The key benchmark indices cut losses after slipping in red from a firm start triggered by positive Asia. Metal and realty stocks led the fall. The BSE 30-share Sensex was down 36.65 points or 0.22% off close to 90 points from the day's high and up close to 65 points from the day's fall. The market breadth was negative. Oil exploration stocks fell on fall in crude oil prices but PSU OMCs gained. Index heavyweight Reliance Industries extended Friday's losses after its partner Hardy Oil said on Friday a D9 well will be plugged and abandoned. India's largest car maker by sales Maruti Suzuki India rose on strong Q2 result. Ranbaxy Labs also rose on strong Q2 result
However volatility may remain high as investors rollover positions from October 2009 contracts to November 2009 contracts in the derivative segment, ahead of the expiry October 2009 contracts on Thursday, 29 October 2009.
Faster industrial output growth and rising inflationary pressures have strengthened case for an end to the RBI's accommodative monetary stance next year. Industrial output grew at its fastest pace in 22 months in August 2009 at 10.4%. Inflation based on the wholesale price index (WPI) rose 1.21% in the year through 10 October 2009, higher than previous week's annual rise of 0.92%, data released by the government on 22 October 2009 showed.
The RBI pumped in massive liquidity in the banking system in the past one year or so to help revive the domestic economy in the aftermath of the global financial crisis. While as exit from the loose monetary policy is imminent, speculation on the bourses is the timing of the exit policy. The RBI is expected to keep its benchmark lending and borrowing rates on hold at a quarterly monetary policy review on Tuesday, 27 October 2009.
A section of market, however, expects the RBI to raise the cash reserve ratio (CRR), the proportion of deposits that banks keep with the central bank, to tame inflationary pressures in the economy. A possibility of a hike in the statutory liquidity ratio (SRL) cannot be ruled out either. In November 2008, the RBI had reduced the SLR by one percentage point to 24% - its first move in 11 years - as part of its measures to boost liquidity to cushion the impact of the global credit crisis after Lehman Brother's collapse. SLR is the minimum share of bank deposits to be held in approved government securities.
Stock and sector-specific activity may dominate trade on the bourses in the coming days based on expectations on Q2 September 2009 results. Auto firms are seen reporting strong Q2 results on strong volume growth and on lower input costs. Lower interest rates and pay hike for government employees has boosted auto sales this year after last year's slowdown in demand. Government employees have started receiving the balance 60% of their wage arrears as per the recommendations of the VIth Pay Commission.
Cement firms, too, are seen reporting good Q2 numbers on the back of volume growth, higher realisation and decline in costs like imported coal. Metal firms are seen reporting fall in net profit due to a sharp fall in metal prices on year-on-year basis.
Fall in volumes in the commercial property segment and lower realisations in both commercial and residential property segments, will pull earnings of realty firms lower.
Banks are seen reporting a sedate growth in core lending amid sluggish credit offtake. On the flip side, PSU banks will benefit from treasury gains amid volatility in prices of government securities during the quarter.
Strong growth in new subscriber additions will aid topline growth of telecom firms. But falling average revenue per user (ARPU) and revenue per minute due to intense competition will cap bottom line growth.
Asian stocks gained on Monday on signs the global economy is recovering. Key benchmark indices in China, Singapore, Japan, South Korea and Taiwan rose by between 0.06% to 1.71%.
South Korea's economy expanded at the fastest pace in seven years. Gross domestic product increased 2.9% in the third quarter from three months earlier, when it grew 2.6%, the central bank said in Seoul today
Trading in US index futures indicated Dow could rise 14 points at the opening bell on Monday, 26 October 2009.
But the earnings-fueled rally fizzled on the Wall Street on Friday, 23 October 2009, as investors began to lock in some profits. The Dow Jones Industrial Average was down 109.13 points, or 1.1%, to 9,972.18. The S&P 500 Index fell 13.31 points, or 1.2%, to 1,079.60. The Nasdaq Composite slipped 10.82 points, or 0.5%, to 2,154.47.
Microsoft's results beat Wall Street expectations. Amazon too reported better-than-expected third quarter profit and stronger sales outlook.
