Takeover rejected

In Asia, the MSCI index of Asia Pacific stocks traded outside Japan was down 0.9 per cent while the Thomson Reuters index of regional shares was 1.4 per cent lower.

Shares in Australia were down 0.8 per cent, but toll-road operator Transurban Group surged as much as 20 per cent after the company rejected a takeover offer by two Canadian pension funds but said it was open to talks.

Japanese government bond futures fell, tracking a slide in longer-term US Treasuries overnight on investor fears of excessive government debt supply after the Fed’s statement.

The euro was down slightly at $1.4841, from $1.4865 in early trade, as investors awaited a European Central Bank meeting later on Thursday. The ECB is expected to keep interest rates at a record low but may give clues on when it will start weaning banks off cheap funds.

The Bank of England also meets on Thursday with policymakers set to decide whether to inject more stimulus into the British economy.

Gold hovered around $1,088 an ounce after hitting another record high overnight, at $1,097.25.

In New Zealand, markets were still pricing in monetary tightening by the end of April but the Kiwi dollar fell after comments from the central bank that the economic recovery was more vulnerable than in Australia and after the jobless rate hit a nine-year high at 6.5 per cent.

“New Zealand has had a recession, and the pick-up is slower and more vulnerable – a difference financial markets do not appear to appreciate,” Reserve Bank of New Zealand Governor Alan Bollard said in notes prepared for a business group.

The Kiwi fell to as low as $0.7192, from around $0.7270 before Bollard’s comments.

The oil price dipped 0.6 per cent to $79.9 a barrel, after gaining more than $3 a barrel in the past three days. – The Times of India

Good morning friends.  Asian shares dipped on Thursday, and the dollar fell after the US Federal Reserve vowed to keep rates near zero for “an extended period” and said the recovery of the world’s biggest economy would be sluggish. 

The Fed’s pledge to stick to a very loose monetary policy was expected and gave investors little new to trade on, although its cautious economic outlook prompted light profit taking.

Shares of exporters were hit by Asian currencies’ modest gains. The dollar index was flat at around 75.8 but the US currency was quoted at 90.54 yen, down from 90.75 in late Asian trade on Wednesday, and slipped against other currencies.

“I do not think the Fed signaled any change,” said Richard Grace, chief currency strategist at Commonwealth Bank of Australia. “The policy guidance remains the same. I think the downtrend in the US dollar is intact and we could see the dollar index fall to around 74 in the short term.”

Japan’s Nikkei slid 1.4 per cent as the yen’s advance hurt exporters, but Nissan Motor was up 1 per cent after soaring sales in China prompted the carmaker to reverse its annual outlook to a profit from a loss.

A rise in the Korean won, to as high as 1,174 to the dollar from 1,178.4 at Wednesday’s close, also hurt exporters in Seoul where the KOSPI index tumbled 1.4 per cent. That was despite upbeat economic data, including double-digit department store sales growth and a further rise in exports to China last month.

“Investors are looking at the first batch of fourth-quarter indicators now that we are unsure about whether markets will remain solid in November or not,” said Kim Seung-han, a market analyst at HI Investment & Securities in Seoul.

The Dow Jones rose just 0.3 per cent on Wednesday, giving up earlier gains after the Fed’s statement, which said the lack of inflation pressure would enable it to maintain loose monetary policy.

Network equipment vendor Cisco Systems posted positive earnings after the bell though, sending its shares up 3.1 per cent. And there was encouraging economic news as data showed the US services industry grew modestly for a second month in October and private sector job losses slowed.

Good morning friends.  European shares turned positive after hitting a four-week low in early trading on Monday, with banking shares recovering after losses and energy shares following stronger crude oil prices.

By 0856 GMT, the FTSEurofirst 300 index of top European shares was up 0.1 per cent at 977.39 points after falling to a four-week low of 968.19. It slipped 2.1 per cent on Friday, the biggest one-day slide in nearly four months, hit by weak US consumer sentiment data.

