Market Outlook 26th Aug 2009

INTRADAY calls for 25th Aug 2009
+ve script, sector: Realestate, MLL
BUY Mindtree-501 @ 490 for 515+ with sl 482
BUY IVRCLinfra-371 @ 360 for 375+ with sl 353
BUY Cummins-330 @ 320 for 335+ with sl 313
BUY Cairn-257 @ 251 for 264+ with sl 247

Expected Breakout
BUY Punjlloyd-254 above 260 for 285+ with sl 255
BUY LIChousing-639 above 645 for 700-730+ with sl 635
BUY Ashokley-37.85 above 38.50 for 42-47+ with sl 36

Positional
BUY Tataspong-216 @ 212 for 232+ with sl 209
BUY Ansalinfra-70 @ 67 for 82+ with sl 64

 

NIFTY FUTURES LEVELS

RESISTANCE

4678

4709

4738

SUPPORT

4642

4638

4607

4578

4491

4462

Buy WOCKHARDT;SELAN EXPLORATION

 

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

Purva, Tulip, Bhushan Steel, Patni, Insal Infra, Aurobindo Pharma, HCL Tech, Mphasis, Jindal Saw & FSL .

And this is list of 10 Weak futures:

Chambal Fert, India Cements, Dabur India, Cipla Ltd, Bajaj Hind, Indian Overseas Bank, Suzlon, Sesa Goa Ltd, ACC Ltd & Federal Bank.
Nifty is in Up trend
 

NIFTY FUTURES (F & O): 
Rally may continue up to 4678 level for time being.

Support at 4638 & 4642 levels. Below these levels, expect profit booking up to 4607-4609 zone and thereafter slide may continue up to 4578-4580 zone by non-stop.

Buy if touches 4491-4493 zone. Stop Loss at 4462-4464 zone.

On Positive Side, cross above 4707-4709 zone can take it up to 4736-4738 zone by non-stop. If crosses and sustains this zone then uptrend may continue.
 
Short-Term Investors:
Bearish Trend. 3 closes below 4623.80 level, it can tumble up to 4092.20 level by non-stop.
SL triggered. 3 closes above 4623.80 level, expect short covering up to 4889.60 level by non-stop.
 
BSE SENSEX:
Higher opening expected. Uptrend should continue. 

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 WOCKHARDT LTD (NSE Cash) 
Uptrend may continue.

Mild sell-off up to 167 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 158 level for your long positions too.
 
Buy SELAN EXPLORATION TECHNOLOGY (NSE Cash) 

Uptrend may continue.

Mild sell-off up to 254 level can be used to buy. If uptrend continues, then it may continue up to 284 level for time being. 

If crosses & sustains at above 298 level then uptrend may continue.

Keep a Stop Loss at 240 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	24-Aug-2009	2489.5	1777.96	+711.54

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	24-Aug-2009	1338.32	1063.26	+275.06

 

Global Cues & Rupee
The Dow Jones Industrial Average closed at 9,509.28. Up by 3.32 points.
The Broader S&P 500 closed at 1,025.57. Down by 0.56 points.

The Nasdaq Composite Index closed at 2,017.98. Down by 2.92 points.

The partially convertible rupee INR=IN closed at 48.62/63 per dollar on yesterday, unchanged from Friday's close.
 
 Interesting findings on web:
As the Dow Jones Industrial Average rose for its fifth consecutive session, member Boeing helped it stay aloft after receiving a contract, Advanced Micro Devices was a chip outperformer and stunted HD-TV demand singed Best Buy.

The Dow Jones Industrial Average rose 3.32 points, or 0.03%, to 9509.28, its highest close in more than nine months. The Nasdaq Composite Index dropped 2.92 points, or 0.14%, to 2017.98. The Standard & Poor's 500-stock index shed 0.57, or 0.06%, to 1025.56. Both the Nasdaq and the S&P 500 snapped four-session winning streaks.

U.S. stocks pulled back at the close Monday from a daylong rally, giving back gains late in the afternoon as advances outnumbered declines 1,968 to 1,773.

For the year:

The Dow is up 732.89, or 8.4 percent.

The S&P is up 122.32, or 13.5 percent.

The Nasdaq is up 440.95, or 28.0 percent.

