Market Outlook for 28th Aug 2009

INTRADAY calls for 28th Aug 2009
+ve script : Textile,PRAKASH, EIHotel,Arvind,IFCI,SBI
BUY BRFL-205 for 224+ with sl 200
BUY TITAN-1250 for 1270-1290+ with sl 1231
BUY Mundraport-584 for 600-605+ with sl 575

Expected Breakout
BUY PTC-95 above 98 for 105-110+ with sl 95
BUY IndBnk-134 above 137 for 151+ with sl 132
BUY GAIL-343 above 347 for 401+ with sl 340

Positional
BUY Bombaydye-381 for 505-530+ with sl 360
BUY Pantaloon-318 for 390+ with sl 300

Investment
BUY BRFL-205 with sl 165
BUY Aloktex-22 with sl 18

 

stocks that are in news today:
RNRL seeks oil ministry to become party to RIL-NTPC case: sources
Tata Steel says not to participate in Coal India IPO
RIL board meet on audited results postponed to September 2
Bharati Shipyard board meet on September 3 on issue of convertible warrants, shares
Thermax bags order worth Rs 255 crore
Valecha Engineering bags orders worth Rs 172 crore
Madhucon Projects board meet on September 3 on stock split from Rs 2 to Re 1
SRF buy back at maximum Rs 160/share opens on September 7
20 lakh Webel SL shares to hit market ((QIP issue))
Ex-dividend: Hero Honda @ Rs 20

 

Telecom Ministry Says:
-To auction 4 3G licenses; 1 reserved for PSUs
-3G auction reserve price at Rs 3,500 crore
-3G auction to be completed in 90 days
-Expect Rs 25,000 crore from 3G, WiMax auction
-BSNL, MTNL to match private sector winning bid in Delhi, Mumbai
-3 WiMax slots to be auctioned; reserve price at Rs 1,750 crore

 

NIFTY FUTURES LEVELS

RESISTANCE

4711

4716

4732

4739

4759

SUPPORT

4688

4682 
4660

4639

4632

4612

Buy SOBHA DEVELOPER; GITANJALI GEMS 

 

 

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

Aban Off shore, Ansal Infra, DCHL, Purva, Bhushan Steel, Orchid Chem, India Bulls Retail, HCL Tech, FSL & Polaris Software. 

And this is list of 10 Weak futures:

Sesa Goa Ltd, Hind Uni Lvr, India Cements, Dabut India, Tata Steel, ACC Ltd, Colpal, Federal Bank, Hind Petrol & Canara bank.
 Nifty is in Up trend

NIFTY FUTURES (F & O):
Above 4709-4711 zone, rally may continue up to 4716 level and thereafter expect a jump up to 4730-4732 zone by non-stop.

Support at 4682 & 4688 levels. Below these levels, expect profit booking up to 4660-4662 zone and thereafter slide may continue up to 4639-4641 zone by non-stop.

Buy if touches 4632-4634 zone. Stop Loss at 4612-4614 zone.

On Positive Side, cross above 4737-4739 zone can take it up to 4757-4759 zone by non-stop. If crosses & sustains this zone then uptrend may continue.
 
Short-Term Investors:
Bearish Trend. 3 closes below 4628.40 level, it can tumble up to 4101.60 level by non-stop.
SL triggered. 3 closes above 4628.40 level, expect short covering up to 4891.80 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.

 
POSITIONAL BUY 
Buy SOBHA DEVELOPERS (NSE Cash) 
Uptrend may continue.

Mild sell-off up to 239 level can be used to buy. If uptrend continues, then it may continue up to 252 level for time being. 

If crosses & sustains at above 264 level then uptrend may continue.

Keep a Stop Loss at 227 level for your long positions too.
 
Buy GITANJALI GEMS (NSE Cash) 
Uptrend may continue.

Mild sell-off up to 120 level can be used to buy. If uptrend continues, then it may continue up to 131 level for time being. 

If crosses & sustains at above 136 level then uptrend may continue.

Keep a Stop Loss at 115 level for your long positions too.
 

 
Global Cues & Rupee
The Dow Jones Industrial Average closed at 9,580.63. Up by 37.11 points.
The Broader S&P 500 closed at 1,030.98. Up by 2.86 points.

The Nasdaq Composite Index closed at 2,027.73. Up by 3.30 points.

The partially convertible rupee INR=IN ended at 48.91/92 per dollar on yesterday, stronger than its previous close of 48.93/94.
 
 Interesting findings on web:
  U.S. stocks on Thursday finished with modest gains in thin volume, with the Dow Jones Industrial Average extending its winning streak into an 8th consecutive day, its longest such run since April 2007. The Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (INDU 9,581, +37.41, +0.39%) added 37.11 points, or 0.4%, to 9,580.63. The S&P 500 Index /quotes/comstock/21z!i1:in\x (SPX 1,031, +2.86, +0.28%) gained 2.86 points, or 0.3%, to stand at 1,030.98, while the Nasdaq Composite /quotes/comstock/10y!i:comp (COMP 2,028, +3.30, +0.16%) added 3.3 points, or 0.2%, to 2,027.73.

About eight stocks rose for every seven that fell on the New York Stock Exchange, where volume came to 1.16 billion shares, up from 1.05 billion at the close on Wednesday.

