Cautious guidance hammers US stocks

Merck and Yahoo announce layoffs and Apple gives cautious guidance

Stocks at Wall Street registered substantial loses for the second consecutive day on Wednesday, 22 October, 2008. The Dow ended the day with a 514 point drop today following yesterday's 237 point drop. Couple of companies that came out with earning reports announced job cuts on Wall Street today. Market had started the day in the red. Earning reports dominated overall market sentiments. While more companies beat expectations, outlooks, however, leaned negative as companies remained uncertain about the economic environment. All ten sectors posted a loss.

The Dow Jones Industrial Average ended the day down by 514 points, to 8,519. The Nasdaq Composite Index, finished lower by 80 points at 1,615. S&P 500 finished lower by 58 points at 896.78.

All thirty Dow stocks ended in the red led by Aloca. The stocks closed lower by 11%.

Among the major companies that reported earnings today, and topped earnings estimates were Apple, McDonald's and Merck. Merck said that it plans to cut 7,200 jobs, or 13% of its workforce.

AT&T and Boeing were two of the bigger names that missed earnings estimates.

The technology sector witnessed lesser losses due to positive reactions to earnings reports from Apple and Yahoo!.

Apple reported better-than-expected quarterly earnings due to strong iPhone sales. The company's outlook for its current quarter, however, was cautious and was well below the market estimates. On the other hand, Yahoo! reported in-line earnings, and the results were better-than-feared. Yahoo said it plans to cut 1,500 jobs, or 10% of its workforce.

Crude prices fell today, and closed at the $65/barrel level for the first time in eighteen months. Prices fell due to a strong dollar and also after the Energy Department reported a more than expected build up in crude inventories for the week ended 17 October.

Crude-oil futures for light sweet crude for December delivery closed at $66.75/barrel (lower by $5.45 or 7.5%) on the New York Mercantile Exchange. Prices reached a high of $147 on 11 July but have dropped almost 55% since then. On a yearly basis, crude price is lower by 24%. For this year in 2008, crude prices have dropped 34%.

In the currency market on Wednesday, the dollar soared against the euro and the British pound pressured by further fund repatriation and expectations that the European Central Bank and the Bank of England will move to aggressively cut interest rates in coming months. But the greenback slipped against the yen. The dollar index, a measure of the greenback against a trade-weighted basket of six major currencies, traded at 85.602, up from 84.434 on late Tuesday.

Volume on the New York Stock Exchange topped 1.5 billion, and for every stock on the rise, six fell. On the Nasdaq, 1.1 billion shares traded, and decliners topped advancers, also by a 6-to-1 ratio.

Initial jobless claims for the week ending 18 October are due ahead of the opening bell tomorrow. Other than that, earning reports will dominate the day once again.

REC - SELL

We recommend a sell in Rural Electrification Corporation from a short-term perspective. It is apparent from the chart of Rural Electrification that it has been on an intermediate-term downtrend since the day of its listing in March. The stock touched Rs 128, its all-time high on that day and it has been forming lower tops and lower bottoms since then.

However, after recording a life-time low of Rs 62 on October 10, the stock witnessed a corrective up move to Rs 75 level. Due to the presence of significant resistance at around Rs 75 level, the stock failed to surpass this level.

 

On October 22, the stock tumbled 6 per cent accompanied with above average volume. The daily relative strength index (RSI) is on the verge of entering the bearish zone from the neutral region and the weekly RSI is featuring in the bearish zone. The intermediate-term down trendline is intact.

Our short-term forecast for the stock is bearish. We anticipate the stock to decline further until it hits our price target of Rs 63 in the forthcoming trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 74.

via BL

Daily News Roundup - Oct 23 2008

Moody's lowers Tata Steel outlook to negative. (ET)
NTPC plans to raise US$1bn to fund expansion plans. (ET)
TVS Motors to reduce investment by 20% and cut production. (BS)
Ashok Leyland to cut its vehicle output in second half of the current financial year. (BS)
Jet, Kingfisher likely to reduce flight. (ET)
Singapore based PE firm buys into HDIL and Indiabulls Real Estate. (ET)
SAIL to set up steel processing units in Himachal Pradesh and Rajasthan. (DNA)
DLF emerges as sole bidder for developing Mumbai rail land. (BL)
Elder Pharma buys 3 small Bulgarian-based pharma companies. (ET)
Areva T&D bags Bhilai Steel order worth Rs2.2bn. (BS)
Tata Tele Services to roll-out services in J&K and North East region from November. (FE)
JSW Steel and Georgian Steel Holding Group have closed US$28mn debt financing for setting up steel plant in Georgia. (DNA)
Crompton Greaves is considering cutting down its capex budget for this year. (DNA)
HOV services open facility in North California. (BS)
DLF enter into an agreement with Italian apparel brand Alcott and Paris based SIA group to launch them in India. (ET)
HDFC Bank opens a branch in Bahrain. (BS)
Honda India and Hero Honda ventures to jointly source auto parts. (BL)
LIC to launch credit card with Corporation Bank. (FE)Government may pump Rs30bn into 7 public sector banks to shore up their capital adequacy ratio to 12%. (BS)

Government may miss FY09 budget targets for fiscal and revenue deficit. (ET)
Government allows airlines to clear fuel dues owed to oil companies, totaling about Rs30bn in six EMIs. (ET)
Indian Banks ask RBI to ease norms on reserve requirements. (ET)
RBI eases norms on overseas borrowing for Indian companies. (ET)
DoT faces 3G spectrum crunch in 9 other circles. (ET)
Petroleum secretary says government has no immediate plans to cut fuel prices. (ET)
SEBI plans to review direct market access facility rules. (ET)
Government may import 100mn ton of coal to meet the projected demand in the 11th five year plan. (BS)
DoT to meet defence ministry on Oct24 to discuss the issue on spectrum vacation. (DNA)
Banks unlikely to extend credit support to airlines. (BL)

Easy be norms...Borrow and sorrow!

"It is far better to borrow experience than to buy it".

The easing of ECB norms and the crash in crude prices should have brought cheer. Alas, we remain at the mercy of global markets which promise new lows for our indices today. Investors, who have been waiting with cash can look to make some deployment today. And don't forget to get back to cash during a bounce back in the coming days.

We are likely to witness an opening carnage today on the back of another round of vicious sell-off across global markets. Stock markets across the globe have taken a severe beating amid mounting fears of a world-wide recession. Even the commodities have not been spared, with oil prices plumbing to a 16-month low, gold slipping to one-year low and a key commodities index hitting a four-year nadir. The yen is gaining ground against the dollar and euro, suggesting a reversal in the so-called carry trades.

Asian markets have opened sharply lower this morning. We see a gap-down opening despite the RBI announcing further easing in the ECB norms to help Indian companies raise funds abroad amid the crippling credit crisis. FIIs continue to offload money from emerging markets like India as risk aversion is on the rise.

The macro-economic picture too remains grim, with the Prime Minister saying that FY09 GDP growth will be sharply lower from last year and the Finance Minister saying that the targets on fiscal deficit will be missed. A weakening rupee is only adding to the pressure on the domestic liquidity situation and worries for the policymakers.

Meanwhile, the RBI may further relax its monetary stance on Friday, when it undertakes a mid-year review of its annual policy. However, one needs to see what kind of impact it will have on the markets if global markets continue to bleed.

Amidst all this chaos, Reliance, the once upon a time microcosm of the Indian capital market will announce its results.

FIIs were net sellers of Rs5.4bn (provisional) in the cash segment on Wednesday while the local institutions poured in Rs4.04bn. In the F&O segment, the foreign funds were net sellers at Rs7.49bn. On Tuesday, FIIs were net buyers of Rs1.14bn in the cash segment, taking their total outflows this year to above $11.9bn.

US stocks another beating on Wednesday, with the Dow Jones Industrial Average slumping by more than 500 points, as mounting fears of a global recession sparked selloff of equities across the globe as well as commodities.

The S&P 500 index finished at its lowest level in more than five years.

Having sunk by nearly 700 points in the final 15 minutes of trade, the Dow finally tumbled by 514 points, or 5.7%, to end at 8,519.21. Wednesday's point loss was the blue chip American index's seventh worst daily performance ever.

The S &P 500 index nose-dived 58.27 points, or 6.1%, to 896.78, its lowest finish since April 21, 2003, when the S&P ended at 892.01. The Nasdaq Composite index slid 80.93 points, or 4.8%, to 1,615.75, closing at its lowest level since June 26, 2003.

Market breadth was negative. About 24 stocks fell for each that rose on the New York Stock Exchange.

On the positive side, lending rates continue to improve in inter-bank markets, as the efforts of governments to resolve the financial mess starts to kick in. But any relief about the improvement in the credit markets has been overshadowed by recession fears.

US light crude oil for November delivery settled down $5.43 to $66.75 a barrel on the New York Mercantile Exchange, a 16-month low. Oil prices have been dropping since crude peaked at an all-time high of $147.27 a barrel on July 11.

Gasoline prices fell another 3.1 cents overnight, to a national average of $2.858 a gallon. It was the 35th consecutive day that prices have decreased. During that time, prices have fallen by nearly $1 a gallon.

Treasury prices rose, lowering the yield on the 10-year note to 3.59% from 3.70% on Wednesday. COMEX gold for December delivery fell $24.10 to $743.90 an ounce. In currency trading, the dollar rose against the euro and fell against the yen.

Across the Atlantic, markets across European markets slumped for the second straight session amid fresh worries about how earnings will hold up in an environment of economic contraction.

The pan-European Dow Jones Stoxx 600 index dropped 5.1% to 209.57, giving back gains made earlier in the week. For the year, the Stoxx 600 is down over 40%. The UK's FTSE 100 closed down 4.5% at 4,040.89, while Germany's DAX 30 dropped 4.5% to 4,571.07 and the French CAC-40 slid 5.1% to 3,298.18.

Emerging markets too closed sharply down. The Bovespa in Brazil was down 10.2% at 35,069 while the IPC index in Mexico slid 7% to 18,787. The RTS index in Russia slipped 7.2% to 665 and the ISE National 30 index in Turkey was down 4.6% at 31,902.

Markets plunged on Wednesday, reversing previous day's gains. The fall could be attributed to weak global cues and heavy selling witnessed in the metal and realty stocks.

The Asian markets ended sharply lower, with the Hang Seng, Nikkei and the Kospi index dropping over 5%

All the BSE Sectoral indices ended in the red except for the FMCG index. The BSE metal index was the biggest loser down almost 8%. Among the major laggards were Tata Steel and Sterlite Industries, falling more than 10%.

The BSE benchmark Sensex lost 513 points or 4.8% to close 10,169 and the NSE Nifty index declined 169 points to close at 3,065.

Century Textile recovered sharply from day's low and closed at Rs203 after the company registered a net profit for the period of Rs285.50mn for the quarter ended September 30, 2008 as compared to Rs663.70mn for the quarter ended September 30, 2007.

The total income increased from Rs7849.5mn for the quarter ended September 30, 2007 to Rs8721.1mn for the quarter ended September 30, 2008. The stock was down by 1.5% at Rs203 touching an intra-day high of Rs211 and a low of Rs186 and recorded volumes of over 8,00,000 shares on BSE.

Shares of UTV Software rallied by over 10% in October Futures to Rs330 as compared to flat in cash market. A huge gap of Rs285 was created between the spot and the current Futures prices.

