Market Outlook 30th Oct 2009

INTRADAY calls for 30th Oct 2009
+ve Script & Sector : Pharma,Lupin,Cipla,Escorts
BUY Ranbaxy-391 for 422+ with sl 384
BUY BOB-512 for 525+ with sl 506
BUY Dr.reddy-1016 for 1048-53+ with sl 1005

BREAKOUT
BUY HPCL-347 for 368+ with sl 339

EXPECTED BREAKOUT
BUY GlenMark-216 above 220 for 251+ with sl 210

POSITIONAL
BUY Sunpharma-1403 for 1495-1533+ with sl 1380

 

 

Strong & Weak  futures  
This is list of 10 strong futures: Balrampur Chini, Crompton Greaves, Dr Reddy, Polaris, Wipro, PTC, Dabur, GTL Infra, Colpal & ITC.  And this is list of 10 Weak futures: IOC, EKC, GMR Infra, RCom, RNRL, Punj Lloyd, MLL, Rel Capital, Unitech & JP Hydro.
 Nifty is in Down trend  
 

NIFTY FUTURES (F & O):
 
Above 4789 level, expect short covering up to 4816-4818 zone and thereafter expect a jump up to 4844-4846 zone by non-stop.

Support at 4767-4769 zone. Below this zone, selling may continue up to 4765 level and thereafter slide may continue up to 4751 level by non-stop.

Break below 4722-4724 zone, can create panic up to 4694-4696 zone by non-stop.

On Positive Side, cross above 4889-4891 zone can take it up to 4917-4919 zone by non-stop. Supply expected at around this zone and have caution.
 
Short-Term Investors:
 
1 Week: Bearish with a SL of 4927.00. Target at 4697.80.
1 Month: Bearish with a SL of 5734.40. Target at 4661.45.

3 Months: Bearish with a SL of 6190.00. Target at 3900.00.
 
BSE SENSEX:
 
 
Sell with a SL of 16182.09. Target at 15742.13. 
Short-Term Investors:  
1 Week: Bearish with a SL of 16606.95. Target at 15720.73.
1 Month: Bearish with a SL of 18381.96. Target at 14937.03.

3 Months: Bearish with a SL of 17361.47. Target at 12425.52.

1 Year: Bullish with a SL of 15197.60. Target at 18289.88.
 

POSITIONAL BUY:
Buy TECHTRAN POLYLEN (BSE Cash & BSE Code:523455) 
Buy with a Stop Loss of 19.90. Above 23.30, it will zoom.
 

Today: May hold on gains.

1 Week: Bearish, surprisingly going up.

1 Month: Bullish, as per current market conditions.

3 Months: Bearish, surprisingly going up.

1 Year: Bullish, as per current market conditions.
 
Buy SBEC INTL (BSE Cash & BSE Code: 532102) 
Buy with a Stop Loss of 13.46. Above 18.30, it will zoom.
 

1 Week: Bullish, as per current market conditions.

1 Month: Bullish, as per current market conditions.

3 Months: Bearish, surprisingly going up.

1 Year: Bullish, as per current market conditions.
 

 

SPOT LEVELS

	4750.55	( -1.57 %)	-75.60
		1	2	3
Resistance		4804.97	4859.38	4892.67
Support		4717.27	4683.98	4629.57

	16052.72		( -1.42 %)	-230.77
			1	2	3
Resistance			16213.26	16373.81	16483.52
Support			15943.00	15833.29	15672.74

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	29-Oct-2009	2994.99	5541.66	-2546.67

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	29-Oct-2009	2653.79	1676.73	977.06

 

Interesting findings on web:
U.S. stocks rallied, sending benchmark indexes to their biggest advance since July, after the economy returned to growth following the worst contraction in seven decades. Treasuries dropped and the dollar and yen weakened, while commodities surged.

The major averages gave the news a warm reception: The Dow Jones Industrial Average added 199.89 points, or 2.1%, to 9962.58, and the S&P 500 rose 23.48 points, or 2.3%, to 1066.11. The Nasdaq advanced 37.94 points, or 1.8%, to 2097.55.

RUSSELL580.2213.86+2.45%

TRAN3703.6563.30+1.74%

UTIL369.933.88+1.06%

S&P 100496.059.55+1.96%

S&P 400678.2314.86+2.24%

NYSE6955.31189.62+2.8%

NAS 1001711.2729.21

Stocks on Wall Street rallied sharply after the US economy showed a return to growth, giving the blue chip index its biggest one-day gain in three months.

The government's first estimate of U.S. gross domestic product showed the economy expanded at an annual rate of 3.5 percent in the third quarter, suggesting it was emerging from the worst recession in 70 years. The quarter of growth was the first after more than a year of contraction in GDP.

The government's first estimate on third-quarter gross domestic product rose at a seasonally adjusted 3.5% annual rate in July through September. This compared with consensus predictions of a 3.2% rise.

