Crude Cracks Above $80 As GDP Boost Stays On

Traders continue to embrace risk appetite amid dollar weakness; latest spurt in the US GDP also proves beneficial 

Crude oil prices raced up yet again in Asian trades today, extending a rebound from the previous session as traders continued to embrace risk appetite amid dollar weakness and ideas that the latest spurt in the US GDP would bring about a substantial up tick in the demand for crude. 

Yesterday, Crude oil prices rose after the United States economy grew in the third quarter for the first time in more than a year. The US economy expanded at a 3.5% annual pace in the third quarter, as massive government stimulus helped drag the economy out of the longest and deepest recession since the 1930s, the Commerce Department estimated Thursday. 

New York's main contract, light sweet crude for delivery in December, added $US2.41 cents to $US79.87 a barrel. The counter added further gains today, edging above $80 per barrel mark and hitting a high of $ 81.21 per barrel as Asian markets swung sharply up. Dollar neared 1.4850 levels against the Euro, ensuring that the GDP stays on for the commodity. 

MCX Crude oil futures for November, meanwhile, are lingering into negative territory as the prices try to catch up the global cues amid a strong bout of strength in the Indian rupee. Rupee has jumped near 47 per US dollar levels following a rebound in the domestic stocks. The counter trades at Rs 3760, down Rs 6 per barrel or 0.16% from the previous close with 1.13% drop in the open interest. Watch out for a break above Rs 3765 to make the counter eye a target of 3781-90.

Gold Tumbles; Looks In For A Correction

US personal inc, Chicago PMI, consumer confidence data scheduled for release 

Gold futures tumbled in the mid day London dollar reversed its course and the equities in Europe traded on a weak note. Oil was also pulled lower below $ 80 a barrel mark. 

The U.S. stock futures also pointed to a weaker start Friday following the rally in the prior session on surprisingly strong economic growth in the third quarter. S&P 500 futures fell 4.4 points to 1,057.20 and Nasdaq 100 futures fell 3.5 points to 1,704.00. Futures on the Dow Jones Industrial Average dropped 35 points.

In the currencies the US dollar approached the 1.4700 Euro mark again after falling to as low as 1.4858 Euro. However it was weaker against the Japanese Yen giving gold mixed signal as a appreciating dollar against the Euro is giving it a negative signal but however a falling dollar against the Yen is lending support to it as a safe asset. 

Further momentum for the metal will depend on flurry of US data releases and movement in market. Friday's calendar has plenty of items of note as well, with personal income for September, Chicago PMI for October and the final reading of the University of Michigan's consumer confidence for October.

The December COMEX Gold futures contract was unable to break above the $1050 mark, the level, which we had mentioned in the morning update, has been intact. It fell more than $6 from those levels today and a further downward spiral can be expected on break of $1043 towards 1039, 1032 & 1020 levels. 

MCX bullion also slipped in red quoting at Rs 15827 down more than Rs 10 per 10 grams. A break of Rs 15914 levels may take it to 15880 & 15800 levels today. 

Recently the domestic gold futures are seen trapped between the volatile movements in the Rupee. The MCX December contract traded in the range of merely Rs 200 to Rs 16014-15810 due to ups and downs in the Indian currency, which is directly affected by the Indian equity market and US dollars movement in the international markets. 

Whereas the international bullion futures traded in the range of $30 so far this week which should have actually shown around Rs 500 movement in the Indian gold futures. But due to volatile swings in the Indian Rupee the Indian gold under performed.

FIIs resort to heavy selling

Outflow of Rs 1594.60 crore on 29 October 2009 

Foreign institutional investors (FIIs) dumped shares worth a net Rs 1594.60 crore on Thursday, 29 October 2009, as against a tiny inflow of Rs 27.70 crore on Wednesday, 28 October 2009.

FII outflow of Rs 1594.60 crore on 29 October 2009 was a results of gross purchases Rs 3418.90 crore and gross sales Rs 5013.50 crore. The BSE Sensex fell 230.77 points or 1.42% to 16,052.72 on that day.

FII inflow in October 2009 totaled Rs 7,568.10 crore (till 29 October 2009). Foreign funds had bought equities worth Rs 17,328 crore in September 2009. FII inflow in the calendar year 2009 totaled Rs 67,705.40 crore (till 29 October 2009).

There are a total of 1699 foreign funds registered with the Securities & Exchange Board of India (Sebi).

Financial News Flash

ICICI Bank Second-Quarter Net Unexpectedly Rises on Bonds, Currency Income ICICI Bank Ltd., India’s second- largest lender, reported an unexpected gain in second-quarter profit as income from trading bonds and currencies climbed.

India Plans to Import 30,000 Metric Tons of Rice as Drought Reduces Output India, the world’s second-biggest rice grower, plans to import as much as 30,000 metric tons of the grain after a drought in almost half the nation cut output.

Vodafone Receives India's Tax Department Notice on Purchase of Hutchison India’s tax department today issued a notice to Vodafone Group Plc on tax it may have to pay for the $11.2 billion acquisition of Hutchison Essar Ltd.

Shell in Talks Only With Essar Over Possible German, U.K. Refinery Sales Royal Dutch Shell Plc, Europe’s largest oil company, is in exclusive talks with Essar Oil Ltd. over the sale of three refineries in the U.K. and Germany.