In the cash market the scrip touched an intra-day high of Rs620 and a low of Rs599 and recorded volumes of over 93,000 shares on NSE. The stock had hit 52-week high of Rs1132 on December 13, 2007 and 52-week low of Rs592 on October 21, 2008.

Gemini Comm slipped by 1% to Rs18. The board of directors of the company approved Buy back up to 10% equity shares capital and reserve of the Company. The scrip touched an intra-day high of Rs19.3 and a low of Rs18.1 and recorded volumes of over 24,000 shares on BSE.

Educomp Solutions announced consolidated results for the Quarter ended September 30, 2008

The Group posted a profit after tax of Rs288mn (up 121%) for the quarter ended September 30, 2008 as compared to Rs131mn for the quarter ended September 30, 2007. Total Revenue increased by 150% to Rs1429.925 million for the quarter ended September 30, 2008 from Rs568.933 million for the quarter ended September 30, 2007.

The stock dropped by over 11% to Rs1829 hitting an intra-day high of Rs2040 and a low of Rs1811 and recorded volumes of over 3,00,000 shares on BSE.

Real Crisis for real estate employees

DLF, Unitech, Omaxe, Parsvnath and BPTP plan to lay off staff in significant numbers soon after Diwali

Developers wait for Diwali to get over as they don't want to dampen sentiments further

Post Session Commentary - Oct 22 2008

Indian market snapped its two days of gain and tumbled due to huge selling across the board. Weakness continued during the trading session on the back of weak global cues and sustained selling by foreign funds. Along with that fears of recession and deteriorating corporate earnings dragged down equity markets all over the world. Domestic markets opened sharply lower tracking nervousness in global markets. The US markets fell on sharp sell off and on feeble earnings. Market slipped further on the back of profit booking as well as weak Asian markets. Further, stocks continued to trade sharply lower to end with huge losses. BSE Sensex ended below 10,200 level along with NSE Nifty below 3,100 mark. On the sectoral front, most of the indices remained under pressure and among those, Metal, Oil & Gas, Capital Goods, Bank and IT stocks witnessed most of the selling from these baskets. However, FMCG stocks were in limelight. Profit booking was also witnessed in Midcap and Smallcap stocks.

Among the Sensex pack 28 stocks ended in negative terrain while 2 in positive. The market breadth was negative as 1733 stocks closed in red while 778 stocks closed in green and 77 stocks remained unchanged.

The BSE Sensex closed lower by 513.49 points at 10,169.90 and NSE Nifty ended down by 169.75 points at 3,065.15. The BSE Mid Caps and Small Caps closed with losses of 96.85 points 3,490.39 and by 84.59 points at 4,111.69. The BSE Sensex touched intraday high of 10,484.85 and intraday low of 10,128.22.

Losers from the BSE Sensex pack are Tata Steel (12.04%), Sterlite Industries (10.04%), Reliance Communication Ltd (8.79%), ICICI Bank (8.04%), JP Associates (7.88%), Tata Motors (7.87%),), Bharti Airtel (7.76%), M&M Ltd (7.14%), ACC Ltd (7.11%), SBI (6.56%), Wipro Ltd (5.61%) and Reliance Infra (6.37%).

The BSE Metal index ended down by 482.31 points at 5,619.45. Major losers are Tata Steel (12.04%), Sterlite Industries (10.04%), Jindal Steel (9.45%), Nalco (9.10%), Steel Authority (7.13%) and Wespan Gujarat Sr (6.89%).

The BSE Oil & Gas index plunged 376.70 points to close at 6,397.58. Major losers are Cairn Ind (9.64%), BPCL (8.15%), Gail India (7.05 %), HPCL (6.85%), Reliance Petroleum (5.97%) and Reliance (5.83%).

The BSE Bank index lost 337.65 points to close at 5,504.58 as Bank of Baroda (8.53%), ICICI Bank (8.04%), Union Bank (7.73%), SBI (6.56%), Bank of India (6.41%) and Punjab National Bank (5.78%) in negative territory.

The BSE Capital Goods index closed lower by 336.49 points at 7,226.93. Losers are Areva (80.35%), Usha Martin (12.37%), Praj Industries (9.18%), ABB Ltd (8.26%), Gammon Indi (8.01%) and Suzlon Energy (7.16%).

The BSE Reality index ended down by 199.23 points at 2,433.70. Losers are Indiabull Real (12.75%), Phoenix Mill (12.42%), Anant Raj (11.63%), Unitech Ltd (9.87%), Parsvnath (8.98%) and Mahindra Life (7.41%).

The BSE FMCG index gained 12.20 points to close at 1,969.56 as United Spr (5.08%), ITC Ltd (1.04%), HUL (0.50%) and Colgate Palm (0.41%) ended in positive territory.

BSE Bulk Deals to Watch - Oct 22 2008

Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
22/10/2008 531223 ANJANI SYNTH RAKESH NIRANJANLAL AGARWAL B 106000 16.35
22/10/2008 533016 AUSTRAL COKE AAKARSHAN TRACON PRIVATE LIMIT S 185000 68.45
22/10/2008 531216 COMFORT INTC MADINA GULAMALI GHEEWALA B 55000 18.83
22/10/2008 512047 NATRAJ FIN PARACHIT SALES MKT SERVICES B 30000 33.00
22/10/2008 512047 NATRAJ FIN MANDVI DYES AND CHEMICALS PVT B 30000 33.00
22/10/2008 512047 NATRAJ FIN DASH PHARMACEUTICALS PVT LTD B 30000 33.00
22/10/2008 512047 NATRAJ FIN TUTIS TECHNOLOGIES LIMITED B 30000 33.00
22/10/2008 512047 NATRAJ FIN RAJENDRAKUMAR G LAHOTI HUF S 75000 33.00
22/10/2008 506590 PHIL CAR BLK GRANTHAM ACCOUNT GMO EMERGING MARKET F B 139300 97.10
22/10/2008 511730 TRC FINAN SE MAXSOL FINANCIAL CONSULTING PVT LTD B 25000 10.15
22/10/2008 532765 USHER AGRO R U RAMCHANDANI B 101730 130.16

NSE Bulk Deals to Watch - Oct 22 2008

Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
22-OCT-2008,20MICRONS,20 Microns Limited,PRASHANT JAYANTILAL PATEL,BUY,172,21.23,-
22-OCT-2008,ASIANELEC,Asian Electronics Ltd,PRASHANT JAYANTILAL PATEL,BUY,203557,35.01,-
22-OCT-2008,HDIL,Housing Development and I,GENUINE STOCK BROKERS PVT LTD,BUY,1417843,148.91,-
22-OCT-2008,IBREALEST,Indiabulls Real Estate Li,ORIENT GLOBAL CINNAMON CAPITAL LIMITED,BUY,1300000,125.72,-
22-OCT-2008,MASTEK,Mastek Ltd,NALANDA INDIA FUND LIMITED,BUY,1400000,217.50,-
22-OCT-2008,PAGEIND,Page Industries Limited,NALANDA INDIA FUND LIMITED,BUY,97500,423.34,-
22-OCT-2008,20MICRONS,20 Microns Limited,PRASHANT JAYANTILAL PATEL,SELL,75172,20.88,-
22-OCT-2008,ASIANELEC,Asian Electronics Ltd,MERRILL LYNCH CAPITAL MARKETS ESPANA S.A. SVB,SELL,180000,31.59,-
22-OCT-2008,ASIANELEC,Asian Electronics Ltd,PRASHANT JAYANTILAL PATEL,SELL,203557,31.34,-
22-OCT-2008,AUSTRAL,Austral Coke & Projects L,AAKARSHAN TRACON PRIVATE LIMITED,SELL,224804,69.49,-
22-OCT-2008,HDIL,Housing Development and I,GENUINE STOCK BROKERS PVT LTD,SELL,1417843,148.99,-
22-OCT-2008,MASTEK,Mastek Ltd,KOTAK MAHINDRA INTERNATIONAL LTD,SELL,1400000,217.50,-

Market drubbed over 500 pts

The market witnessed an across-the-board selling, as the sentiment remained bearish on the back of liquidity squeeze in the domestic market and a sharp fall in the Asian indices. Sustained selling in metal, realty and banking stocks too added pressure on the domestic indices. The major Asian indices like Hang Seng (Hong Kong), Kospi (South Korea), Straits Times (Singapore) and Nikkei (Japan) shed over 5-6% each. After resuming 228 points below its previous close at 10,683, the market remained under the grip of sustained selling pressure. Extensive correction in heavyweights and index pivotal stocks towards the close dragged the index to the day's low of 10,128. The Sensex finally ended the session at 10,170, down 513 points, while Nifty shed 170 points to close at 3,065.

All the sectoral indices were hammered on the back of relentless selling pressure. The BSE Metal dropped 7.90% at 5,619, BSE Realty lost 7.57% at 2,433, BSE Bankex shed 5.78% at 5,504 and BSE Oil & Gas fell 5.56% at 6,398. The broader market was weak. Of the 2,588 stocks traded on the BSE, 1,732 stocks declined whereas 780 stocks advanced. Seventy six stocks ended unchanged.

Except ITC and Hindustan Unilever, all the stocks in the Sensex basket ended in the red. Among the major losers, Tata Steel tanked 12.04% at Rs244.80, Sterlite Industries tumbled by 10.04% at Rs265.10, Reliance Communications declined by 8.79% at Rs235.50, ICICI Bank slumped 8.04% at Rs396.45, Jaiprakash Associates fell 7.88% at Rs72.50, Tata Motors plunged 7.87% at Rs228.25, Bharti Airtel dropped 7.76% at Rs667.40, Mahindra & Mahindra slipped by 7.14% at Rs379.35 and ACC was down 7.11% at Rs452.15. Other front-line stocks were down 4-6% each.

HDIL witnessed volumes of over 99 lakh shares on the BSE followed by Chambal Fertilisers and Chemicals (79 lakh shares), IFCI (65 lakh shares), Reliance Petroleum (61 lakh shares) and Reliance Natural Resources (59 lakh shares).

Nifty October 2008 futures below 3100

Turnover increases

Nifty October 2008 futures were at 3051, at a discount of 14.15 points as compared to spot closing of 3065.15. NSE's futures & options (F&O) segment turnover was Rs 50,046.83 crore, which was higher than Rs 49,845.05 crore on Tuesday, 21 October 2008.

NTPC October 2008 futures were at discount at 143.85 compared to the spot closing of 144.30.

Reliance Industries (RIL) October 2008 futures were at discount at 1312.90 compared to the spot closing of 1316.80.

Bharti Airtel October 2008 futures were at 666.75, near the spot at closing of 666.25.

In the cash market, the S&P CNX Nifty lost 169.75 points or 5.25% at 3065.15.

Asian markets shattered as wall street sinks deeper

Shanghai, Hang Seng extend losses while Nikkei also enters the losers club with 6.7% fall

The stock markets across the Asian region closed lower after Wall Street fell overnight on profit taking from recent sharp rises and recession fears following disappointing earnings reported by big name companies such as Dupont, Caterpillar, and Texas Instruments. The Dow Jones Industrial Average ended the day down by 231 points, to 9,033. The Nasdaq Composite Index finished lower by 73 points at 1,696. S&P 500 finished lower by 30 points at 955.

