Wild swings...be responsive

It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.

Welcome to another week of wild swings. Given the strong rebound by indices on Friday, the hope is that the momentum continues at least at the open. A possible softening at higher levels is the most likely scenario. With the sun outage and F&O expiry this week, be responsive to the changing market conditions. If you can't understand what's happening around you, make sure you protect your capital at least.

Indicators from the derivative side of the market are showing positive bias in the short-term. On Friday, the open interest in September futures increased while the premium on these contracts too rose simultaneously. Also, call options saw a lot of unwinding, a sign of bullish things, ahead of Thursday's F&O expiry. If we take this with the fact that short selling has been banned temporarily in the US and the UK, the bears may come pressure if the global rally manages to hold up. In that case, they will have to cover their shorts here as well, which could lead the main indices to the top end of the projected range of 3800-4650. Overall, the sentiment will be driven by the global trend, especially in the US. Trading in such highly volatile condition is fraught with a lot of risks. Hence, one should be very careful and could stay on the sidelines and allow the dust to settle.

Last week, the bulls survived what could be one of the worst weeks in recent history, as the much-vaunted US capitalism teetered on the brink of a collapse. After slumping close to the year's low, the Indian indices staged a remarkable rebound, in line with other global markets, as news broke that the Bush regime was preparing a massive bailout plan to save its fragile economy form the financial terror. Washington has already submitted the plan (worth a whopping $700bn) to the Congress. After some debate and political rhetoric in an election year, Capitol Hill is likely to clear the program in the next few days. However, one needs to question the move as many previous attempts at checking the financial contagion had failed miserably. As a result, some analysts are skeptical of the effectiveness of the Bush government's plan. There is also the 'moral hazard' (we heard this term when the farm loan waiver was announced by Chidambaram) issue as the move sets a bad precedent by rescuing the bad guys.

Already, there are signs that the global rally, powered by an extra-ordinary rescue effort mounted by the beleaguered US government and others of its ilk, may not sustain for long. Asian markets this morning (barring Shanghai which is up for different reasons), have given a muted response to Washington's humungous bailout package. In fact, the Hang Seng even dipped into the red briefly, and was last trading flat. Among the other regional stock benchmarks, the Kospi was only marginally up, while the Straits Times was down slightly. The Nikkei and the Shanghai Composite are the only two markets up sharply. The latter is continuing last week's rebound after the Chinese government announced a slew of steps to shore up sentiment in the local stock market.

Reliance Industries could see some wild swings. Mukesh Ambani says that the company has started pumping oil from KG Basin. The stock already rallied on Friday and don't be surprised if some cooling takes place.

FIIs were net buyers of Rs10.16bn (provisional) in the cash segment on Friday. Local institutions pumped in just Rs439.1mn. In the F&O segment, the foreign funds were net buyers of Rs39.8bn. On Thursday, the foreign funds were net sellers of Rs5.99bn in the cash segment. Mutual Funds poured in Rs9.39bn on the same day.

US stocks soared further on Friday, extending the rally from the previous day, as the Bush regime mounted an unprecedented counter attack to unclog the stressed markets and revive investor confidence at the end of a tumultuous week.

Washington's proposed plan to help banks get rid of the toxic securities, coupled with the lifeline given to bleeding money market funds and the crack down on speculators restored some trust in the world's premier financial market.

Major stock indexes wiped out big losses suffered earlier in the week in the wake of the unraveling of the latest round of financial excesses by some of Wall Street's leading institutions. However, some analysts warned that the crisis is not completely over.

The Dow Jones Industrial Average jumped 368.75 points, or 3.3%, to end at 11,388.44, capping its biggest two-day jump in six years. The S&P 500 index rallied 48.57 points, or 4% to 1,255.08. Nasdaq Composite index surged 74.80, or 3.4%, to 2,273.9.

Small cap stocks jumped too, with the Russell 2000 index up 4.1%.

Eleven stocks advanced for every two that fell on the New York Stock Exchange.

Including Thursday's big rally, the Dow's two-session advance was 779 points, the biggest since March 2000, according to Dow Jones. On a percentage basis, the two-session advance of 7.3% was the biggest since October 2002.

The Dow's daily gyrations between lows and highs added up to a more than 2800-point run. However, for the week, the Dow closed down less than 34 points.

Trading volume were heavy, with nearly 3bn shares exchanged on the New York Stock Exchange. Advancers beating decliners roughly 7 to 1. On the Nasdaq, more than 2bn shares traded, and for every stock on the decline, four advanced.

The S&P 500 erased its decline for the week, ending 0.3% higher. All of the S&P's 10 industry groups advanced, with the financial and energy sectors leading the charge, the former up 15% and the latter gaining 8.1%.

