A recovery in Asian markets failed to lift key benchmark indices as
they remained subdued in afternoon trade. Selling was conspicuous
in index pivotals ever since the onset of the day's trading
session. The Sensex was now hovering below the psychological 17,000
level, after alternatively moving above and below that level. The
market fell today as investors priced in the sharp weakness in
global markets on Friday, 2 October 2009, when the Indian market
was closed for a public holiday. The BSE 30-share Sensex was down
190.05 points or 1.11%, off 117.47 points from the day's high and
up 46.43 from the day's low
After opening with a downward gap, the market extended losses at
the onset of the trading session. The Sensex fell below the 17,000
mark. Buying in some defensive stocks helped the market soon cut
initial losses. The market weakened again in mid-morning trade. The
market moved in a narrow range later. A sell-off in Bharti Airtel
pulled indices lower in afternoon trade.
The market breadth was weak. Telecom shares dropped on reports of a
likely delay in the third generation auction process with Bharti
Airtel tumbling over 6%. Index heavyweights Reliance Industries and
State Bank of India were down by between 1.5% and 2%. Realty shares
declined on profit booking. But select FMCG and pharma stocks
gained on defensive buying.
Corporate affairs minister Salman Khursheed has warned firms
against paying huge salaries to top company brass and said the
government would keep a watch on executive compensation. "I think
when we are working on this (austerity), we can hardly say that we
(will) shut our eyes on what salary the CEOs are going to take," a
news agency quotedKhursheed as saying. "I don't think anyone in
India today, in politics or outside politics ... has reached the
level of liberalism where vulgarity is also a fundamental right."
Some caution may prevail on the bourses ahead of assembly polls in
three states viz. Maharashtra, Haryana and Arunachal Pradesh on 13
October 2009. The counting of votes will take place on 22 October
2009. The total number of electorate in Maharashtra is 7.56 crore,
Haryana 1.2 crore and Arunachal Pradesh 7.5 lakh.
A section of the market is worried of hedge fund redemptions after
the one year moratorium on redemption ends in October 2009. Buried
under redemption pressure in the aftermath of the collapse of US
investment bank Lehman Brothers, hedge funds took a moratorium
period of one year in October last year.
The next trigger for the stock market is Q2 September 2009 results
of India Inc. Infosys kickstarts the reporting season on 9 October
2009. There is optimism about Q2 September 2009 results after
advance tax collections registered a positive growth in the second
quarter after witnessing a negative growth in the first quarter.
Corporate advance tax and advance personal income-tax were up by
14.7% and 1.7%, respectively in the September 2009 quarter.
European markets opened on a subdued note today, 5 October 2009
weighed by oil stocks. Key benchmark indices in Germany, France and
UK were down by between 0.02% and 0.26%
Asian stocks were trading mixed today, 5 October 2009. Hong Kong's
Hang Seng index reversed early fall to turn positive and Taiwan's
Taiwan Weighted index small gains. Key benchmark indices in South
Korea, Japan, and Singapore were down by between 0.59% and 2.49%.
However, indices in Taiwan and Hong Kong rose 0.35% and 0.14%
respectively.
Chinese markets have been shut since 1 October 2009 for National
day and Autumn festival celebrations. Trading will resume on 9
October 2009
Trading in US index futures indicated Dow could rise 18 points at
the opening bell today, 5 October 2009.
US stocks ended lower on Friday, 2 October 2009, as investors
worried that a worse-than-expected jobs report was further evidence
that the rally has run ahead of improvement in fundamentals. The
Dow Jones Industrial Average lost 21.61 or 0.23% to 9,487.67 while
the S&P 500 index was down 4.64 or 0.45% to 1,025.21 and the Nasdaq
Composite index shed 9.37 or 0.46% to 2,048.11.
In economic data, employers cut 263,000 jobs from their payrolls in
September 2009 after cutting a revised 201,000 in August 2009, the
Labor Department reported Friday, 2 October 2009. Economists were
expecting 175,000 jobs cuts, on average.
The unemployment rate, generated by a separate survey, rose to 9.8%
in September 2009, a 26-year high. That was in line with
economists' forecasts and up from the 9.7% rate in August 2009.
A separate government report showed that factory orders plunged in
September 2009 in contrast to economists forecast of rise in
factory orders. The Commerce Department said factory orders fell
0.8% in September 2009 as compared with 1.4% rise in August 2009.
US stocks were hammered on Thursday, 1 October 2009, setting off
declines in market's across the globe on Friday, 2 October 2009.