In other trading, the Russell 2000 index of smaller companies slipped 0.25, or 0.04 percent, to 583.77.

Dow makes it 8: Best win streak since April '07.

Wall Street closes at fresh 2009 highs, with blue chip average managing longest winning streak in nearly 2-1/2 years.

Sharp gains in financial and industrial stocks helped turn the market around, overwhelming losses in energy and utility companies.

Trading lacked enthusiasm, however, as it has over the past week, with many investors shying away from making greater commitments to stocks.

With many traders on vacation, volume has been extremely light, adding to the market's recent choppiness. The day's economic news, including a slightly smaller-than-expected dip in initial unemployment claims and a fairly benign reading on gross domestic product, did little to excite investors.

Analysts say the market has been running on its own momentum more than anything else, adding that a lot of the improving economic data has already been priced into stocks.

A lot of activity has also been driven by short-covering, analysts say, which tends to magnify the market's gains. Short-covering occurs when investors have to buy stock after having earlier sold borrowed shares in a bet they would fall.

Traders have been anticipating a pullback for weeks, but any dips in the market continue to be met with more buying.

"There is just too much cash sitting on the sidelines," said Phil Orlando, chief equity market strategist at Federated Investors.

There were still fears that a pullback, possibly coinciding with the end of the month, was developing.

"I'm taking a little risk off the table," Art Cashin, director of floor operations at UBS, told CNBC. "September is truly one of the toughest months on the calendar, so I think it's prudent to pull your horns in somewhat."

The mood seemed to be catching; fund managers pared their exposure to stocks and raised their bond holdings, a Reuters poll showed.

Stocks rose Thursday, with the Dow extending its winning streak to eight straight sessions in a thinly-traded advance fueled by bank shares and Boeing.

Dell (DELL, Fortune 500) reported weaker sales and earnings that beat expectations, in a profit report that was released minutes before the close of trading, ahead of schedule. Shares gained 6.5% in extended-hours trading.

"There's a floor in this market and it's probably at least 5% below the recent highs," said Tyler Vernon, chief investment officer at Biltmore Capital. "There's still so much cash on the sidelines that when we see a selloff, there are retail investors and institutional investors ready to jump back in."

Stocks have essentially risen for the last five months, with the S&P 500 ending Wednesday's session up 52% from the 12-year low it hit on March 9. But the pace of the run, coupled with light August trading volume, has left markets churning over the last two weeks.

Better-than-expected economic news -- and a healthy infusion of monetary and fiscal stimulus -- drove the rally. But the latest batch of economic reports have had less of an impact on investor sentiment.

Reports are due Friday on July personal income and spending from the Commerce Department and August consumer sentiment from the University of Michigan.

Gross Domestic Product, the broadest measure of the health of the economy, declined at a 1.0% annual pace in the second quarter, unchanged from the initial reading last month. Economists thought GDP would be revised to show it slowed at a 1.5% annualized pace, according to Briefing.com estimates. In the first quarter, GDP declined at a 6.4% annualized rate.

The number of Americans filing new claims for unemployment last week dipped to 570,000 from a revised 580,000 the previous week. Economists surveyed by Briefing.com thought claims would fall to 565,000.

Meanwhile, energy stocks pulled off of their lows after crude prices reversed early losses. Like stocks, oil prices have been extremely volatile in recent weeks as investors try to determine whether current prices are warranted given still weak demand.

Dow components Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500) both posted modest losses after sliding 2% through the early afternoon.

On the upside, shares of AIG (AIG, Fortune 500) rallied 27% after the company's CEO told Reuters that he doesn't support a fire sale of the insurer's assets. New CEO Robert Benmosche said in a year, people will say the bailed-out insurer is performing well. The stock has jumped 274% in August alone.

AIG shares have more than doubled in eight days.

Other financials rallying included Freddie Mac (FRE, Fortune 500), Fannie Mae (FNM, Fortune 500), Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500) -- all of which have also received government help. The four have been responsible for much of the trading volume over the last few sessions.

Also in active trading, bond insurer AMBAC Financial (ABK) jumped 28%, while CIT Group (CIT, Fortune 500) gained 12%.

Analysts said the gains in AIG and other financial shares were likely magnified by a "short squeeze," in which short sellers scramble to cover their positions in the stocks.

"I think the banks are way overdone right now," said Terry Morris, senior equity manager at National Penn Investors Trust Co., contending that short-covering drove bank stocks higher on Thursday. "They're not twice the companies that they were a week ago."

Dow component Boeing (BA, Fortune 500) said it will have its long-in-the works 787 Dreamliner in the air by the end of the year and that it will make deliveries in the fourth quarter of 2010. The airplane manufacturer said it will take a non-cash charge of $2.5 billion, or $2.21 per share, in the third quarter.

Shares rallied 8.7%.

Checking the NASDAQ Top 100: Making the most gains overnight was Seagate Technology, adding 12.04% to $13.59. Dell and NetApp were the next best performers. Looking at the downside, NII Holdings was the worst performer, loosing 1.69% to $22.71, followed by Amgen and Research in Motion.

