Market Outlook for 11th Sep

INTRADAY calls for 11th Sep 2009
+ve sector , scripts : Apollytyre, TCI,HOPFL,UnionBank
BUY Tatasteel-520 for 536-40-54+ with sl 515
BUY Sesagoa-239 for 247-55-64+ with sl 235
BUY RNRL-90 for 91.80-93-96+ with sl 88
BUY MRO-Tek-107 for 116+ with sl 104

 

NIFTY FUTURES LEVELS
RESISTANCE
4835
4870
4902
4913
4945
SUPPORT
4808
4803
4794
4771
4760
4728
Buy JAYANT AGRO;GMRINDS

 

Strong & Weak  futures 
 This is list of 10 strong futures: Jindal Steel, Bhushan steel, OBC, Tata Motors, Sterlite Indu, Chennai Petro, Unitech, Hind Zind, Century Text & Aban. And this is list of 10 Weak futures: FinanTech, Bharti Airtel, McDowell, TV-18, Dish TV, Tata Comm, BEL, Triveni, MTNL & Bajaj Hind.
 Nifty is in Up trend

 

NIFTY FUTURES (F & O):
Above 4835 level, rally may continue up to 4868-4870 zone and thereafter expect a jump up to 4900-4902 zone by non-stop.

Multiple support at 4803-4805 zone & at 4808 level. Below these levels, expect profit booking up to 4794 level and thereafter slide may continue up to 4771-4773 zone by non-stop.

Buy if touches 4760-4762 zone. Stop Loss at 4728-4730 zone.

On Positive Side, cross above 4911-4913 zone can take it up to 4943-4945 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. 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.

SL triggered. 3 closes above 15973 level, expect short covering up to 16842 level by non-stop.
 
POSITIONAL BUY:
Buy JAYANT AGRO (NSE Cash) 
Excellent show by bulls.

Immediate support at 78.00 level. Will try to touch 86 level on upper side. Supply expected at around 94 level and have caution.

Good looking buy at around 70 level. Should not be allowed to break at any cost.
 
Buy GMR INDS (NSE Cash) 
Uptrend should continue.

Immediate support at 118 level and good looking buy at around this level. Will try to touch 131 level on upper side. 

If crosses & sustains at above 138 level then it will zoom.

Keep a Stop Loss at 112 level for your long positions.

 

 

FUNDS DATA 

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	10-Sep-2009	2966.21	2498.16	468.05

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	10-Sep-2009	1294.52	1418.19	-123.67

 

 

 

	4819.40	( 0.11 %)	5.15
		1	2	3
Resistance		4869.67	4919.93	4950.82
Support		4788.52	4757.63	4707.37

	16216.86		( 0.21 %)	33.31
			1	2	3
Resistance			16378.95	16541.03	16647.30
Support			16110.60	16004.33	15842.25

 Global Cues & Rupee
 
The Dow Jones Industrial Average closed at 9,627.48. Up by 80.26 points.
The Broader S&P 500 closed at 1,044.14. Up by 10.77 points.

The Nasdaq Composite Index closed at 2,084.02. Up by 23.63 points.

The partially convertible rupee INR=IN ended at 48.63/64 per dollar on yesterday, weaker than Wednesday's close of 48.51/52.
 
 Interesting findings on web:
U.S. stocks gained for a fifth straight session on Thursday, their longest string of gains since November, as a bright outlook from consumer product company Procter & Gamble and a successful Treasury bond auction boosted investors' confidence.

Strong demand for the sale of 30-year Treasury bonds lifted confidence in U.S. assets, including stocks. The S&P 500 stock index rose to its highest in nearly a year.

Though the month is generally the worst for stocks, the market is on a five-day rally that has seen tepid but steady gains.

Another broad rally pushed major stock averages to their highest closes of 2009 Thursday, with a diverse group including Walt Disney and Procter & Gamble pacing the market higher while AT&T led a surge for telecommunications firms.

Positive news about the labor market also helped boost stocks. U.S. initial jobless claims fell 26,000 to 550,000 in the first week of September, while continuing claims came down more than expected from the previous week.

In other economic news, the U.S. trade deficit in July widened to $32.0 billion, more than expected, following a revised $27.5 billion deficit in June.