Back home, the supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary equity market. As per reports, Indian firms have garnered about $9 billion (Rs 32,400 crore at the current exchange rates) through sale of shares and convertible bonds to institutional buyers since April 2009. Indian companies are taking advantage of a surge in liquidity to recapitalize and fund capital expenditure after being starved of cash last year.
Most of these companies - from industries ranging from liquor and spirits to infotech - issued equity shares to a select group of investors by way of qualified institutional placement or QIP. If the enabling resolutions passed by the companies are any indication, Indian firms are gearing up to raise $15 billion (Rs 69,427 crore) in the next six months. The list includes Hindalco (Rs 2,900 crore), JSW Steel ($1 billion), India Cements ($100 million), Essar Oil ($2 billion), Tata Steel (Rs 5,000 crore), Jet Airways ($ 400 million) and Bharat Forge ($150 million).
Unlisted Reliance Infratel announced on 22 September 2009 its intention to raise Rs 5,000 crore from the primary market. Divestment of state-run firms by the government may also increase the supply of paper in the market.
The government last week approved stake sales in state-run power producer NTPC and another unlisted power firm Satluj Jal Vidyut Nigam which reflects the country's resolve to speed up reforms and raise more resources for social schemes. On Monday, Trade Minister Anand Sharma said the Union Cabinet had approved a 5% stake sale in NTPC, and 10% in, an unlisted power producer. On Friday, 16 October 2009, Prime Minister Manmohan Singh said many state-run firms are eager to list their shares in the stock market as it would help unlock their value.
The government has approved a follow-on public offering of 20% of state run Steel Authority of India, the steel minister said on Wednesday, 21 October 2009. The Government of India owns nearly 86% of Sail.
At 10:20 IST, the BSE 30-share Sensex was down 36.65 points or 0.22% to 16774.16. The Sensex rose 56.76 points at the day's high of 17,867.57 in early trade. The barometer index fell 102.15 points at the day's low of 16,708.66 in early trade.
The S&P CNX Nifty was down 17.75 points or 0.36% to 4,979.30.
The market breadth, indicating the overall health of the market was negative. On BSE, 613 shares advanced as compared with 737 that declined. A total of 30 shares remained unchanged.
Among the 30-member Sensex pack, 20 fell while rest rose.
The BSE Mid-Cap index fell 1.01% and the BSE Small-Cap index fell 0.71%.
Energy major Reliance Industries fell 1.24% to Rs 2022 extending fall for the second straight day. The stocks fell 4.04% on Friday as partner Hardy Oil said on Friday a D9 well will be plugged and abandoned. Hardy holds a 10% participating interest in the D9 block, which is located in the Krishna Godavari basin on the east coast of India. Reliance Industries is the operator and holds a 90% stake.
Meanwhile, RIL told the Supreme Court on Thursday it had no knowledge of the pact between its chairman Mukesh Ambani and his younger brother Anil. On the third day of hearing on the gas supply dispute between the group firms of the Ambani brothers, Justice R.V. Raveendran asked RIL to satisfy the bench that the MoU, signed in 2005, was not between two companies, but two individuals. The bench also enquired if the pact, which has not been made public till date, could be produced before the court.
Mukesh Ambani-controlled Reliance Industries, India's top conglomerate, is fighting with Reliance Natural Resources, led by younger brother Anil Ambani, over the terms of a deal to sell gas to Reliance Natural at below the price set by the government. Reliance Industries has been presenting initial arguments in the case before the Supreme Court since Tuesday, saying the private deal between the Ambani brothers is not binding on the company, and it can sell the gas only at the government-approved price.
The government, which has the power to decide who can buy gas and at what price, had filed an application asserting it is the rightful owner of the disputed gas.
Anil Ambani's Reliance Natural Resources claims the contract is valid and wants the court to direct Reliance Industries to supply it with 28 mmscmd of gas for 17 years at almost half the government-set price of $4.2 per mmBtu.
The Supreme Court will resume hearing the case next Tuesday, with Reliance Industries expected to conclude its initial arguments by Thursday, 29 October 2009. The court will then hear arguments by Reliance Natural Resources, following which it will consider a petition by the government to become a party to the dispute.
