Market zooms 536 points

Overcoming sustained selling pressure of the past five sessions, the Bombay Stock Exchange benchmark Sensex surged on Thursday by over 530 points to regain the 13k level with buying activity picking up on strong global cues and easing of crude oil prices.

The 30-share BSE barometer, which has lost nearly 1,350 points in past five trading sessions, gained 536.05 points at 13,111.85 points today.

It touched the day's high of 13,150.35 and a low of 12,843.79 points.

Market breadth was impressive with 28 stocks out of 30-scrip Sensex ending in green while two stocks -- Ranbaxy Labs and Tata Steel-- closing in red.

National Stock Exchange index Nifty also shot up by 130.50 points at 3,947.20, after hitting a high of 3,968.75 and a low of 3,823.15 points.

Marketmen said buying activity picked up following reports of crude oil falling from record high levels and global stock markets surging.

With crude oil prices easing, most of refinery stocks, led by Reliance Industries, recorded fresh gains.

Crude for August delivery fell three per cent in New York after the US Energy Department showed an unexpected gain in supplies as fuel demand slowed.

Asian markets rallied mirroring the gain in US stocks. Hong Kong, Tokyo, South Korea and Singapore exchanges closed with handsome gains.

Capital goods sector index gained the most by 601.48 points at 10,762.01, followed by banking index by 327.36 points at 5,727.60.

Oil and Gas index rose by 263.69 points at 8,852.08, realty index by 208.90 points at 4,428.02, auto index by 141.29 points at 3535.78, IT index by 108.22 points at 3675.20, power index by 92.89 points at 2302.77, PSU index by 113.97 points at 5866.67, FMCG index by 44.48 points at 1941.94, tech index by 80.30 points at 2864.80 and consumer durable index by 49.37 points at 3440.60.

Healthcare gained 4.87 points at 3976.28 as most of the gains in the sector were pulled down after the segment leader Ranbaxy Laboratories fell Rs 18.50, 3.93 per cent to Rs 452.20 on some negative reports.

Midcap index gained 67.06 points at 5155.34 and smallcap index by 62.67 points at 6387.12.

However, Metal index fell by 238.62 points at 11697.30 as the segment majors Jindal Steel, Sterlite and Tata Steel fell sharply on profit selling.

Not all hope lost - economy can still grow at 8%

Amid various disappointing indicators, India has received some solace with the International Monetary Fund marginally revising its projections for economic growth to 8 per cent in 2008 from its earlier estimates of 7.9 per cent.

IMF in its update of World economic Outlook released today, however, retained its earlier forecast of 8 per cent GDP growth for India during 2009.

Indian economy grew by 9.3 per cent in 2007.

 

Projections for Indian economy are not too dismal, if one takes IMF views on the world economy. The multi-lateral agency projected the global growth to moderate from five per cent in 2007 to 4.1 per cent in 2008 and 3.9 per cent in 2009.

"The slowdown in global growth is expected to continue through the second half of 2008, with only a gradual recovery during 2009," IMF said.

It said the global growth decelerated to 4.5 per cent in the first quarter of 2008, down from 5 per cent in the third quarter of 2007, with sluggish activities both in advanced and emerging economies.

In advanced economies, business and consumer sentiments have continued to retreat, while industrial production has weakened further. There has also been signs weakening in business activities in emerging economies.

The projections of the multilateral funding agency for India came a few days after Fitch downgraded the country's domestic credit outlook to negative from stable. Fitch also expected Indian economy to grow at 7.7 per cent in 2008-09 against nine per cent in the previous year.

Indian economy is widely expected to witness a moderation this year due to rise in borrowing costs as RBI continued to tighten monetary stance to tame inflation, which is inching towards 12 per cent mark.

The recent industrial production data have also shown that the industry continued to bear the brunt of rising costs as its growth plunged to 3.8 per cent in May compared to 10.6 per cent last year. Both manufacturing and electricity sectors showed a sharp decline in their growth. This may be pointer to the slow down in the Indian economy.

The Finance Ministry also expects moderation in India's growth this fiscal, though not much. It hopes that the economy would grow between 8-8.5 per cent in 2008-09.

Asian Markets Rallied As Crude Oil Continues Its Retreat

 Also Follows The Positive Sentiments Generated By Wall Street

The Asian stock markets rallied on bargain hunting following positive sentiments generated by Wall Street's biggest one-day gains since 1 April overnight and a steep fall in oil prices for a second day. Financial stocks rebounded as credit worries eased, following surprisingly strong results from the U.S. bank Wells Fargo. But the resources sector was lower following weaker commodity prices. On the Wall Street, the Dow jumped 2.52% to 11,239.28, the broader S&P 500 gained 2.51% to 1,245.36 and the Nasdaq surged 3.12% to 2,284.85.

Crude oil prices fell $4.14 to settle at $134.60 a barrel on the New York Mercantile Exchange after data released by the U.S. Energy Department showed that domestic inventories of crude oil and gasoline rose last week, rather than declining as analysts had expected. Crude oil is currently down 41 cents at $134.19 a barrel in Asian trade Thursday.

On the currency front, the U.S. dollar recovered to lower 105-yen range in early Tokyo deals from lower 104-yen levels late Wednesday. In Asian currency trading, the U.S. dollar bought 104.82 yen recently, compared with 105.03 yen late in New York. In South Korea, the U.S. dollar opened lower at 1,007.5 won compared to previous day's close of 1,009.3 won. The Australian dollar has opened weaker at US$0.9746-0.9749 and the kiwi held on to its overnight gains and was buying US$0.7715 in early local trade.

The Japanese market closed higher after a mixed performance on yesterday. Wall Street's rally overnight following a sharp decline in oil prices boosted market sentiment. However, concerns over the dollar's weakness against the yen. The banking sector rallied after the U.S. bank Wells Fargo reported better-than-expected quarterly numbers, but oil-related stocks lost ground. The benchmark Nikkei 225 index gained 1.0% to finish at 12,887.95. The broader Topix index gained 1.15% at 1,263.65.

On the economic front, the Finance ministry said that foreign residents were net sellers of Japanese stocks last week. The dumped shares in favor of bonds. Foreigners were net sellers of 242.4 billion yen worth of Japanese stocks for the week ended July 12, the third week of net stock selling. Meanwhile, foreigners were net purchasers of 528.2 billion yen in Japan bonds and notes during the week, the second straight week of net acquisition.

Meanwhile, a final report from the Japanese Cabinet Office showed that the leading index stood at 92.9 in May, up from an initial estimate of 92.6 and 92.8 recorded in April. The coincident index also showed an improvement from its initial estimate. The index recorded a reading of 103.3, an increase from 103 reported earlier. It was also up from 101.7 registered in April. However, the lagging index decreased to 103.4 from 103.7 seen in April.

China's Shanghai Composite Index posted modest losses, lagging a sharp regional advance, after data showed wholesale inflation and factory investment remain elevated, likely leaving policy makers few options on a tightening bias.

The benchmark Shanghai Composite Index closed down 0.8% at 2,684.78 extending yesterday's fall of 2.7%.

According to the data released by the National Bureau of Statistics Bureau showed producer prices rose a faster-than-expected 8.8% in June, up from 8.2% in May. The pace of gains in consumer prices eased somewhat, with the CPI rising 7.1% in June on year, down from a 7.7% in May and 8.5% in April.

First-half gross domestic product climbed 10.4% from a year earlier, easing from an 11.9% expansion in 2007. The consumer price index rose 7.1% in June from a year earlier, easing from a 7.7% rise in May and 8.5% in April.

In Hong Kong, the Hang Seng Index increased 2.4% to 21,734.72, while the Hang Seng China Enterprises Index zoomed up 2.9% to 12,056.56.

The Australian stock market closed higher. The market started off on a firm note and extended its gains for the second straight session after Wall Street rallied overnight following a steep fall in crude oil prices for a second day. The resources stocks fell on weak commodity prices. The benchmark S&P/ASX 200 index closed up 0.6% at 4,901.0 and the broader All Ordinaries index also gained 0.6% to finish at 4,991.4.

On the economic front, Australia's international merchandise imports totaled A$17.527 billion in June, down from a revised A$18.191 billion in May, according to the Australian Bureau of Statistics. The bureau also said preliminary analysis showed that goods imports on a balance of payments basis fell by 2% in seasonally adjusted terms between May and June.

The data, included in the Reserve Bank of Australia monthly bulletin, showed that the central bank sold a net A$875 million in the spot foreign exchange market in June. The central bank also bought a net A$993 million from the government during the month. The Reserve Bank's spot foreign exchange market transactions in May amounted to net sales of A$336 million.

The South Korean market closed higher, ending a three-day losing streak. However, the market came of the day's highs amid caution ahead of the release of quarterly earnings by major U.S. investment banks later in the day. The benchmark Korea Composite Stock Price Index closed up 1.2% at 1,525.56, off a day's high of 1,546.84. The key index rebounded following a nearly 4% decline over the previous three days

On the economic front, Korea Automobile Importers and Dealers Association said that sales of imported cars in South Korea jumped 31.2% from a year earlier in the first half of this year, despite weaker consumer sentiment.

The New Zealand market closed higher extending yesterday's gains. The market started off on a firm note as Wall Street's rally overnight, following a sharp decline in oil prices for a second consecutive session, encouraged investors to look for bargain buys. The benchmark NZX 50 index closed up 1.04% at 3,091.38, after adding 0.6% on Wednesday.

The Indian market is trading firm after opening sharply higher in the morning. A sharp plunge in the price of oil for a second day and positive global cues triggered buying interest, but traders are expressing caution ahead of the release of inflation data today.

After opening sharply higher at 12,909, the BSE Sensex rose to an intra-day high of 13,099 within a few minutes. The Sensex pared its gains closing at 13,111.85, up 536 points or 4.26% over the previous day's close. Meanwhile, the S&P CNX Nifty is up 130 points or 3.42%.

Elsewhere, Taiwan's weighted index spiked 3.9% to 6,974.51, while Singapore's Straits Times Index added 1% to 2,864.10.

Turning toward European markets, jumped higher with investors taking heart from a continued retreat in oil prices and moving back into recently battered sectors such as the banks. In the opening trade, the U.K. FTSE 100 index climbed 1.7% to 5,238.90, the German DAX 30 index rose 1.5% to 6,245.20, and the French CAC-40 index advanced 1.6% to 4,178.23.

On the economic front the day is scheduled to release construction output for the Eurozone, which will be followed by ZEW economic survey for the Switzerland. From US we have building permits, which will be followed by the continuous and initial jobless claims. In the evening we have housing starts accompanied by Philadelphia Fed's manufacturing survey. From Canada the Bank of Canada will release its monetary policy report, which will be preceded by the data on the foreign investment in Canadian securities.

