Market Outlook for 12th Aug 2009

 spot levels today

	4471.35	( 0.76 %)	33.70
		1	2	3
Resistance		4521.80	4572.25	4633.70
Support		4409.90	4348.45	4298.00

	15074.59		( 0.43 %)	64.82
			1	2	3
Resistance			15240.75	15406.91	15595.17
Support			14886.33	14698.07	14531.91

INTRADAY calls for 12th Aug 2009

Positional
Buy FCSsoft-51 @ 48 for a target 60-65 stop loss 45
Buy GVKPIL-46 @ 44 for a target 50-55 stop loss 41
Buy Orbitcorp-192 @above 197 for a target 207 stop loss 192

 

Strong & Weak  futures  
This is list of 10 strong futures:

Bharat Forge,Patni,Cummins India,Shree Renuka,Tata Motors,FSL,HCL Tech,Mphasis,Jindal Saw & GT OFFshore.

And this is list of 10 Weak futures:

Suzlon,Chambal Fert,Divi'S Lab,Indn Hotels,Nagarjun Fertil,Patel Engineering,Hero Honda.Pantaloon Retail ,Educomp & MLL
Nifty is sideways
 

RIL-NTPC gas dispute: from agencies
-RIL files caveat in SC ahead of NTPC appeal
-NTPC expected to move SC against Bombay HC ruling in July
-Bombay HC allowed RIL to amend plea in gas dispute with NTPC

Mint Exclusive
-NTPC, NHPC, PGCIL and PFC to sell entire stake in PTC
-4 PSU promoters together hold 16.32% stake in PTC
-Move prompted as PTC competes in utilities space
-Final decision on stake sale requires cabinet approval

 

UCO Bank - Exclusive: Sources Say
-UCO Bank's General Insurance Venture to consist of banks' consortium
-3-4 mid-sized domestic banks to hold 74% stake in venture
-Foreign partner to hold 26% in UCO Bank's General Insurance Venture

 

NIFTY FUTURES (F & O):
Below 4447 level, expect profit booking up to 4401-4403 zone and thereafter slide may continue up to 4357-4359 zone by non-stop.

Hurdle at 4474 level. Above this level, buying may continue up to 4481-4483 zone and thereafter expect a jump up to 4496 level by non-stop.

Multiple Resistance Zones at 4525-4527 zone & at 4540-4542 zone. Sell at around these zones. Stop Loss at 4583-4585 zone.

On Negative Side, break below 4342-4344 zone can create panic up to 4298-4300 zone. If breaks & sustains this zone then downtrend may continue.
 
Short-Term Investors:
Bullish Trend. 3 closes above 4473 level, it can zoom up to 4988 level by non-stop.
Stop Loss Triggered. 3 closes below 4473 level, it can tumble up to 4215 level by non-stop.
 
BSE SENSEX:  
Lower opening expected. Profit Booking should start. 

Short-Term Investors:
Short-Term trend is Bearish and target at around 14235 level on down side.
Maintain a Stop Loss at 15973 level for your short positions too.

 

POSITIONAL BUY:
Buy NDTV LTD (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 172 level can be used to buy. If uptrend continues, then it may continue up to 187 level for time being. 

If crosses & sustains at above 197 level then uptrend may continue.

Keep a Stop Loss at 162 level for your long positions too.
 
Buy CUMMINS (I) (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 312 level can be used to buy. If uptrend continues, then it may continue up to 329 level for time being. 

If crosses & sustains at above 339 level then uptrend may continue.

Keep a Stop Loss at 302 level for your long positions too.

 

FII DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	11-Aug-2009	2191.36	2368.83	-177.47

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	11-Aug-2009	1451.61	822.74	+628.87

 Global Cues & Rupee  
The Dow Jones Industrial Average closed at 9,241.45. Down by 96.50 points.
The Broader S&P 500 closed at 994.35. Down by 12.75 points.

The Nasdaq Composite Index closed at 1,969.73. Down by 22.51 points.

The partially convertible rupee INR=IN closed at 47.97/98 per dollar on yesterday, below its previous close of 47.82/83.
 
 Interesting findings on web:
Stocks slumped Tuesday, with a pummeling in bank shares and jitters ahead of a Federal Reserve announcement giving investors a reason to retreat.

The Dow Jones Industrial Average fell 96.5 points, or 1.03 per cent, to 9241.45.

The tech-heavy Nasdaq composite points fell 22.51 points, or 1.13 per cent, to 1969.73 and the broad-market Standard & Poor's 500 index retreated 12.75 points, or 1.27 per cent, to 994.35.

