lifting spending after years of under-investment and rising demand helped send prices skyrocketing. Much of the boost is being soaked up by rising costs for rigs, steel and wages. Brent crude hit an 11-month high at $78.40 a barrel earlier in July, within sight of the record high $78.65 touched in August last year. It has since eased to around $76. Exxon expects capital investment to remain little changed, up around 0.5%, in 2007 while Shell and BP plan larger in-creases of up to 9.5% and 6.5%, respectively. Total, the fourth-largest non government-controlled oil firm, may buck the trend among its larger rivals by reporting an increase in Q2 production because of new fields in Angola, ING's Kenney said.</DIV>

Big money pumps out few barrels of oil

The world's three largest fully publicly traded oil firms are investing billions of dollars more this year and the extra spending has yet to result in higher production. Exx…

31 Jul 2007

Equity boom to aid soft landing for Indian firms

<DIV>Indian companies seem surprisingly well placed to handle any contagion from credit-related turbulence in the global markets. The main worry in the markets has been that banks which hold the debts of over-leveraged companies, market players and individuals will see a piling up of bad debts which, in turn, will affect their future loans and investments. But in such a scenario, companies that have strong balance sheets and low debt are unlikely to be affected. A Mint analysis of 217 Indian listed firms with market capitalization of more than Rs1,000 crore finds that their debt-equity ratio, a measure of their level of borrowing and their financial soundness, was a low 0.97 as on 31 March. This essentially means that for every Rs100 worth of equity, these firms are borrowing Rs97. Commercial banks and information technology companies have been left out of this analysis, the former because the ratio of debt to equity is not a valid metric in analysing them, and the latter because they typically do not borrow. Furthermore, despite the sharp rise in bank credit in the last few years and in the amounts raised abroad by way of external commercial borrowings, there has been hardly any change in the debt-equity ratio in the past five years. That's not all. A sample of 1,427 listed companies with market capitalization below Rs1,000 crore, too, shows an improvement in their debt-equity ratio. For this group, the ratio has fallen from 1.73 as on 31 March 2004 to 1.42 in 2007. During this period, the debt-equity ratio of large-cap firms with market capitalization of over Rs1,000 crore has moved only marginally by a few basis points—from 0.94 to 0.97. How has this occurred in spite of the large external loans taken by companies? "Don't forget that stock markets have been booming in the last few years and Indian firms have raised a large amount of equity. This has lowered the debt-equity ratio," says Veena Mishra, senior business economist with Mahindra & Mahindra Ltd (M&M). "Corporate profits have soared and companies have a lot of free cash flow and this has strengthened their balance sheets." she says. Adds Vinay Patel, economist with ICICI Securities Ltd: "The stock of external debt hasn't really gone up too much." Raman Uberoi, senior director at rating agency Crisil Ltd, points out the sharp improvement in the finances of companies rated by his agency. "Our AAA-rated companies had a debt-equity ratio of 0.5 in 2001, which improved to 0.21 by 2006," he says. For A-rated companies, adds Uberoi, the ratio improved from 1.5 in 2001 to 0.9 in 2006. A recent Reserve Bank of India study on the finances of 1,064 non-financial, non-government large public limited companies showed that the percentage of debt to equity of these companies fell from 47.9% in 2003-04 to 36.4% in 2005-06. The improvement has occurred because Indian companies have only recently started expanding capacity, which means they didn't really need much funding. Also, they have become far more efficient in managing their working capital, which again reduced their demand for loans. Interest rates, too, came down during the period, as a result of which they were able to service their debt more easily. Points out Uberoi: "for Crisil-rated AAA borrowers, the interest cover (the number of times interest payments were covered by profits before interest and tax) improved to 19.75 in 2006, from 6.85 five years ago. For A-rated borrowers, the improvement in interest cover was from 2.48 to 5.36." Most brokerages remain sanguine to concerns that the recent tightness in the credit markets will hurt Indian companies. Says Ajay Parmar, head, Ideas Research at Emkay Securities in Mumbai: "Corporate earnings growth remains strong and foreign investors will continue to flock to India. The strength of the rupee is an added attraction." But Mishra of M&M is less sure. "It will hurt those companies that have taken bridge loans from banks, say for funding an acquisition," she says. Mukarram Bhagat, CEO and managing partner, broking services, of ASK Securities in Mumbai, says markets are worried about the possibility of higher costs of funding and of acquisitions abroad. "There's no truth in the story that emerging markets are decoupling from the US," he says. "If the US gets hurt, so do emerging markets." It's true that the big-ticket acquisition deals of Indian corporates have been funded by foreign banks, which might suggest that if they face a liquidity crunch, acquisition financing could get affected. However, Uberoi does not believe so, underlining the fact that while the debt-equity ratios of Indian firms will rise in the future on account of capacity expansion, they will still be at very low levels. Adds Patel, "Although spreads on junk bonds in the US have gone up, they remain at historically low levels. Also, even in the US, most of the big companies are unlikely to be affected by any credit squeeze. As for the impact on Indian companies, it's likely to be very manageable."</DIV>

Equity boom to aid soft landing for Indian firms

Indian companies seem surprisingly well placed to handle any contagion from credit-related turbulence in the global markets.The main worry in the markets has been that banks…

31 Jul 2007

RBI unlikely to hike interest rates

<DIV>Reserve Bank on Monday hinted it is unlikely to tamper with benchmark interest rates in its bid to keep inflation around 4-4.5 per cent, amid reports that lenders recorded a sharp dip in housing and consumer loans. While inflation has eased to 4.41 per cent from 6.69 per cent in January, housing finance sector declined in the first quarter this fiscal warranting some interest rate moderation by RBI in its quarterly review of monetary policy tomorrow. "The resolve going forward would be to condition policy and perceptions for inflation in the range of 4-4.5 per cent. This objective would be conducive for maintaining self- accelerating growth over the medium term," RBI said in its Macroeconomic and Monetary Development report released today. RBI's intervention becomes more important in view of the fact that leading housing finance players like ICICI Bank and HDFC have reported a sequential dip in housing loan disbursals by 42 and 35 per cent respectively in April-June 2007. RBI has raised key lending and borrowing rates five times and Cash Reserve Ratio thrice since mid-2006. Since inflation has moderated after these measures, bankers and economists were optimistic there may not be any hike in rates tomorrow. ICICI Bank managing director and CEO K V Kamath said: "...liquidity is comfortable, inflation is under control, credit offtake is going down. I am sure RBI will keep these factors in mind while reviewing the credit policy." LIC Housing Finance director and chief executive S K Mitter too said: "We only wish that the RBI does not do any thing that would have an adverse bearing on interest rates". Analysts, however, said RBI may slightly tighten the policy especially in view of the higher growth in broad money supply which recorded a growth of 21.6 per cent as of July 6, 2007 compared to 19 per cent a year ago.</DIV>

RBI unlikely to hike interest rates

Reserve Bank on Monday hinted it is unlikely to tamper with benchmark interest rates in its bid to keep inflation around 4-4.5 per cent, amid reports that lenders recorded a…

31 Jul 2007

Result Updates

<DIV> Reliance Industries: 1QFY08 results: Stronger-than-expected results on forex gains and stronger margins State Bank of India: SBI's profit optically good, but operational performance in line, valuations full, downgrading to IL ITC: 1QFY08: Cigarettes division posts impressive numbers despite taxation issues'we retain OP Hindustan Lever: 2QCY07 Results: Core FMCG sales growth of 13.4%; retain In Line rating Suzlon Energy: Results disappoint as several problems come to haunt simultaneously GMR Infrastructure: Results first take: operating performance in-line with expectations GAIL (India): Stronger-than-expected 1QFY08 results on lower subsidy losses, jump in gas transmission profits Grasim Industries: 1QFY08: VSF leads the growth even as other division perform well; retain IL ABB: Strong revenue growth and margin expansion; estimates and target price revised upwards Tata Power: 1QFY08: Good growth in Mumbai licence area; maintain In Line Container Corporation: Lower than expected exim volume growth; revise target price, maintain rating BPCL: In the black despite no oil bonds Bank of Baroda: BoB delivers on profit, driven by lower provisions Canara Bank: Performance likely to remain under pressure, downgrading to IL MTNL: No improvement in sight; broadband subs addition slow down; maintain U Punj Lloyd: Strong operating performance helps beat expectations Indian Overseas Bank: IOB on track as usual, retain OP Colgate-Palmolive (India): 1QFY2008: Volumes growth near double-digits; upgrade rating to Inline Lanco Infratech: 1QFY08: results in line with expectations; Upgrade to Outperform CESC: 1QFY08: Results in line with expectations J&K Bank: PAT exceeds estimate supported by non-interest income, retain OP GSPL: In-line 1QFY08 results; retain estimates with DCF-based target price of Rs58 TVS Motor Company: No respite from troubles; net profit down 65% yoy Updates Federal Bank: Amongst the few good results in financial sector, upgrading target price, retain OP</DIV>