The growth was driven by consumer spending, which rose 3.4% in the third quarter.

"The market sold off Wednesday in expectation of a lower number and today it got a positive surprise," said Karl Mills, president and chief investment officer at Jurika Mills & Keifer.

"This shows the economy is continuing to recover and heal," he said. "It's just not clear what that recovery is going to look like."

"It was a little better than expected, but you have to wonder how much of the growth was pulled from another quarter, with the stimulus driving so much of it," said Drew Kanaly, chairman and CEO at Kanaly Trust.

"As you look to quarters down the road, you have to wonder how sustainable this level of GDP is," he said. "Can the government take away all the stimulus and make that handoff to the private sector?"

"The expansion in Q3 GDP (3.5%) shows we have clearly begun to emerge from the trough," Bart van Ark, chief economist of The Conference Board, wrote in a note following the report. "But there's still a long way to go," he said, "and we still don't know enough about the sustainability of these recovery signals."

"The fourth quarter will be the Waterloo of the bears," said E. William Stone, who oversees $102 billion as chief investment strategist at PNC Wealth Management in Philadelphia. "We are in economic recovery both in the U.S. and globally, so you will eventually see revenue growth because you are seeing the recovery hold."

"The stock rally is not over yet," said Jeffrey Kleintop, who helps oversee about $247 billion as chief market strategist at LPL Financial in Boston. "The stock market can celebrate. This news is an important confidence boost, in particular to individual investors."

The return to growth also fueled speculation that the Federal Reserve will begin to discuss lifting its benchmark interest rate from a record low range near 0 percent and further unwind other programs meant to stimulate the economy.

European Central Bank council member Axel Weber signaled the bank may start to withdraw its emergency stimulus measures next year. The Fed has already announced a phase-out of some of its programs and completed its $300 billion Treasury purchase program today. Norway and Australia have started to raise interest rates.

Treasury Secretary Timothy Geithner told a congressional committee today that the recession remains "alive and acute" for struggling homeowners and the unemployed.

"It's a tug-of-war," said Michael Binger, a Minneapolis- based fund manager at Thrivent Asset Management, which oversees about $60 billion. "We've had a stronger-than-expected GDP number and corporations are running more efficiently. But I don't see the government reversing the stimulus measures or the Fed changing language or indicating higher interest rates any time soon. The unemployment rate is still very high."

Earnings-per-share have exceeded the average analyst estimates at 81 percent of the companies in the S&P 500 that posted third-quarter results so far, which would be a record proportion for a full quarter, according to Bloomberg data going back to 1993. Still, profits have decreased 23 percent on average for the 296 companies that reported since Oct. 7.

U.S. stocks also gained after the number of Americans collecting unemployment insurance fell more than forecast to the lowest level in seven months. The number of people receiving jobless benefits declined by 148,000 to 5.8 million in the week ended Oct. 17, the lowest since March 21 and biggest weekly drop since July, Labor Department figures showed.

All 10 industry groups in the S&P 500 climbed at least 0.6 percent. Indexes of raw-material producers and energy companies rose at least 2.4 percent as oil, gold and industrial metals gained after the GDP data.

The rally in global stocks has failed to convince investors and analysts that it's time to take on more risk or dispel their concerns about U.S. economic policies and its banking system.

Only 31 percent of respondents to a poll of investors and analysts who are Bloomberg subscribers in the U.S., Europe and Asia see investment opportunities, down from 35 percent in the previous survey in July. Almost 40 percent in the latest quarterly survey, the Bloomberg Global Poll, say they are still hunkering down. U.S. investors are even more cautious, with more than 50 percent saying they are in a defensive crouch.

The U.S. economy faces "serious bumps" ahead that are likely to slow the pace of growth, Nobel prize-winning economist Joseph Stiglitz said. The economy won't be expanding quickly enough to reduce unemployment, Stiglitz told a press conference in Beijing today. The economy will enter "a very gloomy period" of high unemployment, economist David Malpass, president of Encima Global in New York, told Bloomberg Radio.

The U.S. unemployment rate reached a 26-year high of 9.8 percent in September.

"GDP numbers were good and will stimulate more investor interest in stocks," said Randy Bateman, who oversees $13 billion as chief investment officer at Huntington Asset Advisors in Columbus, Ohio. "We can't declare victory yet. Maybe it was more pronounced because of the success of cash-for-clunkers program. I believe we are not going to double dip, but maybe we'll see a lesser number in the fourth quarter."

Morgan Stanley said the global stock market rally, which resembles the bull run between 2003 and 2007, will end as government spending slows after so-called easy money boosted asset prices.

"Such echo rallies are never as big as the original one and we will see it fading away," Ruchir Sharma, 35, who oversees $25 billion in emerging-market stocks at Morgan Stanley, said in an interview in Mumbai. "The rally will end as the effects of the stimulus begin to fade and the credit bubble caused by easy money disappears."

