Market Outlook for 26th Aug 2009

INTRADAY calls for 26th Aug 2009
BUY AXISBank-916 above 920 for 937-39+ with sl 913
BUY Crompgre-306 above 311 for 325+ with sl 306
BUY Welguj-232 for 244-251+ with sl 227

Breakout
BUY TECHM-891 for 940-945+ with sl 880
BUY NIIT-70 for 73-76+ with sl 67.50

Positional
BUY KGL-karuturi-15 for 23+ with sl 12

 

NIFTY FUTURES LEVEL
RESISTANCE
4681
4719
4731
4769
SUPPORT
4651
4647
4607
4570
4557
4519
Buy DISHMAN PHARMA;ING VYSYA BANK

 

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, Dabut 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):  
Above 4679-4681 zone, rally may continue up to 4692 level and thereafter expect a jump up to 4717-4719 zone by non-stop.

Support at 4647 & 4651 levels. Below these levels, expect profit booking up to 4607-4609 zone and thereafter slide may continue up to 4570-4572 zone by non-stop.

Buy if touches 4557-4559 zone. Stop Loss at 4519-4521 zone.

On Positive Side, cross above 4729-4731 zone can take it up to 4767-4769 zone. If crosses & 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. 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.

POSITONAL BUY:
Buy DISHMAN PHARMA (NSE Cash) 
Uptrend may continue.

Mild sell-off up to 210 level can be used to buy. If uptrend continues, then it may continue up to 235 level for time being. 

If crosses & sustains at above 248 level then uptrend may continue.

Keep a Stop Loss at 198 level for your long positions too.
 
Buy ING VYSYA BANK (NSE Cash) 
Uptrend may continue.

Mild sell-off up to 255 level can be used to buy. If uptrend continues, then it may continue up to 274 level for time being. 

If crosses & sustains at above 291 level then uptrend may continue.

Keep a Stop Loss at 238 level for your long positions too. 

Global Cues & Rupee  
The Dow Jones Industrial Average closed at 9,539.29. Up by 30.01 points.
The Broader S&P 500 closed at 1,028.00. Up by 2.43 points.

The Nasdaq Composite Index closed at 2,024.23. Up by 6.25 points.

The partially convertible rupee INR=IN closed at 48.75/76 per dollar on yesterday, below its previous close of 48.62/63.

 

SPOT LEVELS TODAY

	4659.35	( 0.36 %)	16.55
		1	2	3
Resistance		4694.00	4728.65	4784.40
Support		4603.60	4547.85	4513.20

	15688.47		( 0.38 %)	59.72
			1	2	3
Resistance			15808.06	15927.66	16119.99
Support			15496.13	15303.80	15184.20

 

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	25-Aug-2009	1930.59	2189.73	-259.14

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	25-Aug-2009	1445.19	1008.6	+436.59

 Interesting findings on web:
U.S. stocks on Tuesday tallied modest gains, with the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (INDU 9,539, +30.01, +0.32%) extending its winning streak into a sixth consecutive session, after upbeat reports on consumer confidence and the housing market. The Dow industrials gained 30.01 points, or 0.3%, to 9,539.29. Closed at its highest point since Nov. 4. The S&P 500 Index /quotes/comstock/21z!i1:in\x (SPX 1,028, +2.43, +0.24%) added 2.43 points, or 0.2%, to finish at 1,028.01, closed at its highest point since Nov. 6. While the Nasdaq Composite /quotes/comstock/10y!i:comp (COMP 2,024, +6.25, +0.31%) climbed 6.25 points, or 0.3%, to end at 2,024.23 and the highest close since Oct. 1.

It was the choppiest day on Wall Street for a while, one in which 25% of not remarkable share volume was again concentrated in the three financial stocks Citigroup, Fannie Mae and Freddie Mac. At 10am - half an hour into the session - the Dow was up 111 points. At 10.30am it was only up 33 points but by 12.30pm it was back up 98 points. The Afternoon then saw a choppy decline to the finish of up only 30 points.

There was plenty of good news to consume, and it was that which gave the market its impetus to push higher.

Wall Street rallied to its best levels since last November on Tuesday following confirmation Fed chairman Ben Bernanke will serve a second four-year term and on stronger than expected confidence and home prices data.

Since bottoming at a 12 1/2 year low on March 9, the S&P 500 is up 52% as of Tuesday's close. The pace and breadth of the run up has left many Wall Streeters calling for a big sell off in September and October. But so far, there has been no indication of that.

"Generally, the market keeps moving higher even though so-called experts are saying it's overbought," said Terry Morris, senior equity manager, National Penn Investors Trust."It's surprisingly strong. Maybe we have turned a corner."