In a speech before Congress Thursday, Treasury Secretary Timothy Geithner testified that the strategy has shifted from economic rescue to preparing for future growth, necessitating the wind down of extraordinary financial system support, reports Action Economics. He sees gradual economic growth after the extensive damage, but says the economy is back from the brink. Geithner is also not likely to request another bailout round, and will drop that contingency from the budget. "That's positive fiscal news, along with the view that some $50 billion in TARP money will be repaid over the next year or so," says Action Economics. Geithner will be speaking again tonight at 7 pm ET in a CNBC town hall meeting format.

Procter & Gamble (PG.N) was the Dow's biggest lift, climbing 4.2 percent to $56.04 after it affirmed its earnings forecast for the current quarter and said sales would improve in the next quarter.

"There is no selling pressure in this market. You see more believers in the market, more bullish sentiment and people are starting to believe that this rally is real," said Keith W. Springer, president at Capital Financial Advisory Services in Sacramento, California.

David Bianco, head of U.S. equity strategy at Banc of America Securities-Merrill Lynch in New York, said the rally has merit because stocks had tumbled so far since their peak.

"This is a rally that's supported by the fundamentals," he said. "Maybe it's moving a little bit too fast for the normal rules of thumb but we haven't seen a crash like that since the Great Depression."

Ralph Fogel, co-chief investment officer at Fogel Neale Partners in New York, argues that too many analysts are now expecting a pullback for it to happen. He pointed to a well-tested piece of Wall Street wisdom that if a certain prediction becomes too widely expected in the marketplace, that conclusion is often wrong.

"I'm not sure why sure this market is going to slow up so much," Fogel said. "We look for a nice continued move upward."

Some analysts remain cautious. Subodh Kumar, global investment strategist at Subodh Kumar & Associates in Toronto, contends that the market needs a break.

"The fact that it got here without any meaningful corrections means it hasn't stopped since March to test the validity of its assumptions," he said.

The S&P now stands 54 percent higher from its 12-year closing low on March 9.

Chip companies Texas Instruments (TXN.N) and ASML (ASML.AS) both boosted their sales outlooks in a signal consumers are spending cash on personal technology. Semiconductor shares .SOXX gained 1.8 percent. Chip maker Texas Instruments (TXN) was down slightly.

In finishing higher for the fifth straight day, the Dow Jones Industrial Average closed up 80.26 points, or 0.84%, at 9627.48, its highest close since Oct. 6. Gains were led by a diverse spectrum of companies, including media and entertainment giant Walt Disney, up 1.41, or 5.2%, to 28.36; industrial 3M, up 1.21, or 1.7%, to 74.39; and energy firm Chevron, up 1.12, or 1.6%, to 71.45.

The move for Chevron and a series of other energy firms stemmed from a fourth straight day of gains for oil prices.

In addition, consumer-products conglomerate Procter & Gamble increased 2.28, or 4.2%, to 56.04 after saying it will cut prices and increase promotions across nearly 10% of its portfolio because those and other moves will drive sales growth in its second quarter, which ends in December.

Among other indexes, the Standard & Poor's 500 rose 10.77, or 1.04%, to 1044.14, also marking its highest close since Oct. 6. All of the S&P 500's sectors finished in the green, led by a 2.1% jump for telecommunications companies.

The Russell 2000 index of smaller companies rose 8.50, or 1.5 percent, to 594.90.

"Tech had been screaming, then health care and commodities made a recovery. It's been broad based throughout and especially today," said Shawn Price, a large-cap portfolio manager with Navellier.

Notably, Price said part of the broad-based gains have stemmed from a perceived reduction in risks for stocks generally. Volatility has notably come down, with the CBOE Volatility Index losing another 3.1% Thursday, making stocks across the board a more comfortable investment, says Price.

For telecom on Thursday, the gains included AT&T, up 62 cents, or 2.4%, to 26.56, and Verizon Communication, which rose 46 cents, or 1.5%, to 31.35.

Also in the sector, Sprint Nextel gained 10 cents, or 2.7%, to 3.78 after launching a service plan offering unlimited calls to any U.S. cellphone.

The technology-heavy Nasdaq Composite closed Thursday up 23.63, or 1.15%, to 2084.02. The index finished higher for the fifth straight day, ending at its highest point since Sept. 30.