Result Updates

Reliance Industries: 1QFY08 results: Stronger-than-expected results on forex gains and stronger marginsState Bank of India: SBI's profit optically good, but operational per…

30 Jul 2007

Sensex inches ahead in volatile trade

<DIV>The market which was strong till late-afternoon trade, following steady buying interest for index pivotals, came sharply off higher level later on fresh selling. Short covering at lower level restricted the fall after the Sensex slipped into the red at one point of time in late trade. Stocks rose in Asia. China's Shanghai Composite hit all time high. Most of European indices were trading with small gains. The BSE 30-share Sensex rose 29.12 points to 15,263.39, as per provisional closing. It opened higher at 15,278.03 and slipped to a low of 15,135.25 shortly. From here, the index staged a solid rebound to hit a high of 15,451.81 at 14:28 IST. It moved in a range of 317 points for the day. The S&P CNX Nifty lost 5.40 points to 4,439.80 as per provisional closing The market breadth was positive on BSE with 1,360 shares advancing as compared to 1,267 that declined, while 67 remained unchanged The turnover on BSE spiked in the last hour of trade to Rs 5031 crore from Rs 3772 crore by 14:30 IST. Among the Sensex pack, 17 advanced while the rest declined Hindustan Unilever jumped 6.10% to Rs 208.40 on 14.42 lakh shares after its board of directors at its meeting held on 29 July 2007 approved the buyback at a price not exceeding Rs 230 per share up to an aggregate amount of Rs 630 crore. India's largest FMCG player in terms of sales registered a 29.56% growth in net profit to Rs 493.08 crore in Q2 June 2007 over Q2 June 2006. Net sales increased 12.9% to Rs 3,481.40 crore. It was the top gainer from the Sensex pack. State Bank of India (SBI), the country's biggest commercial bank advanced 5.40% to Rs 1,581. SBI on Saturday, 29 July 2007, posted 78.6% jump in net profit to Rs 1,425.81 crore in Q1 June 2007 over Q1 June 2006. The bank's consolidated net profit jumped 93.3% to Rs 1,862 crore in Q1 June 2007 over Q1 June 2006. Net interest income was up 15% at Rs. 4,497.40 crore in Q1 June 2007 over Q1 June 2006. Cement stocks ACC (up 2.37% to Rs 1023.60), Ambuja Cements (up 2.92% to Rs 128.70), and UltraTech Cement Company (up 2.80% to Rs 899) gained on fresh buying Aditya Birla Group diversified company Grasim Industries gained 2.20% to Rs 2925. Grasim, on Saturday, 29 July 2007 reported a 64.04% jump in net profit to Rs 511.66 crore in Q1 June 2007 over Q1 June 2006. The total income of the Mumbai-based company increased 30.23% to Rs 2,512.53 crore in Q1 June 2007 over Q1 June 2006. India's leading utility company Reliance Energy rose 1.95% to Rs 778.25, after hitting a high of Rs 814.90. It has won the revised bid for the Sasan ultra mega power project (UMPP), the government said today. Last week, the government officially disqualified the Lanco Infratech-Globeleq consortium, alleging misrepresentation of financial data and the subsequent withdrawal of Globeleq from the consortium. Lanco had apparently bid Rs 1.19 per unit in the first auction. REL had previously bid Rs 1.29 per unit. Other suitors in the race for the Sasan project were NTPC and Jaiprakash Associates. L&T, India's largest engineering & construction firm, rose 0.97% to Rs 2449. The stock had cooled off recently from a solid surge it had witnessed over the past two months. From a lifetime closing high of Rs 2667.55 on 24 July 2007, the stock had lost 9% in three trading sessions to Rs 2425.55 on 27 July 2007. India's largest private sector company Reliance Industries (RIL) declined 1.27% to Rs 1,842.70 on media reports that it may suspend its $5.2 billion project for producing gas from D6 block in KG basin if the Indian government does not approve its gas price formula by the end of August 2007. The stock hit high of Rs 1900 in early trade after it reported a forecast-beating 28.1% growth in net profit to Rs 3264 crore in Q1 June 2007 over Q1 June 2006, on Saturday, 28 July 2007. Revenue rose 14.4% to Rs 28056 crore in Q1 June 2007 over Q1 June 2006. Gross refining margin (GRM) for the quarter was $15.4 per barrel, highest in the company's history. Aluminium and copper major Hindalco Industries slumped 4.24% to Rs 165.95, on 4.99 lakh shares. It was the top loser from the Sensex pack Mahindra & Mahindra, the country's largest tractor maker by sales slumped 2.82% to Rs 754, after its net profit declined 6.37% to Rs 191.17 in Q1 June 2007 over Q1 June 2006. Total income rose 15.89% to Rs 2644.38 crore in Q1 June 2007 over Q1 June 2006. ITC (down 2.65% to Rs 167.25), TCS (down 1.73% to Rs 1133), and Bhel (down 1.21% to Rs 1640) were the other losers. India's largest private steel maker Tata Steel lost 0.70% to Rs 647 after it reported 28% growth in net profit to Rs 1222 crore in Q1 June 2007 over Q1 June 2006. Net sales rose 7.66% to Rs 4198 crore in Q1 June 2007 over Q1 June 2007 As per provisional data, foreign institutional investors (FIIs) sold shares worth a net Rs 1475 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 727.32 crore on Friday, 27 July 2007. Asian markets recovered from initial fall. Japan's Nikkei (up 0.03% at 17,289.30), Seoul Composite (up 1.25% to 1,906.71) and Straits Times (up 0.96% to 3,526.96), edged higher. China's shares rose to a new record high on Monday, 30 July 2007 boosted by investor expectations of strong corporate profits despite government efforts to rein in the sizzling economy. The benchmark Shanghai Composite Index gained 2.2% at 4,440.77, surpassing its previous all-time closing high of 4,346.46. It also struck an all time high of 4,450.18 today. Wall Street extended its steep decline for the second straight day Friday, 27 July 2007, pulling the Dow Jones industrials down more than 500 points over the two days after investors gave in to mounting concerns that borrowing costs would climb for both Japan 17, companies and homeowners. The Dow slipped 208.10 points, or 1.54%, to 13,265.47. Broader stock indicators also fell. The S&P 500 ended down 23.71 points, or 1.60 %, at 1,458.95. The Nasdaq Composite index fell 37.10 points, or 1.43 %, to 2,562.24. Oil prices were lower in morning in Singapore trade on Monday, 30 July 2007, on profit-taking even as key producer Iran expressed opposition to any hikes in OPEC crude output. New York's main contract, light sweet crude for September delivery, was down 35 cents at $76.67 a barrel from 77.02 dollars in late US trade Friday. Brent North Sea crude for September eased 41 cents to $75.85.</DIV>

Sensex inches ahead in volatile trade

The market which was strong till late-afternoon trade, following steady buying interest for index pivotals, came sharply off higher level later on fresh selling. Short cover…