"I think there's some apprehension ahead of the Fed," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "We know they're going to leave rates alone, but there's some question about what they'll say."

The banking sector retreated after CIT Group (CIT, Fortune 500) delayed its quarterly filing, reviving bankruptcy fears, and several analysts sounded an alarm on the sector. Influential analyst Richard X. Bove of Rochdale Securities said that bank stocks are trading on "fumes" and that investors should take some short-term profits. JPMorgan Chase downgraded bond insurer MBIA (MBI), according to published reports.

After opening with narrow losses, stocks moved swiftly lower in New York Tuesday thanks to a reading that showed wholesale inventories dropped more than expected.

The Commerce Department's June reading showed businesses reduced inventories at the wholesale level by 1.7%, a deeper cut than analysts expected.

A 0.4% rise in sales marked the first back-to-back increase this year, but it couldn't lift the sagging market.

Another bright spot came in the second-quarter productivity reading from the Labor Department, which jumped 6.4%, but even that figure came with red flags. Employers aggressively cut hours, reining in labor costs, which helped boost productivity and pretty up second-quarter earning reports. The strategy is an effective one in the midst of recession, but not a sustainable solution for long-term bottom line growth, and Tuesday's data further depressed any lingering hope for a better employment picture before the year is out.

The NFIB said its small business confidence index fell in July for the second straight month, dropping 1.3 points to 86.5. Dunkelberg said the number is consistent with negative growth in gross domestic product, depsite the predictions of many economists who see GDP turning positive this year.

Amid Tuesday's losses, Wall Street also had an eye on the Federal Reserve, which opened a two-day monetary policy meeting. Traders are anxious to see if the central bank will embrace signals that the economy is in recovery and hint at possible rate hikes early next year.

Ahead of the Fed meeting, the Commerce Department releases the June trade gap. The trade gap is expected to have widened to $28.5 billion from $26 billion in May, a 10-year low.

Stock declines were broad based, with 26 of 30 Dow issues falling.

Stocks continued to slide Tuesday as bank stocks dragged on the broader market following a weak prognosis from a well-known banking analyst.

Financial stocks, which have gained 25 percent in the past month, skidded after Rochdale Securities analyst Dick Bove recommended taking short-term

profits in the sector, saying bank stocks were running on "fumes" and not reality in their recent run-up. He said bank earnings won't improve in the third or even the fourth quarter. Still, he says the sector is attractive long-term.

Citigroup [C  3.69    -0.25  (-6.35%)   ] and Wells Fargo both dropped more than 6 percent.

Citigroup ( C - news - people ) published its second-quarter TARP progress report, announcing it approved $6 billion in new initiatives to extend credit to consumers and businesses during the period. At the close of the quarter, Citi had put $15.1 billion to work, out of the $50.8 billion in TARP capital it allocated to such programs. Shares of Citi were down 27 cents, or 6.9%, to $3.67.

AIG shares [AIG  24.92    -3.78  (-13.17%)   ] fell another 13 percent and Bank of America [BAC  15.85    -0.83  (-4.98%)   ] lost 5 percent following a story in the Wall Street Journal today about the SEC's plan to ramp up its enforcement actions to convey a "sense of urgency."

Piling on to the pressure on the banking sector, Miller Tabak cut its price targets on Zions Bancorp [ZION  16.428    -1.502  (-8.38%)   ] and Regions Financial [RF  4.76    -0.21  (-4.23%)   ]. Those stocks shed 8.4 percent and 4.2 percent, respectively.

CIT Group shares [CIT  1.20    -0.28  (-18.92%)   ] tumbled 19 percent after the company said it would file for bankruptcy protection if it failed to complete its debt tender or arrange other financing.

CIT Group ( CIT - news - people ) has delayed a second-quarter filing to its regulators, as it works on a tender offer to bondholders designed to stave off bankruptcy. The lender already received a $3 billion emergency loan from a group of debt holders, and said it is reviewing assets that it may be able to sell.

Shares of Freddie Mac [FRE  1.56    -0.13  (-7.69%)   ], the battered government-sponsored mortgage agency, skidded 7.7 percent a day after the company reported its first quarterly profit in two years. Shares of its sister agency, Fannie Mae [FNM  1.07    0.07  (+7%)   ], jumped 7 percent.

At the same time, regional banks like Huntington Bancshares (HBAN: 4.45, -0.32, -6.71%) tumbled after Miller Tabak cut its price targets on Zions Bancorp (ZION: 16.48, -1.45, -8.09%) and Regions Financial (RF: 4.79, -0.2, -4.01%).