President Obama broke off from his summer holiday at Martha's Vineyard to end speculation about Bernanke's future. Although the decision was widely expected, some pundits had questioned whether Obama would reappoint someone originally chosen by President George W. Bush.

The reappointment is expected to receive the approval of the Senate.

"There was a bit of uncertainty around Bernanke's reappointment and the fact that the announcement was made today is driving the gains," Caughey said.

To many investors, the Bernanke announcement, made Tuesday morning, signals Obama's own vote of confidence in the Princeton economist and scholar of the Great Depression. White House Chief of Staff Rahm Emanuel said the President credits the Fed Chair "for pulling the economy back from the brink of depression," according to news reports. Bernanke must be confirmed by the Senate, which is expected to pass the measure.

"I don't think the market is at all surprised. Why would you switch horses midstream with the expert of the Great Depression and the Japanese lost decade?" said Robert Howe, founder of Hong Kong-based Geomatrix.

There had been speculation that White House economic advisor Lawrence Summers might be tapped for the job, but Obama opted to reappoint Bernanke.

Bernanke's next challenge will be presiding over the recovery, economists said.

"The next phase is almost as difficult as the first one he presided over in saving the economy from a deeper recession or worse," FAO chief economist Robert Brusca said.

Banks cheered the decision, with Bank of America and JP Morgan both among the best of the risers.

A day after he said 150 to 200 more banks are going to fail before it's all over, Rochdale analyst Dick Bove widened his full-year loss projection for Morgan Stanley [MS  30.19    0.54  (+1.82%)   ], saying the brokerage is increasing risk and personnel without justification and that it "continues to fail to articulate a strategy."

Still, Morgan Stanley shares gained 1.8 percent.

Bernanke was a Bush appointee who took the reins just as the housing bubble was peaking. Coincidentally he is specifically a student of the Great Depression and its causes. One might say "if ever there was a man for the job" but Bernanke came under a lot of criticism early in the credit crisis for not moving fast enough. Now that the economy appears to have stabilised however, Bernanke is God. Wall Street was expecting a reappointment, given now is hardly the time to start bringing in someone new for the sake of what is traditionally a rolling position. Let Uncle Ben see it through and then give him a rest. Besides, we want to see just how he is going to get out of it - the exit strategy for quantitative easing required at some point to prevent hyperinflation. He got us into it...

A further boost to sentiment was given by better than expected consumer confidence figures and an unexpected upturn in the US housing market.

The Conference Board's confidence index advanced to 54.1 in August from 47.4 in July, beating expectations of a reading of 47.5, while house prices in the second quarter of 2009 rose by 2.9%, exceeding economists' expectations.

Unlike most economic indices this is not a 50-neutral measure, suggesting confidence is now growing whereas previously it was contracting. It is merely a score out of 100 and its average is in the 70s. In bull markets scores over 90 are the norm. Hence economists warned that there's still a long way to go.

"The missing ingredient has been the recovery in consumer spending. The market is now hopeful that the strong consumer confidence data could lead to better consumer spending numbers," Keith Springer, president of Capital Financial Advisory Services, told Reuters.

While the report was significant, it doesn't often correlate to what the consumer ends up doing, said Kim Caughey, senior equity analyst at Fort Pitt Capital Group.

"Unemployment is continuing to rise, and that's going to keep the consumer out for the time being," Caughey said. She said inventory rebuilding on the part of corporations will help support the economy in the short term, rather than a rise in consumer spending.

She said the Bernanke announcement was more notable.

Home prices rose 2.9% in the second-quarter versus the first quarter, according to an S&P/Case-Shiller report. That's the first quarterly rise in prices in three years and could signal that the housing market has bottomed.

The 20-city index declined 15.4% in June versus a year ago, but that was shy of forecasts for a drop of 16.4% versus a year ago.

Again, the warnings accompanied the release. Economists were quick to point out the market should not necessarily take a positive reading as a definitive indication the housing market has bottomed. For starters, the Case-Shiller is not seasonally adjusted and this is a Spring reading - a time when buying interest is always at its height. Secondly, prices are being supported by the government's US$8000 tax credit grant for first homebuyers, and unless extended that will end in November. Thirdly, banks have been offering mortgage payment moratoriums in order to stem the downward spiral of mortgage foreclosures and that has had some impact on preventing further foreclosure sales. Fourthly, despite this, foreclosure rates continue to rise into record territory, and unemployment is still predicted to reach 10%.

The house price news boosted demand for DIY retailer Home Depot and house builders such as KB Home, Lennar, D R Horton,Hovnanian and Pulte Homes. Meanwhile retailers such as Macy's, WalMart, Costco and Bed, Bath and Beyond welcomed the consumer confidence report.

But eyebrows were raised by a White House report predicting a federal budget deficit of $9 trillion over the next decade, $2 trillion more than previously forecast. They think the 2009 shortfall will hit $1.58 trillion.