30 Jul 2007

Indian Market - a laggard

<DIV>Eye-popping gains over the past few months notwithstanding, the Indian stock market has not been among the star performers of 2007. And if share turnover velocity is any indicator of the breadth of activity and liquidity in the market, India fares poorly compared with other (both developed and emerging) markets. Share turnover velocity is the ratio of traded turnover to market capitalisation. Higher the ratio, better the liquidity and more widespread the activity in the market. Globally, investors are attracted to markets with high share turnover velocity as it means lower impact costs (the cost of entering and exiting a stock). In stock markets across the globe, share turnover velocity has been on the rise over the past one-and-a-half years. In India, the trend has been the opposite, with share turnover velocity declining steadily. Experts attribute factors like concentration of trading in few stocks and high-promoter holding in companies to this trend. The share turnover velocity on BSE was as low as 28%, while on NSE it was 59% in June 2007. In January 2006, these figures were 36% and 75%, respectively, as per World Federation of Exchanges' data. Share turnover velocity in some of the developed world stock exchanges like Nasdaq, NYSE, Shenzhen Stock Exchange, Taiwan Stock Exchange, BME Spanish, Borsa Italiana, Tokyo Stock Exchange and Deutchse Borse is very high and in many cases runs to over 100%. "Trading in Indian exchanges is very concentrated. Though we have progressed on market depth, market liquidity and market activities remain a concern. Though BSE has the largest number of shares listed on it, the top 5% companies in terms of market capitalisation account for over 80% of the trading volume. Though it is better in case of NSE, it is still not the best," says Ajay Bagga, CEO, Lotus India AMC. He says that there is very low market participation, restricting the trading concentration to a few players. This is also due to the fact that promoter shareholding is over 50% in Indian markets, compared with 10-15% in countries like the US. For example, in Korea, there is a huge domestic base of mutual funds and retail investors unlike India. Expressing concern over the decreasing share turnover velocity, JR Varma of IIM-A says that "this is also probably due to the fact that retail investors are finding the market less attractive and are worried about valuations. Also, barring a few stocks, liquidity has not improved much. Also, we have a very active stock futures market, which attracts day traders as they prefer to trade in futures where it is available, which may not be the case with other countries. The best way for institutions is to split the order between two exchanges to avoid the high impact costs," adds Mr Varma. The fallout of the low share turnover velocity in the Indian market is that institutional investors stop looking beyond the top 100 companies. Of late, they have been showing a higher degree of interest in second-line shares. But market players feel it is not much. "Brokerage houses do not cover more than 100 top companies. So if funds want stock ideas beyond these companies, they have to deploy their own people, which is a costly affair," says Mr Bagga.</DIV>

Indian Market - a laggard

Eye-popping gains over the past few months notwithstanding, the Indian stock market has not been among the star performers of 2007. And if share turnover velocity is any ind…

30 Jul 2007

US Market witnesses its worst weekly drop in four years

<DIV>Just the way deal-making news had taken the US Market to new highs, problems related to financing those deals pushed US Market to their lows for the week ended Friday, 27 July, 2007 and Dow Jones Industrial Average witnessed its worst ever weekly loss in last four years in percentage terms. Investors digested mixed earnings results once again during the week but ongoing problems in housing and credit market added to the list which already had subprime issues heading it. Other than Apple, none of the earnings reports had any major positive impact on the market sentiments. Market even ignored the strong second quarter GDP numbers announced on Friday, 27 July, 2007. Growing fears that private equity is having difficulties raising money for acquisitions they've already made was the biggest catalyst behind the week's market crash. The Dow Jones Industrial Average lost 586 points for the week. Tech heavy Nasdaq lost 125 points while S&P 500 lost 75 points. The Dow's percentage loss was its worst since March 2003, when it dropped 4.4%. The S&P 500's loss, in percentage terms, was its worst since September, 2003. The Nasdaq's percentage loss for the week was its worst since 2004. The Materials sector turned in the worst performance followed by Utilities, Financial, and Consumer Discretionary. Materials were worst hit due to a bad earnings report from an important Dow component, Du-Pont. Exxon Mobil was the other biggie to come out with an earnings miss. Among other names, Merck, AT&T and Amazon.com reported positive results. Ford Motors surprisingly reported its first quarterly profit in almost two years. On Wednesday, 25 July, 2007, the National Association of Realtors reported that existing home sales, which represent approximately 85% of the housing market, fell 3.8% in June to a 5.75 million annual rate. That was a larger decline than expected and marked the lowest level in nearly five years. On Thursday, 26 July, 2007, the Commerce Department showed sales of new homes dropped by 6.6% last month to an annual rate of 834,000, well below the consensus estimate of 900,000. The median home price also fell 2.2% to $237,900. That was the largest drop since April. On Friday, 27 July, 2007, the Commerce Dept reported that the U.S. gross domestic product grew at a 3.4% annual pace in the second quarter, a strong rebound from the 0.6% gain in the first quarter of the year (against economists' expectation of a 3.2% gain for the quarter). Executive Summary For the week, all the three indices registered substantial losses. DJIx is down by 4.41%, S&P 500 is down by 4.9% and Nasdaq is down by 4.7%. Housing and credit market problems continued to haunt stocks. Earnings misses from two big names – Du Pont and Exxon Mobil shook sentiments further. The yield on the benchmark 10-year Treasury note fell to 4.74% from 4.96% during the end of the week. Crude prices soared beyond $77/bbl but it did not help Energy stocks any way which continued to bear the brunt of Exxon Mobil's disappointing result. For the year, Dow is up by 6.4%. Nasdaq is up by 6.1% and S&P 500 is up by 2.9%. With credit crunch hitting the market and housing problem still having a long way to go before soothing, market sentiment is presumed to remain a bit shaky in the forthcoming week too.</DIV>

US Market witnesses its worst weekly drop in four years

Just the way deal-making news had taken the US Market to new highs, problems related to financing those deals pushed US Market to their lows for the week ended Friday, 27 Ju…

30 Jul 2007

US Market continues to bleed

<DIV> Stocks ignore strong economic data and focuses on credit market concerns US Market continued with its downward journey even on Friday, 27 July, 2007. Strong economic data failed to cheer market sentiment as ongoing worries about deal-financing overshadowed largely positive economic data and continued to sweep Wall Street. Crude prices crossed $77/bbl but it was of no use to Energy stocks which continued to slip due to Exxon Mobil's earnings miss. Reports that Cadbury Schweppes delayed the potential $15 bln sale of its drink division due to "extreme volatility" in debt markets exacerbated the worst of the fears that had been haunting the credit market since the past couple of weeks. The Dow Jones Industrials plummeted by a huge 208 points to close at 13265.47. Tech heavy Nasdaq shed 37.1 points to close at 2562.24. S&P 500 dropped by 23.71 points to close at 1458.95. Twenty-six out of the thirty Dow stocks closed in red on Friday. American Express, AIG and Exxon Mobil headed the list of the Dow laggards. JP Morgan and P&G were the Dow winners along with Boeing and 3M which managed to register marginal gains for the day. US GDP makes a strong rebound in Q2 In the morning hours, the Commerce Dept reported that the U.S. gross domestic product grew at a 3.4% annual pace in the second quarter, a strong rebound from the 0.6% gain in the first quarter of the year (against economists' expectation of a 3.2% gain for the quarter). The core consumer price index, rose 1.4% in the second quarter. But that core number, which excludes food and energy, was down from the 2.4% rise in the first quarter, a good sign for inflation. The good GDP numbers just had a momentary positive impact on stocks. Crude futures climbed, with September crude closing at $77.02 a barrel, its highest level since mid-August of last year. The contract was up 2.8% for the session and 1.6% for the week as supply and demand concerns returned. On the New York Stock Exchange, more than 2.2 billion shares were traded, while 2.7 billion shares were exchanged at the Nasdaq. At the NYSE, declining stocks beat advancers, 2-1, and by 11-5 on the Nasdaq.</DIV>

US Market continues to bleed

Stocks ignore strong economic data and focuses on credit market concernsUS Market continued with its downward journey even on Friday, 27 July, 2007. Strong economic data fa…

30 Jul 2007

Reliance earns record refinery margins in Q1

<DIV>Reliance Industries Ltd, the nation's most valued company, made a record refinery margin of 15.4 dollars per barrel in the first quarter this fiscal as its Jamnagar refinery processed more complex crude oils. The Mukesh Ambani-run company had recorded a gross refinery margin (revenue earned on processing of a barrel of crude) of 12.4 dollars per barrel in April-June last year, a company source said. "This performance is a result of a highly complex refinery along with most efficient liquid port, location advantage and following sound economics of buying cheap and selling premium products," he said. The complex refineries allows RIL to buy and process some of the heaviest and sour crude the world has seen and which only a handful of refineries have the capability to process. The refinery regularly tries out crude from new sources, which are both cheaper and challenging to process. During the quarter, RIL tried out crude with an API of 21-24. API is an indicator of how heavy, sour and difficult the crude is to process. The differential in light and heavy margins has been growing in the past few quarters and today it stands at 5-5.5 dollars per barrel, the source said. With the refinery converted into an export-oriented unit, the company has focused on exports with reducing sales in the local market where it is incurring losses as government refuses to give RIL subsidy at par with what it gives to the PSU oil companies. The source said that for a long time now RIL has outperformed the Singapore complex benchmark GRM by a wide margin. "The factors that have contributed to high GRMs are cost of sourcing crude oil, manufacturing reliability and efficiency, ability to produce quality transportation fuels and flexibility of crude oil receipt and product evacuation infrastructure." During the quarter, RIL processed four new crudes which it procured at a substantial discount, the source said. The 33-million-ton Jamnagar refinery imports all of its crude oil requirement in VLCCs (very large crude carriers) capable of bringing up to two million barrels in each shipment. "This reduces the freight costs considerably and optimises the overall landed cost of crude oil. The product evacuation infrastructure again provides the flexibility to evacuate the products in varying parcel sizes and optimises the supply chain costs of the buyers," the source said.</DIV>

