India 1.2% Higher, Inflation Lower

Elena
25 Jan, 2007
New York City

The market traded in a tight range until the final hours when traders covered their short positions ahead of the expiry of January derivatives. Metal, software and telecom stocks led the advance in a broad rally. Tata Steel continued its surge, Hindalco, Bharti Airtel and Wipro were the other main advancers. Cipla and Ranbaxy led the decliners. Weekly measure of inflation declined.

[R]10:30AM NY-9:30PM Mumbai The Sensex gains on a rally in metal stocks.[/R]
The Sensex on BSE ended with a gain of 172.26 points, or 1.22%, at 14,282.72. The market-breadth was strong as small-caps and mid-caps also took part in the rally. For 1,424 shares which advanced, 1,194 declined and 72 shares were unchanged. Of the 30 stocks in the Sensex, 27 advanced, while the rest declined. The turnover on BSE was Rs 4,680 crore, higher than 4,470 crore on Wednesday. On NSE, the turnover amounted to 11,465.61, compared to Rs 8,186.52 crore on Wednesday.

Economic news

Inflation in India declined during the week ending January 13th, 2007. The wholesale price index was down to 5.95% when measured for the last 52 weeks, compared to 6.12% the previous 52-week period on lower prices of food products.

India and Pakistan have not overcome their disagreements for Iranian oil and gas transportation piped via Pakistan, according to Iranian government. The $7 billion pipe network transportation project is stymied by the Pakistan government’s inability to provide secured passage and Iran’s desire to lock higher prices than India is willing to pay.

Trading highlights

Pyramid Saimira was the most-active stock with a turnover of Rs 217 crore followed by HDFC and Tech Mahindra.

Advancers

Tata Steel led the gainers, rising 5.62% to Rs 508.50. There are just a few days for the submission of revised bids for Corus, the Anglo-Durch steel maker. Tata is in the race together with CSN, the latter still ahead with a slightly better deal.

Hindalco advanced 3.35% to Rs 174.50 and Bharti Airtel gained 3.14% to Rs 708.50, and Wipro added 3.61% to Rs 655. BHEL surged 3.13% to Rs 2,444.50. The company is scheduled to release its third quarter earnings results today. Grasim jumped 2.5% to Rs 2,863, and Larsen & Toubro advanced 2% to Rs 1,613.

HDFC advanced 2.58% to Rs 1,685. HDFC posted 25% growth in Q3 net profit to Rs 355.49 crore, compared with Rs 284.52 crore in the same period last year. Maruti Udyog also advanced 0.57% to Rs 937.25, following the news that it launched diesel version its popular Swift model on Wednesday. Index heavy Reliance Industries edged 0.14% higher to Rs 1,370.65, recovering from a low of Rs 1,362.10.

Metal and mining stocks gained on expectations of higher prices. Sesa Goa advanced 5.45% to Rs 1,915, Jindal Steel & Power was up 6.22% to Rs 2,305, Jindal Stainless added 5.12% to Rs 127.25 and SAIL rose 6.23% to Rs 110.90.

Decliners

There were few stocks that declined on a day of broad rally. Cipla led the decliners, slipping 1.49% to Rs 245. Ranbaxy also shed 1.21 % to Rs 396.50 and Hero Honda dipped 0.45% to Rs 715.

Of the mid-caps and small-caps, prominent decliners included Ind-Swift Laboratories which lost 2.44% to Rs 68.10 on 39% decline in net profit and Balaji Telefilms which shed 1.06% to Rs 121.80, despite 49% advance in third quarter net profit.


[R]9:45AM Market opened mixed. eBay and Nokia boosted the tech sector.[/R]
U.S. stock markets opened mixed Thursday, with technology stocks showing continuous strength and helping the Nasdaq move above the flat line. Investors reviewed strong quarterly results from eBay Inc., Nokia, AT&T Inc. and a huge profit loss at Ford Motor.

In corporate news, eBay ((EBAY)) jumped 11% after the online auction house posted a 24% profit growth, with 29% sales increase. AT&T Inc. ((T)) rose 2.3% after the company reported 17% profit rise in Q4 amid growth in wireless subscribers and in its regional wireline businesses. Nokia ((NOK)) provided considerable support to the sector, rising 5.2% after the world''s largest handset maker posted a better-than-forecast 19% profit rise on 13% revenue growth. Among other tech heavyweights, Qualcomm ((QCOM)) gained 1.7% after posting better-than-expected 5% profit rise and reiterated its outlook for 2007. Dow component Ford Motor Co. ((F)) reversed from early losses to traded 1.1% in the positive. The automaker reported its largest annual loss amid weaker sales and huge restructuring costs.