The market was also buzzing about an op-ed in the Wall Street Journal today about Ginnie Mae, the Government National Mortgage Association, and the fact that much of its lending is essentially subprime.

Target shares [TGT  42.20    0.22  (+0.52%)   ] rose 0.5 percent after activist hedge-fund manager William Ackman converted most of his options in the retailer into common stock to become more of a long-term investor.

Several other retail stocks also rose, including Wal-Mart, Macy's and Gap.

More moving-and-shaking news out of the auto sector: General Motors executives said the all-electric Chevrolet Volt — expected to hit showrooms late in 2010 — will get 230 miles per gallon.

Dow financial issues American Express (AXP, Fortune 500), Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Travelers Companies (TRV, Fortune 500) all declined. The KBW Bank (BKX) index lost 4.4%.

Among other financial sector movers, CIT Group (CIT, Fortune 500) slumped after saying it will delay filing its quarterly report as it continues to try to restructure its debt and avoid filing for bankruptcy protection.

IBM (IBM, Fortune 500), Cisco Systems (CSCO, Fortune 500), Chevron (CVX, Fortune 500), Caterpillar (CAT, Fortune 500), Walt Disney (DIS, Fortune 500) and General Electric (GE, Fortune 500) were the Dow's other big decliners.

In corporate news, hedge fund Pershing Square Capital revealed it cut its stake in retailer Target ( TGT - news - people ) nearly in half. Pershing, run by William Ackman, disclosed a 4.4% holding in the discount retailer, down from 7.8% as of May 26. Ackman has pushed for a series of changes at Target, which gained 45 cents, or 1.1%, to $42.43 Tuesday.

General Motors ( GMGMQ.PK - news - people ) made a splash Tuesday, estimating that its forthcoming electric-powered Chevy Volt could get up to 230 miles to the gallon in city driving. The automaker's Chief Executive Fritz Henderson also said GM is on track to report positive cash flow in 2010 and return to profitability in 2011.

Applied Materials (AMAT, Fortune 500) is likely to be active Wednesday. After the close Tuesday, the chipmaker reported a quarterly loss versus a profit a year ago on weaker revenue. However, the results were better than what analysts were expecting and shares gained 3% in extended-hours trading.

Corning (GLW: 16, -0.37, -2.26%) said the 6.4-magnitude earthquake that struck central Japan on Monday disrupted production at a Japanese factory, forcing the company to cut its production outlook for LCD screens. The glass maker said it now sees third-quarter volume falling 5% to 10% from a year ago.

Tellabs (TLAB: 6.15, 0.25, 4.24%) jumped to a 52-week high after the company announced plans to buy back up to $200 million of its stock. Tellabs, which has no debt, said late Monday it will use some of its $1.2 billion in cash and equivalents for the program, starting as early as Aug 13.

The gold market is watching the U.S. dollar as the Federal Open Market Committee meets, because any hints on interest rate hikes or announcement on the Federal Reserve's Treasury-buying program could bolster the greenback and weaken the metal's price.

The two-day FOMC meeting began Tuesday, with an interest-rate decision expected around 2:15 p.m. EDT (1815 GMT) Wednesday.

Few anticipate the Fed will move interest rates in the short term, said Adam Klopfenstein, senior market strategist at Lind-Waldock, a division of MF Global.

Nevertheless, he said, a shift is afoot in dollar buying, with participants moving from buying the dollar as a safe haven to buying the currency in anticipation of interest rate hikes over the next few years.

"Any talk about higher rates is going to support the dollar," said Frank Lesh, broker and futures analyst with FuturePath Trading. "We all know rates are going up. It's a question of when and how fast."

Lesh thinks it will be next year before interest rates start rising.

Fed decisions are key for the dollar, and consequently for gold, because the metal acts as an inflation and currency hedge, meaning it is often bought in times of dollar weakness and sold in times of dollar strength. A stronger greenback also tends to pressure dollar-denominated commodities, such as gold, by making them more expensive in other currencies, damping demand.

Another possible support for the dollar may come if the Fed announces it won't renew its Treasury-buying program.

That could be dollar supportive because those Treasury purchases are viewed by some as inflationary, and it might be taken as a sign of economic improvement if the buying is seen as no longer needed, Lesh said.

"I think they're going to let this program end in September," Lesh said, but he emphasized that doesn't mean the Fed will necessarily make that announcement Wednesday.