Also helping technology firms, Dell said its technology to digitize medical records for physicians working with hospitals is less expensive and more compatible with outside systems, hurdles that have held back the movement to put records online. Dell closed up 64 cents, or 4%, at 16.56, on Nasdaq.

In addition, Xerox increased 51 cents, or 5.8%, to 9.37. Brean Murray Carret said the firm still has long-term upside potential, raising its rating on the photo-copying and printing icon to buy from hold.

Adding to optimism was jobless claims data, which fell to its lowest since July last week, while a separate government report showed imports of foreign goods rose to a record, suggesting more strength in U.S. consumer spending.

But among decliners, Monsanto, the world's biggest seed company, fell 5 percent to $79.30 after it forecast fiscal 2010 earnings below Wall Street's estimates.

Health insurance stocks .HMO rose 3.5 percent after analysts said President Barack Obama's speech urging Congress to act on health care reform indicated a government-run insurance option opposed by the industry was less likely to pass.

U.S. health insurers such as Cigna [CI  31.06    1.65  (+5.61%)   ] and Aetna [AET  29.85    0.60  (+2.05%)   ] climbed.

Managed health care stocks moved higher after President Obama said in a speech Wednesday night that a health insurance plan of $900 billion over 10 years will be funded with spending cuts and tax increases.

The sector itself was slightly higher, with the SPDR Healthcare Select [XLV  28.91    0.22  (+0.77%)   ] ETF edging up and improving with the broader market.

Weakness in the financial sector had been limiting gains, but the market rallied as the SPDR Financial Select [XLF  14.64    0.14  (+0.97%)   ] ETF, which tracks the movements of larger companies in the group, turned positive.

On the Nasdaq, Yahoo Inc added 4.5 percent to $15.45 after Banc of America Securities-Merrill Lynch Research upgraded the company, saying growth in user traffic continues to outpace growth in the Internet as a whole.

An airlines stocks index .XAL added 6.7 percent after J.P. Morgan said fundamentals for the U.S. airlines sector are on the mend and upgraded UAL Corp (UAUA.O) and U.S. Airways Group Inc (LCC.N).

UAL Corp, United Airlines parent, jumped 17.8 percent to $7.60 while U.S. Airways shares surged 12.3 percent to $4.02.

Airlines generally got a boost from JP Morgan. JP Morgan downgraded JetBlue (JBLU) to "neutral.

Navistar International declined 3.51, or 7.7%, to 42.17, as the truck and engine maker swung to a fiscal third-quarter loss on lower revenue and margins. The company also again lowered its fiscal-year earnings target.

As Hartford Financial Services rebuilds, it will focus more on insurance than annuities, said Chief Executive Ramani Ayer Thursday. Ayer added the firm is being helped along by improved investment-portfolio performance in the third quarter. Hartford closed up 1.99, or 8.7%, at 25.

NBTY edged up 1.40, or 3.6%, to 39.95, after the vitamin company reported a 16% increase in preliminary August sales, fueling more hope that margins are improving on stabilizing raw material costs.

Skyworks Solutions (Nasdaq) tacked on 1.53, or 12%, to 14.28, as the wireless semiconductor company boosted its earnings and revenue guidance for the fiscal fourth quarter saying new programs and diversification efforts have helped.

Internet marketplace eBay's efforts to drive traffic toward top selling items improves the buying experience and should stem market share losses, said Janney in upgrading the shares to buy. Ebay closed up 83 cents, or 3.7%, to 23.51, on Nasdaq.

General Motors (GM) is expected to spin off its German Opel and UK Vauxhall units to a consortium led by Magna of Canada, backed by Russian banks and automakers.

In other news, Moody's reiterated its negative outlook for U.S. banks, saying that asset-quality troubles will forcebanks to post substantial additional provisions in 2009 and 2010, making many banks unprofitable for extended periods and putting stress on capital levels. "We do not believe asset quality deterioration for the U.S. banking industry has reached its peak, and we therefore anticipate multiple quarters of losses for a large number of rated banks," Moody's said in a report.

USEC Inc., up 61 cents at $5.12. The enriched uranium provider signed a contract to supply nearly $1.2 billion worth of uranium to Exelon nuclear power plants.