Indian Oil Says Production at Mathura Refinery Unaffected by Jaipur Fire Indian Oil Corp., the nation’s second-largest refiner, said a fire at a terminal in Jaipur hasn’t affected output at its refinery in Mathura, which supplies fuels to the storage unit through pipeline.

Tata Power Forms Venture With Norway's SN Power for Hydroelectric Projects Tata Power Co. is forming a venture with SN Power of Norway to generate hydroelectric power.

India Stocks Post Longest Losing Streak in 11 Months as Profits Disappoint India’s benchmark stock index fell for a fifth day, the longest losing streak in 11 months, after Reliance Industries Ltd. and Bharti Airtel Ltd. posted profits that fell short of analysts’ forecasts.

Bharti's Profit Growth Slows For Ninth Quarter as Competition Intensifies Bharti Airtel Ltd., the Indian operator that failed to merge with MTN Group Ltd., reported profit growth slowed for the ninth quarter as competitors cut call charges in the world’s second-largest wireless market.

Reliance Industries May Bank on Higher Natural Gas Output to Boost Profit Reliance Industries Ltd., India’s most valuable company, may bank on increased production of natural gas to cut dependence on refining and end four straight quarters of declining profit.

Stocks in U.S. Extend Weekly Decline on Economic Reports, Concern Over CIT U.S. stocks tumbled the most since July after declines in personal spending and consumer confidence and the threat of a CIT Group Inc. bankruptcy raised concern over the durability of the economic recovery. The dollar and Treasuries gained, while commodities retreated.

VIX Jumps Most in Year as Drop in U.S. Stocks Spurs Demand for Protection The benchmark index for U.S. stock options rose the most in a year as consumer confidence and personal spending fell and CIT Group Inc. worked to avert collapse.

Wilbur Ross Sees `Huge' Commercial Real Estate Crash Ahead for U.S. Assets Billionaire investor Wilbur L. Ross Jr., said today the U.S. is in the beginning of a “huge crash in commercial real estate.”

Frank Reverses Course, Says He'll Support Prepayment to Unwind Large Firms Barney Frank, chairman of the U.S. House Financial Services Committee, reversed course and will support requiring financial firms to prepay into a fund the government will use to unwind large firms after they fail.

Madoff's Accountant Friehling Will Plead Guilty, Cooperate With Government David Friehling, the accountant for con artist Bernard Madoff, will plead guilty on Nov. 3 for his role in the largest U.S. Ponzi scheme, prosecutors said.

CIT Reaches Agreement With Carl Icahn to Back Lender's Restructuring Plan CIT Group Inc., the 101-year-old commercial lender trying to avert collapse, reached an agreement with billionaire investor Carl Icahn to support its prepackaged bankruptcy plan.

U.S. Airlines Boost Fares as Much as $10 for Third Increase in Three Weeks Delta Air Lines Inc., AMR Corp.’s American Airlines and other U.S. carriers raised round-trip domestic fares by as much as $10, the industry’s third increase in three weeks.

source: Bloomberg

Mutual Funds continue buying

Purchases worth Rs 457.70 crore on 29 October 2009 

Mutual funds (MFs) bought shares worth a net Rs 457.70 crore on Thursday, 29 October 2009, slightly higher than Rs 438.70 crore on Wednesday, 28 October 2009.

MFs' net inflow of Rs 457.70 crore on 29 October 2009 was a result of gross purchases Rs 1758.40 crore and gross sales Rs 1300.70 crore. The BSE Sensex fell 230.77 points or 1.42% to 16,052.72 on that day.

MFs sold shares worth a net Rs 5,309.10 crore in October 2009 (till 29 October 2009). MFs had sold shares worth a net Rs 2334.60 crore in September 2009.

Non Business Day on 02nd November 2009

Indian Banks & Stock Markets are closed in Mumbai on 02nd November 2009 (Monday) on account of Guru Nanak Jayanti.

Oil Submerges Below $78 On Heavy Retreat In Markets; Demand Concerns

Crude oil dropped below the $78 a barrel mark on as Asian markets retreated very steeply today. The surge in the inventories and concerns over the fuel demand also increased the weight of the bears in the market.

Asian share markets were solidly lower Thursday after large declines on Wall Street sapped investors' appetite for risk.

Japan's Nikkei 225 was down 2.1% with Australia's S&P/ASX 200 off 2.4% and South Korea's Kospi Composite down 2.6%. Hong Kong's Hang Seng Index had fallen 2.6% while the Shanghai Composite was down 1.2% and Taiwan's main index off 2.8%.

Light sweet crude for December delivery was seen trading at $77.06 a barrel. On Wednesday, US Energy Department report showed that U.S. gasoline stockpiles climbed 1.62 million barrels last week and inventories of crude oil rose 778,000 barrels to 339.9 million. Fuel demand dropped 0.8% to an average of 18.5 million barrels a day last week, the report showed. 

In currency markets the euro managed to recover after falling to a low of $1.4683 against the U.S. dollar, with the single currency at $1.4718 from $1.4704 late in New York, and at Y132.90 against the Japanese yen, from a low of Y132.81 and Y133.55 in New York.

MCX November oil futures are trading down Rs 6 at Rs 3675 per barrel. The traders may sell the counter on rallies towards Rs 3680-85 levels with the target of Rs 3655 and stop loss of Rs 3700.