Crude oil prices fell for a second day after the U.S. dollar climbed to a 20-month high against the euro, reducing the appeal of commodities as a hedge. Crude oil for December delivery declined as much as $3.28, or 4.5%, to $68.90 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $69.10 a barrel at 2:33 p.m. Singapore time. The November contract expired yesterday, after declining $3.36 to settle at $70.89 a barrel. Prices, which have tumbled 53 percent from the record $147.27 on July 11, are down 21 percent from a year ago.

In currency trading, the U.S. dollar fell against the Japanese yen. The U.S. dollar fell to the mid 99-yen levels in late Tokyo deals from the lower 100-yen range in early trade and lower 101-yen levels late Tuesday in Tokyo. The Japanese yen also gained against the euro.

The Australian dollar closed down 3.28% as ongoing fears about a global recession dragged commodity prices and high-yielding currencies lower. The Aussie finished the domestic session at US$0.6687-0.6692, down from Tuesday's close of US$0.6914-0.6919.

The New Zealand dollar fell against the U.S. dollar ahead of the Reserve Bank of New Zealand's interest rate decision. The central bank is expected to cut the official cash rate by 100 basis points. The kiwi finished the domestic session at US$0.6020, down from US$0.6144 in early trade and US$0.6178 late Tuesday.

The South Korean won fell 3.1% against the dollar. The won finished the session at 1,362.0-1,363.1 a dollar, after hitting a low of 1,399.9 a dollar, its weakest since October 10, compared to Tuesday's domestic close of 1,320.1 a dollar.

The Philippines peso edged down to a new 18-month low against its US counterpart today morning in Asia. The peso plunged to 48.6650 against the US dollar, compared to yesterday's close of 48.1750.

Coming back in equities, the Japanese stock market tumbled nearly 7%, ending its three-day winning streak. Worries about the grim outlook for Japanese firms' earnings and a stronger yen dented investor sentiment. The market opened lower following an overnight retreat on Wall Street, but Japanese stocks widened their losses in the afternoon on a flurry of bad news that aggravated fears about the global slowdown. The benchmark Nikkei 225 Stock Average plunged 631.56 points or 6.79% to end at 8,674.69, posting its biggest loss in a week, and the broader Topix index of all first-section issues lost 67.41 points or 7.05% to 889.23.

On economic front, all industry activity index, which captures the monthly change in overall production by all industries of the Japanese economy, fell 1.8%. The indices of all industry activity except agriculture, forestry and fisheries declined 1.8% in August as compared to a 0.8% rise in July. Indices of Industrial Production plunged 4.1%, while indices of building work and indices of tertiary industry activity declined 2.4% and 1.4% respectively in the month of August as against the previous month.

In Mainland China, the benchmark index closed sharply lower after some key companies reported weaker-than-expected quarterly earnings, heightening worries about the impact of the global slowdown. In addition to this yesterday, the Ministry of Finance and the State Administration of Taxation said in a joint statement that China will raise export rebates on textiles, toys and apparel and some other products next month to support exporters amid declining external demand. The Shanghai Composite Index finished lower for a second day, down 62.71 points or 3.20% to end at 1,895.82 while the Shenzhen A-share Index fell 8.84 points or 1.62 pct to 536.53.

In Hong Kong, the Hang Seng Index struggled for a came back in the positive territory closing the day in negative territory. The benchmark index closed down by 5.15% at 14,266.50, while the Hang Seng China Enterprises Index slumped by 7.79% to 6,700.87.

The Australian stock market plunged more than 3% on profit taking after posting sharp gains in the previous two trading sessions. The key S&P/ASX index lost most of the previous session's gains, led by BHP Billiton and Westfield. The benchmark S&P/ASX200 index closed down 146.4 points, or 3.4%, at 4,156.1, its lowest point for the day. The broader All Ordinaries index lost 131.4 points or 3.1% to 4,120.0.

On the economic front, Australia's rate of inflation increased by more than expected in the third quarter. The Australian Bureau of Statistics reported that the country's Consumer Price Index for the three months to September increased 1.2% over the previous quarter. Annually, CPI grew to 5.0%.

The New Zealand stock market closed sharply lower, ending a three-day winning streak. The benchmark NZX 50 index closed down 52.62 points or 1.78% at 2,899.40 after surging 2.15% on yesterday. The broader NZX All Capital index shed 40.21 points or 1.34% to 2,953.46.

On the economic front, Statistics New Zealand reported that visitor arrivals in September dropped 7.0% to 157,700 from the 168,800 reported for September 2007. For the full year to September 2008, there were 2.469 million visitor arrivals, down 6,200 or less than 1% from the previous 12-month period. New Zealand resident departures were down 8.0% compared to September 2007.

The South Korean stock market plunged more than 5% to a new three year-low on deepening economic fears, extending its modest losses registered yesterday. The benchmark Korea Composite Stock Price Index or Kospi closed down 61.51 points or 5.14% at 1,134.59 points, its lowest close since September 6, 2005. In intraday trading, the key index fell more than 8% to hit a low of 1,095.56. The Kospi has shed 22% over the month, and is down 40% from the year's high of 1,901 hit in mid-May.

In Taiwan, Taiex - the benchmark index continued to remain below the key 5,000 points level breaching the previous five-year low level. The weighted index closed down 80.13 points or 1.62% at 4,862.59 - the lowest level since 11 June 2003 when it ended at 4,804.65 points. The market was distracted by fears that an anti-government demonstration planned by the opposition for Saturday could turn violent.

On the economic front, Taiwan's unemployment rate was 4.27% in September, versus 4.14% in August and 3.99% in September 2007, the Directorate General of Budget, Accounting and Statistics (DGBAS) said. In the first nine months of the year, unemployment averaged 3.96%, versus 3.92% a year earlier. On a seasonally adjusted basis, the September unemployment rate was 4.12%, compared with 3.93% in August and 3.89% a year earlier.

In Malaysia, the Kula Lumpur composite index was down by 13.88 points or 1.51% at 904.28. On economic front, the international reserves of Bank Negara Malaysia amounted to RM371.8 billion, equivalent to USD107.6 billion as on 15 October 2008, 2% down from RM379.3 billion as recorded on 30 September 2008. The reserves position is sufficient to finance 8.7 months of retained imports and is 4 times the short-term external debt.

In India, the weakness prevailed on the regional bourses in mid-afternoon trade on declined in global markets, cautious outlook by IT firm Wipro and sustained selling by foreign funds. At 15.20 IST the BSE Sensex was down 522.16 points or 4.86%. The S&P CNX Nifty was down 5.33% to 3,062.40.

Elsewhere, the Philippines stock market tumbled 1.12% or 23.73 points to 2,093.01 while Singapore Strait Times was trading lower by 99.66 points or 5.19% trading at 1,821.13.

In other regional markets, European shares fell with commodity-sector firms leading decliners as BHP Billiton added to growing evidence that the global economy continues to deteriorate.

The U.K. FTSE 100 index fell 1.9% to 4,150.07, the German DAX 30 index dropped 2.5% to 4,662.77 and the French CAC-40 index slid 2.5% to 3,389.53.

Market tumbles as Asian stocks slump on global recession worries

The market gave away a large part of the last two days' gains on weak global markets, cautious outlook by IT firm Wipro and sustained selling by foreign funds. The BSE Sensex slumped 513.49 points or 4.81%. Though in the red, both the both the BSE Mid-Cap and Small-Cap indices outperformed the Sensex.

Index heavyweight Reliance Industries fell more than 5.5%. Tata Steel fell more than 12% after Moody's Investors Service lowered outlook on corporate family rating to negative from stable. Sterlite Industries fell more than 10%. The market breadth was weak.

IT stocks fell on Wipro's cautious outlook at the time of announcing Q2 results before trading hours. Metal stocks declined sharply on weak global metal prices. Banking stocks fell in weak market after recent gains triggered by the central bank's repo rate cut.

Down 6.79%, Japanese stocks led decline in Asian equities as poor US corporate results and falling commodity prices fanned worries of a protracted global economic slowdown. Stocks in Hong, China, Singapore, South Korea and Taiwan were down by bewteen 1.62% to 5.07%.

European markets which opened after Indian market, fell on global recession worries. Key benchmark indices in France, Germany and UK fell by between 3.51% to 3.69%. Trading in US index futures suggested the Dow would fall 185 points at the opening bell.

The BSE 30-share Sensex lost 513.49 points or 4.81% to 10,169.90. The Sensex fell 555.17 points at day's low of 10,128.22 in late trade. The index declined 198.84 points at the day's high of 10,484.85 in early trade.

The S&P CNX Nifty was down 169.75 points or 5.25% to 3,065.15.

After an earlier steep slide, the Sensex had risen 708.04 points or 7.09% in two trading sessions to 10,683.39 on Tuesday, 21 October 2008, from its close of 9,975.35 on 17 October 2008, boosted by a repo rate cut by the central bank and on short covering on the stock market regulator's warning to foreign funds against overseas lending of shares.

There has been a massive erosion in investors' wealth this year. The barometer index is down 10,117.09 points or 49.86% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11,036.87 points or 52.04% below its all-time high of 21,206.77 struck on 10 January 2008.

BSE clocked a turnover of Rs 3,087 crore today as compared to a turnover of Rs 3,882.49 crore on 21 October 2008.

Nifty October 2008 futures were at 3051, at a discount of 14.15 points as compared to spot closing of 3065.15. NSE's futures & options (F&O) segment turnover was Rs 50,046.83 crore, which was higher than Rs 49,845.05 crore on Tuesday, 21 October 2008.

The BSE Mid-Cap index was down 2.7% at 3,490.39 and the BSE Small-Cap index was down 2.02% at 4,111.67. Both the indices outperformed the Sensex.

BSE Metal index (down 7.9% to 5,619.45), BSE Realty index (down 7.57% to 2,433.70), BSE Bankex (down 5.78% to 5,504.48), BSE Oil & Gas index (down 5.56% to 6,397.58), BSE Teck index (down 5.37% to 2,160.07) underperformed the Sensex.

BSE FMCG index (up 0.62% to 1,969.56), BSE HealthCare index (down 3.16 % to 3,199.32), BSE Consumer Durables index (down 3.63% to 2,189.33), BSE IT index (down .4.01% to 2,790.27), BSE PSU index (down 4.22% to 5,046.33), BSE Power index (down 4.27% to 1,676.62), BSE Auto index (down 4.42% to 2,985.16), BSE Capital Goods index (down 4.45% to 7,226.93), underperformed the Sensex.

The market breadth was weak. On BSE, 778 shares advanced as compared to 1733 that declined. 77 shares remained unchanged.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 5.83% to Rs 1,315.55, ahead of Q2 September 2008 result tomorrow, 23 October 2008. The Bombay High Court, on Tuesday, 21 October 2008, allowed the central government to implead itself in the RIL-Reliance Natural Resources (RNRL) case on gas supply after RNRL said it had no problem to the government being a party in the matter. The hearing of the case is now likely to continue after Diwali vacation.

Jaiprakash Associates (down 7.88% to Rs 72.50), ACC (down 7.11% to Rs 452.15), Larsen & Toubro (down 5.34% to Rs 815.15) were the major losers from the Sensex pack.

Reliance Infrastructure fell 6.56% despite 15.5% rise in net profit to Rs 288.97 crore on 51.11% rise in total income to Rs 2674.86 crore in Q2 September 2008 over Q2 September 2007.

Metal stocks declined on slump in metal prices on the London Metal Exchange. The BSE Metal index was down 7.9% and was the major loser from the sectoral indices on BSE. Sterlite Industries, Hindustan Zinc, National Aluminum Company, Steel Authority of India and Tata Steel fell by between 7.13% to 10.04%.