BSE Bulk deals to Watch - July 17 2008

 Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
17/7/2008 532981 ANU LABS DIPAK R RATHOD B 68824 330.28
17/7/2008 532981 ANU LABS DIPAK R RATHOD S 68824 333.24
17/7/2008 532996 FIRST WIN MBL AND COMPANY LIMITED B 93094 115.72
17/7/2008 532996 FIRST WIN OPG SECURITIES PVT LTD B 231418 115.93
17/7/2008 532996 FIRST WIN BUNIYAD CHEMICALS LIMITED B 100000 113.70
17/7/2008 532996 FIRST WIN MBL AND COMPANY LIMITED S 93094 115.46
17/7/2008 532996 FIRST WIN OPG SECURITIES PVT LTD S 231418 115.96
17/7/2008 532996 FIRST WIN BUNIYAD CHEMICALS LIMITED S 100000 119.63
17/7/2008 532909 GRABAL ALOK INDEX EQUITIES P .LTD S 149878 82.00
17/7/2008 524330 JAYANT AGRO HARISH TARSEM MITTAL B 100000 50.34
17/7/2008 523628 WEAROLOGY LT SOPHIA GROWTH A SHARE CLASS B 200000 73.00

NSE Bulk Deals to Watch - July 17 2008

 Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
17-JUL-2008,BASF,BASF Ltd.,INDIA DIVERSIFIED (MAURITIUS) LIMITED,BUY,142000,291.21,-
17-JUL-2008,FIRSTWIN,First Winner Industries L,BUNIYAD CHEMICALS LIMITED,BUY,96230,114.15,-
17-JUL-2008,FIRSTWIN,First Winner Industries L,PRASHANT JAYANTILAL PATEL,BUY,156275,116.21,-
17-JUL-2008,FIRSTWIN,First Winner Industries L,SANJAY BHANWARLAL JAIN,BUY,127440,115.00,-
17-JUL-2008,FIRSTWIN,First Winner Industries L,TIRUPATI ONLINE,BUY,100000,121.00,-
17-JUL-2008,FIRSTWIN,First Winner Industries L,TRANSGLOBAL SECURITIES LTD.,BUY,89300,116.93,-
17-JUL-2008,IFCI,IFCI Ltd.,CLEAN FINANCE & INVESTMENT LTD,BUY,5744254,37.66,-
17-JUL-2008,PRIMESECU,Prime Securities Limited,OMEGA FINHOLD PRIVATE LTD.,BUY,247072,35.90,-
17-JUL-2008,WEBELSOLAR,Webel-SL Energy Systems L,SOHAN LAL AGARWAL,BUY,50337,214.89,-
17-JUL-2008,BASF,BASF Ltd.,DEUTSCHE SECURITIES MAURITIUS LIMITED,SELL,172975,286.05,-
17-JUL-2008,FIRSTWIN,First Winner Industries L,BUNIYAD CHEMICALS LIMITED,SELL,96230,121.22,-
17-JUL-2008,FIRSTWIN,First Winner Industries L,PRASHANT JAYANTILAL PATEL,SELL,156275,116.24,-
17-JUL-2008,FIRSTWIN,First Winner Industries L,SANJAY BHANWARLAL JAIN,SELL,127440,115.09,-
17-JUL-2008,FIRSTWIN,First Winner Industries L,TIRUPATI ONLINE,SELL,91849,120.25,-
17-JUL-2008,FIRSTWIN,First Winner Industries L,TRANSGLOBAL SECURITIES LTD.,SELL,89300,117.07,-
17-JUL-2008,IFCI,IFCI Ltd.,CLEAN FINANCE & INVESTMENT LTD,SELL,5744254,37.66,-
17-JUL-2008,PRIMESECU,Prime Securities Limited,CITIGROUP GLOBAL MARKETS MAURITIUS PRIVATE LIMITED ,SELL,250000,35.90,-
17-JUL-2008,PRIMESECU,Prime Securities Limited,OMEGA FINHOLD PRIVATE LTD.,SELL,158141,36.04,-
17-JUL-2008,WEBELSOLAR,Webel-SL Energy Systems L,MORGAN STANLEY MAURITIUS COMPANY LTD,SELL,73150,215.00,-

Sensex rebounds

After crashing over 1,000 points in the last five sessions, the market witnessed a strong relief rally on across-the-board buying through the day. The strong optimism in key indices triggered a steep rally and the Bankex index managed to register gains of over 4%. Sensex opened on a strong note with a positive gap of 334 points at 12,910, but quickly tumbled; anyway, it remained upbeat all through the session on sustained buying support. The rally gathered steam towards the close and Sensex touched an intra-day high of 13,150 before ending the session at 13,112, up 536 points. Nifty also bounced back sharply and advanced 130 points to close at 3,947.

The breadth of the market was absolutely positive. Of the 2,689 stocks traded on the BSE, 1,529 stocks advanced, 1,088 stocks declined and 72 stocks ended unchanged. All the sectoral indices closed with significant gains except the BSE Metal index. The BSE Bankex index was the major gainer and soared 6.06% followed by the BSE CG index (up 5.92%), the BSE Realty index (up 4.95%), the BSE Power index (up 4.20%) and the BSE Auto index (up 4.16%). The BSE Metal index was however down by 2%.

Among the 30 Sensex stocks, 28 ended in the green. Attracting strong buying support HDFC surged 9.78% at Rs1,888.70, Maruti Suzuki India soared 9.52% at Rs600, JP Associates jumped 9.19% at Rs149.05, DLF advanced 8.44% at Rs427.20, State Bank of India (SBI) added 7.75% at Rs1,227.05, Larsen & Toubro zoomed 7.49% at Rs2440, Tata Consultancy Services gained 7.13% at Rs779.50, ICICI Bank vaulted 6.08% at Rs551.20 and HDFC Bank was up 6.03% at Rs958.10. Other frontline stocks also moved up by 2-5% each.

Banking stocks witnessed sustained buying support. Axis Bank surged 8.73% at Rs635.50, UBI jumped 7.94% at Rs108.05, SBI added 7.75% at Rs1,227.05, Bank Of India advanced 7.31% at Rs243.65 and ICICI Bank gained 6.08% at Rs551.20. Kotak Bank, Yes Bank and Punjab National Bank were up over 4% each.

Over 1.91 crore Reliance Petroleum shares changed hands on the BSE followed by Reliance Natural Resources (1.55 crore shares), IFCI (1.44 crore shares), Ispat Industries (1.05 crore shares) and Chambal Fertilisers (89 lakh shares).

Market rebounds after four-day steep slide; Sensex vaults 536 points

Frenzied buying in battered pivotals along with short covering after four straight days of catastrophic fall triggered a solid rally on the bourses today. Strong global markets and a savage cut in crude oil for the second straight day yesterday, 16 July 2008 triggered the rally. The market breadth was strong. Except metal stocks, shares from other sectors rose

As per provisional data, foreign funds today, 17 July 2008, bought shares worth a net Rs 310.45 crore. Domestic funds bought shares worth a net Rs 168.02 crore.

Asian and European stocks rallied today, propelled by the biggest surge in US bank shares in 16 years and a sharp drop in oil prices, easing the worst fears about the global credit crisis spiralling out of control.

Political uncertainty will continue to weight on the market in the near term. The government is holding a two-day special session of parliament on 21 July 2008 and 22 July 2008 to seek vote of confidence after it was reduced to minority following withdrawal of support by Left parties on 8 July 2008. The government hopes to retain power due to backing from Samajwadi Party, a regional party in Uttar Pradesh.

The 30-share BSE Sensex surged 536.05 points or 4.26% at 13,111.85. The Sensex opened with a sharp 333.77 point upward gap at 12,909.57 and advanced further to touch a high of 13,150.35 in late trade. At the day's high, the Sensex surged 574.55 points. At the day�s low of 12,843.79 touched in mid-morning trade, the Sensex gained 267.99 points.

The broader based S&P CNX Nifty advanced 130.50 points or 3.42% at 3,947.20. Nifty July 2008 futures were at 3930.25, at a discount of 16.95 points as compared to spot closing.

The BSE Sensex shed 1350.44 points or 9.67% in four trading sessions to 12575.80 on 16 July 2008 from 13964.26 on 9 July 2008.

The BSE Sensex is down 7175.14 points or 35.36% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 8094.92 points or 38.17% away from its all-time high of 21,206.77 struck on 10 January 2008.

The market breadth was strong on BSE with 1529 shares advancing as compared to 1092 that declined. 70 remained unchanged.

The BSE Mid-Cap index was up 1.32% to 5,155.34 and the BSE Small-Cap index rose 0.99% to 6,387.12. Both these indices underperformed the Sensex.

The total turnover on BSE amounted to Rs 4847 crore as compared to Rs 4,611.44 crore on Wednesday, 16 July 2008. NSE's futures & options (F&O) segment turnover was Rs 46,300.96 crore, which was higher than Rs 45,738.28 crore on Wednesday, 16 July 2008.

Among the 30-member Sensex pack, 27 advanced while the rest declined

India�s largest real estate developer in terms of market capitalisation DLF galloped 10.93% to Rs 437 on 20.58 lakh shares. It was the top gainer from the Sensex pack.

Auto shares advanced on fresh buying. India�s top small car maker in terms of sales Maruti Suzki India surged 9.52% to Rs 600. Mahindra & Mahindra (up 4.31% to Rs 514.95), Hero Honda Motors (up 2.89% to Rs 657.20), and Tata Motors (up 3.44% to Rs 409), rose

India�s largest private sector firm by market capitalization and oil refiner Reliance Industries rose 4.15% at Rs 2026.15 on 11.07 lakh shares. The stock moved in a range of Rs 2030 and Rs 1965 so far during the day.

Capital goods heavyweights advanced. India�s largest engineering & construction company in terms of order book position Larsen & Toubro jumped 8.11% to Rs 2454.50. The stock is trading 1:1 cum bonus.

India�s largest power equipment maker in terms of sales Bharat Heavy Electricals advanced 5.75% to Rs 1460.50.

India's largest dedicated housing finance company in terms of operating income HDFC vaulted 9.38% to Rs 1881.8. The company reported 25.56% rise in net profit to Rs 468.11 crore on a 26.67% increase in total income to Rs 2318.62 crore in Q1 June 2008 over Q1 June 2007. The results were announced during trading hours yesterday, 16 July 2008.

HDFC chairman Deepak Parekh yesterday denied rumors that Citigroup may sell its 11.74% stake in HDFC to Oman Investment Corporation.

Banking shares witnessed across-the-board rally ahead of the inflation data to be released after market hours today. HDFC Bank (up 5.57% to Rs 955.50), State Bank of India (up 9.33% to Rs 1245), and ICICI Bank (up 6.92% to Rs 555.55), also gained.