Banks gained some ground after falling earlier in the session. Standard Chartered, HSBC, BNP Paribas and Societe Generale rose 0.2 to 0.7 per cent.

But Royal Bank of Scotland and Lloyds fell 1.1 per cent and 5.4 per cent respectively. The Daily Telegraph reported that the UK government will unveil plans this week to spend 30 billion pounds ($49.3 billion) buying further shares of rescued banks.

Energy shares tracked crude oil prices, which rose 0.7 per cent. BP, Royal Dutch Shell, BG Group, Repsol, Total and StatoilHydro added 0.4 to 1.7 per cent. -  The Economic Times

Good morning friends. There is a recovery path  in ITC, M&M,TCS. 

Indian equities were gaining momentum as buying activity resumed at lower levels. Indices got support from FMCG, pharma and IT stocks while capital goods space was a little subdued.

“The correction for the markets for 150-200 points was due but the time frame of it was not known as markets had risen very fast from its last October lows. Seeing markets for last 3-4 sessions the correction is happening as it is loosing its uptrend, though on weak global markets and profit booking by short term traders.

Fundamentally we are still going well but technically till we hold the 4950 levels, stock specific buying interest may emerge in the market. We will need to wait and watch the situation to get a clear direction for short to medium term. Domestic news flow like the RIL –RNRL case hearing, banks downgrade by the Moody’s, increasing inflation and the CBI scanner on DoT may bring in some action in sector specific stocks,” said Anand Rathi report.

At 12:52 pm, National Stock Exchange’s Nifty was at 5031.95, up 43.35 points or 0.87 per cent. The 50-share index touched a low of 4983.80 and high of 5054.95.

Bombay Stock Exchange’s Sensex was at 16921.50, up 131.76 points or 0.78 per cent. The index hit a low of 16795.66 and high of 17006.77.

BSE Midcap Index was up 1.63 per cent and BSE Smallcap Index moved 1.48 per cent higher.

Amongst the sectoral indices, BSE FMCG Index moved 2.29 per cent higher, BSE Healthcare Index climbed 2.12 per cent and BSE IT Index was up 1.91 per cent.

BSE Capital Goods Index slipped 0.73 per cent and BSE Oil&gas Index declined 0.59 per cent.

Hindalco Industries (3.66%), Mahindra & Mahindra (3.44%), ITC (3.37%), Axis Bank (3.09%) and TCS (2.96%) were amongst the Nifty gainers.

GAIL (-2.54%), L&T (-2.10%), Grasim Industries (-1.43%), Reliance Industries (-1.09%) and JP Associates (-0.97%) were amongst the losers.

Larsen & Toubro (L&T), which declared its results for the quarter ending September 2009 on Thursday, appears to be struggling to come out of the recessionary pull, with barely 6% growth in sales excluding the business it has exited. This is the second successive quarter of muted growth for the company, which had managed a sales growth of 30% in H2 2009 at the peak of the slowdown.

Reliance Industries on Thursday belittled the importance of the memorandum of understanding (MoU) signed between members of the Ambani family and said the government’s gas utilisation policy had taken away the company’s freedom to market gas. RIL’s lawyer Harish Salve resumed his arguments on Thursday and as on previous days was peppered by questions from the justices on various aspects of the complex case.

Market breadth was positive on the BSE with 1785 advances and 814 declines. – The Economic Times

Good morning friends.  We are having a fall oil price per barrel.  Oil prices fell to near USD 71 a barrel on Friday in Asia, giving up part of the previous day’s big gains, as the US dollar rebounded.

Benchmark crude for November delivery was down 49 cents at USD 71.20 by midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract added USD 2.12 to settle at USD 71.69 on Thursday.

Oil has bounced in a range between USD 65 and USD 75 for months amid signs a recovery of the US economy could be slow and uneven.

A weakening dollar has helped support crude prices as investors pour money into commodities on concern that the surge in stimulus spending will eventually spark inflation.