The Dow had crashed over 200 points on Thursday, 1 October 2009,
after weaker-than-expected readings on manufacturing and jobless
claims sparked worries about the pace of the economic recovery.
Closer home, India's economy is expected to grow between 5.2-5.8%
in 2009-10, much lower than last year as the agriculture output is
estimated to decline significantly because of drought in 276
districts of the country, an industry paper has said.
The GDP projections for the current fiscal made by the Federation
of Indian Chambers of Commerce and Industry (Ficci) are far dismal
than the estimates of 6% by the Reserve Bank of India and 6.3% by
the Planning Commission.
India's monsoon rainfall running between June to September was the
worst since 1972 with cumulative seasonal rainfall for the country
as a whole being 23% below the Long Period Average (LPA), the India
Meteorological Department (IMD) said on Thursday, 1 October 2009.
Considering district-wise rainfall during the period 1 June to 30
September, the rainfall was excess in 9%, normal in 32%, deficient
in 51% districts and scanty in 8% of total districts of the
country, the IMD release said. Monsoon has withdrawn from many
parts of India and will gradually shift out of the country
completely over the next few days.
Coming back to stock markets, a section of the market is concerned
that a glut in share sales may suck liquidity from the secondary
market. The corporate sector has raised large sums of money through
equity and equity related instruments in the past six months or so
to either to retire high cost debt or to fund expansion. The supply
of paper by Indian firms appear limitless, raising concerns that
additional share sales will suck liquidity from the secondary
market.
As per one report, companies plan to raise at least Rs 40,000 crore
through initial public offers (IPOs)/follow on public offers (FPOs)
in the second half of the current financial year. Power companies
such as GMR Energy, Indiabulls Power and JSW Energy and state-run
Bharat Heavy Electricals and NTPC are likely to tap the primary
market. A number of realty firms, too, have announced plans to
raise funds through the primary market in the coming months.
Reliance Infratel also announced on 22 September 2009, its
intention to raise Rs 5000 crore from the primary market. A number
of realty firms have announced plans to raised funds through the
primary market route. Further, many companies are also in the fray
to raise funds by way of qualified institutional placement (QIP),
reports suggest.
Divestment of state-run firms by the government may also increase
the supply of paper in the market. A decent debut of Oil India on
the bourses on Wednesday, 30 September 2009, may boost government's
divestment plan. As per recent reports, the government is planning
to announce a blueprint for selling its stake in state-owned firms
in the first week of October 2009. The policy is expected to
suggest how the government will eventually bring down its stake in
public sector companies to 75% over a period of time.
At 13:25 IST, the BSE 30-share Sensex was down 190.05 points or
1.11% to 16,944.54. The Sensex opened 72.54 points lower at
17,062.01, also its day's high so far. The barometer index lost
236.44 points at the day's low of 16,898.11 in early trade.
The S&P CNX Nifty was down 55.15 points or 1.08% to 5028.25
The total turnover on BSE amounted to Rs 3013 crore by 13:25 IST as
compared with Rs Rs 2330 crore by 12:25 IST
The market breadth, indicating the overall health of the market was
weak. On BSE, 1758 shares declined as compared with 934 that rose.
A total of 77 shares remained unchanged.
Among the 30-member Sensex pack, 22 declined while the rest gained.
Telecom stocks were under pressure on reports the government is
unlikely to keep its 7 December 2009 dateline for the auction of 3G
airwaves, which are vital for high-end services such as video
conferencing and ultra-fast internet on mobiles.
India's largest cellular services provider by sales Bharti Airtel
slumped 6.01% to Rs 409.20. It was the top loser from the Sensex
pack. The stock had jumped over 4% on 1 October 2009 after its
proposed merger talks with South Africa's MTN Group to create the
world's third-largest mobile operator were called off just a few
hours before the end of the 30 September 2009 deadline for the
talks. The deal was called off after South Africa's reluctance to
allow a flagship corporate in the country to lose its national
character.
India's second largest cellular services provider by sales Reliance
Communications dropped 1.42%.
The DoT was slated to release the Information Memorandum (IM), a
key document containing all details of the auction, including
availability of radio frequencies across circles, policy changes,
the rules of the auction and mode of payment among several other
issues to all potential bidders by 29 September 2009, but has
failed to do so.
This has resulted in the 8 October 2009 deadline for submission of
questions for pre-bid conference also being postponed. All other
timelines, such as those for submission of bids and mock auctions,
are also likely to be changed, which may push the December bid plan
to early next year.
Shares of diversified firm Grasim plunged 5.67% after the company
said on Saturday, 3 October 2009 it will transfer its cement
business to its unlisted unit Samruddhi Cement. The demerger will
be completed by March 2010 after which Samruddhi Cement will be
listed. Samruddhi will then make an offer to UltraTech Cement for
consolidation of the group's cement business.