Talbots Inc., up $1.21 at $8.16. Sales at established stores, a key measure of a retailer's health, could improve at Talbots in the next six months, said a Citi analyst.

Men's Wearhouse Inc., down $2.45 at $25.06. Wall Street analysts had expected a higher third-quarter profit guidance from the men's suit and tuxedo retailer.

RF Micro Devices (RFMD: 5.5, 0.49) also said demand is tracking ahead of plan, which is boosting the stock. RFMD is up about 7.5% while ASML is 1.4%.

Walt Disney [DIS  28.36    1.41  (+5.23%)   ], Time Warner [TWX  29.51    1.04  (+3.65%)   ] and CBS [CBS  11.95    0.93  (+8.44%)   ] were among major media companies that surged after Goldman Sachs raised the U.S. entertainment sector to "attractive" from "neutral," citing a stronger-than-expected rebound in national advertising.

Disney was the top gainer on the Dow 30 while Kraft Foods [KFT  26.19    -0.66  (-2.46%)   ] was the weakest performer on the bluechip index as shares continued to sag following its failed buyout offer of Cadbury [CBY  51.90    0.10  (+0.19%)   ].

But the optimism was offset by Merck [MRK  31.96    0.41  (+1.3%)   ], which dropped slightly after the drugmaker said it is abandoning an experimental drug to treat acute migraines because the drug caused elevated liver enzyme levels in some cases.

Oil,Gold & Currencies:

Crude oil futures rose to $72.14 following the EIA inventory data which showed a 5.9 million barrel fall in crude stocks.

Gold futures rose $1.90 to $997.20.

As stocks rallied, the U.S. dollar index fell to fresh one-year lows.

Dollar Near Nine-Month Low Against Euro Before Chinese Reports.

The dollar traded near a nine-month low against the euro on speculation reports today will show China's factory output gained and exports dropped at a slower pace, reducing demand for the U.S. currency as a refuge.

The euro may approach a two-week high against the yen before an Italian report today that economists said will show industrial production rose in July after dropping in June, adding to signs Europe's recession is easing. The pound was near a one-month high against the dollar after the Bank of England yesterday kept its bond-buying program unchanged in a sign policy makers believe the economy is recovering.

"Assuming China's data will come out stronger than expected, that's going to keep the U.S. dollar under pressure across the board," said Sue Trinh, senior currency strategist at RBC Capital Markets in Sydney. "Risk appetite should be pretty well underpinned."

The dollar traded at $1.4578 per euro as of 9:10 a.m. in Tokyo from $1.4582 yesterday in New York, when it dropped to $1.4613, the weakest level since Dec. 18. The euro was little changed at 133.64 yen from 133.76 yen. The dollar was at 91.67 yen from 91.73 yesterday when it fell to 91.44 yen, the lowest level since Feb. 16.

Sterling traded at $1.6652 from $1.6651 yesterday, when it climbed to $1.6687, the strongest level since Aug. 10. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners including the euro, yen and pound, was at 76.819 from 76.827 yesterday.

Demand for the dollar may decline as economists surveyed by Bloomberg News said China's industrial production gained 11.8 percent in August from a year earlier. The statistics bureau will release the report at 10 a.m. in Beijing.

China's Exports

China's exports may have dropped 19 percent in August from a year earlier, the slowest decline since March, a separate Bloomberg survey showed before today's report.

The Bank of England's nine-member Monetary Policy Committee decided to keep buying as much as 175 billion pounds ($291 billion) of assets to help the economy's recovery. Policy makers also kept the main rate at a record low of 0.5 percent.

"The market was concerned that the BOE may introduce additional asset purchases," said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto. "The BOE did nothing. There's a window of opportunity for the pound to pick up some ground in the next two months."

The euro add to gains as the national statistics office in Rome is forecast to report today that industrial production in Italy gained 0.4 percent in July after declining 1.2 percent in June, according to a Bloomberg survey.

The yen was little changed after a government report today showed Japan's economy grew less than initially estimated in the second quarter.

Gross domestic product expanded at an annual 2.3 percent pace in the three months ended June 30, according to revised figures from the Cabinet Office in Tokyo. Economists surveyed by Bloomberg News forecast a 3.7 percent expansion, unchanged from the preliminary report.