Klopfenstein said the dollar may even head lower in the short term if the Fed statement doesn't contain what participants are expecting.

If the FOMC announces that it won't extend the Treasury-buying program, that would be positive for the dollar, a Barclays Capital research note said.

Barclays expects gold's gains to be capped by a falling euro against the dollar.

"Prices continue to take their cue from currency movements and external markets," Barclays said.

Treasury prices were higher, even as the government prepares to issue $75 billion worth of new debt this week. The latest round of bond auctions starts with Tuesday's $37 billion offering of three-year notes. The benchmark ten-year note had a yield of 3.70%, down from 3.80% Monday.

Economy:

U.S. productivity in the second quarter jumped at the fastest pace in six years, the government said Tuesday. Productivity -- which measures how much workers produce per hour worked -- rose 6.4% versus forecasts for a rise of 5.5%. Productivity rose 0.3% in the first quarter.

Oil and gold:

U.S. light crude oil for September delivery fell $1.15 to settle at $69.45 a barrel on the New York Mercantile Exchange.

COMEX gold for December delivery rose 70 cents to settle at $947.60 an ounce.

Bonds:

Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.67% from 3.77% late Monday. Treasury prices and yields move in opposite directions.

The government is offering $75 billion this week as part of its ongoing efforts to reduce the deficit and fuel its recovery efforts.

Investors reacted mildly to the conclusion of the first auction Tuesday. Treasury sold $37 billion in three-year notes and saw stronger demand than in other recent auctions.

On Wednesday, the government auction $23 billion in 10-year notes and on Friday it auctions $15 billion in 30-year bonds.

Treasury prices rose Tuesday as investors anxious about the Federal Reserve's assessment of the economy took shelter in government debt.

The government's auction of $37 billion in three-year notes went well, allowing Treasurys to hold their gains. But investors, who were pulling money

out of the stock market and stashing it in government securities, were more focused on what the Fed will say about the economy when it ends a two-day meeting Wednesday.

It's a foregone conclusion that the central bank will hold the federal funds rate at its current level near zero. The question is whether Chairman Ben Bernanke and other Fed officials will be more upbeat about the economy in the statement that accompanies the rate decision — especially after the unemployment rate fell unexpectedly last month to 9.4 percent from 9.5 percent in June.

Stocks fell for a second straight day Tuesday, putting a slight dent in a four-week rally that lifted the Standard & Poor's 500 index 15 percent. As jitters over the Fed meeting sent stocks lower, investors saw a good opportunity in the relative safety of the Treasury market.

In late trading, the benchmark 10-year Treasury note rose 26/32 to 95 17/32, pushing its yield down to 3.67 percent from 3.78 percent late Monday.

A lower yield is good news for consumers because it is tied to rates on mortgages and other loans.

"People are taking advantage of these yield levels to put some money to work," said Carl Lantz, a fixed income strategist at Credit Suisse.

The rise in Treasury prices added to Monday's gains, which came after big losses on Friday in reaction to the unexpected dip in the unemployment rate.

The Treasury's three-year note auction was a success. The auction's bid-to-cover ratio, a measure of demand, was 2.90 percent, compared with 2.62 percent at a similar auction last month and above a recent average of 2.58 percent.

Indirect bids, an indication of foreign buying, hit an all-time high, Lantz said.

"All the statistics look good," he said. "A good auction all around."

The government is selling massive amounts of debt this year to help pay for its bailout of the financial system and jump-start the economy. Investors have been worried that demand would abate amid the surplus, but so far most auctions have been going well. If demand were to consistently fall short, the government would have to raise the interest it pays, which would drive up borrowing costs and potentially hinder the economy's recovery.

In total, the Treasury Department is issuing $75 billion of debt this week. On Wednesday, the government will auction $23 billion in 10-year notes followed by $15 billion in 30-year bonds on Thursday.

The three-year note rose 6/32 to 99 12/32, while its yield fell to 1.72 percent from 1.78 percent.

In other trading, the 30-year bond rose 1 14/32 to 96 27/32, and its yield fell to 4.44 percent from 4.53 percent.

The two-year note rose 4/32 to 99 21/32 and its yield fell to 1.18 percent from 1.25 percent.

The yield on the three-month T-bill was unchanged at 0.17 percent. Its discount rate was 0.18 percent.

The cost of borrowing between banks fell. The British Bankers' Association said the rate on three-month loans in dollars — the London Interbank Offered Rate, or Libor — slipped to 0.45 percent from 0.46 percent.