Mid-cap banks, Kotak Mahindra Bank (up 4.26% to Rs 465), Axis Bank (up 10.02% to Rs 643), Union Bank of India (up 7.89% to Rs 108), Bank of India (up 7.31% to Rs 243.65), also joined the rally.

Starting this week the government will inflation data every Thursday at 17:00 IST instead of mid-day every Friday.

India�s largest cellular services provider in terms of market capitalisation Bharati Airtel advanced 1.87% to Rs 744, Reliance Communications, the country�s second largest cellular services provider in terms of market capitalisation rose 4.66% to Rs 417.90.

Two oil exploration heavyweights saw divergent trend. Oil & Natural Gas Corporation (ONGC) soared 4.22% to Rs 902.90 while Cairn India lost 3.77% to Rs 215.90

India�s largest cigarette manufacturer in terms of sales ITC gained 3.51% to Rs 168. As per recent reports Amar Singh, whose Samajwadi Party is the key to the survival of the ruling Congress-led UPA Government wants the Unit Trust of India (UTI) and other public financial institutions to divest their stake in ITC in favour of British American Tobacco (BAT). Public financial institutions have a combined 37.62% (as at end March 2008) holding in ITC, which includes 11.90% of UTI and 13.65% of Life Insurance Corporation of India.

IT pivotals rallied. TCS surged 6.83% to Rs 773 after the company reported 8.58% rise in net profit to Rs 1204.01 crore on a 5.99% increase in total income to Rs 5321.88 crore in Q1 June 2008 over Q4 March 2007. The results were declared after market hours yesterday, 16 July 2008.

Infosys Technologies (up 2.25% to Rs 1581), Satyam Computer Services (up 5.26% to Rs 415.25), and Wipro (up 2.36% to Rs 380), edged higher from IT pack.

Reliance Infrastructure (up 4.67% to Rs 801.25), Jaiprakash Associates (up 9.34% to Rs 149.25), were the other gainers from Sensex pack.

India�s largest pharma company in terms of sales Ranbaxy Laboratories was the top loser from the Sensex pack. The stock slumped 3.89% to Rs 452.40 on profit booking after surging 15.03% to Rs 470.70 yesterday, 16 July 2008. The counter saw high volumes of 69.68 lakh shares. The stock surged wildly in a range of Rs 494.40 and Rs 431 today.

The stock galloped after the company's chief executive Malvinder Singh yesterday, 16 July 2008 said in a televised conference that the deal with Japan's Daiichi Sankyo remains on track. He also said that the firm would provide all information required for a probe by the US authorities within the next month.

Steel stocks extended early losses on reports the government may consider setting up a price band for steel products to control inflation. Tata Steel (down 2.91% to Rs 607.50), Sail (down 6.29% to Rs 119.20), and Kalyani Steel (down 1.05% to Rs 146), declined from steel sector.

Besides metal stocks like Sterlite Industries (down 5.69% to Rs 608), National Aluminium Company (down 4.78% to Rs 336.50), and Hinstan Zinc (down 0.02% to Rs 527.80) were not spared either.

Ranbaxy Laboratories was the top traded counter on BSE with turnover of Rs 316.39 crore followed by Reliance Petroleum (Rs 288.68 crore), Reliance Capital (Rs 243.26 crore), Reliance Industries (Rs 221.65 crore), and Larsen & Toubro (Rs 176.10 crore), in that order.

Reliance Petroleum led the volumes chart notching volumes of 1.92 crore shares followed by Reliance Natural Resources (1.56 crore shares), IFCI (1.45 crore shares), Ispat Industries (1.05 crore shares) and Chambal Fertilisers (89.55 lakh shares), in that order.

State run oil-marketing companies extended yesterday gains after sharp fall in crude oil prices for the second straight day yesterday, 16 July 2008. Hindustan Petroleum Corporation (up 5.10% to Rs 207.95), Bharat Petroleum Corporation (up 7.74% to Rs 272.10), and Indian Oil Corporation (up 6.16% to Rs 363.90), surged.

HCL Technologies was down 1.21% to Rs 212.75 after the company said on Wednesday, 16 July 2008, it has acquired UK based business process outsourcing provider Liberata Financial Services. The company made this announcement after trading hours on Wednesday, 16 July 2008.

Biocon fell 6.96% to Rs 350 after posting 71.66% fall in consolidated net profit to Rs 15.02 crore in Q1 June 2008 over Q1 June 2007. The company announced the results during trading hours today, 17 July 2008.

BGR Energy Systems spurted 20% to Rs 297.35 after the company said during trading hours on Wednesday, 16 July 2008, it has secured a contract worth Rs 4900 crore for engineering, procurement and construction of a thermal power project in Rajasthan. The stock surged 13.41% to Rs 247.80 on Wednesday, 16 July 2008

Chambal Fertilisers & Chemicals declined 0.20% to Rs 57.10 on reporting 61.44% fall in net profit to Rs 23.80 crore on 31.90% rise in total income to Rs 843.78 crore in Q1 June 2008 over Q1 June 2007. The company announced the results after trading hours yesterday, 16 July 2008.

Polaris Software Lab spurted 17.30% to Rs 80 after posting 40.27% surge in net profit to Rs 19 crore on 11.59% growth in net sales to Rs 267.12 crore in Q1 June 2008 over Q4 March 2008. The company announced the results during trading hours today, 17 July 2008.

Unichem Laboratories gained 7.89% to Rs 176 on reporting 48.34% surge in net profit to Rs 33.38 crore on 18.27% increase in net sales to Rs 181.54 crore in Q1 June 2008 over Q1 June 2007. The company made this announcement during trading hours today, 17 July 2008.

Among the side counters, ORG Information (up 20% to Rs 22.80), First Winner Industries (up 15.75% to Rs 119.50), IVRCL Infrastructures (up 14.55% to Rs 296), Eimco Elecon (up 12.40% to Rs 285), Hitachi Home & Life Solutions (up 13.77% to Rs 128.50), Astral Polytecnik (up 12.68% to Rs 160), Siemens (up 9.68% to Rs 473.20), Essar Shipping (up 10% to Rs 96.05), Balaji Telefilms (up 9.27% to Rs 162), Gokul Refoils (up 8.32% to Rs 191.40), surged.

Ace Software (down 13.23% to Rs 11.15), Nahar Industrial (down 9.55% to Rs 38.35), and Deltron Cables (down 9.41% to Rs 90), slipped.

Crude oil was up 26 cents at $134.86 today, 17 July 2008. On the New York Mercantile Exchange, August crude plunged $4.14 to $134.60 a barrel yesterday, 16 July 2008.

The Reserve Bank of India (RBI) may reportedly opt for further tightening of money supply as there is no likelihood of inflation coming down to single digit figure in the next six months based on indications given by the central bank Governor to a parliamentary panel.

European markets, which opened after Indian markets edged higher trade. Key benchmark indices in UK, Germany and France were up by between 1.78% and 2.21%.

Most Asian markets, which opened before Indian markets, were trading higher today, 17 July 2008. Key benchmark indices in Japan, Hong Kong, Taiwan, Singapore and South Korea were up by between 1% and 3.93%. However China's Shanghai Composite fell 0.78%.

US markets surged yesterday, 16 July 2008 led by financial stocks, after unexpectedly strong results from Wells Fargo & Co, the fifth-largest US bank and mortgage lender, eased worries about the on-going credit crisis. A drop in oil prices also aided the upmove.

The Dow Jones industrial average soared 276.74 points, or 2.52%, to 11,239.28. The S&P 500 index rose 30.45 points, or 2.51%, to 1,245.36, and the Nasdaq Composite index advanced 69.14 points, or 3.12%, to 2,284.85.

Tough day ahead

The market may correct further for the second straight session on inflation worries and dwindling foreign fund inflows in domestic markets. Nervousness in the market is likely to continue after the Sensex reported losses in Friday's trades. Weakness in the global indices could make the investors jittery from taking any fresh position. Among the key local indices, the Nifty could decline to 4010 or 3950 on the downside while on the upside there is a near term resistance at 4100. The Sensex has a likely support at 13350 and may face resistance at 13600.

US Indices tumbled on Friday as investors continued to worry about the credit market crisis and rise in the oil prices. While the Dow Jones slipped 128 points to close at 11101, the Nasdaq lost 19 points to close at 2239.

Except Dr Reddy & Tata Motors all the Indian floats had a lost heavily on the US bourses. Infosys tumbled 13.30%, Satyam slipped 9.17% and ICICI Bank lost 7.38% while, Rediff, Patni Computer, VSNL, HDFC Bank, Wipro and MTNL lost around 2-4% each. Among the gainers Dr Reddy rose 1.90%, while Tata Motors was up by 0.11%.

Crude oil prices in the US market gained sharply, with the Nymex light crude oil for August delivery up $3.43 to close at $145.05 a barrel. In the commodity space, the Comex gold for August series gained $18.60 to settle at $960.60 an ounce.

Equities seen range-bound on mixed cues

Local shares are likely to be witness range-bound activity today, 14 July 2008, tracking mixed cues from global shores. However crude oil hovering near record highs may dampen the sentiment.

Global investment banker Barclays Capital projecting inflation to surge to 17% by September 2008 on back of another round of hike in fuel prices in the same month may also play the spoilsport. The investment banker believes that wholesale price index inflation will remain in double-digit territory until May 2009.

Inflation based on the wholesale price index surged to a fresh 13-year high 11.89% in 12 months to 28 June 2008, above the previous week's annual rise of 11.63%, government data released on 11 July 2008 showed. This is much higher than the Reserve Bank's tolerance limit of 5.5% set for the current fiscal.

Crude oil for August delivery fell as much $1.01 to $144.07 a barrel in after-hours trading on the New York Mercantile Exchange on Friday, 11 July 2008.

Asian markets were trading firm today, 14 July 2008, led by advances in banking stocks after the US government unveiled measures to help the troubled home financing providers. Shanghai Composite rose 0.36% or 10.36 points at 2,866.99, Japan's Nikkei gained 1.12% or 146.21 points at 13,185.90, Hong Kong's Hang Seng advanced 0.51% or 113.57 points at 22,298.12, South Korea's Seoul Composite added 0.54% or 8.51 points at 1,576.02, Taiwan Weighted was down 0.21% or 14.91 points at 7,229.85 and Straits Times fell 0.53% or 15.52 points at 2,911.32

US markets ended volatile session on Friday, 11 July 2008, with the Dow Jones falling below the 11,000 level for the first time since August 2006. Growing concern about the health of Fannie Mae and Freddie Mac send bank shares to an 11-year low. The Dow Jones Industrial Average slumped 128.48 points to 11100.54 and the Nasdaq Composite shed 18.77 points at 2239.08. The Standard & Poor's 500 index dropped 13.90 points to 1,239.49.