COMEX Gold Jumps; US GDP Awaits

Gold futures surged in the mid London trades today as dollar depreciated after yesterday's sharp appreciation and also attracted safe haven demand as the Asian equities tumbled heavily today. 

Stock futures were mixed Thursday after the previous session's sell-off, but some signs of optimism emerged ahead of the release of U.S. gross domestic product data for the third quarter. Futures for the Dow Jones Industrial Averages rose 35 points, or 0.4%, to 9,746.

However, S&P 500 futures were virtually unchanged at 1,038.40 points and Nasdaq 100 futures were flat at 1,679.70.

Investors are eagerly awaiting the release of third-quarter U.S. gross domestic product data, which is due at 8:30 a.m. Data on weekly initial jobless claims is also on the schedule.

MCX Gold futures however traded in the petite range of Rs 80 to Rs 15946-15866 due to flat momentum in the Euro- USD pair. The counter was off late seen quoting at Rs 15867 per 10 grams. The supports for the counter are at Rs 15830 & Rs 15783 levels.

International gold futures jumped more than $ 5 at $ 1036 levels and were recently seen quoting at $ 1034.5 levels. It should find supports at $ 1026 & $ 1023 levels.

FII buying slows down

Inflow of Rs 27.80 crore on 28 October 2009 

Foreign institutional investors (FIIs) bought shares worth a net Rs 27.80 crore on Wednesday, 28 October 2009, sharply lower than Rs 1341 crore on Tuesday, 27 October 2009.

FII inflow of Rs 27.80 crore on 28 October 2009 was a results of gross purchases Rs 3035.90 crore and gross sales Rs 3008.10 crore. The BSE Sensex lost fell 69.91 points or 0.43% to 16,283.49 on that day.

FII inflow in October 2009 totaled Rs 9,162.70 crore (till 28 October 2009). Foreign funds had bought equities worth Rs 17,328 crore in September 2009. FII inflow in the calendar year 2009 totaled Rs 69,299.90 crore (till 28 October 2009).

There are a total of 1700 foreign funds registered with the Securities & Exchange Board of India (Sebi).

RBI revised WPI projection

WPI is at 1.51% 

The index of headline inflation has remain unchanged at 242.2 level during the week ended 17 Ocotber2009 however the annual rate of inflation stood at 1.51% for the week ended 17 October 2009 compared with 1.21% last week and 10.82% during 18 October 2008.

The index of primary articles declined at 0.1% % to 273.3 from 273.5 for the previous week. The index for 'Food Articles' group declined by 0.1 % to 278.4 from 278.6 for the previous week due to lower prices of fish-marine (6%). However, the prices of tea, mutton, maize, arhar, condiments & spices and moong (1% each) moved up.

On other hand, the index of fuel and power declined by 0.1% to 344.9 from 345.4 for the previous week due to lower prices of aviation turbine fuel (3%), furnace oil (2%) and light diesel oil (1%). However, the prices of bitumen (2%) moved up.

One of the major index in WPI, that is manufactured product rose by 0.1 % to 208.6 from 208.3 for the previous week.

The index for 'Food Products' group rose by 0.4 % to 240.2 from 239.2 for the previous week due to higher prices of imported edible oil and gur (4% each), rice bran oil (3%) and oil cakes (2%). However, the prices of butter and groundnut oil (2% each) and gingelly oil and ghee (1% each) declined.

The index for 'Textiles' group declined by 0.1 % to 144.6 from 144.7 for the previous week due to lower prices of cotton yarn-cones (1%). However, the prices of hessian cloth (2%) moved up.

The index for 'Chemicals & Chemical Products' group rose by 0.2 % to 229.8 from 229.4 (Provisional) for the previous week due to higher prices of calcium ammonium nitrate n-content (8%), liquid chlorine (2%) and caustic soda (sodium hydroxide) (1%). However, the prices of p.v.c. resins (6%) declined.

In second quarter review the apex bank of India has revised its inflation projection to 6.5% for March 2010 from 5% set earlier. Global commodity prices have rebounded ahead of global recovery. The upside risk of deficient monsoon rainfall projected in the First Quarter Review of July 2009 has since materialised and prices of primary food items and manufactured food products have risen due to short supply. In short , inflation specially prices of food articles are set to rise.

Financial News Flash

Reliance Industries Second-Quarter Profit Falls, Missing Analyst Estimates Reliance Industries Ltd., the energy explorer battling a lawsuit over natural gas sales, reported a lower profit for the fourth straight quarter, joining Exxon Mobil Corp., after demand for fuels declined.

ONGC Net Income Beats Estimates After Cutting Discounts to State Refiners Oil & Natural Gas Corp., India’s biggest explorer, increased profit 5.8 percent, beating estimates, after cutting discounts given to state refiners and selling crude oil closer to market prices.

Prices in India Accelerate, Vindicating Subbarao's Exit From Loose Policy India’s wholesale prices increased the most since May, highlighting the inflation risks that prompted the central bank this week to begin withdrawing record monetary stimulus.

Mahindra Triples Second-Quarter Profit, Beating Estimates, on Auto Sales Mahindra & Mahindra Ltd., India’s largest maker of sport-utility vehicles and tractors, said second-quarter profit rose to a record, beating expectations, as lower borrowing costs spurred auto sales.

GE Names John Flannery India CEO to Advance Its Local-Development Strategy General Electric Co., which gets more than half of its sales outside of the U.S., named John Flannery chief executive officer for India as the company seeks to develop products inside countries where they’re sold.

