Weekly Update 18th – 22nd October 2010

Most of the world markets rallied in the week gone by on the buzz of further quantitative easing by U.S. Without giving details about the strategies on how the central bank will act its Nov. 2-3 meeting, Federal Reserve Chairman Bernanke said additional monetary stimulus may be warranted because inflation is too low and unemployment is too high.

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Fed is considering ways for raising inflation expectations to encourage people to believe that prices will start rising at a faster pace so that they would spend more of their money now. Retail sales in U.S.climbed more than forecast as purchases rose 0.6 percent following a 0.7 percent gain in August and manufacturing in the New York region expanded in October at a faster pace than anticipated.

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China’s Shanghai Composite Index saw gains of 8.5 percent on the anticipation that China’s banks show strong earnings growth this quarter as the lending has beaten the forecast. Moreover the strong exports growth of 25.1 percent in September mirrors the strong underlying economic momentum. The country’s foreign-exchange reserves, the world’s largest, surged by a record to $2.65 trillion at the end of September.

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India’s wholesale price index rose to rose 8.62 percent in September from a year earlier after an 8.5 percent gain in August. Manufactured product inflation and Food price inflation rose by 0.3 percent and 1.6 percent respectively in September fromthe previous month. RBI Chief Subbarao said that inflation in India is being “quite stubborn,” a sign that controlling prices remains the central bank’s priority.

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Reserve Bank Deputy Governor Subir Gokarn signaled the central bank may intervene in the currency markets to shield exporters from the strengthening rupee. The capital account showed a surplus of $17.5 billion in the quarter to June 30, compared with a record shortfall of $13.7 billion in its current account.

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Foreign investors have so far poured approximately $23 billion in stocks and 10 billion indebt this year. Industrial production expanded by 5.6 percent in August after seeingan expansion of 15.2 percent in July.Going next week the main attraction for retail investors would be the primary market with Mega IPO of Coal India slated to open on 18th October. As Infosys has already rung the bell with positive surprise in terms of earning growth, the investors would now look forward to numbers of companies like L&T, HDFC, Bajaj Auto, etc that are scheduled to announce numbers next week.

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Nifty has support between5870-5950 and Sensex between 19200-19640 levels.With expecting second round of monetary easing, investors dumped dollar and endowed other investment avenues. Commodities extended a rally to the highest intwo years and CRB closed near the mark of 300. The dollar fell to its lowest in 10 months against a basket of currencies and breached the mark of 77. Five week continuous downfall enhanced metals and agricultural commodities.

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Gold gave heroic performance and made another life time high. It rose more than 25% in 2010.Silver is also trading near 30 year high. However, being prudent investors, one should book profit in gold and silver, considering safe trading. Base metals are expected to trade in a range. Crude oil should trade in range $80-85 in short run on mixed fundamental. OPEC has decided to keep the production quota unchanged in last meeting. Agro commodities should trade with high volatility ahead of expiry of October contract.

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Weekly Update of The Market (08th-12th February)

Hello Friends, here, we bring you the weekly overview of the Indian as well as of the Global economy and  latest global business and industry updates.

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Weekly Update of The Market (08th-12th February)

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After starting the year on a good note & Indices making fresh highs within few weeks many Asian markets have corrected between 7 to 10%.

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The global sell off over sovereign debt problems in Europe and an unexpected rise in jobless claims in US put investors on the defensive mode.

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The anxiety about sovereign debt in Greece, Portugal and Spain sparked a sell-off in the Euro & has led strength to US dollar.

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Foreign investors sell off is an outcome of dollar-carry-trade unwinding as when they borrowed the dollar was cheap & now it is recovering.

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Investors viewed the markets in year 2010 with confidence in view of recovery gaining momentum is now shaken over the debt problems, nascent economic recovery & confidence of the governments that stand behind the euro.

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Efforts of China to curb lending preventing overheating in economy also pose a risk to derail the global recovery.

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Back at home, the effect of turmoil in the international market also made government to think its strategy on ambitious disinvestment programme.

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🙂

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Lukewarm response to the NTPC, the much awaited issue managed to get subscription of just 1.2 times on its closing day.

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The maximum bid of 20.87 crore shares was put by Indian institution under the first time adopted French Auction route.

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This has challenged the finance Ministry hopes on the proceeds from disinvestments to make up the sliding revenue & rising expenditure.

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While it looks that PSU disinvestment may not yield desired results on market weakness, the 3G auction i.e. expected to garner Rs. 35,000 crore could be postponed to next fiscal year.

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🙂

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The fate of some of the IPO’s like NMDC, Satluj Jal Vidyut Nigam Ltd and Rural Electrification Corporation that are on the disinvestment agenda before March 31, looks tough to sail through, if the stock markets do not rise and big investors do not come back.

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On the contrary, Banks like Bank of Baroda & Indian Bank that were expected to raise money overseas have put now their plans on hold.

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🙂

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The good news from the external sector continued as the data showed a 9.3% annual increase in exports in December to $14.6 billion, a second consecutive month rise.

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While imports increased by 27.2% from a year earlier to $24.75 billion.