India's largest steel maker by sales Tata Steel fell 12.04% after Moody's Investors Service lowered outlook on corporate family rating to negative from stable. The change in outlook reflects the more challenging operating conditions now facing Tata Steel UK as a result of the likely deterioration in demand in Europe and the UK in the next 18 months, with declining steel prices and reduced production volumes. Tata Steel, will declare Q2 September 2008 results on 24 October 2008.

India's largest aluminum maker by sales Hindalco Industries skidded 5.67% reports it may sell a part of its Rs 2,081.34-crore stake in group companies, including Grasim Industries, Idea Cellular and Aditya Birla Nuvo, to raise funds to repay a part of the $3-billion bridge loan it obtained to buy Novelis.

Telecom stocks fell on reports telecom firms may have to shell out Rs 6,000 crore for failing to verify their customers. India's largest telecom services provider by market share Bharti Airtel fell more than 7.5%. India's second largest telecom services provider by market capitalisation Reliance Communications fell more than 8.5%. The government on Monday, 20 October 2008, announced that it would impose a fine of Rs 1,000 for every unverified subscriber.

Banking majors fell after recent gains on hopes lower rates will boost lending. ICICI Bank, HDFC Bank and State Bank of India fell by between 3.64% to 8.04%. The BSE's banking sector index Bankex declined 5.57%. ICICI Bank, State Bank of India and HDFC Bank have a weightage of 24.21%, 22.44% and 20.55%, respectively, in the Bankex.

Yes Bank was almost fell 2.92% in an otherwise weak market, as net profit jumped 40.50% to Rs 63.62 crore in Q2 September 2008 over Q2 September 2008.

Bank of India declined 6.41% after providing for Rs 108.60 crore on account of exposure to troubled US investment bank Lehman Brothers, in Q2 September 2008.

Power Finance Corporation fell 0.09% even on 16.70%rise in net profit to Rs 329.33 crore in Q2 September 2008 over Q2 September 2007.

The Reserve Bank of India cut repo rate by 100 basis points to 8% on 20 October 2008. The repo rate is the rate at which the RBI provides funds to banks against the collateral of government bonds for a day to three days.

IT stocks slumped on overnight fall in American depository receipts (ADRs) and on cautious outlook by IT major Wipro. Weak rupee which augurs well for the sector did not stem the slide. The BSE IT index fell 4.37%.

India's fourth largest IT exporter by sales Wipro fell 5.79% after it said the outlook is cautious in the near term given the extent of strain on the global economy. Wipro ADR fell 2.87% on Tuesday, 21 October 2008, ahead of the results. Wipro reported 56.13% spurt in net profit to Rs 852.50 crore on a 15.48% increase in total income to Rs 5551.60 crore in Q2 September 2008 over Q1 June 2008.

India's third largest IT exporter by sales Satyam Computer Services lost 2.93%. Its ADR skidded 1.63% overnight. The company raised its earnings guidance in rupee terms at the time of announcing Q2 September 2008 results on Friday, 17 October 2008.

India's second largest IT exporter by sales Infosys fell 3.56%. Infosys ADR lost 5.21% overnight. India's largest IT services provider by sales Tata Consultancy Services lost 2.63%, ahead of Q2 results today.

Infosys, Satyam Computer Services, Tata Consultancy Service and Wipro have a weightage of 55.06%, 16.01%, 10.45% and 7.09%, respectively, in the BSE IT index.

Tech Mahindra rose 1.3% as net profit rose 16.36% to Rs 295.98 crore in Q2 September 2008 over Q1 June 2008.

Compucom Software surged 4.93%, on proposal to consider issue of bonus shares.

Geodesic rose 2.93% as net profit jumped 23.54% to Rs 48.95 in Q2 September 2008 over Q1 June 2008.

Educomp Solutions tumbled 11.47% on BSE, on profit taking, as net profit soared 51.40% to Rs 25.39 crore in Q2 September 2008 over Q1 June 2008.

The rupee weakened to a record low against the dollar on Wednesday as losses in the stock market fuelled concerns more foreigners would likely pare their risk exposure and repatriate investments. At the Interbank foreign exchange (Forex) market, the rupee, which ended steady at 49.00/49.01 yesterday, fell by 25 paise to 49.25 against the greenback.

PSU OMCs fell despite crude oil falling nearly $3 to hit a one-week low below $70 a barrel and extending a 4% slide in the previous session, on mounting worries that output cuts by Organisation of Petroleum Exporting Countries (OPEC) will not be enough to offset slackening energy demand. BPCL, HPCL and Indian Oil Corporation fell by between 2.09% to 8.15%. Lower oil prices will reduce underrecoveries at the state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price

Bongaigaon Refinery & Petrochemicals slumped 7.23%, on slipping into the red in Q2 September 2008

Most realty stocks declined today after yesterday's rise despite hopes cut in lending rates will spur demand for residential properties. The BSE Realty index fell 7.57% and was the second major loser from the sectoral indices on BSE. Realty majors, DLF, Indiabulls Real Estate Unitech fell by between 5.05% to 12.75%.

BSE FMCG index rose 1.26% and was the only gainer from the sectoral indices on BSE. United Spirits, Hindustan Unilever and REI Agro rose by between 0.05% to 5.08%. India's largest cigarette maker by sales ITC rose 3.05%. The company will announce the Q2 September 2008 result on 24 October 2008.

Rate sensitive auto stocks fell despite hopes rate cuts would spur auto demand which is largely driven by finance. Maruti Suzuki India, Mahindra & Mahindra, Hero Honda Motors declined between 1.95% to 7.14%.

India's largest commercial vehicle maker by sales Tata Motors declined 4.94% on reports of missing its original Nano rollout deadline of October-December 2008.

Ashapura Minechem dropped 19.7% on reports the company faces three lawsuits in New York federal court seeking a total of more than $47 million.

Reliance Natural Resources declined 3.43% on BSE on muted growth in net profit in Q2 September 2008.

Kirloskar Brothers jumped 7.41% on its consortium winning an order worth Rs 1446 crore, with the company's share pegged at Rs 270 crore.

Pantaloon Retail India gained 0.07% as net profit surged 21.90% to Rs 36.18 crore in Q1 September 2008 over Q1 September 2007.

Champagne Indage was locked at lower limit of 5%, a 52-week low on plan to raise up to Rs 120 crore.

Max India provisionally ended down 6.57% as net profit declined 30.67% to Rs 11.73 crore in Q2 September 2008 over Q2 September 2007.

Piramal Healthcare fell 7.57% as net profit fell 14.2% to Rs 69.44 crore on 19.7% rise in total income to Rs 636.9 crore in Q2 September 2008 over Q2 September 2007.

Housing Development & Infrastructure clocked the highest volume of 99.89 lakh shares on BSE. Chambal Fertilisers & Chemicals (79.51 lakh shares), IFCI (65.13 lakh shares), Reliance Petroleum (61.34 lakh shares), Reliance Natural Resources (59.23 lakh shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 189.32 crore on BSE. Reliance Capital (Rs 169.53 crore), ICICI Bank (Rs 149.63 crore), Housing Development & Infrastructure (Rs 148.64 crore) and State Bank of India (Rs 135.48 crore) were the other turnover toppers in that order

Redington India

Investors willing to bet on the strong domestic and Middle-East's IT (hardware and software) adoption story can consider buying the shares of Redington India, a hardware, software products and digital products distributor. At Rs 192, the stock trades at 10 times its likely 2008-09 earnings.

In the absence of listed peers and its strong positioning in the domestic IT market, the stock is attractive at these levels. The stock has come down from 27 times its historic earnings in January this year to the current levels.

Redington is the distributor for a range of IT products such as personal computers, laptops, servers, networking products and packaged software. It has vendor relationships with all the major names in this segment such as HP, HCL Infosystems, Acer, IBM, Intel and Cisco. This segment contributes over 85 per cent of its revenues.

The company has also started distributing products such as mobile handsets of Nokia, Microsoft X-Box, Apple iPods, Mac and consumer electronic products.

Redington's revenues have grown at a compounded annual rate of 39 percent over the three years to Rs 10,883 crore in 2007-08, while net profits grew at a CAGR of 47.5 per cent to Rs 136 crore. The business is reliant on volumes and offers wafer-thin margins.

Though they remain narrow, Redington's net profit margins have improved (from 0.69 per cent to 1.25 percent in the last five years) due to the reselling of better margin products such as networking products, lifestyle gadgets and contributions from improved after-sales and post-warranty service.
IT Products drive growth

Redington generates 53 per cent of its revenues domestically, and the rest from South East Asia, West Asia and Africa. The company's customer base is now at 14,458 corporate clients, spread across as many as 44 brands and caters to a wide range of sectors.

Players such as HP and HCL Infosystems, and Wipro that dominate the domestic PC market, have continued to have strong relationship with Redington, thus assuring it of sustained volume growth.

According to a recent IDC report, the domestic IT hardware market is set to grow at an annual rate of 14.6 per cent to Rs 96,558 crore by 2012, while the packaged software segment is set to grow at a rate of 20.9 per cent to Rs 21,129 crore, representing a huge opportunity for players such as Redington. Increased Governmental spending on IT-enablement across the country is another important growth driver for the company.

The prospects are especially good for the better margin laptops, which have outpaced desktops in terms of sales growth in India and West Asia. The growth prospects for West Asia and the African region are equally impressive for IT hardware and software.

Redington, with its relationship with all the big names in the IT business, would be well placed to tap this opportunity.

In addition to hardware, the company has begun to resell packaged software as well and has tied up with players such as Adobe to distribute their products in India. This could usher in better margins, as does the expansion into networking and data storage products.

The company has also diversified into distribution of non-IT products such as mobile handsets of Nokia in Africa and other digital and consumer electronic products across India and West Asia. This segment contributes less than 10 per cent of the current revenues and may serve as a good diversification strategy over the long run.
Services business and other ventures

Redington has also added to its offerings, high-end repair, warranty and post-warranty services. These are aimed at capturing annuity-based revenues, in addition to hardware sales. This apart, Redington has leveraged on its existing distribution network to venture into third-party logistics and has acquired spaces in Chennai, Delhi and Kolkata and Dubai.

This division already has a few clients and hopes to target manufacturing companies for transporting their goods to retailers/other distributors. The company has already automated its distribution centres and additional clients may help the company optimise costs by better utilisation of space.

Both these ventures are at a nascent stage and do have the potential to scale up in the future.

Earlier this year, the company also started its NBFC operations to finance its channel partners. The division has already disbursed around Rs 477 crore and has reported profits for 2007-08. Given the long association with channel partners, Redington would be well aware of the credit quality of its borrowers, reducing the risk of default.
Risks

Competition from other bulk distributors such as Ingram Micro and Synnex Corporation is a threat. The company's interest costs are going up. But the interest coverage has improved in 2007-08 compared to the previous fiscal (2.5 times compared to 2 times).

But in the light of the high interest rate scenario, maintaining effective working capital management could be a challenge.

HDFC Bank

Investors can consider accumulating the HDFC Bank stock with a two-year perspective, given the bank's resilience in a challenging environment and scope for strong growth in earnings.

At the current price of Rs 1,026, HDFC Bank is trading at 19 times its estimated earnings per share for 2008-09 and 3.2 times historic book value. Best-in-industry Net Interest Margins (NIMs) which provide a cushion against rising costs, a high proportion of low-cost deposits and an extensive branch network that can drive advances growth, make the stock a preferred exposure in the banking space.