The GDP report served as more affirmation of investors' recent bets on the recovery, which fueled a sharp advance from the 12-year lows of early March.

"We see today that the optimism about corporate earnings reports is just being confirmed in the GDP report," said Kenneth Kamen, president of Mercadien Asset Management in Hamilton, New Jersey. "We are starting to see the economy really recover and GDP picking up."

Even with the optimism inspired by the latest GDP report, other money managers said there was still reason to be cautious as the recovery might prove bumpy.

"We are in the early stages of a recovery process," said Les Satlow, portfolio manager at Cabot Money Management in Salem, Massachusetts. "It's a very good thing that GDP is growing quarter-on-quarter, but if this is a V-shaped recovery we are still well below the top left of the V."

"I think it obviously is showing that the monetary policy has worked, and some of the government programs -- tax credits and clunkers -- have basically pulled the economy out of recession," says Peter Cardillo, chief market economist at Avalon Partners. But the consumer will have to assist in the second wave for growth to continue, and it hasn't been a consumer-led recovery, says Cardillo, "so the question mark is how growth will shape up in 2010."

Duessel and Cardillo both predict economic growth will likely be stronger than expected going into next year. Duessel believes this is in part because the consumer -- particularly of the wealthier variety -- has "the pent-up desire to spend." "One of the things I'd be concerned about is a large part of this is 'if we prime the pump and get consumers spending again, that's going to solve our problems,'" says Doug Roberts, chief investment strategist at ChannelCapitalResearch.com. "But is that really sustainable in the long term? -- simply because the consumer is highly leveraged, he's spent quite a bit, and we have demographic arguments of an aging population indicating reduced consumer spending going into the future.

"So even if you're able to do it and force the issue for the next several quarters or next several years, what are you going to do after that?" asks Roberts. "And that's something I don't think we've really addressed -- but at the same time, over the next several quarters or years this could remain workable."

In other data, weekly jobless claims were 5,000 more than expected, at 530,000, down by 1,000 from the week prior. Continuing claims were less than expected, however, at 5.79 million, down from 5.94 million and better than expectations for 5.9 million.

Government stimulus programs including the popular Cash for Clunkers auto rebates and tax credits for first-time home buyers bolstered the economy. Once the government's stimulus measures run their course, the economy could run afoul of lingering problems such as high unemployment and weak consumer spending.

"I don't think that at this point in the rebound that the economy would be self-sustainable," said Jason D. Pride, director of research at Haverford Investments in Philadelphia. "The only way to have effective sustained economic growth is to have job growth, but it tends to come later."

Analysts say the recovery is likely to be bumpy as consumers try to pay down debt and credit for small businesses remains tight.

But such concerns were pushed aside Thursday.

With 302 companies, or 60% of the S&P 500 having already reported results, profits are on track to have fallen 17.9% from a year ago, according to the latest results from Thomson Reuters.

Gains were broad based, with 29 of 30 Dow issues rising, led by Boeing (BA, Fortune 500), Chevron (CVX, Fortune 500), Caterpillar (CAT, Fortune 500), Hewlett-Packard (HPQ, Fortune 500), IBM (IBM, Fortune 500) JPMorgan Chase (JPM, Fortune 500), 3M (MMM, Fortune 500), Travelers (TRV, Fortune 500), Wal-Mart Stores (WMT, Fortune 500) and Procter & Gamble (PG, Fortune 500), which reported a better-than-expected profit.

Equity gains were widespread, with big manufacturers, technology, financials, energy and the materials sectors all benefiting. The S&P 500 and the Nasdaq halted a four-day rout.

Sentiment was also boosted by stronger-than-expected quarterly results from consumer product heavyweights Procter & Gamble Co (PG.N) and Colgate-Palmolive Co (CL.N).

Shares of Dow component P&G, which also raised its full-year revenue outlook, gained 4 percent to $59.54, while Colgate-Palmolive shares rose 1.6 percent to $78.94.

Caterpillar Inc., Alcoa Inc. and American Express Co. jumped at least 5.1 percent after the Commerce Department said gross domestic product grew at a 3.5 percent pace from July through September after shrinking for four straight quarters. Motorola Inc., Procter & Gamble Co., Newmont Mining Corp. and Kellogg Co. climbed on better-than-estimated earnings.

Shares of aircraft maker Boeing Co (BA.N) rose 3.4 percent to $48.81.

Merck [MRK  31.24    -0.81  (-2.53%)   ] was the only decliner on the Dow today, down 2.3 percent.

Motorola surged 9.8 percent to $8.74. The biggest U.S. mobile-phone maker reported third-quarter profit excluding some costs of 2 cents, exceeding the average estimate for a breakeven quarter in a Bloomberg survey. Motorola cut jobs and production costs to offset slumping handset sales.