Stock gains were pretty broad based, with 21 of 30 Dow stocks rising, led by Boeing (BA, Fortune 500), JPMorgan Chase (JPM, Fortune 500), United Technologies (UTX, Fortune 500) and Travelers Companies (TRV, Fortune 500).

But falling oil prices cut into any stock gains, dragging down the influential energy sector. Dow components Exxon Mobil (XOM, Fortune 500) and Chevron (CVX, Fortune 500) declined and the Amex Oil (XOI) index was off 1%.

The tech loaded Nasdaq Composite finished 6 higher at 2,024, although IBM, Hewlett-Packard, Cisco Systems and Microsoft softened. The broad-based S&P 500 was 2 better at 1,028.

Remaindered stock discount retailer Big Lots shot ahead in after second quarter earnings came in ahead of expectations. The company also raised third quarter earnings guidance above current market consensus.

Audio systems maker Harman International was making a big noise after JP Morgan upgraded the stock to 'overweight'.

Crane manufacturer Manitowoc fell victim to institutional selling after it emerged it will lose its place in the S&P 500 index to CareFusion.

A cross-section of companies operating in Pittsburgh saw mixed results with mild shifts. Allegheny Technologies Inc. (NYSE:ATI) registered the biggest percentage change as it dropped 3.73 percent to $28.41 per share.

Here's how others fared:

Alcoa Inc. (NYSE:AA), down 0.40 percent to $12.37

Allegheny Energy Inc. (NYSE:AYE), down 0.27 percent to $25.74

American Eagle Outfitters Inc. (NYSE:AEO), up 0.42 percent to $14.32

CONSOL Energy Inc. (NYSE:CNX), down 2.64 percent to $39.85

Dick's Sporting Goods (NYSE:DKS), up 0.99 percent to $22.53

Federated Investors Inc. (NYSE:FII), up 0.26 percent to $26.65

H.J.Heinz Co. (NYSE:HNZ), down 0.03 percent to $39.02

Kennametal Inc. (NYSE:KMT), up 1.05 percent to $21.22

Koppers Holdings Inc. (NYSE:KOP), down 0.18 percent to $28.20

Mylan Inc. (Nasdaq:MYL), up 0.27 percent to $14.67

PNC Financial Services Group Inc. (NYSE:PNC), up 2.14 percent to $41.99

PPG Industries Inc. (NYSE:PPG), up 0.33 percent to $54.33

U.S. Steel Corp. (NYSE:X), down 1.60 percent to $44.28

WABTEC Corp. (NYSE:WAB), up 0.25 percent to $36.15

ThinkEquity raised its rating on Google [GOOG  471.18    2.45  (+0.52%)   ] to "buy" from "source of funds" and raised its price target on the stock, saying it expects the search giant to meet or beat consensus estimates for the next few quarters. Its shares gained 0.5 percent.

The final remnants of earnings season continued to trickle in.

Burger King [BK  29.39    0.20  (+0.69%)   ] shares climbed 0.7 percent after the fast-food giant reported its profit increased as food costs declined.

Big Lots [BIG  25.60    1.57  (+6.53%)   ] shot up 6.5 percent after the close-out retailer beat Wall Street expectations with what has become familiar theme for the second quarter: Sales fell but cost-cutting helped the bottom line numbers.

Staples [SPLS  21.79    -0.40  (-1.8%)   ], however, skidded 1.8 percent after the office-supply chain reported a 38 percent drop in quarterly profits as both costs and sales rose.

Oil,Gold & Currencies:

U.S. light crude oil for October delivery fell $2.32 to settle at $72.05 a barrel on the New York Mercantile Exchange, after touching a new 10-month high in the morning.

For many oil traders, US$75/bbl has been a target since the rally began. Indeed, a popular prediction has been for oil to range-trade between US$65-75. For the first time since last year, oil last night hit US$75 - US$75.02/bbl to be precise - and so the bell was rung and in came the sellers. There was no specific impetus other than the technical level, and indeed oil ignored the above data which on any other day recently would have been bullish by plunging instead, to be US$2.32 down on the day by the close at US$72.05/bbl .

COMEX gold for December delivery rose $2.30 to settle at $946 an ounce.

The yen rose for a second day against the euro amid concern financial losses will delay a recovery in the global economy, boosting demand for Japan's currency as a refuge.

The yen advanced against all 16-major currencies after Colonial BancGroup Inc., the bank holding company under a criminal probe that was taken over Aug. 14 by North Carolina lender BB&T Corp., filed for bankruptcy. Australia's dollar weakened versus the greenback as demand for commodity currencies waned on a drop in oil prices and speculation Chinese demand will slow.

