Market slips in late trade of session

After trading within a narrow range in afternoon, the market declined in late trading as US stock futures indicated lower opening on the Wall Street on Monday, 5 May 2008. Dow futures were down 105 points and S&P 500 futures were down 6.80 points.

Realty stocks were the star performers of the session. Consumer durables and IT stocks were worst hit. Small-cap and mid-cap counters were active throughout the session with their barometer indices outperforming the Sensex.

European markets, which opened after Indian market, were mixed. France`s CAC 40 was down 0.29% whereas Germany`s DAX was up 0.02%. The stock market in UK was closed for a holiday.

Asian markets, which opened before Indian market, were mostly in green. Key indices in China, and Singapore were up 0.37% to 1.84%. However, Taiwan`s Taiwan Weighted Index was down 1.41% and Hong Kong`s Hang Seng was down 0.22%. Markets in Japan, and South Korea were closed for holiday.

As per provisional closing, the 30-share BSE Sensex fell 119.84 points or 0.68% at 17480.28. Sensex gained 135.58 points at day`s high of 17,735.70, hit in the early afternoon trade. The index lost 142.85 points at day`s low of 17,457.27, hit in the late trade.

The broader based S&P CNX Nifty was down 35 points or 0.67% at 5193.20.

The market breadth was strong on BSE with 2090 shares advancing as compared to 664 stocks that declined. 18 stocks remained unchanged.

The BSE Mid-Cap index rose 1.31% to 7,331.93 and BSE Small-Cap index rose 0.80% to 8,892.27.

BSE clocked a turnover of Rs 6350 crore as against Rs 6,606.18 on Friday, 2 May 2008.

India`s largest private sector firm by market capitalisation and oil refiner Reliance Industries fell 0.48% to Rs 2,662.

India`s largest engineering and construction firm by revenue Larsen & Toubro fell 0.51% to Rs 3125. The stocks had earlier touched a high of Rs 3262. The firm is reportedly set to revamp its corporate structure to create a dozen operating companies under the direction of a separate board of directors. Effective 1 July 2008, the move will lead to L&T becoming the umbrella organisation with a board to administer the performance of all businesses and ownership of the brand, pegged at around $2 billion.

The top Sensex gainers were, Grasim Industries (up 0.70% at Rs 2,385.10), ACC (up 0.58% at Rs 757.90), Tata Steel (up 0.45% at Rs 800.55), ITC (up 0.34% at Rs 221.50) and Cipla (up 0.14% at Rs 213.25).

Top Sensex losers were, Wipro (down 2.42% at Rs 490.05), Housing Development Finance Corporation (down 2.37% at Rs 2,708.80), DLF (down 2.15% at Rs 704.65), TCS (down 1.57% at Rs 925.95) and NTPC (down 1.57% at Rs 197.55).

India`s largest commercial bank State Bank of India declined 2.36% to Rs 1781.90. The bank reported 26.1% rise in net profit to Rs 1883.25 crore on 26.7% growth in operating income to Rs 16393.93 crore in Q4 March 2008 over Q4 March 2007.

Drug maker Suven Life Sciences surged 2.12% to Rs 36.05 after the company said it has received European product patent from European Patent Office for its clinical candidate SUVN-502.

India`s largest commercial vehicles maker Tata Motors fell 0.72% to Rs 685.50 after the company reported 5.8% fall in total automobile sales to 38,149 units in April 2008 over April 2007 largely on account of dip in passenger car segment and exports.

Jewellery maker Surana Corporation was locked at upper limit of 4.97% to Rs 47.55 on reporting 371.03% surge in net profit to Rs 6.11 crore on 37.44% growth in total income to Rs 619.33 crore in Q4 March 2008 over Q4 March 2007.

Real estate developer Housing Development and Infrastructure fell 1.60% to Rs 832.50. The company has reportedly received Maharashtra state government`s approval for the Mumbai airport slum rehabilitation programme.

Telecom service provider Spice Communications surged 5.65% to Rs 42.15 on reports Telekom Malaysia is looking at increasing its stake in the company to at least 51% through a combination of open offer and acquisition of shares the co-promoters.

US market ended with modest gains on Friday, 2 May 2008 after the latest non-farm payroll data showed 20,000 jobs were lost in April 2008, a far better result than an expected loss of 75,000 jobs. Dow Jones Industrial Average gained 48.2 points or 0.4% at 13,058.20, the Nasdaq Composite index fell 3.72 or 0.2%, to 2,476.99 and the S&P 500 ended up 4.56 points to 1,413.90.

High inflation remains the biggest concern for the Indian stock market. The measures taken by the Union government to control inflation have also added to uncertainty on corporate profit. Finance Minister P Chidambaram on Tuesday, 29 April 2008, said government will impose export tax on basmati rice and some steel products, and cut import duties on key inputs like ferro alloys and metallurgical coke. He said the measures were being taken to improve domestic supplies and to moderate prices. The government has already banned export of cement and non-basmati rice.