Kellogg rose 2.8 percent to $51.38. The largest U.S. maker of breakfast cereal said it had third-quarter profit of 94 cents a share. The company was forecast by analysts to earn 85 cents, based on the average estimate from a Bloomberg survey. Symantec Corp. jumped 13 percent to $17.74. The biggest maker of security software reported second-quarter profit that topped analysts' estimates after winning back customers from competitors and adding new business users.

Genworth Financial Inc. jumped 17 percent and led insurance companies 5.4 percent higher, the biggest gain among 24 S&P 500 industries. The life insurer and mortgage guarantor was raised to "buy" from "neutral" by Bank of America Corp.

MetLife Inc. gained 7.9 percent to $36.84 ahead of its earnings report. The biggest U.S. life insurer reported third- quarter operating profit of 87 cents a share after the close, beating the average analyst estimate by 1 cent. Lincoln National Corp., the bailed-out insurer, climbed 14 percent to $25.34 after its first profit in a year topped estimates.

Financial shares surged 4.3 percent for the biggest gain in the S&P 500 among 10 industries. The group of 79 banks, insurers and investment firms had slumped 7.8 percent in the four days through yesterday, compared with a 4.6 percent drop of the U.S. equity benchmark.

Bank of America Corp., JPMorgan Chase & Co., Goldman Sachs Group Inc., Citigroup Inc. and Morgan Stanley added at least 3.7 percent each.

Dow components American Express(AXP Quote) up by 5.1%.

Newmont Mining added 3.6 percent to $43. The largest U.S. gold producer reported third-quarter profit of 79 cents a share on higher bullion prices and lower production costs. The results topped the 55-cent per-share average estimate of 17 analysts.

Exxon Mobil Corp. rose 0.2 percent to $73.96, after falling as much as 2.4 percent. The world's biggest company by market value reported third-quarter net income of 98 cents a share, 4 cents lower than the average of 15 analyst estimates compiled by Bloomberg. Demand slumped for fuels to run cars, trucks, factories and airplanes.

First Solar Inc. tumbled 17 percent to $126.47. The world's largest maker of thin-film solar power modules reported sales of $480.9 million in the third quarter, trailing the average analyst estimate by 9.3 percent, according to Bloomberg data.

iPhone maker Apple Inc (AAPL.O) rose 2.1 percent to $196.35 on Nasdaq, where Symantec Corp (SYMC.O) jumped 12.8 percent to $17.74, a day after the business software maker posted a quarterly profit that eclipsed Wall Street's forecasts.

Several brokerages raised price targets on Symantec.

Higher oil prices contributed to the energy sector's gains, with the S&P energy index .GSPE up 2.4 percent. Chevron Corp (CVX.N) gained 2.7 percent to $77.95 ahead of its quarterly results on Friday.

Exxon Mobil Corp (XOM.N) edged up 0.2 percent to $73.96, but the stock spent most of the session in negative territory following the company's report of a third-quarter profit below expectations.

Reports on personal income and spending, consumer sentiment and manufacturing are all due Friday morning.

Dow component Chevron (CVX, Fortune 500), Duke Energy (DUK, Fortune 500), Alcatel-Lucent (ALA) and Sony (SNE) are among the corporations reporting quarterly results in the morning.

Friday is the last trading day of October: As of today's close, the Dow is up 2.6 percent for the month, the S&P is up 0.9 percent and the Nasdaq is down 1.2 percent.

The VIX, the benchmark for U.S. stock options that is known as Wall Street's "fear gauge," tumbled 11 percent to 24.76 in its steepest slide since February amid reduced demand for protection against declines in equities.

Oil,Gold & Currencies:

U.S. light crude oil for December delivery rallied $2.44 to settle at $79.87 a barrel on the New York Mercantile Exchange, a gain of 3%.

COMEX gold for December delivery rallied $16.60 to settle at $1,047.10 an ounce.

The dollar fell versus the euro, resuming its slide after a few up days and moving closer to a 14-month low hit last week. The greenback gained versus the yen.

Oct. 30 (Bloomberg) -- The dollar headed for a fourth monthly drop against the euro, its longest stretch since 2004, as the U.S.'s return to growth renewed optimism a global recovery will quicken, aiding demand for higher-yielding assets.

The yen was little changed against the euro, set for the biggest monthly slide since May, after a government report showed Japan's jobless rate unexpectedly dropped for a second month, reducing demand for the relative safety of the Japanese currency. Australia's dollar is rising for a record ninth month as global stocks rallied and prices climbed for commodities that comprise more than half the South Pacific nation's exports.

"The recovery is still at work and the liquidity is ample," said Tomohiro Nishida, a dealer in Tokyo at Chuo Mitsui Trust & Banking Co., a unit of Japan's seventh-largest banking group. "You can't stop money flying into higher-yielding currencies at the expense of funding currencies."

The dollar traded at $1.4832 per euro at 9:47 a.m. in Tokyo from $1.4822 yesterday in New York. The yen was at 135.46 per euro from 135.51 yesterday. The greenback bought 91.32 yen from 91.41 yen.