"The outlook for economies around the world is still doubtful," said Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale SA, France's third-largest bank. "Sentiment is tilting toward risk aversion, with the yen and the dollar being bought."

The yen rallied to 134.36 per euro as of 10:23 a.m. in Tokyo from 134.65 yesterday in New York. The Japanese currency traded at 94.00 per dollar from 94.18 yesterday. The dollar was at $1.4293 per euro from $1.4296 yesterday.

Japan's export slump deepened in July, indicating the boost in demand that helped pull the country out of its recession last quarter may be short-lived. Shipments abroad fell 36.5 percent from a year earlier, steeper than June's 35.7 percent drop, the Finance Ministry said today in Tokyo.

Credit Woes

Colonial, a Montgomery, Alabama-based holding company, sought Chapter 11 protection yesterday, listing assets of $45 million and debts of $380 million. Its banking unit became the biggest bank to be seized by regulators since the collapse last year of Washington Mutual Inc.

The company provided funding for Taylor Bean & Whitaker Mortgage Corp., the 12th-largest U.S. home lender, which shuttered its mortgage-lending a week after being suspended by federal agencies. The yen strengthened yesterday after Atlanta- based SunTrust Banks Inc. said U.S. financial institutions may report more credit losses as commercial real estate falters.

The pound fell to a one-month low against the yen after the Financial Times reported that Lloyds Banking Group Plc may have to write off 500 million pounds ($817 million) on loans made to Admiral Taverns Ltd.

The U.K. pub operator is in talks with lenders about a possible debt-for-equity swap after it breached banking covenants, the FT reported, citing accounts filed yesterday. Lloyds's Bank of Scotland unit is the company's biggest lender, the FT said.

'Still Worrying'

"The report suggests the state of the financial sector in the U.K. is still worrying," said Hideki Amikura, deputy general manager of foreign exchange at Nomura Trust and Banking Co. in Tokyo. "It's negative for the pound and positive for the yen and the dollar."

The pound declined to 153.39 yen from 154.00 yen in New York yesterday, after earlier falling to 153.12 yen, the lowest level since July 22.

The Australian dollar extended its decline for a second-day against the dollar as prices for crude oil, the nation's fourth- most valuable commodity export, declined. Crude lost 0.5 percent to $71.68 a barrel.

Australia's currency also fell after China National Radio said yesterday the country's economic growth isn't strong enough and the government will continue to stimulate domestic demand in the second half. China faces pressure on employment and shrinking external demand, the state-owned broadcaster said, citing a report by Zhang Ping, head of the nation's top planning agency.

"It seems that bets that the Australian economy will benefit from the strength of commodity prices and a bright outlook for the global economy have gone too far," said Morio Okayasu, chief analyst at Monex FX Inc., a unit of Japan's third-largest online broker.

Bonds:

Treasury prices inched higher, lowering the corresponding yields, following a positive response to the first of three government debt auctions this week. The rise in prices lowered the yield on the benchmark 10-year note to 3.44% from 3.47% Friday. Treasury prices and yields move in opposite directions.

Treasury sold $42 billion of 2-year notes Tuesday and is planning to sell $39 billion of five-year notes Wednesday and $28 billion of 7-year notes Thursday.

What to expect:

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.

Wednesday brings reports on new home sales and durable goods orders, both from the Commerce Department.

New home sales are expected to have risen to a 390,000 unit annualized rate in July from a 384,000 unit annualized rate in June, according to Briefing.com forecasts.

July durable goods orders are expected to have risen 3.2% after falling 2.5% in June. Orders excluding transportation are expected to have risen 1% after rising 1.1% in June.

The weekly crude oil inventories report from the Energy Information Administration is also due in mid morning.

Asia:

Asian stocks advanced, lifting the MSCI Asia Pacific Index to its highest level in more than a week, after U.S. consumer confidence gained and American home prices fell less than economists estimated.

Toyota Motor Corp., which gets 31 percent of its sales in North America, climbed 1.5 percent, while Honda Motor Co. added 1 percent in Tokyo. Air China Ltd., the country's biggest international carrier, gained 3.5 percent in Shanghai after saying first-half net income doubled.

"People are generally happy that things are improving," said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. "It's now a question of how strong that is going to be. We're probably still going to get the occasional rogue figure from time to time."

The MSCI Asia Pacific Index rose 0.3 percent to 113.43 as of 11:23 a.m. in Tokyo. The gauge has climbed 61 percent from a more than five-year low on March 9 on speculation government stimulus packages and lower borrowing costs will revive the global economy.

Japan's Nikkei 225 Stock Average gained 0.6 percent as a government report showed the country's exports fell 36.5 percent in July from a year earlier. The median estimate of economists surveyed by Bloomberg News was for a 38.4 percent decrease. China's Shanghai Composite Australia's S&P/ASX 200 Index rose 0.8 percent.

