stocks that are in news today:
-Everonn Systems changes its name to Everonn Education
-Temptation Foods sells further 2.23% stake in Kohinoor Foods, stake down to 5.6%
-Titan block deal: Tata Chemical sells 8.1 lakh shares @ Rs 1223.40/sh to Tata Sons for Rs 98 crore
-Ex-bonus: Jindal Steel & Power ((5:1))
-Ex-dividend: BEL (Rs 12.70)
-Punj Lloyd bags Rs 550 crore order
-Patni promoters revive stake sale talks – BS
-PNB to sell NPAs worth Rs 540 crore – BS
-Tinplate Rights issue opens on September 17, ratio 3 shares for 2 shares held at Rs 45/share
-3G auction slated to start on December 7
-Wockhardt offers 65% discount to FCCB holders, $110 million bonds redeem on October 25, but CDR banks will have a final say – DNA
-Tata Motors plans to raise Rs 2,000 crore via GDR issue – Mint
-RBI approves further FII buying in Spanco and Tribhuvan housing
ketan lakhani: Govt reacts to ADAG: govt sources say
-Govt only fixes landfall price & allocates gas
-Other terms of sale decided between buyer & seller
-Buyers can approach various bodies for relief
-Buyers can always sign GSPAs under protest
-RNRL itself buyer of gas for 1 plant in Andhra Pradesh
NIFTY FUTURES LEVELS
SUPPORT
4818
4808
4783
4775
4750
RESISITANCE
4855
4866
4891
4899
4924
Buy SHRIRAM TRANS FI;AXIS-IT&T
Strong & Weak futures
This is list of 10 strong futures:
Orient Bank, Jindal Saw, Allahabad Bank, Hindalco, Bhushan steel, Chennai Petro, Patel Engineering, Tata Motors, Hind Zinc & IOB.
And this is list of 10 Weak futures:
India Cements, McDowell, TV-18, FinanTech, Triveni, ACC, Bajaj Hind, Dish TV, Hind Uni Lvr & Bharti Airtel.
Nifty is in Up trend
NIFTY FUTURES (F & O):
Below 4818 level, expect profit booking up to 4808-4810 zone and thereafter slide may continue up to 4783-4785 zone by non-stop.
Hurdles at 4852 & 4855 levels. Above these levels, rally may continue up to 4864-4866 zone and thereafter expect a jump up to 4889-4891 zone by non-stop.
Cross above 4897-4899 zone, can take it up to 4922-4924 zone. Supply expected at around this zone and have caution.
On Negative Side, rebound expected at around 4775-4777 zone. Stop Loss at 4750-4752 zone.
Short-Term Investors:
Bullish Trend. 3 closes above 4780.25 level, it can zoom up to 4999.55 level by non-stop.
BSE SENSEX:
Lower opening expected. Recovery should happen.
Short-Term Investors:
Short-Term trend is Bullish and target at around 16824.77 level on upper side.
Maintain a Stop Loss at 16044.77 level for your long positions too.
positional BUY:
Buy SHRIRAM TRANS FI (NSE Cash) Uptrend may continue.
Support at 372 level and correction up to this level is possible. Traders can expect uptrend up to 379 level. If crosses 383 level then it will zoom.
Keep a Stop Loss at 369 level for your long positions.
Buy AXIS-IT&T (NSE Cash)
Uptrend may continue.
Support at 58 level and correction up to this level is possible. Traders can expect uptrend up to 60 level. If crosses 61 level then it will zoom.
Keep a Stop Loss at 57 level for your long positions.
Global Cues & Rupee
The Dow Jones Industrial Average closed at 9,605.41. Down by 22.07 points.
The Broader S&P 500 closed at 1,042.73. Down by 1.41 points.
The Nasdaq Composite Index closed at 2,080.90. Down by 3.12 points.
The partially convertible rupee INR=IN closed at 48.48/49 per dollar on Friday, stronger than its previous close of 48.63/64.
Interesting findings on web:
The Dow Jones industrial average fell 22.07, or 0.2 percent, to 9,605.41.
The Dow Jones Industrial Average, which has risen nearly 350 points over the last five sessions, was recently off 26 points at 9602. Financials were among the leading decliners, as American Express tumbled 1.4% and Bank of America and JPMorgan each slid nearly 1%. Intel and Chevron also weighed, with declines of more than 1%.
The Dow closed fractionally below the closing level on September 10, 2001 of 9,605.51. The stock market reopened after the terror attacks, on September 17.
The broader Standard & Poor's 500 index fell 1.41, or 0.1 percent, to 1,042.73, and the Nasdaq composite index fell 3.12, or 0.2 percent, to 2,080.90.
The S&P 500 slipped, with every sector except industrials in the red. Its financial and consumer-discretionary sectors had the biggest declines, down 0.7% and 0.5%, respectively.
The three major indexes rose for the week.
RUSSELL declines to 593.59-1.31-0.22%.
Despite their declines Friday, all three major market measures are still up on the week, thanks to a rally the first three trading days of the week that sent stocks Thursday to their highest point this year. It came as traders returned from the extended Labor Day weekend making riskier bets, increasing volume and allaying fears that September - historically a bad month for stocks - would deliver the correction to the summer rally many said was due.
"It's been quite a while since we had five consecutive plus days like we did," said Linda Duessel, equity market strategist at Federated Investors. Given that new highs for the year were reached during the five-session winning streak, a small pullback on Friday wasn't a surprise, she said.
"It's a well-deserved rest for a stock market that continues to climb a wall of worry," Duessel added.
The Dow Jones Transportation Average was one measure that rose Friday.
Transportation stocks have been leaders throughout the market's recent winning streak, with many investors placing bets that trucking companies, railroads and shipping companies will be among the first to benefit as economic activity picks up.
"It's been clear for some time that there's been little risk in these stocks, unless they go bankrupt, which didn't seem likely," said Don Hodges, chairman of Hodges Capital Management in Dallas. "Now that things are improving [in the economy] a bit, they're picking up."
Gains in industrial stocks came at the expense of areas that have been leaders in the market's six-month rally such as technology and financial shares.
"The market always overshoots on either side. I think we're at the point in the move where we need to see the fundamentals catch up to support these levels," said Sean Simko, head of fixed income management at SEI Investments in Oaks, Pennsylvania. "In the short-term, the market is going to take a little breather."
Wall Street retreats as energy prices drop and investors show fatigue after a run that put the Dow, S&P and Nasdaq at 2009 highs.
Stocks slip after 5-day advance.
Stocks slipped Friday, as falling oil prices dragged on the influential commodities sector and investors took a step back after pushing the major indexes to 11-month highs in the previous session.
Stocks managed slim gains through midday as investors welcomed FedEx's upbeat profit forecast and a jump in consumer sentiment, but the gains were shaky on the heels of a five-session advance.
"Though stocks slipped for their first time in six sessions to finish the week in unimpressive fashion, stocks were still able to log their best weekly gain since July by advancing 2.6 percent in this holiday-shortened week of trade," Briefing.com analysts said in a note to clients.
Fred Dickson of DA Davidson & Co. said the market remained bullish, but cautioned it "should continue to experience rallies interspersed with short, shallow pullbacks such as witnessed at the end of August."
Traders were "in a somber mood" on the eighth year anniversary of the September 11 Al-Qaeda terror attacks that killed 3,000 people, many of them workers in the financial industry at the World Trade Center, Charles Schwab & Co. analysts said in a client note.
On Thursday, stocks rallied as a well-received debt auction and Procter & Gamble's improved forecast added to recovery hopes.
The weak dollar, higher commodity prices and investor fears of missing out on a rally have all contributed to the rally's most recent leg. However, this week's advance has been fueled by light trading volume, suggesting investors are reluctant to commit.