Australia's currency bought 91.51 U.S. cents from 91.50 cents in New York yesterday and is set to gain 3.7 percent in October.

The MSCI Asia Pacific Index of regional shares advanced 0.8 percent today and the Nikkei 225 Stock Average gained 1.1 percent. The Standard & Poor's 500 Index increased 2.3 percent yesterday and crude oil for December delivery increased 3.8 percent to $79.87 a barrel.

U.S. Recovering

The dollar is poised for the longest stretch of monthly losses against the euro since 2004 as a Bloomberg News survey of economists showed that the Institute for Supply Management- Chicago Inc's business barometer probably rose to 49.0 in October from 46.1 in the previous month. The data is due today.

Adding to signs the world's largest economy is recovering, the Institute for Supply Management's factory gauge also rose to 53.0 in October from 52.6 in the previous month, according to a separate Bloomberg News survey before the release on Nov. 3. Fifty is the dividing line between expansion and contraction.

The Commerce Department reported yesterday U.S. gross domestic product grew at a 3.5 percent annual pace in the third quarter, after shrinking in the previous four periods. The median forecast of 79 economists in a Bloomberg survey was for an expansion of 3.2 percent.

Japan Adds Jobs

The yen fell against 13 of the 16 most-active currencies as the unemployment rate declined to 5.3 percent from 5.5 percent in August. The median estimate of 29 economists surveyed by Bloomberg was for the rate to increase to 5.6 percent.

"Good data from Japan will strengthen the risk appetite that resurfaced on strong U.S. data," said Takashi Kudo, director of foreign-exchange sales in Tokyo at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp.

Separate Japanese government figures showed the job-to- applicant ratio, a leading indicator of employment trends, improved for the first time in more than two years. The ratio rose to 0.43 last month from a record low of 0.42 in August, meaning there are 43 jobs for 100 job seekers.

Euro Versus Pound

The euro may rise for the first time in four days against the pound on speculation a German report will show retail sales rebounded in September, adding to signs the recession in the 16- nation region is over.

Retail sales in Germany, Europe's largest economy, rose 1 percent in September after a revised 2.4 percent decline in August, according to a Bloomberg News survey of economists. The Federal Statistics Office releases the report at 8 a.m. in Weisbaden today.

"The recovery in the euro-zone economy appears to be on a solid footing," said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. "The bias is for the euro to rise."

European Central Bank council member Axel Weber yesterday signaled policy makers may start to withdraw emergency stimulus measures next year by scaling back the bank's "very long-term" loans to banks. The comments are the first to indicate the ECB is getting closer to enacting its exit strategy.

The euro traded at 89.63 pence from 89.58 pence in New York yesterday, and was set for its first monthly decline versus the pound since June.

Bonds:

Treasury prices tumbled, raising the yield on the 10-year note to 3.49% from 3.41% Wednesday. Treasury prices and yields move in opposite directions.

What to expect:

FRIDAY: Personal income and spending; consumer sentiment; Earnings from Chevron

Obama's review of Afghan war strategy nears end 

House takes another step on healthcare reform

JP Morgan raised concerns about Galleon in 2001: report

Lawmakers close in on extending housing support

As many as 5 million Americans infected with H1N1

Iran proposes big changes to draft atom deal: report 

U.S. envoy back in Jerusalem to pursue peace talks

Resurgent Chip, LCD Sales Boost Samsung Elec Margins

Stocks Unlikely to be Spooked on Halloween Eve

Japan Deflation Pressure Builds, Jobless Falls

Health Bill Hikes Taxes for Rich, but Could Cut Deficit

Obama's Too-Big-to-Fail Plan Attacked in Congress

China Economy Gaining Momentum, Can Meet 8% Growth Target, Li Keqiang Says

U.S. economy stabilizing, still difficulties: Geithner

U.S. Treasury Secretary Timothy Geithner on Thursday said third quarter growth figures showed the U.S. economy was stabilizing but it was in the early phase of recovery and difficulties still lay ahead.

The U.S. government must keep reinforcing economic growth as risks of a credit crunch remain, Geithner said during a seminar at the Economic Club of Chicago.

He added that there was broad support for the overhaul of the U.S. financial regulatory system and it was on track to achieve major reforms.

Fed should lose AIG-style bailout powers: Geithner

The Federal Reserve should lose its authority to bail out big, failing financial firms like AIG and Bear Stearns under proposed reforms aimed at limiting the collateral damage from such failures, U.S. Treasury Secretary Timothy Geithner said on Thursday.

Geithner, in testimony to the U.S. House of Representatives Financial Services Committee, said the Fed should keep its ability to act as an emergency lender of last resort, but only to solvent firms in times of severe stress in financial markets -- with Treasury consent.

"Any firm that puts itself in a position where it cannot survive without special assistance from the government must face the consequences of failure," Geithner said. "The proposed resolution authority would not authorize the government to provide open-bank assistance to any failing firm."