Noritz Corp., which makes water heaters, soared 10 percent in Tokyo after Credit Suisse Group AG said the party favored to win Japanese elections on Aug. 30 will push a policy that would require people to replace old boilers. Consolidated Media Holdings Ltd. surged 11 percent in Sydney after agreeing to sell a stake in Australia's largest employment Web site.

Consumer Confidence

Futures on the Standard & Poor's 500 Index lost 0.1 percent. The gauge added 0.2 percent yesterday as the Conference Board's consumer-confidence index climbed in August for the first time in three months. The S&P/Case-Shiller home-price index declined 15.4 percent in June from a year earlier, less than estimated by economists.

"The housing and confidence reports cemented evidence that the U.S. economy is recovering," said Hiroichi Nishi, an equities manager at Tokyo-based Nikko Cordial Securities Inc.

Toyota gained 1.5 percent to 4,110 yen. Honda, which gets 45 percent of its revenue in North America, added 1 percent to 3,020 yen. Automakers as a group contributed the most to the Topix Index's 0.6 percent advance today.

Air China climbed 3.5 percent to 7.45 yuan. Net income surged to 2.88 billion yuan ($422 million) from 1.23 billion yuan a year earlier, the carrier said in a Hong Kong stock exchange statement late yesterday.

Water-heater maker Noritz climbed 10 percent to 1,298 yen, while rival Rinnai Corp. added 3.8 percent to 4,640 yen.

The Democratic Party of Japan, which opinion polls suggest will win Aug. 30 parliamentary elections by a landslide margin, has promised to require old water heaters to be replaced with high-efficiency models, a Credit Suisse report said.

Consolidated Media surged 11 percent to A$3.24. The company said today it expects A$440.6 million ($368 million) from the sale of a stake in Seek Ltd. Seek dropped 1.3 percent to A$5.28.

Nikkei 225  10,564.56     +67.20 ( +0.64%) (08.26 AM IST).

Japan's Nikkei stock average edged up 0.5 percent on Wednesday, with Toyota Motor Corp (7203.T: Quote, Profile, Research) and other exporters gaining after U.S. data boosted confidence about the strength of the economic recovery.

NEC Electronics Corp. (6723) shares went limit-up by 100 yen to hit 980 yen Wednesday morning..

Seiko Epson Corp. (6724) said Wednesday that it now expects to post an even deeper net in the business year ending March 31, following its decision to pay a U.S. antimonopoly fine worth about Y2.5 billion.

Sony Corp. (6758) shares rebounded Wednesday morning on an overnight rise on Wall Street fueled by a better-than-expected U.S. consumer sentiment reading in August. 

HSI 20522.09 +86.85 +0.43% (08.28 AM IST).

Hong Kong shares opened 0.5 percent higher on Wednesday, recovering from losses in the previous session, but gains are likely to be fragile as Shanghai shares got off to a weak start on worries about liquidity.

[ID:nBJD002951] The benchmark Hang Seng Index .HSI opened up 107.52 points higher at 20,542.76. The China Enterprises Index .HSCE, which represents top locally listed mainland Chinese stocks, was up 0.6 percent at 11,724.33.

Hong Kong shares nudged higher Wednesday, with China Life Insurance Co. /quotes/comstock/13*!lfc/quotes/nls/lfc (LFC 64.23, +0.74, +1.17%) /quotes/comstock/22h!e:2628 (HK:2628 33.60, +0.35, +1.05%) and Air China /quotes/comstock/22h!e:753 (HK:753 4.57, +0.09, +2.01%) rising after they posted strong half-yearly results after Tuesday's close. But mainland Chinese stocks wavered after dropping 2.6% in the previous session, with banks still weighed by concerns they may need to raise capital. The Shanghai Composite Index was down 0.1% to 2,912.21 in early morning trade after briefly turning positive, with Shanghai Pudong Development Bank down 1.4% and China Construction Bank /quotes/comstock/11i!cichf (CICHF 0.76, -0.01, -0.66%) 0.2% lower. In Hong Kong, China Life shares added 1.1% and Air China gained 1.1%. The benchmark Hang Seng Index climbed 0.2%, while the Hang Seng China Enterprises Index inched up 0.1%.

Hang Seng Index opens 107 points higher on Wed

Hong Kong stocks rose on Wednesday morning, with the benchmark Hang Seng Index opening 107 points higher at 20,542.

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 69 points higher at 11,724.

Sinopec<600028><0386><SNP> rose 0.84% and opened at HK$7.18. PetroChina<601857><0857><PTR> increased 1.95% from the previous closing to HK$8.89.