Toll Brothers (TOL) reported a quarterly loss of $2.93 per share, versus a loss of 18 cents a year ago. The luxury homebuilder was expected to report a loss of $1.79 per share, according to Briefing.com estimates. Toll Brothers also reported a drop in revenue that nonetheless managed to top estimates.

Its shares, along with those of competitor Hovnanian [HOV  5.12    0.12  (+2.4%)   ], turned positive after being lower through morning trading.

TiVo [TIVO  10.16    -0.34  (-3.24%)   ] shares dropped it reported a smaller-than-expected loss, with sales exceeding estimates. It's also filing lawsuits against both Verizon [VZ  31.05    -0.43  (-1.37%)   ] and AT&T [T  26.42    -0.09  (-0.34%)   ] over patents regarding its time-shifting DVR technology, sending shares of both companies lower.

Verizon was the leading drag on the Dow.

The number of financial institutions on the government's watch list surpassed 400 in the second quarter, the highest level in 15 years, the government said Thursday.

For the week:

The Dow is up 74.67, or 0.8 percent.

The S&P is up 4.85, or 0.5 percent.

The Nasdaq is up 6.83, or 0.3 percent.

For the year:

The Dow is up 804.24, or 9.2 percent.

The S&P is up 127.73, or 14.1 percent.

The Nasdaq is up 450.70, or 28.6 percent.

Oil, Gold & Currencies:

The price of oil turned higher, erasing morning lows. Oil hit 10-month highs earlier in the week. U.S. light crude oil for October delivery rose $1.06 to settle at $72.49 a barrel on the New York Mercantile Exchange.

COMEX gold for December delivery rose $6 to settle at $951.80 an ounce.

In currency trading, the dollar rose versus the euro and fell versus the Japanese yen.

The euro rose, headed for its first two-month gain against the dollar in 17 months, on optimism the 16-nation region is emerging from its recession, spurring demand for higher-yielding assets.

Europe's currency also strengthened for an eighth day against the pound, its longest winning streak since March 2005, before a European report that may show confidence in the economic outlook increased in August to the highest level in 10 months. The yen weakened against all 16 major counterparts after Japanese government reports showed the unemployment rate rose to an all-time high and consumer prices fell at a record pace in July, reducing the currency's allure as a refuge.

"The euro-zone economies look like they're starting to recover," said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. "The euro is easy to buy, given higher interest rates there than in the U.S. and Japan."

The euro rose to $1.4366 as of 11:13 a.m. in Tokyo from $1.4341 in New York yesterday, when it reached $1.4406, the highest level since Aug. 7. The currency has advanced 0.9 percent this month. It climbed to 134.57 yen from 134.14 yen, and strengthened to 88.24 British pence from 88.07 pence.

The yen weakened to 93.66 per dollar from 93.52 yesterday. It declined to 64.34 versus New Zealand's dollar from 64.28 yesterday and from 64.40 last week.

Executive, Consumer Sentiment

Europe's single currency strengthened as an index of executive and consumer sentiment in the 16-nation region climbed to 78 in August, the highest since October, from 76 in July, according to a Bloomberg News survey of economists. The European Commission will release the data today in Brussels.

European Central Bank board member Mario Draghi said on Aug. 26 that the global economy appears to be recovering from its first recession since World War II even though "strong uncertainties" remain.

The yen headed for a second-straight weekly loss versus the New Zealand dollar on speculation investors sold the Japanese currency to buy higher-yielding assets.

Japan's jobless rate rose to 5.7 percent in July, eclipsing the previous worst of 5.5 percent seen in April 2003, the statistics bureau said today in Tokyo. Consumer prices excluding fresh food declined 2.2 percent in July from a year earlier after dropping 1.7 percent in the previous month, the statistics bureau also said today.

"The markets seem to be perceiving the data as a negative for the safe-haven status of the currency," said Takashi Kudo, director of foreign-exchange sales in Tokyo at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp. "This is probably why the yen is being sold."

The benchmark interest rate is 0.1 percent in Japan, compared with 2.5 percent in New Zealand, attracting investors to the South Pacific nation's assets.

U.S. Confidence

The dollar was poised for a third weekly loss versus the Swiss franc before a U.S. report forecast to show a gauge of consumer confidence rose this month, sparking an increase in risk appetite.

A Bloomberg News survey of economists showed that the Reuters/University of Michigan gauge on Aug. 28 is projected to rise. The barometer of confidence among U.S. consumers probably rose to 64.0 in August from 63.2 in the previous month.

The dollar was at 1.0581 francs, down from 1.0594 francs yesterday, holding near the year-to-date low of 1.0531 touched on Aug. 27.

"The overall picture that the global economy is gradually improving remains intact," said Tomokazu Matsufuji, a dealer in Tokyo at SBI Liquidity Markets Co., a unit of financier SBI Holdings Inc. "The safe-haven currencies are likely to weaken against higher-yielding ones as risk sentiment is on the mend."

Adding to signs the recession is easing, the U.S. economy, the world's largest, contracted less than economists forecast as companies reduced inventories, spending started to climb and profits grew, a Commerce Department report said yesterday.

Gross domestic product shrank 1 percent in the three months ended in June, matching the initial estimate on July 31. The contraction was less than the 1.5 percent median forecast in a Bloomberg News survey of 75 economists.