Given that parliamentary elections are scheduled next year (in May 2009), the government may leave no stone unturned in its attempt to rein in inflation. This is bad news for commodity scrips like cement, steel etc.

In a bid to rein in inflation, the Reserve Bank of India, on Tuesday, 29 April 2008, raised cash reserve ratio (CRR) by 25 basis points to 8.25%, to suck out excess liquidity in the banking system, in its annual monetary policy review. While the central bank has mentioned price stability as its key priority, the overall undertone of the policy is not as hawkish as market had feared. The RBI governor Y V Reddy expects inflation to moderate in the next 2-3 months.

Good Q4 results March 2008 results and firm global markets, triggered a solid rebound in the Indian market over the past few days. Buying by domestic institutions has supported the market. From a recent low of 14,809.49 on 17 March 2008, the Sensex climbed 2,790.63 points or 18.84% to 17,600.12 on 2 May 2008.

The structural growth drivers of the Indian economy remain intact – India`s economy is expected to witness a decent-to-strong growth for a long period of time due to favourable demographics. Acceleration in infrastructure creation will be another driver of strong growth in India`s economy. Rating agency CRISIL in its latest outlook for Indian economy for the year through March 2009 hs stated that the overall growth scenario is expected to remain strong with investment as the main driver.

Another pointer to the fact that the long term India growth story remains intact is the outcome of the latest 2008 US-India Business Council (USIBC) survey, according to which, India is, and will continue to be, a premier destination for investment by US firms, with a large number of respondents rating future economic growth in India as highly sustainable

Global steel price suddenly increase in contradivtion to government efforts

A surge in international prices of steel over the past one week and a commensurate fall in exports from China may well negate the Indian government’s hopes of cooling steel prices by slashing import duty to nil in the hope of increasing supplies. The government last week abolished customs duty on pig iron and mild steel items as well as metcoke, while imposing a 5-15% export duty on steel products. But during the week April 25 to May 2, export price of pig iron from CIS spurted 32% to $700 per tonne, while export of heavy plates from Latin America too was up 30% to $1,295 per tonne.

Indian producers such as Tata Steel, Steel Authority of India Ltd (SAIL) and JSW Steel, nudged by the government, have however promised to hold prices for the next two to three months. The surge in global prices will now increase the differential between domestic and international price, thereby negating higher imports to ease the supply-side issues and prices.

Meantime, the government’s silence on rising input costs may further aggravate iron ore supplies at least for non-integrated steel companies or those without captive mines. All expectations of an stiffer export tax on iron ore exports was belied with the government not changing the existing levy of Rs 300 per tonne for ore with ferric content higher than 62% and Rs 50 per tonne for lower grades. This may prove too expensive for steel producers. They are now likely to face another spurt in iron ore prices.

Australian miners are expected to clinch a deal with Chinese steel companies wherein contracts are priced 80% more than last year, against the initial negotiations based on a 65% increase. Indian public sector mining companies such as NMDC has already announced a 50% increase in iron ore prices for supplies to Indian steel companies based on the 65% anticipated increase in contracts between Australian miners and Chinese steel producers. Now the 80% hike that is expected to be signed, it will give further headroom for Indian mining companies to go in for further price increase.

Stock Market Prediction for 5th May 2008

Market may open up. Market would be volatile & show significant ups and down. Market may up between 10.25 and 10.50. Market may steady or up side between 13.48 and 14.19. Market may close at up to previous closing.


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Opening Bell Call
Buy
RELIANCE - Reliance Industries Ltd
RELCAPITAL - Reliance Capital Limited
SATYAMCOMP - Satyam Computer Services Ltd
RPL - Reliance Petroleum Limited
HINDPETRO - Hindustan Petroleum Corporation Ltd.
JPHYDRO - Jaiprakash Hydro-Power Limited
MRPL - Mangalore Refinery and Petrochemicals Ltd.
MARUTI - Maruti Suzuki India Limited

Opening Bell Call
Sell
ACC - ACC Limited
GMRINDS - GMR Industries Limited
UCOBANK - UCO Bank
ONMOBILE - OnMobile Global Limited
GUJNRECOKE - Gujarat NRE Coke Ltd.
ASHOKLEY - Ashok Leyland Ltd
UTVSOF - UTV Software Communications Limited


Technical Analysis for 5th May 2008

BSE-SENSEX - Major Support - 17555, 17522, 17489, 17434, 17379, 17291, 17027
BSE-SENSEX - Major Resistance - 17610, 17665, 17698, 17731, 17819, 17907, 17995

NSE-NIFTY - Major Support - 5212, 5184, 5162, 5140, 5089, 5039, 4988
NSE-NIFTY - Major Resistance - 5241, 5263, 5285, 5313, 5342, 5392, 5443