SSE Composite  2925.99  + 0.35.(08.32 AM IST).

China stocks fall 1.5 percent on liquidity worries

China's benchmark stock index fell 1.5 percent early on Wednesday, extending the previous day's losses as a central bank warning on bank lending stirred worries about liquidity.

The market continued struggling to stabilise after this year's 90 percent rally stalled early in the month, sending the benchmark index tumbling in a two-week, 20 percent correction.

The Shanghai Composite Index opened at 2,889.735 points and slipped further in early trade as low as 2,872.264, down 1.5 percent.

Investors were concerned by the central bank's 2008 annual report released late on Tuesday, which emphasised stable credit growth and rational levels of liquidity in the banking system, rekindling worries about moves toward tightening lending and liquidity in the markets after a surge in bank lending in the first half of the year, analysts said.

The index had ended down 2.6 percent on Tuesday, halting a three-day rebound, although it managed to bounce smartly from the day's low which had seen the index at a deficit of 5.67 percent.

($1 = 6.83 yuan)

Chinese stocks open 0.89% lower on Wed

Chinese stocks opened lower on Wednesday morning, tracking losses from the previous closing.

The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, opened at 2,889.74 points, down 0.89% or 26.06 points from the previous closing.

The Shenzhen Component Index on the smaller Shenzhen Stock Exchange opened 0.77% or 89.59 points lower at 11,598.58 points.

Mainland trade delegation inks US$3.87 bln in deals with Taiwan.

JPMorgan Chase raises stake in Huaneng Power International.

Wellington Management cuts stake in Weichai Power.

JPMorgan cuts stake in ICBC to 4.98%.

FIL raises stake in Weiqiao Textile to 7.37%.

Air China's net profit surges 151% in H1.

Pudong Dev't Bank approved of private placement plan.

Longfor may IPO in Hong Kong after long wait.

China Int'l Marine obtains RMB 20-bln credit line from CCB.

Kunming Iron & Steel to issue RMB 1.5 bln in financing bills.

China Telecom places biggest-ever 3G handset order. 

Air China profit more than doubles

Air China Ltd. on Tuesday reported that its profit more than doubled as fuel costs dropped, which compensated for declining international traffic. 

China Life Insurance profit increases

China Life Insurance Co. on Tuesday reported a 15% rise in first-half profit on a rally in the stocks it holds, though the result was less than expected. 

Dollar May Keep Falling, Yuan Gain, Strategists Say

The dollar will continue to weaken this year as the global economy recovers from recession and investors seek currencies linked to growth, strategists said in a panel on Bloomberg Radio.

"Investors in the U.S. and globally are sitting in too many T-bills and too much cash," said Rebecca Patterson, global head of foreign exchange at JPMorgan Private Bank in New York. "As the world slowly gets better, they are going to want to take advantage of that. They want a better yield than you get in a T-bill, and that keeps the dollar under pressure."

The dollar has weakened this year against 13 of the 16 most-traded currencies tracked by Bloomberg. Currencies tied to commodities and growth, such as the Brazilian real, South African rand and Australian and New Zealand dollars, gained the most against the greenback. U.S. Treasury notes and bills due in one year and less returned investors 0.4 percent this year, according to a Merrill Lynch & Co. index.

"We are still in the camp that the dollar has further downside to go," said Callum Henderson, global head of currency strategy at Standard Chartered in Singapore. "You'll see a renewed period of downside for the dollar, but more positively, upside for high-yielding emerging market and developed market currencies."

European Recovery

Gross domestic product in Germany, Europe's biggest economy, unexpectedly grew 0.3 percent in the second quarter from the first, the nation's statistics office said Aug. 13, bringing an end to its worst recession in more than a half-century. France's economy, the second largest among the 16 nations that use the euro, also unexpectedly exited a recession in the second quarter, with GDP rising 0.3 percent, the nation's statistics office also said on Aug. 13.

The U.S. economy shrank 0.3 percent in the second quarter from the first three months of the year.

"In Europe, we have a much stronger economic outcome as many people believed," said Hans-Guenter Redeker, the London- based global head of currency strategy at BNP Paribas SA. "German and French growth numbers have been a pleasant surprise for the second quarter."

Redeker said the euro, which gained 2.3 percent against the dollar this year, may strengthen to $1.50. The euro traded at $1.4296 at 7:08 a.m. today in Tokyo.

JPMorgan's Patterson said there are better ways to take advantage of increased risk appetite as the global economy recovers than investing in the euro.

"I look at the euro and I say the worries about the deficit and U.S. debt are mirrored in Europe," Patterson said. "The euro doesn't have the same reserve currency support that the dollar has. For a short-term trade, it's fine. For a long- term diversification tool, I'd stay away from it."