The main opposition Democratic Party of Japan may win more than 320 of the 480 seats at the election Aug. 30, the Asahi newspaper reported yesterday. Prime Minister Taro Aso dissolved parliament on July 21, triggering the general election.

"The DPJ lacks policies which can re-invigorate the corporate sector as it focuses on households," said Kazuto Uchida, chief economist in Tokyo at Bank of Tokyo Mitsubishi UFJ Ltd., a unit of Japan's biggest banking group. "The limited prospect of an acceleration in growth expectations may prevent foreign investors from buying into Japanese assets."

Spending Policies

DPJ President Yukio Hatoyama and his party have pledged cash for child care and an abolition of highway tolls among their spending policies.

A convincing victory by the DPJ may turn out be positive for the yen in the short term, according to Koji Fukaya, a senior currency strategist at the Tokyo unit of Deutsche Bank AG, the world's largest currency trader.

"The DPJ won't block the Bank of Japan from hiking interest rates when the right time comes, and it will be reluctant to intervene currency markets," he said.

The Bank of Japan, which gained independence from the government in 1998, has kept its benchmark overnight lending rate at 0.1 percent since December. The rate has remained at 0.5 percent or lower since 1995.

Bonds:

Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.47% from 3.43% late Wednesday. Treasury prices and yields move in opposite directions.

Treasury sold $42 billion of 2-year notes Tuesday, $39 billion of five-year notes Wednesday. The sale of $28 billion of 7-year notes Thursday saw a weaker-than-expected demand, but it didn't seem to impact the bond market much.

What to expect:

Friday's data, consumer sentiment and personal income, will provide more clues about the U.S. consumer Friday. Consumer sentiment, reported at 9:55 am New York time, follows on a better than expected consumer confidence report earlier this week. Personal income is released at 8:30 am.

Asia:

Nikkei 225 10,530.62     +56.65 ( +0.54%) (08.06 AM IST).

The Nikkei share average rose 0.5 percent on Friday as exporters such as Kyocera Corp (6971.T) gained, with investors encouraged by a strong run-up on Wall Street, while Japan's Aug. 30 election and Chinese stock moves attracted attention.

Tokyo stocks rose Friday morning from the previous day's fall, buoyed by gains on Wall Street overnight, but the rebound was capped by a lack of other positive cues ahead of Sunday's House of Representatives election.

Casio Computer Co. (6952) shares rebounded sharply Friday morning, climbing as much as 10.5% to 936 yen, surpassing the previous year-to-date high set June 2.

All Nippon Airways Co. (9202) rose as much as 5 yen to hit 289 yen Friday morning, the day after Boeing Co. said it will supply its long-delayed 787 Dreamliner to the firm in October-December 2010.

HSI 20140.87 -101.88 -0.5% (08.14 AM IST).

Hong Kong shares wavered Friday, with Bank of China Ltd. /quotes/comstock/22h!e:3988 (HK:3988 3.84, +0.03, +0.79%) rising after its first-half performance beat expectations, though the advance was capped by a fall in Shanghai shares. The Hang Seng Index dropped 0.4% to 20,165.32 after opening higher, while the Hang Seng China Enterprises Index fell 0.5% to 11,518.92. China's Shanghai Composite dropped 1.8% to 2,893.56, with refineries and airline stocks sharply lower. China Petroleum & Chemical Corp., better known as Sinopec /quotes/comstock/13*!snp/quotes/nls/snp (SNP 89.80, -0.76, -0.84%) /quotes/comstock/22h!e:386 (HK:386 6.82, -0.19, -2.71%) , slumped 5.4% amid concerns about its earnings outlook, as Beijing hasn't allowed fuel price increases as some expected. Air China Ltd. /quotes/comstock/11i!airyy (AIRYY 12.08, +0.23, +1.94%) stock fell 5.2%, while China Southern Airlines /quotes/comstock/13*!znh/quotes/nls/znh (ZNH 16.64, -0.56, -3.26%) tumbled 4.1%. Baoshan Iron & Steel Ltd. /quotes/comstock/28c!e:600019 (CN:600019 7.01, -0.18, -2.51%) down 3.4% after the steelmaker's group agreed to buy a 15% stake in Australia's Aquila Resources /quotes/comstock/22x!e:aqa (AU:AQA 7.18, +0.63, +9.62%).

Hang Seng Index opens 166 points higher on Fri

Hong Kong stocks rose on Friday morning, with the benchmark Hang Seng Index opening 166 points higher at 20,409.

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 100 points higher at 11,671.

China Mobile<0941><CHL> increased 1.28% from the previous closing to HK$79.25. China Unicom (Hong Kong) Ltd<600050><0762><CHU> rose 3% and opened at HK$11.

SSE Composite  2867.62   -2.67. (08.17 AM IST).

Chinese stocks open 0.27% lower on Fri

Chinese stocks opened slightly lower on Friday 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 2,938.42 points, down 0.27% or 7.98 points from the previous closing.

The Shenzhen Component Index on the smaller Shenzhen Stock Exchange opened 0.15% or 17.71 points lower at 11,880.03 points. 

Seoul's Kospi  [KR;KSPI  1602.54    3.2101  (+0.2%)   ] shares rose on stronger-than-expected U.S. data and a positive finish on Wall Street, with techs such as Hynix lifted by Dell's better-than-expected quarterly results.

