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.