Reserve Role

The U.S. dollar may weaken as governments worldwide reduce the currency's role in their foreign-exchange reserves, said David Wyss, chief economist at Standard & Poor's.

"We do expect a bit of dollar weakness and expect the dollar won't be as dominant in world reserves as it has been in the recent past," he said today in Sydney at a conference. "It will still be the biggest reserve currency but we will go back to a more normal distribution, back to more like what we had 10 or 15 years ago when the dollar was 70 percent of reserves instead of 90 percent of reserves."

China's Domestic Demand

Strategists also said China's ability to continue growth will depend on the nation changing from an economy driven by exports to one expanding on domestic demand, which may increase the value of the yuan. The People's Bank of China said today in its 2008 annual report that the yuan's exchange rate will be kept at a "reasonable and balanced" level.

"Asia is at a tipping point where you'll see a transition from export-led growth to domestic-demand growth," Standard Chartered's Henderson said. "We've already seen the first stage with a huge focus on domestic demand, a huge focus on consumption. The next stage is surely a move away from a cheap currency policy toward stronger trade-weighted currency appreciation in order to dampen consumer costs."

The pound may have to weaken for the U.K.'s economy to recover from recession, Paribas' Redeker said. GDP contracted 0.8 percent from the in the second quarter from the first, twice as much as economists forecast.

"When you look at the situation in the British economy, it is very obvious you need substantial contributions from net exports in the next five to 10 years," Redeker said. "That means the U.K. will have to adjust its cost structures drastically or operate with a much cheaper exchange rate." 

Japan Exports Dip, Stimulus Effect May Be Waning

Japan's exports fell in July from the previous month for the first decline in two months, in a possible sign that the impact of stimulus measures in major economies worldwide is starting to wane.

Exports to the United States, which have lagged improvements in shipments to Asia, fell at a faster annual rate in July compared to the previous month, as the world's largest economy struggles to pick up steam, while the yen's rise also played a part.

Japan's exports to the fast-growing Chinese economy also declined at a faster annual pace, as a surge in state spending and loan growth failed to mask tepid domestic demand there.

Some overseas stimulus programmes have already expired, and economists' warn that as fiscal support for the global economy runs its course, Japan's exports could slow as weak labour markets in the United States and Europe mean consumers won't be able to pick up the slack.

"Falls in Japanese exports have been moderating in recent months on companies' restocking efforts and government stimulus worldwide. But the July trade data indicate that the recovery momentum is losing steam," said Seiji Shiraishi, chief economist at HSBC Securities.

"It is questionable whether exports will continue to recover once the stimulus effect runs out because global final demand may not turn up fully."

On a seasonally adjusted basis, exports dropped 1.3 percent in July from June, trade data showed on Wednesday, the first drop in two months.

Compared with a year earlier, Japan's exports fell 36.5 percent in July from a year earlier, a slightly smaller drop than the market forecast.

Economists' median forecast was for a 38.6 percent fall in July from the same month last year, after a 35.7 percent annual decline in June.

Altogether, Japan logged a trade surplus of 380.2 billion yen ($4 billion) in July, just short of the median estimate for a 385.0 billion yen surplus.

Exports of steel to China were weak, said Junko Nishioka, chief Japan strategist at RBS Securities, raising worries about a China-driven recovery scenario.

"I think material exports to China will garner more attention in coming months," she said.

Overall exports to China fell 26.5 percent from a year earlier, while exports to the United States fell 39.5 percent.

Japan's economy returned to growth in the second quarter, becoming the third G7 country after France and Germany to emerge from recession, as exports rebounded and government subsidies at home lifted private consumption.

But economists say that once stimulus spending in major economies runs its course, global trade may slow again as falling salaries and a lack of job security weigh on consumer spending.

In one example of the temporary nature of stimulus measures, the U.S. government said last week it would end a programme that gives rebates to car buyers for trading in less fuel-efficient vehicles. 

Bernanke Is Likely to Face Grilling at Senate Confirmation

Wall Street may be behind President Obama's decision to nominate Fed Chairman Ben Bernanke for a second term, but the central bank boss is likely to face plenty of criticism at his Senate confirmation hearing.

For all of the talk of Bernanke being slow to react to the financial crisis with a too-little-too-late style, some think he has now done too much, overextending the Fed's powers and undermining its independence.

Senate Banking Chairman Chris Dodd (D-Conn.) who's facing a tough re-election bid this fall, was among the first to comment, offering tepid support for Bernanke in an otherwise skeptical statement about the chairman and the central bank.

"There will be a thorough and comprehensive confirmation hearing," Dodd said. "I expect many serious questions will be raised about the role of the Federal Reserve moving forward and what authorities it should and should not have."