Bonds:

The yield on the benchmark 10-year Treasury note fell to 3.35 percent from 3.48 percent late Wednesday. The yield on the 30-year bond fell to 4.20 percent from 4.33 percent.

What to expect:

On Friday, the preliminary September reading of the University of Michigan's Consumer Sentiment survey is expected at 67.0 from August's reading of 65.7. Despite the pull-back in sentiment in July and August, all the sentiment measures have posted a notable rebound from the lows in the fourth quarter and first quarter, says Action Economics, but "still remain in recessionary territory."

FRIDAY: Import and Export Prices; Consumer Sentiment; Wholesale Trade; and Earnings from Campbell Soup. 

Asia:

Most Asian stock markets rose as lower U.S. jobless claims and a higher forecast for global oil demand from the International Energy Agency offset slower-than estimated growth in Japan's economy.

Santos Ltd., Australia's third-biggest oil and gas producer, gained 1.5 percent as crude oil rose to the highest in more than a week. Dentsu Inc., Japan's largest advertising agency, dropped 4.1 percent, while Nissan Motor Co., the country's No. 3 carmaker, lost 1.3 percent in Tokyo.

The MSCI Asia Pacific Index added 0.2 percent to 117.44 as of 10:30 a.m. in Tokyo, with about as many stocks rising as falling. The gauge has surged 60 percent in the past six months on speculation global growth is recovering. Six of the eight markets open for trading so far today advanced.

"The market has been a bit volatile lately, but some of the big money managers are increasingly putting money in, so there's a firm bottom under the market," said Hiroaki Kuramochi, head of equity sales at Tokai Tokyo Securities Co.

Australia's S&P/ASX 200 and Malaysia's Kuala Lumpur Composite Index both added 0.6 percent, leading gains in the region. Japan's Nikkei 225 Stock Average lost 0.2 percent.

Futures on the Standard & Poor's 500 Index dropped 0.2 percent. The benchmark added 1 percent yesterday after a Labor Department report showed the number of Americans filing first- time claims for joblessness benefits dropped more than economists had estimated.

The International Energy Agency also increased its 2010 estimate for global demand because of stronger sales in North America and China, helping crude oil futures to advance 0.9 percent to the highest settlement since Aug. 28.

Santos, BHP Billiton

Santos added 1.5 percent to A$15.88, while BHP Billiton Ltd., Australia's biggest oil producer, gained 0.8 percent to A$38.31. Sumitomo Corp., Japan's third-biggest trading house, advanced 1.4 percent to 956 yen.

The U.S. market was also boosted yesterday after Treasury Secretary Timothy Geithner told Congress that the government is preparing to withdraw some of its support for financial markets as it moves from "crisis response to recovery."

China's Premier Wen Jiabao signaled he will maintain unprecedented government spending because China's economic rebound "is unstable." The Shanghai Composite Index has climbed 61 percent this year amid surging loan growth. China is scheduled to release a report on the nation's industrial production today.

Rising Valuations

The MSCI Asia Pacific climbed for a sixth-straight month in August, the longest stretch of gains since the 10 months ended July 2007. Stocks on the gauge are priced at an average 1.6 times book value, up from 1 at the index's low in March, data compiled by Bloomberg show.

Greater-than-expected profit reports have fueled the rally. Among the 642 companies on the MSCI Asia Pacific Index that reported quarterly net income in the past two months, 35 percent have beaten analyst estimates, while 21 percent have missed.

Japan's Cabinet Office reported today that the country's economy grew at a 2.3 percent annual rate in the second quarter, lower than the 3.7 percent expansion originally estimated.

Dentsu fell 4.1 percent to 2,110 yen. Nissan lost 1.3 percent to 624 yen.

Haseko Corp., one of Japan's largest construction companies, tumbled 17 percent to 101 yen after saying it will issue convertible bonds, prompting Credit Suisse Group AG to cut the shares to "neutral" from "outperform." 

Nikkei 225 10,465.86     -47.81 ( - 0.45%). (08.26 AM IST).

Japan's Nikkei average slipped 0.5 percent on Friday, hit by concerns about a stronger yen and selling over the settlement of futures and options, with automakers such as Toyota Motor Corp (7203.T: Quote, Profile, Research) losing ground. Daiwa Securities Group (8601.T: Quote, Profile, Research) fell after it said it would pay about $2.2 billion to buy out Sumitomo Mitsui Financial Group (8316.T: Quote, Profile, Research) from their investment banking joint venture, leaving Daiwa vulnerable amid intensifying competition for deals in Japan. 