Oil exploration stocks fell as crude oil fell for a third day on Monday in New York after four weeks of gains pushed prices above levels justified by a recovery in demand.. Fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms. Crude for December delivery fell as much as 93 cents, or 1.2 percent, to $79.57 a barrel on the New York Mercantile Exchange.
Cairn India fell 1.56%. UK-based oil and gas exploration major Cairn Energy Plc recently mopped up $240 million by selling 2.3% in its Indian subsidiary Cairn India to Malaysia's Petronas International Corporation.
With this move, Petronas' stake in Cairn India jumps to 14.94%, within touching distance of an open offer trigger. Cairn UK now retains a 62.75% interest in Cairn India, which made a major oil discovery (Mangala) in Rajasthan in the north west of India in 2004. Cairn India, the Indian arm of the UK firm, has interests in a total of 13 acreage blocks in India and Sri Lanka.
India's second biggest state-run oil exploration firm by revenue Oil India fell 1.11%.
But, India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) rose 0.2%. ONGC has bagged over a third of the 70 blocks offered under the government's eighth New Exploration Licensing Policy (NELP 8), amid luke-warm response towards the bidding round. ONGC bid for 25 blocks and was awarded 11 offshore and two onshore concessions.
Nearly half of 70 blocks offered under NELP 8 found no bidder, with 76 bids submitted for 36 exploration blocks, D.N. Narasimha Raju, joint secretary in the oil ministry said on Monday.
PSU OMCs rose as lower crude oil prices will reduce under-recoveries on domestic sale of petrol, diesel, kerosene and LPG at controlled prices. HPCL, BPCL, Indian Oil Corporation (IOC) fell by between 0.37% to 0.45%.
Govinda Rao, a member of the Prime Minister's Economic Advisory Council last week said there is no need to raise fuel prices, if global oil prices remain in the range of $70 to $75 a barrel. Rao said the government expects international crude oil prices to hover around $70 to $75 per barrel. If prices go beyond that consistently, then the numbers will have to change, Rao said.
India's largest drug maker by sales Ranbaxy Laboratories rose 2.91% after it reported net profit of Rs 186.08 crore in Q3 September 2009 compared to a net loss of Rs 352.93 crore in Q3 September 2008. Results hit market during market hours today.
India's largest car maker by sales Maruti Suzuki India rose 1.23% after net profit rose 92.5% to Rs 570 crore on 46.6% rise in sales to Rs 7080.67 crore in Q2 September 2009 over Q2 September 2008. The company announced the results on Saturday, 24 October 2009
Maruti said the company remains cautiously optimistic with regard to volume growth in the near future. It said margins in the future may be under pressure due to hardening of commodity prices and strengthening of the Japanese yen. The company said it continues to focus on cost optimization.
India's largest commercial vehicle maker by sales Tata Motors fell 0.l71% ahead of its Q2 September 2009 result today.
Realty stocks fell on profit taking. Indiabulls Real Estate, Unitech, Omaxe, DLF fell by between 2.28% to 2.57%. The stocks rose recently on reports that demand for residential projects in major cities is picking up on lower home loan rates, property price cuts by developers and a recovery in the job market. The housing market had slumped last year amid a global credit crunch and buyers fearing job losses
Metal stocks also fell on profit taking after recent strong gains. Hindustan Zinc, National Aluminum Company, Hindalco Industries fell by between 0.25% to 1.85%.
India's largest steel maker by sales Tata Steel fell 0.5%. Tata Steel and state-run MMTC signed an agreement to set up a joint venture to acquire, develop, operate mines and process minerals and metals. Tata Steel would hold 74 % stake in the proposed JV, while the remaining 26% will be held by MMTC
India's largest copper maker by sales Sterlite Industries fell 1.48%. The company, last week, raised $500 million in convertible senior notes and plans to use the proceeds primarily for expansion of its copper business. The notes are convertible into American depositary shares at $23.33 per share.
Steel Authority of India (Sail) fell 2.03%. The steel minister said last week the government has approved a follow-on public offering of 20%. The government holds 85.82% stake in Sail.
Powered by Capital Market - Live News