Though somewhat surprising, the President's timing may hardly be serendipitous, especially since the White House told the press corps over the weekend not to expect any news while the first family was on vacation in Martha's Vineyard.

Congress, the home of much criticism, is in recess, and critics of Bernanke and the Fed are scattered around the country, far a field of Washington's center stage.

The President's commitment to Bernanke surprised some analysts, who either thought he would appoint an openly Democratic individual—White House adviser and former Treasury Secretary Lawrence Summers was thought to be waiting in the wings—or accommodate Bernanke critics in the Democratic party.

"Experience trumped politics in this apparent renomination, as there were many Democrats calling for change," said Chris Rupkey, economist at Bak of Tokyo-Mitsubishi, in applauding the president's decision.

Also interesting is that Obama's announcement comes just weeks after the Fed chairman and the central bank took a rare bipartisan political beating over the White House's proposals to give the Fed sweeping new powers in its regulatory reform plan.

That in turn relit the debate over the central bank's supervision of bank holding companies and extraordinary policy responses in bailing out troubled financial firms and reflating the economy beyond the use of basic monetary policy tools.

Not only did Congressional critics question the Fed's political independence from the executive branch, they deemed the central bank's unusual and enormous lending programs as a challenge to the spending power reserved for the legislature under the Constitution.

Much of that is likely to resurface at Bernanke's confirmation hearing, which has yet to be set.

"You have a lot of guys who are professional Fed critics who'll have a great opportunity [with the nomination hearing]," said Bill Frenzel, a 10-term Republican Congressman now with the Brookings Institution.

The regulatory reform plan penned by Republicans in Congress would narrow, not expand, the Fed's responsibilities, transfer much of its balance sheet activity to the Treasury Department and impose regular audits by the General Accountability Office.

Wariness about the Fed—and by association, Bernanke—has become fairly common in the GOP in the last year and is unlikely to fade anytime soon.

"I'd think long and hard about reappointing him," said Minnesota Governor Tim Pawlenty, who is thought to be considering a run for the presidency in 2012.

It would be easy to dismiss Republicans on some of the Fed issues, were it not that Democrats at various points of the party spectrum share some of that thinking.

The Federal Reserve Sunshine Act of 2009 introduced by Ron Paul (R-Texas) and Senator Bernie Sanders (I-Vt.), which would also audit the central bank, has garnered dozens of supporters on both sides of the political aisle.

"I think they will try to make political hay of it," adds Frenzel, "At the same time, with the president's sponsorship and the major Democrats wanting to follow the president, I think Bernanke will coast."

As reaction tickled out in the hours after the president's news conference, that forecast appeared well founded.

House Financial Services Chairman Barney Frank issued a statement that was as much a vote of confidence in the president as the Fed chairman.

Frank, who has his own issues with the Fed's powers, said, "I strongly support President Obama's nomination of Ben Bernanke," adding that the Fed chairman's response to the crisis "has been wise and appropriate."

Republican Senator Bob Corker, another member of the Banking committee, was certainly more measured but may have summed up the obvious for both critics and supporters, saying Bernanke "hadn't made all the right calls," but had "earned the right to see this through and lead the Fed but lead the Federal Reserve through these volatile times."
 
INVESTMENT VIEW
Jyothy Laboratories-Bringing Colour To Life

BSE 532926
 
FMCG player Jyothy Laboratories has evolved from a single product proprietary firm into a multi brand company involved in the manufacture and marketing of products in fabric care, mosquito repellant, surface cleaning, personal care and incense sticks.

 

The company has 21 manufacturing facilities in 14 locations across India, some of which are tax efficient units. Jyothy has 3000 distributors, 1500 field staff and direct reach of over a million outlets.

 

Jyothy has recently forayed into the organized laundry services segment "providing World Class laundry at an affordable price" through it's subsidiary Jyothy Fabricare Services Limited.

 

Financials

 

For the Q1 to June 2009, Jyothy reported a 21 per cent increase in Revenues to Rs 119 crore (Rs 98 crore), accompanied with a 22 per cent increase in PAT to Rs 22 crore (Rs 18 crore). EBITDA margin stood at 27 per cent (25 per cent), with Q1 non annualized EPS of Rs 3 (Rs 2.48).

 

Segmental performance

 

The soaps and detergents business, including fabric whiteners, fabric detergent, surface cleaning products and soaps witnessed a 24 per cent increase in Q1 FY10 to Rs 83 crore (Rs 67 crore). Brand Ujala registered a 72 per cent market share for the quarter, while "Exo" reported a 22 per cent market share in South India. 

Home care products which include mosquito coils, scrubber and incense sticks saw increase in Revenues by 18 per cent to Rs 37 crore (Rs 31 crore). Maxo, the major contributor to the segment garnered a market share of 23 per cent at the end of Q1 FY10.
 

(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