And Australia's S&P/ASX 200 [AU;XJO  4467.0    16.20  (+0.36%)   ] was higher with energy stocks such as Woodside Petroleum helping lead the gains after a rise in the price of crude oil.

Woodside rose 1.3 percent to A$49.43, Beach Petroleum gained 1.9 percent to A$0.805 and Santos gained 0.5 percent to A$15.62 after oil prices pulled out of a two-day slump.

Asian stocks rose, sending the MSCI Asia Pacific Index to its second weekly advance in three, as commodity prices and Dell Inc. profit beat analyst estimates.

Inpex Corp., Japan's largest oil explorer, gained 2 percent. Samsung Electronics Co., the world's largest maker of computer- memory chips, added 1.4 percent in Seoul. Casio Computer Co. surged 7.3 percent in Tokyo after the Yomiuri newspaper reported the company is merging its mobile phone business with NEC Corp. and Hitachi Ltd. Japanese equities advanced before an Aug. 30 election that newspaper polls suggest will result in the ruling party being put out of office.

"Risk appetite has recovered from the depths that we had in March and people are looking at fundamentals," said Prasad Patkar, who helps manage about $1.1 billion at Platypus Asset Management in Sydney. "Confidence is there for the right reasons. Economies are stabilizing and things are starting to normalize."

The MSCI Asia Pacific Index advanced 0.4 percent to 113.47 as of 12:05 p.m. in Tokyo, taking its gain this week to 2.6 percent. 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 added 0.8 percent. The country holds parliamentary elections on Aug. 30, in which the opposition Democratic Party of Japan is expected to win by a landslide, newspaper polls show. The ruling Liberal Democratic Party has governed Japan for all but 10 months since 1955.

Shanghai Composite

Australia's S&P/ASX 200 Index gained 0.7 percent. South Korea's Kospi Index climbed 0.9 percent. China's Shanghai Composite Index dropped 1.9 percent, while Hong Kong's Hang Seng Index fell 0.5 percent.

Futures on the U.S. Standard & Poor's 500 Index lost 0.2 percent. The yield on the 10-year Treasury note rose one basis point to 3.46 percent, according to BGCantor Market Data.

The S&P 500 rose 0.3 percent yesterday as crude oil futures rose for the first time in three days with a 1.5 percent climb. Separately, a Commerce Department report showed the U.S. economy shrank at a 1 percent annual rate from April to June, less than the 1.5 percent contraction estimated by economists.

Inpex gained 2 percent to 750,000 yen in Tokyo. Woodside Petroleum Ltd., Australia's second-largest oil producer, added 1.1 percent to A$49.32 in Sydney.

"Investors are putting their money in risk assets such as oil and stocks," said Kiichi Fujita, a strategist at Nomura Holdings Inc. in Tokyo.

Dell Earnings

BHP Billiton Ltd., the world's biggest mining company, added 0.7 percent to A$37.90. Copper for September delivery in New York increased 1.7 percent in after-hours trading.

Samsung Electronics rose 1.4 percent to 778,000 won in Seoul. Dell, the world's second-largest maker of personal computers, reported sales and profit that beat estimates after cutting manufacturing costs and attracting buyers with low- priced notebooks.

Second-quarter net income at the Texas-based company declined 23 percent to $472 million, or 24 cents a share, as sales fell 22 percent to $12.8 billion in the period. Analysts had predicted a profit of 22 cents a share on average and sales of $12.6 billion, according to a Bloomberg survey.

Dell suppliers in Taiwan gained. Quanta Computer Inc., the world's largest laptop maker, climbed 2.7 percent to NT$69.1. Compal Electronics Inc., the world's second-largest laptop maker, advanced 2 percent to NT$32.65.

Acer Inc., the world's third-largest computer maker, gained 2.8 percent to NT$72.8. HSBC Holdings Plc upgraded the stock to "neutral" from "underweight" and Goldman Sachs Group Inc. raised its share-price estimate by 19 percent to NT$74.

Casio Computer Co., the maker of digital cameras and mobile phones, surged 7.3 percent to 909 yen in Tokyo. Casio, NEC Corp. and Hitachi Ltd. are in talks to merge their mobile-phone businesses by April, the Yomiuri newspaper reported. The venture, of which NEC may own more than a half, would have more than 20 percent of Japan's mobile-phone market, the newspaper said.

NEC added 0.3 percent to 332 yen. Hitachi gained 1.2 percent to 326 yen. 

Macquarie sets up trust JV in Shanghai.

Angel Yeast to issue RMB 300 mln in financing bills.

Midea Electric's net profit up 18.63% in H1.

Powertech to buy Spansion's plant in Suzhou.

JPMorgan raises stake in Yanzhou Coal Mining to 5.04%.

China industrial output to rise 11.5% in Q3: MIIT.

T. Rowe Price cuts stake in Wumart Stores to 10.97%.

Panzhihua Iron & Steel to issue RMB 1 bln in notes.

SAIC Motor reports 26% decline in net profit for H1.

NetDragon Websoft's net profit plunges 42.4% in H1.

Sportswear firm Li Ning reports 41.6% surge in net profit for H1.

Guangzhou's industrial exports up 2.3% in Jul.