Investors have also been pulling money out of stocks and funds and putting it into cash or bonds. Tracker Trim Tabs said equity mutual funds and ETFs are on track to post the first monthly outflows since March.
Since bottoming March 9 at a more than 12-year low, the S&P 500 has risen 54% as investors have gone from pricing in a depression to a recession to a recovery.
The pace of the advance, combined with the seasonal tendency for September and October to be weak for stocks, led many to predict a fall selloff. But that hasn't happened and doesn't seem to be brewing as of yet.
The CBOE Volatility index, the VIX, Wall Street's fear gauge, closed Friday at the lowest point since Sept. 8 of last year. Typically, the VIX moves inversely to the direction of stocks.
Tuesday marks the first anniversary of the collapse of Lehman Brothers, an event seen as exacerbating the recession and pushing the economy into crisis mode.
Ahead of that, President Obama will speak Monday about the steps his administration has taken to "bring the economy back from the brink" and make sure a collapse at that level doesn't happen again.
Only nine of the Dow's 30 blue-chip stocks finished in the green.
Weighing on the Dow were oil heavyweights Chevron, down 0.98 percent at 70.75 dollars, and ExxonMobil, off 0.95 percent at 69.98 dollars.
"Both equities and oil are exhausted. Money has been coming out of dollar into equities and holding up energy all this week," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.
But he added that as long as the U.S. dollar remains weak, stocks will not see a hefty correction since cash was moving out of the dollar and into risk-associated assets. The U.S. dollar fell to a one-year low against major currencies on Friday.
However, stock declines were broad based, with 21 of 30 Dow issues falling. In addition to the oil components, other big losers included IBM (IBM, Fortune 500), Hewlett-Packard (HPQ, Fortune 500) and Procter & Gamble (PG, Fortune 500).
Upbeat economic data in China and better-than-expected guidance from US delivery giant firm FedEx had underpinned sentiment.
FedEx, often seen as a proxy for the economy, lifted its fiscal first- and second-quarter earnings forecasts due to cost cutting and stronger international shipments.
FedEx said it expects to earn 58 cents per share in the first quarter versus its earlier forecast for a profit of 44 cents per share. The company expects to earn between 65 cents and 95 cents per share in the second quarter versus its earlier prediction of 70 cents.
FedEx (FDX, Fortune 500) shares gained 6.4%.
The news also gave a boost to shares of rival package-delivery service UPS [UPS 58.80 2.50 (+4.44%) ], which gained 4.4 percent.
Morgan Stanley advanced 0.63 percent to 28.82 dollars. The Wall Street investment giant announced Thursday that John Mack will step down as chief executive in January but remain chairman. Mack will be succeeded by co-president James Gorman.
Financials were back in the spotlight after Treasury Secretary Timothy Geithner said the US government is anxious to shed stakes in financial companies but will take care not to do so too soon.
"The classic mistake that countries make in crises is they put the brakes on too early, they reignite the recession ultimately at much greater fiscal costs and much greater damage to the economy. That's the balance we've got to get right," Geithner told a CNBC town hall meeting.
Goldman Sachs [C 4.61 -0.14 (-2.95%) ] ended slightly lower, even after Citigroup raised its earnings projection for the firm, saying Goldman is poised to gain market share amid strong capital-markets activity, a drop in systemic risk and a better deal climate.
Campbell Soup [CPB 33.13 0.01 (+0.03%) ] shares finished flat after the company beat earnings expectations, helped by higher prices and increased sales of condensed soup and Prego pasta sauce as cost-conscious consumer ate at home more. The company also projected full-year earnings would top expectations.
In deal news, HSBC [HBC 54.78 -0.07 (-0.13%) ] has made a $1.63 billion bid for Dutch financial group ING's private banking business, Reuters said, quoting a report in The Sunday Times. Other bids are expected from DBS, a Singaporean investment fund, and Swiss wealth manager Julius Baer. American depositary shares of ING [ING 16.42 -0.32 (-1.91%) ] fell.
And Delta [DAL 8.06 -0.04 (-0.49%) ] may invest tens of billions in Japan Airlines [JAL 297.11 -3.42 (-1.14%) ], Asia's largest airline by revenue.
Alcoa [AA 12.99 0.15 (+1.17%) ] shares rose 1.2 after the aluminum producer and Dow component said it will continue working with Chinese companies in a quest for mergers and acquisitions.
Oil-services giant Schlumberger [SLB 60.39 1.96 (+3.35%) ] rose 3.4 percent after Goldman raised its rating on the company to a "buy" and reiterated its positive view on the space.
Shares of Wynn Resorts [WYNN 64.50 2.35 (+3.78%) ] were among the biggest percentage gainers on the Nasdaq, climbing nearly 4 percent, amid buzz that casino operator plans to raise up to $1 billion by listing its Macau assets on the Hong Kong stock exchange.
And Motorola [MOT 8.68 0.71 (+8.91%) ] jumped nearly 9 percent as analysts are optimistic about the firm's new cellphone, which it developed with Google [GOOG 472.14 1.20 (+0.25%) ]. RBC raised its price target on the stock to $10 and gave it a "sector perform" rating.
Harmony Gold gained 1.96 percent to 11.43 dollars, as gold prices surged, topping 1,000 dollars an ounce in New York.
Delta Air Lines dipped 0.49 percent to 8.06 dollars after Japanese broadcaster NHK reported Delta is in talks to buy a stake in cash-strapped Japan Airlines, Asia's biggest carrier, making the US airline JAL's biggest shareholder.
Monsanto fell 1.60 percent to 78.03 dollars. The seed giant said late Thursday it would cut about 1,800 jobs worldwide in the current fiscal year, double the number previously announced.
Medtronic Inc (MDT.N) fell 2.9 percent to $37.90 after it said it was warning doctors about problems with 6,300 implantable heart devices because the batteries in the devices drain sooner than normal.
Regent Communications (NASDAQ: RGCI), a penny stock, was the biggest gainer, up almost 8 percent, while Fifth Third Bank (NASDAQ: FITB) was the biggest loser of the day, down more than 6 percent.
The action came after Wall Street's main indexes jumped to 11-month highs Thursday as encouraging corporate news and generally positive economic data helped the market make its fifth daily gain.
Al Goldman, chief market strategist at Wells Fargo Advisors, pointed out the market has shrugged off a 56 percent rally from March lows and the uncertainty of the outlook for corporate earnings and the recession-stricken economy.
"Market action says the correction is over and we thus removed the word 'cautious' from our advice to be short-term cautiously optimistic. Starting about two weeks ago, we advised investors to buy (on) intraday pullbacks. We now simply say 'be a buyer,'" he said.
The University of Michigan's initial reading on consumer sentiment rose to 70.2 in September from 65.7 in late August. That topped the 67.5 reading economists surveyed by Briefing.com were expecting and is the highest reading since June.
"The improvement reflects the fact that stocks have risen more than 50% since March, home prices are stabilizing and the economy is starting to recover," said John Canally, economist at LPL Financial.
But for sentiment to make more substantial gains, investors will need to see a recovery in the labor market, Canally said.
"The last piece of the puzzle will come in when people have confidence that they are going to have a job," he said. "That's going to help boost consumer spending."
The report showed that only 16% of consumers said their finances had improved, the smallest percentage on record since the university first asked the question in 1946. Only 25% of consumers said they expected income gains over the next year.
In other economic news, the Commerce Department reported that wholesale inventories fell 1.4% in July after falling a revised 2.1% in June. Economists surveyed by Briefing.com thought inventories would fall by 1%. It was the 11th consecutive month investors dropped.