Sugar Cane Price, Fixed Throughout India, May Ease Shortages, Millers Say India’s decision to fix sugar cane prices nationwide may ease shortages in the world’s biggest sugar-consuming country and smooth fluctuations in annual crops, industry officials said.

Gold Imports Decline for Sixth Month as Record Prices Cool Jewelry Demand Gold imports by India, the world’s biggest buyer, probably fell for the sixth month in October as record prices curbed demand from jewelers, a traders’ group said.

Thermax Says India Sales of Pollution-Control Equipment May Triple by 2016 Thermax Ltd., an Indian power- equipment maker that has a marketing deal with General Electric Co., expects air and water treatment machinery sales to triple by 2016 as Asia’s second-biggest polluter curbs emissions.

Rupee Advances as Exporters Purchase Currency After Drop to Three-Week Low India’s rupee rose, snapping a three-day decline, on speculation some exporters converted their foreign-currency earnings to take advantage of the local currency’s recent slide. 

U.S. Economy Expands for the First Time in More Than a Year Amid Stimulus The U.S. economy grew in the third quarter for the first time in more than a year, propelled by stimulus-driven gains in consumer spending and home building.

Stocks in U.S., Commodities Advance as Dollar, Bonds Drop on Growth in GDP U.S. stocks rallied, snapping a four-day losing streak for the Standard & Poor’s 500 Index, after the economy returned to growth following the worst contraction in seven decades. Treasuries dropped and the dollar and yen weakened, while commodities rose.

Malpass Says U.S. Economy Will Enter `Gloomy Period' After Initial Rebound Economic growth in the U.S. will slow after the rebound in the third quarter and enter “a very gloomy period” of high unemployment, said economist David Malpass, president of Encima Global in New York.

Bank of Japan to Debate Stopping Corporate Debt Purchases as Credit Thaws Bank of Japan policy makers will probably today debate ending their purchases of corporate debt as central banks around the world start phasing out emergency measures taken at the height of the financial crisis.

Volvo Rival Offer by Sweden's Konsortium Jakob May Be Made by End of Week Konsortium Jakob AB, the Swedish investor that wants to buy Volvo Cars from Ford Motor Co., aims to make a bid by end of this week, the head of the group said.

U.S. Home Vacancies Increase to 18.8 Million as Lenders Seize Properties About 18.8 million homes stood empty in the U.S. during the third quarter as banks seized properties from delinquent borrowers and new home sales fell in September.

BlackRock, T. Rowe Price Mutual Funds Tap Fed Loans to Buy TALF Securities Mutual funds run by companies including BlackRock Inc. and T. Rowe Price Group Inc. have begun buying bonds through a $1 trillion government lending program after a June regulatory ruling cleared the way.

source: Bloomberg

Birla Sun Life Basic Industries Fund Revises Exit Load Structure

With effect from 30 October 2009 

Birla Sun Life Mutual Fund has announced the revision of exit load structure for Birla Sun Life Basic Industries Fund. The changes will be effective from 30 October 2009.

Revised Exit Load: 

 

Accordingly, for redemption/switch-out of units within 365 days from the date of allotment, an exit load of 1.00% of applicable NAV will be charged. For redemption/switch-outs of units after 365 days from the date of allotment, the exit load charge will be nil.

Existing Exit Load: 

 

For redemption/switch-out of units within 7 days from the date of allotment, an exit load of 0.50% of applicable NAV is being charged. For redemption/switch-out of units after 7 days from the date of allotment, the exit load charge is nil.

Birla Sun Life Basic Industries Fund is an open ended growth scheme, which has the primary investment objective to generate long-term growth of capital, through a portfolio with a target allocation of 100% equity, focusing on investing in companies sensitive to economic cycles and commodity pricing cycles. The investment will be in companies which are often referred to as cyclical companies. The secondary objective is income generation and distribution of dividend.

Taurus MF Announces Changes to Ethical Fund

With effect from 29 October 2009 

Taurus Mutual Fund has announced that Taqwaa Advisory and Shariah Investment Solutions Pvt. Ltd. (TASIS) is now not assisting Taurus Asset Management Company Limited on Shariah Compliance. All references to TASIS, Mufti Barkutallah Abdul Kadir and Shariah Board of Taurus Ethical Fund stand annulled, with effect from 29 October 2009.

Taurus Ethical Fund is an open end equity oriented scheme, which has the investment objective to provide capital appreciation and income distribution to unitholders through investment in diversified portfolio of equities, which are based on the principles of Shariah.

Mutual Funds turn buyers after selling in 12 days in a row

Purchases worth Rs 438.70 crore on 28 October 2009 

Mutual funds (MFs) bought shares worth a net Rs 438.70 crore on Wednesday, 28 October 2009, as against an outflow of Rs 637.60 crore on Tuesday, 27 October 2009.

MFs' inflow of Rs 438.70 crore on 28 October 2009 was a result of gross purchases Rs 1290.20 crore and gross sales Rs 851.50 crore. The BSE Sensex lost fell 69.91 points or 0.43% to 16,283.49 on that day.

MFs sold shares worth a net Rs 5,766.80 crore in October 2009 (till 28 October 2009). MFs had sold shares worth a net Rs 2334.60 crore in September 2009.

