Weak Asian cues and profit-booking by investors suppress market sentiments

The Sensex gained 18 points from the previous day’s close, ending the day at 17,051 while the Nifty closed at 5,062; four points higher due to profit-booking by investors and weak Asian markets. 

During the day IT stocks were major gainers despite rupee appreciation. Tata Consultancy Services topped the list of 30 stocks in the Sensex as it gained 4% while Infosys Technologies and Wipro were up 2% and 1% respectively.

Index heavyweight Reliance Industries (RIL) was down 1%. During trading hours, RIL chairman Mukesh Ambani said the company plans an aggressive exploration campaign over the next three years. Exploration and production business will give the company a much higher growth trajectory in the coming years, he added. He also said the company plans global growth by acquisition of energy platforms.

Take Solutions shot up 20% on signing a deal for its PharmaReady SPL solution suite with Wanbury. Vijay Shanthi Builders has obtained the planning permission for all its newly-launched projects totalling to about 18,58,500 sq ft at located mainly in Chennai. The stock was up 10%.

Brigade Enterprises announced its foray into affordable homes through Brigade Value Homes, with base prices ranging from Rs10lakh-Rs26 lakh. The stock ended flat after hitting an intraday high of Rs141, a 5% jump from the previous day’s close.

Sun Pharmaceutical Industries Ltd has announced that the USFDA has granted tentative approval to an Abbreviated New Drug Application (ANDA) for generic Gleevec (Imatinib Mesylate) tablets. However, the stock declined 1%.

Economists and analysts surveyed by the Reserve Bank of India (RBI) revised downwards India’s gross domestic product projection to 6% for 2009-2010 from 6.5% in the previous round of the survey.

The forecasters also assigned a highest 34.3% chance for inflation to be within 6%-6.9% in 2009-2010, the survey showed. The study also indicated that the economists expect the July to September 2009 GDP growth at 6.2% and for October to December 2009 and January to March 2010 at 5.7% and 6.7% respectively.

Meanwhile, the government is scheduled to announce the July 2009-September 2009 GDP growth numbers on 30 November 2009. The forecasters expect headline inflation to be at 4% in October to December 2009 and at 6.8% the following quarter. Over the next five years, GDP is expected to grow at 7.5%, unchanged from the previous round of the survey, the RBI said. But inflation forecast over the next five years was revised upwards to 5.5% from 5.3% in the previous survey.

During the day, Asia’s key benchmark indices in Hong Kong, Japan, South Korea, Taiwan and Singapore fell by between 0.13%-0.76%. However, China’s Shanghai Composite rose 0.24%.

Chinese president Hu Jintao said that he had agreed with US president Barack Obama to increase international cooperation. He said there are signs of revival, but still no firm recovery in the international financial situation. He further added that the two sides had reiterated commitments to increase dialogue on macroeconomic issues and will resolve economic and trade frictions.

US president Obama said that he was pleased with China’s commitment on moving towards a more market-oriented exchange rate.

On Monday 16 November 2009, the Dow Jones Industrial Average rose 137 points while the S&P 500 was up 16 points, and the Nasdaq Composite was up 30 points after Federal Reserve chairman Ben Bernanke reinforced expectations that interest rates would stay low to spur growth.

Bernanke said it’s “not obvious” that asset prices in the US are out of line with underlying values. He said in his speech that the headwinds of reduced bank lending and a weak labour market will probably restrain the pace of the US economic recovery, warranting continued low borrowing costs. He also said that the Fed is attentive to changes in the dollar’s value and will help ensure that the dollar is strong.

As per US economic data, retail sales rose 1.4% in October 2009 amid a jump in auto sales while another report showed that the empire state manufacturing index fell to 23.51 from 34.57. In premarket trading, the Dow Jones was trading 10 points lower.
– Swapnil Suvarna [email protected]
 

The recent hike in coal prices have already spelt trouble for cement and power companies in India. Coal supply and coal prices are likely to suffer another massive blow, given new mining laws for coal in Indonesia. Indonesia, which is one the major suppliers of coal to India, now plans to cap its exports for domestic demand.

China’s steel trade body fears a rapidly worsening situation in the December quarter and early 2010

While Indian steel stocks are rallying, China Iron and Steel Association (CISA) has warned that oversupply is the major problem that the Chinese steel sector would need to confront. The trade body expects the situation to worsen in the fourth quarter and in early 2010. Steel is a globally-traded commodity and overcapacity in China is bound to lead to lower global prices and pressure on Indian steel companies.

According to CISA statistics, the steel inventories of 26 large and medium-sized cities totalled 11.13 million tonnes (MT) at September 2009, up 5.3MT or 90.9% from the beginning of this year. Further, the 68 large- and medium-sized steel enterprises’ steel and billet steel inventories totalled 11.55MT at September’s closing, up 1.44MT or 14.26% from the beginning of the year. Of the 70 large- and medium-sized steel enterprises, 10 suffered losses in the first nine months as compared to seven in the same period last year. China’s crude steel output was 420.40MT, up 7.5% year-on-year over the first nine months of this year, up 29.37MT. China’s current steel capacity is around 600MT per year, with around another 58MT per year under construction.

Meanwhile, the entire year’s output is estimated at 550MT, up 50MT or 10% from 2008. In the first nine months of this year China imported 1.37MT of crude steel as compared with the 39.47MT of net exports in the same period last year.

As total net crude steel exports reached 47.63MT for the entire 2008, some 47MT will be shifted from the international market to the domestic market. China’s apparent steel demand rose 20% year-on-year in the first nine months, to 421.8MT, mainly driven by the government’s expansion of fixed asset investment, and the growth is predicted to sustain into the fourth quarter and early next year.

China has also imported 1.005MT of stainless steel in the first nine months, up by 4.3% year-on-year and exported 4,76,800 tonnes, down by 45.5% year-on-year. During January 2009 to September 2009 the Chinese stainless steel output was 6.569MT, up by 37.5% year-on-year.

As per reports, the output growth of crude steel and the change in imports and exports would bring the supply of crude steel in the Chinese market at 20% above last year’s figures. In October 2009 alone, Chinese crude steel production growth has sharply grown by 44% year-on-year to 51.75MT.
—Swapnil Suvarna [email protected]