Additionally, the Bureau of Labor Statistics said August import prices rose 2% versus forecasts for a rise of 1%. Import prices excluding oil rose 0.4% after falling 0.2% in July. Export prices rose 0.7%.
The August Treasury budget was released in the afternoon. The deficit grew by $111.4 billion in August versus forecasts for a deficit of $139.5 billion. The deficit for the first 11 months of the fiscal year stood at $1.38 trillion.
In other news, the New York Stock Exchange commemorated the 8th anniversary of the 9/11 terrorist attacks on New York and Washington D.C. at the ringing of the opening bell and closing bell.
Oil,Gold & Currencies:
Benchmark crude for October delivery tumbled $2.65 to $69.29 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery rose $9.60 to settle at a record $1,006.40 an ounce, after topping the key $1,000 level during the day for the past three sessions.
Meanwhile, gold hit a seven-month high above $1,011 an ounce as investors were looking for a hedge against the dollar's slide, before settling at $1,006.40.
The dollar continued its slide against other major currencies, falling to multi-month lows versus the euro and the Japanese yen.
The dollar and the yen rose against the euro on speculation trade protectionism between the U.S. and China will increase, boosting demand for the relative safety of the two currencies.
The U.S. currency gained versus 15 of its 16 major counterparts after China announced a probe into the alleged dumping of American auto and chicken products, two days after the Obama administration imposed tariffs on imports of tires from the Asian nation. The yen climbed toward a seven-month high against the dollar on prospects Japanese investors will repatriate earnings before the end of the fiscal first half this month and as Asian stocks declined.
"The dollar should bounce back on the back of trade tensions that have occurred over the weekend between the U.S. and China," said Greg Gibbs, a currency strategist in Sydney at Royal Bank of Scotland Group Plc, in a Bloomberg Television interview. The news is "creating some fears this could spill over to U.S. equity markets or equity markets in general and take some of that risk appetite off the table," he said.
The dollar advanced to $1.4545 per euro as of 11:25 a.m. in Tokyo from $1.4571 in New York on Sept. 11. It earlier touched $1.4608, near the year-to-date low of $1.4634. The U.S. currency traded at 1.0394 Swiss francs after falling to 1.0340 on Sept. 11, the weakest level since July 29, 2008.
The yen climbed to 131.46 per euro from 132.17 in New York on Sept. 11. The Japanese currency rose to 90.38 against the dollar from 90.71, after earlier gaining to 90.21, the highest level since Feb. 12.
Asian stocks declined, with the MSCI Asia-Pacific Index of regional shares dropping 1.4 percent and futures on the Standard & Poor's 500 Index falling 0.9 percent.
'Unfair Trade Practices'
Chinese industries have complained that they're being hurt by "unfair trade practices," the nation's Ministry of Commerce said on its Web site yesterday. The Beijing-based ministry is also looking into subsidies for the products, it said. It didn't specify the imports' value.
The European Central Bank said last week that rising protectionism may hamper world trade and undermine the global economy's recovery from recession. The U.S. placed tariffs starting at 35 percent on $1.8 billion of tire imports from China, backing a United Steelworkers union complaint against the second-largest U.S. trading partner.
The dollar benefits from risk aversion because it is the world's main reserve currency. Japan's currency typically rises during times of financial turmoil because the nation's trade surplus means the country doesn't have to rely on overseas lenders.
The yen strengthened against all 16 major currencies on prospects that Japanese companies will bring back their overseas earnings to take advantage of a tax break that went into effect this fiscal year.
Yen Repatriation
"There are expectations for yen repatriation ahead of Japan's half fiscal year end," said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. "The yen is likely to appreciate further."
The Japanese government announced this year that it would waive taxes on repatriated profits from April 1 to help support the economy. Under previous laws, companies had to pay a combined 40 percent tax on overseas earnings.
Japanese investors sold 205 billion yen ($2.3 billion) more in overseas securities including bonds and notes than they bought during the week ended Sept. 5, according to figures from the Ministry of Finance in Tokyo on Sept. 10.
Bonds:
Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.31% from 3.35% late Thursday. Treasury saw strong demand for its auction of $32 billion in long-term bonds earlier this week.
What to expect:
Among the highlights for next week, President Obama will speak on financial reforms on Monday. Plus, readings on consumer prices, producer prices, retail sales, housing starts and industrial production. And earnings reports from Best Buy, Oracle, FedEx and Palm.
MONDAY: Obama speech; Fed's Lacker, Yellen speakTUESDAY: PPI; retail sales; Empire State survey; business inventories; earnings from Best Buy, Adobe
WEDNESDAY: Weekly mortgage applications; CPI; current account; industrial production; weekly crude inventories; earnings from Oracle
THURSDAY: Housing starts; weekly jobless claims; Philly Fed; Earnings from FedEx
FRIDAY: Quadruple witching
Asia:
Asian stocks fell, dragging the MSCI Asia Pacific Index from a one-year high, as the dollar weakened and New Zealand retail sales unexpectedly fell.
Honda Motor Co., which gets 47 percent of its sales in North America, retreated 2.6 percent in Tokyo on concern the yen's appreciation will lower the value of overseas revenue. Fisher & Paykel Appliances Holdings Ltd. lost 1.3 percent in Wellington after sales at New Zealand's retailers dropped 0.5 percent in July. Santos Ltd., Australia's No. 3 oil producer, sank 3 percent as commodity prices declined.
"Expectations may be beginning to moderate regarding the ongoing strength of the recovery," said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. "Investors will be concentrating on discerning real underlying growth in the global economy."
The MSCI Asia Pacific Index sank 1.6 percent to 115.93 as of 11:06 a.m. in Tokyo after ending last week at its highest level since Sept. 9, 2008. The gauge has climbed 64 percent from a five-year low on March 9 as government stimulus measures worldwide pulled the global economy out of recession.
Japan's Nikkei 225 Stock Average fell 2.5 percent, while Hong Kong's Hang Seng Index dropped 1.6 percent. Australia's S&P/ASX 200 Index declined 1.1 percent as Treasurer Wayne Swan said the country's unemployment rate will increase, boosting the need for the government to maintain stimulus measures.
K.K. DaVinci Holdings, a real-estate investor, was bid lower in Tokyo after the company said it wasn't likely to reach an agreement on a loan extension. Among stocks that gained today, Japan Airlines Corp. jumped 6.8 percent on speculation American Airlines, Inc. will buy a stake in the company.
Consumer Confidence
Futures on the U.S. Standard & Poor's 500 Index dropped 1 percent. The gauge dipped 0.1 percent on Sept. 11 even after a report showed the Reuters/University of Michigan preliminary index of consumer sentiment rose more than economists had estimated in September.
The MSCI Asia Pacific Index gained 4.4 percent last week, its biggest weekly gain since the period ended July 24. The rally since March has driven the average price of stocks on the gauge to 24 times their estimated net income for this year, compared with 17 times for the S&P 500 and 16 times for Europe's Dow Jones Stoxx 600 Index.
Honda fell 2.6 percent to 2,790 yen. Sony Corp., the world's second-biggest maker of consumer electronics, dropped 2.8 percent to 2,415 yen. Toyota Motor Corp., which got 31 percent of its revenue in North America, lost 2.3 percent to 3,750 yen.
New Zealand Retailers
The yen appreciated versus the dollar to as much as 90.21 today, a level not seen since Feb. 12. A stronger yen reduces the value of overseas sales at Japanese companies when converted into their home currency.
Japan's large manufacturers expect the yen to trade at an average of 94.85 this year, according to the Bank of Japan's most recent quarterly Tankan survey.