HSI 21163.49 +93.93 +0.45%.(08.29 AM IST).

Hang Seng Index opens 52 points higher on Fri

Hong Kong stocks rose on Friday morning, with the benchmark Hang Seng Index opening 52 points higher at 21,122.

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 35 points higher at 12,252.

China Mobile<0941><CHL> decreased 0.57% from the previous closing to HK$79.15. China Unicom (Hong Kong) Ltd<600050><0762><CHU> rose 0.36% to opened at HK$11.1. 

Hong Kong shares made modest advances in volatile trade early Friday, as gains on Wall Street and in Shanghai supported financials such as HSBC Holdings Plc. and China Life Insurance Co. The Hang Seng Index rose 0.3% to 21,133.38, and the Hang Seng China Enterprises Index climbed 0.6% to 12,284.09. China's Shanghai Composite added 0.4% to 2,936.22, after official data showed an improvement in industrial production, retail sales and urban fixed investments in August, while bank lending was much higher than anticipated.

SSE Composite  2951.79  + 0.92. (08.32 AM IST)

Chinese stocks open 0.26% 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 2,917.19 points, down 0.26% or 7.69 points from the previous closing.

The Shenzhen Component Index on the smaller Shenzhen Stock Exchange opened 0.4% or 47.94 points lower at 11,839.08 points.

China's industrial output quickens pace of rise

China's industrial output rose 12.3% on year in August, up 1.5% from July in its fourth straight rise, the National Bureau of Statistics said Friday. The gain was wider than a 10.8% on-year gain in July and beat expectations for 12.0% rise, according to a Dow Jones Newswires survey. In other August data Friday, the consumer price index fell 1.2% on year, roughly in line with expectations for a 1.3% drop, while the producer price index was down 7.9%, matching the forecast in the Dow Jones poll. Retail sales rose 15.4% on year, the bureau said. Meanwhile, urban fixed-asset investment for the January-August period rose 33.0% on year. 

China bank lending shows surprise jump in August

Chinese banks made new loans worth 410.4 billion yuan ($60.1 billion) in August, way above market expectations of about 320 billion yuan reported by the state-run Shanghai Securities Journal, and also higher than the total loans of 355.9 billion yuan in July, according to central bank data released Friday. Total bank lending in the first eight months of 2009 rose to 8.15 trillion yuan, far higher than the 4.91 trillion yuan they disbursed in calendar year 2008. The central bank also said M2, a broad measure of money supply, accelerated 28.5% in August, compared with a 28.4% increase in July. 

BAIC to buy minority stake in Koenigsegg Group.

Shell push for local production of coal gasification equipment.

3 shareholders sell 291.5 mln shares in Lenovo.

Suning to set up logistics base in Chengdu.

CCB International to launch 1st RMB PE fund: report.

CNPC obtains US$30-bln credit line from CDB.

China Southern still seeking government capital.

China Communications Construction H1 profit hits RMB 3.03 bln.

China Overseas Land posts 218.8% rise in August property sales.

China Overseas Land buys land in Shanghai for RMB 7 bln.

China Resources Land's contracted sales revenue up 11% in Aug.

China's CPI down 1.2% in Aug.

China's PPI down 7.9% in Aug.

China's value-added industrial output up 12.3% in Aug.

China's urban fixed asset investment up 33% in Jan-Aug.

China's retail sales up 15.4% in Aug. 

Procter & Gamble Predicts Sales Will Recover in Fall

Procter & Gamble officials say they expect sales to begin rebounding this fall as the company cuts prices and adds new versions of its consumer products that emphasize value.

The company, considered a household spending bellwether, has been hurt in the recession as consumers have cut spending and turned to store brands and other cheaper products, so the positive news was welcomed by the markets. On Thursday, Procter & Gamble shares jumped $2.28, or 4.2 percent, to $56.04.

Executives told investors they expected the sale of Procter & Gamble's prescription drug businesses to increase earnings by 32 to 34 cents a share this fiscal year. They also said they projected organic sales growth of 1 to 4 percent for the quarter ending in December.