After including the effect of the Centurion Bank of Punjab (CBoP) merger, HDFC Bank posted a profit growth of 44 per cent, backed by net interest income growth of 66 per cent in the September quarter. NIMs at 4.2 per cent increased due to a hike in lending rates effected this quarter; the impact of this will be sustained over the next few quarters. Deposit growth was strong at 46.7 per cent, with the proportion of Current Account Savings Account at 44 per cent. The recent CRR cut will also release around Rs 3,300 crore to fund growth plans.

Over the past two quarters, strong topline growth for the bank has not translated into equivalent profit growth. The CBoP merger has increased operating costs and reduced asset quality, and added a higher proportion of retail loans. However, as the integration of CBoP takes shape over the next one year, the expansion in the branch network and asset portfolio may help ramp up the bank's growth.

HDFC Bank's successful integration of Times Bank in the past induces confidence on this score. The bank's branch network has expanded 85 per cent post-merger, with a presence in 200 cities added over a year. With this, HDFC Bank's branch network rivals its peer ICICI Bank, but its advances are less than half its rival's levels, suggesting untapped potential.

A high proportion of retail advances (54.7 per cent) is a matter of concern, making the bank more vulnerable to asset quality slippages in a high interest rate scenario. However, macro indications suggesting a peaking of rates and the bank's ability to limit slippages over the past two quarters are the positives. The net NPA to advances ratio remains at a comfortable 0.57 per cent, with the provision coverage on NPAs at 65 per cent. HDFC Bank's capital adequacy ratio at 11.4 per cent is relatively low. But conversion of warrants issued to the promoter, which expire in December 2009, may infuse Rs 3,600 crore and may improve this ratio.

via BL

A Bad year for IPOs

Even as late as June this year, investors in initial public offers (IPOs) continued to be better off than those who dabbled in the secondary market. Smaller IPOs continued to deliver good listing gains, even while selecting stocks in the secondary market became a much more difficult proposition.

But the vicious downswing in the market over the past three months has well and truly blown the froth off the IPO market. Not just the new ones, but even ones that were listed over the past year have all plunged below their offer price. Seventy-six of the 83 IPOs that listed between March 2007 and March 2008 are now available below their offer price.

Here are the lessons from those 83 IPOs (recent ones were excluded as the time window would be insufficient to draw conclusions).

Of the total 96 initial public offers in the period, 13 were withdrawn. The remaining 83 IPOs were considered for this analysis. For performance study, price movement from the listing date to October 15 was considered.
Should have sold on first day

One common lesson for investors from IPOs in this period is that, irrespective of the quality of the issuer, you would have fared better had you booked gains on the listing day. Holding these stocks in expectation of better gains in the secondary market would have resulted in sharp erosion in value. Fifty-two of the 83 stocks that debuted in the period closed in the green on listing day. Of these, 22 listed at a price which clocked a 50 per cent gain over their issue price.

However, of the 83 stocks only one (Allied Digital) currently trades at a price higher than its listing price; all others have fallen from their Day One prices. On the other hand, of those that had a bad listing, only three — Koutons Retail, Page Industries and Bang Overseas — made gains in the days following listing. The wait was not worth it for the others.

If stocks gave away much of the gains made on listing, a good number of them also plunged below their issue prices. As many as 76 IPO stocks are trading below their offer price now. When it comes to the extent of losses, the quality of the business didn't matter much — IPOs from quality businesses, such as BGR Energy, Transformers and Rectifiers and Edelweiss Capital, were among the worst performers — their prices beaten down by over 70 per cent.

The extent of decline in stock prices shows that the pricing for IPOs in a bull market tends to factor in premium valuations and probably assume best scenarios for these businesses, resulting in high downside risk.

Better bet than listed peers

Would investors have been better off picking stocks from the secondary market as compared to the IPO? The answer is still 'no'. Though IPOs have put up a dismal performance, they have still fared marginally better than peers from the same sector in the secondary market. A study of 30 prominent IPOs in this period suggests that newly listed stocks fared better than their listed peers since their offer date.

Of the 30 IPOs, 18 recorded a lower percentage fall than a listed peer from the same sector, from the time of their offer. In fact, select stocks such as Maytas Infra (up 22 per cent) and Religare Enterprises (up 76 per cent) actually delivered hefty gains from their offer price, even as listed companies from the sector fell sharply. Nagarjuna Construction (down 79 per cent) and Geojit Financial Services (down 47 per cent), loosely comparable to the above, declined sharply over the same period.

But do note that it is only the listing gains that have ensured better performance from the debutants.

Religare Enterprises, a financial services firm focussed on broking services, was sold at Rs 185 in its IPO. But on the day of listing, the stock closed at Rs 525.30, a straight 183 per cent gain. In one year from the month it listed (October 2007), the stock lost nearly 38 per cent, but the gains made on listing are still holding the stock above its issue price. This further supports the logic for selling stocks on the day of listing.

Maytas Infra, Power Grid Corporation, Everonn Systems, Allied Digital Services and ICRA are the other stocks that held on to gains over their offer price, thanks to strong listing performance.

So, if you were to make a decision on the day of the offer, the IPO would have been the better buy. But if you were to look for secondary market options, an older peer would have been a better buy than a newly listed stock.
The subscription figures delude

As in the preceding year, overwhelming response to an IPO was no guarantee of the stock's performance. Of the IPOs in this period, Everonn Systems was in the top place, over-subscribed 145.5 times, followed by Future Capital (131.79 times), Mundra Port and SEZ (115.32 times) and BGR Energy (115.13 times).

However, from the date of listing to now (October 15), Everonn Systems has fallen by 55 per cent, Future Capital by 77 per cent, Mundra Port and SEZ by 60 per cent and BGR Energy by 81 per cent. The best performing IPO — Allied Digital Services — was subscribed by a little over 59 times and Indian Bank, another good performer, by 32 times.
No sector orientation

Last year's IPO returns numbers showed a distinct trend, with those from financial services, software and infrastructure faring relatively well. But this year's performance tally shows no sector-specific trend in the returns. In every sector an equal number of IPOs performed better than their listed peers as those that did worse.

The stocks that topped the listing gains list were Everonn Systems, Vishal Retail, Religare Enterprises, Nitin Fire and Mundra Port, hailing from diverse sectors. But the common thread that ran through them all was the time of their debut.

All these stocks were listed between June and December last year, a period when the Sensex rallied from 14K to 20K levels. And of all the IPOs, only seven are still holding above their issue price — Religare Enterprises, Maytas Infra, Koutons Retail, Everonn Systems, Time Technoplast, ICRA and Page Industries. Again, all of them listed between March and December 2007.

The performance of the IPOs was thus a function of market conditions at the time of the offer, more than company-specific or sector-specific factors. Of the 17 stocks that listed in the choppy markets between January and March this year only Bang Overseas is still in the green (up 54 per cent from the issue price). However, at current levels a few of them are really attractive 'buys' — Maytas Infra, Consolidated Construction Consortium, Mundra SEZ, Onmobile Global and MindTree Consultancy. Given the change in the earnings outlook, the ones in the financial sector are better avoided as concerns over the financial turmoil in broader markets persist.

Clearly this has been a bad year for greenhorns, whether they were investors or companies seeking to make a debut in the market!

More losses expected

Investors and speculators watched the Indian stock markets crash and a key index dip to the four-digit level with a distinct sense of déjà vu during the week ended Friday with sentiments completely battered by the fears of a US recession and an overall global slowdown.

Looking ahead, they feared more losses in the ensuing sessions, since some key measures by India's Finance Ministry and the central bank to infuse additional liquidity into the country's financial system over the past week had failed to lift the market sentiments.

As the market saw one of the worst drubbings in recent years, the sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ended with a loss of 5.25 percent over the week, completely negating the impressive gain of 7.42 percent and 1.54 percent, respectively, during the first two days of trading.

"The fall was in line with what is happening across the globe. I'd expect the market to touch 9,500 points by next week," said Amitabh Chakrabarty, president of Religare Securities.

On most of the five trading days of the week, Finance Minister P Chidambaram sought to calm the nerves of anxious investors, saying there was no need to fear and that steps had been taken to infuse additional liquidity into the coffers of commercial banks to help them extend more corporate credit.

And the statements did work on the first two days.

But on each of the last three days of trading during the week, the index took a major beating - falling as much as 606.14 points, or 5.73 percent, on Friday alone.

The Sensex, which was ruling at an all-time high of 21,206 points barely nine months ago, has fallen nearly 25 percent over the past month and more than 45 percent over the past 52 weeks.

As many as 24 out of 30 shares that go into the Sensex basket ended with losses. The other six were led by Hindustan Unilever, up 8.56 percent and ICICI Bank, up 7.58 percent.

Hindalco led the losers, down as much as 20.40 percent over the week, followed by Tata Motors, down 16.49 percent, Oil and Natural Gas Corp, down 15.28 percent, Reliance Industries, down 14.52 percent, and Tata Steel, down 13.67 percent.

Foreign funds, which have been the main drivers of India's stock market upswing in recent years, were net sellers of equity in Indian bourses on each of the five days of trading this week, pulling out over a billion dollars.

These foreign institutional investors have been net sellers of equity worth USD 2.46 billion in October and USD 11.56 billion during the calendar year, latest data with the markets watchdog showed.

"There is a lack of interest from foreign institutional investors as well as retail investors due to the financial meltdown," said Ashok Jainani, head of research with Khandelwal Securities.

"Everybody is holding back on investing, as most of them feel the market will crash further."

Sensex plunges more than 500 pts for the week

The Sensex plunged to 53%, falling to four digits for the first time in more than two years on concerns of a sharp global economic slowdown and sluggish corporate earning. Bearish sentiment in global markets and heavy selling by FIIs drove many blue chips to all- time lows.

In nine months after hitting its all-time peak of 21,206.77 on January 10, 2008, the index dipped below 10,000 in more than two years. It had taken 21 months for the Sensex to touch the 20,000 level from the 10,000 level.

A series of measures announced by the government and the Reserve Bank of India failed to check rising capital outflow by foreign funds. Even inflation numbers did not helped.

The wholesale price index (WPI) Inflation declined further to 11.44% for the week ended Oct. 4, 2008, as compared to 11.80% in the week before due to moderation in the prices of essential commodities and also on account of falling crude oil prices. Government`s fiscal and monetary measures have helped to moderate the rising prices.

In an effort to pump liquidity into the global crisis stricken market, the Reserve Bank of India (RBI) decided to slash Cash Reserve Ratio (CRR) further by 100 basis points to 6.5% from the current level of 7.5%. This cut in CRR was made to inject additional liquidity into the system of the order of Rs 400 billion.

The 30 share index, Sensex plunged 552.5 points, or 5.25%, to 9,975.35 in the week ended Oct. 17, 2008. On the other hand, the broad based NSE Nifty plunged 205.6 points, or 6.27%, to 3,074.35 in the same period.

Mid-cap stocks dropped 131.16 points, or 3.57%, to 3,544.84 in the week. While small-cap shares plunged 187.59 points, or 4.31%, to 4,167.86 during the week.

Major gainers over the week in the sectoral indices were Realty which gained 0.07%, FMCG rose (0.08%), HC climbed (0.13%), IT went up (1.82%), and TECk rose (2.08%).