Fisher & Paykel, New Zealand's biggest maker of cookers and washers, lost 1.3 percent to 77 New Zealand cents after the drop in 0.5 percent drop in July retail sales missed the 0.4 percent increase anticipated by economists in a Bloomberg survey. Warehouse Group Ltd., New Zealand's biggest discount retailer, gained the most in almost dropped 0.7 percent to NZ$4.22.
In Sydney, Santos sank 3 percent to A$15.40, while Rio Tinto Group, the world's No. 3 mining company, fell 1.7 percent to A$58.22. Mitsui & Co., which counts commodities as its biggest source of profit, lost 2.4 percent to 1,203 yen in Tokyo.
Aussie, Kiwi Dollars
Copper futures in New York dropped 1.3 percent today, the fourth day of declines. A gauge of six metals in London lost 3.5 percent on Sept. 11. Crude oil dropped 3.7 percent in New York the same day, the biggest decrease since Aug. 31.
The Australian and New Zealand dollars fell today, retreating from last week's strongest levels since August 2008, following the declines in commodities, which account for more than half of the two nations' exports.
K.K. DaVinci, which manages real-estate investment funds, had yet to trade, though was being bid for at 12,350 yen following its statement on its loan extension. That's compared with its last traded price of 14,350 yen.
Japan Airlines climbed 6.8 percent to 174 yen. American Airlines may buy a stake in the carrier, people familiar with the plan said. Japan Airlines, which has received three government bailouts since 2001, is also discussing possible stake sales to Delta Air Lines Inc. and Air France-KLM, people familiar with those negotiations have said.
Japan Air is talking with other carriers to strengthen its business, spokeswoman Sze Hunn Yap said in Tokyo, declining to comment on discussions or possible investments.
Nikkei 225 10,186.63 -257.70 ( - 2.47%). (08.21 AM IST)
Japan's Nikkei stock average lost 2.1 percent on Monday, with Canon Inc (7751.T) and other exporters sliding after the dollar fell to a fresh seven-month low against the yen.
The dollar fell to a seven-month low below 90.21 yen in early Asian trade, helped by talk of Japanese fund repatriation and the view that it is replacing the yen as the funding currency for carry trades. It later pared some of its losses to be 0.2 percent lower at 90.53 yen. JPY= The benchmark Nikkei .N225 lost 214.54 points to 10,229.79, while the broader Topix fell 1.6 percent to 934.88.
HSI 20978.46 -182.96 -0.86%.(08.23 AM IST)
Hong Kong shares traded lower early Monday in response to a fall on Wall Street and a broad drop in other Asian equities, though the losses in China-related companies were limited as Shanghai stocks outperformed the rest of the region. Commodity stocks lost ground following the drop in crude-oil and base metal prices, though gold miners like Zijin Mining Industry Co. Ltd. /quotes/comstock/22h!e:2899 (HK:2899 7.91, +0.24, +3.13%) were buoyed, as the precious metal's price remained above $1,000 a troy ounce. The Hang Seng Index fell 1% to 20,959.71, and the Hang Seng China Enterprises Index fell 0.8%. China's Shanghai Composite was flat at 2,989.99 in morning trade.
Hang Seng Index opens 319 points lower on Mon
Hong Kong stocks fell on Monday morning, with the benchmark Hang Seng Index opening 319 points lower at 20,841.
The Hang Seng China Enterprise Index, which tracks the overall performance of 43 mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, opened 201 points lower at 12,066.
Sun Hung Kai Properties<0016> decreased 1.81% from the previous closing to HK$113.7. Cheung Kong (Holdings) Ltd<0001> fell 1.6% and opened at HK$95.6.
SSE Composite 3004.77 + 0.50.(08.25 AM IST).
China share index opens slightly higher
China's key stock index opened 0.04 percent higher on Monday with sentiment partly weighed down by concerns over upcoming share supply from newly listed issues and China's trade dispute with the United States.
Dealers said funds unfrozen for Metallurgical Corp of China's (MCC) share applications since Friday, however, may flow back into equities and help prop up the market.
The Shanghai Composite Index opened at 2,990.933 points after rising 2.22 percent on Friday buoyed by strong August economic data which signalled the country's recovery was well on track.
($1 = 6.83 yuan)
Chinese stocks open nearly flat on Mon
Chinese stocks opened nearly flat on Monday morning.
The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, opened at 2,990.93 points, up 0.04% or 1.14 points from the previous closing.
The Shenzhen Component Index on the smaller Shenzhen Stock Exchange opened 0.41% or 49.58 points higher at 12,145.84 points.
BYD aims to finish Shenzhen listing procedure next Sept.
Ping An Insurance ties up with Greentown Real Estate.
Shenzhen Investment reports 78% jump in H1 profit.
Samsung sells 654,000 LCD TVs in China in July.
Regal Hotels appoints Maria Tsai as marketing VP,
Hunan TV obtains RMB 19.7-bln credit line from CDB.
HSH buys remaining 7.5% stake in Peninsula Chicago.
TSMC sees sales revenue decrease in Aug.
Google to expand sales team in China.
Marvell to increase headcount at Shanghai design center.
Wanda Group to pour RMB 6 bln into Fuzhou project.
Greenland acquires land in Hefei for RMB 1.08 bln.
Poly acquires land in Nanjing for RMB 1.59 bln.
CNPC HK raises holding in Shennan Oil to 80.39%.
Unite against tire tariff hike, exporters urged
Fan Rende was so angry on Saturday he skipped breakfast, lunch and dinner to work on a petition to United States President Barack Obama in protest at the higher tariff placed on Chinese tire imports.
The chairman of the China Rubber Industry Association was especially incensed as he feels the decision was made based on "bunch of lies".
"The new tariff will be highly damaging to China's tire industry and may cause 100,000 Chinese tire workers to lose their jobs," said an emotional Fan.
He urged the Chinese government to adopt mandatory retaliatory measures against US manufacturers of agricultural products and automobiles.
Fan's association, the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters, and other affected firms, have already sent one petition to Washington, as well as appealing to the US Court of International Trade.
China's tire companies may stop exporting to the US for the first year of the new tariff, bringing an initial loss of about $1 billion, Fan estimated before adding that the US had already ordered the nation's firms to stop supplying tires.
"The effect will be immediately obvious," he said, adding that the basis for the decision was seriously flawed.
According to China's Ministry of Commerce, tire producers pose no direct challenge to those in the US, while the nation's tire exports to the US have not witnessed trmendous growth since 2007.
"China's tire exports are mainly to the US automobile maintenance market, while those made by local producers are supplied to car producers," said the ministry statement.
He Weiwen, council member for the China Society for American Economy Studies, said China would be justified in taking retaliatory measures.
"We could levy higher tariffs on tires and automobiles imported from the US. China should not let the US car firms make easy money from its vast car market. We should teach them a lesson," said He.
Analysts also called for Chinese enterprises to unite against the US trade barriers and reduce their exports to the country.
"Gradually, US companies will notice that trade barriers do them no good and will start seeking dialogue with their Chinese counterparts," the chairman of an export company that won a lawsuit against a similar US effort told China Daily on condition of anonymity.
The tariff duties may also impact US importers of Chinese tires and US tire companies with tire production operations in China, said Hubert Tse, a Shanghai lawyer.
There are 20 tire producers in China and four - Bridgestone/Firestone, Goodyear, Michelin and Cooper - are from the US, said Fan.
Cooper already filed a complaint on the higher tariff with an open letter last month.
Although China's tire makers are disappointed by the news, some are already preparing to adjust.
Giti Tire China, which generates $800 million a year from exports to the US, has already shifted focus to the domestic market, as well as Europe, Southeast Asia, South America and Africa, said its executive director Shen Weijia.