Investors slowed their hectic buying of stocks Monday, leaving the major indexes little changed after a four-day advance. Stocks pulled back from early highs as financials, which have been surging lately, retreated. Analysts had expected a pause after stocks soared last week, lifting the Dow Jones industrials 370 points. Market experts have been warning, though, the market's upbeat mood could be tested with reports this week on consumer confidence and housing.

A big rise in US Treasury bond prices, which drove benchmark yields lower, dampened sentiment as the federal government bought debt in an apparent bid to keep interest rates low, traders said.

"A contest between buyers and sellers has left stocks at the unchanged mark," analysts at Briefing. com said in a client note.

"The volume was just about as slow as we've seen all summer," said Art Hogan, chief market analyst at Jefferies. "But it could be the quiet before the storm with all the economic data, especially related to housing, that we expect this week."

Stock analysts cautioned that the bull run could face sharp corrections, as stocks were now up some 17 per cent during the last six weeks despite weak US consumer confidence and rising unemployment clouding recovery prospects.

Worries about the consumer restrained Wall Street's momentum on Monday, reflecting investors' concerns that the economy might limp along if Americans did not start spending again.

Auto-related shares in the consumer discretionary sector weighed the most, with the government's incentive program for car purchases due to expire.

But one concern, analysts said, is whether the economy can sustain long-term growth after businesses restock their depleted inventories and increase their production from record low levels. Many forecasters expect the economy to grow in the third and fourth quarters as the recession fades, but some warn the rebound could be long and difficult.

"This recovery is going to have a lot of fits and starts because the consumer is still under major stress," said Peter Boockvar, equity strategist at Miller Tabak.

This week, investors will get more insight into consumer behavior. The government is set to release the latest numbers on personal income and spending on Friday, and it will release revised estimates of the gross domestic product on Thursday.

The government's advance report on G.D.P. found that the economy shrank at a rate of 1 percent in the second quarter. While categories like trade and government spending helped to lift domestic output, consumer spending fell at an annual rate of 1.2 percent.

Financial stocks were among the day's most heavily traded. In fact, Citigroup [C  4.82    0.12  (+2.55%)   ], Fannie Mae [FNM  1.70    0.50  (+41.67%)   ] and Freddie Mac [FRE  2.05    0.32  (+18.5%)   ] accounted for more than 25 percent of all volume on the New York Stock Exchange.

Traders said they don't actually believe Fannie and Freddie have equity value — they're just trading on momentum. On Friday, the Federal Reserve bought $5.6 billion in housing debt in an attempt to spur borrowing by keeping rates low.

Credit-card companies, including American Express [AXP  32.67    -0.18  (-0.55%)   ], Capital One [COF  36.45    -0.03  (-0.08%)   ] and Discover Financial [DFS  13.72    0.21  (+1.55%)   ], were in the spotlight after Barclays upgraded the sector to "overweight." All three were higher in morning trading but by the close, only Discover was in positive territory.

Banks tanked after analyst Dick Bove said 150 to 200 more U.S. banks are going to fail before it's all over.

SunTrust Banks [STI  21.79    -0.85  (-3.75%)   ] lost 3.8 percent after the bank said more credit losses are coming down the pike and commercial real estate may be shaky through next year.

Shares of Warner Chilcot [WCRX  20.41    4.35  (+27.09%)   ] soared 27 percent after the contraceptive maker said it has agreed to buy Procter & Gamble's prescription-drug business for $3.1 billion. P&G shares [PG  53.34    -0.24  (-0.45%)   ] slipped 0.5 percent.

And the Ricketts family has finalized a deal to buy the Chicago Cubs from Tribune for $845 million. That transaction still needs the approval of major league baseball owners, and the court that's overseeing Tribune's bankruptcy case.

Energy stocks were among the few advancers after oil settled above $74 a barrel. Both ExxonMobil [XOM  71.30    1.38  (+1.97%)   ] and Chevron [CVX  70.76    1.03  (+1.48%)   ] gained more than 1 percent.

Pharmaceuticals also ended higher, with Abbott Labs [ABT  46.08    0.69  (+1.52%)   ] up 1.5 percent and Pfizer [PFE  16.73    0.09  (+0.54%)   ] up 0.5 percent.

Advanced Micro Devices [AMD  4.00    0.30  (+8.11%)   ], which has fallen more than 25 percent in the past year, gained 8.1 percent following an upgrade from Citigroup.