BOE to invest RMB 28 bln in 8G TFT-LCD production line.   

 

Half-year net profit of BOC (HK) down 5.6%

Bank of China (Hong Kong) said Thursday its half-year profit fell by 5.6 percent from a year earlier, dragged lower by falling interest income amid the deepening economic downturn.

The bank's net profit for the six months ending June 30 amounted to 6.69 billion Hong Kong dollars, down from 7.09 billion Hong Kong dollars in the same period last year.

However, the bank said it represented a major improvement against the net loss of 3.75 billion Hong Kong dollars in the second half of 2008, which can be attributed to the increase in operating income as well as the decrease in impairment charges on securities investments.

Net interest income decreased by 11 percent to 8.93 billion Hong Kong dollars as net interest margin narrowed by 27 basis points to 1.76 percent. But the net fees and commission income grew by 1.7 percent year-on-year to 2.95 billion Hong Kong dollars driven by the rebound of the local stock market in the first half of this year.

The bank's vice chairman and chief executive He Guangbei said the performance in the first half of this year reflected the progress the bank had made in regaining its growth momentum. As the turbulence and its knocks-on effects began to subside, the bank would pursue a prudent yet flexible development strategy in an environment of change and challenge.

He also said BOC (HK) would actively expand the RMB-related banking business as the sole Clearing Bank for Renminbi business in Hong Kong. 

Bank of China Plans to Slow Lending in Second Half

Bank of China Ltd., the nation's third-largest by assets, plans to slow credit growth in the second half of the year and improve loan quality after posting an unexpected profit gain in the second quarter.

Net income climbed 10 percent to 22.6 billion yuan ($3.3 billion), based on earnings figures the Beijing-based company reported yesterday. That exceeded the 19.51 billion yuan average estimate of five analysts compiled by Bloomberg.

Bank of China joined its three biggest publicly traded rivals in reporting better-than-estimated profits after state- owned lenders advanced a record amount of new loans in the first half to revive economic growth. Plans to rein in loan growth may relieve investors concerned that asset bubbles will form and bad loans will rise. Bank of China advanced more new credit than any other Chinese lender in the first half.

"BOC took full advantage of the loose monetary policy in the mainland to expand its market share," Bank of America Corp.'s Merrill Lynch & Co. analysts led by Winnie Wu wrote in a note today. "BOC could offer one of the best earnings growth stories in 2009 and 2010."

Shares in the company rose 1.6 percent to HK$3.87 at 10:06 a.m. in Hong Kong. The stock has gained 82 percent this year, outperforming China Construction Bank Corp., Industrial & Commercial Bank of China Ltd. and Bank of Communications Ltd.

Credit Growth Slows

Lending in the second half will be "much smaller," with new credit in July and August dropping from the monthly averages of the first half, President Li Lihui told reporters yesterday.

Bank of China was the last of the country's four biggest publicly traded lenders to report earnings.

The profit growth "confirms our belief that the worst is over for Chinese banks," said Lu Xiaojiu, an analyst in Beijing at BOCOM International Ltd. who expects the lenders to post a 12 percent rise in full-year profit.

Chinese Premier Wen Jiabao in March set a new loan growth target of 5 trillion yuan in 2009 for the banking industry to revive economic growth that dropped to 6.1 percent in the first quarter, the slowest pace in almost a decade. New loans, which reached a record 7.73 trillion yuan as of July 31, may top 11 trillion yuan by the end of the year, BNP Paribas SA estimates.

Construction Bank this week warned of asset bubbles in capital markets after posting a 4.9 percent drop in net income in the first six months. ICBC, the world's biggest bank by market value, last week said its profit in the period rose 2.9 percent on record lending.

Equities Rally

China's regulators are changing tack after gross domestic product expanded 7.9 percent in the second quarter and the benchmark Shanghai Composite Index rallied 25 percent.

The China Banking Regulatory Commission last month required the nation's lenders to raise reserves to 150 percent of non- performing loans by the end of this year, and on July 27 told banks to ensure loans intended for investment in fixed assets go to projects that support the real economy. Three days later, it announced plans to tighten rules on working capital loans.

The regulator also sent draft rule changes to banks on Aug. 19 requiring them to deduct all existing holdings of subordinated and hybrid debt from supplementary capital, people familiar with the matter said last week. As a result, banks may need to rein in lending to meet capital requirements.

Bank of China is considering plans to replenish capital and maintain the capital adequacy ratio at an "appropriate" level, Li said yesterday.

Net Interest Income

The lender posted an 8.3 percent drop in first-half net interest income, or the difference between revenue from lending and payments to depositors, as the profitability of loans worsened. Income from fee-based services, such as trade finance and distribution of insurance policies, gained 2.6 percent to 22.98 billion yuan.

Bank of China set aside 7 billion yuan to cover potential loan defaults in the first half, an increase of 7.8 percent from a year earlier. Its impaired-loan ratio narrowed to 1.83 percent from 2.29 percent three months earlier.

Impairment losses on Bank of China's subprime-related investments and other securities holdings stood at $4.67 billion as of June 30, down from $4.84 billion three months earlier. The loss remains more than that suffered by all the other Chinese banks combined.

The bank still held $2.2 billion of subprime-mortgage investments, $1.05 billion of securities backed by so-called Alt-A home loans and $3.2 billion of other "non-agency" mortgage investments as of June 30.