Wang Guomei, director of overseas marketing for Shandong Linglong Rubber, said his firm will use the changes as an opportunity to improve the quality and brand image of its tires in the global market.
"We will also put more focus on developing new products during the grace period, but we won't give up on the US market," said Wang.
Half of Linglong's total revenue last year came from tire exports, 50 percent of which went to the US.
Interview: Financial crisis tells us global economic challenges need global solutions
The main lesson from the financial crisis is that the economic problems that the world now faces will always in future be global problems and the solutions will have to be global, said Andrew Cahn, CEO of UK Trade and Investment.
He told Xinhua in an exclusive interview that the global economic crisis is the first truly global event of its kind. "We as a global financial community and as a group of nations can only address the sort of challenges that the credit crunch has created if we work together in partnership," he said.
"It is also clear to me that now and for the future we must involve what we call the 'emerging economies,' like China, but which really are economies that have already emerged and which are important vital partners in finding any solution to the future of the global economy."
He said that everyone could learn that appropriate, well targeted, expert regulation is essential if the financial markets are to work effectively.
"We cannot do our financial regulation alone; we cannot manage our markets alone. We must do it in partnership with the other major economies of the world, which includes China which is clearly now a major economy," Cahn added.
"We must ensure in future that we have appropriate regulation agreed at a global level and that we have the appropriate financial infrastructure, including the international financial institutions, which can deal with future crises."
He admitted that there will be future crises and that is the nature of all financial systems. But he said: "We need the right institutional architecture and the right regulatory systems to reduce the severity of the crises and to deal with them effectively when they do arise."
As for the recent recovery signs of the global economy, Cahn said the most important thing is that "we have averted and avoided the really serious crisis that could have happened."
"We looked over the precipice, decided we didn't like what we saw and we moved back. Governments have found the way to avoid falling over the precipice. In that sense, it's a very optimistic thing."
When asked how to sustain the economic recovery, he said that the most important thing is to keep markets open and to avoid a fall into protectionism.
"When life is difficult, when unemployment is high, when production is falling, when exports are difficult to achieve, the natural political response is to say we will close our borders, we will look inward," he said.
"But that way will make all of us poorer. The right response is to not only keep markets open but to liberalize them further because that will promote trade, that will increase economic activity, that will increase efficiency and competitiveness and that will make us all the more prosperous."
He believed keeping markets open and increasing the amount of trade and investment is absolutely key to returning prosperity.
He is satisfied with the efforts made by British and Chinese governments to promote bilateral trade and reach the target of 60 billion U.S. dollars set for 2010.
"We will have new, even higher targets to reach because only by setting ourselves targets and achieving those targets for the amount of trade and the amount of investment between our two countries, in both directions, only that way I think can we help our economies to thrive," he said.
Cahn added that China was the market that Britain had to serve properly, really effectively and China was the market Britain had to learn about, to understand, to enter into for the long term. "I am particularly impressed with China's performance this year, where growth remains robust."
As for the upcoming G20 Pittsburgh summit, he said Pittsburgh Summit is another vital step in the process of returning the global economy to normality. "There are many issues to be addressed and they have to do with the future architecture of global financial arrangements," he said.
He said that G20 now provides a Forum with the right membership. "China is there, as it should be, at the top table, participating in the debate. There can be no solutions, no answers to the global crisis without China's participation," he said.
The International Capital Conference of Bo'ao Forum will be held again in London on September 15-16. Cahn said: "Bo'ao forum is a key way of increasing understanding between our two countries and the understanding between politicians, the understanding between regulators, and the understanding between business people."
BMW leases out electric Mini Coopers to LA sheriffs to get feedback
China Stock Index May Surpass 2009 High, Fortis Says
China's benchmark stock index may surpass this year's highs as private consumption and investment boost demand for health-care services and real estate, Fortis Haitong Investment Management Co. said.
The Shanghai Composite Index, which doubled from November to 3,471.44 on Aug. 4, may rise to as much as 3,600 by the end of the year, said Liu Hong, Shanghai-based fund manager at Fortis Haitong, which oversees $6.4 billion in assets. The gauge rose 2.2 percent to 2,989.79 on Sept. 11, a three-week high.
"Our strategy over the past month has been to switch into domestic related sectors," Liu said in a phone interview today. "Considering the resilience of earnings and potential for improvement, we think the valuation is supportive."
China's industrial production rose at a faster pace than forecast in August and new lending unexpectedly climbed, indicating growth in the world's third-biggest economy is likely to accelerate. Output at the nation's factories gained 12.3 percent from a year earlier, the most since August 2008, the statistics bureau said last week in Beijing.
Liu's Fortis Flexi III - Equity China A fund has risen 45 percent in the past six months, beating 89 percent of funds that invest in the nation's equities, data compiled by Bloomberg showed. Fortis Haitong is a venture between Fortis Investment and Haitong Securities.
Higher Target
The latest target is higher than Fortis Haitong's forecast on March 2 for the Shanghai Composite to rise to 2,500 by the end of 2009. The measure exceeded that estimate a month later.
Liu said he likes real estate companies with land holdings and "visible earnings" for the next year, declining to name individual stocks.
China's local-currency new loans reached 410.4 billion yuan ($60 billion), up from 355.9 billion yuan in July, the central bank reported last week, exceeding a separate survey's projection of 320 billion yuan.
Premier Wen Jiabao pledged last week to sustain stimulus measures to secure the recovery, saying the rebound "is unstable, unbalanced and not yet solid."
The pick up in credit growth may raise concerns about asset-price inflation, as Bank of China Ltd. Vice President Zhu Min said last week liquidity may cause "asset bubbles in commodities, stocks and real estate."
Home Prices
China's home prices are driven by expectations for appreciation of prices, causing a "vicious circle," China International Capital Corp. Chief Executive Officer Levin Zhu also said last week. Home prices in China's 70 biggest cities rose 2 percent from a year earlier in August, the fastest pace in 11 months, the National Bureau of Statistics said.
Economists anticipate China's GDP growth will accelerate to a 9.5 percent pace next year after an 8.3 percent rate in 2009, according to a Bloomberg survey of economists conducted the week ended Aug. 28. Wen also said in his speech in Dalian last week that officials also need to guard against inflation.
"China clearly has taken a V-shaped recovery but the footing is still not very solid," Fortis Haitong's Liu said. "The government will continue with accommodating monetary policy, but keep a close eye on inflation."
Other figures last week showed consumer prices fell 1.2 percent last month from a year earlier, declining for a seventh month and giving the central bank more room to keep interest rates at a four-year low to stoke growth. Producer prices dropped 7.9 percent compared with a record 8.2 percent fall in July.
Obama to Discuss Unwinding of Bank Industry Help
U.S. President Barack Obama will discuss the winding down of the government's involvement in the financial sector in a wide-ranging speech on Monday in which he will try to reinvigorate stalled legislation on regulatory reform.
An administration official, who previewed the speech, said it would also include a call for global coordination to prevent future financial crises.
In the remarks scheduled for 12:10 p.m. EDT, he will also urge Wall Street firms to take responsibility and avoid the kind of reckless behavior that led to the 2008-2009 financial chaos.
Obama's remarks coincide with the anniversary of the collapse of Lehman Brothers that triggered the global contagion.
"President Obama will discuss the administration's plan to wind down government involvement in the financial sector, lay out a strong case for immediate action on regulatory reform and reiterate the importance of global coordination in preventing future crises," the official said.
"He will also urge the financial community to take responsibility, not only to support reforming the regulatory system but also to avoid a return to the practices on Wall Street that led us to the financial crisis, and to recognize their obligation to help produce a wider recovery on behalf of the American people," the official said.