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Food inflation remained at high levels & rose to 17.56% in the week ended 23 January 2010 from 17.40% in the previous week on the back of rising pulses & potato prices.

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Markets are likely to take a closer view of the advance estimates on economic growth for the current fiscal ending March 2010 scheduled to be released on Monday.

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🙂

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In the days to come an activity in the sectors like railways, fertiliser, textiles, pharma, education, power and infrastructure may be seen on expected positive policy announcements and budgetary sops.

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It was clearly mentioned last week that world markets are going in downtrend and one should be careful in such a scenario and that one should be moving in cash.

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Now the markets have taken a very sharp fall last week due to rise in Dollar Index and fall in all asset classes.

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🙂

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The coming week might see some counter rally from lower levels.

Nifty faces resistance between 4900-5000 levels and Sensex between 16400-17000 levels.

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🙂

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If we talk about commodity markets then one can see that strengthening dollar and lack of firm global cues had pressurized commodities prices to move southward.

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Investors are selling riskier assets and putting their money in dollar as a safe haven buying.

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Debt concerns facing Greece, Portugal and Spain coupled with dollar index which is trading above the mark of 80 is most likely to compel commodities to trade lower.

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French and euro zone GDP, USD advance retail sales, USD U. of Michigan Confidence will give further direction to commodities.

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Investors should keep an eye on gold – silver ratio.

It was 58:1 few months back, now reached to 67:1 on MCX, heading towards the level of 70:1.

It is demonstrating more selling in silver.

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🙂

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Stay Tuned for More on weekly updates.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please click here

Indians Equities Gained a Meagre 14 Points this Week

Indians Equities Gained a Meagre 14 Points this Week

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A benchmark index of Indian equities gained a meagre 14 points this week from its last weekly close even as broader indices managed to move up significantly and foreign investors bought into a wide range of scrips.

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Trading this week was range-bound on most days, and brushed aside improved industrial output numbers.

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The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) rose 14.1 points or 0.08 percent to end Friday at 17,584.87 points, from its previous weekly close at 17,540.29 points.

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The broader S&P CNX Nifty of the National Stock Exchange (NSE) moved up 0.14 percent or 7.45 points from its last weekly close to end at 5,252.2 points.

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Broader market indices, however, reflected the buying interest in mid-to-small sized scrips as the BSE midcap index ended 1.5 percent up and the BSE smallcap index rose 3.14 percent.

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Data with markets watchdog Securities and Exchange Board of India (SEBI) showed that foreign funds were net buyers during the week, having bought scrips worth $981.55 million.

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According to Jagannadham Thunuguntla, the equity head for brokerage firm SMC Capitals, the benchmark indices will continue to see a lot of sideways movement, having rallied over 90 percent in a year.

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‘Such sideways movement is expected, and will be the norm for some time to come.

Positive economic numbers and encouraging corporate results will not always translate into gains in the market,’ said Thunuguntla.

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The week started on a lackluster note Monday, with the Sensex ending 13 points lower at 17,526.71 points due to profit booking in front line stocks — Reliance Industries, ICICI Bank, and SBI.

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The Nifty, which followed a similar trajectory to the BSE benchmark, managed to gain marginally at 5,249.4 points, a rise of 0.09 percent.

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The top gainers in the Sensex were TCS (up 13.1 percent), Wipro (up 10.2 percent), Infosys (up 8.6 percent), ACC (up 7.5 percent) and Ambuja Cements (up 6.9 percent).

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Among top losers were SBI (down 6.2 percent), Hindalco (down 3.9 percent), ICICI Bank (down 3.6 percent), Hindustan Unilever (down 3.6 percent) and Reliance Infra (down 3.3 percent).

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🙂

Current Fiscal Witnessed Fund Raising of $16.7 Billion

The first eight months of the current fiscal witnessed fund raising of $16.7 billion (Rs 78,000 crore) through equity issues by India Inc due to the returning of the foreign investors and resuming of expansion activities by the companies.

However, the amount raised so far in this fiscal is still far below as compared to the corresponding period of 2007-08, a year that witnessed a boom for the stock markets. India Inc had raised Rs 125,526 crore for the period between April and November 2007.

The overall fund-raising through equity and equity convertible financial instruments in the period between April-November 2009 was backed by an increase in the overseas issues and a rush by the companies to issue fresh shares to institutional investors through qualified institutional placement (QIP).

The total funds raised through overseas issues, including equity and equity convertible bonds in the first eight months of the current fiscal stood at Rs 27,745 crore across 28 issues as against Rs 945 crore reported during the whole of 2008-09, data compiled by Prime Database show.

However, during the same period, QIP issues also touched an all-time high with firms across sectors raising Rs 31,292 crore as compared to Rs 188 crore reported during FY09. This surge in QIPs is linked to the rise in stock market valuations as institutional investors flush with liquidity returned to fund expansions and new ventures of companies.

The fund-raising by companies coming through public issues also surged eight times to Rs 15,981 crore through 16 initial public offer (IPO). However, despite a revival in the capital market, the IPO market has not taken off in direct proportion to the revival in the capital market, which was witnessed in 2007-08. So far this fiscal there have been 19 IPOs while the same was at 67 in 07-08.

