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Nifty Outlook for the day
The Nifty is likely to consolidate between the range of 4950 to 5200 levels in coming trading session.Market is waiting for trendline breakout. On the downside 4800-4700levels is an immediate support. On the higher side it may face resistance around 5200-5300 levels
In volatile trading, the Bombay Stock Exchange benchmark Sensex on Wednesday gained over 225 points on buying mainly in metal and information technology stocks.
The 30-share index, which opened lower by 126.51 points, bounced back to close higher by 225.49 points at 16,978.35. It touched the day’s low of 16,626.35 and high of 17,014.94 points.
Similarly, wide-based National Stock Exchange index’s Nifty rose 53.95 points at 5,011.75, after touching the day’s high of 5,026.10 and low of 4,932.05 points.
Metal Index gained the most by 687.30 points, or 4.36 per cent. at 16,435.18. It was followed by IT Index that rose by 162.22 points, or 3.80 per cent, at 4,427.36.
Teck Index increased by 107.93 points at 3,487, Consumer Durable Index by 106.11 points at 4,507.56 and Healthcare Index by 74.29 points at 4,252.54.
Indian Oil Corp., the nation’s biggest refiner, and its state-run counterparts fell in Mumbai trading after a report that the government would compensate 50 percent of their losses from selling fuel below cost, less than what the Oil Ministry is seeking.
The government will give 350 billion rupees ($8 billion) of bonds to state-run refiners to compensate for half the losses they incurred in the last fiscal year, the Financial Express reported today.
The government estimates refiners lost 770 billion rupees last year, Oil Minister Murli Deora said yesterday. The bonds should compensate for 57 percent of the losses, he said. India has capped fuel prices to curb inflation while oil has risen to a record $126.98 a barrel.
Indian Oil fell 9.7 rupees, or 2.3 percent, to 408 rupees at 10:52 a.m. local time.
Hindustan Petroleum Corp., India’s second-biggest refiner, fell 2.4 rupees, or 1 percent, to 233.35 rupees. Bharat Petroleum Corp., the third biggest, declined 4.25 rupees, or 1.2 percent, to 344.5 rupees.
India’s rupee fell the most in nine months on speculation record crude oil prices will widen the nation’s trade and current-account deficits, increasing demand for foreign currencies.
The rupee declined to the lowest since April 2007 as local refiners increased dollar purchases to pay for imports of crude, which reached an all-time high of $126.98 a barrel in New York yesterday. The currency also weakened after data from India’s capital markets regulator showed overseas investors added to sales of local equities.
``The rupee’s depreciating bias continues as oil prices remain high, raising concern about wider trade and current- account deficits,’’ said Agam Gupta, head of trading at Standard Chartered Plc’s Indian unit in Mumbai.
The rupee weakened 1.2 percent to 42.6150 per dollar as of 2:18 p.m. in Mumbai and reached 42.6775, according to data compiled by Bloomberg. The currency is the third-worst performer among the most-traded Asian currencies outside Japan this year, losing 7.5 percent.
India’s currency has fallen 7.7 percent in the past six months as oil prices advanced 33 percent. India’s oil imports rose to a record $8.6 billion in March, government data show. Asia’s third-largest economy depends on shipments from abroad to meet three-quarters of its energy needs.
Trade Deficit
The South Asian nation’s trade deficit widened to an all- time high of $25.4 billion in the three months through December, according to the central bank. The current-account shortfall, a measure of trade and investment flows, increased to $5.4 billion in the same quarter from $4.7 billion.
Funds based abroad sold $2.8 billion more Indian equities than they bought this year, after making net investments worth a record $17.2 billion in 2007, according to data released by the Securities and Exchange Board of India.
The rupee, which fell past the 42 per dollar level this week for the first time since April 2007, extended losses following a series of bomb blasts in the northern Indian city of Jaipur. Eight explosions killed as many as 60 people and injured another 200 yesterday in the country’s deadliest terrorist attack in more than a year.
``It’s an incident that has happened, a one-off incident, and may not really affect foreign investment inflows,’’ Standard Chartered’s Gupta said. ``If the rupee had been in an appreciating trend, we could have asked whether it’d face a setback. But since the rupee is already in a depreciating trend, we may not see much of a difference.’’
Source: Bloomberg
The markets have rallied further with strong support from technology, metal, telecom, pharma, realty and capital goods stocks. The Sensex has again crossed 17000 mark and Nifty above 5000. Market breadth is positive; 790 shares advanced while 550 shares declined on the NSE. Midcap and small cap indices remained flat. On the global front, European markets were trading in positive terrain.
At 2:43 pm, the Sensex was up 260 points at 17,012 and the Nifty up 62 points at 5019.
TCS, Hindalco, Tata Steel and Dr Reddy’s Labs were top gainers while losers - ONGC, ACC, M&M and GAIL.