Elsewhere in tech land, Finnish handset maker Nokia [NOK  12.48    -0.01  (-0.08%)   ] is planning to enter the PC market with a netbook computer.

Boeing rose $1.26, or 2.7%, to $47.13, the Dow industrial average's best percentage gainer. Canadian airline WestJet said it ordered 14 of the aircraft maker's next-generation 737-700s.

Advanced Micro Devices rose 30 cents, or 8.1%, to 4, the S&P 500's best percentage gainer. The chip maker is trading at an unwarranted discount to its peers, given its prospects, including the likelihood of better gross margin, said Citigroup in raising shares to "buy" and boosting its price target to $5.50 from $4.25.

Best Buy lost 1.68, or 4.5%, to 35.81. A twice-monthly consumer survey by Stifel Nicolaus found only 22% of respondents intend to buy a high-definition television set within the next year, down from 27% in early August and making it the worst performing category for the first time in the survey's five-year history.

Warner Chilcott jumped 4.35, or 27%, to 20.41. The specialty-drug maker plans to acquire Procter & Gamble's prescription-drug business for $3.1 billion, a sign that the market for loans on more highly levered deals may be loosening. Dow industrial member P&G shed 24 cents, or 0.4%, to 53.34.

Toll Brothers lost 93 cents, or 4.1%, to 21.77. Ahead of the luxury-home builder issuing results Thursday, Citigroup downgraded shares to "hold," saying the stock is trading too high based on Citi's outlook for the housing market.

Dell (Nasdaq) advanced 29 cents, or 2%, to 14.78, its highest close in more than 10 months. Seeing an improved outlook for computer demand, Broadpoint AmTech raised the personal-computer maker's stock rating to "buy."

Sears Holdings (Nasdaq) dropped 2.08, or 3.2%, to 63.94. The retailer could see its already-stricken stock fall 50%, as the company's profitability is being choked by the severe cost-cutting of its chief owner Eddie Lampert and his hedge-fund partners, Barron's said.

Investors edged away from consumer-focused companies like clothing retailers, food companies and furniture makers. Shares of Home Depot and Coca-Cola fell the most among blue-chip stocks.

Shares of major auto dealers and retailers like AutoNation and Penske Automotive sagged as the government's cash-for-clunkers rebate program was set to end. Dealers have until noon on Tuesday to file applications for the government's $3 billion program, which offered rebates for car owners to exchange their gas guzzlers for more fuel-efficient models.

The program drew people back to dealerships, but analysts said the wave of car buyers might recede without hefty government subsidies.

But investors continued to warm to energy producers like Chevron and ConocoPhillips. Shares swung higher as crude oil prices rose 48 cents, to $74.37 a barrel.

Commodity prices rose as investors placed additional bets on a global turnaround. The price of oil rose to its highest point of the year. Copper also gained.

Oil,Gold & Currencies:

Crude futures rose Monday, briefly touching their highest level in 10 months, as optimism about a rebound in the global economy boosted energy prices.

Limiting crude's gains, the U.S. dollar strengthened against most of its major rivals, curbing dollar-denominated prices of commodities. Meanwhile, natural gas rose, recovering some ground after falling to a seven-year low in the previous session.

Light sweet crude for October delivery gained 48 cents, or 0.6%, to $74.37 a barrel on the New York Mercantile Exchange. The contract hit an intraday high of $74.81 earlier, the highest level for a front-month contract since late October. Oil reduced its earlier gains in afternoon trade as U.S. stocks turned lower.

Gold futures on the COMEX Division of the New York Mercantile Exchange declined on Monday as dollar went up, limiting gold's hedge appeal. Silver inched up, but platinum closed lower.

Gold price for December delivery fell 11 U.S. dollars, or 1.2 percent, to finish at 943.70 dollars an ounce.

The contract ever rose to 958.50 dollars earlier in the session, the highest level since Aug. 13, but in the last half hour, the precious metal plummeted about as much as 19 dollars to an intraday low of 935.70 dollars under the technical pressure of chart-based selling off.

Stronger dollar weighed on the yellow metal in the morning session, when the contract was just slightly below the previous closing price. By the end of gold floor trading time, the dollar index, a gauge measuring the greenback's value against six major currencies, climbed more than 0.2 percent to 78.224.

