5 Aug
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5 Aug
The Indian markets witnessed panic selling in last session and extended their fall despite a positive start. Today, the global scenario is indicating for a sharp gap-down opening for the domestic markets and the benchmark indices are likely to extend their losses further before any relief rally. Though, the condition at home is not as grim as in the other countries but the investors will be concerned that the prolonging weakness in the global economic recovery will affect the Indian economy too. Meanwhile, Finance Minister Pranab Mukherjee gave assurance that all possible steps were being taken to tackle price rise, and said there was no need to moderate growth in a bid to tame inflation. RBI’s has raised interest rates for 11 times since March 2010 and still the inflation remains at elevated levels, instead has hurt the industrial growth. However, Planning Commission Deputy Chairman Montek Singh Ahluwalia has held out hopes for India’s growth story and had said that the short-term interest rate can easily be reversed once it is clear that inflation is stabilising. Though it is likely to be a down day for all the sectoral gauges but the sharp fall in international crude prices are likely to give some reason to cheer for the government oil companies.
There will be lots of important result announcements to watch for; Aban Offshore, Bosch, BPL, Escorts, Great Eastern Shipping, Cipla, Ranbaxy Lab, Hindustan Oil and Wyeth are among the many to announce their numbers today.
The US markets suffered sharp sell-off on Thursday after witnessing a mild pull back in previous session. All the major indices plunged by 4-5% for the day, worries about the US economy and other global markets led the investors flee from riskier assets like stock. There is a blood bath in the regional sphere and most of the indices following their US peers are down by 2-4%, near their lows since March.
Back home, all hopes of a comeback for the increasingly vulnerable Indian stock markets got shattered in Thursday’s trading session as many heavyweight stocks that saw short covering early in the day lost colossal ground in late trade. The bourses failed to snap the two session losing streak as the panic selling in second half of the session dragged the frontline indices below the important psychological 5,350 and 17,700 levels in the session. Marketmen showed unrelenting selling pressure in the second half of trade squaring off tremendous positions from the major counters like high beta – Realty, rate sensitive – Auto Oil and Gas and defensive – FMCG counters as they remained concerned about the mounting evidence that slowdown in global growth is not just a temporary soft patch, but a more substantive loss of momentum. Markets in other part of the too globe got off to an optimistic start however, most markets failed to hold on to the gains as investors chose to take profits off the table ahead of monetary policy announcements from the ECB and Bank of England scheduled later , a day before the United States publishes vital employment data. Bank home, the weekly inflation data released by the commerce ministry which showed that India’s wholesale food prices rose by 8.04% on-year in the week ended July 23, 2011, faster than the 7.33% on-year inflation recorded in the week ended July 16. PSU Oil marketing companies like HPCL, BPCL and IOC rallied in the range of 3-4% in the session on the back of overnight fall in international crude oil prices while reports of Finance Minister Pranab Mukherjee signaling end of subsidies on diesel used by cars, also encouraged investors. Earlier on Dalal Street, the benchmark got off to a flat start with a positive bias as investors resorted to bottom fishing in badly beaten down but fundamentally strong counters. However, the optimism fizzled out as soon as the frontline indices went on to test the psychological 5,450 and 18,000 levels. The bourses showed signs of consolidation through the first half but the key gauges unexpectedly got dragged in afternoon trades and thereafter there was no turning back for the indices which once again closed with hefty losses, and ended around the session’s lowest level. Finally, the BSE Sensex plunged by 247.37 points or 1.38% to settle at 17,693.18, while the S&P CNX Nifty shaved off 73.00 points or 1.35% to close at 5,331.80.
The US markets slumped on Thursday and resumed their slide once again as investors compiled a lengthy list of concerns about the US and global economy. Investors got worried on reports of weak job data in US, budget cut worries and as the debt contagion spreads to bigger nations of Europe like Spain and Italy. The latest market slide was prompted by the weak jobs market report after a string of reports on income and spending, manufacturing and service sector health and worries of the protracted fight from Republican controlled House for $1.2 trillion of spending cuts.