Reliance earns record refinery margins in Q1

Reliance Industries Ltd, the nation's most valued company, made a record refinery margin of 15.4 dollars per barrel in the first quarter this fiscal as its Jamnagar refinery…

30 Jul 2007

Analysts expecting another sharp drop in markets today

<DIV>Taking a cue from the continued decline in US equities, the Indian equity market could witness another sharp decline on Monday, say analysts. The weakness could persist for the next two to three trading sessions, they add. The Dow Jones Industrial Average dipped 208 points, or 1.54%, to end at 13,265.47 on Friday. Indices across the world had plunged on Friday after US markets crashed on Thursday. The Sensex—the benchmark index of the Bombay Stock Exchange (BSE)—shed 3.4% to close at 15,234.57 as foreign institutional investors (FIIs), the single most influential force in the markets, started selling. FIIs were net sellers of equities worth Rs1,475 crore on Friday, while domestic institutional investors took this opportunity to buy shares (they were net buyers of equities worth Rs727 crore). This was a sharp reversal of the trend witnessed so far this month. Until 26 July, the FIIs had made net investments of about $10 billion (Rs40,500 crore), while domestic institutions were net sellers of more than $2 billion worth of equities. Foreign portfolio fund managers, analysts say, are trying to cut short their exposure to riskier assets such as emerging markets equities. Looking pensive: Investors standing outside the Bombay Stock Exchange react as the benchmark index shed 3.4% on Friday. Indices across the world fell after US markets declined the previous day. Ketan Karani, head of research at Kotak Securities Ltd, says FII inflows could moderate in the next few weeks. "The ripple effect of problems in US financial markets will continue in our market. The liquidity in our market will dry up if the money flow from US investors slows down," he adds. But Lalit Thakkar, head of research at Angel Broking Ltd, says the correction period in the market will not last long. "There is no doubt that all the Asian markets will open weak on Monday morning. However, the fall will not be as steep as witnessed on Friday's trade," Thakkar adds. "FIIs currently own about 20% of the Indian equity market. India is still one of the strongest markets in terms of corporate earnings growth. It is very unlikely that this negative sentiment among FIIs will continue for long." Trading volumes on Friday's session were very high, say technical analysts, pointing out that this signals an immediate risk. "When the market falls sharply on heavy volumes, it indicates severe weakness," says Vinit Birla, a technical analyst at Mumbai-based Pranav Securities. Short positions built up by speculators will add to the downward trend. "There is strong short build-up in many blue-chip counters and heavily on the index. This indicates fresh losses on Monday. The weakness will continue for three to four trading sessions. We see 14,700 as the downside for the Sensex. At that level, the index could start a positive rally to recover lost ground. In the case of Nifty, 4,310 is the downside," he said. Another Mumbai-based technical analyst who did not wish to be identified says a recovery rally could start in Asian markets after a few trading sessions. However, he expects plenty of volatility in the market. "I would advise taking a neutral position in a market such as this. The Nifty futures are trading at about 40 to 45 points discount. There is huge short build-up on the index. The Nifty could get support at 4,380 levels. If the Nifty breaks below 4,320, it could create panic leading to margin calls. This could accentuate the sell-off," he adds</DIV>

Analysts expecting another sharp drop in markets today

Taking a cue from the continued decline in US equities, the Indian equity market could witness another sharp decline on Monday, say analysts. The weakness could persist for …

30 Jul 2007

RBI's monetary policy review holds key

<DIV> With most of the frontline companies having already declared their Q1 June 2007 results, the market will closely watch the monetary policy review of RBI due on Tuesday, 31 July 2007. RBI is likely to keep rates steady. However, it remains to be seen whether the central bank will raise cash reserve ratio (CRR) to suck out excess liquidity in the banking system. The 30-share BSE Sensex lost 330.98 points or 2.13% to 15,234.57 in the week ended 27 July 2007, on profit booking. The S&P CNX Nifty lost 120.85 points or 2.6% to 4,445.20 in the week. Prior to this, the market had been posting weekly gains since the past six weeks. Latest Data released on Friday, 27 July 2007, showed India's wholesale price index rose 4.41% in the 12 months to 14 July 2007, higher than the previous week's 4.27% due to increase in food prices. The inflation is within the central bank's medium-term target of 4-4.5% and annual target of 5% for this fiscal. The Finance Minister, P Chidambaram, hinted recently that high crude oil and food prices did not necessary mean that money policy would be tightened further. Among the frontline companies - Bharat Heavy Electricals, Bharat Electronics, Mahindra & Mahindra, Cairn India and i-flex Solutions, will declare their June 2007 quarter results in the coming week Gujarat Mineral Development Corporation, India Cements, Balkrishna Industries, Bharati Shipyard, Dredging Corporation of India, Gitanjali Gems, India Infoline, Indiabulls Real Estate, Nagarjuna Construction Company, Wanbury, Asian Electronics, Development Credit Bank, Ashapura Minechem, Parsvnath Developers, Birla Corporation, Financial Technologies (India), Provogue (India), Madhucon Projects, Sterling Biotech and United Phosphorous, will also declare their result Oil prices have held firm above $75 a barrel on fears of tight summer supplies would offset a fresh wave of risk aversion that struck US equities and dragged oil down a day ago. Any sharp rise from these levels, may dampen the sentiment </DIV>

RBI's monetary policy review holds key

With most of the frontline companies having already declared their Q1 June 2007 results, the market will closely watch the monetary policy review of RBI due on Tuesday, 31 …