December silver finished at 14.231 dollars per ounce, up 3.2 cents. October platinum fell 11.10 dollars to 1248.10 dollars an ounce. 

The yen and dollar advanced against the euro after renewed concerns the U.S. financial crisis will linger sent regional shares lower and revived demand for so- called safe-haven currencies.

The yen rose against all of the 16 most-active currencies tracked by Bloomberg News after Atlanta-based SunTrust Banks Inc. said U.S. financial institutions may report more credit losses as commercial real estate falters. Australia's dollar snapped a five-day gain as the Baltic Dry Index, a measure of shipping costs for commodities, slid to a three-month low, damping demand for higher-yielding assets.

"Worries are re-emerging that regional and local banks in the U.S. may be facing more loan losses," said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. "This is causing risk aversion and buying of the yen and the dollar."

The yen rose to 134.54 per euro as of 10:26 a.m. in Tokyo from 135.27 yesterday in New York. The currency was at 94.17 per dollar from 94.56. The U.S. currency gained to $1.4285 per euro from $1.4304 yesterday.

Australia's dollar slipped to 83.55 U.S. cents from 83.89 cents in New York yesterday, when it touched 84.29 cents, the most since Aug. 14 and near its highest level this year. The Baltic Dry Index dropped for a fifth day and oil prices fell for the first time in six days.

Japan's Nikkei 225 Stock Average declined 0.7 percent and the MSCI Asia Pacific Index of regional shares fell 0.4 percent. U.S. stocks yesterday erased gains after SunTrust, Georgia's biggest bank, said commercial real estate may falter through 2010.

'Long Way'

"The industry is a long way from declaring any sort of victory, especially regarding credit issues," SunTrust Chief Executive Officer James Wells III said yesterday. "This credit cycle has yet to play itself out. We do not expect things to improve for the banking industry in the very near future."

The Chicago Board Options Exchange Volatility Index, or VIX, rose 0.5 percent to 25.14 yesterday, signaling investor skepticism about the sustainability of the recovery.

As anxiety about the health of the U.S. financial system resurfaces, "Asian stocks will probably fall," said Tomokazu Matsufuji, a dealer in Tokyo at SBI Liquidity Markets Co., a unit of financier SBI Holdings Inc. "There is a good chance that the yen and dollar will rebound from yesterday's losses."

Taylor, Bean & Whitaker Mortgage Corp., the 12th-largest U.S. mortgage lender, filed yesterday for bankruptcy protection from creditors as regulators question its involvement with Colonial BancGroup Inc.

Bank Failures

Another 150 to 200 U.S. banks may fail in the current banking crisis and the industry's payments to keep the Federal Deposit Insurance Corp afloat could eat up 25 percent of pretax income in 2010, Reuters reported, citing banking analyst Richard Bove of Rochdale Securities.

The U.S. Dollar Index, a six-currency gauge of the greenback's value, rose for the second day before U.S. government reports expected to show consumer spending slowed and the economy shrank last quarter by more than initially estimated. The dollar gauge advanced 0.3 percent to 78.241.

The U.S. government's revised figures for second-quarter gross domestic product, due on Aug. 27, may show the economy contracted at a 1.4 percent annual rate, according to the median estimate in a survey of economists. That compares with a 1 percent estimated decline last month.

Consumer purchases increased 0.2 percent after a 0.4 percent gain in June, according to the median estimate of 61 economists surveyed by Bloomberg News before a Commerce Department report Aug. 28.

Euro Zone

Losses in the euro may be tempered before a German report tomorrow forecast to show business confidence rose for a fifth month, adding to signs that the recession in the 16-nation region is abating.

European Central Bank President Jean-Claude Trichet said on Aug. 22 there are "some signs confirming that the real economy is starting to get out of the period of freefall." John Lipsky, first deputy managing director at the International Monetary Fund, wrote yesterday on the agency's Web site the global economy is showing "clear" signs of a rebound.

"The euro-zone economy looks like it's heading for a recovery," said Akifumi Uchida, deputy general manager of the marketing unit at Sumitomo Trust & Banking Corp. in Tokyo. "The euro will probably strengthen further."

The ECB will keep its main refinancing rate at 1 percent for the rest of this year, according to the median estimate of 22 analysts surveyed by Bloomberg News.