Back home, the market slumped on Friday, 11 July 2008 as spiraling crude oil prices and weak economic data dampened investor sentiments. The 30-share BSE Sensex lost 456.39 points or 3.28% at 13,469.85 and the broader based S&P CNX Nifty was down 113.20 points or 2.72% at 4049, on that day.

The BSE Sensex rose 15.85 points or 0.12% to 13,469.86 in the week ended Friday, 11 July 2008. The S&P CNX Nifty edged up 33 points or 0.82% to 4,049 in the week.

From a record high of 21,206.77 hit on 10 January 2008, Sensex has lost 7736.92 points or 36.48%. It is down 6817.14 points or 33.60% in calendar year 2008 so far.

As per provisional data, foreign funds sold shares worth a net Rs 467.67 crore while domestic funds bought shares worth a net Rs 214.74 crore, on 11 July 2008.

Foreign institutional investors (FIIs) were net buyers of Rs 511.43 crore in the futures & options segment on 11 July 2008. They were net buyers of index futures to the tune of Rs 715.44 crore and sold index options worth Rs 221.49 crore. They were net sellers of stock futures to the tune of Rs 20.84 crore and purchased stock options worth Rs 38.31 crore.

Industrial production rose 3.8% in May 2008, much lower than revised 6.2% growth in April 2008, the government data released on 11 July 2008 showed. Industrial production growth for April 2008 revised downwards to 6.2% from earlier 7%.

Caution may prevail on the bourses in the near term due to political uncertainty as to whether the government will be able to win confidence vote in the parliament. Prime Minister Manmohan Singh is likely to seek a vote of confidence in parliament shortly following the Left's withdrawal of support to the government over the India-US civil nuclear agreement. There is speculation that the government may choose a date around 22 July 2008 to call a special Lok Sabha session for the vote.

Pre Session Commentary - July 14 2008

The Indian Market is expected to have positive opening on the back of favorable global cues as Asian markets are trading in green and crude oil prices dropped in Asian trade. It dropped $1.65 to $143 a barrel. The Indian market on Friday closed in deep red on inflation data, which stood at 11.89% for the week ended June 28 as against 11.63% in earlier week and IIP number for the month of May, which declined at 3.8% as against 10.6% in same period of last year. Indian market opened on positive note due to the mixed cues from the global markets but soon it slipped with giving up its initial gains. Further after showing some volatility it lost more grounds to close in extremely negative territory. From the sectoral front, all indices closed in red and major selling witnessed among the frontline indices mainly the Capital Goods, IT, Metal, Power and Oil & Gas stocks. IT index closed with deep cut of more than 6% and Capital Goods and Power indices slipped by more than 4%. The BSE Sensex closed lower by 456.39 points at 13,469.85 and NSE Nifty ended down by 113.20 points at 4,049. We expect that market may remain voaltile during the trading session.

On Friday, the US market was closed in red on concern about the health of U.S. mortgage lenders Fannie Mae and Freddie Mac, which send bank shares to an 11-year low. U.S. These two large US mortgage financing companies slumped on Friday on fears for their financial stability. The Dow Jones Industrial Average (DJIA) closed lower by 128.48 points at 11,100.54 along with NASDAQ ended down by 18.77 points at 2,239.08 and S&P 500 index closed down by 13.90 points at 1,239.49.

Indian ADRs ended down. In technology sector, Infosys ended down by (13.30%) along with Satyam by (9.17%), Patni Computers by (4.74%) and Wipro dropped by (2.82%). In banking sector, ICICI bank and HDFC bank lost (7.38%) and (3.43%) respectively. In telecommunication sector, Tata Communication and MTNL ended down by (3.89%) and (2.46%)). Sterlite industries increased by (0.07%).

Today the major stock markets in Asia are trading firm. Japan's Nikkei is trading higher by 146.21 points at 13,185.90, Hang Seng index is trading up by 113.57 points at 22,298.12 and Taiwan Weighted trading at 7,229.85 gained 14.91 points.

The FIIs on Friday stood as net seller in equity and in debt. The gross equity purchased was Rs1,988.40 Crore and the gross debt purchased was Rs28.60 Crore while the gross equity sold stood at Rs2,334.40 Crore and gross debt sold stood at Rs31.10 Crore. Therefore, the net investment of equity reported was (Rs345.90) Crore and net debt was (2.50) Crore.

Today, Nifty has support at 3,979 and resistance at 4,137 and BSE Sensex has support at 13,222 and resistance at 13,740.

Of Soros and sorrows!

There are people who are always anticipating trouble, and in this way they manage to enjoy many sorrows that never really happen to them.

Global investor George Soros has done some Quantum buying associating himself with those who are temporarily losing their Power and glory. Betting against the British pound in 1992 made him famous and richer. Will be able to extract his pound of flesh from the Indian market only time will tell.

The string of sorrows on Friday saw an overreaction. We expect a rebound at the opening bell after Friday's weak show. Some more short-covering-led rallies are not ruled out. Don't get fooled by such pull-backs as there is no dearth of perceived bad news.

The trend this week will hinge on a slew of variables, such as the global markets, crude oil, macro-economic data, FII flows, results and of course the political situation. The Dow Jones Industrial Average managed to bounce back on Friday after sliding under the 11,000 mark in early trades. Crude oil too has cooled off after hitting a new record above $147 on Friday. Asian markets are mixed, with the Nikkei is up over 1%, while the Straits Times and Taiex are down 0.2-5%.

In a rare development, the key indices actually managed to post modest gains for the week, mainly on account of short-covering in the F&O segment. The Nifty, which hit a low of 3848 on July 2 has not breached that bottom ever since. This may provide some comfort to the bulls, though there is every danger that the level will also be taken out if the current string of bad news persists.

One thing is pretty difficult to attain in stock market i.e. timing of entry and exit. Last week's resilience notwithstanding, we still can't say whether a temporary bottom was reached on July 2. It's too tough to ascertain the market's direction at this juncture.

Results Today: Axis Bank, CMC, Everonn Systems, Tanla and Tata Sponge.

Silverline Animation Technologies Ltd. and KSK Energy Ventures Ltd. will get listed today.

Ranbaxy may be under pressure as the US government has sued Ranbaxy for concealing and forging crucial data to get a favourable judgment in an ongoing investigation.

HCL Tech is another stock that will face investors' ire after announcing that it may incur forex losses of about US$65-75mn for the quarter ended June 30, owing to a weak rupee.

The US Securities and Exchange Commission (SEC) says it is examining ways to prevent stock-price manipulation by short sellers and others amid amid worries about the financial health of mortgage giants Fannie Mae and Freddie Mac as well as Lehman Brothers.

In Asian markets, the Nikkei is up 1.1% while the Hang Seng has turned flat after being up nearly 200 points. the Kospi in Seoul is up 0.2% while the Straits Times in Singapore is down 0.65%. The Shanghai Composite in China is up 1.3% and the Taiex in Taiwan was down 0.4%.

US stocks fell on Friday, but closed off their lows, as fears that Fannie Mae and Freddie Mac would collapse eased amid reports that the Bush administration will rescue the mortgage financiers and talk that the Federal Reserve would open up its discount window.

The Dow dropped below the 11,000 level for the first time since August 2006. But, the blue-chip index settled at 11,100.54, down 128.48 points, or 1.1%. For the week, the Dow lost 1.6%.

The S&P 500 Index shed 13.89 points, or 1.1%, to 1,239.50, giving it a weekly loss of 1.8%. The Nasdaq Composite Index skidded 18.77 points, or 0.8%, to 2,239.08, giving the technology-laden index a 0.3% weekly loss.

Fannie Mae and Freddie Mac both fell by close to 50% in early trading amid fears about their bankruptcy and speculation of a government bailout.

But shares trimmed losses as the day wore on, recovering after Treasury Secretary Henry Paulson and Sen. Christopher Dodd, D-Conn., made comments that sought to assuage some fears. Freddie ended 3% lower and Fannie ended 22% lower.

For the financial sector and for the stock market, there's more pain to come before a bottom is reached, according to some Wall Street analysts.

US light crude oil for August delivery gained $3.43 to settle at $145.08 a barrel on the New York Mercantile Exchange, after hitting a trading record of $147.27 earlier.

The national average price for a gallon of regular unleaded gas fell Friday to $4.096 from $4.104 Thursday, according to AAA.

In currency trading, the dollar fell versus the euro and the yen. In the bond market, Treasury prices tumbled, raising the yield on the benchmark 10-year note to 3.95% from 3.80% late on Thursday. COMEX gold for September delivery rose $18.70 to settle at $963.20 an ounce.

Lehman Brothers lost another 16.6%, amid continued uncertainty about the brokerage's financials since it reported a nearly $3bn second-quarter loss last month. Citigroup managed to close with just modest losses, after the company said it is selling its German retail banking unit to France's Credit Mutuel for $7.7bn.

GE reported weaker earnings that met forecasts on higher sales that beat estimates. The company reiterated that it would earn $2.20 to $2.30 per share for the full year versus analysts' estimates of $2.22 per share. GE also said it will sell its Japanese consumer finance business for $5.4bn. GE shares ended nearly unchanged, after rising a bit in the morning.

Over the weekend, Anheuser-Busch accepted Dutch brewer InBev's sweetened bid of $70 a share, according to media reports. Anheuser-Busch stock gained more than 8% in regular trading.

The US trade deficit narrowed in May by more than expected, as the record demand for exports - due to the weak dollar - overshadowed the record demand for imports, including crude oil.

The University of Michigan's July consumer sentiment index inched up to 56.6 from 56.4, versus forecasts for a drop to 55.5. However, the index's expectation component, which relates to consumer spending, fell to a 28-year low.

European shares ended around three-year lows on Friday due to a spike in crude oil futures and fresh concerns over the financial sector. The pan-European Dow Jones Stoxx 600 index tumbled 2.7% to 270.36, taking year-to-date losses to nearly 26%.

Germany's DAX 30 fell 2.4% to 6,153.30, while the French CAC-40 dropped 3.1% to 4,100.64 and the UK's FTSE 100 fell back into bear market territory after it lost 2.7% to 5,261.60.

Last trading session of the week ended with a sharp cut. Markets started off with a positive gap but immediately slipped into red on back of disappointing guidance from IT bellwether Infosys. Sentiments were further hit after India's industrial production tumbled in May, to 3.8% from 10.6% in the same month last year. What's even worse was that April's growth has been trimmed to 6.2% from 7%.

Inflation figures were also another dampener. India's Inflation accelerated to the fastest pace since 1995. Inflation rose to 11.89% in the week to June 28 against 11.63% in the previous week

Finally the Sensex lost 456 points to close at 13,469 and the Nifty lost 113 points from to close flat at 4,049.

Bharti Airtel gained by half a percent to Rs745 after the company announced that it adds 2.56mn subscribers in June according to industry data. The scrip touched an intra-day high of Rs798 and a low of Rs737 and recorded volumes of over 9,00,000 shares on BSE.