The speech will be held at the historic Federal Hall in the heart of Wall Street. Among those in the audience will be the President's Economic Recovery Advisory Board, which is led by former Federal Reserve Chairman Paul Volcker.
Consumer Spending Could Boost the Stock Market
Wall Street wants consumers to do their part to heal the economy. Traders know it's going to take some time.
Investors will get some insight this week into how much consumers are spending from a government report on August retail sales. They'll also get an indicator of how willing consumers are to borrow money to make those purchases when credit card lender Discover Financial Services reports earnings.
"I think everybody is focusing so heavily on if people are releasing some of those dollars they have been clinging so tightly to over the past year," said Jamie Cox, managing partner at Harris Financial Group in Colonial Heights, Va.
Analysts say investors need to see evidence that consumer spending is picking up before the market can extend its recent gains. Economists surveyed by Thomson Reuters estimate retail sales increased 1.2 percent last month, after falling 0.1 percent in July. The report comes out Tuesday.
Many analysts have been expecting a pullback in the markets, which have risen more than 50 percent since bottoming out at a 12-year low in early March. The S&P 500 index, a widely used market gauge and the basis for many mutual funds, rose for five days before slipping Friday and ending the week up 2.6 percent. The Dow rose 164 points, or 1.7 percent, for the week.
"The market could take a breather before third-quarter earnings reports," said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc. Companies will start reporting results in early October for the three months ending in September.
The stock market ended the week with a few pieces of reassuring news on the economy. The Commerce Department reported Friday that even though wholesale inventories fell for a record 11th straight month in July, sales rose by the largest amount in more than a year. Also, the University of Michigan consumer confidence index showed improving views of both current conditions as well as expectations for the future.
"You have to remember that consumers will spend money if they feel like that their prospects for a job or for wealth feels OK," Cox said. "That 'wealth effect' is huge."
Despite signs that the recession is easing, the reluctance of consumers to spend money is a top concern to investors. With spending by consumers making up a huge portion of the U.S. economy, about 70 percent, economists see little chance of a robust economic rebound until that spending picks up again.
Earlier this month, the Labor Department reported that the unemployment rate jumped almost a half point to 9.7 percent in August, the highest level since 1983. Experts expect the unemployment rate to surpass 10 percent before coming back down, and the concern is that rising unemployment will put more pressure on beleaguered consumers and further depress their spending.
Investors will also see if consumers are helping the electronics retailer Best Buy Co., which is slated to report earnings Tuesday. Discover Financial reports its results before the market opens on Thursday.
Nearly all lenders are seeing more customers miss their monthly payments as the economy falters and unemployment surges, but analysts say Riverwoods, Ill.-based Discover has been doing better than its peers.
"Consumers are definitely paying down credit card debt and not replacing it with new debt, and that's not unhealthy," said John Ulzheimer, president of consumer education for Credit.com, an online financial services company. "People should be paying for things in ways that they can afford."
Investors may receive more reasons to bid stocks higher next week if new signs of strength emerge in new housing and manufacturing data. The market will get readings on housing starts for August as well as two regional manufacturing reports.
The week also brings a sobering milestone: Tuesday marks the one-year anniversary of the collapse of Lehman Brothers, which became the largest bankruptcy in U.S. history and triggered the most acute phase of the financial crisis. President Barack Obama will make a speech on Monday from Wall Street on the government's response to the crisis.
Government Spending Is Naked Without the Fed: Caroline Baum
President Barack Obama takes his show on the road today for what the White House says is a "major speech" on the financial crisis.
And where better to deliver such a speech on the one-year anniversary of Lehman Brothers' collapse than Wall Street?
Today's address will no doubt build on the administration's report card, issued last week, on the $787 billion American Recovery and Reinvestment Act. The president's Council of Economic Advisers determined that the ARRA added about 2.3 percentage points to real gross domestic product growth in the second quarter and created or saved about 1 million jobs as of August.
These estimates "are made by comparing actual economic performance" to the baseline forecast, the CEA said, which is like comparing real life to a Hollywood movie.
While the CEA included the caveat that any definitive assessment of the stimulus's impact is impossible because of the lack of a control study -- no one knows what would have happened without the intervention -- the Council concludes the intervention had "a substantial positive impact on real GDP growth and on employment in the second and third quarters of 2009."
Nonsense, according to Stanford University economics professor John Taylor. "I can't see any evidence the stimulus is working," Taylor said at a Sept. 10 dinner in New York sponsored by the Hoover Institution, where he is a senior fellow.
Endless Argument
Real GDP fell 1 percent in the second quarter compared with declines of 5.4 percent and 6.4 percent in the previous two quarters, respectively. It sure looks as if some kind of dam acted to hold the waters back in the April-to-June quarter.
The only component of final domestic demand to show an increase was government spending. Real consumer spending fell 1 percent, residential investment was down 22.8 percent and business fixed investment slumped 13.5 percent, all at a seasonally adjusted annualized rate.
If the stimulus were working as advertised, consumption would have increased, Taylor said.
Economists have been arguing about the merits of fiscal stimulus for as long as it's been a fixture of crisis management. All governments are guilty when it comes to intervention in the economy, tweaking the name and spinning the effect -- supply side, demand side -- to suit their political purposes.
Us and Them
The question of whether it works is never settled to the satisfaction of either the proponents or opponents. How can we expect politicians to enact legislation that's good for the economy if the economics profession can't agree on what works and what doesn't?
There is something intuitively appealing about the idea of fiscal stimulus, although it probably has something to do with the name. When animal spirits are depressed, some entity has to step in to get the economy moving, spending money that generates income for others, which begets more spending.
Logic argues against such a notion.
Think about it this way. The federal government is just like you and me (well, sort of). It gets a "paycheck" in the form of taxes (no, you can't withhold the paycheck for non- performance of services). And it uses the money for "household expenditures," including basic necessities (food and shelter for our armed forces), support for the unemployed, sick and elderly, and various pork-barrel projects.
Fiscal Is Monetary
And just like many of us, the government spends more than it "earns." So it has to borrow or raise taxes, in which case you and I have less money to spend.
In other words, government spending is a wash in terms of the dollars spent now or in the future, except that you and I are more discerning about what we buy and how much we pay.
Sure, when you throw enough money at the economy, there will be some GDP response, now versus later. But there's no free lunch.
There is, however, a third possibility, akin to a magician's hat. You and I can set up a high-tech counterfeiting operation in the basement, forging crisp hundred-dollar bills. The central bank does pretty much the same thing, creating money out of thin air, in which case the federal government has money to spend and it doesn't come from you and me. The only difference is that we go to jail if we're caught.
Confusing Nomenclature
If it sounds too good to be true, it is. Printing money increases aggregate demand in the short run but leads to higher inflation down the road.
Any discussion of fiscal stimulus -- whether it works, how big it should be, where it should be targeted -- must therefore start and end with monetary policy. That's what provides the stimulus.
It would go a long way toward alleviating the confusion if we stopped referring to bridge building and farm-price supports as stimulus and called them by their proper name: government spending. By that name, it doesn't smell as sweet.
INVESTMENT VIEW
Sugar: This may not be the usual cyclical run-up
The International Sugar Organization, said that sugar prices are expected to be supported by an ongoing global supply deficit. India is expected to import 4.1 mn MT of sugar in the year through September 2010, 3% more than in the last fiscal year. Imports by the European Union are expected to rise 1.5% to 4.5MT over the same period, while imports by the U.S. are expected to grow 0.1% to 2.5MT. By end of the FY10 sugar crushing season global sugar inventories would have dropped down to 1-1.5 months of global sugar consumption. Another vagary of nature anywhere in the World could push Sugar into a fresh bull orbit.