28 Jul 2007

Sensex sheds 331 points

<DIV>The market edged lower, last week, due to a sharp fall in a single trading session on Friday, 27 July 2007, that was caused by setback in Asian and US stocks. Earlier, the market remained firm for a better part of the week as renewed buying was witnessed due to good Q1 June 2007 results. FII inflows remained robust. The 30-share BSE Sensex lost 330.98 points or 2.13% to 15,234.57 in the week ended 27 July 2007. The S&P CNX Nifty lost 120.85 points or 2.6% to 4,445.20 in the week. Profit taking was witnessed in small-cap and mid-cap shares after their recent solid surge. BSE Small-Cap index shed 261.67 points or 3.2% to 7,926.45 in the week. BSE Mid-Cap index lost 237.75 points or 3.48% to 6,598.32 in the week. A good rollover was witnessed to the August 2007 series from the July 2007 series when the July 2007 contracts expired on Thursday, 26 July 2007. According to one brokerage report, overall 83% positions have got rolled to August 2007 from July 2007. A good rollover of 73% was witnessed in index futures as well. Institutional investors rolled over short positions in Nifty following the hedging of their positions in the cash market FIIs inflow in three trading sessions from Monday, 23 July 2007, to Wednesday, 25 July 2007, totaled Rs 2322.40 crore. Mutual funds sold shares worth a net Rs 468.70 crore in four trading session from Monday, 23 July 2007 to Thursday, 26 July 2007. Trading for the week began on an upbeat note. Sensex surged 166.65 points or 1.07% to 15,732.20, an all time closing high on Monday, 23 July 2007. Shares from the auto, real estate, and capital goods sectors were at the forefront of the rally. Shares rose in China as well on that day. Shanghai Composite jumped 3.81% to 4,213.36, even as the central bank raised borrowing costs, effective Saturday, 21 July 2007, in the latest of a series of moves aimed at capping inflation and preventing the world's fourth-largest economy from overheating. The market extended its winning steak to firth straight session on Tuesday, 24 July 2007, helped by steady buying interest for capital goods, power and IT stocks. Sensex rose 62.72 points to 15,794.92, an all time closing high. The market remained weak throughout the day on Wednesday, 25 July 2007, as correction set in after five straight days of rally. Sensex lost 95.59 points to 15,699.33. Weakness in global markets triggered profit taking. Short covering ahead of expiry of July 2007 derivatives contracts aided 77-point surge in Sensex on Thursday, 26 July 2007. Two index heavyweights Reliance Industries and Infosys led rally on that day. Weak Asian and US markets spooked domestic bourses on Friday, 27 July 2007, as Sensex plunged 541.74-point, or 3.4%, to 15,234.57, registering its biggest rout in a single trading session in nearly four months. Stocks across Asia fell after the US market dropped 2.3% on Thursday, 26 July 2007, on signs of further weakness in the US housing market and deteriorating conditions for corporate buyouts. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were down between 2.4% to 4% Reliance Energy surged extending its solid rise witnessed since mid-June 2007 on hopes that the company may win the 4,000- megawatt Sasan power project in Madhya Pradesh as it was the second best bidder after Lanco. The empowered group of ministers (E-GoM) headed by power minister Sushil Kumar Shinde, on Tuesday, 24 July 2007, decided to scrap the allotment of the 4,000- megawatt Sasan power project in Madhya Pradesh to the lowest bidder, the Lanco-Globeleq consortium. E-GoM declared Lanco's bid as void ab-initio (invalid from the outset). However, E-GoM did not take any decision on awarding the Rs 20,000-crore project to REL or invite fresh bids. India's largest cigarette manufacturer ITC surged nearly 9% in a single trading session on Wednesday, 25 July 2007, on market talks it may announce demerger of its agri business. The stock extended gains on Friday, 27 July 2007, when it reported a forecast beating 20% growth in net profit in Q1 June 2007. The company unveiled its results during trading hours on Friday, 27 July 2007. Car major Maruti Udyog rose nearly 4% on Thursday, 26 July 2007, when it beat forecast by reporting a 35.1% growth in net profit in Q1 June 2007 over Q1 June 2007 during trading hours. Ranbaxy Laboratories, India's largest pharma firm by sales, jumped nearly 10% on Thursday, 26 July 2007, after it reached an agreement with GlaxoSmithKline (GSK) to end their litigation in the US on Valtrex (valacyclovir hydrochloride tablets) used in the treatment of herpes. NTPC, India's largest power generation company, firmed up after it signed an MoU with Asian Development Bank for setting up a joint venture company to undertake renewable power generation. The company made this announcement after trading hours on Monday, 23 July 2007. Hindustan Unilever (HUL) surged on Monday, 23 July 2007, after its parent announced after market hours on 20 July 2007 it is considering a plan to buy its own shares on 29 July 2007. HUL will also declare financial accounts for the second quarter and half year ended 30 June 2007 on that day. Index heavyweight Reliance Industries (RIL) edged higher on reports it may seek foreign partner for its deep-water exploration blocks off the country's east coast. The stock hit record high of Rs 1948 on Thursday, 26 July 2007. Reports indicate that global oil firms, including Chevron, have shown interest in partnering RIL for its Cauvery oil & gas assets Oil exploration major ONGC extended gains after reported an 11.9% growth in net profit to Rs 4610 crore in Q1 June 2007 over Q1 June 2006, due to fall in subsidy sharing burden. The company unveiled results on 25 July 2007. Cement stocks plunged after their recent rally following reports on Tuesday, 24 July 2007, that Monopolies & Restrictive Trade Practices Commission (MRTCP) had ordered a probe into the business practices of 14 leading cement manufacturers. ICICI Bank drifted lower despite posting a 25% rise in net profit in Q1 June 2007 to Rs 775.08 crore over Q1 June 2006, riding on increased fee-based income and retail lending. Total operating income rose 46.9% to Rs 9,281.42 crore in Q1 June 2007 over Q1 June 006. The results were announced on 21 July 2007. UTI Bank lost ground after it priced its GDR issue at a discount to the ruling market price. It announced before market on 23 July 2007 that it had priced its offering of 14.13 million GDRs, aggregating $ 218.07 million. Each GDR, representing one underlying share, was priced at $15.43 and will be listed on the London Stock Exchange. This represents a discount of 1.7% to the closing price of the Bank's GDR on 20 July 2007. Real-state developer Housing Development and Infrastructure settled at Rs 558.60 on BSE on Tuesday, 24 July 2007, a modest premium of 11.72% over the price of Rs 500 per share. The stock debuted at Rs 567.50. The stock also debuted in NSE's F&O segment with a lot size of 400. The HDIL IPO was subscribed 6.6 times Debutante Suryachakra Power Corporation settled at Rs 22.82, on Monday 23 July 2007, a premium of 14.1% over the IPO price of Rs 20. The stock debuted at Rs 30. The Suryachakra IPO had closed on 29 June 2007 with 2.18 times subscription. BSE, on Monday, 23 July 2007, announced that it is shifting 45 scrips to trade-to-trade segment with effect from Friday, 27 July 2007. The stocks transferred to trade-to-trade segment include B.A.G. Films, BSL, Dharamsi Morarji Chemical, Isibars, Pearl Engineering Polymers, V.I.P. Industries and Southern Ispat among others. Meanwhile, a development that could increase domestic liquidity is the approval given by the Cabinet Committee on Economic Affairs on Thursday, 26 July 2007, to public sector companies enjoying Navratna and Miniratna status to invest up 30% of their surplus funds in equity mutual funds. The total surplus of central PSUs in 2005-06 was estimated at about Rs 2,39,500 crore, according to public enterprises survey. This means that about Rs 70,000 crore may flow to equity mutual funds. However, investments would be allowed only in public sector mutual funds. Emerging markets-dedicated funds saw their second best inflows ever in the week ending 18 July 2007, after setting their all-time high just the previous week. Inflows to emerging markets equity funds exceeded outflows by $3.3 billion in the week ended 18 July 2007. More than half of this net inflow - a record high of $1.8 billion went to funds dedicated to Asia ex-Japan. Global index provider FTSE Group (FTSE) and Indian infrastructure specialist, Infrastructure Development Finance Company (IDFC) on Tuesday, 24 July 2007, the FTSE IDFC India Infrastructure Index Series which will represent the performance of Indian companies listed on NSE or BSE, generating the majority of their revenue from infrastructure. Bowing to pressure from Left-backed trade unions, the Employees Provident Fund (EPF) board on Monday, 23 July 2007 agreed to continue paying 8.5% interest rate to its nearly four crore subscribers for fiscal 2006-07 as well. The EPF has a corpus of Rs 94,000 crore including pension fund. Data released on Friday, 27 July 2007, showed India's wholesale price index rose 4.41% in the 12 months to 14 July 2007, higher than the previous week's 4.27% due to increase in food prices</DIV>

Sensex sheds 331 points

The market edged lower, last week, due to a sharp fall in a single trading session on Friday, 27 July 2007, that was caused by setback in Asian and US stocks. Earlier, the m…