Sterlite Industries gained by 1.7% to Rs661 after the company along with its unions representing the workers of US based Asarco agreed to acquire all the assets of the bankrupt copper producer. The scrip touched an intra-day high of Rs680 and a low of Rs652 and recorded volumes of over 4,00,000 shares on BSE.

Shree Ashtavinayak advanced by 1% to Rs562 following reports that the company is planning to invest ~Rs9bn in its forthcoming movies. The scrip touched an intra-day high of Rs583 and a low of Rs540 and recorded volumes of over 50,000 shares on BSE.

Max India advanced by 1.6% to Rs158 after the company announced that it would spend Rs1bn along with Bupa Finance for setting up an Insurance company. The scrip touched an intra-day high of Rs167 and a low of Rs155 and recorded volumes of over 54,000 shares on BSE.

Welspun-Gujarat Stahl slipped by 2.5% to Rs304. The company announced that it won order worth Rs30bn and also said that it has total orders worth Rs77bn. The scrip touched an intra-day high of Rs315 and a low of Rs300 and recorded volumes of over 1,00,000 shares on BSE.

Shares of Infosys Technologies plunged by over 7% at Rs1676 erasing early gains as the company didn't increase guidance for FY09 on back of continuation of challenging business outlook. The stock had hit an intra-day high of Rs1876. However, went on to hit an intra-day low of Rs1,641 recording volumes of over 20,00,000 shares on BSE.

Infosys Technologies reported a net profit of Rs13.02bn in the quarter ended June 30, 2008 as against Rs12.49bn in the previous quarter. This translates into a sequential growth of 4.2%. This is better than expectations of a slight dip Quarter on Quarter (QoQ).

Infosys Technologies hiked its revenue and earnings per share (EPS) guidance for the fiscal year 2008-09 as per Indian GAAP. The company expects net sales to be between Rs212.78-216.22bn for the year ending March 2009. The EPS for the current fiscal year is expected to be in a range of Rs99.34-101.06. The company has taken a conversion rate of 1 US$ = Rs.43.04.

Allied Digital gained by 1.2% to Rs906 after the company announced that it acquired 80.5% stake in US based EnPointe Global Services for US$30mn. The scrip touched an intra-day high of Rs932 and a low of Rs880 and recorded volumes of over 4,000 shares on BSE.

BHEL declined by 2.6% to Rs1521. The company announced that it won order worth Rs21.75bn from Tamil Nadu Electricity Board. The scrip touched an intra-day high of Rs1588 and a low of Rs1493 and recorded volumes of over 5,00,000 shares on BSE

US government files suit against Ranbaxy Laboratories for concealing and forging crucial data to get a favourable judgment in an ongoing investigation.(BS)
HCL Technologies may incur forex losses of about US$65-75mn for quarter ended June 30, owing to a weak rupee. (BS)
BHEL receives Rs22bn contract for setting up a 600MW thermal power generating unit in Tamil Nadu.(FE)
ADAG group on look out for acquisitions to start its cement business much before it completes its 4,000MW mega power project at Sasan, Madhya Pradesh.(BS)
JSW Steel looking to acquire US-based United Coal Company. (ET)
Athena Energy Venture, a JV between Power Trading Corp and IDFC to set up a 1,320MW coal-fired power plant in Andhra Pradesh. (DNA)
ONGC may offer joint operatorship of a KG block to British Gas in exchange for rig support to complete drilling in 2009.(BL)
Swan Telecom in negotiations with BSNL for a strategic alliance under which the former will utilise the network of the state-owned company to roll out its operations.(BS)
SAIL-Tata Steel JV company wants five coal blocks to cut imports.(FE)
JSW Steel will explore the possibility of importing iron ore from its mine in Chile and sell it in the local market.(BS)
Maxis Communications would not sell Aircel stake to any third party.(TOI)
Tata Steel is looking at acquiring an iron ore mine in Western Australia to supply ore to Corus' plants.(Mint)
Jindal Stainless is close to acquiring chrome ore and manganese mines in West Asia to cater to its project in Orissa.(BS)
Welspun Gujarat Stahl secures orders worth Rs30bn from Indian as well as overseas companies. (DNA)
Wipro's Asian unit looking to secure deals worth US$100mn from India and Middle-East.(FE)
Ansal API announces the launch of its hi-tech city spread over 2,500 acres adjoining Greater Noida.(Mint)
Commerce ministry examining possibilities of stripping RPL refinery of its 100% export oriented unit status. (ET)
Healthcare services provider Max India board approves its JV with UK-based Bupa Finance Plc for setting up a health insurance company.(FE)
Siemens India secures order from Tata BlueScope Steel to supply equipments to the company's new processing lines at Jamshedpur.(DNA)
Maytas Properties to develop three IT SEZs.(BL)
Drug maker Abbott India to buy back shares at Rs630 each.(BL)
Reliance Industries, Essar Oil, GAIL, Videocon may bid for five exploration blocks in Australia.(ET)
ONGC Videsh in talks to form an alliance with UK based Imperial Energy with oil producing assets in Western Siberia.(TOI)
M&M reduces ownership interest in subsidiary companies by 6-7%, brings forgings unit under Mahindra Forgings.(ET)
Spice Energy plans a GDR issue of US$300mn by August; proceeds to be used to set up 1,000MW thermal power plant in Tamil Nadu.(DNA)
ICICI, HDFC AMCs among 20 companies in race for managing Employees Provident Fund Organization's funds.(ET)
Reliance Logistics looking to acquire mid-sized logistics firm operating in third party logistics field. (DNA)
Phoenix Mills, Adlabs in pact for India's largest multiplex cinema. (ET)

Economic Front Page

Government may cut duty on major petrochemical feedstock building blocks. (ET)
Benchmark ten year bond yield rises to seven year high of 9.55% on rising inflation.(BS)
DoT dilutes the proposed pricing of excess spectrum held beyond contracted limit by mobile operators.(Mint)
Service Sector growth slips from 14.7% to 10.5% in Q4 2008. (ET)
TRAI proposes to raise the base price for operators participating in the auction for 3G and broadband wireless spectrum (BL)
Domestic airlines witnessed a 17% decline in passenger traffic in June as compared to earlier month.(FE)
Kingfisher-Deccan may be dragged to Supreme Court by government.(Mint)
Civil aviation minister directs Bangalore International Airport Limited to increase its capacity to handle passengers.(BS)
Exchange traded currency futures likely to be launched by mid August.(BL)
Government planning to raise FDI ceiling in defense production to 49% from the current 26%. (ET)
RBI eases rules governing external commercial borrowing. (ET)
National Bio-fuel policy may be unveiled by September.(DNA)
Prices of plastic products have become costlier by 35% according to its manufacturers.(BL)
Mining minister approaches Prime minister for the review of iron ore export duty. (ET)

Be afraid ! Inflation may rise to 17%

Global investment banker Barclays Capital has projected that inflation may surge to 17 percent by September on back of another round of hike in fuel prices in the same month.

"We believe WPI inflation will remain in double-digit territory until May 2009. We expect WPI inflation of 17 percent by September 2008," the report said.

For the week-ended June 28, wholesale prices-based inflation touched a new 13-year high of 11.89 percent much higher than the Reserve Bank's tolerance limit of 5.5 percent for the current fiscal.

According to the report, the government is likely to hike fuel prices between 10 and 20 percent again as early as September to limit fiscal risks.

Rise in the price of the Indian crude oil basket to USD 145-150 per barrel from the current USD 132 per barrel could be the trigger for another round of increase in fuel prices, it said.

The government last revised retail petroleum prices with effect from June 5, when petrol prices was increased by Rs 5 a litre, diesel by Rs 3 per litre and cooking gas by Rs 50 per cylinder.

This resulted in inflation touching a double-digit figure of 11.05 percent for the week ended June 7.

Last week, even Finance Minister P Chidambaram's adviser Shubhashis Gangopadhyay predicted that double digit inflation will continue throughout the year 2008 and could impact the economic growth negatively.

Gold rises as crude rises

 Missile tests by Iran and surging crude price makes gold a bet for safe haven

The weak US dollar and the rising oil price pushed bullion metals higher on Friday, 11 July, 2008. Prices rose as tension once again mounted at Middle East and the also rose on reports of more missile tests by Iran. Gold is typically seen as a safe-haven investment and its appeal increases during times of heightened geopolitical tensions. The increase in energy costs also generally increase demand for the precious metal as a hedge against inflation. Silver prices gained for the day.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies.

Comex Gold for August delivery rose $18.6 (1.97%) to close at $960.6 ounce on the New York Mercantile Exchange. Prices climbed to a high of $967 during intra day trading. For the week, it ended higher by $27 (2.8%). On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped since then.

It was reported on Friday that Iran test fired more missiles on Thursday, after testing missiles the day before that could reach Israel. Iran is the world's fourth-largest exporter of crude oil.

At the currency markets on Friday, the dollar lost ground against other major currencies on rising geopolitical risk and renewed credit worries. The dollar index which tracks the greenback against a basket of major currencies, fell 0.6% to stand lately at 72.03.

In the crude market on Friday, prices fell initially amid a rising dollar but leaped right back on speculation that Israel may be nearer to launching an attack on Iran and on worries that supplies in Nigeria and Brazil may be disrupted. Crude for August delivery closed up $3.43 or 2.4%, at $145.08 a barrel on the New York Mercantile Exchange.

The weakening dollar and higher global demand for raw materials have led to records this year for commodities including gold. Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices.

Gold prices ended June, 2008 with a gain of 4.1%. The yellow metal ended second quarter with a marginal gain of 0.7%. In May, it ended with a gain of higher by $22.5 (2.5%). Before May, for April, prices closed lower by 6.3%.

This year, gold prices have gained 13.5% till date against a 5.6% drop for the dollar against the euro. For first quarter prices gained 10.7%. In January, prices gained 11%, the highest monthly gain since April 2006. For February, it gained 6%. But in March, prices succumbed and fell by 5.5%.

On Friday, Comex silver futures for September delivery gained 50 cents (2.7%) to $18.82 an ounce. Silver has gained 25% in 2008 till date. For the second quarter, it gained a paltry 1.4%.

Silver prices ended the month of May 2008 with a gain of 2.7%. For April, it closed lower by 5.5%. Silver had gained 16% in Q1. In January this year itself, prices climbed 14%. In February, it gained another 15%. For March, it ended lower by 13%. The metal had climbed 16% in FY 2007. The metal also has gained for seven straight years.

Crude rises on middle east concerns

 CRUDE OIL

Middle East tension pushes crude higher

Prices end marginally higher for the week

Geo political tensions in Iran and Nigeria and a lower dollar pushed up crude prices on Friday, Friday, 11 July, 2008. Israel launching an attack on Iran and worries that supplies in Nigeria and Brazil may be disrupted, sent crude prices soaring. Traders also continued to worry about slowing demand and continued selling despite a sharp drop in U.S. inventories. Prices nevertheless ended the volatile week with marginal gains.