Bernanke's Second Term

Market reaction was muted to reports President Barack Obama nominated Federal Reserve Chairman Ben S. Bernanke to a second term. Bernanke led the biggest expansion of the central bank's power in its 95-year history to avert a second Great Depression.

"The re-nomination of Bernanke, who has a high reputation among investors, will spread some relief about the sustainability or the consistency of the current monetary policy framework," said Shuzo Kakuta, a senior foreign-exchange adviser at Tokyo Tomin Bank Ltd. "But this news won't move the currency, whereas a failure in his re-nomination would."

Obama will make the announcement tomorrow at Martha's Vineyard, Massachusetts, where he is vacationing with his family, and Bernanke is expected to join him, an administration official, who spoke on the condition of anonymity, told Bloomberg News. The nomination requires Senate approval. Bernanke's four-year term as chairman expires Jan. 31.

Bernanke, 55, slashed the main interest rate almost to zero, pumped $1 trillion into the banking system and led rescues of Bear Stearns Cos. and American International Group Inc. He now must guide the world's largest economy back to growth and reduce unemployment approaching 10 percent while shrinking the Fed's balance sheet to prevent a surge in inflation.

Bonds:

The 10-year-Treasury note rose 23/32 to 101 7/32. The yield fell to 3.48 percent, from 3.56 percent late Friday.

"The stock market is sending this message of optimism while the U.S. Treasury market is sending another message," Mr. Boockvar said. "Both can't be right."

What to expect:

The news will pick up as the week goes on. On tap are more than $100 billion in Treasury auctions, a report on bailout executive pay, durable-goods orders, new-home sales, the second reading on second-quarter GDP, personal income and spending, consumer confidence and spending, and earnings from Dell and Tiffany.

Asia:

Stocks across Asia started slightly lower Tuesday, with some selling coming after the previous sessions sharp gains and a disappointing market close in the United States.

Nikkei average dipped 0.4 percent on Tuesday, as shares of exporters such as Canon Inc (7751.T) took a breather after a rally the previous day, while investors focused Japan's general election and U.S. economic data.

Nikkei 225 10,498.19     -82.86 ( - 0.78%). (07.53 AM IST)

Nitori Co. (9843) shares traded higher for the fourth consecutive trading day Tuesday morning, climbing 230 yen from Monday at one point to 6,950 yen.

Ministop Co. (9946) shares fell back Tuesday morning in response to the company's downgrade the previous evening of its group earnings outlook for the six months through August.

Lawson Inc. (2651) shares continued their ascent Tuesday morning after the convenience store operator officially announced Monday evening it is forming an alliance with Matsumotokiyoshi Holdings Co. (3088) to launch hybrid convenience stores and drugstores.

Japanese shares slipped lower in early action Tuesday, with export-focused majors retreating as the yen strengthened. The benchmark Nikkei 225 Average shed 0.5% to trade at 10,526.9, while the broader Topix 1000 was off 0.4% at 918.65. Shares of Sony Corp. /quotes/comstock/!6758 (JP:6758 2,520, +75.00, +3.07%) /quotes/comstock/13*!sne/quotes/nls/sne (SNE 26.59, +0.05, +0.19%) were 1.2% lower, while those of rival electronics company Panasonic Corp. /quotes/comstock/!6752 (JP:6752 1,489, +35.00, +2.41%) fell 0.7%. Auto makers were broadly lower, with Honda Motor Co. /quotes/comstock/!7267 (JP:7267 3,050, +95.00, +3.21%) /quotes/comstock/13*!hmc/quotes/nls/hmc (HMC 32.06, +0.05, +0.17%) falling 1.3% in early moves, while Toyota Motor Corp. /quotes/comstock/!7203 (JP:7203 4,070, +90.00, +2.26%) /quotes/comstock/13*!tm/quotes/nls/tm (TM 83.64, -2.11, -2.46%) retreated 0.7%. As the Tokyo market opened, the U.S. dollar was buying 94.38 yen, weakening slightly from 94.51 yen in late North American trading.

Toyota reportedly to hike daily output for first time in 16 months.

HSI 20221.3 -314.64 -1.53% (07.56 AM IST).

Hong Kong stocks fall on Chalco result, liquidy.