What to expect:

WEDNESDAY: Weekly mortgage applications; international trade; weekly crude inventories; Treasury 10-year auction; Fed announcement; Earnings from Macy's.

THURSDAY: Retail sales; weekly jobless claims; import/export prices; business inventories; Treasury 30-year auction; Earnings from Wal-Mart, Kohl's and Nordstrom.

FRIDAY: CPI; industrial production; consumer sentiment; Earnings from JCPenney.

Among the stocks expected to see active trading Wednesday are LDK Solar Co. Ltd., Liz Claiborne Inc., Macy's Inc. and Sara Lee Corp.

LDK Solar Co. Ltd. /quotes/comstock/13*!ldk/quotes/nls/ldk (LDK 11.22, +0.18, +1.63%) is expected to post a second-quarter loss of 91 cents a share, according to analysts surveyed by Thomson Reuters.

Liz Claiborne Inc. /quotes/comstock/13*!liz/quotes/nls/liz (LIZ 4.02, +0.01, +0.25%) is projected to post a second-quarter loss of 40 cents a share.

Macy's Inc. /quotes/comstock/13*!m/quotes/nls/m (M 15.44, -0.03, -0.19%) is forecast to post second-quarter earnings of 14 cents a share.

Netease.com Inc. /quotes/comstock/15*!ntes/quotes/nls/ntes (NTES 45.30, +0.29, +0.64%) is expected to post second-quarter earnings of 45 cents a share.

Sara Lee Corp. /quotes/comstock/13*!sle/quotes/nls/sle (SLE 10.85, +0.05, +0.46%) is projected to post fiscal fourth quarter earnings of 24 cents a share.

The Progressive Corp. /quotes/comstock/13*!pgr/quotes/nls/pgr (PGR 15.80, -0.37, -2.29%) is forecast to post second-quarter earnings of 36 cents a share.

U.S. Home Systems /quotes/comstock/15*!ushs/quotes/nls/ushs (USHS 2.97, +0.25, +9.19%) is expected to post a second-quarter loss of 10 cents a share.

After Tuesday's bell, NYSE Euronext's NYSE Group Inc. /quotes/comstock/13*!nyx/quotes/nls/nyx (NYX 28.47, -0.22, -0.77%) said short interest on the New York Stock Exchange fell in the second half of July from the first half, to the lowest level since late February. Short interest fell to 14.03 billion shares from 15.64 billion shares. Short interest on July 31 was equal to 3.67% of total shares outstanding.

Watch List

Nasdaq OMX Group Inc. /quotes/comstock/15*!ndaq/quotes/nls/ndaq (NDAQ 21.89, -0.01, -0.05%) said Tuesday that short interest declined over the most recent period. The exchange had short interest in 6.78 billion shares in 2,903 securities at the end of July 31, compared with 7.14 billion shares in 2,883 securities as of July 15.

Warnaco Group Inc. /quotes/comstock/13*!wrc/quotes/nls/wrc (WRC 37.30, -1.01, -2.64%) said late Tuesday that its second-quarter profit fell to $17.8 million, or 38 cents a share, from $19.4 million, or 41 cents a share, in the year-ago period.

Asia:

Stock markets in Asia were slightly lower in morning trading Wednesday, with a selloff in the US weighing on trading and investors somewhat cautious ahead of a Federal Open Market Committee meeting.

Japan's Nikkei [JP;N225  10502.96    -82.50  (-0.78%)   ] average pulled back from 10-month highs on Wednesday, as concerns over a U.S. economic recovery grew after an unexpectedly large drop in  wholesale inventories and negative comments about the banking  sector from a prominent analyst.

Analysts said investors were locking in profits ahead of the end of the Federal Reserve board meeting and issuance of its policy statement, with attention on whether it unwinds some of the quantitative easing policies currently in place.

Exporters such as Canon fell but Sapporo gained on a report it will buy 20 percent stake  in drinks maker Pokka Corporation as part of a three-way tie-up  with Meiji Holdings.

"There's some concern that the Nikkei has been overbought,  and that put together with inability to read what the Fed might  do is leading to profit-taking," said Takashi Ushio, head of the  investment strategy division at Marusan Securities.

"I wouldn't go so far yet as to call what's happening now an  adjustment, but for the Nikkei to rise past 11,000 we need to see  proof of quite a sharp recovery in earnings," said Ushio.

Japanese wholesale prices fell a record 8.5 percent in July from a year earlier, highlighting growing deflationary pressure in the economy and limiting the Bank of Japan's scope for ending its unorthodox policy measures, but analysts said there was little impact from this on the Nikkei.