The markets went for a free fall when the Labor Department reported that initial claims for jobless benefits fell by 1,000 to a seasonally adjusted 400,000, higher than the expected; initial claims from two weeks ago were revised up to 401,000. Now Investors are shifting their attention to Friday’s US nonfarm payrolls report and fear that the budget cuts that are forced on the fragile economy and heavy war expenditures are now almost certain to keep unemployment above 10% so much as the economy may slip into a recession as early as this year. The US debt crisis is likely make to employment crisis worse.
The Dow Jones industrial average lost 512.76 points, or 4.31 percent, to 11,383.70. The Standard and Poor’s 500 lost 60.27 points, or 4.78 percent, to 1,200.07, while the Nasdaq composite closed lower by 136.68 points, or 5.08 percent, to 2,556.39.
Almost all the Indian ADRs closed in red on Thursday; Infosys Technologies was down by 3.42%, ICICI Bank was down by 2.26%, Dr. Reddy’s Lab was down by 2.00%, HDFC Bank was down by 1.57% and Tata Motors was down by 1.31%.
Crude prices plunged on Thursday, sliding over 5 percent, their lowest level since February on worries about slowing economies in debt-laden Europe and the United States. The fears that world’s major economies are stalling got strength with the US Labor Department report that the number of people claiming new jobless benefits was nearly unchanged at an elevated level last week.
Sign of slowdown in economic growth, particularly in the United States, is hitting consumers and companies and forcing economic forecasters to slash estimates for global oil demand.
Benchmark crude futures for September delivery settled down $5.30, or 5.8%, to $86.63 on the New York Mercantile Exchange. In London, Brent crude settled down $5.98, or 5.3%, to $107.25 a barrel on the ICE.
5 Aug
Diesel engines manufacturer Cummins India is setting up a global technology centre in Pune for their research and development projects which will accommodate over 2500 engineers. The company is investing around Rs 337 crore for this centre. The company aims to triple its annual revenue to $2.7 billion over the next 5 years at a growth rate of 22 percent. Cummins is setting up its third plant in Phalatan which will manufacture engines for commercial vehicles, generators and other industrial applications. This will be operational by the end of 2012. In the initial phase, it will produce 15000 engines and will ramp up the capacity by 30,000 engines per year. The company also plans to set up 10 small factories at its Phaltan site in Maharashtra to support its three companies.
JSW Steel, part of the $10 billion O P Jindal Group, said it was the “aggrieved party” in Karnataka since it had not been allotted a single mine despite investing Rs 40,000 crore over the past 15 years in the state. The company denied allegations of bribery and illegal procurement and transportation of iron ore in Karnataka made by anti-corruption watchdog Lokayukta N Santosh Hegde. The steelmaker is currently not thinking of taking any legal step but may do so in the future if the need arises. The recent blanket ban imposed by the Supreme Court on mining in the Bellary district has forced the company to cut down production from its showcase 10 million-tonne Vijaynagar steel plant by 35 percent.
Tata Steel will invest 7 million pounds (over Rs 500 crore) at its Hartlepool mill in the United Kingdom to enhance the welding and material handling capability. The 7 million pound investment will also include new cranes, handling equipment and storage at both mills, which will improve the quality of the finished product as well as customer service. This investment will help company to retain position as a world-leading supplier of pipes and tubes. Investments of this kind will help the company to build a sustainable future in Hartlepool, which will be welcomed by its skilled workforce and the local community.
5 Aug
Bombay Dyeing, the loss-making flagship textile company of the Wadia group, has planned to open a new retail counter every day in this year to boost its revenues. A retail focus is to be a new thrust area for the company, which forayed into real estate development in recent years, with large-scale property developments in the Worli and Dadar areas. It currently has 350 points of sale, comprising company-owned, franchisee-run stores, multi-brand outlets and so on. It wants to add 365 new points of sale in the coming months. The company plans to open more flagship stores to sell premium and designer products and international brands to boost revenue. Currently, it has 14 such flagship stores in the country.
Electrical equipment maker Havells India announced its entry into the domestic appliances market with an aim to garner sales of Rs 500 crore from the segment in the next four years. The company will also invest up to Rs 80 crore on marketing, research and development of its small appliances range over the next two to three years. The company launched a range of products including food preparation, garment care, home comfort, cooking and brewing to cater to the estimated Rs 5,200 crore Indian domestic appliances market. The products would initially be available in top 40 cities through some 4,000 outlets apart from its 100 exclusive Havells Galaxy stores. Besides, the firm also plans to export its products to Latin America and Thailand using the distribution channel of Sylvania, which it bought in early 2007.