Geithner said a bill by the Financial Services Committee's chairman, Representative Barney Frank, meets the tests for key elements of a resolution authority that the Obama administration would like to see passed.

It is a "comprehensive coordinated answer to the moral hazard problem" and does not provide any implicit guarantees for financial institutions, he said.

"We cannot put taxpayers in the position of paying for the losses of large private financial institutions," Geithner said. "We must build a system in which individual firms, no matter how large or important, can fail without risking catastrophic damage to the economy."

Geithner said large failing firms should be put into a receivership managed by the Federal Deposit Insurance Corp that would seek to "unwind, dismantle, sell or liquidate the firm in an orderly way" where losses would be borne by shareholders and creditors of the firms.

The costs of such shutdowns would be borne by other large financial firms, imposed afterward, Geithner said. This would eliminate a standing insurance fund that creates expectations that the government would step in to protect creditors and shareholders.

Regulators also must impose tougher capital and liquidity standards on large firms that take on more risk, Geithner said, to reduce the probability of a larger firm experiencing financial distress.

But Geithner said there would not be a set list of large firms held to higher standards, adding that the government did not want to provide a false impression that such firms would be protected from failure by the government in times of stress.

Fed Raises AIG Asset Value, Reversing Possible Losses

The Federal Reserve increased its estimated value of investment portfolios acquired in the rescue of American International Group Inc., reversing potential losses to taxpayers.

The net holdings of three corporations set up by the Fed for the mortgages and securities it took on in bailing out AIG and Bear Stearns Cos. rose by $4.35 billion, or 7.1 percent, to $65.5 billion, the Fed said today in a quarterly revaluation of the assets. The Bear Stearns investments fell by $116 million to $26.3 billion, while the two AIG portfolios gained $4.46 billion to $39.2 billion, the central bank said.

The central bank has said it doesn't expect taxpayer losses on the two bailouts in part because the Fed has as long as 10 years to sell the assets. In July, Fed Chairman Ben S. Bernanke said that the former AIG securities were "under water."

Loans and interest due to the Fed on the deals totaled $65.1 billion, the Fed said today. The figures reflect values of assets as of Sept. 30.

The Fed released the valuations as part of the weekly calculation of its balance sheet, which shrank by $39.6 billion, or 1.8 percent, as banks and corporations reduced reliance on the Fed as a lending backstop. The Fed's assets fell to $2.16 trillion in the week ended yesterday, the central bank said.

Credit extended through the Term Auction Facility, which sells cash loans to commercial banks, dropped $16.2 billion to $139.2 billion. The face value of commercial paper held by the Fed under an emergency program begun in October 2008 tumbled to $14.6 billion from $35.1 billion on Oct. 21.

Lending Dropped

Discount-window lending to commercial banks dropped to $22.5 billion from $23.6 billion the previous week. Currency swaps with other central banks declined $8.71 billion to $32.9 billion.

While the Fed completed its Treasuries-purchase program today, the central bank is still buying housing debt through March as part of efforts to expand credit and revive the economy. The balance sheet may expand to $2.5 trillion next year, New York Fed President William Dudley said Oct. 5. Fed policy makers next meet Nov. 3-4 in Washington.

Mortgage securities held by the Fed declined by $2.8 billion to $774.1 billion, while Treasury-bond holdings rose by $1.08 billion to $774.6 billion. Federal agency debt purchased by the Fed rose $1.76 billion to $141.6 billion.

Planned Purchases

Policy makers said Sept. 23 they will complete the Fed's planned $1.25 trillion in purchases of mortgage securities and extended the end-date of the program to March from December. They kept the benchmark interest rate in a range of zero to 0.25 percent and repeated that rates will stay low for an "extended period."

The Fed's loans to a program providing liquidity to the asset-backed commercial paper market and money-market funds stood at zero for a third week. It's one of four Fed emergency programs to show a zero balance, including two facilities that lend cash and securities to bond dealers. Another that was designed to aid money-market funds is set to expire tomorrow.

M2 money supply rose by $26.4 billion in the week ended Oct. 19, the Fed said. That left M2 growing at an annual rate of 6.9 percent for the past 52 weeks, above the target of 5 percent the Fed once set for maximum growth. The Fed no longer has a formal target.

The Fed reports two measures of the money supply each week. M1 includes all currency held by consumers and companies for spending, money held in checking accounts and travelers checks. M2, the more widely followed, adds savings and private holdings in money market mutual funds.

For the latest reporting week, M1 rose by $12 billion, and over the past 52 weeks, M1 rose 16.1 percent. The Fed no longer publishes figures for M3.

Asia:

Asian stocks advanced, paring the MSCI Asia Pacific Index's first monthly decline since February, as Japan's jobless rate unexpectedly dropped and the U.S. economy grew faster than economists expected.