Crude-oil futures for light sweet crude for August delivery today closed at $145.08/barrel (higher by $3.43/barrel or 2.4%) on the New York Mercantile Exchange. For the week, prices gained $0.21 (0.2%). A day earlier, on Thursday, 10 July, crude rose by almost $6 at one shot today in the final hour of trading after trading around $2 higher in the previous hours.

Crude prices gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. It ended June 2008 higher by 9.9%. Prices are 105% higher than a year ago. For the year, crude is up by 44% till date.

It was reported on Friday that Iran test fired more missiles on Thursday, after testing missiles the day before that could reach Israel. Iran is the world's fourth-largest exporter of crude oil.

At the currency markets on Friday, the dollar lost ground against other major currencies on rising geopolitical risk and renewed credit worries. The dollar index which tracks the greenback against a basket of major currencies, fell 0.6% to stand lately at 72.03.

EIA reported earlier during the week that crude inventories fell 5.9 million barrels in the week ended 4 July to stand at 293.9 million barrels. Daily crude imports averaged 9.5 million barrels last week, down 621,000 barrels from the previous week. U.S. refineries operated at 89.2% of their operable capacity last week, unchanged from the previous week.

EIA also reported that U.S. gasoline supplies rose by 900,000 barrels in the latest week, while distillates rose by 1.8 million barrels.

Against this backdrop, August reformulated gasoline rose 5.23 cents, or 1.5%, to $3.56 a gallon and August heating oil added 3.92 cents, or 1%, to $4.08 a gallon. Natural gas for August delivery, however, reversed earlier gains and fell 40 cents, or 3.3%, to $11.90 per million British thermal units.

Executive Summary

Crude prices showed immense volatility during the week that ended on Friday, 11 July, 2008. Prices gave up more than $9 during the first two days of the week. But then, it touched a all time high price of $147/barrel. It also gained $9.03 during the last two days of the week. For the week, it ended higher by a marginal 21 cents.

Prices fell during the first part of the week due to the strong dollar. But then, it gained back all of its losses after Middle East tensions cropped up between Iran and Israel and also on weekly inventory report from the Energy department.

The Paris based International Energy Agency (IEA) said during the week that it expects 2009 global energy demand to rise 1% from 2008 levels. Robust growth in developing economies will more than offset demand contractions in developed countries.

The IEA also said that the bunching of new projects and Saudi Arabia's pledge for 250,000 barrels a day in additional production should lead to an increase in spare capacity for crude oil next year. But it said current high prices are not just about tight crude supplies, pointing to refinery capacity as another major contributor.

US Markets end with modest losses

 Dow sinks below the 11,000 level for the first time in two years

US Market ended the week on Friday, 11 July with moderate losses. But it was the financial sector and the rising crude price that played the role of major villains for the indices registering losses. Upbeat announcement from a major retailer and encouraging economic data were the major reasons as to why the losses were restricted to modest levels.

The Dow Jones Industrial Average lost 188 points for the week to end at 11,100. Tech - heavy Nasdaq lost 6.3 points at 2,239. S&P 500 shed 23.4 points to end at 1,239. In percentage terms, Dow, S&P 500 and Nasdaq lost 1.7%, 1.9% and 0.3% respectively. The Dow fell below the 11,000 level for the first time in two years.

The financial sector came under severe pressure after Fannie Mae and Freddie Mac were two notable laggards in the sector. The two stocks encountered selling pressure throughout the week on news that accounting changes could force the companies to bring off-balance sheet assets on to their books, thus requiring large capital raises. In fact things worsened on reports that the executive branch has been discussing a plan for the government to take over either one or both of them if conditions worsened. It was only during the end of the week when a Reuters source indicated the two lenders would have access to the Fed's discount window did the stocks rally into the green.

Crude prices showed immense volatility during the week. Prices gave up more than $9 during the first two days of the week. But then, it touched an all time high price of $147/barrel. It also gained $9.03 during the last two days of the week. For the week, it ended higher by a marginal 21 cents and ended around $145/barrel.

Crude prices fell during the first part of the week due to the strong dollar. But then, it gained back all of its losses after Middle East tensions cropped up between Iran and Israel and also on weekly inventory report from the Energy department.

Dow component Alcoa marked the start of second quarter earnings season. The aluminum company reported a drop in earnings due to high energy costs, but the results met Wall Street's forecast. GE also reported earnings in line with expectations.

Wal-Mart reported during the week that June same-store sales were up 5.8% thanks to bargain-hunting consumers. In turn, Wal-Mart raised its second quarter earnings outlook also. This gave the bulls a good reason to come to the forefront during the middle of the week.

In other economic news, the National Association of Realtors reported that May pending home sales fell 4.7%, which is slightly more than the expected decline of 2.8%. However, April was revised higher to a gain of 7.1% from a rise of 6.3%. The data indicated that that the home sales market is still weak, but is not deteriorating at the same rate as in 2007.

Separately, weekly initial claims dropped 58K to 346K, well below the consensus estimate of 395K. The two-week average of 375K put claims at a level that was witnessed in mid-March, so it can be said the claims level is fairly stable.

Cisco Systems weighed heavily on the technology sector during the week after the stock fell to a new 52 week low after UBS said that Cisco faces challenges due to slowing sales in the U.S. and Europe.

Among interesting corporate news, Microsoft is reported to be willing to enter discussions with Yahoo! if Yahoo replaces its board of directors. Next, General Electric's NBC Universal is joining Blackstone Group and Bain Capital to purchase The Weather Channel for $3.5 billion. Also, Merrill Lynch might be planning to sell its stakes in holdings like Bloomberg and BlackRock soon which would generate cash to help offset potential write-downs and adjustments.

In the M&A arena, Dow Chemical announced its intent to acquire Rohm & Haas for $78 per share in cash. That price marked a 74% premium for ROH shareholders based on the stock's closing price the day before the deal was announced.

Executive Summary

For the week, indices registered modest losses. In percentage terms, Dow and Nasdaq lost 1.7% and 0.3% respectively. S&P 500 lost 1.9%. It was the battered financial sector and the rising crude price that played the pranks with the market. Government sponsored Freddie Mac and Fannie Mae were reported to be in distressed condition and this worried the investors. On Friday, 11 July, the Dow sank below the 11,000 level during intra day trading for the first time in two years.

For the year, Dow, Nasdaq and S&P 500 are down by 16.3%, 15.6% and 15.6% respectively.

The coming week as a host of important reports both on economic and earnings front. The earnings reporting will kick up several notches with reports from a number of major financial and technology companies. The minutes from the 25 June Federal Open Market Committee (FOMC) meeting will be released and Fed Chairman Bernanke is slated to present his semi-annual testimony before Senate and House committees. Also, on the dock are key inflation reports in the form of the PPI and CPI Indexes, as well as the latest data on retail sales, housing starts and industrial production.

Today's Pick - Alstom Projects

We recommend a sell in Alstom Projects from a short-term perspective. From the charts of Alstom Projects we note that the stock has been on long-term downtrend from its January 2008 high of Rs 1,085 level, forming lower peaks and lower troughs since then.

However, recently the stock found support at Rs 310 level and witnessed a minor corrective up move to Rs 450 level.

The twin resistance at this level (a key resistance level and the long-term down trendline) halted the up trend. Subsequently the stock declined sharply by 6 per cent on July 11.

The daily momentum indicator is falling in the neutral region and the weekly indicator is featuring in the bearish zone.

Considering that the long-term down trendline is intact we are bearish on this stock in the short-term. We expect the stock to decline until it hits our price target of Rs 365 in the forthcoming trading sessions.

Traders with short-term perspective can sell the stock while maintaining stop-loss at Rs 426.

Tata Power

The Tata Power stock has declined sharply in the ongoing market correction. The stock has shed 40 per cent from the peak registered in early January which is in tune with the erosion suffered by the benchmark Sensex over the same period. At the current price of Rs 975, the stock appears attractive for investments with a long-term perspective. The current price represents a 22 per cent fall since our recommendation to book profits in the stock in mid-November 2007.

Of all the power generation companies now implementing projects, Tata Power is placed best in terms of revenue visibility over the medium-term. Financing and fuel have been tied up already for over half the projected capacity addition in the next five years while its subsidiaries in transmission and distribution are beginning to contribute handsomely to the consolidated financial picture.

Financial returns from the investment in two Indonesian coal mining companies has started flowing in even as implementation of the 4,000 MW Mundra ultra mega power project is on schedule. Investors would do well to acquire the stock in small lots taking advantage of price weaknesses caused by broad market factors.
Expansion on schedule

The next five years will see Tata Power adding more than 10,000 MW to its existing capacity of a little under 2,500 MW. While the Mundra ultra mega project will contribute 4,000 MW, there are other big capacity projects such as the 1,050 MW Maithon and the 2,400 MW Coastal Maharashtra projects.

The company is well on track to commission the Mundra project by 2012, two years ahead of the committed date in 2014. While financing was tied up in April, orders for boilers, turbines and other equipment that have a long lead time have already been placed and civil construction has commenced at the project site.

While fuel will come from the Indonesian acquisitions, Tata Power has also tied up the logistics by setting up a shipping subsidiary in Singapore which will take care of the transportation of coal from Indonesia to Mundra.

Meanwhile, funding for the Maithon project, which is a 74:26 joint venture with Damodar Valley Corporation, has been tied up as also the coal supply. The project is on schedule for a 2011 commissioning. In the current fiscal, Tata Power will be adding about 600 MW of fresh capacity mainly at Jamshedpur (120 MW, 74:26 joint venture with Tata Steel), Trombay (Unit 8, 250 MW) and Haldia (120 MW). The full impact of the cash flows from these projects will be felt from 2009-10. Projects adding up to another 5,670 MW are at advanced stages of finalisation.

With funding, fuel and customers tied up for more than 5,000 MW of projects under implementation, visibility in revenues and earnings is high.
Subsidiary strengths

Two of Tata Power's subsidiaries — Powerlinks Transmission, the 51:49 joint venture with Power Grid Corporation that operates the transmission line from the Tala hydroelectric project in Bhutan and North Delhi Power Ltd., the 51:49 joint venture with Delhi Vidyut Praday Nigam which is a distribution licensee in Delhi — have begun to contribute significantly to the consolidated financials.

In 2007-08, North Delhi Power's post-tax earnings rose by 52 per cent to Rs 282 crore while revenues increased by 11 per cent to Rs 2,287 crore.

The company earned a hefty Rs 53 crore incentive by reducing aggregate technical and commercial losses in its licence area to 18.4 per cent, which is considerably lower than what was mandated. Similarly, Powerlinks turned in a net profit of Rs 58 crore on revenues of Rs 245 crore in 2007-08.

