Foreigners Sell in India

Elena
12 Apr, 2006
Mumbai

On the heels of weak Asian markets, Sensex in India lost 2.6% for the first time in two years. International fund managers sold more than $200 million of stocks in the last three trading sessions. In volatile trading several leading stocks of IT, telecom, pharmaceuticals and banking sectors stock fell more than 5%.

[R]10:30AM Foreign investors kick-off a sharp sell-off in India.[/R]
Sensex in India lost 307 points or 2.6% to close at 11,355. After steadily rising for the last two years, the index has encountered its first loss of more than two percent since May 14, 2004. The day of BJP led government election defeat. In a volatile stock trading market changed hands for stocks worth $1.3 billion. Intra-volatility whipsawed most leading stocks in the session. Banking, IT and Telecom and cement makers declined during the session.

ACC, cement maker, lost 0.8% despite the company reporting strong fourth quarter ending March 2006 results. Profit rose 42% to $45 million on 19% rise in revenue to $230 million. Major players in Information Technology sector lost between 5% and 7% during the day. TCS lost 5% to Rs. 1,788 Satyam Computer lost 4.8% to Rs. 495 and Infosys dropped 3.6% to 3,071 at close. Tata Motors lost 4% on an unpaid sales tax collection charge from local tax collection authority. Cipla lost 5.7% to Rs. 682. The stock had jumped more than 15% in the last three sessions ahead of stock split of 3 for 2. Metal stocks remained firmed and some advanced as metal prices are likely to advance in the coming weeks. Sterlite Industries 6%, Hindustan Zinc rose 13% and Madras Aluminium rose 20% at close.


[R] 9:45AM Stocks opened modestly higher.[/R]
U.S. stock markets opened Wednesday session mixed with the Dow Jones and S&P 500 starting higher lifted by stronger-than-expected quarterly results, while the Nasdaq was below the flat line as downgrade of Google weighed. However, shortly after the opening, the tech-heavy index advanced to join the other averages in positive territory. In early trading, gold stocks moved significantly higher, benefiting from an increase in the price of the precious metal and leading the sector up 1.8%. Health insurance stocks also posted strength, with the sector currently up 1.7%, recovering after reaching a2-month closing low Tuesday. Biotechnology stocks were also among early advancers, with Vertex ((VRTX)) helping to lead the sector higher with an advance of 6.7% after Piper Jaffray upgraded the stock to outperform from Marker perform. Genentech ((DNA) fell 0.7% after the company reported Q1 earnings and sales growth but disappointing sales of Rituxan. Oil service stocks showed early weakness ahead of the weekly report on U.S. oil inventories. Bonds were flat, with the yield on the 10-year Treasury note at 4.93%


[R]9:15AM Stock futures indicated a flat opening.[/R]
U.S. stock futures pointed to a lackluster start of Wednesday session, following a sharply lower close yesterday when stocks dropped for a third day in a row, hurt by speculations that surging oil prices and other commodity prices could lead to higher inflation and lower consumer and corporate spending. On Wednesday soaring oil prices and disappointing sales of a key drug by Genentech weighed on pre-market sentiment. Genentech ((DNA)), the world''s second largest biotechnology company, reported higher quarterly profit on strong sales of cancer medicines, but its shares fell in after-hours trading on disappointing sales of a drug treating rheumatoid arthritis. In earnings news, U.S. motorcycle maker Harley-Davidson Inc. ((HDI)) reported 3.3% earnings rise in the latest quarter, matching expectations. Consumer electronics specialty retailer Circuit City ((CC)) posted strong Q4 profit growth of 84 cents a share with net sales rising to 12.8% on 11.6% increase in comparable store sales. S&P 500 futures were down 0.2 point, just slightly above fair value. Dow Jones industrial average futures fell 2 points, and Nasdaq 100 futures fell 1.25 points.

[R]U.S. trade deficit narrowed more than economists had expected.[/R]
Wednesday morning, the Department of Commerce released its report on the U.S. trade deficit in the month of February. The report showed that the U.S. trade deficit narrowed more than economists had expected. The Commerce Dept. said that the trade deficit narrowed to $65.7 billion in February from an upwardly revised $68.6 billion in January. Economists had expected the deficit to narrow to $67.0 billion from the $68.5 billion originally reported for January. The narrower trade deficit came as a decrease in the value of imports outpaced a drop in the value of exports. The report showed that the value of imports fell 2.3 percent to $178.7 billion while the value of exports fell 1.1 percent to $113.0 billion. The drop in the value of imports was partly due to decreases in imports of capital goods, automotive vehicles and parts, and consumer goods. Decreases in exports of foods, feeds, and beverages and capital goods contributed to drop in the value of exports.