IT firm Infosys Technologies has implemented its core banking solution, Finacle, in Bank Chinatrust Indonesia. Replacing the bank’s legacy system, Finacle now drives operations across 13 branches. The bank is now empowered with a unified view of customers and seamless integration across its channels. This new platform will also enable the bank to unify disparate systems, reduced turnaround times and empower staff to radically improve their service.
Looking to hit back at competitors with the new version of its premium hatchback Swift,Maruti Suzuki India would drastically cut exports of diesel engines to Hungary to concentrate on the Indian market. The company, which has seen increased competition from new entrants likes Ford Figo, Toyota Liva and Volkswagen Polo, will increase production of the Swift to up to 18,000 units a month to reduce waiting period. Honda’s upcoming Brio is also expected to add to the competition. The company’s diesel engine plant at Manesar currently produces 2.8 lakh engines per annum but it needs about four lakh units for the Indian market. With petrol prices going up, demand for diesel engine cars have soared. Most of the companies, which offer petrol and diesel variants of a car model are now witnessing demand ratio of 70:30 in favour of diesel cars.
Hindustan Motors, the beleaguered maker of the Ambassador car, has disposed of its entire land holding of about 120 acre at Halol in Gujarat to avoid turning into a potentially sick company. The CK Birla-group company sold off around 120 acres in Gujarat’s industrial estate in tranches garnering about Rs 70 crore. Hindustan Motors had been present in Halol since the 80s when it used to make 3-5 tonne Isuzu trucks. The production stopped in 1992, but the company then entered into a joint venture in 1994 with General Motors to make Opel Astra cars. GM subsequently bought the Halol plant from HM in 1999. Apart from the land, HM has been disposing of its strategic investment in auto-component maker Avtec to other group outfits. Avtec was formed by hiving off HM’s auto component business into a separate company, in which private equity firm Actis holds 30%.
Sun TV Network has set a target of 12-15 percent growth in its advertisement revenue during the current financial year. The company has increased its advertisement rates by 12 percent with effect from April 1, 2011. Also the company management ruled out a foray into Hindi general entertainment channel (GEC) segment, but said it might look at other regions if it gets a good opportunity. Though during the first quarter, non-GEC did not do well in terms of advertisement revenue and pressure was more on those channels, Sun TV would continue to launch such channels in this space. The company would invest Rs 150-160 crore in the acquisition of satellite rights for around 300 movies, of which 30 percent would be Tamil. On its movie distribution business through Sun Pictures, the company before September, it would release two movies and another three or four in the next nine months.
5 Aug
Clients called financial planners from the golf course. Sell orders piled up. Bargain hunters made bets that Thursday’s 512.76-point drop by the Dow Jones Industrial Average was the end of the stock market’s recent swoon.
The moves showed how much individual investors were whipsawed by the worst one-day point drop for the Dow since Dec. 1, 2008. While the Dow’s decline of 4.3% was nowhere close to the worst days of the financial crisis, it felt bad enough.
Stocks plunged, driving the Dow Jones Industrial Average down more than 500 points, as investors worried about the global economy and Europe’s debt crisis. Paul Vigna has details.
“I’m getting the calls about whether this is 2008 all over again,” said Garth Scrivner, a financial planner at StanCorp Investment Advisers Inc. in Albuquerque, N.M.
Many of his clients are retirees still reeling from the crisis. “We told clients that we thought some of the debt-ceiling stuff was overblown,” he said. “Now, we’re starting to see the effects of some of these policies, and it doesn’t look good.”
Call-center volume surged at mutual-fund company T. Rowe Price Group Inc. and discount-brokerage firm Charles Schwab Corp. More people than usual flocked to Schwab’s brokerage offices or made appointments to sort out their investments, the San Francisco company said.
At about 1 p.m., with the Dow down nearly 300 points, financial planner Mark Berg’s phone rang. A client heard about the stock market’s tumble while playing golf “and wanted to make sure he shouldn’t sell everything,” said Mr. Berg, president of Timothy Financial Counsel in Wheaton, Ill.
“This is just a sanity call,” the client told him. Mr. Berg urged the client to stay put, and the client agreed.