Treasury prices plunged and gold prices tumbled as investors moved out of safe-haven assets and poured money into equities, reversing the flight-to-safety trend of earlier in the week. Oil rallied more than US$6 a barrel. The dollar jumped nearly 2% versus the yen, but fell versus the euro.

The cost of default protection on corporate bonds dropped by the most since the bailout of Bear Stearns in March.

Across the Atlantic, the FTSE 100 index in London surged more than 400 points on Friday in the biggest one-day outpouring in 20 years. The FTSE 100 index rebounded 431.30 points, or 8.8%, to 5,311.80.

Other European markets surged to their best one-day percentage rise ever and US stocks rallied from the outset as the Bush government said that it was looking to buy billions of dollars of bad assets from its financial institutions.

The pan-European Dow Jones Stoxx 600 climbed 8.3% to 278.16, eclipsing the Stoxx 600 rise of 5.9% on Oct. 15, 2002. The French CAC-40 index jumped 9.3% to 4,324.87 and Germany's DAX 30 index climbed 5.6% to 6,189.53.

Bonds fell sharply and gold prices dropped, as investors headed back toward riskier investments such as equities in the belief that the worst may be over.

In the emerging markets, Russian stocks rallied nearly 30%, causing the markets' regulator to halt trading once again on the two main stock exchanges, after the government took a series of steps aimed at stemming the country's financial turmoil.

The ruble-denominated Micex index soared 29% to finish at 1,098 points and the dollar-denominated RTS stock index rallied 22% to end at 1,295.91 points.

Among the other emerging markets, the Bovespa in Brazil surged 9.6% to 53,055 while the IPC index in Mexico jumped 4.6% to 25,701. The ISE National-30 index in Turkey soared by 13.6% to 45,402.

Markets extended gains to second straight trading session on Friday brushing aside concerns over US credit crisis. The significant rally was led by the banking stocks after the finance minister clarified, stating that the Indian banks have little exposure to US financial crises. The realty, IT and the oil & gas stocks were also among the major gainers. The Sensex ended 764 points higher to close at 14,079 and the NSE Nifty index ended at 4,245 gaining 207 points.

All the 30 components of the Sensex ended in positive terrain. Index heavyweights like Reliance Industries, ICICI Bank and Infosys were among the major gainers.

Among the BSE Sectoral indices, BSE Realty index was the top gainer (up 7.6%), BSE IT index (up 6.7%), BSE Oil & Gas index (up 5.5%) and BSE Bankex index (up 5.2%).

Shares of Patel Engineering surged by over 3.5% to Rs364 after the company announced that it secured order worth Rs6.96bn from krishna Delta System. The scrip touched an intra-day high of Rs385 and a low of Rs360 and recorded volumes of over 65,000 shares on BSE.

Shares of Reliance Industries surged by over 6% to Rs2051 after the company discovered gas in eight new locations in the Krishna-Godavari basin off the country's east coast stated reports. The scrip touched an intra-day high of Rs2065 and a low of Rs1960 and recorded volumes of over 16,00,000 shares on BSE.

Shares of Opto Circuits gained by 2% to Rs295 after the company announced that it signed a non binding letter of Intent (LOI) for the proposed purchase of 100% of the capital stock of a privately held medical devices Company in Europe manufacturing Medical Equipments. The acquisition is estimated over USD 100.00 million. The scrip touched an intra-day high of Rs299 and a low of Rs291 and recorded volumes of over 56,000 shares on BSE.

Shares of Garware Offshore advanced by 5% to Rs180 after the company announced that it secured a firm contract for upto 3 years in South Africa for its new Anchor Handling Tug-cum-Supply Vessel (AHTSV) viz. "M V Meghna" scheduled for delivery in the last quarter of the year.

The annual revenue from this Contract is expected to be in the region of Rs220mn. The scrip touched an intra-day high of Rs182 and a low of Rs174 and recorded volumes of over 18,000 shares on BSE.

Shares of HCL Technologies surged by over 8% to Rs229 after the company announced it would spend as much as US$2bn for acquiring a company by 2011, stated reports. The scrip touched an intra-day high of Rs233 and a low of Rs220 and recorded volumes of over 5,00,000 shares on BSE.

Shares of Phoenix mills ended higher by 2.2% at Rs146 after ~1.4% of equity changed hands in two trades. One of ~1.28mn shares and the other of 0.7mn shares deals, took place at an aeage price of Rs151.5 per share. The scrip touched an intra-day high of Rs169 and a low of Rs143 and recorded volumes of over 20,00,000 shares on BSE.

Indian market might continue its recovery mirroring gains in the global markets. However, after a 700 point upmove, key indices could witness some profit booking.