28 Jul 2007

Global fall triggers correction

<DIV> The market was gripped with intense selling pressure throughout the day's trading session, following sharp fall in US and Asian stocks. There was bloodbath on the street with all most sectoral indices on BSE posting sharp losses. Despite the sharp fall, the turnover was very high today, 27 July 2007. All the Asian markets settled with sharp losses while most European markets were trading weak. The BSE 30-share Sensex plunged 541.74-point, or 3.4%, to 15,234.57, its biggest rout in a single trading session in nearly four months. The Sensex had tumbled 617 points on 2 April 2007 following the Reserve Bank of India (RBI)'s surprise hike in interest rates announced after trading hours on 30 March 2007. Sensex opened lower today, 27 July 2007 at 15,487.76 and recovered some ground to hit a high of 15,495.51. But the index was not able to sustain the recovery and succumbed to intense selling pressure. It slumped to a low of 15,159.68 at 12:24 IST. At day's low, the index suffered a sharp fall of 616.63 points The S&P CNX Nifty plunged 174.20 points or 3.78% at 4,445.20. The Nifty August 2007 futures was at 4,392.85, a sharp discount of 52.35 points as compared to spot closing All the Asian indices settled with sharp losses. Japanese stocks led Asian markets lower in a broad-based retreat today, 27 July 2007, as export stocks such as Canon Inc. and Honda Motor Corp. were hit hard on concerns over the outlook for the US economy. Nikkei tumbled 2.36% at 17,283.81. Hang Seng (down 2.76% at 22,572.95), Taiwan Weighted (down 4.22% at 9,162.28), Singapore's Straits Times (down 2.43% at 3,492.70) and South Korea's Seoul Composite (down 4.09% at 1,883.22) declined sharply. Shanghai Composite was down 0.03% to 4,345.35 Wall Street suffered one of its worst losses in this year so far on Thursday, 26 July 2007, as investors succumbed to months of worry about the mortgage and corporate lending markets. The Dow Jones plunged 311.50 points, or 2.26%, to 13,473.57. Broader market indicators also slid. The Nasdaq Composite index declined 48.83 points, or 1.84%, to 2,599.34, while the Standard & Poor's 500 slipped 35.43 points, or 2.33%, to 1,482.66. The fall on the domestic bourses materialised after a recent solid surge as FIIs stepped up buying on strong Q1 June 2007 results and in anticipation of good results from companies which were yet to unveil their numbers. The Sensex has gained 5.5% in the past one month and nearly 42% in the past one year. Small-cap and mid-cap shares lost ground. The BSE Mid-Cap index lost 192 points or 2.8% 6,598.32 to while the BSE Small-Cap index slipped 219 points or 2.7% to 7,926.45. The market breadth was weak on BSE with 630 shares advancing as compared to 1,991 that fell, while 62 remained unchanged. Even as the markets declined, the turnover vaulted. The total turnover on BSE amounted to Rs 6,593 crore as against Rs 5,758 crore on Thursday, 26 July 2007. The NSE F&O turnover was Rs 65,777.96 crore. The NSE F&O turnover was a record Rs 79,995.85 crore on Thursday, 26 July 2007, on the day of expiry of July 2007 derivative contracts. Among the Sensex pack, 27 slumped, while three stood tall in the bloodbath. India's largest cigarette manufacturer ITC jumped 2.67% to Rs 171 after its net profit rose 20% to Rs 782.87 crore in Q1 June 2007 over Q1 June 2006, exceeding market expectation. ITC raised cigarette prices by about 20% in the first quarter due to tax increases. Sales were up 16.6% to Rs 3,325.23 crore in Q1 June 2007 over Q1 June 2006. Sales growth was within market expectations. It was the top gainer from the Sensex pack. The BSE FMCG Index outperformed the market. It shed just 0.12% to 1,927.86, led by ITC. Tata Tea rose 0.64% to Rs 759.60, after it on Thursday, 26 July 2007, said it has become the number one domestic packet tea company in terms of volume. For the first time ever, Tata Tea outperformed its nearest competitor Hindustan Unilever (HUL) in June 2007 by garnering a volume share of 19.2%, compared to HUL's 18.6%. Ranbaxy Laboratories, India's largest pharma firm by sales, was up marginally by 0.16% to Rs 374. The stock rose for the second straight day after Ranbaxy yesterday, 26 July 2007, reached an agreement with GlaxoSmithKline (GSK) to end the litigation in the US on Valtrex (valacyclovir hydrochloride tablets) used in the treatment of herpes. The stock had jumped 9.95% to Rs 375 on Thursday, 26 July 2007, boosted by the announcement. North India's largest-selling cement company Ambuja Cements rose 0.76% to Rs 125.35. Other cement stocks also recovered from their lows, still ending the day lower. UltraTech Cement Company (down 6.93% to Rs 865), India Cements (down 5.38% to Rs 195), and ACC (down 3.10% to Rs 990) slipped. Metal stocks tumbled on intense selling pressure, with BSE Metal Index plunging 5.3% to 11,501.52. It was the biggest loser among the sectoral indices on BSE. India's largest private sector steel producer Tata Steel slumped 7.92% to Rs 647.75 on 11.53 lakh shares. It was the top loser from the Sensex pack. JSW Steel (down 2.82% to Rs 727), Hindustan Zinc (down 5.52% to Rs 704), Sterlite Industries (down 4.54% to Rs 628), Hindalco Industries (down 5.68% to Rs 172.55), and Sail (down 5.10% to Rs 147.70) were the other losers from metal pack. The BSE Bankex lost 3.2% at 7,920.19. Canara Bank (down 6.34% to Rs 263), Bank of Baroda (down 3.74% to Rs 292), HDFC Bank (down 3.54% to Rs 1175.90), State Bank of India (down 3% to Rs 1504.10), and ICICI Bank (down 3.18% to Rs 915), all edged lower. Capital goods duo, the recent favourites of the market, suffered steep losses. India's largest power equipment maker Bhel lost 5.14% to Rs 1665 while L&T plunged 4.61% to Rs 2424.90. The BSE Capital Goods index was down 3.8% at 12,748.77. India's largest power generation firm National Thermal Power Corporation slipped 4% to Rs 161.10 after it signed a joint venture agreement with Rashtriya Ispat Nigam to set up a 150-MW power plant at Vishakapatnam, Andra Pradesh. The BSE IT Index lost 2.5% at 4,876.34. Infosys (down 1.25% to Rs 2009.50), Satyam Computers (down 4.67% to Rs 471.50), Wipro (down 4.18% to Rs 490.25), and TCS (down 2.56% to Rs 1155), slipped. Telecom stocks declined on fresh selling. Reliance Communications, the country's second largest listed telecom company, plunged 5.40% to Rs 537 while Bharti Airtel, the country's largest telecom company based on subscribers, slumped 3.61% to Rs 892. The country's second largest motorcycle maker Bajaj Auto declined 3.77% to Rs 2,310. French car maker Renault today confirmed that it is in talks with Bajaj Auto for producing a car for around Rs 1.20 lakh ($ 3000). India's largest truck maker Tata Motors slumped 4.06% to Rs 701, after it announced that its small car would hit the market in the first half of 2008. India's largest private sector company Reliance Industries (RIL) was down 4.12% to Rs 1861, on 21.90 lakh shares. RIL unveils its Q1 June 2007 results tomorrow, 28 July 2007. The top losers from small-cap and mid-cap space were Sterling Biotech (down 11.8% to Rs 173.60), Tele Data Informatics (down 10.8% to Rs 61.45), NIIT Technologies (down 9.7% to Rs 491.10), Wire & Wireless India (down 8.2% to Rs 57.50), Bombay Rayon (down 8% to Rs 202.70), Emkay Share & Stock Brokers (down 9.5% to Rs 99), KS Oils (down 8.9% to Rs 52.70), Energy Development Corporation (down 7.9% to Rs 58.20) and Nectar Lifesciences (down 7.9% to Rs 227.65). Select stocks, however, rose in an otherwise weak market: Timex Watches (up 10% to Rs 29.70), Triveni Engineering (up 9.7% to Rs 57.15), Assam Company (up 6.5% to Rs 17.80) and JK Tyres (up 5% to Rs 147.95), surged. Shares from the real estate pack were hammered brutally, with the BSE Realty index declining 5.25% to 7,823.91. DLF (down 4.78% to Rs 602.55), Unitech (down 6.06% to Rs 557.60), Mahindra Gesco Developers (down 3.70% to Rs 572.95) and Sobha Developers (down 2.13% to Rs 893) declined from the real estate sector. Venky's (India) jumped 14.31% to Rs 172.10 after its net profit jumped 197% to Rs 9.06 crore in Q1 June 2007 over Q1 June 2006. Sales moved up 37.88% to Rs 124.07 crore in Q1 June 2007 over Q1 June 2006. GlaxoSmithkline Consumer Healthcare rose 3.63% to Rs 595 after its net profit moved up 36.80% to Rs 42.30 crore in Q2 June 2007 over Q2 June 2006. Sales were up 17.41% to Rs 315.60 crore. Tata Chemicals lost 2.76% to Rs 250. It posted a 60.79% rise in net profit to Rs 121.16 crore in Q1 June 2007 over Q1 June 2006. Total income decreased 10.4% to Rs 681 crore in Q1 June 2007 over Q1 June 2006. Moser Baer India rose 1.97% to Rs 311 after the company said its photo voltaic unit has entered into a agreement with Norway's REC Group for sourcing silicon wafers over an eight-year period beginning from 2008. Ballarpur Industries jumped 7.29% to Rs 131.65. With an aim to create a large asset base company overseas, the company will transfer ownership of its three units at Bhigwan, Ballarpur and Kamalapuram to an overseas subsidiary for Rs 1,950 crore. Alok Industries gained 5.54% to Rs 67.60 as buying continued after the scrip's 10.81% rally yesterday, 26 July 2007. The company will declare its Q1 results on 31 July 2007. Lanco Infratech rose 0.81% to Rs 211 after its consolidated net profit spurted 1,103% to Rs 51.28 crore over Q1 June 2006. Total income rose 136.89% to Rs 603.27 crore. The results were announced after market hours on Thursday, 26 July 2007. Crompton Greaves rose 2.45% to Rs 285 after its net profit rose 89.1% to Rs 68.76 crore in Q1 June 2007 over Q1 June 2006. Sales moved up 21% to Rs 896.07 crore. The diversified engineering company made the announcement after market hours yesterday, 26 July 2007. India's third largest power generator and distributor in terms of revenue Tata Power Company dropped 0.86% to Rs 700 even as it reported a 56.09% rise in net profit in Q1 June 2007 to Rs 190.20 crore over Q1 June 2006. Sales rose 9.80% to Rs 1,511.48 crore. Wholesale price-based inflation rate increased to 4.41% in the week ended 14 July 2007 from 4.27% in the previous week mainly on higher prices of fruits and vegetables, ragi, wheat, jowar, condiments and spices. The inflation numbers are still within the 5% annual target of the Reserve Bank of India, which is set to review the monetary policy on 31 July 2007. The annual rate of inflation was 4.62% in the corresponding week last year. Meanwhile, a development that could increase domestic liquidity is the approval given by the Cabinet Committee on Economic Affairs on Thursday, 26 July 2007, to public sector companies enjoying Navratna and Miniratna status to invest up 30% of their surplus funds in equity mutual funds. The total surplus of central PSUs in 2005-06 was estimated at about Rs 2,39,500 crore, according to public enterprises survey. This means that about Rs 70,000 crore may flow to equity mutual funds. However, investments would be allowed only in public sector mutual funds. A good rollover was witnessed to the August 2007 series from the July 2007 series when the July 2007 contracts expired on Thursday, 26 July 2007. According to one brokerage report, overall 83% positions have got rolled to August 2007 from July 2007. A good rollover of 73% was witnessed in index futures as well. Institutional investors rolled over short positions in Nifty following the hedging of their positions in the cash market. Oil rose on Friday, 27 July 2007 holding firm above $75 a barrel as traders bet that fears of tight summer supplies would offset a fresh wave of risk aversion that struck US equities and dragged oil down a day ago. London Brent crude gained 41 cents to $75.59 a barrel. US crude rose 43 cents to $75.38 </DIV>