Organic sales, which are sales not related to acquisitions, have fallen the past two quarters. The company expects them to be flat or drop as much as 3 percent in the current quarter.

Procter & Gamble plans to cut prices on about 10 percent of its broad global portfolio and step up "value" pitches to consumers. Officials say they are cutting prices on Cheer brand laundry detergent; they have said they are also testing a low-cost version of their top-selling Tide.

Jon Moeller, the chief financial officer, said the company was not counting on better market conditions, but expected investments in innovation, marketing and pricing to help sales.

"We firmly believe we've made the right choices in the past year to deal with the global economic crisis, but we also know that we can and must deliver better overall results," Mr. Moeller said.

He said Procter & Gamble expected solid earnings growth for its second quarter ending in December, but did not provide any figures. Analysts surveyed by Thomson Reuters expected average growth of 97 cents a share.

The company stuck to a first-quarter estimate of 95 cents to $1.

Japan Revises Down Q2 GDP as Inventory Falls

Japan's economy grew a revised 0.6 percent in the three months to June, less than preliminary figures had shown but confirming that the economy crawled out of recession after a full year of sharp contraction.

The unexpected downward revision from a preliminary 0.9 percent rise was mostly due to falls in inventories, which analysts took as a positive sign for the world's No. 2 economy.

With the global economy on the mend, exports are likely to underpin a recovery in Japan in the near future.

But analysts warn that growth may slow again once a temporary boost from government stimulus fades early next year, meaning the Bank of Japan will keep interest rates near zero for a while to come.

"The revised data shows that the economy's rebound was too modest in comparison to its deep slump in preceding quarters. But it does not change the near-term picture because a bigger negative contribution from inventory is not necessarily a minus factor -- it indicates progress in inventory adjustments," said Yoshiki Shinke, a senior economist at Dai-ichi Life Research Institute.

"The economy is likely to recover through the end of 2009 and slow down the following year. Given that such problems as deflation and a wide output gap are unlikely to be solved in the near term, the Bank of Japan will be pressed to keep its easy monetary policy."

Economists polled by Reuters had expected revised data to confirm the preliminary reading of 0.9 percent quarterly GDP growth.

The revision translated into annualized growth of 2.3 percent, against the previous reading of a 3.7 percent expansion.

Japan joined Germany and France in pulling out of recession first among the G7 countries in the second quarter.

Still, some economists are worried that a recovery in the global economy may be weaker than many hope given that consumers in the United States and some European countries are burdened by debt and banks are still far from healthy.

Japan's economy bounced back in April-June after contracting for four straight quarters, the longest such spell on record, as exports of cars and machines plunged in the wake of the global economic crisis triggered by the collapse of Lehman Brothers last September.

Morgan Stanley's John Mack Plans To Step Down as CEO

Fed Will Be Ready to Tighten Monetary Policy: Kohn

Federal Reserve Vice Chairman Donald Kohn said Thursday the U.S. central bank was developing tools to remove its extremely loose monetary policy, but this exit would not happen any time soon.

"Any combination of these tools, in addition to the payment of interest on reserves, may prove very valuable when the time comes to tighten the stance of monetary policy," Kohn said in discussing a paper presented at the Brookings Institution.

"As the FOMC has said, that time is not likely to come for an extended period," he said, referring to the Fed's monetary policy-setting Federal Open Market Committee.

The paper, on the Fed's track record since the failure of investment bank Lehman Brothers this time last year, noted the Fed's massive expansion of its balance sheet would not lead to inflation due to its ability to pay interest on reserves that are held with it by commercial banks.

"Paying interest on reserve balances also has important benefits and will play a key role in our exit from unusually accommodative policies when the time comes," Kohn said.

Critics say the doubling in size of the Fed's balance sheet to around $2 trillion since last September will lead to higher prices when growth picks up and banks begin to lend out these excess reserves, fueling another credit bubble.

But the Fed argues that its ability to pay interest on reserves will break this linkage.

"Raising the interest paid on those balances should provide substantial leverage over other short-term market interest rates because banks generally should not be willing to lend reserves in the federal funds market at rates below what they could earn simply by holding reserve balances," Kohn said.

This position was supported in the paper by Columbia University economist Ricardo Reis.

