Nervous Markets in India

123jump.com Staff
07 Aug, 2007
New York City

Sensex in Mumbai trading closed higher by a fraction. Weakness in Asian markets have battered the indexes in the region with New York continuing to inflict volatility to global markets. Emerging marekts are beginning to recover and trade on local economic and earnings news. Fall in oil lifted goverment controlled refineries. Cement stocks increased on shortages in key markets. Banks recovered from earlier losses in the week. Real estate stocks rebounded.

[R]10:30AM New York, 8:00PM Mumbai – Banks, real estate, and cement stocks led a mild rise in Sensex in India.[/R]

Sensex in Mumbai trading closed up 29.74 or 0.2% to 14,932.77. Weakness and volatility in New York trading has held most global markets hostage to vagaries of traders in New York. In the broader market in Mumbai trading, 1,660 stocks gained, 1,026 declined, and 62 remained unchanged.

Of the 30 stocks in Sensex, 17 increased and 13 declined. ITC with a loss of 3% led the decliners in the index. Bajaj Auto lost 2% to 2,262 and Bhel declined 0.8% to 1,670.

Companies in power generation, cement, banks, and mobile telephony led a mild advance.

Ambuja Cements gained 0.8% to close at 127 rupees, ACC increased 0.35% to 982 rupees, and Grasim increased 0.45% to 2,910 rupees. Rising construction in Mumbai and surrounding areas in Maharashtra has prompted cement prices to jump 20% above 280 rupees.

Bharti Airtel jumped 1.9% to 877.20 rupees but Reliance Communication decreased 0.2% to 530 rupees.

Banks led the most gainers in the index. Canara Bank led the banking stocks with a gain of 4% and Kotak Mahindra, Bank of India, and Union Bank of India jumped 2%. ICICI Bank dropped 2% to 870 rupees and State Bank of India lost a fraction to close at 1,726 rupees.

Punk Llyod surged 3.6% to 287 rupees on an order to build a unit for Bharat Oman Refineries. The project with a 2-year completion date, has lifted total order backlog to 16,480 crore rupees.

Sharp decline in oil prices led state owned oil companies higher. HPCL jumped 2.4% to 256 rupees, BPLC closed 1.7% higher to 316 rupees, and Indian Oil Corp gained 1.8% to 407 rupees.

Kale Consultants soared 4% to 95 rupees on the news that the company has acquired UK based airline revenue auditing company for nearly $10 million. Zero Octa, based in the UK, has revenue of $6 million.

Real estate stocks were on the upswing after falling sharply in the previous session. Housing Development & Infrastructure soared 4%, DLF increased 1.3%, and Mahindra Gesco increased 0.7%.

[R]8:30AM New York, 9:30PM Tokyo – Asian markets make a feeble attempt to climb. Japan lost most of the day’s gain at the close.[/R]

Asian markets closed lower but select emerging markets managed to close higher. Philippines led the region with a gain of 2.8% followed by 1.1% rise in Australia and fractional gains in India, Japan, and Korea. Taiwan with a loss of 0.9% led the decliners in the region followed by 0.7% in Indonesia, followed by fractional losses in Thailand, Singapore, and Hong Kong. The Shanghai Composite gained 0.5% bucking the regional trend of lower markets for the last one week.

In Hong Kong trading insurance companies fell. China Life and Ping An lost nearly 0.7% dragged by weakness in financial and banking sector across the region. The regional commercial property developer Hong Kong Land reported first half profit increase of 32% to $155 million. The commercial property vacancy rates fell to 3% in Hong Kong but residential market remained relatively soft. The company is enjoying a rising demand from financial services segment. When counting the property valuations gain the profit in the first half jumped to $1.2 billion from $924 million a year ago. Diluted earnings per share jumped to 50.49 cents from 39.92 cents.

Indonesia Central Bank left the key interest rate unchanged to 8.25% meeting the expectations of the most economists. Food and energy prices have been stubbornly high and continue to rise. In July the prices gained 6.1% after rising 5.8% in June. The bank is targeting inflation between 5% and 7%. Rising prices of palm oil and crude oil have forced the government to reduce exports of palm oil. Indonesian currency rupiah edged a fraction lower at close to 9,316 to a dollar.

In Sydney trading Macquarie Bank recovered with a gain of 6.4% after falling more than 15% in the first week of this month. Novo Energy jumped 8% after a takeover offer from Toro Energy valuing the company at A$276 million. Primary Healthcare and Hills Industry edged up a fraction after reporting earnings. Australian Agriculture fell 7% after reporting first half profit decline of 31%. Casino operator, Publishing & Broadcasting jumped 4% and Austar United fell 2% on broker rating revisions.


[R]7:00AM New York, 8:00PM Tokyo – Market opened higher but steadily lost its gain the afternoon trading.[/R]

Nikkei 225 closed 7.31 or 0.04% higher to close at 16,921.77. The index opened nearly 1% higher but gave up most of its gains on weakness in banking and commodities related stocks. Topix index fell 0.5% or 7.8 to close at 1,660.01

Toyota is planning to increase its global of production of vehicles to 10.5 million vehicles. According to a report in local business newspaper, the Nikkei Weekly, in a recent meeting with parts suppliers the company is targeting higher global sales to meet rising demand. Toyota last week reported 32% rise in quarterly earnings on 16% gain in sales and planned to produce 8.9 million vehicles in the fiscal year ending in March 2008.

According to Bloomberg news Shinsei Bank Ltd reported accumulated losses from subprime lending in the U.S. of $30 million and has exposure of $200 million to mortgage bond market. After the news the stock jumped 8% but closed 3.3% higher at 430 yen.

Trend Micro, Internet security and software provider, jumped 14% or 500 yen to close at 4,100 yen. The company revised its guidance for the second quarter sales to 25 billion from 22.5 billion yen and earnings to 6.2 billion yen from 3.7 billion yen. The sales were revised up 11% and earnings were revised up 67%.

Japan Steel Works soared 5.8% to close at 1,926 after reporting 300% increase in earnings to 7.9 billion yen.

Softbank said that it has added 224,000 mobile users in the month of July.

Nomura Holdings lost its gain of 3% in the morning trading to close up 0.5% to 2,145 yen. The brokerage company in the previous week had reported a sharp rise in earnings on higher trading and brokerage revenue. Mizuho Financial after reversing from an earlier gain of 2.2% to close 2% lower at 687,000 yen. In the last week the company reported lower that expected earnings.

Oil closed sharply lower in the international markets with a loss of 5% dragging energy and trading companies. Inpex, oil explorer, fell 8% to 90,000 yen. Mitsui & Company fell 5.2% and Mitsubishi dropped 4.5%.