(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) |
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 11-Sep-2009 | 2641.22 | 2412.45 | 228.77 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) |
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 11-Sep-2009 | 1126.17 | 1420.37 | -294.2 |
INDEX OUTLOOK — Stepping beyond 16,000
Sensex (16,264.3)
The three-month long wait came to an end last week with the Sensex finally scaling the 16,000 summit. But the retinue of investors, who were supposed to follow in its wake, scrambling to buy stocks, were missing. Market participants adopted a more mature and watchful attitude instead, resulting in a sedate 3.6 per cent weekly gain. There was plenty to lend support to equities last week including the benign stance of G-20 leaders and dollar weakness.
The shove that finally pushed Sensex past 16K came from foreign institutional investors. They pumped in close to Rs 3,000 crore last week after being on the back-foot over the last two months. Volumes were also good though breadth turned iffy towards the weekend. Derivative data however is flashing red as the open interest has moved above Rs 1 lakh crore and Nifty put call ratio is over 1.2 indicating that market is overbought at this stage.
Small and mid-cap stocks were edgy last week. BSE Smallcap Index has reached key long-term resistance at 7,264 and it will be interesting to see if it is able to move above this level. In other words, small-cap stocks could under-perform for a few weeks. BSE 500 too went on to a new 2009-peak last week. The trend in this index continues to be strong.
Despite the brouhaha over Sensex scaling 16,000 and Nifty rising above 4,800, the charts have not altered significantly last week. There is a clear lack of momentum over the daily and weekly time-frame while oscillators in the monthly chart have reached overbought levels.
Sensex is currently testing the outermost target for 2009 that was carried in our December 28, 2008 edition. It has been an incredible journey for the market so far and a lesson that the market can and will make the most fantastic moves. We will wait for another weekly close beyond 16,200 before revising the upper targets for this calendar.
If we extrapolate the move from the 13,219 trough, the targets for Sensex are 16,403 and then 17,467. If we consider the minor wave counts of the move from 8,047, the targets are 16,103 and then 17,370. As mentioned in our last column, there is a confluence of targets in the zone between 16,000 and 16,500. Since 61.8 per cent retracement of the down-move from January 2008 peak too occurs at 16,200, the zone where Sensex is currently poised is a critical long-term resistance.
But a strong move beyond 16,500 would take the index to the zone around 17,400. The medium-term trend would turn negative only on a close below 14,600.
The nervous trading witnessed over the last four sessions indicates that there can be a short-term decline before the index makes further progress. Supports for the week would be at 16,020, 15,770 and 15,360. Short-term traders can buy in declines as long as the first support holds. Upper targets for the week would be 16,430, 16,541 and 16,722.
Nifty (4,829.5)
Nifty went on to the intra-week peak of 4,889 before closing 149 points higher. If we consider the target of the third wave from 3,918 trough, the levels are 4,855 and then 5,166. As we have been reiterating, 61.8 per cent retracement of the previous decline gives us the resistance at 4,900 that can be a formidable hurdle in the near-term. In other words, the Nifty could struggle to move past 4,900 just yet. But if it does so, next target is 5,166.
The short-term trend in the index is up but a bout of selling can pull it lower to 4,740 or 4,680. Short-term traders can hold their longs as long as the index trades above the first support. Upper targets on a move above 4,900 are 4,952 and 5,052.
Global Cues
Global equity markets were in as good a shape as it can get towards the end of last week. Falling dollar and the resultant spike in commodity prices buoyed equities.
The small losses made in the previous week were recouped last week and most benchmark indices ended the week 3 to 4 per cent higher. Asian indices moved to the upper end of their trading ranges. Shanghai Composite closed 4.5 per cent higher, close to 3,000. Next targets for this index are 3,050 and 3,150. CBOE VIX declined to a new 2009 low indicating that investors are cheery and optimistic. The Dow has once more closed in on the resistance at 9,650. Third leg of the up-move from March lows gives the targets of 9,575 and then 10,476. The index is pausing close to the first target where the rally can terminate. However, if the rally continues, it can proceed towards the 10,500 that is also close to the 50 per cent Fibonacci retracement level of the decline from October 2007 highs. As mentioned before, the medium-term view for the index will stay positive as long as it holds above 9,000.
PIVOTALS — Reliance Industries (Rs 2,140.9)
RIL took on the onus of keeping the Sensex propped above 16,000 towards the middle of last week; surging more than Rs 200 in three sessions.
Although traders appeared hesitant towards weekend, the stock closed 8 per cent higher for the week. Strong volumes recorded on the days the stock closed higher is a positive.
But RIL has not yet moved above the key medium-term resistance at Rs 2,200 that we have been watching. We adhere to the view that the medium-term trend remains down as long as the stock trades below this level. A reversal from here can cause the third leg down from the May peak to kick-off that can drag the stock lower to Rs 1,727 or Rs 1,667.
The short-term trend is however strong and investors can hold the stock with a stop at Rs 2,070. Target on a move above Rs 2,200 are Rs 2,307 and Rs 2,372.
State Bank of India (Rs 1,918.8)
SBI appears to have been goaded into action last week and surged to an intra-week high of Rs 1,928.
Despite the strong close, the stock continues to trade close to the critical resistance at Rs 1,900. As we have been maintaining, a reversal from here can pull the stock lower to Rs 1,500 again whereas a strong close above Rs 1,950 will signal that the stock is heading towards its all-time high.
Fresh purchases are therefore recommended only on a firm close above Rs 1,950.
The short-term trend in the stock is up and if the rally continues, subsequent targets are Rs 1,990 and Rs 2,075. Short-term traders can, therefore, hold the stock with a stop at Rs 1,840. Next support is at Rs 1,795.
Tata Steel (Rs 469.1)
Tata Steel moved well past our short-term target of Rs 460 to close 9 per cent higher for the week. The up-trend from the trough at Rs 408 appears strong and the stock could move on to Rs 496 or Rs 508 in the near-term. Short-term traders can hold their long positions with a stop at Rs 448.
Investors with a medium-term perspective should, however, exercise caution since the stock is nearing key resistance zone between Rs 460 and Rs 500. Another reversal from here can pull the stock lower to Rs 360 again.
Infosys (Rs 2,266)
Infosys moved sideways with a positive bias last week before closing with a marginal 3 per cent gain. The move last week appears to be a running correction that can be followed by another leg higher to Rs 2,342 or Rs 2,439. Short-term investors can therefore hold the stock with a stop at Rs 2,100.
We retain the view that the medium-term outlook stays positive as long as the stock stays above Rs 1,950. Immediate medium-term target for the stock is Rs 2,439.
ONGC (Rs 1,176.3)
ONGC did not emulate its other large-cap peers and remained stuck in the range between Rs 1,140 and Rs 1,200 last week as well. Target on a break-out above Rs 1,200 stays at Rs 1,356.
Short-term investors can hold the stock with a stop at Rs 1,115.
Next support for the stock is at Rs 1,060.
Maruti Suzuki (Rs 1,467.2)
MSIL launched in to a gentle correction last week. Immediate supports for the stock are at Rs 1,410 and Rs 1,370. Short-term investors can hold the stock as long as it trades above Rs 1,370.
We maintain that the long-term trend will stay positive as long as the stock stays above Rs 1,248.
Nifty futures may enter corrective phase
It was a wonderful week for the Nifty futures as it ended on a positive note on all five days. The Nifty futures closed well above the 4,800-mark at 4,841.8 and also put in a gain of over 3.1 per cent over its previous week's close of 4,695.65 points.
Though throughout the week's trade it swung between premium and discount to its spot it managed to close with a healthy premium of 12 points, suggesting short covering. Nifty spot ended at 4829.55.