However, he did caution that the increase in the balance sheet was not without risks, and warned that if this led to credit losses at the Fed, this could force it to go cap in hand to the U.S. government, compromising its policy independence.

Kohn said this outcome "seems extremely remote" and he argued that the Fed would continue to earn substantial net profits on its balance sheet for the next few years in all but the most distant scenarios.

"Short-term interest rates would have to rise very high very quickly for interest on reserves to outweigh the interest we are earning on our longer-term asset portfolio. With the global economy quite weak and inflation low, a large and rapid rise seems quite improbable," Kohn said.

Reis also argued that the Fed could target higher inflation in order to lean against the risk that the severe U.S. recession pushes the country into a Japan-style deflation, where falling prices inflicted a decade of stagnation.

Kohn said this might work in the perfect environment of an economic model, but was a bad idea in the real world.

"A policy of achieving "temporarily" higher inflation over the medium term would run the risk of altering inflation expectations beyond the horizon that is desirable. Were that to happen, the costs of bringing expectations back to their current anchored state might be quite high," he said.

"The anchoring of inflation expectations has been a hard-won achievement of monetary policy over the past few decades, and we should not take this stability for granted," Kohn added.
 
INVESTMENT VIEW
Oil and Gas-Will Cairn's Mangala turn out to be a game changer? 
 
Over the lifetime of the project, Royalties of $ 7.6 bn will accrue to the State of Rajasthan and profit petroleum of $ 9.5 bn will accrue to the GOI, assuming crude oil price of a mere $ 50 a bbl. More significantly oil and natural gas produced in Barmer will hook-up with existing crude pipelines of IOC in Gujarat, and gas pipelines of Gail and GSPC. Suddenly, the most prosperous State in India-Gujarat, will be sitting atop an oil and gas gusher changing the investment prognosis for the State dramatically.
 

Last week Cairn India started production from the world class Mangala field-the largest of the 25 discoveries made in the Barmer Basin Block RJ-ON-90/1. Cairn India, the operator of the Rajasthan block, holds a 70 per cent participating interest with Ongc it's JV partner holding the balance 30 per cent. The JV has invested approximately US $ 2 bn in the Rajasthan project and has plans to invest a further US $ 1.8 bn by 2011, making it one of the largest onshore oil and gas projects in India.

 

The Rajasthan project includes:

 

-Mangala field-largest onshore discovery in India for more than 20 years.

 

-Mangala, Bhagyam and Aishwarya (MBA) fields have recoverable oil of nearly 1 bn barrels which includes proven plus probable gross reserves and resources of 685 mn bbls of oil equivalent (mmboe) with a further 300 mmboe or more of ehanced oil recovery  (EOR) potential.

 

-Initial volumes of crude oil will be produced through the first processing train which has a capacity of 30,000 barrels and production ramp up will continue until all four processing trains with a total capacity of 205,000 bpd are built and installed by 2011.

 

-The MBA fields once on peak plateau production of 175,000 bopd will contribute more than 20 per cent of India's domestic crude production.

 

-The total acreage under the long term contract is 3111 sq kms spread across the districts of Barmer and Jalore.

 

-The Mangala Processing Terminal will act as the hub for processing crude oil from all the Rajasthan fields.

 

-16,000 workers are currently involved in the construction activities-5000 on the pipeline and 11000 on the MPT.

 

-The World's longest heated and insulated crude oil pipeline is being built by Cairn from the MPT to the Gujarat coast with a length of 670 kms-giving access to more than 75 per cent of the refining capacity-the first phase targeted for completion by December 2009.

 

-Cairn has deployed highly mobile custom built rapid drilling rigs, with compact lay-out, which has resulted in savings in land, infrastructure and drilling costs.

 

-Use of latest drilling and completion technology will create high rate production wells with capacity of up to 10,000 bpd.

 

-The GOI has nominated MRPL, IOC and HPCL for the initial offtake quantities from the Rajasthan block for the period 2009-10 and 2010-11 and the commercial terms and pricing negotiations have been concluded with IOC-MRPL. 

-Over the lifetime of the project, Royalties of $ 7.6 bn will accrue to the State of Rajasthan and profit petroleum of $ 9.5 bn will accrue to the GOI, assuming crude oil price of a mere $ 50 a bbl.
 

(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