Tokyo stocks fell Wednesday morning on renewed jitters over the U.S. economic recovery path, with Japanese exporters weighed down by a stronger yen and financial shares tracking their U.S. peers' decline.

IT Holdings Corp. (3626) shares opened ask-only Wednesday morning, as the company on Tuesday evening downgraded its earnings outlook for the current year through March 2010.

JGC Corp. (1963) shares bounced back Wednesday after a down day on Tuesday, at one point up 76 yen at a year-to-date high of 1,729 yen.

Australian stocks recovered early losses to stand flat after Commonwealth Bank of Australia reversed course as investors took an optimistic view of its earnings results and outlook. The benchmark S&P/ASX 200 [AU;XJO  4328.2    -3.80  (-0.09%)   ] was up slightly.

It earlier posted a 2.3 percent rise in second-half profit, above analyst expectations, although it gave a cautious outlook.

"It's quite a promising result and it's quite promising for the rest of the financial sector," said James Foulsham, head of  trading at CMC Markets.

In Korea, the Kospi [KR;KSPI  1556.33    -22.88  (-1.45%)   ] slid on US weakness, with KB Financial among the big losers.

Singapore Slides, Hong Kong Starts Down

Singapore's Straits Time Index [GB;STI  2576.25    -21.05  (-0.81%)   ] was also down. Shares of Ascendas Real Estate Investment Trust fell sharply after the firm announced that it had made a private placement of 185 million new units at S$1.63 each, analysts said.

The price was at the bottom of the indicative range of S$1.63 and S$1.70, and well below the firm's pre-suspension price of S$1.76.

"People are taking it as a 'sell' signal that the company needs to raise cash as it's not the first time they're dipping into the market," said a trader from a local brokerage.

Hong Kong's Hang Seng index [HK;HSI  20623.04    -451.1719  (-2.14%)   ] started down 2 percent.

HSI 20561 -513.21 -2.44%. (08.32 AM IST).

Hong Kong stocks fell Wednesday from their highest level in nearly a year, as investors locked in profits after recent strong gains in market heavyweights HSBC Holdings Plc. and China Mobile Ltd., as well as Chinese banks. The Hang Seng Index dropped 2% to 20,655.77 in early trade, after ending above 21,000 Tuesday. The Hang Seng China Enteprises Index lost 2% to 11,744.17, also hurt by a decline for stocks in mainland China, where the Shanghai Composite dropped 0.9%. Shares of HSBC /quotes/comstock/22h!e:5 (HK:5 86.08, -0.40, -0.46%) /quotes/comstock/13*!hbc/quotes/nls/hbc (HBC 54.90, +0.53, +0.98%) dropped 3.1%, and China Mobile /quotes/comstock/22h!e:941 (HK:941 91.10, -0.25, -0.27%) /quotes/comstock/13*!chl/quotes/nls/chl (CHL 57.55, -0.01, -0.02%) shrank 2.9%, while Bank of China /quotes/comstock/22h!e:3988 (HK:3988 3.79, +0.05, +1.34%) /quotes/comstock/11i!bachy (BACH.Y 12.10, -0.45, -3.59%) fell 2.4%. 

Hutchison Telecom shares suspended

Hutchison Telecommunications International Ltd. /quotes/comstock/22h!e:2332 (HK:2332 1.98, -0.03, -1.49%) /quotes/comstock/13*!htx/quotes/nls/htx (HTX 3.79, -0.09, -2.35%) said Wednesday its shares have been suspended from trading "pending the release of an announcement regarding a very substantial disposal by the company." The Hong Kong telecom didn't give further details. It was slated to announce earnings later in the day.

Microsoft Corp. has reached an agreement with Nokia Corp. to make a mobile version of Microsoft's Office suite of software that works on Nokia mobile phones, The Wall Street Journal reported late Tuesday, citing a person familiar with the matter. 

Chinese prosecutors have charged four staff members of Anglo-Australian miner Rio Tinto Plc. with corporate espionage and bribery, according to an announcement late Tuesday in state media. 

China imports record crude, iron ore as economy expands

China's imports of oil and iron ore hit a record high in July, customs data showed Tuesday, as the nation's $586 billion stimulus plan continues to push up demand for commodities.

Crude imports jumped 18% from a month ago to 19.63 million metric tons last month, or about 4.64 million barrels a day, according to monthly data released by China's General Administration of Customs. Iron-ore imports rose 5% to 58.08 million metric tons.