Global fall triggers correction

The market was gripped with intense selling pressure throughout the day's trading session, following sharp fall in US and Asian stocks. There was bloodbath on the street wi…

28 Jul 2007

Global meltdown leads to market crash

<DIV>The market witnessed the biggest carnage today, as widespread selling caused the index slip below the 15,500 mark shortly after the opening bell. A sharp slump across the international markets saw the Sensex resume 288 points lower at 15,488 and shed 616 points to touch the day's low of 15,160. The market soon moved above the 15,250 level but traded below 15,500 through the session as intense selling continued in metal, realty, capital goods, oil and other counters. The Sensex finally ended the session with a loss of 542 points at 15235. The Nifty, too, came under selling pressure and lost 175 points to close at 4445. The market breadth was extremely weak, with losers outnumbering gainers by 3.44:1 on the BSE. Of the 2,576 stocks traded on the BSE 1,951 stocks declined, 570 stocks advanced and 55 stocks ended unchanged. All the BSE sectoral indices continued to trade weak and dropped around 2-5% each. The BSE Metal Index was the major loser and lost 5.53% while the BSE Realty Index shed 5.11%. Majority of the 30 stocks of the Sensex ended in the red. Among the major losers Tata Steel shed 7.83% at Rs648, Reliance Communication plunged 6.30% at Rs534, Hindalco crumbled 5.47% at Rs173, HDFC crashed 5.21% at Rs1,946, BHEL slipped by 5.14% at Rs1,665, Reliance Energy tumbled 4.99% at Rs760, Tata Motors lost 4.60% at Rs697, L&T dropped nearly 4.48% at Rs2,428, ONGC slumped 4.38% at Rs905 and Satyam Computer crashed 4.37% at Rs473. Select front-line counters ended in the green. ITC rose 3.12% at Rs172 while Ranbaxy and Ambuja Cement closed with moderate gains. Metal stocks witnessed a steep fall. Shree Precoated Steel plummeted 7.23% at Rs358, while Hindustan Zinc crashed 5.55% at Rs704. SAIL at Rs148, Jindal Saw at Rs655, Welspun Gujrat at Rs246, Sterlite Industries at Rs628, Jindal Stainless at Rs166 and Nalco at Rs280 tumbled over 4% each. Among the realty stocks Parsvanath Developers plunged 7.21% at Rs359, Peninsula land fell by 6.14% at Rs455, Unitech lost 5.75% at Rs559, Ansal Infrstructure shed 5.64% at Rs265 and Indiabulls Real Estate declined 5.47% at Rs564. Over 2.41 crore IFCI shares changed hands on the BSE followed by Bellary Steel (2.31 crore shares), Suryachakra Power Corporation (1.70 crore shares), Mangalore Chemical & Fertilizers (1.29 crore shares) and Harig Crankshafts (1.08 crore shares). Valuewise, Reliance Industries registered a turnover of Rs414 crore followed by Housing Development & Infrastructure (Rs296 crore), Reliance Energy (Rs239 crore), DLF (Rs235 crore) and L&T (Rs172 crore).</DIV>

Global meltdown leads to market crash

The market witnessed the biggest carnage today, as widespread selling caused the index slip below the 15,500 mark shortly after the opening bell. A sharp slump across the in…