Metal stocks were shining, Index rose over 4% on the news from Steel secretary desk that secondary steel companies (like Uttam Galva, Bhushan Steel etc) will cut flat product price by Rs 4000 per tonne. Major steel companies will hold reduced prices for 3 months. Price cut is applicable only for domestic market, the said.
Technology stocks also moved up faster, Index up nearly 4% as the Indian Rupee slipped over 1% to 41.58/$. Telecom stocks also gained, BSE TECk Index up 3%.
Healthcare Index jumped by over 2% due to buying in Sun Pharma, Dr Reddy’s Labs, Ranbaxy and Biocon.
The stock market showed signs of consolidation on alternate bouts of buying and selling in line with narrowly mixed global trend with the benchmark Sensex quoting nearly flat at 1030 hours on Wednesday.
The Bombay Stock Exchange 30-share index moved erratically in a range of 16,793.37 and 16,626.35 before being quoted at 16,754.00 at 1030 hours, hardly changing against overnight close of 16,752.86.
Yesterday, it was down by over 108 points. The S&P CNX Nifty of the National Stock Exchange, however, eased by 7.60 points to 4,950.20 from previous close.
Market players still concerned over the steep slowdown in industrial output and rising inflation as the global crude oil prices remained high near USD 126 a barrel after striking a new peak of USD 126.98 a barrel in New York on Tuesday.
Besides Taiwan, most of the other Asian Markets were trading slightly lower. On Wall Street, the Dow Jones Industrial Average ended weak while the Nasdaq Composite Index edged up last night.
Foreign Institutional Investors (FIIs), after three days of sell-off, turned positive and they picked up shares worth Rs 73.93 crore on Tuesday as per provisional data.
Some of the banking, power, capital goods and refinery shares displayed feeble trend while consumer durable, metal and IT stocks were quoting in the green on buying support.
Outlook for the day
The Sensex is likely to consolidate between the range of 16500 to 17500 levels in coming trading session.On the downside 16500-15500levels is an immediate support. On the higher side it may face resistance around 18300-19000 levels
US Federal Reserve Chairman Ben Bernanke said that despite the improvement, financial markets are still under stress. "If moral hazard are effectively mitigated, and financial institutions and investors draw appropriate lessons from the recent experience about the need for strong liquid risk management practices, the frequency and severity of the future crisis should be significantly reduced," Bernanke
The dollar-rupee pair outdid our near term expectation to record a peak at Rs 42.2 on Tuesday. A five-wave move is nearing completion from the Rs 39.6 trough. The near term targets for this move are Rs 42.35 or Rs 42.5. An extension can pull the currency pair towards Rs 42.87. However, a sideways move between Rs 41.5 and Rs 42.5 is quite likely for a few sessions. A close below Rs 41.1 is needed to negate the positive near term outlook.
Supports – 41.25, 41.10, 40.85
Resistances – 42.55, 42.78, 42.95
Outlook for the day
The Nifty is likely to consolidate between the range of 4900 to 5100 levels in coming trading session.On the downside 4800-4700levels is an immediate support. On the higher side it may face resistance around 5200-5300 levels
Long-term view for the currency has not been altered despite the 5 per cent depreciation in rupee over the last ten sessions. We expect a movement between Rs 39 and Rs 43 for a few months as the currency corrects the entire down-move recorded since May 2002. However, a move past Rs 43 would imply that the up-move can extend to Rs 45.
The USD-INR currency pair has achieved the target for the third leg of the move from January trough that is Rs 42.06. An extension of this wave would give the next target at Rs 42.62. However, it needs to be borne in mind that the currency pair is currently close to significant medium and long-term resistance levels. There is a confluence of targets in the band between Rs 42 and 43 from where a medium term reversal can take place. A reversal from these levels can pull the currency pair back towards Rs 40.
The dollar-rupee pair outdid our near term expectation to record a peak at Rs 42.2 on Tuesday. A five-wave move is nearing completion from the Rs 39.6 trough. The near term targets for this move are Rs 42.35 or Rs 42.5. An extension can pull the currency pair towards Rs 42.87.
However, a sideways move between Rs 41.5 and Rs 42.5 is quite likely for a few sessions. A close below Rs 41.1 is needed to negate the positive near term outlook.
Supports – 41.25, 41.10, 40.85
Resistances – 42.55, 42.78, 42.95
The Indian rupee dropped to a 13-month low on Tuesday, weighed down by concerns a slowing economy would result in less foreign inflows while uncertainty about global oil prices prompted refiners to buy dollars.
The partially convertible rupee ended at 42.10/11 per dollar, off an intraday trough of 42.2175, its lowest since mid-April 2007. It had closed at 42.05/06 on Monday.