Reliance Industries finds another gas reserve in KG Basin which may be bigger than the country's biggest gas field.(ET)
ONGC plans to incur Rs19.3bn capital expenditure in the current financial year.(BS)
Maytas Metro, the company formed to build, operate and transfer the Rs121bn metro rail project, signs concession agreement with Andhra Pradesh government.(BL)
Patel Engineering receives Rs6.9bn order from the Andhra Pradesh state government.(FE)
Reliance Power receives possession of 1,800 acres of land for its Krishnapatnam UMPP, further 700 acres to be acquired soon.(BS)
SBI, BNP Paribas, Standard Chartered Bank and Barclays bank to bail out Lehman's India business.(BS)
Kingfisher to cut 300 jobs.(BS)
JSW Steel secures licenses to mine iron ore and manganese in Jharkhand. (TOI)
Spencer's Retail of the RPG Group decides to focus on food and bakery services.(ET)
ONGC Videsh may take US$2.8bn loan to buy Imperial Energy.(BS)
Larsen & Toubro set to prune its business portfolio; may exit from three or four businesses that have failed to post significant growth.(FE)
Opto Circuits to buy Europe based medical devices maker for over US$100mn.(TOI)
Ranbaxy Laboratories likely to shift production of Valacyclovir to FDA approved facility.(ET)
BHEL plans Rs15bn forgings joint venture.(BS)
Tata Motors to launch higher end version of 'Ace Magic' vehicle.(Mint)
DLF is retrenching around 300 employees.(ET)
Reliance Industries starts test production of crude oil from KG basin; commercial gas flow begins from January 2009.(DNA)
Videocon JV buys Brazilian company for US$283mn.(BL)
PFC Consulting, a subsidiary of Power Finance Corp., may provide services to UMPPs.(ET)
US FDA is probing the quality of AIDS medicines supplied by Ranbaxy Laboratories to developing countries under US government funded programmes.(BS)
Future Logistics plans to raise US$40mn from PEs.(ET)
Referendum on land acquisition for Reliance Industries' proposed SEZ in Raigad, Maharashtra.(BL)
Indian Oil Corp. to invest Rs70bn in this fiscal as part of its capital expenditure.(BL)
Apollo Hospital's HealthHiway eyes US$2mn PE fund.(ET)
Simbhaoli Sugars is mulling acquisition of two sick sugar units in Uttar Pradesh at an investment of Rs600mn.(BS)
Power Finance Corporation to join hands with PE firms to finance power plants.(ET)
Hindustan Motors to soon launch a SUV.(FE)
Reliance ADAG will invest US$550mn to form a new venture with Steven Spielberg, allowing him to break away from his studio, DreamWorks.(DNA)
Mphasis cuts hiring guidance by 50%.(BS)
Indian Oil Corp. expects government to issue oil bonds for the last quarter of FY08 to it by October end.(DNA)
Garware Offshore says it has secured a US$15mn contract for supplying a vessel in South Africa.(FE)
Nalco lines up Rs400bn growth plans involving projects abroad within the country.(BL)
State Bank of India mulling overseas acquisition.(BS)
Oil India to begin its maiden overseas drilling in Libya next year.(BL)
RCF kicks off its plan to invest US$1.3bn in Mozambique.(FE)
United Breweries is lining up two premium variants of Kingfisher beer.(ET)
Essar Steel Holdings says it would invest US$4bn in North America, including US$1.6bn in a mine-based steel plant in the state of Minnesota.(FE)
Export-Import Bank of US has given Air India US$549mn in loan guarantees to support the purchase of Boeing aircraft.(Mint)
Hindalco plans new units, to invest Rs19.8bn; to raise Rs50bn through a rights issue slated to open on Monday.(FE)
MCX gets SEBI approval for trading in currency futures.(ET)
Company Law Board stays the September 27 AGM of Kohinoor Foods, which is facing a hostile takeover from Temptation Foods.(FE)
Merger of Bongaigaon Refinery with Indian Oil Corp unlikely in current fiscal due to investors' resistance.(BL)
A four-way JV between Oil India., the Assam oil division of Indian Oil Corp., Coal India and Engineers India is under way to produce synthetic crude from high-sulphur coal.(DNA)
Oil India may raise debt if its IPO falters.(BS)
Tulip Telecom plans Rs6bn capital expenditure over the next two years to expand its data connectivity network.(BL)
Claris Life Sciences is planning capital expansion to the tune of Rs2-3bn.(BS)
NTPC has warned Russia's Technopromexport of legal action if it does not resume work at its Barh power project in Bihar.(BS)
India may take up the Ranbaxy Laboratories drugs case with the US government.(ET)