Sony Corp., which makes the PlayStation game console, gained 3 percent in Tokyo. Komatsu Ltd., the world's second- biggest maker of construction equipment, advanced 3.3 percent, even after its first-half net income plunged. Rio Tinto Group, the world's third-biggest mining company, rose 4 percent in Sydney as commodity prices increased.

The MSCI Asia Pacific Index added 1.1 percent to 115.97 as of 10:51 a.m. in Tokyo, paring its drop this week to 3 percent. The gauge has lost 1.7 percent in October on concern governments will start withdrawing measures enacted to revive global growth. Australia this month became the first Group of 20 nation to raise interest rates amid signs of strength in its economy.

"There's a sigh of relief," said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. in Melbourne. "The Japan data gives credence to the breadth of the recovery, that it's not just occurring in the developing economies, and that's very important for the sustainability of it."

Japan's Nikkei 225 Stock Average rose 1.2 percent. The unemployment rate declined to 5.3 percent from 5.5 percent in August, the statistics bureau said today in Tokyo. The median estimate of 29 economists surveyed by Bloomberg was for the rate to increase to 5.6 percent.

U.S. Growth

South Korea's Kospi Index added 0.5 percent. Australia's S&P/ASX 200 Index increased 1.3 percent, while New Zealand's NZX 50 Index gained 0.5 percent.

Futures on the S&P 500 lost 0.2 percent. The gauge jumped 2.3 percent yesterday, the largest advance since July 23, as the U.S. government said gross domestic product grew at a 3.5 percent pace from July through September. The growth, which followed four quarters of contraction, topped the median estimate of 3.2 percent in a Bloomberg survey of economists.

Sony gained 3 percent to 2,790 yen on hopes the weaker yen will raise the value of sales generated overseas in local terms for Japanese companies. The yen depreciated to 91.58, compared with 90.39 against the dollar at the close of stock trading in Tokyo yesterday. Against the euro, Japan's currency weakened to 135.92 from 133.14.

"I see many positive surprises and many companies are likely to raise profit forecasts," said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. "A gradual recovery will continue in the October-December period."

Oil, Metals

Panasonic Corp., Japan's biggest maker of home appliances, added 1.9 percent to 1,278 yen. Komatsu advanced 3.3 percent to 1,803 yen.

The MSCI Asia Pacific Index has climbed 64 percent from a more than five-year low on March 9, outpacing gains of more than 50 percent by the Standard & Poor's 500 Index and Europe's Dow Jones Stoxx 600 Index. Stocks in the MSCI index are valued at 22 times estimated earnings, compared with 17 times for the S&P and 15 times for the Stoxx 600.

Rio Tinto Group, the world's third- biggest mining company, rose 4 percent to A$63.40. BHP Billiton Ltd., the world's largest mining company, gained 0.9 percent to A$37.48.

Raw-material producers accounted for 20 percent of the MSCI Asia Pacific Index's advance today. The London Metals Index, a measure of six metals including copper and zinc, rallied 3.5 percent, the largest advance in three weeks. Crude oil climbed 3.1 percent to $79.87 a barrel in New York yesterday.

Nintendo Co., the world's largest maker of video-game players, fell 2.4 percent to 23,470 yen after slashing its full- year net income forecast on slumping sales of its Wii console.

Net income will fall to 230 billion yen ($2.5 billion) in the year to March 2010, the company said. The projected profit, the first annual drop in six years, missed the 270 billion yen median of 23 analyst estimates compiled by Bloomberg. 

Nikkei 225 10,015.28     +124.18 ( +1.26%). (08.06 AM IST).

HSI 21813.43 +548.44 +2.58%. (08.07 AM IST).

SSE Composite 2960.47 3000.04 3017.14 2983.93 1.34. (08.08 AM IST).

Rupee:

The partially convertible rupee INR=IN closed at 47.21/22 per dollar on yesterday, stronger than its previous close of 47.34/35.

India:

Sensex gainers were Mahindra & Mahindra (3.62%), ONGC (1.61%), Sun Pharmaceuticals (1.47%), Hindustan Unilever (0.83%) and HDFC (0.82%).

DLF (-7.33%), Reliance Communications (-7.09%), Jaiprakash Associates (-4.52%), ICICI Bank (-4.07%) and BHEL (-3.64%) ended with losses.

Market breadth was negative on the BSE with 1860 declines and 818 advances.

The Sensex tumbled 4.34% and Nifty lost 4.7% in October series.

In the telecom space, Reliance Communication plunged 38%. Idea Cellular was down 27.5% and Bharti Airtel down 25.5%. The BSE Realty Index was down 14%.

In largecaps, Grasim tanked 24.5%. Suzlon Energy was down 22% and Reliance Capital down 20.5%.

However, the FMCG Index rose 10% and Healthcare Index was up 7.8%. ITC was up 11%, Jindal Steel up 9% and HUL up 8.5%.