On the economic news front, the Labor Department said that 325,000 newly laid-off workers filed claims for jobless benefits, an increase of 36,000 from the previous week. Market also awaited word on the state of the housing market. In the first hour of trading, the Dow Jones industrial average was down 14.10, or 0.11%, at 12,607.67. The Standard & Poor''s 500 index was down 1.36, or 0.09%, and the Nasdaq composite index was up 0.70, or 0.03%, at 2,466.98.


[R]9:30AM NY-2:30PM London UK benchmark index gains Thursday on oil, banks.[/R]
By midday the FTSE 100 in London advanced 6 points, or 0.1% at 6,321.1.

Advancers

Insurer Legal & General helped London counterparts. It reported a 42% increase in worldwide new business and guided double digit growth in the UK life assurance market in 2007, buoying Friends Provident to rise 0.4% to 227p and Aviva to gain 0.1%.

The US is to increase the size of its strategic petroleum reserve and that supported oil companies as crude prices advanced. BP rose 0.6% and Royal Dutch Shell was up 0.6%.

The property sector also advanced after broker comment from JP Morgan. The bank upgraded the sector from neutral to overweight resulting in advances in British Land, up 1.2%, Liberty International 0.2% higher and Hammerson rising 0.8%.

BT Group was 0.3% firmer after ABN Amro increased its rating on the stock to hold from sell and raised the price target on the stock.

Decliners

British Airways said that talks with cabin crew unions failed and that news sent the shares of airline lower 0.6%.

Drax Group broke its strong winning streak as hopes that the cold spell in the UK would lift its earnings. The biggest coal-fired power station in Europe was also downgraded by JP Morgan to underweight from neutral and slipped 2.4%.

Unilever, consumer products producer shed 0.4% on worries over weakness in the food sector before its Q4 results, due next Thursday.


[R]9:00AM Market futures were flat on mixed earnings reports.[/R]
U.S. stock futures pointed to a flat market opening, as better-than-anticipated results at eBay and Nokia provided further strength to the tech sector, while Ford weighed on the broader market with a wider Q4 loss. EBay ((EBAY)) jumped 12% in pre-open trading after posting a 29% rise in quarterly sales. Nokia ((NOK)) rose 5.3% after the handset maker posted 19% profit rise on 13% revenue increase. Qualcomm ((QCOM)) gained 3% after the company posted a 5% profit rise and confirmed its 2007 outlook. AT&T ((T)) reported a 17% rise in Q4 earnings, bolstered by strength in its wireless business, amid a 23% increase in revenue. Among other high-tech giants, Microsoft ((MSFT)), Apple Inc. ((APPL)) and Google ((GOOG)) moved to the upside. Microsoft is scheduled to report results after the closing bell.

Dow component Ford Motor ((F)) fell 1.2% in pre-open trading the automaker said its loss widened to $3.05 a share, from 4 cents a share a year earlier. Excluding special items, the company would have lost $1.10 a share, wider than the average analyst loss estimate of $1.01 a share. Among other early losers, Bristol-Myers Squibb ((BMY)) moved 0.2% lower, as the pharmaceutical company posted a quarterly net loss, citing special costs. However, earnings per share excluding special items surpassed the average analyst expectations. S&P 500 futures slipped 0.90 of a point to 1,445.30 while Nasdaq 100 futures climbed 2.25 points to 1,817.50. Dow industrial futures were unchanged at 12,661.

[R] Initial jobless claims rose above expectations.[/R]
Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended January 20, showing that jobless claims increased by much more than economists had been expecting. The report showed that jobless claims rose to 325,000 from the previous week''s revised figure of 289,000. Economists had been expecting a somewhat more modest increase to 310,000 compared to the 290,000 originally reported for the previous week. With the increase, initial jobless claims climbed back above 300,000 after claims were below that key level for the two previous weeks. The increase marked the biggest one-week rise since an increase of 96,000 claims in the week ended Sept. 10, 2005, which came after Hurricane Katrina. The Labor Department also said that the less volatile four-week moving average rose to 309,250 from the previous week''s revised average of 307,750. At the same time, the report showed that continuing claims in the week ended January 13 fell to 2.484 million from the preceding week''s revised level of 2.523 million.