Meanwhile, UltraTech Cement said Monday, 5 October 2009, its board
will meet on Tuesday, 6 October 2009 to consider a merger with the
cement unit of Grasim Industries. Shares of UltraTech Cement were
down 3.17%. Aditya Birla group Grasim and Ultratech Cement
currently operate a combined production capacity of 42 million
tonnes a year or a fifth of India's cement capacity
Realty stocks slipped on profit booking. DLF (down 2.04%),
Indiabulls Real Estate (down 1.25%), Parsvnath Developers (down
2.07%), Unitech (down 2.98%), and Omaxe (down 1.08%), slipped.
Realty companies including Emaar MGF Land, Lodha Developers and
Sahara Prime City have filed their draft red herring prospectuses
on 29 September 2009 with the market regulator, Securities and
Exchange board of India (Sebi), to raise a total of around Rs 9,800
crore through initial public offerings (IPO).
IT stocks declined after poor jobs data report and fall in factory
orders in September 2009 raised fears about the US economic
recovery. US is the key market for Indian IT pivotals.
India's second largest software services exporter Infosys fell
0.66%. India's largest software services exporter TCS lost 1.46%.
India's third largest software services exporter Wipro shed 0.27%.
India's largest private sector firm by market capitalisation and
oil refiner Reliance Industries (RIL) fell 1.50% to Rs 2137.50. The
government may reportedly review RIL's Krishna-Godavari basin gas
price along with the allocation of additional gas production from
the D-6 block. Reports added that some consumers from fertiliser
and power sectors have claimed the $4.20 per million British
thermal unit (mBtu) price for KG gas approved during the previous
UPA government is 'high' and warrants a 'review'.
Meanwhile, the Supreme Court on Thursday, 1 October 2009 dismissed
National Thermal Power Corporation's (NTPC) special leave petition
seeking quashing of a Bombay high court order giving permission to
Mukesh Ambani's RIL to amend its written submissions in its
on-going dispute with the India's largest power generation firm by
sales NTPC on the supply of gas from the Krishna-Godavari basin.
Shares of NTPC declined 0.67%.
India's largest cement firm by sales ACC declined 1.30% after the
company's cement dispatches fell 2.40% to 1.63 million tonnes in
September 2009 over September 2008. The company announced the
monthly dispatches data after market hours on Thursday, 1 October
2009.
India's top small car maker by sales Maruti Suzuki India lost
2.47%. The company's total sales rose 17.3% to 83,306 vehicles in
September 2009 over September 2008. The figures were released
during trading hours on 1 October 2009.
India's largest bank by net profit and branch network State Bank of
India slipped 2.03%. The bank is reportedly planning to raise $1
billion by bond issuance as a part of the bank's Medium Term Note
program or MTN, a tool that allows raising funds through various
products including floating rate notes or on a fixed rate, subject
to necessary regulatory approvals.
India's largest private sector power generation firm by sales
Reliance Infrastructure surged 2.95% to Rs 1241.20 on reports the
company is considering offering shares of its newly created
subsidiaries to the public and looking to bring in strategic
financial partners as part of value unlocking. It was the top
gainer from the Sensex pack.
The report said that of the six subsidiaries formed as part of a
demerger scheme, yet to be approved by the Bombay High Court, the
company plans to list at least the power distribution companies,
Reliance Energy and Reliance Power Transmission in addition to its
metro projects.
Shares from FMCG and pharma pack gained on defensive buying. ITC
(up 1.89%), Nestle India (up 1.86%), Colgate Palmolive (up 0.67%),
Hindustan Unilever (up 0.25%), rose from the FMCG pack.
Cipla (up 1.40%), Lupin (up 2.02%), Sun Pharma (up 1.13%), and
Ranbaxy Laboratories (up 0.12%), edged higher from the pharma pack
Bharti Airtel was the top traded counter on BSE with turnover of Rs
121.66 crore followed by Educomp Solutions (Rs 104.01 crore), Aban
Offshore (Rs 81.87 crore), Reliance Industries (Rs 77.40 crore),
and HDIL (Rs 73.28 crore).
Among the side counters, Elnet Technologies (up 17.47%), Minda
Industries (up 16.27%), Alchemist (up 15.07%), Tips Industries (up
13.90%), and Wendt India (up 11.22%), surged.
ABC India (down 8.03%), Timex Watches (down 7.86%), and Andrew Yule
Company (down 7.24%), slipped.
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