Hong Kong stocks fell in early trading, pressured by concerns of tightening liquidity conditions in China and a disappointing result from Aluminum Corp of China, or Chalco. The Hang Seng Index retreated 282 points, or 1.4%. to 20,251.30 in early trade. The China Enterprises Index fell 1.7% at 11,496.33. Shares of Chalco [s:hk:2600] were down 3.4% after the aluminum giant reported late Monday a net loss of $515 million in the first half amid sluggish demand from the construction and automobile industries.

Hong Kong shares opened 1.4 percent lower on Tuesday, weighed down mainly by disappointment over Chinese aluminium producer Chalco's interim loss, while the market sought more positive data elsewhere.

Investors will be watching the trend in U.S. housing data, due for release later in the day. The benchmark Hang Seng Index .HSI opened down 290.23 points at 20,246.34.

Chalco (2600.HK), which posted its third consecutive quarterly loss on Monday on weak demand and low prices for the metal, dropped 3.6 percent. The China Enterprises Index .HSCE, which represents top locally listed mainland Chinese stocks, opened down 1.9 percent at 11,478.53.

Hang Seng Index opens 289 points lower on Tue

Hong Kong stocks fell on Tuesday morning, with the benchmark Hang Seng Index opening 289 points lower at 20,246.

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 227 points lower at 11,476.

Sinotruk (Hong Kong) Ltd<3808> fell 1.41% and opened at HK$9.07. BYD Co Ltd<1211> decreased 0.33% from the previous closing to HK$46. 

China stocks open down after premier reaffirms policy

SSE Composite  2896.17   -3.25. (08.05 AM IST).

China's benchmark stock index opened down 0.45 percent on Tuesday, led by Industrial Bank , after Premier Wen Jiabao said that China would keep its monetary policy loose as the economy faces new difficulties, including trouble boosting domestic consumption.

The Shanghai Composite Index opened at 2,980.100 points. It staged a technical rebound over the past three trading days after a 20-percent slide in the two weeks to last Wednesday's close, spurred by profit-taking and worries over fresh share supplies among other factors.

Industrial Bank edged 0.41 percent lower to 36.50 yuan after it posted a disappointing 4.9 percent drop in net profit to 6.22 billion yuan ($911 million) in the first half from a year earlier.

In a downbeat statement published after the market closed on Monday, Wen said Beijing would ensure a sustainable flow of credit and a reasonably sufficient provision of liquidity to support growth.

Traders said Wen's comments cast fresh uncertainty over China's economic recovery, which showed signs of slowing in July after solid improvement in the first half. Such uncertainty might limit the room for stocks to rebound in the near term.

At the same time, however, signs of a possibly quicker-than-expected global economic recovery might gain increasing influence over China's stock market, traders said.

China's commodity futures market has taken the lead in this trend, with optimism over global recovery replacing optimism on a Chinese recovery as the biggest single factor pushing copper futures to close limit-up on Monday, although the futures fell in early trade on Tuesday due to profit-taking.

($1 = 6.83 yuan)

Chinese stocks open 0.45% lower on Tue

Chinese stocks opened slightly lower on Tuesday morning.

The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, opened at 2,980 points, down 0.45% or 13 points from the previous closing.

The Shenzhen Component Index on the smaller Shenzhen Stock Exchange opened 0.55% or 66 points lower at 12,009 points.

Seoul's Kospi [KR;KSPI  1599.1    -13.12  (-0.81%)   ] opened lower day following near 2-percent gains in the previous session, with a flat finish on Wall Street offering little direction and LG Display falling after reports of a new China venture.

And Australia's S&P/ASX 200 [AU;XJO  4400.3    -25.80  (-0.58%)   ] also dropped. Banks fell, led by No.4 Australia & New Zealand Banking Group.

Asian stocks declined, dragging the MSCI Asia Pacific Index from a one-week high, after Chinese commodity companies reported lower profits and SunTrust Banks Inc. said U.S. lenders face more credit losses.

Jiangxi Copper Co. sank 4.9 percent in Shanghai after posting a 61 percent decline in first-half net income.Aluminum Corp. of China Ltd., which reported its third quarterly net loss, fell 3.6 percent in Hong Kong. KB Financial Group Inc., which operates South Korea's largest bank, lost 3.2 percent as the chief executive officer of U.S.-based SunTrust said "the industry is a long way from declaring any sort of victory."