Over 100 companies raised Rs 83,000 crore by issuing debt instruments like bonds and debentures during H1 of the current fiscal. However, on a period-on-period basis, the April-September period saw funds raised to the tune of Rs 83,961 crore, an increase of 25% over Rs 67,108 crore mobilized in the corresponding period of the previous year.

Meanwhile, the funds were raised by issuing through private placement debt instruments, including bonds, debentures and securitized papers, which have a tenor and put or call option of more than one year.

Company Insiders Sold Shares Worth Rs.15K Crores

Company Insiders Sold Shares Worth Rs.15 K Crores

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Company insiders, including top management and promoters, have sold shares in their firms worth about Rs.14,950 crore in the past three months.

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This was most perhaps done to cash in on the steep rise in prices during the recent rally and signaling that the market may be fully valued.

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“Insiders are cashing out some part of their shares.

That shows the market is no longer undervalued,” says Jagannadham Thunuguntla, head of research at SMC Capital Ltd.

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Since the Bombay Stock Exchange’s benchmark hit a low of 8,160 points on 9 March earlier this year,

the 30-stock Sensex, India’s most widely tracked index, has risen 103.81%

as foreign investors injected $15.42 billion (Rs 72,165 crore) into the markets, enticed by the prospect of economic growth.

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🙂

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While major Western economies are barely emerging from a deep recession,

India’s economic output is expected to expand at least 6%, according to estimates by the Reserve Bank of India (RBI), making it the second fastest growing major economy.

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🙂

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Insider sales include those by promoters, top management such as chief executive officers and chief financial officers, as well as sales of treasury stock.

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While insider trades are reported to the stock exchanges, only the number of shares is disclosed.

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Often, such sales take place over a period of time.

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SMC Capital has played a role in the compilation of the data.

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Insider transactions also include share purchases.

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On an overall basis, company insiders bought shares worth around Rs 5,194 crore during the same period, or around one-third of the Rs 14,950 crore of shares sold.

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🙂

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A large part of these have happened in the last six months because people are still sceptical about the sustainability of the recovery.

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“No one has any conviction on how long this bull market will last,” said SMC’s Thunuguntla.

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🙂

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Indeed, with the pace of economic recovery in the West still under question, a potential debt default by Dubai government-promoted entities rocked global markets last week,

sending the Sensex down 3.3% in just two days of trading.

🙂

SEBI May Reduce the Trading Holidays at Bourses

SEBI May Reduce the Trading Holidays at Bourses

Market regulator SEBI is looking into a proposal by several investors to allow fewer trading holidays on stock exchanges in line with the global practice.

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“SEBI is actively considering the proposal to reduce the trading holidays at bourses and is likely to take a decision on the matter soon,” an official close to the development said.

According to analysts, this move by Securities and Exchange Board of India (SEBI) will increase the trading volume in domestic bourses and would also attract foreign investors.

SMC Capitals Equity Head Jagannadham Thunuguntla said,

“From the global standards, India has more number of trading holidays. The reducing of holidays would increase the participation of investors, including the foreign ones, and would increase the trading volume,” he said.

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For 2009, the Bombay Stock Exchange has 19 listed trading holidays and these exclude the weekly Saturday and Sunday off.

In developed countries, the trading holiday at leading bourses are far less.

For 2009, there are only nine trading holidays on the New York Stock Exchange.

In European markets, there are just four holidays this year excluding Saturdays and Sundays.

Recently, Sebi opened gates for longer trading hours for stock exchanges, allowing the bourses to extend market hours by around two-and-a-half hours between 9 am and 5 pm.

The market regulator had further asked the bourses to reset their timings provided they have in place risk management system and infrastructure commensurate to the trading hours.

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Foreign Investors Poured $9 Billion in Indian Stock Market :)

Foreign investors have poured Rs 43,837 crore (USD 9.05 billion) into the country’s stock markets so far this year, reflecting confidence of foreign funds in the Indian equity markets.

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At the close on Wednesday, overseas investors were gross buyer of shares worth 4,17,121 crore and gross sellers of stocks valued at Rs 3,73,283 crore, resulting in a net flow of Rs 43,837 crore into the stock markets so far this year.

This latest data has been announced by the market regulator Securities and Exchange Board of India (SEBI).

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Significantly, the Bombay Stock Exchange benchmark Sensex has gained nearly 73 per cent so far this year.

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The National Stock Exchange barometer Nifty – composed of 50 shares — has also advanced fairly and for the first time in more than a year it touched 5,000 level on Thursday.

(Read more about that on previous blog).

Global fund houses have made a total net investment of Rs 3,564 crore so far in September, according to the SEBI data.

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After pulling out a huge sum of Rs 52,986 crore (USD 11.9 billion) from the local stock markets, foreign investors are now moving their money towards emerging economies like India.

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However in debt market segment, overseas investors have not turned net investor so far this year.

FIIs were net sellers of debt instruments worth Rs 527 crore (USD 49 million) in 2009 so far according to the latest data received from the market regulatory body,SEBI.

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