“People are using crude and gold as an inflation hedge because the US is just printing money,” said Clarence Chu, a trader at market maker Hudson Capital Energy in Singapore.

“There’s definitely been a negative correlation between the dollar and oil.”

The euro fell to USD 1.4722 from USD 1.4791 the previous day, and the dollar rose to 89.18 yen from 88.37.

Oil prices will likely trade near USD 70 until there are more positive economic signs, such as job creation, Chu said.

“There hasn’t been a strong signal that the economy is recovering,” Chu said. “There are still job losses every month.” – Indian Express

Good morning friends.  It’s a good thing to know that the global wheat trade sets to slump by 17% . 

The first growth in the service industry in a year and upbeat comments about big banks pulled investors into the stock market after two losing weeks.

The Dow Jones industrial average rose 112 points as all major stock indicators gained 1 percent.

The Institute for Supply Management said its service index rose to 50.9 in September from 48.4 in August. Analysts polled by Thomson Reuters had expected a reading of 50, the dividing line between growth and contraction. The index hadn’t grown since August of last year.

Financial and energy stocks led the gains after Goldman Sachs raised its rating on large banks and the price of oil jumped.

The advance follows the market’s first back-to-back weekly drops since July, which came as reports on manufacturing and consumer sentiment fell short of expectations.

Stocks had fallen for seven of eight days, which likely brought buying interest from investors seeking bargains. The Dow lost 332 points, or 3.4 percent, in the past two weeks. Monday’s advance also came in light trading volume, which can skew price moves. Bigger tests of the market will arrive in the coming weeks when companies begin turning in earnings reports for the July-September quarter.

Thomas J. Lee, chief U.S. equity strategist at J.P. Morgan, said the improvement in the service index is encouraging because it could help boost confidence in the economy, a key element of a sustainable recovery.

“We really have to see the animal spirits kick in in the next six months, which is confidence in both businesses and consumers,” he said.

The Dow rose 112.08, or 1.2 percent, to 9,599.75, its first gain in four days. The broader Standard & Poor’s 500 index rose 15.25, or 1.5 percent, to 1,040.46, and the Nasdaq composite index rose 20.04, or 1 percent, to 2,068.15.

Lee said the market’s two-week drop is a healthy sign of investor caution after stocks rose for seven months off of 12-year lows in March. He also said the mixed economic readings aren’t surprising and don’t mean the rally is over.

“We should be kind of looking for data to come in a little choppy because no recovery is going to be linear and smooth,” he said. – The Economic Times

Equities opened with marginal gains on Thursday amid weak cues from overseas shores. But the star performer was Bharti Airtel which attracted buyer interest after talks with MTN Group collapsed. 

Bombay Stock Exchange’s Sensex was trading at 17188, higher by 61 points while National Stock Exchange’s Nifty climbed 5.6 points to 5089.

“Nifty has strong support at 5,010-4,980 levels and resistance is placed at 5,150. Technically we see this current momentum heading towards the 5,210/17,550 levels shortly from where we could witness some decent profit taking happening.

Capital Goods and Oil & gas sector is currently showing strong relative strength and we believe that these could outperform in coming days,” said Nirmal Bang Securities in a note.

US stocks fell on Wednesday after a surprising contraction in an index of Midwest business activity, but buying of technology bellwethers like Cisco Systems Inc at the end of a strong quarter limited losses.

The Dow Jones Industrial Average slipped 29.92 points, or 0.31 per cent, to 9,712.28. The Standard & Poor’s 500 Index fell 3.53 points, or 0.33 per cent, to 1,057.08. The Nasdaq Composite Index shed 1.62 points, or 0.08 percent, to 2,122.42.

Stocks across Asia declined following Wall Street cues after a surprise drop in manufacturing in the US cast doubts on the strength of a global recovery, while the dollar was on the back foot against higher-yielding currencies. The Nikkei lost 1.41 per cent, Topix fell 1.28 per cent, Straits Times shed 0.73 per cent and Kospi slid 2.43 per cent. Markets in Shanghai and Hong Kong were shut for China’s National Day holidays. – The Economic Times

Good morning friends.  The rupee rose to a six-week high on Wednesday as the dollar fell to a one-year low against a basket of currencies and as some gains in Asian shares raised hopes of further foreign fund inflows.