Canara Robeco Large Cap+ Fund files offer document with Sebi

An open ended equity scheme 

Canara Robeco Mutual Fund has filed an offer document with Securities and Exchange Board of India (SEBI) to launch Canara Robeco Large Cap+ Fund, an open ended equity scheme. The new fund offer (NFO) price for the scheme is Rs 10 per unit.

The Investment Objective of the fund is to provide capital appreciation by predominantly investing in companies having a large market capitalization.

The scheme shall offer growth, dividend payout and dividend re-investment options.

The scheme may invest 65% to 100% of asset in large cap equity and equity related instruments, with high risk profile. It would also invest 0-35% in domestic debt and money market instruments including securitized debt up-to 10% of AUM, with low risk profile.

Entry load will be nil and exit load charge will be 1% for all amounts if redeemed / switched-out within 1 year from the date of allotment.

Minimum application amount will be Rs. 5000 and in multiples of Re.1 thereafter and Rs. 1000 for subsequent purchases and in multiples of Re.1 thereafter.

The minimum subscription (target) amount of Rs. 10 crore is expected to be raised during the NFO period of Canara Robeco Large Cap+ Fund.

The Scheme's performance will be benchmarked against BSE 100.

The fund manager of the scheme will be Nimesh Chandan.

Crude surpasses $79

Prices rise on inventory report anticipation 

Crude prices ended higher at Nymex on Tuesday, 27 October, 2009. Prices rose as traders anticipated that tomorrow's weekly inventory report will show drop in crude product inventories.

On Tuesday, crude-oil futures for light sweet crude for December delivery closed at $79.55/barrel (higher by $0.87 or 1%). Last week, crude ended higher by 3.4%.

For the month of September, 2009, crude ended higher by a marginal 0.9%. For the third quarter, crude ended higher by just 1%. Crude prices had rallied 40% and 11.3% in the second and first quarter of 2009 respectively.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 58% since then. Year to date, in 2009, crude prices are higher by 57.8%.

In the currency market on Tuesday, the dollar index, which calculates the strength of the dollar against a basket of six other currencies reversed its course after dropping earlier during the day. Last week, it had dropped to fourteen month lows.

Among other energy related products, gasoline for November delivery rose 4 cents, or 1.9%, to $2.07 a gallon. November heating oil also rose 4 cents to $2.06 a gallon.

Also on Tuesday, Natural gas for November delivery rose 5 cents, or 1.1%, to $4.56 per million British thermal units.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for November delivery closed higher by Rs 11 (0.3%) at Rs 3,712/barrel. Natural gas for November delivery closed higher by Rs 2.8 (0.85%) at Rs 248.4/mmbtu.

Precious metals drop again

Prices turn paler as dollar reverses its course 

Precious metal prices ended lower on Tuesday, 27 October, 2009. Prices fell due to the rebounding dollar which rose due to the weak consume confidence report.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Tuesday, gold for December delivery ended at $1,035.4, lower by $7.4 (0.7%) an ounce on the New York Mercantile Exchange. Last week gold ended higher by 0.5%. Last week, gold had registered record highs quite a few times reaching an all time high of $1071. Year to date, gold prices are higher by 17.6%.

Gold ended September, 2009 higher by 5.9%. For the third quarter it ended higher by 8.7%. Before this, for the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On Tuesday, December Comex silver futures ended lower 56 cents (3.2%) at $16.54 an ounce. Last week, silver ended higher by 1.7%.

Silver ended 11.8% higher for September, 2009. Year to date, silver has climbed 53.1% this year. For 2008, silver had lost 24%.

In the currency market on Tuesday, the dollar index, which calculates the strength of the dollar against a basket of six other currencies reversed its course after dropping earlier during the day. Last week, it had dropped to fourteen month lows.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for December delivery closed lower by Rs 34 (0.21%) at Rs 15,857 per 10 grams. Prices rose to a high of Rs 15,890 per 10 grams and fell to a low of Rs 15,810 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 589 (2.2%) lower at Rs 26,255/Kg. Prices opened at Rs 26,900/kg and fell to a low of Rs 26,200/Kg during the day's trading.

FII inflow in October 2009 crosses Rs 9000 crore

Inflow of Rs 1341 crore on 27 October 2009 

Foreign institutional investors (FIIs) bought shares worth a net Rs 1341 crore on Tuesday, 27 October 2009, much higher than Rs 191 crore on Monday, 26 October 2009.

FII inflow of Rs 1341 crore on 27 October 2009 was a results of gross purchases Rs 4989.80 crore and gross sales Rs 3648.80 crore. The BSE Sensex fell 387.10 points or 2.31% to 16,352.40 on that day.

FII inflow in October 2009 totaled Rs 9,135 crore (till 27 October 2009). Foreign funds had bought equities worth Rs 17,328 crore in September 2009. FII inflow in the calendar year 2009 totaled Rs 69,272.20 crore (till 27 October 2009).

There are a total of 1699 foreign funds registered with the Securities & Exchange Board of India (Sebi).

Financial News Flash

Indian Inflation Is a `Regressive Tax' on Poor, RBI Governor Subbarao Says India’s central bank Governor Duvvuri Subbarao described inflation as a “regressive tax,” justifying his steps yesterday to start withdrawing the monetary stimulus as price pressures build.

Sensitive Index Falls on Concern India's Government May Withdraw Stimulus Indian stocks fell for a second day, posting their biggest two-day loss in two months, on concern that the government will halt stimulus spending as the central bank tightens monetary policy.