China, the world's second-biggest oil consumer and the No. 1 user of iron ore, spent $13.8 billion in the imports of the two commodities. China's strong demand for commodities came also as the country continued to build its strategic reserve for crude, copper and other commodities.

Total oil imports in the first seven months rose to 110.4 million metric tons, up 5.5% from a month ago. Iron-ore imports rose to 355.25 million metric tons, up 31.8% from a year ago.

"This rapid and broad-based growth in commodity imports in July reflects both the strong real demand in China and China's deep pockets," said Ting Lu, an economist at Bank of America Merrill Lynch, in a note.

Merrill Lynch recently raised its forecast for the world's third-largest economy to grow 8.7%, from 8% previously. China last month reported its economy increased by a higher-than-expected 7.9% in the second quarter. See full story on China's economic growth data.

Official data released on Tuesday showed China's industrial production and investments in urban fixed assets increased at a rapid rate in July, keeping alive expectations government policies will continue to support an economic recovery. See related story.

While global oil demand is expected to fall this year for a second year in a raw, China's oil demand is expected to rise by 1.1%, according to the International Energy Agency. The IEA also expects China's oil demand in 2010 to rise by 4.2% to 8.3 million barrels a day.

"Recent data continue to paint a bullish picture for underlying energy demand in China, and one that is clearly improving," said Amrita Sen, an oil analyst at Barclays Capital.

China imports more than half of its oil demand.

In Tuesday trading, crude futures slid 1.9% to $69.23 a barrel on the New York Mercantile Exchange. Oil has rallied about 60% this year.

U.S-listed shares of PetroChina Ltd. /quotes/comstock/13*!ptr/quotes/nls/ptr (PTR 116.09, -1.68, -1.43%) slid 1.4% to $116.17, those of China Petroleum & Chemical Corp. /quotes/comstock/13*!snp/quotes/nls/snp (SNP 86.43, +0.14, +0.17%) fell 1.6% to $86.64.

Japan wholesale prices fall record 8.5%

Wholesale prices in Japan fell a record 8.5% in July from the year-earlier period, the Bank of Japan said Wednesday.

The fall in the preliminary domestic Corporate Goods Price Index outpaced a 6.7% on-year fall in June. However, the July figures marked a 0.4% rise when compared to the month before.

The drop was the fastest on-year decline on record but still came in below an average market forecast for an 8.6% fall, according to a Kyodo news report.

Import prices were down 33.3% on-year in yen terms and down 26.5% on a contract-currency basis, the data said.

Export prices fell 15.3% in yen terms and 6.5% in contract currencies.

Report: Economists Say Recession Over, Want Bernanke to Stay

Economists date the start of the recession to December 2007 -- defining much of Ben Bernanke's term as Federal Reserve chairman -- and a majority in a Wall Street Journal survey agree that the recession is coming to an end.

Is the recession over? Economists polled by the Wall Street Journal say yes, and they suggest that's a big reason why Federal Reserve Chairman Ben Bernanke should stay.

The Journal reports that the experts are overwhelmingly in favor of President Obama asking Bernanke to stay on for another four-year term when his current term ends Jan. 31. Bernanke has been a key figure in the government's efforts to reverse the country's economic meltdown, a role that has earned him some criticism but also praise for handling of the crisis.

Economists date the start of the recession to December 2007 -- defining much of Bernanke's term, which started in early 2006 -- and a majority agree that the recession is coming to an end.

Bernanke "deserves a lot of credit for stabilizing the financial markets," Joseph Carson of AllianceBernstein told the Journal.

Obama said last week that the "worst may be behind us," and the Labor Department on Tuesday seemed to bolster that notion, reporting that productivity surged in the spring by the largest amount in almost six years while labor costs plunged at the fastest pace in nine years.

Productivity is a key ingredient for rising living standards because it means that companies can pay their workers more with the wage increases financed by rising output.

However, in the current recession, companies have been using the productivity gains to bolster their bottom lines in the face of declining sales. Many companies have been reporting second-quarter earnings results that have beaten expectations despite falling sales, due largely to their aggressive cost cutting.

Many economists believe the current recession is on the verge of ending. If the economy starts to grow in the second half of this year, companies are expected to switch from layoffs and trimming workers' hours to boosting employment as demand for their products increases.

As for Bernanke, it seems increasingly likely that he'll get to keep his job.

"Continuity is critical as we emerge from this crisis," Diane Swonk of Mesirow Financial told the Wall Street Journal. "Otherwise, we could slip back in again.