In the pharma space, Cipla gained 16% and Sun Pharma went up 14.5%.

Punj Lloyd declined 22% and Jaiprakash Associates was down 11% post disappointing results.

Among the broader indices, BSE Small Cap Index was down 3.7% and CNX Midcap Index down 0.25%. Aptech tumbled 33%.

A surge in inflation - it rose 1.51% in the year through 17 October 2009, higher than previous week's annual rise of 1.21% - kept investors on the defensive.

Among Sensex stocks, only 8 stocks managed to sign off on a positive note.

Nifty stocks Ranbaxy Laboratories (2.9%), BPCL (2.5%), GAIL India (1.8%) and Idea Cellular (1%) closed on a firm note.

In straight four days of hectic selling, the Sensex slid below 16,000 level during intra day today but just managed to regain the crucial level.

The key index has lost massive 758.09 points or 4.51 per cent in the past four days.

Brokers said that selling pressure gained momentum after investors off-loaded part of their holdings as inflation accelerated the most since May and exports declined by 13.8 per cent in September for the 12th month in a row.

Bank of India was the biggest loser in the banking space. The stock plunged 12.3 per cent to Rs 357. The bank today reported 51 per cent decline in its net profit at Rs 176.04 crore for the second quarter ended September 30, 2009.

Indian shares continued to fall for the fourth day in a row, and closed 1.4 percent lower in volatile trade on Thursday to their worst close in nearly 8 weeks, pulled down by weakness in world equities on concerns over global growth.

The index slipped below the 16,000 mark in early deals, for the first time since Sept. 7.

RIL Q2 net up 6% @ Rs 3,852cr

Voltas Q2 profit up 13%

Grasim Q2 net down 28%

DLF Q2 net up 11% at Rs 440cr

Exports continue decline;dip 14% in Sept

Tata Chemicals Q2 net profit at Rs 222.8

Emami Q2 net up 54%

Gas @ $4.2/unit good only for RIL:SC

India gold imports drop for sixth month

Uniform sugar price may ease shortages

ONGC Q2 net up 5% at Rs 5,090cr

Ruchi Soya Q2 net down 4%

iGate expands operations in B'lore

HDIL Q2 profit up 38%

Sterlite Q2 net up 84% at Rs 1,240 cr

Bank of India Q2 profit down 45%

SFIO begins Sesa Goa probe

Mahindra Q2 net soars; drought a concern

Cairn India July-Sept qtr net jumps 60 pct
 

investment view
Trouble In The Rice Bowl  
 

Rising rice prices and possible shortages in the world's poorest countries will hinge on what major growers India, China and Thailand do to make up for millions of tons of the staple lost to floods and droughts, officials said Thursday.

 

All eyes are on India, traditionally one of the world's top rice exporters, which may import 1.1 million tons (1 million metric tons) to 3.8 million tons (3.5 million metric tons) next year to replace production losses after a drought ravaged the country's rice bowl.

 

"Just the fact that India has significantly reduced production alone is a significant development given the tightness of supplies that we see in the world today," said Jim Guinn, vice president of USA Rice Federation.

 

"But the fact that they may actually be an importer is of even more importance," he said.

India's return to the import market is viewed as pushing up the price of benchmark Thai 100 percent Grade B rice, which this month traded at $530 per ton (metric ton), though still down from more than $1,000 at the height of last year's food crisis.

 

Guinn said other factors include whether China will export or not, and if Thailand releases its bumper stocks. China holds half the world's rice stocks and has been exporting on-and-off.

 

"The circumstances are there certainly for another panic in the marketplace," Dwight Roberts, president and CEO of U.S. Rice Producers Association, told The Associated Press at an international rice conference.

 

India may also turn to wheat, which remains relatively cheap, as a short-term solution to its lower rice production, said Jeremy Zwinger, publisher of The Rice Trader, which monitors the industry.

 

But India's shift to wheat consumption may not be enough to stop the country from importing, Roberts said. "In Asia, if you don't eat rice, you don't eat," he said. "Rice here is a religion as much as a food product."

 

The 2008 rice crisis demonstrated that the crop "is a very political commodity," Roberts said.

 

Last year's record-high price of rice and other staples led to riots in at least 30 countries, according to the World Food Program. The biggest producers, Thailand, Vietnam and India, had curbed exports to protect domestic supply. In the Philippines, people formed long lines to buy low-quality rice at subsidized prices while traders were suspected of hoarding.

 

Philippine Agriculture Secretary Arthur Yap said Wednesday that any rice crisis similar to last year's would hurt developing countries like his, the world's top rice importer.

The Philippines says it has lost at least 925,000 tons (840,000 metric tons) due to recent back-to-back storms.

 

Officials had said it was unlikely more imports would be needed this year, but on Wednesday Yap refused to rule that out, saying the government will do "what we have to do to protect our people's food security."

(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.)
  

--
Arvind Parekh
+ 91 98432 32381