SpiceJet to Raise $50 Million to Finance Expansion, Flights Out of India SpiceJet Ltd., an Indian low-fare airline that counts billionaire Wilbur Ross among its investors, may raise as much as $50 million by selling shares to fund expansion and start international flights.

Indian Developers Say `Negative Signal' on Lending Rules to Increase Costs The Reserve Bank of India’s move to ask lenders to set aside more funds to cover defaults on loans to property companies may boost costs at real estate developers and reduce demand for homes, company officials said.

GAIL India's Profit Declines 30 Percent on Lower Chemicals, LPG Earnings GAIL India Ltd., the country’s monopoly natural gas distributor, reported a 30 percent decline in second-quarter profit after earnings from chemicals and liquefied petroleum gas fell.

India Selects Power Units to Get Half of Natural Gas From Reliance Field India selected power producers to get half of the natural gas to be produced from a field operated by Reliance Industries Ltd., which is fighting a lawsuit over fuel sales from the area.

India May Have to Import Rice in 2010, Triggering Price Surge, Trader Says India, the world’s second-largest rice grower, may import up to 3 million metric tons next year as the government secures supplies in case the nation faces another year of drought, triggering a price surge, a trader said today.

Maxis, Planning to Expand in India, Sets Price in Largest Malaysia Offer Maxis Communications Bhd., Malaysia’s biggest mobile-phone company, plans to sell shares to individual investors for as much as 5.20 ringgit ($1.50) apiece in the nation’s largest public offering.

Riversdale, Tata Approve Development of $270 Million Mozambique Coal Mine Australia’s Riversdale Mining Ltd. and Tata Steel Ltd., India’s biggest producer of the metal, approved development of a $270 million coal mine in Mozambique with first production scheduled for next year.

Nuclear Power Output in India to Increase This Year on Lifting of Fuel Ban Nuclear Power Corp. of India Ltd., the nation’s monopoly producer, said generation may jump 47 percent this year after the U.S. and Europe lifted a ban on the sale of uranium fuel and technology.

K1 Hedge Fund Snared in Probe as Barclays, JPMorgan, BNP Paribas Face Loss K1 Group, the German hedge fund firm, is embroiled in an international criminal investigation after saddling banks, including Barclays Plc, JPMorgan Chase & Co. and BNP Paribas SA, with about $400 million of losses, people with knowledge of the probe said.

New-Home Sales in U.S. Unexpectedly Fall as End of First-Time Credit Nears Sales of new U.S. homes unexpectedly fell in September as the end of a tax credit for first-time homebuyers approached, highlighting the importance of government aid to the emerging economic recovery.

Norway Lifts Key Rate to 1.5%, Becoming First in Europe to Reverse Easing Norges Bank raised its key interest rate a quarter point from a record low and signaled steeper increases than it previously forecast over the next three years as inflation accelerates and unemployment remains low.

Stocks in U.S. Extend Global Drop on Economy Concern; Oil, Metals Retreat U.S. stocks fell, extending a global slump, as an unexpected decrease in new-home sales added to concern the seven-month rally in equities outpaced prospects for economic growth. The dollar rose against most major currencies and Treasuries gained, while oil and metals fell.

CIT Group Obtains an Additional $4.5 Billion in Financing, Spurning Icahn CIT Group Inc., the 101-year-old commercial lender seeking to avoid collapse, received $4.5 billion in financing by expanding an existing credit facility.

Ace's Greenberg Says Insurance `Cowboys' Hurting Industry With Rate Cuts The insurance industry has underpriced its policies, with “cowboys” setting unreasonable rates for coverage, Ace Ltd. Chief Executive Officer Evan Greenberg said.

Deutsche Bank Will Acquire Wealth Manager Sal. Oppenheim for $1.48 Billion Deutsche Bank AG, Germany’s biggest bank, agreed to buy wealth manager Sal. Oppenheim Group for 1 billion euros ($1.5 billion), the second purchase this month as it tries to cut reliance on investment banking.

source: Bloomberg

SBI MF Declares Dividend for Debt Fund

Record date for dividend is 2 November 2009 

SBI Mutual Fund has announced the declaration of dividend on the face value of Rs. 10 per unit under dividend option of SBI Debt Fund Series – 18 Months - 3. The record date for dividend has been fixed as 2 November 2009.

The quantum of dividend will be 100% of distributable surplus as on the record date. The NAV for retail option was at Rs. 10.6079 per unit and Rs. 10.6081 per unit for institutional option as on 21 October 2009.

SBI Debt Fund Series – 18 Months – 3 is a close – ended debt scheme, which has the investment objective to provide regular income, liquidity and returns to the investors through investments in a portfolio comprising of debt instruments such as Government Securities, AAA/AA+Bonds and Money Market Instruments.

Birla Sun Life Tax Relief ‘96” adjudged “the World's Best-Performing Equity Fund”

It posted 13 year annualized return of 35.33% 

Birla Sun Life Tax Relief ‘96” (BSLTR'96”) has been adjudged “the World's Best-Performing Equity Fund” for the 13-year period ended 30 September 2009, according to Lipper global data. 

Birla Sun Life Tax Relief '96 has secured the 1st rank based on 13 year annualized return of 35.33% in Indian Rupee as of 30 September 2009. This recognition is based on the study of 3006 equity funds as per Lipper global fund data, excluding ETF funds and closed ended funds, having a minimum track record of at least 13-year as of September 2009.