"There is oil demand, importer demand and exporters are not selling," said Agam Gupta, head of forex trading at Standard Chartered.
Oil traded above $124 a barrel, after touching a record of $126.40 on Monday. High global oil prices raise the risk of widening India’s trade deficit and putting downward pressure on the rupee.
India’s trade deficit had widened 35.5 per cent to $80.4 billion in the fiscal year ended March, largely due to soaring oil prices.
Dealers said that weak factory data this week also raised worries of a slowdown in Asia’s third-largest economy, reinforcing expectations the rupee may weaken further.
Industrial output grew 3.0 per cent in March from a year earlier, its weakest growth in six years as high interest rates squeezed demand for consumer goods, data showed on Monday.
In volatile trading, the Bombay Stock Exchange benchmark Sensex on Wednesday recovered by over 40 points in early trade on emergence of funds buying at existing lower levels.
The 30-share index, which had plunged 126.51 points at the outset, bounced back to quote 40.05 points higher at 16,792.91 in the first five minutes of trading. It had lost 108.04 points on Tuesday.
Similarly, the wide-based National Stock Exchange index’s Nifty moved up by 12.35 points at 4,970.15.
Marketmen said the initial sell-off by funds was influenced by the serial blasts in Jaipur last evening.
Major gainers which supported the Sensex were Grasim Industries, Infosys Technologies, Tata Consultancy, Wipro, HDFC, Bharti Airtel, DLF Ltd and Tata Steel.
However, stocks such as HDFC Bank, ONGC and Reliance Energy were in the negative zone on some selling.
Oil surged to a record peak near $127 on Tuesday after OPEC producer Iran said it was studying a plan to cut output despite signs record-high prices are hurting consumer nations.
US crude settled up $1.57 to $125.80 a barrel, after striking a record $126.98 earlier. London Brent crude rose $1.19 to $124.10 a barrel. President Mahmoud Ahmadinejad said a proposal to reduce Iran’s crude output was being reviewed by experts, the semi-official Fars News Agency reported.
"There has been such a proposal and it is under expert review," Fars quoted Ahmadinejad as saying when asked about the possibility of the world’s No. 4 producer reducing output. Iranian Oil Minister Gholamhossein Nozari earlier said Iran was reviewing how much oil it pumps, but no decision had been taken on any changes.
"We’re in a market where anything bullish is going to be able to push the price higher," said Peter Beutel, president of Cameron Hanover. Oil prices have already surged sixfold since 2002 as supply has struggled to keep pace with booming demand from emerging economies.
Further support came from tight global supplies of distillate fuels such as diesel after a snag at the Grangemouth refinery in Scotland. European middle distillate stocks fell sharply in April, down 1.4 percent from March and 7.2 percent lower than a year ago, data from industry monitors Euroilstock showed.
Demand Revisions
Oil had closed lower on Monday after data showed a decline in oil imports by No. 2 consumer China in April, the first year-on-year drop in 18 months, raising further questions about demand growth forecasts.
The International Energy Agency on Tuesday said record-high oil prices will slow global oil demand growth this year to 1.03 million barrels per day (bpd), 230,000 bpd less than its previous forecast. Demand from emerging countries remained strong, however.
The US Senate voted to suspend deliveries to the Strategic Petroleum Reserve until crude prices fall below $75 a barrel, repudiating the Bush administration’s policy of boosting the stockpile despite high prices.
Consumer nations have called on OPEC to ramp up production to help ease the sting of high fuel prices, but officials from the cartel insist that speculators -- not a lack of supply -- are responsible for surging prices.
Investors have piled into oil and other commodities as a hedge against the falling dollar and rising inflation following a series of interest rate cuts by the US Federal Reserve.
San Francisco Federal Reserve Bank President Janet Yellen said that she would be happy if futures Markets were right in forecasting a Fed rate increase by year end, which analysts have said could weaken commodity prices.
Traders also were awaiting weekly US inventory data due on Wednesday, which are expected to show a build in US crude and distillate inventories with gasoline stocks unchanged, according to a Reuters poll of analysts.
The rupee fell to a fresh 13-month low on Wednesday as record oil prices and growing worries about a slowdown in the Economy spurred demand for US dollars.
India’s rupee fell for a third day on speculation near-record crude oil price will widen the South Asian nation’s trade deficit.
At 9:02 a.m., the partially convertible rupee was at 42.26/27 per dollar, a level it last traded on April 16, 2007, according to Reuters data. It had closed at 42.10/11 on Tuesday
The rupee weakened 0.4 percent to 42.27 per dollar as of 9:05 a.m. in Mumbai, according to data compiled by Bloomberg. The currency, headed for a fourth weekly decline, is the second- worst performer among the most-traded Asian currencies this year with a 6.8 percent loss.