China Telecom first-half net income falls 29% to $1.3 billion

China Telecom Corp., the nation's largest fixed-line operator, said Thursday its net income for the first half fell 29% from a year earlier because of significant costs for its new its 3G network and for marketing, as well as the loss of 9 million fixed-line subscribers.

Meltdown 101: Is Dow 10,000 important?

It's time to look in the closet for that crumpled Dow 10,000 cap.

The first time the Dow Jones industrial average entered five-figure territory, corporate bigwigs tossed hats that said "Dow 10,000" to cheering traders on the floor of the New York Stock Exchange.

That was a decade ago. Traders could soon see 10,000 again soon, but any celebrating would be more a show of relief than an expression of brimming confidence.

The Dow stands about 500 points shy of the 10,000 mark, putting the milepost on investors' radar for the second time in a year. In October, the Dow tumbled below that mark as traders saw an already weak economy come to a jerking halt.

Now, the stock market is in the sixth month of what investors hope will be a lasting recovery on Wall Street and in the economy. So 10,000 is, once again, in sight. But what would hitting that mark mean this time, if anything?

Analysts say it's mostly a psychological barrier, but it could draw more attention to the enormous run in stocks since March. It could also fan skepticism about a market that some analysts say has gained too much, too quickly.

Here are some questions and answers about what it would mean for the Dow to hit 10,000.

Q: When did the Dow first close above that level?

A: After several tries, the Dow finished above 10,000 on March 29, 1999, in the midst of a powerful market rally that would end with the dot-com collapse at the start of this decade.

Q: What would Dow 10,000 mean this time?

A: Some analysts say it holds little significance given how far the market remains from its peak almost two years ago. But many contend that seeing Wall Street's best-known thermometer roll back to five digits could inject traders with confidence.

"It's a like a century rather than 99 years. There's not that big of a difference but there's a big difference psychologically," said Dan Cook, senior market analyst at IG Markets in Chicago.

Q: What would it mean for the market's recovery?

A: The Dow is down 32.6 percent from its peak of 14,165 in October 2007. At 10,000 it would still be down 29.4 percent. Other indicators that traders tend to pay more attention to, like the Standard & Poor's 500 index, are also down by similar amounts.

Q: Should a climb past 10,000 make investors more confident?

A: Analysts are divided. But it would certainly feel better than when the Dow skidded 370 points on Oct. 6, 2008, to close below 10,000 for the first time in four years. By March, the Dow had tumbled to a 12-year low of 6,547. That was a drop of 53.8 percent from its high.

Some analysts say, though, that reaching 10,000 would make them nervous that the market was overheated.

"I'd rather almost hit the March lows again before it hit 10,000 because I do think we have run ahead of ourselves," Cook said.

Q: What would be needed to push the Dow above 10,000?

A: Investors will need to see more signs of an improving economy, because the stock market tends to bounce back as the economy is getting ready to recover from a recession. Investors need reassurance that they've been right to buy into the market.

Recent economic readings on housing, employment and the economy's output have signaled that the longest recession since World War II, which began in December 2007, could be ending.

"It's good news that the market has reached 9,500, but it's particularly good news that it's confirmed by most of the important economic numbers that we're looking at," said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, N.Y.

"It's not fanciful or whimsical or sheer speculation," he said, adding that some doubters have missed the rally. "The market is right; strategists, economists and individual investors have been wrong."

Q: Should average investors prepare in some way for the Dow at 10,000? Should they even care?

A: Long-term investors shouldn't react to day-to-day moves in the market, but it could be a good time to prune portfolios. Most financial advisers say it's wise to pull money from the strongest performers and funnel some of it to other investments. That helps guard against letting one part of a portfolio carry too much weight.

Q: What if the Dow doesn't hurdle 10,000?

A: If weeks and months go by and the index hasn't cruised past that number, some investors will see that as a signal that the rally is over. But keep in mind that stocks paused in June before surging again in July. Some analysts say a time-out is what stocks need after the Dow surged 45.8 percent since March — the kind of gain that might take investors five years to amass in less volatile periods.

Q: If the Dow does reach 10,000, how soon might we see another notable number?

A: Cook contends that a number like 10,500 could come within days because short-sellers — investors who try to make money by predicting that stocks will fall — could get spooked by the Dow's ascent. As worried short-sellers buy stock to cover their bets, the market could get a boost.

Q: What could blow the market out of the water?

A: It's impossible to say what could upend the rally, but analysts caution that any big disruption in the economy's recovery — like new waves of foreclosures or jumps in unemployment rolls — could send stocks tumbling.

Japan Logs Record CPI Drop and Jobless Rate

Japanese core consumer prices fell a record 2.2 percent in July from a year earlier, with weak demand playing a growing role in pushing the world's No. 2 economy deeper into deflation.

And Japan's jobless rate rose to a record high 5.7 percent in July

While last year's spike in energy costs continued to weigh on on-year comparisons in prices, an index stripping out both energy and food prices showed deflationary pressure was broadening.

The core-core inflation index, similar to the core index used in other developed countries, fell 0.9 percent in July from the same month a year ago after declining 0.7 percent in June.