Bernanke is the best suited to undo what has been done when the time comes."

China's July fiscal revenue up 10.2% 

China's Ministry of Finance announced Wednesday that the country's fiscal revenue in July rose 10.2 percent year on year to 669.59 billion yuan (97.96 billion U.S. dollars). 

White House Adviser Summers Predicts Slow Recovery.

Breaking News:

U.S. Marines Mount Assault on Taliban Town

U.S. Marines have mounted a helicopter assault to seize the Taliban-held town of Dahaneh in southern Afghanistan and are fighting gain control of the area ahead of next week's presidential elections.

The assault began before dawn Wednesday, with Marines entering the town as others battled militants in the surrounding mountains.

Associated Press journalists traveling with the first wave say Marines were met with small arms, mortar and rocket propelled grenade fire. Fighting is still under way hours later, with U.S. Marine Harrier jets streaking over the town and dropping flares in a show of force.

Marines have captured several suspects and seized about 66 pounds (30 kilos) of opium.

   

INVESTEMENT VIEW
Are Banks creating A Real Estate Bubble? 

Are they spurring unwanted personal consumption by throwing cheap loans at borrowers?

 
It's a crazy circle. Banks lower interest rates on deposits, find there are no takers for credit. So they go out and reduce rates on personal and car loans, even mortgages. But these sectors are the worst hit by rising numbers of unemployment. So Banks try something else-they go for GOI Treasuries.
 

For 10 year paper they bid 7 per cent, but already 2-3 year deposit rates fetch 7 per cent so there is an asset-liability mismatch if Banks go for long term paper funded by equally costing short term paper. So once more they cut deposit rates and the circle keeps repeating till the situation becomes so bad, that interest rates drop to zero and yet there are no safe customers to whom money can be lent out. So what do you do?

 

Just sit on your haunches and hope for better times. Or atleast this is what commercial banks are doing. Either they get cheap deposits or they get higher yields on 10 year Treasuries. The failure of the recent Bond offering from the Government last week shows the malaise. The GOI will not accept higher yields and Banks will not accept lower yields.

 

The Depositor will suffer and so would investors as Bank returns keep dropping. Anyone with common sense should look around the Globe, even with zero per cent interest rates in Japan, US and Hong Kong the economies are not growing. Infact, Economic Activity is sinking. So zero interest rates is not the answer. The answer lies in Growth, but if the Banks start taking speculative risk on sectors like Real Estate then we have a problem of Banking proportions on our hand.

 

To raise or not to raise?

 

Do the banks want to raise rates? Probably not. Not when they know the fragile state that many of their borrowers will be in once rates really start rising.

The fact is they've got to. With all the debt floating around on the market, and more to come, the competition for debt issues will be even fiercer this time next year.

Banks will have to offer higher levels of interest in order to attract funds. That will have to filter through to their borrowers. There's no question about that.

The ability to move on interest rates has been helped by their little PR coup on bank fees. It's much easier for them to take a small hit in the pocket now on fees knowing full well they'll have an easy excuse to increase interest rates regardless of what the RBI does.

Even until recently the economists at the major banks were still singing from the same hymn sheet - "interest rates will fall further." Most of them were calling for a drop to 2% as they told us not to worry about inflation.

All the while the banks were helping to fuel the hot air keeping the property bubble in the air. They've succeeded in suckering in hundreds of thousands of property buyers on the back of artificially low interest rates. 

Extraordinarily, not a single one of the expert economists at the banks have considered this to be a problem. How could they possibly ignore it?

After all, the low interest rates and government cash bribes have given the property sector a three-in-one boost. A boost that can only result in a bubble.

This triumvirate consists of: people who would have bought into the market now anyway, those that have been delaying a purchase, and those that have brought forward a purchase.

The simple laws of supply and demand tell you that if you're grouping together every potential purchaser from the last five years, today, and the next five years, it has to have an impact on prices.

When demand rises, prices rise. We're not talking a complex scientific formula here.

But still the mainstream media largely ignores it.

The big problem for the banks and the property sector could come as early as next year. With interest rates even 1% higher than today, and no government bribes there will undoubtedly be fewer buyers in the market.

That will be bad news for the banks, especially if home repossessions continue to rise. Think about what it'll be when rates push higher and the cost of servicing loans also increases.

All we can say is that it's a good job the banks are stocking up the cupboards now. We may soon find out whether they've kept enough in reserve to last through the Property Winter of Discontent or not.

(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.)
 

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Arvind Parekh
+ 91 98432 32381