The two Indonesian coal companies chipped in with a handy dividend of more than Rs 300 crore ($75 million); they contributed about 17 per cent to the consolidated post-tax earnings.

The dividends will be useful to service the large debt incurred for the acquisition. Given the rising prices of thermal coal, Tata Power stands to gain significantly from its investment in the Indonesian companies financially.
Tripwire

The downside to our recommendation stems from possible delays in commissioning the projects that are under implementation and on the drawing board. Project schedules could go haywire if there is a delay in delivery of critical equipment, which is something not in the control of the company.

There is also the risk that given the rising interest cost regime worldwide, Tata Power will have to service costlier loans. About Rs 18,000 crore of the total capital requirement of Rs 24,000 crore over the next five years will be funded by debt, domestic and overseas.

The company may be forced to contract loans at a higher rate than what it had bargained for, leading to pressure on cash flows, especially in projects that will operate on a merchant basis.

CII - remove obstactles for investment

Industry body CII has asked the government to remove hurdles in investments, improve access to capital, fast-track fiscal reforms and boost infrastructure building in the wake of slowing industrial production as indicated by IIP figures for May.

CII has expressed its concern over fall in industrial production to 3.8 percent, as this is for the first time IIP growth has fallen to such a low rate since March-2002, CII said in a release.

"It seems that the period of robust 8 percent plus growth of the last four years is coming to an end," the chamber said.

Rising interest rates continued to hit industry as its growth plummeted to 3.8 percent in may against 10.6 percent a year-ago and manufacturing and electricity generation rose by a decelerated rate.

This is the second month in a row this fiscal that the industry performed poorly with industrial growth, as reflected by the index of industrial production (IIP), dipping to 5 percent in April-May against 10.9 percent a year-ago.

"The distinct possibility has arisen that growth will be below potential in the near term," CII said and added that average growth in April-May 2008 was 5 percent down from 10.9 percent in the previous year.

"The slowdown in capital goods is especially worrisome as it indicates slower growth in investment demand. While the other sectors have been slowing down through last year, growth in the capital goods sector had remained strong," it said.

"CII appreciates the dilemma that this causes in the minds of the government and the Reserve Bank of India regarding how to balance the objectives of robust growth and low inflation," it added.

Glenmark Pharma

Investors with a low-risk appetite can avoid taking fresh exposures in the stock of Glenmark Pharmaceuticals at the current levels (Rs 630), given its rich valuations. Glenmark, an integrated pharma major with capabilities in drug discovery and manufacture of finished medicine dosages, has grown its revenues by over 40 per cent and profits by over 70 per cent compounded annually in the last five years.

Partly due to this robust performance and the fancy for 'drug discovery plays', a lot of interest has been built into the stock — it trades at around 21 times its estimated 2008-09 earnings per share — making it highly valued, when seen in comparison with other large-cap pharma companies as well as the benchmark Sensex.
Why hold

Though the outlook on the company is positive, there are two concerns. First, on how the distribution of benefits from the reorganisation of Glenmark's businesses, are going to take shape. The company plans to have two separate companies focussing on speciality and generics. The specialty business will include the discovery and branded business (under Glenmark) while the generics business (housed under Glenmark Generics) will comprise bulk drugs, generic business in the EU and the US, Argentina oncology business as well as a research-based division focused on API and formulation development. Glenmark has already got approval to transfer these businesses for not less than Rs 698 crore to its subsidiary Glenmark Generics, where Glenmark holds 90 per cent and the balance is held by another wholly owned subsidiary. It remains to be seen how Glenmark will utilise the money, as and when it receives the full consideration. Shareholders may benefit from the proposed IPO (of Glenmark Generics), likely to occur later this year, as Glenmark dilutes its holding.

However, they are unlikely to receive any shares as witnessed in de-mergers of companies in the pharma space. While this reorganisation may give both the companies better valuations, on a standalone basis Glenmark will have to make up for the 30 per cent revenue, which are going into Glenmark Generics.

Secondly, even though Glenmark has broadened its drug discovery portfolio (13 in discovery pipeline) and its base business has witnessed major traction in the US and Latin America, Glenmark currently is not a straight-forward investment decision. The sheer presence of the element of drug discovery adds a threat, as does the failure of any molecule, affecting future milestone payments (over $700 million). Plus, compared to generic players of similar size, Glenmark's front-ended presence is weak and efforts to build its own (Glenmark Generics will have to build capabilities also) could weigh on earnings. Execution will remain a key, especially in regulated markets.
Business profile

Glenmark's business does present quite a few positives. Its businesses — specialty/proprietary as well as generics — makes it an end-to-end specialty company and integrated generic formulation maker.

Glenmark has also delivered strongly on earnings as well as guidance. Its 2007-08 core revenues grew by 62 per cent, driving profits by over 100 per cent on a year-on-year basis. The US generic business was a key driver (enjoying exclusive products and limited competition). Operating margins expanded by 7.5 per cent to 40 per cent. The outlook is strong with management now guiding sales growth of over 35 per cent for both 2008-09 and 2009-10.

In the 12-15 month horizon, the Glenmark stock could see potential triggers from out-licensing deals, 'value unlocking' from Glenmark Generics listing and acquisitions in the EU and the US. However, there continue to be certain areas that may pose challenges.

Glenmark's US business, which focusses on niche segments, may not find ramping up drug filings that easy over the next two years (currently has 61 approvals). Drug filings translate to approvals needed for selling drugs in the US.

The company's target to file 25 filings this year, if achieved, would swell the R&D spend, thereby putting pressure on margins. As stated earlier, Glenmark's R&D capabilities appear to be its key attraction. Having forged four deals, plans to bring eight molecules to the lab by next fiscal and targeting different therapeutic areas — every molecule, including the ones already under work — look promising.

This said, world over most molecules fail to make it to commercialisation in the later stages and in this context, uncertainties associated with research should be assessed.

While early-stage development-linked milestone payments (around $110 million till now) will be retained in an event of a failure, a few more instances reputation could however take a beating.

via BL

US FDA moves to court against Ranbaxy

American health regulator USFDA has filed a motion in a US court seeking 'certain' documents from Ranbaxy, amid reports of systematic fraudulent conduct, which the company denied.

"No legal proceeding has been initiated against us and we continue to co-operate with the department of justice," a company spokesperson told a news agency.

The spokesperson, however, admitted that USFDA had filed a motion in a US court seeking certain documents.

The spokesperson refused to disclose as to what the USFDA was seeking clarifications on from the company.

A section of the media has reported that USFDA has taken Ranbaxy to the court for systematic fraudulent conduct and has asked the court to force Ranbaxy to internally review the manufacturing operations.

The spokesperson said Ranbaxy will remain committed to supply high quality generic medicine at affordable prices the to US customers , the spokesperson added.

Bartronics

Mid- and small-cap stocks often bear the brunt of a steep market correction such as the present one. These stocks also face higher challenges in terms of making a comeback. Stocks (in this segment) with strong business prospects, sustainable growth and minimal risks of blip in earnings are the ones that would hold renewed return potential for investors.

The triple-digit growth experienced by Bartronics in revenues and profits over the last couple of years has come on the back of a rapid scale-up of operations and expanding geographic presence.

Its automatic information and data capture (AIDC) business and, more recently, its smart-card business which has seen an increasing pipeline of orders from government initiatives provide a sustainable revenue stream for the company. Importantly, many of these deals may provide scope for improving margins over the next couple of years.

In this light, investors with a one-two year perspective can buy the shares of Bartronics, considering its strong business prospects and reasonable valuations. At the current share price of Rs 157, the stock trades at about 10 times its trailing earnings and 6-7 times its likely earnings for FY 2009.

Bartronics primarily sells products and solutions for data capture in the areas of logistics and inventory management, time and attendance management and asset tracking operations. It has now broad-based its AIDC offering to services such as bar coding, biometrics, radio frequency identification and radio frequency data communications and electronic article surveillance. This has not only signalled a move up the value chain but also enabled the company to have a stronger client penetration in India, South-East Asian countries and the US. The company derives 50 per cent of its revenues from India, 30 per cent from the US and the rest from countries such as Singapore and Malaysia, providing reasonable geographic diversification.
Smart Cards drive growth

The smart card business, for which the company has its own manufacturing facility, holds considerable promise with opportunities in areas such as SIM cards, identity cards, credit cards and social security. Bartronics appears well-placed to capture a reasonable slice of the SIM cards market. It is also doing pilot studies in this field with a few banks and is eyeing the opportunity of the government rolling out national social security cards. With a production capacity of 80 million smart cards, the company has ramped up utilisation levels to 90 per cent from a production of 40 million cards in March 2008. Bartronics has subsidiaries in Singapore and the US to cater to the local markets in South-East Asia. The Singapore facility has already started to contribute to profits. This segment is expected to contribute to over 50 per cent of total revenues in the next couple of years.
Strong Deal Pipeline

Bartronics continues to benefit from government technology initiatives. For example, the Bhamashah Financial Empowerment Scheme of the Government of Rajasthan intends to cover about 50 lakh families through biometrically identifiable smart cards. The project, valued at about Rs 150 crores, commenced operations earlier this month. A similar project involving issuance of 39 lakh smartcards envisaged by the Bihar Government has also commenced last month. There is also a national identification card project on the anvil to be introduced across the country and Bartronics would look at tapping this opportunity.
Promise in AIDC

In AIDC, the company is well-placed to capture a significant share of manufacturing clients, both in India and abroad. The boom in organised retail in the country also offers opportunities for scaling up revenues. With strong client base in the manufacturing space — in the areas of inventory control and material tracking — this segment continues to be the main contributor to revenues (over 50 per cent) as of now.

With the Railways also looking at RFID (radio frequency identification) enablement across trains in the country and increased spends therein, Bartronics with its prominent presence in this segment appears well-qualified to capitalise on investments made by the Railways in IT enhancement.
Risks

Competition from players such as CMC in the RFID space is a risk. Direct entry by the company's overseas principals (from which Bartronics sources some products), into the Indian market, is also a risk if there is an absence of non-compete agreements.

Technicals - Infosys Technologies

This stock recorded a sharp reversal on Friday forming a bearish engulfing candle in the daily chart. This move has also made the stock close below both the 200 and 50-day moving averages and also below the key medium-term support at Rs 1,700.

Both the daily and the weekly momentum oscillators are in the sell mode now implying the reversal in both the short and the medium-term trend.

However, the medium term view will turn overtly negative only on a close below Rs 1,528. Subsequent target is Rs 1,300.