28 Jul 2007

IT stocks stage a comeback

<DIV>The market posted modest gains amid high volatility today, 26 July 2007, the day the July 2007 derivatives contracts expired. It was firm in the first half of the day following healthy rollover of derivative positions from the July 2007 series to the August 2007 series. But it weakened in mid-afternoon trade on profit booking, before bouncing back again in late trade. The turnover in NSE's derivatives segment hit record high for the third consecutive day. Shares from auto, pharma and IT sectors were in demand, while cement, banking and capital goods stocks edged lower. Sugar stocks spiked at the fag end of the trading session. Global markets were subdued. Meanwhile, the International Monetary Fund (IMF) on Wednesday, 25 July 2007, revised upwards its growth projections for the global economy, citing accelerating growth in China, India and Russia, while the United States appears to be regaining momentum. The IMF's updated World Economic Outlook forecast global growth of 5.2% for both calendar year 2007 and 2008, up from its earlier forecast of 4.9% growth for both years. The BSE 30-share Sensex rose 76.98 points to 15,776.31. It opened higher at 15,768.28 and jumped to a high of 15,812.27. The index also slipped to a low of 15,654.40 at 13:01 IST The S&P CNX Nifty was up 31.10 points to 4,619.80. The Nifty July 2007 derivatives contracts expired today. Nifty August 2007 futures settled at 4581.50, a sharp discount of 38.30 points as compared to spot closing. The NSE F&O turnover was a record Rs 79,995.85 crore as compared to Rs 72,365.46 crore on Wednesday, 25 July 2007. The market breadth, indicating the overall health of the market, held firm as small- and mid-cap stocks saw continued buying interest. On BSE, 1,558 shares advanced as compared to 1,100 that declined, while 73 remained unchanged The BSE Mid-Cap index rose 35 points or 0.5% to 6,790.50 while the BSE Small-Cap index advanced 90 points or 1.1% to at 8,145.86. The total turnover on BSE amounted to Rs 5,719 crore as compared to Rs 5,929 crore on Wednesday, 25 July 2007. Among the 30-Sensex pack, 18 gained and the rest declined IT pivotals rose on stock-specific buying despite the Indian rupee heading towards a nine-year high on Thursday, 26 July 2007, in anticipation of strong capital inflow. India's second largest software services exporter Infosys Technologies gained 1.81% to Rs 2,026 after it bagged a $250-million (around Rs 1,010 crore) contract from Royal Philips Electronics. It is one of the largest acquisition-cum-outsourcing deal by an Indian information technology firm. TCS (up 3.13% to Rs 1185), Wipro (up 4.22% to Rs 520) and Satyam Computers (up 1.64% to Rs 494.90) gained in anticipation of further mergers and acquisitions activity in the IT sector. The BSE IT Index gained 1.92% at 5,001.24, and was the top gainer among the sectoral indices on BSE. In early trade, the rupee was at 40.31/32 per dollar, strengthening from the previous close of 40.3500/3575 and inching towards from a nine-year high of 40.20 hit earlier this week. India's largest drug manufacturer by sales Ranbaxy Laboratories jumped 9.95% to Rs 375 on 19.34 lakh shares. It was the top gainer from the Sensex pack. The stock rose after Ranbaxy today, 26 July 2007, reached an agreement with GlaxoSmithKline (GSK) to end their litigation in the US on Valtrex (valacyclovir hydrochloride tablets) used in the treatment of herpes. Other pharma stocks Cipla (up 4.16% to Rs 193.90) and Dr Reddy's Laboratories (up 0.29% to Rs 667.40) also edged higher. The BSE Health Care Index was up 1.5% at 3,788.36. Auto stocks advanced on fresh buying interest in anticipation that sales will pick up after monsoon, generally a slack season. Bajaj Auto (up 1% to Rs 2378) and Mahindra & Mahindra (up 2.55% to Rs 802) advanced. The BSE Auto Index closed at 5,096.44, up 1.5%. Maruti Udyog vaulted 3.38% to Rs 837 after India's biggest small car maker today, 26 July 2007, reported a 35.1% growth to Rs 499.60 crore in net profit in Q1 June 2007 over Q1 June 2006. Net sales were up 26% at Rs 3,930.82 crore. Maruti Udyog will be renamed as Maruti Suzuki India. Cement shares declined for the second straight day on fresh selling following reports that the goverment is easing cement import norms in an attempt to rein in prices. India's second largest cement manufacturer ACC plunged 4.55% to Rs 1,021.80 on 3.82 lakh shares. It was the top loser from the Sensex pack. Ambuja Cements (down 3% to Rs 124.50) and Shree Cement (down 2.86% to Rs 1,280) also slipped. Cement scrips had fallen yesterday, Wednesday, 25 July 2007, following reports that the Monopolies and Restrictive Trade Practices Commission (MRTCP) had on Tuesday, 24 July 2007, ordered a probe into the business practices of 14 leading cement manufacturers. The country's biggest private sector company Reliance Industries (RIL) advanced 1.92% to Rs 1,940, after striking an all-time high of Rs 1,948. RIL's results are due on Saturday, 28 July 2007. The market expects surprise on the positive side. Capital goods heavyweights Bhel (down 2.05% to Rs 1,753) and L&T (down 1.13% to Rs 2,544.50) declined on profit booking after a recent rally. The BSE Capital Goods index lost 1.35% to 13,247.03, and was the worst performing sectoral index on BSE Top cellular services provider Bharti Airtel dropped 2.30% to Rs 925 on profit taking even as it reported robust Q1 June 2007 results. The stock had hit an all-time high of Rs 960 in early trade. Bharti Airtel's consolidated net profit as per US GAAP jumped 100% to Rs 1,511.60 crore in Q1 June 2007 over Q1 June 2006, exceeding market expectations. Revenue rose 53% to Rs 5,904.60 crore in Q1 June 2007 over Q1 June 2006. Revenue growth was within market expectation. Bank shares drifted lower on selling pressure. HDFC Bank (down 2.12% to Rs 1,215), State Bank of India (down 1.2% to Rs 1,549) and ICICI Bank (down 1.51% to Rs 945) slipped. With inflation under control, the Reserva Bank of India (RBI) is likely to keep rates steady when the monetary policy comes up for review on 31 July 2007. However, it remains to be seen whether the central bank will raise the cash reserve ratio (CRR) to suck out excess liquidity in the banking system. BSE Bankex lost 1.2% at 8,185.52. India's biggest cigarette maker ITC lost 0.21% to Rs 165.50. The stock had surged almost 9% on Wednesday, 25 July 2007, on market talks it may announce demerger of its agri business. ITC announces Q1 June 2007 results tomorrow, 27 July 2007. Sugar stocks spurted at the fag end of the trading session. Shree Renuka Sugars (up 5.51% to Rs 635), Bajaj Hindustan (up 4.30% to Rs 160.20) and Balrampur Chini Mills (up 5.45% to Rs 70.65), galloped. NDTV (up 4.44% to Rs 400.90) and IFCI (up 9.43% to Rs 58) rose on build-up of fresh positions after NSE lifted the ban building fresh derivatives positions in these two stocks. IDFC rose 2.30% to Rs 134.90 after 74.32 lakh shares changed hands at Rs 134 per share on BSE in early trade. IDFC's net profit rose 38.42% to Rs 167.81 crore in Q1 June 2007 over Q1 June 2006. Total income surged 73.19% to Rs 556.8 crore . The company announced the Q1 results after trding hours yesterday, 25 July 2007. Cummins India lost 0.17% to Rs 382.80 after it reported 26.07% rise in net profit to Rs 64.02 crore in Q1 June 2007 over Q1 June 2006. Total income was up 38.7% to Rs 565.49 crore in Q1 June 2007 over Q1 June 2006. 3i Infotech rose jumped 5.20% to Rs 306.35 after its net profit rose 39.09% to Rs 21.42 crore in Q1 June 2007 over Q4 march 2007. Sales were up 25.43% to Rs 118.81 crore in Q1 June 2007 over Q4 March 2007. Drug maker Wochkardt gained 4.47% to Rs 400 after it reported a 39.6% growth in net profit in 39.6% growth in net profit to Rs 69.10 crore in Q1 June 2007 over Q1 June 2006. Multiplex cinema operator Shringar Cinemas gained 3.16% to Rs 62 after it reported a 314% growth in net profit to Rs 5.22 crore in Q1 June 2007 over Q1 June 2006. Bombay Dyeing & Manufacturing Company advanced 6.0% to Rs 618 on promoters' intention to raise their stake. The Wadia family, directly and indirectly, owns 43% in the textile company. Sterlite Industries declined 2.90% to Rs 651 after posting 9.85% fall in net profit in Q1 June 2007 to Rs 201.46 crore over Q1 June 2006. Total income rose 31.70% to Rs 3,165.85 in Q1 June 2007 over Q1 June 2006. India's largest wind turbine generator Suzlon Energy plunged 7.98% to Rs 1,290 after its net profit declined 53.8% to Rs 89.4 crore in Q1 June 2007 over Q1 June 2006. Total income dipped 8.85% to Rs 862.9 crore in Q1 June 2007 over Q1 June 2006. The company made this announcement before market hours today, 26 July 2007. Hitachi Home & Life Solutions (India) galloped 11.26% to Rs 123.50 after its net profit jumped 95.83% to Rs 17.37 crore in Q1 June 2007 over Q1 June 2006. Sales rose 27.95% to Rs 148.49 crore. Japanese shares fell today, 26 July 2007, on decline in stocks of exporters such as Canon Inc. and Advantest Corp., although strong earnings reports lifted shares of Honda Motor Co. and Nintendo Co. Japan's Nikkei slipped 0.88% at 17,702.09, while Hang Seng declined 0.64% to 23,211.69. China's main stock index reached a new high on opening today, 26 July 2007, on strong corporate earnings. The Shanghai Composite Index opened higher and hit 4,357.796, breaching the previous high of 4,335.96 set on 29 May 2007. It was up 0.52% to 4,346.51 European markets were trading slightly weaker today, 26 July 2007. Wall Street rose yesterday, 25 July 2007, on some strong earnings and new deals, but not without a struggle, as mounting signs of a tougher lending climate again dogged investors. The Dow Jones Industrial Average gained 68.12 points, or 0.50%, to 13,785.07. Broader stock indicators also rose in shaky trading. The Standard & Poor's 500 index climbed 7.05 points, or 0.47%, to 1,518.09, and the Nasdaq Composite index advanced 8.31 points, or 0.31%, to 2,648.17. Crude oil rose today, 26 July 2007, for the second day in New York after a report showed US oil inventories fell for a third week and gasoline demand was near a one-year high. Crude oil for September 2007 delivery gained as much as 50 cents, or 0.7%, to $76.38 in after-hours electronic trading on the New York Mercantile Exchange. It was at $76.17 in Singapore</DIV>

IT stocks stage a comeback

The market posted modest gains amid high volatility today, 26 July 2007, the day the July 2007 derivatives contracts expired. It was firm in the first half of the day follow…

26 Jul 2007

Load more posts