Economy Front page

Reliance Industries finds another gas reserve in KG Basin which may be bigger than the country's biggest gas field.(ET)
ONGC plans to incur Rs19.3bn capital expenditure in the current financial year.(BS)
Maytas Metro, the company formed to build, operate and transfer the Rs121bn metro rail project, signs concession agreement with Andhra Pradesh government.(BL)
Patel Engineering receives Rs6.9bn order from the Andhra Pradesh state government.(FE)
Reliance Power receives possession of 1,800 acres of land for its Krishnapatnam UMPP, further 700 acres to be acquired soon.(BS)
SBI, BNP Paribas, Standard Chartered Bank and Barclays bank to bail out Lehman's India business.(BS)
Kingfisher to cut 300 jobs.(BS)
JSW Steel secures licenses to mine iron ore and manganese in Jharkhand. (TOI)
Spencer's Retail of the RPG Group decides to focus on food and bakery services.(ET)
ONGC Videsh may take US$2.8bn loan to buy Imperial Energy.(BS)
Larsen & Toubro set to prune its business portfolio; may exit from three or four businesses that have failed to post significant growth.(FE)
Opto Circuits to buy Europe based medical devices maker for over US$100mn.(TOI)
Ranbaxy Laboratories likely to shift production of Valacyclovir to FDA approved facility.(ET)
BHEL plans Rs15bn forgings joint venture.(BS)
Tata Motors to launch higher end version of 'Ace Magic' vehicle.(Mint)
DLF is retrenching around 300 employees.(ET)
Reliance Industries starts test production of crude oil from KG basin; commercial gas flow begins from January 2009.(DNA)
Videocon JV buys Brazilian company for US$283mn.(BL)
PFC Consulting, a subsidiary of Power Finance Corp., may provide services to UMPPs.(ET)
US FDA is probing the quality of AIDS medicines supplied by Ranbaxy Laboratories to developing countries under US government funded programmes.(BS)
Future Logistics plans to raise US$40mn from PEs.(ET)
Referendum on land acquisition for Reliance Industries' proposed SEZ in Raigad, Maharashtra.(BL)
Indian Oil Corp. to invest Rs70bn in this fiscal as part of its capital expenditure.(BL)
Apollo Hospital's HealthHiway eyes US$2mn PE fund.(ET)
Simbhaoli Sugars is mulling acquisition of two sick sugar units in Uttar Pradesh at an investment of Rs600mn.(BS)
Power Finance Corporation to join hands with PE firms to finance power plants.(ET)
Hindustan Motors to soon launch a SUV.(FE)
Reliance ADAG will invest US$550mn to form a new venture with Steven Spielberg, allowing him to break away from his studio, DreamWorks.(DNA)
Mphasis cuts hiring guidance by 50%.(BS)
Indian Oil Corp. expects government to issue oil bonds for the last quarter of FY08 to it by October end.(DNA)
Garware Offshore says it has secured a US$15mn contract for supplying a vessel in South Africa.(FE)
Nalco lines up Rs400bn growth plans involving projects abroad within the country.(BL)
State Bank of India mulling overseas acquisition.(BS)
Oil India to begin its maiden overseas drilling in Libya next year.(BL)
RCF kicks off its plan to invest US$1.3bn in Mozambique.(FE)
United Breweries is lining up two premium variants of Kingfisher beer.(ET)
Essar Steel Holdings says it would invest US$4bn in North America, including US$1.6bn in a mine-based steel plant in the state of Minnesota.(FE)
Export-Import Bank of US has given Air India US$549mn in loan guarantees to support the purchase of Boeing aircraft.(Mint)
Hindalco plans new units, to invest Rs19.8bn; to raise Rs50bn through a rights issue slated to open on Monday.(FE)
MCX gets SEBI approval for trading in currency futures.(ET)
Company Law Board stays the September 27 AGM of Kohinoor Foods, which is facing a hostile takeover from Temptation Foods.(FE)
Merger of Bongaigaon Refinery with Indian Oil Corp unlikely in current fiscal due to investors' resistance.(BL)
A four-way JV between Oil India., the Assam oil division of Indian Oil Corp., Coal India and Engineers India is under way to produce synthetic crude from high-sulphur coal.(DNA)
Oil India may raise debt if its IPO falters.(BS)
Tulip Telecom plans Rs6bn capital expenditure over the next two years to expand its data connectivity network.(BL)
Claris Life Sciences is planning capital expansion to the tune of Rs2-3bn.(BS)
NTPC has warned Russia's Technopromexport of legal action if it does not resume work at its Barh power project in Bihar.(BS)
India may take up the Ranbaxy Laboratories drugs case with the US government.(ET)