The drop in the core consumer price index, which excludes volatile fresh fruit, vegetable and seafood prices but includes those of oil products, matched a market forecast and was bigger than a 1.7 percent drop in June.

It was the third straight month of record falls in the index, and the biggest drop under calculation methods dating back to 1970. July also marked the fifth straight month of annual falls, the Ministry of Internal Affairs and Communications data showed on Friday.

Core consumer prices in Tokyo, available a month before the nationwide data, fell a record 1.9 percent in August from a year earlier, more than a market forecast of a 1.8 percent decline.

Japan's economy returned to growth in the second quarter, pulling out of its longest recession since World War Two, but analysts warn of a rocky road ahead as the nascent recovery was based on short-term stimulus efforts around the world.

Jobless Rate Hits Record

Job availability in Japan sank to a record low, reinforcing views that it will take time for the job market to recover despite a pick-up in corporate activity.

The seasonally adjusted unemployment rate rose to 5.7 percent from 5.4 percent in June and was above a median market forecast of 5.5 percent.

The jobs-to-applicants ratio slid to 0.42 from 0.43 the month before, meaning only about four jobs were available for every 10 applicants. It was the lowest reading since the data began in 1963 and fell short of a median market forecast of 0.43.

The number of new job offers fell 23.4 percent in July from the same month last year but was flat from June, when new job offers rose on month for the first time in six months.

China's planning agency warns of rising inflation risk

China's economic planning agency said Thursday inflationary expectations are on the rise even as prices show few signs of moving higher, highlighting growing concerns among official agencies about the dangerous side effects from rapid credit growth, according to a report.

The National Development and Reform Commission said in a statement that regulators should closely monitor prices and seek to prevent shortages in the week-long national holiday beginning Oct. 1.

"Overall inflation expectations have increased, affected by recent price rises, high credit growth, and the stock market and property rebound," Dow Jones Newswires cited the National Development and Reform Commission as saying a statement.

The agency added that broad-based inflation was unlikely in the near term.

China's Baosteel to Buy 15% of Australia's Aquila

Baosteel Group, China's biggest steel mill, has agreed to invest US$240 million for a 15 percent stake in Australian coal and iron ore miner Aquila Resources, underscoring China's huge appetite for Australian assets.

Fed Officials: Must Not Ignore Stimulus 'Exit Strategy'

The U.S. Federal Reserve should be careful not to over-stimulate the economy and stay focused on an exit from its aggressive monetary expansion as growth resumes, two senior Fed officials said on Thursday.

St. Louis Federal Reserve Bank President James Bullard said the central bank would need to think about scaling back its economic support in the months ahead, while Richmond Fed chief Jeffrey Lacker said it should weigh whether to carry through with all of its current stimulus plans.

"As we head to 2010, the Fed will shift its focus to implementing an exit strategy in order to avoid any potential inflation threats to the economy,'' Bullard said in prepared remarks.

"Monetary policy is still very accommodative and the (Fed) intends to keep the fed funds target near zero for an extended period,'' he said, according to a summary of his presentation on the economic outlook at the College of Business at the University of Arkansas-Little Rock.

Bullard emphasized that the exit ought to mean allowing the Fed balance sheet to shrink, perhaps by selling assets that it purchased this year to counter the worst recession since the Great Depression, rather than speedy rate hikes.

Lacker, speaking earlier at an event in Danville, Virginia, suggested the Fed should consider now whether its planned purchases of mortgage securities might give the economy more of a boost than it needs.

"I will be evaluating carefully whether we need or want the additional stimulus that purchasing the full amount authorized under our agency mortgage-backed securities purchase program would provide,'' said Lacker, who is a voting member of the central bank's policy-setting committee this year.

The Fed plans to buy up to $1.45 trillion of agency mortgage debt by Dec. 31, 2009, as well as $300 billion of longer-dated U.S. government bonds by the end of October.

The purchases were designed to prevent a contraction in the U.S. monetary base as growth slumped. Policy-makers thought this could inflict a Japan-style deflation, or period of widespread falling prices, which would have made the U.S. recession much worse. As a result they Both officials, who are generally viewed as sitting on the more hawkish, or anti-inflationary, wing of the Fed's policy-setting committee, said that the economy was showing signs of healing.

"Recent data suggest the economy is stabilizing, and there should be positive economic growth in the second half of 2009,'' said Bullard.

Their comments were somewhat at odds with remarks on Wednesday by Atlanta Federal Reserve President Dennis Lockhart, who said there should be no hasty move toward raising rates and who urged policy-makers to show patience before withdrawing monetary policy stimulus, to ensure the recovery take holds. 

Toyota Will Shut California Plant in First Closure

Toyota Motor Corp. will shut an assembly plant for the first time in its 72-year history after the failure of a joint venture with General Motors Corp. 
 

INVESTMENT VIEW
TCS: The Big Keep Getting Bigger
 
 Tata Consultancy Services, a unit of India's Tata Group conglomerate, said Thursday it was selected as a strategic information technology vendor for BP PLC, one of the world's biggest oil and gas companies. Terms were not disclosed.
 

The deal is part of a year-old effort by BP to lower costs by consolidating its information technology vendors for application development and maintenance. Tata will work on refining, manufacturing and corporate IT maintenance.

(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
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