[R]8:00AM Ford reported wider Q4 loss on huge restructuring costs.[/R]
Ford Motor Co. ((F)) said that its Q4 loss widened to $5.8 billion or $3.05 a share from a loss of $74 million, or 4 cents a share last year. The huge quarterly loss was contributed to weaker sales and high restructuring costs, pushing the automaker''s deficit for the year to $12.7 billion, the largest in its 103-year history. Restructuring in Ford''s North American operations cut quarterly earnings by $3.7 billion. Excluding special items, the automaker would have lost $2.1 billion, or $1.10 a share, wider than the average analyst estimates of a loss standing at $1.01 a share. Ford reported quarterly sales decline of 13% to $40.3 billion from $46.3 billion in the year-ago period.

The company posted annual loss which surpassed its previous record for a year of $7.39 billion set in 1992. Excluding special items, Ford lost $1.50 per share in 2006, missing expectations a loss of $1.35 per share for the year. Of all the special items, restructuring costs totaled $9.9 billion for the year. Ford predicts continued losses for 2007. It expects to burn up $10 billion in cash on automotive operations through 2009 and invest $7 billion in new products.


[R]7:30 AM Japan leads Asian stocks lower Thursday on falling exports.[/R]
Asian markets ended mostly lower on Thursday. The Nikkei 225 Index in Japan closed 0.3% lower at 17,458.30. Toyota shares fell 1.7%. Sony gained 1.6% as market talk is growing that the company will launch an IPO of its Sony Financial unit. Shares of shipping line Kawasaki Kisen Kaisha and other domestic-related issues such as Nippon Steel were higher, bucking the trend. In Tokyo currency trading the U.S. dollar was quoted at 120.40 yen, compared to 121.15 yen in late New York

Hong Kong Hang Seng Index fell 0.7% to 20,669.83. China Mobile, the second-biggest Hong Kong large-cap by market capitalization, declined 2% as investors took profits following recent gains. China Life Insurance shed 2.9%, tracking a 4.9% decline. The Shanghai Composite Index slipped 2.6%. The Chinese government announced that the economy expanded faster than forecast in Q4, bringing full-year growth to 10.7%, its fastest pace since 1995.

Taiwan Weighted Price Index dipped 0.15% to 7,923.77 and South Korean Kospi index shed 0.05% to 1,382.36. Australian ASX/S&P 200 rose 0.02%, New Zealand NZSX-50 rose 0.04% and the Composite Index in Malaysia declined 0.1%.


[R]6:30 AM European markets advance Thursday on strong tech sector.[/R]
European markets were higher Thursday. By mid morning, the FTSE 100 in London climbed 0.2% to 6,324.2, Frankfurt Xetra Dax added 0.2% to 6,761.93, and the CAC 40 in Paris gained 0.1% to 5,643.37.

Advancers

Nokia, the Finnish mobile phone maker, posted a better-than-expected 19% increase in Q4 net profit on strong growth in emerging markets.

Pernod Ricard, the French drinks group, advanced 6.2% after it reported a 7.3% growth in first-half net profit thanks to growth in its prestige brands.

Siemens posted a better-than-expected increase in sales and operating profit in its fiscal first quarter. The shares gained 6%.

Swedish clothing retailer Hennes & Mauritz rose 5.2% after it said that its Q4 pretax profit rose 27%, above the expectations of the analysts for a profit.

Decliners

Air Liquide fell 2.1% after a sharp drop in natural gas prices and the strength of the euro contributed to a 0.9% drop in Q4 sales.

U.K airline British Airways slipped 1.4% after the company said that cabin crew members of the Trade Union will stop work for 48 hours starting Jan. 30.

Oil and gold

Crude oil prices dropped in Asian trading Thursday after rising overnight to a two-week high. Crude oil for March delivery dropped 32 cents to $55.05 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude for March dipped 17 cents to $55.26 a barrel on the ICE Futures exchange in London. Gold opened Thursday at a bid price of $646.57 a troy ounce, up from $641.40 late Wednesday.

Currencies

The dollar fell against other major currencies in European trading Thursday morning. The euro traded at $1.2980, up from $1.2961 late Wednesday. The British pound was quoted at $1.9691, up from $1.9672. The dollar bought 120.56 Japanese yen, down from 120.95.