The stock could move lower towards Rs 1564 in the near-term. A reversal from here would mean that a move towards Rs 2,000 is again possible. Resistances would be at Rs 1,876 and then Rs 1,937.

via BL

Weekly Newsletter - July 11 2008

The indices just about managed to end in the green for the week. However, almost all the gains of the week were wiped out on Friday following a confluence of factors. These include Infosys failing to revise its guidance, a rise in inflation and disappointing IIP numbers. Crude, which had crashed during the week initially turned around on Friday to skyrocket to a new high around the US$146 levels.

Global cues may cause some swings at start. Thereafter, the performance of the indices will hinge more on the domestic news flow, especially the corporate results. Given the over reaction in the market on Friday, we see some improvement in the overall indices for the coming week. Another positive close, hopefully better, lays in store.

Infosys fails to boost market mood

Infosys Technologies reported a net profit of Rs13.02bn in the quarter ended June 30, 2008 as against Rs12.49bn in the previous quarter. This translates into a sequential growth of 4.2%. This is better than expectations of a slight dip Quarter on Quarter (QoQ). The company's net sales increased to Rs48.54bn from Rs45.42bn in the January-March quarter. This represents a sequential growth of 6.8%. This is more or less in line with analysts' estimates, and better than the company's guidance of Rs45.7-45.8bn. The Earnings Per Share ( EPS) for the quarter is Rs22.71 versus Rs21.79 in the last quarter. The company had forecast EPS before exceptional items of Rs20.73. The net profit for the quarter ended June 30, 2008 and June 30, 2007 included a reversal of tax provisions amounting to Rs310mn and Rs510mn, respectively. Excluding this reversal, the EPS for the quarter ended June 30, 2008 and June 30, 2007 would have been Rs22.20 and Rs18.00. Infosys hiked its revenue and earnings per share (EPS) guidance for the fiscal year 2008-09 as per Indian GAAP, while leaving its annual outlook unchanged as per the US GAAP. The stock fell 7.2% on Friday, and 4.5% in the week.

PE firms invest US$2.8bn in Q2 CY08

Private equity firms have invested about US$2.8bn in 77 Indian companies during the quarter ended June, according to a study by Venture Intelligence, a research service focused on private equity and venture capital.

The amount invested during the quarter was higher than that during the same period last year, when 74 deals totaling US$1.9bn had taken place. But, this was significantly lower compared to the immediate previous quarter (which witnessed 115 deals worth US$3.6bn).

The latest numbers take the total investments by private equity firms in the first six months of 2008 to over US$6.3bn as against the US$5.4bn invested during the corresponding period in 2007, Venture Intelligence said.

The largest investment reported during Q2 CY08 was US$640mn raised by Aditya Birla Telecom (ABTL), a subsidiary of listed mobile telephone services provider Idea Cellular, from Providence Equity Partners.

"The steep fall in the public markets has resulted in a marked decline in the number of PIPE, Pre-IPO and Late Stage investments during the latest quarter," said Arun Natarajan, Founder & CEO of Venture Intelligence.

"There has been a significant drying up of investments in the BFSI and Engineering & Construction sectors compared to last year. While Power and Telecom companies continue to attract large ticket investments, the positive surprise this year has been the re-emergence of Healthcare and Life Sciences on the radar screens of PE investors," he added.

The April-June quarter also saw more than US$2bn being raised for PE investments in India, with a substantial portion accounted for by infrastructure-focused offerings from 3i and Axis Bank, Venture Intelligence said.

Industrial output shrinks in May

Things are getting out of control on the macro-economic front, even as the Congress-led Government at the Centre is busy preparing for the 'Trust Vote' in parliament over the controversial Indo-US nuclear deal. While inflation is slowly inching towards the 12% mark, the industrial activity in the country is getting hit badly by six-year high interest rates, soaring raw material costs and a slowdown in overall demand. Government data released on Friday showed that the country's industrial production tumbled in May, growing by just 3.8% as against 10.6% in the same month last year. The figure was way off the mark, as average forecast was for a 6-7% expansion. What's even worse is that April's growth was trimmed to 6.2% from 7%. In the first two months of the current fiscal year, industrial output growth more than halved to 5% from 10.9% in the corresponding period of last year.

Manufacturing sector growth slumped to 3.9% from 11.3% in May 2007. Electricity sector's expansion slowed to just 2% compared to 9.4% in the same month a year earlier. Mining, however turned in an improved performance with a growth of 5.2% as against 3.8% in May last year. Growth in Capital Goods plunged to 2.5% in May from 22.4% in the same month a year earlier. Consumer Goods sector managed to hold its own with an expansion of 7.2% versus 8.7% in May last year. Consumer Durables too did quite well, with a growth of 4.4% as against contraction of 0.7% in the year-ago period. Growth in Consumer Non-durables slid to 8.1% from 12.1% in the corresponding month last year.

Growth to fall below 8%

India's economic growth is expected to fall below 8 percent amid likelihood of further tightening of monetary policy by RBI in the wake of inflation inching to 12 percent, said investment banker Goldman Sachs and global rating agency Moody's investor services.

While Moody's expects economic growth to slow down to just under 8 percent in 2008, Goldman Sachs sees it moderate to 7.8 percent this fiscal from 9 percent in FY 2008.

Moody's said even under 8 percent growth would be a cause of envy for most countries.

"India's GDP growth will moderate this year amid slowing exports and softening domestic demand. The retreat of the rupee in the March quarter helped enhance the appeal of Indian products in the global market, keeping export performance healthy," Moody's said.

Meanwhile, on the inflation levels in the country, it said that the wholesale prices jumped 11.9 per cent in the week ended June 28, showing no signs of cooling despite the reserve bank of India's aggressive monetary tightening during the month.

"The higher interest rates and reserve requirements will take time to slow demand-driven inflation. However, if wholesale price growth the key inflation measure in India, continues to accelerate in the next couple of weeks, RBI looks set to further curb lending, which has been a major source of inflation," Moody's added.

IIP plunges, may impact economic growth

ndustrial growth plunged to 3.8 per cent in May, as compared to 10.6 per cent a year-ago, due to poor showing of manufacturing and electricity sector.

Industrial output, as measured by Index of Industrial Production (IIP), grew by just 5 per cent in the first two months of this fiscal, against 10.9 per cent during the same period last year.

Rising interest cost led to drastic deceleration in manufacturing growth to 3.9 per cent in May, compared to 11.3 per cent in a year-ago period. Manufacturing has a weight of over 79 per cent in IIP.

However, the positive point is consumer durables growth rose to 4.4 per cent, against negative 0.7 per cent. Electricity generation also grew by two per cent from 9.4 per cent in May last year.

Only mining output grew by 5.2 per cent, against 3.8 per cent.

The deceleration in industrial output does not augur well for overall economic growth in the first two months.

Market turnover jumps

 RIL, Rel.Infra., RPL July 2008 futures at premium

Nifty July 2008 futures were at 4040, at a discount of 9 points as compared to spot closing of 4049. NSE's futures & options (F&O) segment turnover was Rs 50,149.82 crore, which was higher than Rs 35,645.89 crore on Thursday, 10 July 2008.

Reliance Industries (RIL) July 2008 futures were at premium at 2030 compared to the spot closing of 2016.10.

Reliance Infrastructure (Rel.Infra.) July 2008 futures were at a slight premium at 802.85 compared to the spot closing of 801.25.

Reliance Petroleum (RPL) July 2008 futures were at a slight premium at 168.20 compared to the spot closing of 167.70.

In the cash market, the S&P CNX Nifty lost 113.20 points or 2.72% at 4049.

Post Session Commentary - July 11 2008

The domestic market fell drastically to close in deep red by reacting badly to inflation data, which stood at 11.89% for the week ended June 28 as against 11.63% in earlier week. Also, the IIP number for the month of May, which declined to 3.8% as against 10.6% in same period of last year adds to the negative sentiment. Even the better than expected quarterly results of the IT bellwether "Infosys" fell to give support to the market. Indian market opened on upbeat note tracking mixed cues from the global markets but soon lost ground and slipped into negative territory. Though the market showed some sign of recovery in the mid session but fell to sustain and kept on drifting downwards due to heavy selling pressures. Market witnessed some volatility during the session. From the sectoral front, all indices closed in red and major selling witnessed among the frontline indices mainly the Capital Goods, IT, Metal, Power and Oil & Gas stocks. IT index closed with deep cut of more than 6% and Capital Goods and Power indices slipped by more than 4%. The market breadth was negative as 995 stocks closed in green while 1665 stocks closed in red and 61 stocks remained unchanged.

The BSE Sensex closed lower by 456.39 points at 13,469.85 and NSE Nifty ended down by 113.20 points at 4,049. The BSE Mid Caps and Small Cap closed negative with loss of 106.86 points and 95.58 points 5,365.64 and 6,713.66 respectively. The BSE Sensex touched intraday high 14,066.36 of and intraday low of 13,351.34.

Infosys has announced its first quarter results today. The Company has reported a consolidated net profit of Rs130200 lacs with a growth of 4.2% in the quarter ended June 2008 as against Rs124900 lacs in the previous quarter same year. The standalone Net Profit was at Rs. 126200 lacs for the quarter ended on June 2008 against Rs. 118200 lacs for the quarter ended on March 2008.

Losers from the BSE are JP Associates (8.48%), TCS Ltd (8.03%), Satyam Comp (7.19%), Infosys Tech (7.18%), L&T Ltd (6.89%), Reliance Infra (6.28%), HDFC (5.52%), Tata steel (4.69%), Wipro Ltd (4.34%) and ICICI Bank Ltd (4.09%).

The Capital Goods index closed down by 565.67 points at 10,774.38. Lossers are L&T Ltd (6.89%), Punj Lloyd (6.25%), Alstom Proje (6.13%), ABB Ltd (5.80%), BEML Ltd (4.86%) and Elecon Eng C (4.21%).

The IT Index closed lower by 281.77 points at 3,907.63. Lossers are I-Flex (9.10%) along with Satyam Computer (7.19%), Infosys Tech (7.18), Tech MAhindra (6.87%), Rolta India (6.80%), Moser Bayer (4.55%) and Wipro Ltd Ltd (4.34%).

The Metal index closed down by 247.46 points at 12,711.71. Lossers are Ispat Industries (6.47%), Tata Steel (4.69%), JSW SL (3.51%), Jindal Steel (2.67%), Steel Authority (2.36%) and Jindal Stain (2.35%).

The Oil & Gas index ended down by 193.31 points at 8,886.28. As BPCL (8.06%), Essar Oil Ltd (5.73%), IOC (4.59%), Reliance Natural Resources (3.76%), ONGC (3.65%) and HPCL (2.93%) closed in negative territory.

The Power index lost 104.72 points to close at 2,344.06. Major lossers are GMR Infrastructure (7.17%), Tata Power (6.29%), Reliance Infra (6.28%), ABB Ltd (5.80%), Reliance Power (5.16%) and GVK Power Inf (5.11%).