A Balasubramanian, CEO, BSLMF, said, “It's a big honour for us. This recognition is a testimony of our strong and consistent equity fund performance. What is heartening though is that, while it was a historical achievement to have won the CNBC TV18 Crisil ‘Mutual Fund house of the year' twice in a row, we have of late been recognized at the international platform as well. We want to acknowledge and appreciate the sustained support we have been receiving from our growing customer base. The strong growth momentum and demonstrative fund performance have helped Birla Sun Life Mutual Fund gain recognition from institutions like Crisil-CNBC TV18, ICRA, Lipper and Value Research”. 

Birla Sun Life Asset Management Company has recently won three international awards including “The Best Asset Management Company, India” by The Asset magazine, Hong Kong and the best “Onshore fund house, India” by the Asian Investor magazine, Hong Kong. These recognitions choose individual country's best performers from across Asia.

Lipper, a Thomson Reuters company, provides independent insight on global collective investments including mutual funds, retirement funds, hedge funds, fund fees and expenses to the asset management and media communities. Covering over 193,000 share classes and over 108,000 funds in 571 registered for sale (RFS) universes, Lipper is the world's leading fund research and analysis organization.

Crude ends below $79

Prices drop due to the rebounding dollar 

Crude prices ended lower at Nymex on Monday, 26 October, 2009. Prices fell due to the rebounding dollar.

On Monday, crude-oil futures for light sweet crude for December delivery closed at $78.68/barrel (lower by $1.82 or 2.3%). Earlier during the day, it rose to a high of $81.59. Last week, crude ended higher by 3.4%. In the past two weeks, crude has climbed up by almost 20%.

For the month of September, 2009, crude ended higher by a marginal 0.9%. For the third quarter, crude ended higher by just 1%. Crude prices had rallied 40% and 11.3% in the second and first quarter of 2009 respectively.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 58% since then. Year to date, in 2009, crude prices are higher by 57%.

In the currency market on Monday, the dollar index, which calculates the strength of the dollar against a basket of six other currencies rose by almost 0.6%. Last week, it had dropped to fourteen month lows.

Among other energy related products, November heating oil fell 4 cents, or 2%, to $2.0335 a gallon and November reformulated gasoline lost a penny, or 0.4%, to $2.0338 a gallon.

Also on Monday, natural gas fell 27 cents, or 5.7%, to $4.513 per million British thermal units.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for November delivery closed lower by Rs 23 (0.61%) at Rs 3,701/barrel. Natural gas for October delivery closed lower by Rs 10.6 (4.7%) at Rs 212.4/mmbtu.

Precious metals drop further

Prices turn paler as dollar recovers from fresh lows 

Precious metal prices ended lower on Monday, 26 October, 2009. Prices fell due to the rebounding dollar.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Monday, gold for December delivery ended at $1,042.8, lower by $13.6 (1.3%) an ounce on the New York Mercantile Exchange. Earlier during the day, gold rose to a high of $1,068. Last week gold ended higher by 0.5%. Last week, gold had registered record highs quite a few times reaching an all time high of $1071. Year to date, gold prices are higher by 18.3%.

Gold ended September, 2009 higher by 5.9%. For the third quarter it ended higher by 8.7%. Before this, for the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On Monday, December Comex silver futures ended lower 63 cents (3.5%) at $17.095 an ounce. Last week, silver ended higher by 1.7%.

Silver ended 11.8% higher for September, 2009. Year to date, silver has climbed 56.3% this year. For 2008, silver had lost 24%.

In the currency market on Monday, the dollar index, which calculates the strength of the dollar against a basket of six other currencies rose by almost 0.6%. Last week, it had dropped to fourteen month lows.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for December delivery closed lower by Rs 88 (0.55%) at Rs 15,891 per 10 grams. Prices rose to a high of Rs 16,014 per 10 grams and fell to a low of Rs 15,860 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 597 (2.2%) lower at Rs 26,844/Kg. Prices opened at Rs 27,385/kg and fell to a low of Rs 26,7256/Kg during the day's trading.

FIIs in buying mode

Inflow of Rs 191 crore on 26 October 2009 

Foreign institutional investors (FIIs) bought shares worth a net Rs 191 crore on Monday, 26 October 2009 as against an outflow of Rs 48.80 crore on Friday, 23 October 2009.

FII inflow of Rs 191 crore on 26 October 2009 was a results of gross purchases Rs 2147.90 crore and gross sales Rs 1956.90 crore. The BSE Sensex fell 70.31 points or 0.42% to 16740.50 on that day.

FII inflow in October 2009 totaled Rs 7,794 crore (till 26 October 2009). Foreign funds had bought equities worth Rs 17,328 crore in September 2009. FII inflow in the calendar year 2009 totaled Rs 67,931.20 crore (till 26 October 2009).

There are a total of 1699 foreign funds registered with the Securities & Exchange Board of India (Sebi).

RBI preferred no rate cut

Strong concern on liquidity and inflation 

RBI has released second quarter review on Monetary Policy for the year 2009-10. The apex bank of India has kept all key rates of interest unchanged .The repo rate under the Liquidity Adjustment Facility (LAF) has been retained unchanged at 4.75%. The reverse repo rate under the LAF has been retained unchanged at 3.25%.