At 10:28 a.m. (0458 GMT), the partially convertible rupee was at 47.91/92 per dollar, stronger than Tuesday’s close of 47.9550/9650.

In early deals the rupee hit 47.85, its highest since Aug. 10.

“The rupee is tracking the crosses and also equities,” said V. Kumar, chief dealer with State Bank of Travancore, who said 47.80 was an important technical level.

“Once 47.80 breaks, 47.50-47.20 should be the range for this week,” he said.

The low-yielding dollar fell to a one-year low against a basket of currencies on Wednesday as speculators dumped it ahead of a Federal Reserve policy announcement later in the day.

Expectations are growing that the Fed will reiterate its intention to keep a super-accommodative policy for an extended period.

The dollar index, which measures the dollar’s value against a basket of six major currencies, was down 0.24 percent at 75.934, having fallen to a one-year low of 75.915.

Asian markets were slightly higher, with MSCI’s measure of other Asian markets up 0.43 percent.

Indian shares were flat in early trade on Wednesday, bouncing around their previous close after a five-day run of gains.[.BO]

One-month offshore non-deliverable forward rupee contracts were quoting at 47.86/96. - Yahoo

Good morning friends. Government of India will buy IMF bonds worth $10 billion. 

Toeing the line of other BRIC countries, India today announced that it will buy bonds worth $10 billion from the International Monetary Fund. This was announced by finance minister Pranab Mukherjee who is attending the G-20 finance ministers’ meet in London. China yesterday committed to buy bonds worth $50 billion from the IMF and there have been talks that Russia and Brazil may do the same.

After the IMF bailed out India from one of its worst ever economic crisis in the 1990s, this comes as a kind of role reversal where the government would contribute to the kitty of the multi-lateral institution to revive the world economy and provide funds to needy developing nations. “However, this participation in IMF’s debt would not load India and not further stretch its resources,” an official statement said on Friday. The amount of $10 billion is in proportion to India’s current quota share at the IMF.

A decision to raise IMF’s lendable resources to $500 billion through bilateral financing and the New Arrangements to Borrow (NAB) was taken at the G-20 summit held at London in April 2009. India’s announcement comes in the backdrop of the recent decision of the IMF announcing a framework for the issuance of notes to the official sector. The design of these Notes will allow investments to be treated as international reserves.

This would enable the Reserve Bank of India to invest a portion of its foreign exchange reserves in these financial instruments. The decision will bring India in the forefront as a significant partner in the global economic and financial framework.

“India believes that the IMF is a quota-based institution and raising resources through bilateral financing and the expansion of the NAB are not a substitute for quota resources, but a temporary bridge to a quota increase. We fully expect that the next general quota review, which is now agreed to be concluded by January 2011, will result in the long overdue substantial re-balancing of quota and voting power in favour of emerging market economies and developing countries,” the official statement said. – Yahoo

Good morning friends.  India’s economy grew a slightly faster than expected 6.1 percent in the June quarter from a year earlier, as Government stimulus measures helped spur demand, although a poor monsoon threatens to crimp growth later in the year even as it drives inflation.

The annual growth for India’s fiscal first quarter was just above a median forecast of 6 percent in a Reuters poll, but lower than the year-ago quarter’s 7.8 percent expansion.

The manufacturing sector expanded 3.4 percent in April-June from a year earlier, while farm output grew an annual 2.4 percent, government data showed on Monday.

For the full year, India’s economy grew 6.7 percent in 2008/09, much slower than its expansion of 9 percent or more in the previous three years.

Economists have said poor monsoon rains could erode economic growth by 1 or 2 percentage points in the current fiscal year, although the central bank said last week that dry conditions are more likely to drive inflation than erode growth. – Indian Express