The MSCI Asia Pacific Index lost 0.4 percent to 112.93 as of 11:52 a.m. in Tokyo. The index rallied 2.5 percent yesterday, the steepest advance since May 19. Companies on the gauge are priced at an average 24 times estimated earnings, up from 13.7 times at the end of 2008.

"The market is no longer cheap," said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which manages about $75 billion. "The question is whether the rally is justified by the pick-up in economic data and earnings. Investors are waiting for confirmation that earnings are rebounding."

Japan's Nikkei 225 Stock Average slipped 0.8 percent to 10,498.19. South Korea's Kospi Index dropped 0.8 percent, while Australia's S&P/ASX 200 Index fell 0.6 percent.

NGK, Woolworths

Among stocks that gained today, NGK Insulators Ltd. rallied 4.1 percent in Tokyo after the Nikkei newspaper said it sold a storage battery system to Abu Dhabi. Australia's Woolworths Ltd., the country's biggest retailer, rose 2.6 percent on plans for a joint venture with U.S. home-improvement chain Lowe's Cos.

Futures on the Standard & Poor's 500 Index lost 0.1 percent. The U.S. gauge dropped 0.1 percent yesterday, erasing an earlier 0.9 percent advance, following SunTrust's comments.

Jiangxi Copper, China's biggest producer of the metal, sank 4.9 percent to 37.50 yuan after saying first-half profit slumped 61 percent because of lower prices.

Aluminum Corp., known as Chalco, lost 3.6 percent to HK$8.88. The company aims to break even or at least curb losses in the second half on expectations of an improvement in the market, Chairman Xiong Weiping said at a news conference today.

About 18 percent of the 538 companies in the MSCI Asia Pacific Index that posted results since early July have missed analysts' profit estimates, according to data compiled by Bloomberg. A third of those companies have reported better-than- estimated earnings, helping drive the stock index to the highest level in almost 11 months on Aug. 14.

'Gone Too High'

Equities "have gone too high and this is a time for investors to book profit," said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co.

Wesfarmers Ltd. slumped 4.4 percent to A$24.60. Australia's second-largest retailer is stocking more fresh fruit and vegetables than it can sell to reverse the reputation its Coles supermarkets has for empty shelves and win market share, CEO Richard Goyder said in an interview.

KB Financial retreated 3.2 percent to 54,200 won following comments from James Wells III, CEO of Atlanta-based SunTrust. Mizuho Financial Group Inc., Japan's third-biggest bank by market value, slipped 0.9 percent to 227 yen. Daiwa Securities Group Inc. Japan's second-largest brokerage, fell 2.3 percent to 556 yen.

"This credit cycle has yet to play itself out," Wells said in a speech to the Rotary Club of Atlanta. "We do not expect things to improve for the banking industry in the very near future."

Credit Crisis

Taylor, Bean & Whitaker Mortgage Corp., the 12th-largest U.S. mortgage lender, yesterday filed for bankruptcy protection from creditors.

Global credit losses and writedowns by financial institutions have totaled $1.6 trillion since 2007, according to data compiled by Bloomberg. The financial crisis helped drag the U.S. and Japan into recession and caused the collapse of Lehman Brothers Holdings Inc. and Bear Stearns Cos.

Nouriel Roubini, the New York University professor who predicted the financial crisis, wrote in the Financial Times yesterday the chance of a double-dip recession is increasing because of risks related to ending global monetary and fiscal stimulus.

Suncorp-Metway Ltd., Australia's third-largest insurer, sank 3.5 percent to A$7.53. Net income in the 12 months ended June 30 fell 40 percent to A$348 million ($291 million) as the company set aside more money to cover bad debt. Impairment losses on loans soared 10-fold to A$710 million.

Joint Venture

NGK surged 4.1 percent to 2,280 yen. The company won a 60 billion yen ($635 million) order to supply Abu Dhabi with sodium-sulfur batteries to use for grid-load leveling, the Nikkei reported.

Woolworths rose 2.6 percent to A$28.73. The company said it will start a joint venture with Lowe's and open more than 150 stores over the next five years.

South Korea's Daewoo Engineering & Construction Co. surged 8.5 percent to 14,700 won after Edaily reported Blackstone Group LP, KKR & Co. and Permira Holdings Ltd. may bid for the company.