Employees at Neuberger Berman fanned out to the asset manager’s customers, many with large account balances, to discuss whether they want to roll more money into cash as a safety net.
“We were on the phones all day,” said Matthew Rubin, Neuberger’s director of investment strategy. “Markets are either driven by fear or greed, and we’re definitely in the fear period now.”
The New York firm is advising most clients not to dump stocks just because the overall market sank.
Doug Diederich, a 67-year-old retired engineer who lives in Larkspur, Colo., sold about $200,000, or 20%, of his holdings in exchange-traded funds and closed-end funds that contain municipal bonds and corporate bonds.
“It looked like a good opportunity to start winding down,” he said. “Something is going on. I don’t know what.”
On Thursday, yields on five-year triple-A-rated municipal bonds sank to their lowest level ever, according to Thomson Reuters Municipal Market Data. Yields on triple-A 10-year municipal bonds fell to a 10-month low.
Mr. Diederich’s selling lasted two hours. Then he went out to his garden, filled with Colorado’s state flower, the columbine, but ruined by a hailstorm several weeks ago.
“It’s a losing battle,” he said.
Specialist Bernard L. Wheeler of Knight Capital Americas works on the floor of the New York Stock Exchange Thursday. Just three stocks in the S&P 500 ended higher amid the day’s steep declines.
As many investors scrambled to sell, Samuel Klags, 39, a jewelry dealer, bought 100 shares of Citigroup Inc. and placed a bet that the market’s volatility would fall sharply. “Things have a tendency to recover after they explode,” said Mr. Klags after leaving a Schwab branch in midtown Manhattan. Still, the U.S. economy probably has tipped back into recession, he said, and President Barack Obama can’t do anything about it.
Helen Fitzpatrick, a retired journalist who lives in Chevy Chase, Md., said she didn’t buy or sell Thursday but is likely to invest about $25,000 on Friday in stocks like Exxon Mobil Corp. and AT&T Inc. “You buy when something is on sale,” she said.
Thursday’s stock-market tumble helped Allen Demby, a retired ophthalmologist, fill an open buy order for 1,500 shares of Yum Brands Inc. Shares of the fast-food company fell 1.3%.
“What is safe nowadays?” said Mr. Demby, walking toward the boardwalk in Atlantic City, N.J., as sea gulls cooed overhead.
Not surprisingly, many financial planners urged clients to hold on, even though Friday’s report on U.S. payrolls could deliver another jolt to stocks.
Mr. Scrivner, the Albuquerque financial planner, said the hand-holding worked with most clients.
“But they’re not going out to dinner or remodeling their homes anytime soon,” he said.
5 Aug
The US markets slumped on Thursday and resumed their slide once again as investors compiled a lengthy list of concerns about the US and global economy. Investors got worried on reports of weak job data in US, budget cut worries and as the debt contagion spreads to bigger nations of Europe like Spain and Italy. The latest market slide was prompted by the weak jobs market report after a string of reports on income and spending, manufacturing and service sector health and worries of the protracted fight from Republican controlled House for $1.2 trillion of spending cuts.
The markets went for a free fall when the Labor Department reported that initial claims for jobless benefits fell by 1,000 to a seasonally adjusted 400,000, higher than the expected; initial claims from two weeks ago were revised up to 401,000. Now Investors are shifting their attention to Friday’s US nonfarm payrolls report and fear that the budget cuts that are forced on the fragile economy and heavy war expenditures are now almost certain to keep unemployment above 10% so much as the economy may slip into a recession as early as this year. The US debt crisis is likely make to employment crisis worse.
The Dow Jones industrial average lost 512.76 points, or 4.31 percent, to 11,383.70. The Standard and Poor’s 500 lost 60.27 points, or 4.78 percent, to 1,200.07, while the Nasdaq composite closed lower by 136.68 points, or 5.08 percent, to 2,556.39.
Almost all the Indian ADRs closed in red on Thursday; Infosys Technologies was down by 3.42%, ICICI Bank was down by 2.26%, Dr. Reddy’s Lab was down by 2.00%, HDFC Bank was down by 1.57% and Tata Motors was down by 1.31%.
5 Aug
Domestic market to make a sharp gap-down start in line with global indices:
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