Among major losers in the sectoral indices over the week, Metal dropped 11.32%, Oil & Gas fell 10.9%, Capital Goods lost 9.29%, Power declined 7.7%, and PSU went down 5.43%.

Results:

Satyam, global consulting and IT services company, registered a substantial gain in consolidated net profit in the quarter ended September 2008. During the quarter, the profit of the company climbed 41.98% to Rs 5,808.50 million from Rs 4,090.90 million in the same quarter previous year. Consolidated total income for the quarter rose 35.31% to Rs 28,988.70 million compared with Rs 21,422.60 million in the prior year period.

NIIT Technologies, provider of services in application development on consolidated basis reported a rise of 7% on year on year (Y-o-Y) basis for the quarter ended September 2008. The net profit for the quarter stood at Rs. 367 million as compared to Rs 344 million in the previous year`s same quarter. The revenues were Rs 2587 million as against Rs 2,299 million for quarter ended September 2007, a growth of 13% on Y-o-Y basis.

Biocon, integrated healthcare company delivering biopharmaceutical solutions, registered a sharp fall of 53.64% in the consolidated net profit in the quarter ended September 2008. During the quarter, the profit of the company climbed 32.25% to Rs 250.20 million from Rs 539.70 million in the same quarter previous year. Consolidated total income for the quarter jumped 63.17% to Rs 4,577.30 million compared with the prior year period.

Larsen & Toubro (L&T), India`s largest engineering and construction conglomerate, registered a substantial rise in its standalone net profit for the quarter ended September 2008 driven by strong sales growth. During the quarter, the profit of the company climbed 32.25% to Rs 4,602.60 million from Rs 3,480.20 million in the same quarter previous year. Total income for the quarter jumped 41.99% to Rs 78,422.60 million, when compared with the prior year period.

Weekly Newsletter - Oct 18 2008

Fundamentals and technicals are hardly heeded these days as investors and market participants across the globe wait for some signs of relief. Nothing seems to be very forthcoming despite guarded measures world over, including India. The only thing the bulls could bank on were some banking stocks which managed to clock some gains even as the Sensex fell below a psychological mark of 10,000.

 

The results season is on and there is no solace. When the big boys on the street start tumbling like nine pins the situation does get scary. Among the heavyweights, Reliance too will announce its numbers.

Global credit crisis and headwinds in the domestic economy have influenced heavy selling by FIIs in India. Over the last five days, FIIs have sold worth Rs5,042cr. Year to date, the figures stand at an alarming Rs47,838cr.

The Nifty is yet to find a bottom. We expect Nifty to trade within a range of 2,800-3,000 levels on the lower side. On the upside, we believe intermediate resistance will be witnessed at 3,350 levels.

Turbulence in Indian skies

Amid all the gloom and doom in global financial markets, the Indian skies witnessed a major strategic deal, with Jet Airways and Kingfisher Airlines joining forces to survive the turbulent business environment. However, the alliance came under pressure, with Air Deccan founder Capt. Gopinath slamming the move and expressed the desire to buy back his low-cost carrier from Vijay Mallya. Though later Mallya pacified Gopinath and assured him that Kingfisher Red (erstwhile Air Deccan) will not be scrapped. Even government regulators started scrutinising the alliance for any anti-competitive elements despite receiving Civil Aviation Minister Praful Patel's blessings. Jet and Kingfisher invited Air India to join the alliance, but the latter termed the deal as cartelisation.

Separately, Jet announced that it was laying off 800 cabin crew employees as it tries to fight off the crippling downturn in the local aviation industry. The company also announced that it was planning to axe 1,100 more people from its rolls over the next few days, sparking widespread public outrage. Political parties like Mumbai-based Maharashtra Navnirman Sena and West Bengal's CPI too asked Jet to rollback the retrenchments and threatened to disrupt the companies operations. Petroleum Minister Murli Deora too lambasted Jet's move, saying it was a wrong call as it came just before Diwali. Jet management said the job cuts were necessary to cut losses and enable the airline to become more efficient. But, under pressure from several quarters, Jet chairman Naresh Goyal finally reversed the 800 job cuts and asked the sacked employees to rejoin the company.

There were reports that Air India was planning to send 15,000 non-operations employees on unpaid leave for up to five years. However, the Civil Aviation Minister denied such a move. Separately, Oil Minister Deora accused Jet, Kingfisher and Air India of defaulting on payments of over rs9bn towards the purchase of ATF from public sector oil marketing companies. The Ministry even threatened to stop fuel supply to these airlines if the dues were not paid up.

Separately, reports said that India's struggling airlines may cancel orders for new Airbus and Boeing planes as banks refuse to lend to unprofitable carriers amid the global tightening of credit. At risk are about 300 aircraft due to arrive in India in the next five years from Airbus and Boeing. Jet has already held talks about delaying Boeing planes, while Kingfishers Airlines has scrapped three Airbus

Wanting too much too fast

Inflation, crude oil prices, interest rates, FII investments, currency exchange rates and global risks add to the stock market confusion, and sometimes even a professional investor finds the going tough.

Gopal Krishna Murthy of Vijayawada is a seasoned investor. Equities, mutual funds, real estate, fixed deposits...they all find a place in his portfolio. But as his investment surplus increased, Murthy began relying heavily on his broker. It worked fine till I was involved. But once I started to depend on intermediaries to manage my portfolio, it went all over the place, he says.

The relationship manager at his brokerage firm dangled the lure of quick profits in futures and options (F & amp;O) and Murthy shifted from delivery-based investment to speculating without understanding or realising the potential risks. In the cash segment too, Murthy's investments are in the red. He bought IFCI shares at Rs 95 but didn't sell even after they appreciated by 30%. His relationship manager insisted that the stock would double in value. It is now down to Rs 47.

Murthy is one of the thousands of investors who have turned traders thanks to the four-year bull run. There is a huge difference between a trader and an investor; an investor needs to define a time frame for an investment, whereas a trader looks at profits, says Manish Shah, associate director, Motilal Oswal Securities. Market experts see no room for confusing the two. The basic tenet of investing is to stick to asset allocation.

This is a simple rule, but it's difficult to follow because most investors get carried away by the prospect of earning 100% or more. In their greed, they forget that the stock market functions on a risk-reward equation; the higher the risk, the higher the return. That the reward can be negative is a fact that most players simply don't seem to comprehend.

Inflation, crude oil prices, interest rates, FII investments, currency exchange rates and global risks add to the stock market confusion, and sometimes even a professional investor finds the going tough. Most investors would rather trust an intermediary than go beyond the basics and learn about the new risks associated with their investments.

These risks will ultimately affect their financial goals and plans. Those who enter the stock market without understanding their risk profiles will not be able to invest in instruments that best suit their needs.

Another common mistake that investors make is to buy and forget. It's important to track your investments regularly and book profits to gain from them. Remember, investment calls for discipline and patience. Blindly following what friends, colleagues, even overzealous brokers and relationship managers recommend, could lead to greater losses than you are willing to bear. It's your money at stake and you're the one who has to deal with any losses.

Govt panics, steps up effort for liquidity

Meanwhile in India, the Government stepped up efforts to ease the credit crunch, as last week's measures failed to boost liquidity, especially for Mutual Funds, who were facing severe redemption pressure in money market funds. The Finance Minister continued to swear by the inherent strength of the India growth story, and even cited a recent note by IMF's research department that had stated that the Indian economy would continue to do well despite the impact of the global liquidity crunch. He added that the root cause of the present uncertainty is liquidity and not any dramatic change in the fundamentals of the economy.

The RBI pulled up banks for not parting with loans in the wake of the global financial crisis and the tightening of domestic liquidity. The central bank also chided banks for not restructuring the dues of the SMEs, under the prudential guidelines. The RBI decided to allow banks to take trading positions in Interest Rate Futures (IRFs). The central bank decided to further tighten the prudential norms for banks' exposure to derivative instruments. The RBI said that overdue receivables from corporates on account of mark-to-market (MTM) value of a derivative contract will be treated as a non-performing asset (NPA), if these remain unpaid for 90 days or more.

The RBI decided to conduct a special 14-day repo at 9% per annum for a notified amount of Rs200bn with a view to enabling banks to meet the liquidity requirements of Mutual Funds. The central bank also allowed banks to accept as collateral certificate of deposits (CDs) held by mutual funds for 15 days. However, banks borrowed only Rs35bn on Tuesday through the special LAF window, prompting the RBI to extend the special 14 day repo facility everyday until further notice. The money market remained stressed, forcing the RBI to slash the CRR by another 100 basis points with retrospective effect (Oct. 11).

In addition, the central bank allowed banks a further leeway of 0.5% in SLR to meet the cash requirements of mutual funds. On Sept. 16, the RBI had permitted banks to avail of additional liquidity support to the extent of up to 1% of SLR. The RBI said it will set up Special Market Operations (SMO) for public sector oil marketing companies when oil bonds become available. It also released the Rs250bn reimbursements to banks towards the farm loan waiver. The RBI also increased the interest rates on NRI deposits and FCNR (B) deposits by 0.5%.

Banks were also allowed to borrow funds from their overseas branches and correspondent banks up to a limit of 50% of their unimpaired Tier I capital as at the close of the previous quarter or US$10mn, whichever is higher, as against the existing limit of 25%. Meanwhile, capital market regulator SEBI too swung into action to stem the selloff in stock markets. It hiked the exposure margins for gross open positions in the Futures & Options segment to cut down volatility. The regulator also tightened the disclosure norms for FIIs and their sub-accounts to clamp down on 'illegal' short selling in overseas markets.

Global markets recover, but worst may not be over

Global stock markets were quite volatile this week, and the bias remained negative, as investors continued to be skeptical of the series of measures taken to shore up the banking system and unclog the credit markets. Sure, the money market rates did improve from last week, but still remained much above the levels just before the Lehman Brothers' bankruptcy filing. Also, the logjam in credit markets put several large scale M&A deals in jeopardy. On the whole though, this week was much better after last week's carnage, which was one of the worst ever for the global equity markets.

Britain led the way this week's government initiatives to lift troubled banks out of a deep hole, unlock the credit markets and stop the bloodletting in stocks. The UK unveiled a plan partially to nationalise some of its biggest banks. £20bn (US$35bn) of public money will be injected into Royal Bank of Scotland and £17bn into HBOS and Lloyds TSB (which have announced a merger) in return for substantial stakes - around 60% in RBS and 40% in Lloyds TSB-HBOS.

The US followed suit by providing US$250bn for bank recapitalisation; half of which will go to nine banks, including Bank of America, JPMorgan Chase, Citigroup, Goldman Sachs and Morgan Stanley. In return, the government will get non-voting preference shares that pay a 5% dividend, rising to 9% after five years. In a sign of growing tensions among policymakers, Sheila Bair, head of the US Federal Deposit Insurance Corporation, criticised the $700bn rescue package for banks for not doing more to help homeowners avoid foreclosure.

Germany said it would guarantee bank debt to the tune of €400bn (US$540bn) and supply an extra €100bn to stabilise financial markets; France unveiled a €360bn package of measures, including €40bn of capital funding for banks; and the Netherlands guaranteed €200bn in interbank lending. Austria, Italy, Spain and others also produced proposals.