Chalco swings to first-half loss

The Aluminum Corp. of China, or Chalco, on Monday swung to a first-half loss as prices for the metal it produces slumped.

China Resources Power first-half income more than doubles

China Resources Power Holdings Co. reported Monday net income for the first half more than doubled from a year earlier because of higher electricity tariffs, easing fuel costs and contributions from a plant that were idled due to bad weather in the year-earlier period.

China Construction Bank sees loans falling

China Construction Bank Corp. said Monday it expects to issue CNY900 billion (US$131.94 billion) in new loans this year, indicating a sharp slowdown in lending growth in the second half.

China's LCD TV sales to hit 22.6 mln units this year.

Neo-China Land to sell HK$1.1-bln properties to Oriental Ginza.

CNPC's 1st Chadian refinery start up in 2011.

China Resources Power's net profit surges 125.5% in H1.

Capital Group cuts stake in Anhui Conch Cement to 5.7%.

Hon Hai gets e-book reader orders from China Mobile.

Formosa Petrochemical net profit tumbles 47% in H1.

GD Goworld approved to issue up to RMB 600 mln in financing bills.

China Telecom to buy 4 mln 3G phones.  

Obama to Reappoint Bernanke as Fed Chief

U.S. President Barack Obama will reappoint Ben Bernanke for a second term as chairman of the Federal Reserve on Tuesday, a senior administration official said on Monday.

Bernanke, whose four-year term as head of the U.S. central bank ends on Jan. 31, 2010, will also be praised by Obama for his handling of the financial crisis, the official said.

Financial markets have given Bernanke high marks on the job and his reappointment was widely forecast, although a White House announcement was not expected until later this year.

Bernanke, 55, was appointed by President George W. Bush to succeed Alan Greenspan and is a widely respected monetary scholar who has long called for a more open central bank.

In remarks prepared for delivery at an event in Massachusetts, where Obama is on vacation, the president will also say the U.S. auto industry is "showing signs of life" and the U.S. credit and housing markets have been "saved from collapse," the official said.

"The man next to me, Ben Bernanke, has led the Fed through one of the worst financial crises that this nation and this world have ever faced," Obama will say in a statement to the media at 9 am New York time.

Bernanke has led the Fed and the U.S. economy during its most tumultuous period since the Great Depression of the 1930s. The announcement on Tuesday will end any lingering worries about who might head the central bank as the economy recovers.

Bernanke has mapped out his strategy to pull back the U.S. economy from exceptionally low interest rates and extricate the Fed from a flood of loans to financial markets without sparking unwanted inflation.

Fed Chairman Bernanke reported tapped for second term

President Barack Obama plans to announce the reappointment of Federal Reserve Chairman Ben Bernanke on Tuesday, reports said late Monday.

The announcement of a second term for Bernanke will be made from Martha's Vineyard, Mass., where Obama is currently vacationing, according to a Wall Street Journal report citing White House Chief of Staff Rahm Emanuel.

The Journal report said Obama will credit Bernanke for "pulling the economy back from the brink of depression." Read full WSJ.com story on Bernanke reappointment.

Specifically, Obama is expected to praise the 55-year-old Fed chairman for his "bold action" in dealing with the financial crisis, Reuters reported, citing an unnamed official.

The Reuters report added that the president will say the U.S. auto industry is "showing signs of life" and that the nation's credit and housing markets have been "saved from collapse."

Bernanke's four-year term expires in January, and his reappointment will require Senate confirmation. 
 
INVESTMENT VIEW
Tata Steel: Gets A Lift With Corus
Steel-maker Corus said Monday it would restart production at its Llanwern works in Wales, encouraged by a rise in the price of steel as the global economic downturn eases. The company, Europe's second-biggest steel concern, said it would restart production at the hot rolling mill, which was shut down in January due to lack of demand.
 

According to The Times of London, however, the reactivation will not restore the more than 500 jobs cut by Corus at the time because operating costs have since risen. Steel-makers have suffered as the economic crisis battered large customers in the construction, automotive and equipment industries.

 

Corus, owned by Indian firm Tata Steel, announced in June that it would shed more than 2,000 jobs - or 10 percent of its U.K. work force - in response to the slump in demand. However, world steel prices and production have risen recently, though from very low levels compared to a year ago.

(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