Crude oil prices hovered round $69 a barrel ahead of oil inventory report. Light sweet crude May delivery gained 2 cents to $69 a barrel. London Brent rose 13 cents to reach $69.50. European gold retreated from record highs. In London gold fell to $596.75 per troy ounce, down from $598.50. In Zurich the precious metal slipped to 596.85 from $600.40. In Hong Kong gold dropped $6.60 to close at $595. Silver opened at $12.60, down from $12.70. The U.S. dollar traded lower versus major currencies. The euro traded at $1.2149, up from $1.2136. The dollar bought 118.07, down from 118.37. The British pound was quoted at $1.7558, up from $1.7480.

Gtech Holdings Corp, ((GTK)), maker of gaming equipment, reported Q4 earnings of 45 cents a share, up from a profit of 34 cents a share a year-ago. Q4 results include $6.1 million in one-time costs related to the company''s pending transaction with Lottomatica S.p.A. If not for these costs, the company would have earned 50 cents a share in Q4. Revenue advanced 9% in to $368.3 million from $337.9 million in the same period a year ago. Excluding items, the company beat analysts’ forecasts for a profit of 47 cents a share. Gtech added its product margins grew to 45.6% in Q4 from 26.6% in the same period a year ago due to a favorable change in product mix.

Delia''s Inc, ((DLIA)), direct marketing and retail company, reported Q4 net income was 16 cents a share, up vs. 13 cents a share a year earlier. The company added that earnings from continuing operations amounted to 17 cents a share. Sales advanced 11% to $78.4 million on advances in revenue from both the company''s direct and retail businesses.

Media General Inc, ((MEG)), newspaper publisher and television station operator, reported that total revenue advanced 3% in March to $74.3 million. The company added that revenue from its publishing operations rose 4.5%, while its broadcast business dropped a 1.7%. Media General’s interactive media operations reported a revenue rise of 37.2% for the month amounting to $2.1 million on growth in demand for online classified ads.

Circuit City Stores Inc., ((CC)), consumer electronics retailer, reported Q4 earnings of 80 cents a share, up from 45 cents per share a year ago on strong sales of flat-panel televisions and fewer price cuts. Earnings from continuing operations amounted to 84 cents a share. The company beat analysts’ expectations for earnings of 77 cents per share.

Harley-Davidson, Inc., ((HDI)), producer of heavyweight motorcycles, motorcycle parts, and related accessories, reported record Q1 net income of 86 cents a share, up 3.2% from 77 cents a share for the year-ago period on 4% revenue growth. The company added that its dealers continued their retail sales growth momentum from the second half of 2005 as motorcycle sales rose by approximately 7% worldwide in Q1.

Gannett Co. Inc., ((GCI)), media company, reported that Q1 earnings dropped to 99 cents a share, down from $1.05 cents a share in the year-ago period due to a difficult advertising environment at its flagship newspaper, USA Today. The company earnings are in line with analysts’ forecasts for earnings of 99 cents a share.


[R] 8:15 AM European averages traded in the negative at mid-day.[/R]
European markets moved deeply in the negative at mid-day dealings, following a sharply lower close of U.S. markets overnight. Market sentiment was hurt by concerns that the strong increase in the oil price and the industrial metals will lead to higher interest rates. However, stock-exchange shares gained after the Nasdaq Stock Market acquired a 14.99% stake in the London Stock Exchange. Shares of the LSE jumped 15.6%. London FTSE 100 fell 0.6%, the German DAX 30 lost 0.6%, and the French CAC 40 dropped 0.9%.


[R]7:45AM Asian markets ended sharply lower.[/R]
Asian-Pacific benchmarks closed steeply lower, reflecting weak high technology stocks and concerns that rising oil prices could hurt U.S. consumption and exporter issues. Regional decliners were led by the Nikkei which fell 1.5% to 17,162.55. The third consecutive drop of the Japanese index was contributed by weakness in tech and financial shares. The chip related sector declined, dragged by Advantest, down 3.8%. Among other tech stocks, Toshiba dropped 2.6%, Sony fell 2.5%, while banking stock Mitsubishi UFJ Financial Group slipped 3%. At the same time, drug and wholesale food companies advanced. Across the region, Hong Kong’s Hang Seng was another sharp decliner, falling 1%, followed by Australia’s All Ordinaries, down 0.9%. South Korea’s Kospi was sent 0.2% lower by consumer electronics shares like L.G. Philips LCD and Samsung Electronics.