UBS also got a bail-out. The Swiss government took a 9% stake in the bank and created a fund that allows UBS to offload US$60bn in toxic assets. Credit Suisse said that it won't follow compatriot UBS in transferring bad assets to a mostly Swiss National Bank-funded entity. However, it increased its Tier 1 capital base to 13.7% from 10.4% by raising 10 billion Swiss francs of new capital from major investors, including a subsidiary of the Qatar Investment Authority.

The Bank of Japan held an emergency meeting and decided to loosen up companies' access to cash. Hong Kong provided a blanket guarantee on all bank deposits. And Australia introduced a stimulus bill to boost the economy, including funding for first-time homebuyers. South Korea's policy makers held an emergency summit, seeking steps to restore confidence after shares plunged to a three-year low and the won declined by the most since the 1997 Asian crisis.

The United Arab Emirates (UAE) pledged an extra US$19bn for its banks. Qatar said it would take stakes of up to 20% in banks so that they could continue to fund regional infrastructure projects. Some questioned whether the Gulf states' sovereign-wealth funds still had an appetite to invest abroad, a lifeline to many earlier in the credit crunch.

Concerted efforts by governments around the world to unfreeze the short-term credit markets started to bear some fruit. The cost of borrowing dollars in London for three months was headed for a weekly decline, the first one since July, after central banks injected billions of dollars into money markets and governments guaranteed loans. Money-market rates jumped after Lehman Brothers went bankrupt on Sept. 15.

The dollar rate will drop about 10 basis points to 4.4% on Friday. It was 4.82% a week ago. Global money market rates fell this week after central banks joined forces to offer lenders an unlimited supply of dollars and the ECB did the same with euros. Still, lending costs among banks remain near record highs relative to the Federal Reserve's benchmark rate of 1.5%.

Meanwhile, European leaders called for an overhaul of the global financial system to avert another major crisis. Europe demanded a global summit to discuss the creation of a new form of capitalism, based on moral values, and the effective regulation and supervision of all corners of the financial world, including hedge funds and rating agencies.

The proposed global summit has been described as the starting point for a new "Bretton Woods", the 1944 meeting of Western leaders that led to the foundation of the World Bank and the IMF. It would probably happen in November or December. Britain's prime minister, Gordon Brown, said the world needs more transparency, integrity and systems of global governance. He wants to see cross-border colleges of national supervisors to assume oversight of the 30 largest financial institutions in the world, by the end of the year, and to see the IMF become an early warning system for problems looming in the world economy.

NSE Bulk Deals to Watch - Oct 17 2008

Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
17-OCT-2008,20MICRONS,20 Microns Limited,NAMAN SECURITIES & FINANCE PVT LTD,BUY,10959,24.30,-
17-OCT-2008,20MICRONS,20 Microns Limited,PRASHANT JAYANTILAL PATEL,BUY,119363,26.58,-
17-OCT-2008,ASTRAMICRO,Astra Microwave Products,L&T CAPITAL COMPANY LIMITED,BUY,414592,38.26,-
17-OCT-2008,HDIL,Housing Development and I,GENUINE STOCK BROKERS PVT LTD,BUY,1621019,136.90,-
17-OCT-2008,HDIL,Housing Development and I,GMO EMERGING MARKETS FUND,BUY,3003730,137.91,-
17-OCT-2008,HDIL,Housing Development and I,TOTAL SECURITIES LIMITED,BUY,1403879,135.79,-
17-OCT-2008,SELMCL,SEL Manufacturing Company,ASISH FINANCE LIMITED,BUY,67703,83.00,-
17-OCT-2008,SOMATEX,Soma Textiles & Ind. Ltd.,ALKA INDIA LIMITED,BUY,700000,29.00,-
17-OCT-2008,SUNILHITEC,SUNIL HITECH ENGR. LTD,ANAND RATHI FINANCIAL SERVICES LIMITED PMS A/C,BUY,86936,86.00,-
17-OCT-2008,VINCARDS,Vintage Cards & Creations,ASHOK BABULAL SHAH,BUY,3000,24.75,-
17-OCT-2008,VINCARDS,Vintage Cards & Creations,SUMITA CHUGH,BUY,5000,24.75,-
17-OCT-2008,20MICRONS,20 Microns Limited,NAMAN SECURITIES & FINANCE PVT LTD,SELL,113463,24.46,-
17-OCT-2008,20MICRONS,20 Microns Limited,PRASHANT JAYANTILAL PATEL,SELL,168120,24.10,-
17-OCT-2008,ASTRAMICRO,Astra Microwave Products,RELIGARE FINVEST LTD,SELL,450000,36.97,-
17-OCT-2008,HDIL,Housing Development and I,GENUINE STOCK BROKERS PVT LTD,SELL,1618760,137.05,-
17-OCT-2008,HDIL,Housing Development and I,TOTAL SECURITIES LIMITED,SELL,1404395,135.91,-
17-OCT-2008,SELMCL,SEL Manufacturing Company,ASISH FINANCE LIMITED,SELL,94360,71.91,-
17-OCT-2008,SOMATEX,Soma Textiles & Ind. Ltd.,SOPHIA GROWTH A SHARE CLASS OF S SET I FUND GDR,SELL,700000,29.00,-
17-OCT-2008,SUNILHITEC,SUNIL HITECH ENGR. LTD,MERRILL LYNCH CAP MKTS ESPANA S.A.SVB,SELL,73775,86.60,-
17-OCT-2008,VINCARDS,Vintage Cards & Creations,SUMITA CHUGH,SELL,2000,24.75,-

Nifty October 2008 futures below 3100

Turnover drops

Nifty October 2008 futures were at 3068, at a discount of 6.35 points as compared to spot closing of 3074.35. NSE's futures & options (F&O) segment turnover was Rs 43,767.13 crore, which was lower than Rs 55,892.72 crore on Thursday, 16 October 2008.

Reliance Industries October 2008 futures were at premium at 1310 compared to the spot closing of 1306.05.

Bharat Heavy Electricals October 2008 futures were at premium at 1217 compared to the spot closing of 1191.55.

DLF October 2008 futures were at discount at 289.90 compared to the spot closing of 291.90.

In the cash market, the S&P CNX Nifty lost 194.95 points or 5.96% at 3074.35.

BSE Bulk Deals to Watch - Oct 17 2008

Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
17/10/2008 515030 ASAHI INDIA AMANSA CAPITAL PTE LTD B 1000000 43.50
17/10/2008 515030 ASAHI INDIA CREDIT SUISSE SINGAPORE LIMITED S 1000000 43.50
17/10/2008 519485 ASIA IND NET ATUL NAGINBHAI CHAUHAN B 25008 14.36
17/10/2008 590059 BIHAR TUBES APL INFRASTRUCTURE PVT LTD B 62000 102.55
17/10/2008 590059 BIHAR TUBES BHARATI MAHENDRA BHAKTA S 34755 102.30
17/10/2008 531270 DAZZEL CONFI RITU SARAOGI B 45000 3.08
17/10/2008 531270 DAZZEL CONFI PARESH BALLER S 42500 2.98
17/10/2008 532491 ECE INDUSTRI MAHENDRAKUMARAGARWALA B 45116 193.63
17/10/2008 532491 ECE INDUSTRI RELIGARE SECURITES LTD CATERPI S 22261 194.00
17/10/2008 532440 MACMILAN IND RAMESH S. DAMANI B 99998 100.10
17/10/2008 532440 MACMILAN IND DERIVE TRADING PVT. LTD B 1141461 100.00
17/10/2008 532440 MACMILAN IND CITIGROUP GLOBAL MARKETS MAURITIUS PRIVATE LIMITED S 1141472 100.00
17/10/2008 532440 MACMILAN IND DERIVE TRADING PVT. LTD S 100000 100.10
17/10/2008 632461 PUNJAB NATBK HSBC BANK MAURITIUS LTD B 1855728 509.50
17/10/2008 530269 SCIL VENTU IND FINANCE AND SEC.TRUST P. L B 25000 55.00
17/10/2008 521034 SOMA TEX IND BASMATI SECURITIES PVT. LTD. B 328664 29.00

Post Session Commentary - Oct 17 2008

The domestic market on Friday ended in deep red after paring all its initial gains on aggressive selling pressure across board led by unabated fears of a sharp global economic slowdown. It was terrible day for the market as BSE Sensex touched the lowest level since July 2006 and finally broken the psychological level of 10,000 along with NSE Nifty ended below 3,100 mark. The market started the day on pleasant note tracking global cues as US markets rebounded sharply in yesterday''s trade on the weekly jobless claims that were lower than anticipated. Filings for jobless benefits declined by 16,000 to 461,000, which was below the consensus 470,000 claims. Market was not able to sustain the momentum and turned volatile following mixed global cues along with worries about a gloomy outlook for the world economy and sluggish corporate earnings. Till afternoon market swung between positive and negative terrain as investors searched for direction. Further market continued to slip sharply to conclude the day with huge loses as trading in US index futures suggested the Dow would fall at the opening bell. Market was extremely under pressure despite positive opening of European markets. On the sectoral front, all indices ended in red and among those Reality stocks underperformed the benchmark index as ended with deep cut of more than 10%. Apart from that most of the selling pressure was led by Capital Goods, Oil & Gas, Bank, Power and IT stocks.

Among the Sensex pack all 30 stocks ended in red. The market breadth was negative as 1877 stocks closed in red while 719 stocks closed in green and 56 stocks remained unchanged on BSE.

The BSE Sensex closed lower by 606.14 points at 9,975.35 and NSE Nifty ended down by 194.95 points at 3,074.35. The BSE Mid Caps and Small Caps closed with loss of 112.29 points at 3,544.84 and by 118.50 points at 4,167.86. The BSE Sensex touched intraday high of 10,786.93 and intraday low of 9,911.32.

Losers from BSE Sensex pack are Reliance Infra (11.96%), JP Associates (10.70%), DLF Ltd (10.34%), NTPC Ltd (9.68%), Reliance Communication Ltd (9.64%), BHEL (9.00%), Sterlite Industries (8.82%), SBI (8.42%), TCS Ltd (8.29%), Tata Steel (7.99%) and Hincalco (7.96%).

The BSE Capital Goods index closed lower by 423.44 points at 7,241.36. Losers are Jyoti Structure (11.76%), Punj Lloyd (9.80%), Siemens Ltd (9.49%), BHEL (9.00%), Walchand Industries (8.16%) and Suzlon Energy (7.80%).

The BSE Metal index tumbled 378.16 points to close at 5,801.71. Major losers are Guajrat NRE C (21.52%), Sterlite Industries (8.82%), Welspan Gujarat SR (8.36%), Tata Steel (7.99%), Hindalco (7.96%) and Nalco (7.07%).

The BSE Oil & Gas index plunged 348.21 points to close at 6,479.56 as Essar Oil Ltd (10.36%), Aban Offshore (8.80%), Reliance Petroleum (8.12%), Reliance (6.58%) and Reliance Natural Resources (5.05%) ended in negative territory.

The BSE Bank index ended down by 320.07 points at 5,546.69. Losers are Kotak Bank (8.75%), SBI (8.42%), Indus Ind Bank (5.90%), HDFC Bank (5.82%), ICICI Bank (5.61%) and Union Bank (5.20%).

The BSE Reality index lost 288.37 points to close at 2,524.89. Major losers are Orbit Co (14.87%), Indiabull Real (14.16%), Unitech Ltd (12.44%), Penland Ltd (12.10%), Ansal Infrasturct (11.41%) and Parsvnath (11.30%).

