“The financial markets generally are unpredictable. So that one has to have different scenarios... The idea that you can actually predict what's going to happen contradicts my way of looking at the market.”

Tuesday, March 11, 2008

Market Commentary-11/03/2008

Sensex regains 16,100; realty, capital goods shares rally

Local markets managed to post decent gains in choppy trade boosted by steady buying demand for index pivotals and short covering at lower level after the recent fall. Firm global markets also lifted the sentiment. The total turnover on BSE crossed Rs 7000 core. It had opened lower tracking weak US markets. European markets extended early gains. Asian markets also reversed early losses to post gains.

17 shares from the 30-member Sensex pack advanced. The market breadth was strong after initial weakness. Shares from real estate, capital goods, sugar and oil & gas rallied on fresh buying.

The 30-share BSE Sensex gained 199.43 points or 1.25% at 16,123.15. It opened slightly lower at 15,778.27 and slipped further to touch a low of 15,739.05 in early trade. At the day’s low, the Sensex lost 184.67 points. It gained 244.41 points at day’s high of 16,168.13 hit in early afternoon trade.

China's trade surplus shrinks

China's trade surplus has shrunk to roughly a third of the level in the same month a year ago.

Customs authorities in China have put the figure at US$8.56 billion dollars in February.

Economists had been expecting a weakening of export performance, due to economic woes in the US, which have made consumers less likely to but Chinese-made goods.

They have also warned that China's exports are under threat from a variety of factors, including a strengthening of the yuan, the local currency.

Market News-11/03/2008

L&T takes a hit on bad hedge call disclosure
Engineering major Larsen & Toubro’s one of its subsidiaries in West Asia may incur a loss of Rs 200 crore on commodity-hedging bets gone wrong, erasing last year's profit at that unit. L&T International FZE, a Sharjah (United Arab Emirates)-based arm of L&T, may post a loss of Rs 200 crore because it bet against a decline in prices of zinc and other commodities.
L&T has a large exposure to commodities. It has an order book of $6 billion of which 30 to 40 per cent relates to the commodities. However the company has maintained that it has currently reduced exposure to a considerable extent. Further it has maintained its guidance on order booking, sales and operating margins for the year with an emphasis on improvement in the operating margins.

Rupee depreciates at an accelerated rate
After almost a year of sharp appreciation against major currencies, Indian rupee has actually depreciated in the last seven sessions between 27th February and 10th March 2008. During this period, Indian rupee depreciated by 6.9% against Japanese Yen, 4.7% against Euro, 3.7% against Great Britain Pounds and by 2.3% against US dollars. This has come as welcome breather for the exporters (particularly IT & textiles companies), provided they had not taken otherwise call and hedged their positions.

Government expects fall in spectrum charges
Indian telecom subscriber base grew by 28.5% in FY 2004-05, but the growth leaped to 44.4% in FY 2005-06, and to 44.9% in FY 2006-07. The growth continues, but at a decelerated pace on the higher base, at 36.8% in the ten months ended January 2008. The spectrum charges collected by the Government from the mobile operators were around Rs 1,957 crore in FY 2006-07, but have zoomed by over 74% on annualized basis to about Rs 2,845 crore in the ten months ended January 2008

Monday, March 10, 2008

Market Commentaries-10/03/2008

The two niche indices, BSE Sensex and S&P CNX Nifty, saw divergent trend with the later posting gains helped by spurt in non-Sensex constituents viz. Reliance Petroleum and Cairn India. But a key reason for the divergence of the two indices was a sharp fall in L&T. L&T has a much higher weightage of 7.18% in Sensex compared to the stock's 3.16% weightage in Nifty.

The market staged a solid rebound in second half after suffering a sharp fall earlier in the day as Hong Kong's Hang Seng index moved into green from red. The market had tumbled earlier in the day after a surprisingly weak US employment data on Friday, 7 March 2008, heightened fears of a US recession.

Reliance Industries staged a strong comeback. Heavyweights from the capital goods sector regained some ground after early sell-off. The market breadth, however, remained weak. 16 shares from the 30-member Sensex pack advanced.

The next trigger for the market would come from the figures of advance tax payment by corporates for the fourth installment, which falls due on 15 March 2008.

Wall Street banks making big margin calls

A rolling margin call is being made on US investment firms.

JPMorgan Chase have revealed in a report that more default notices and margin calls are likely.

JPMorgan, which sent a default notice to Thornburg Mortgage after the lender missed a $28 million margin call, said the Carlyle Group had also missed a $37 million margin call.

In the report, the banks analysts said the credit crisis that began about a year ago would most likely intensify after Friday's weak February US employment report.

The JPMorgan report included a revised bleaker forecast for subprime-related home prices.

The bank now sees prices falling 30 percent, from its prior 25 percent forecast.

Market News-10/03/2008

SBI cashes in on realty boom, to beef up Tier II capital
Rising property prices have prompted State Bank of India, the country’s largest lender, to reassess its fixed assets, including some of the palatial office buildings that have been assessed at just Re 1 since the days of the Raj. The first-time move is aimed at unlocking value and strengthening its balance sheet. About half the gains post-revaluation will be added to the bank’s capital. Sources said nearly Rs 1,800 crore would be added to tier II capital.

RIL to surrender 3 blocks in Kerala-Konkan basin
On Government deciding against granting special status to the three blocks of RIL, it has decided to surrender these blocks in the Kerala-Konkan (KK) basin. Both RIL and ONGC had sought special R&D status for their blocks in region, which would have given them five additional years for undertaking exploration and production activities

Patel Engineering sets sights on expansion overseas
Patel Engineering, a leading player in the construction of dams, hydropower and sewage projects, is aiming to ramp up its presence in export markets such as US and Africa. Towards this end, the company plans to invest nearly $100 million (about Rs 400 crore) over the next two years, in equipment and allied areas. Patel Engineering aims to earn about 25 per cent of its turnover from foreign markets over the next two years, against about 10 per cent of its Rs 1132.87 turnover earned from foreign markets in the first nine months of fiscal 2007-08. The company’s total order book at the end of the December 2007 quarter was worth nearly Rs 5,500 crore.