In terms of open interest, while the Nifty futures did see a steady accumulation of open interest till Thursday, it shed close to two lakh shares on Friday signalling profit booking.
But all in all, the Nifty futures open interest jumped to 2.99 crore shares over its previous week's close at 2.77 crore shares.
This week again, trading action was mainly centred on momentum players such as RNRL, IFCI, Unitech, HDIL, Suzlon Energy and Reliance Capital; Sesa Goa and Hindalco also entered the active zone. These apart, Bank Nifty also attracted trading interest.
Follow-up We had presented two strategies
• Consider going long with a stop loss at 4,535. Nifty futures would have returned decent profits.
• We had also recommended buying 4,700 call. This strategy is also in the money.
Outlook Though the overall bullish undertone remains, we feel the current rally may be close to tiring itself out.
It, therefore, may not come as a surprise if the Nifty futures went into a corrective phase next week.
In terms of the crucial levels, the outlook will remain bullish as long as the Nifty futures trade above 4,450, failing which it has the potential to weaken to 4,250 and then to 3,850.
Option monitor This week the trading interest and trends in options present important clues to the overall market movement. For the first time, the December 3,200 Nifty put entered the active zone. Likewise, 4,800 March Nifty 2010 call also turned active. Though these are early days, there may be a lurking expectation among some traders that Nifty could tank to that level. In the October series, call options with strikes 5,300 and 5,100 and puts at strike 4,800 were the most active.
In the current month series, the accumulation of open interest was high in Nifty 4,600 put and Nifty 4,900 call. This indicates that the Nifty could move in a 4,600-4,900 range.
The volatility index ended on a muted note at 32.51 points against the previous week's close of 31.17. The drop in volatility index suggests that market may move in a narrow range.
Recommendation We recommend the following strategies for readers
•Consider going short on Nifty futures with a stop-loss at 4,900. The stop-loss can be adjusted suitably going forward, so as to protect the profits, should the Nifty open on weak note on Monday. Traders could book profits at 4,600 level.
•Set a bear put spread between Nifty strikes 4,700 and 4,800. You can buy the 4,800 put, which closed at Rs 81 and sell 4,700 put which closed at Rs 49.
Essentially, a low-risk and limited return strategy; this will help you play any downside in the market next week.
FII trend The cumulative FII positions as a percentage of the total gross market position on the derivatives segment as on September 10 decreased to 33.63 per cent (35.78 per cent).
They were mainly buyers during the week, particularly in index futures.
Their index futures holding increased to Rs 14,852.67 crore (14,150.87 crore) and stock futures to Rs 21,636.08 crore (Rs 21,251.4 crore). Index options holding also jumped to Rs 30,326.94 crore (Rs 24,210.12 crore).
Liquidity likely to drive benchmarks further
Jayanta Mallick
Dalal Street last week moved closer to the upper band of the benchmark index's short-term range, but did not break it. Trend in fresh liquidity flows suggests creation of an objective condition for a breakout this week.
It is obvious that more flow of money means additional demand for equities, which in turn pushes prices and indices upwards. The fundamentals take a backseat in this situation.
Going by fundamentals, many of the stocks, whether in key indices or in the broader indices, have reached or crossed their fair valuation levels. Investors have shown almost equal inclination towards buying blue chips as well as mid- and small-cap stocks.
Certain market observers feel that euphoria is in the making. How far this would stretch is a difficult call to make.
Those who have first-hand knowledge of money flows into and out of the equities confirm that higher inflow has been visible. But indications are that investors have not let the guards melt away entirely.
Those who want to enter at the current levels wish to hazard riding a momentum, which may turn suddenly in the short-to-medium term.
Liquidity flow
Many fund managers and investment advisors think that in the medium-term fresh liquidity would drive up the market further. Will fundamentals catch up the higher valuations in the next three to four months?
According to market intelligence, current global liquidity inflow is based on two premises. As long as the central banks of the western economies follow the present easy monetary policy, inflow is likely to continue. None of the investors are focusing on the Dalal Street price-earning ratios for the 2010 financial year but 2011 for extending exposures.
Investment management community does not expect tightening of monetary polices by the US Federal Reserves or the European central banks before November. If this happens, it would come in a gradual course, observers feel. This may arrest further inflow then, but unlikely to cause a reverse flow of liquidity.
The primary issues are likely to attract FII money in the next three to four months. The secondary market may also witness overseas money inflow. But, local money may have a strong role in determining valuations and market trend in the medium-term.
The condition of the domestic economy and the industrial activities present a mixed picture. For the long-term investors, the second half of the fiscal 2009-10 still provides hope laced in by certain apprehensions. The projections for the next fiscal, however, continue to be healthier.
Market capitalisation
While large-cap stocks are generally a safer investment, small caps could deliver high returns too. What's market capitalisation, you ask? Just multiply the number of shares in a company by the share price, and there you are. But what does this number signify, and why is it important when selecting stocks? Market cap broadly indicates what investors see as the company's worth, as shares are usually priced according to their current performance, future potential and industry performance. As stock price changes on a daily basis, market cap figures also move accordingly.
Segregating stocks
Market cap is one method of classifying shares. So you have large-cap stocks (market cap of Rs 7500 crore and above), mid-cap stocks (market capitalisation less than Rs 7500) and small-cap stocks (market cap of less than 2500 crore). For instance, Bharti Airtel with a market capitalisation of Rs 160,169 crore qualifies as a large cap, whereas Bharat Forge (Rs 4,740 crore) finds mention as a mid cap. Shoppers' Stop (Rs 912 crore) is a small capitalisation stock.
By and large, large-cap stocks are perceived to be superior investment bets, as the capitalisation also takes into account the current and future performance of the company. And as these stocks also enjoy a higher float their impact costs too are relatively lower than that of mid-and small-cap stocks.
But remember that a smaller stock does not automatically mean it will fail to perform. It's likely that the stock holds a fair bit of potential but has just not caught the market's fancy yet, and so reward you with superior returns when it begins to garner attention. Even so, identifying such stocks is not an easy task and carries a high degree of risk, so always do a thorough fundamental check before investing.
But when analysing investment potential, the market cap of a company may not tell you much on its own unless studied relative to its peers.
Index construction
Market cap comes into play when deciding what weightage each stock would carry in the index. Take the Sensex, for example. Reliance Industries carries the most weight at 14.4 per cent as it boasts the highest full market cap of about Rs 3,36,958 crore. Full market cap is further refined into free-float market cap, which uses the number of shares available for trading to calculate the figure. This is done as shares held by promoters, institutions and such may not really be available to trade on a daily basis.
Applications as investment tool
Market Cap/Sales: Besides giving a general idea of the prospects of a stock, market cap can be combined with other parameters to help your investment decision. First among these is the sales figure. Divide market cap by the sales; this ratio will tell you how much the sales of the company is valued. You can compare this ratio across companies within the same industry to rank them.
This valuation tool is especially handy in the case of companies generating losses. A more refined method is to add the value of debt reduced by the cash on hand to get what is called enterprise value (EV); debt is added here to give a better picture of value, as a buyer would have to take on debt along with ownership.
Market Cap/Book Value: Book value is the assets of the company after removing liabilities; in other words, it indicates how much shareholders will have should the company fold up immediately. This ratio, which indicates how much the market thinks the company is worth over its book value, is usually high for high-growth companies. Companies with little growth expectations may have a low ratio.
Market Cap/GDP: Much like you would judge a stock as being over or under-valued using the market-cap metric, you can on similar lines judge an entire market. The total market capitalisation of a country divided by the GDP shows how much of a market's GDP is represented by the stock markets, and how much more room an economy has to grow. This figure is generally expressed as a percentage.
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Arvind Parekh
+ 91 98432 32381