The Power index went down by 150.74 points to close at 1,712.37 as Reliance Infra (11.96%), Lanco Infra (10.33%), NTPC Ltd (9.68%), Siemens Ltd (9.49%), BHEL (9.00%) and Suzlon Energy (7.80%) in negative territory.

RBI policy review, global markets to dictate trend

Concerns about a global recession may continue to weigh on the domestic bourses which have tumbled in a global equities rout in the past few days. Lack of buying support has accentuated the decline on the bourses

Foreign institutional investors (FIIs) continue to press sales. They have sold shares worth Rs 46,661.20 crore in the calendar year 2008 so far (till 16 October 2008).

Investors now await the mid-term monetary policy review by the Reserve Bank of India (RBI) due on 24 October 2008. Some reports suggest that RBI is set to cut the repo (repurchase) rate by a steep 50 basis points, to signal a strong shift in policy focus to growth from inflation. Repo rate is the rate at which RBI provides funds to banks against the collateral of government bonds for a day to three days.

On the inflation front, experts feel that the wholesale price index is expected to move downward, and will eventually come down to single-digit numbers by January 2009. Inflation based on the whole price index rose 11.44% in year through 4 October 2008, lower than previous week's 11.8% rise, data released on 16 October 2008, showed.

Index bellwether Reliance Industries (RIL) will declare its Q2 September 2008 results on 23 October 2008. According per media reports, RIL's gross refining margins, or GRMs, are expected to decline significantly in Q2. As per research report published by foreign brokerage houses, RIL may report a 4.3% fall in its gross refining margins (GRM) to $13 per barrel in Q2 September 2008 over Q2 September 2007. The GRM is the difference between the selling price of the finished products and raw material cost.

Reliance Industries has 13.64% weightage in Sensex and therefore any sharp fall in the stock may drag the key indices further lower.

Other September 2008 quarter results due next week include Jaiprakash Associates, Reliance Natural Resources, Reliance Petroleum, Idea Cellular, Jet Airways (India), MIC Electronics, Chambal Fertilisers & Chemicals, MRF, Pantaloon Retail (India), Federal Bank, Allahabad Bank, Bank of Rajasthan, Rolta India, United Phosphorus, Titan Industries, Ashok Leyland, Chennai Petroleum Corporation, Emami, Finolex Industries, Geodesic, Hero Honda Motors, Hindustan Motors, Hindustan Zinc, Indiabulls Securities, and Marico, among other will declare their September ended quarter results next week.

Sensex down 13% from recent high

Bears ruled the roost on the boures with the Sensex falling below 10,000 mark for the first time in more than two years. The Sensex lost 606.14 points or 5.73%, on global recession worries. Trading in US index futures suggested the Dow would fall 257 points at the opening bell.

The market declined sharply in late trade after witnessing bout of volatility earlier in the day. An initial surge boosted by reports government was considering several measures to raise domestic institutional participation in the equities, proved short-lived.

Realty and banking stocks tumbled. Index heavyweight Reliance Industries (RIL) dipped more than 7.5%. Reliance Infrastructure was down more than 13.5%, Sterlite Industries was down more than 12% and Jaiprakash Associates slumped nearly 12%. NTPC and DLF lost almost 10% eachl. Though in the red, the BSE Mid-Cap and Small-cap indices outperformed the Sensex.

The government has reportedly sought data from the Reserve Bank of India to consider a proposal to enhance the investment limit for bank exposure to equity markets. This will be part of several measures to boost domestic institutional participation in the markets at a time when foreign institutional investors (FIIs) are exiting. At present, a bank can invest up to 20% of net worth in a single company and up to 40% of net worth in a group.

The domestic markets have declined sharply in the past few days despite Reserve Bank of India' several attempts to infuse liquidity in at a time when global recession worries have marred investor sentiment.

Asian markets were mostly lower as worries about a slowing global economy kept investors on the sidelines.

The BSE 30-share Sensex slumped 606.14 points or 5.73% to 9,975.35. The index dipped 670.17 points at the day's low of 9,911.32 in late trade, its lowest level since 24 July 2006. The Sensex rose 205.44 points at day's high of 10,786.93, at the onset of the trading session.

The S&P CNX Nifty was down 194.95 points or 5.96% to 3,074.35. It hit a low of 3,046.60 in late trade, its lowest level since 25 July 2006.

From a recent high of 11,483.40 on 14 October 2008, Sensex has tumbled 1508.05 points or 13.13% in last three trading sessions. The barometer index is down 10,311.64 points or 50.82% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11,231.42 points or 52.96% below its all-time high of 21,206.77 struck on 10 January 2008.

The BSE clocked a turnover of Rs 4,121 crore today as compared to a turnover of Rs 4,552 41 crore on 16 October 2008.

The BSE Mid-Cap index was down 3.07% at 3,544.84 and The BSE Small-Cap index was down 2.76% at 4,167.86. Both the indices outperformed the Sensex.

BSE Realty index (down 10.25% to 2,524.89), BSE Power index (down 8.09% to 1,71227), BSE Metal index (down 6.12% to 5,801.71), BSE Teck index (down 5.91% to 2,068.20) underperformed Sensex.

BSE FMCG index (down 2.29% to 1,858.99), BSE Consumer Durables index (down 2.64% to 2,085.28), BSE HealthCare index (down 2.68% to 3,209.02), BSE Auto index (down 3.01% to 3,099.60), BSE PSU index (down 4.71% to 5,235.48), BSE IT index (down 4.94% to 2,537.27), BSE Oil & Gas index (down 5.1% to 6,479.56), BSE Bankex (down 5.46% to 5,546.89), BSE Capital Goods index (down 5.52% to 7,241.36), underperformed the Sensex.

The market breadth was weak. On BSE, 719 shares advanced as compared to 1,877 that declined. 56 shares remained unchanged.

India's largest private sector company by market capitalization and oil refiner Reliance Industries fell 6.58% to Rs 1,305.25 off day's high of Rs 1,438. From a recent high of Rs 1619.70 on 14 October 2008, the stock has plunged 19.41% in the last three days on concerns of fall in refining margins.

Meanwhile, the Bombay High Court on Thursday, 16 October 2008, questioned the government about its locus standi in the legal tussle between Reliance Industries and Reliance Natural Resources over supply of gas from the former's Krishna Godavari basin to the latter's proposed power plant at Dadri in Uttar Pradesh. This came after the government sought to be a party to the case. The government counsel will present his case on Friday, 17 October 2008.

Reliance Infrastructure (down 11.96% to Rs 490.75), Jaiprakash Associates (down 10.7% to Rs 66.75), Reliance Communications (down 9.64% to Rs 233.95), NTPC (down 9.68% to Rs 149.75) were the major losers from the Sensex pack.

Realty stocks slumped despite possibility of home loan rate cuts by lenders due to fall in inflation and cut in the cash reserve ratio cut by the Reserve Bank of India three times in last ten days. BSE Realty index fell 10.25% and was the major loser from the sectoral indices on BSE. All the stocks from the index were in red. Realty majors, Indiabulls Real Estate, DLF and Unitech fell between 10.34% to 14.16%. Fall in lending rates may spur demand for residential properties.

Most lenders slipped despite India's second largest private sector bank by net profit, HDFC Bank's robust Q2 results. HDFC Bank fell 5.82% even as it reported 43.2% rise in net profit to Rs 527.98 crore on 62.8% growth in total income to Rs 4,634.32 crore in Q2 September 2008 over Q2 September 2007. The stock had fallen 4.15% yesterday, 16 October 2008, ahead of the results which hit the market after trading hours.

Other banking majors extended fell. ICICI Bank and State Bank of India fell between 5.82% to 8.42%.

India's largest home loan lender by sales HDFC fell 1.37% even as it reported 32.5% growth in net profit to Rs 534 crore in Q2 September 2008 over Q2 September 2007. The results hit the market during trading hours.

Power stocks dropped, with the BSE Power index falling 8.09%. It was the second major loser from the sectoral indices. All the stocks from the index were in red. NTPC, Reliance Infrastructure, Tata Power Company Power Grid Corporation of India and Reliance Power slip between 3.32% to 11.96%.

Metal stocks fell on falling metal prices on mounting fears a global economic slowdown will hit demand. Hindalco Industries, Sterlite Industries, Hindustan Zinc, National Aluminum Company), Steel Authority of India fell between 4.64% to 8.82%.

India's largest steel maker by sales Tata Steel fell 7.99% after its UK unit Corus decided to cut crude steel production by up to 20% or 1 million tonnes over the next three months due to slowing demand caused by the global financial crises. There would be no material change in production for its operations outside Europe, Tata Steel said.

Capital goods stocks fell on reports faulty government policies has resulted in surge in import of capital goods from countries like China thereby impacting the domestic capital goods industry. Bharat Heavy Electricals, Larsen & Toubro and Suzlon Energy fell between 3.19% to 9%.

India's third largest IT services provider by sales Satyam Computer Services fell 2.6% to Rs 265.95. The stock had held firm for a better part of the trading sessions after the company raised its earnings per share forecast in rupee terms for year ending March 2009 at the time of announcing Q2 September 2008 results today.

India Infoline tumbled 16.85% as net profit declined 29.20% to Rs 32.23 crore in Q2 September 2008 over Q2 September 2007.

Elecon Engineering Company declined 6.63% on BSE, as net profit declined 7.05% to Rs 16.01 crore in Q2 September 2008 over Q2 September 2007.

Pritish Nandy Communications declined 2.11% on BSE, on increase in promoters' stake in the company.

Chettinad Cement Corporation declined 2.61%, as net profit declined 32.70% to Rs 34.16 crore in Q2 September 2008 over Q2 September 2007.

Parsvnath Developers slipped 11.3%, despite bagging an order worth Rs 29.50 crore from the Delhi Metro Rail Corporation.

Hindustan Petroleum Corporation gained 3.29%, after the company formed a subsidiary for production of biodiesel.

Pyramid Saimira Theatre fell 0.88% on reports a group firm has acquired a direct-to-home services firm in Europe.

Wockhardt fell 2.36%, after the company secured US Food & Drug Administration approval for a new drug.

Jaiprakash Associates clocked the highest volume of 92.35 lakh shares on BSE. Housing Development & Infrastructure (91.5 lakh shares), Reliance Natural Resources (67.96 lakh shares), Chambal Fertilisers & Chemicals (64.28 lakh shares) and IFCI (63.7 lakh shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 333.61 crore on BSE. ICICI Bank (Rs 235.9 crore), Reliance Capital (Rs 225.31 crore), State Bank of India (Rs 159.36 crore) and Axis Bank (Rs 145.79 crore) were the other turnover toppers in that order.

European markets which opened after Indian markets were positive. France's CAC 40, Germany's DAX and UK's FTSE 100 rose between 2.02% to 3.03%.

Asian markets were mostly lower. South Korea's Seoul Composite, Singapore's Straits Times, and Taiwan's Taiwan Weighted, Hong Kong's Hang Seng, fell between 1.52% to 2.73%. China's Shanghai Composite index and Japan's Nikkei, rose between 1.08% to 2.78%.

US markets staged a comeback in a late-day rally in highly volatile trade on Thursday, 16 October 2008, as investors snapped up beaten-down shares a day after Wall Street's worst day since the 1987 crash. The Dow Industrials surged 401.35 points, or 4.68%, to 8,979.26. The S&P 500 index advanced 38.59 points, or 4.25%, to 946.43, and the Nasdaq composite index added 89.38 points, or 5.49%, to 1,717.71.