The Bank Rate has been retained unchanged at 6.0%. On other hand, the cash reserve ratio (CRR) of scheduled banks has been retained unchanged at 5.0 % of their net demand and time liabilities (NDTL).

However RBI has hiked SLR to 25% from 24%. In view of difficult macroeconomic situation and liquidity conditions in the global and domestic financial markets after the collapse of Lehman Brothers, the statutory liquidity ratio (SLR) of scheduled commercial banks (SCBs) was reduced from 25% to 24% of their NDTL with effect from 8 November 2008. The liquidity situation has remained comfortable since mid-November 2008 as reflected in the surplus funds being placed by banks daily in the LAF window of the Reserve Bank. Accordingly, it has been decided to restore the SLR for scheduled commercial banks to 25% of their NDTL with effect from the fortnight beginning 7 November 2009. SCBs are currently maintaining SLR investments at 27.6% of their NDTL, net of LAF collateral securities, and 30.4 % of NDTL, inclusive of LAF collateral securities. As such, the increase in the SLR will not impact the liquidity position of the banking system and credit to the private sector.

The policy is within the market expectations. The WPI inflation specially food prices are growing. The current inflation rate has largely been derived by supply side and RBI has accepted its little role in this regard. Meanwhile, RBI has raised inflation projection to 6.5% with upward bias for March 2010 from 5% earlier. On other hand, RBI has cut the growth projection in money supply which always fuels inflation. The indicative projection of money supply growth of 18.0% set out in July 2009 is revised downwards to 17.0%.

The central bank cut its FY10 credit growth target to 18% from 20% that it had set in the July monetary policy review. The RBI has preferred to focus on growth and kept growth projection remained at 6% with upward bias for March 2010. On the whole, agricultural production in 2009-10 is expected to be lower than in last year.

The global economic outlook presents a mixed picture. On the positive side, world output, as per the International Monetary Fund (IMF) estimates, has expanded by 3 per cent in the second quarter (quarter-on-quarter, annualized), manufacturing activity has picked up, trade is recovering, financial market conditions are improving, and risk appetite is returning On the negative side, there are concerns that the recovery is fragile. The second quarter improvement is essentially the outcome of policy-induced stimulus. Going forward, the impact of the stimulus will fade away and inventory rebuilding may lose momentum.

Policy Stance

On the basis of the above overall assessment, the stance of monetary policy for the remaining period of 2009-10 will be as follows:

-Keep a vigil on the trends in inflation and be prepared to respond swiftly and effectively through policy adjustments to stabilize inflation expectations.

-Monitor the liquidity situation closely and manage it actively to ensure that credit demands of productive sectors are adequately met while also securing price stability and financial stability.

-Maintain a monetary and interest rate regime consistent with price stability and financial stability, and supportive of the growth process.

-In conclusion, it bears emphasis that the Reserve Bank is mindful of its fundamental commitment to price stability. It will continue to monitor the price situation in its entirety and will take measures as warranted by the evolving macroeconomic conditions swiftly and effectively.

Financial News Flash

Subbarao Signals Exit From Easy Policy With Order to Buy Government Debt India’s central bank took the first step toward withdrawing its record monetary stimulus as inflation pressures build, ordering lenders to keep more cash in government bonds.

Tata Steel's Profit Falls 50% as Lower Prices Negate Demand From Carmakers Tata Steel Ltd., India’s biggest producer, posted a 50 percent drop in second-quarter profit that was worse than analysts’ estimates after lower prices outweighed increased demand from automakers and builders. The shares fell.

India Allocates Reliance Gas to Fuel-Starved Power Plants, Oil Refineries India selected fuel-starved power producers and oil refineries as customers for additional natural gas to be produced from a field operated by Reliance Industries Ltd., which is fighting a lawsuit over sales from the area.

Wipro Profit Rises 22%, Beating Estimates, on Software Orders; Stock Gains Wipro Ltd., India’s third- largest software-services exporter, reported second-quarter profit that beat analysts’ estimates as the global economic recovery spurred clients to increase orders.

Sensitive Index Drops Most in Two Months as India Signals Tighter Policy Indian stocks fell the most in two months, led by lenders as the Reserve Bank of India ordered them to keep more cash in government bonds, signaling tighter monetary policy.

Cotton Exports From India to Beat Forecast as Farmers Plant Record Area Cotton exports from India, the second-biggest grower, may be more than forecast this year after high domestic prices encouraged farmers to plant record acres, the Cotton Association of India said.

Government Bonds Gain Most in a Month as India Raises Banks' Bond Holdings Indian bonds rose by the most in more than a month after the central bank ordered local lenders to boost holdings of state debt following a policy meeting today.

Citigroup Appoints Richard Macfarlane as India Head of Execution Services Citigroup Inc. named Richard Macfarlane as head of execution services for India to expand its equity sales business in the country.

Sesa Goa Plunges on Report India's Government Is Investigating Accounts Sesa Goa Ltd., India’s biggest iron- ore exporter, plunged the most in 21 months following a report that India’s Serious Fraud Investigation Office began an enquiry into its accounts and share price movements.

India Allots Additional Gas From Reliance Field to Power Units, Refineries India selected fuel-starved power producers and oil refineries as customers for additional natural gas to be produced from a field operated by Reliance Industries Ltd., which is fighting a lawsuit over sales from the area.

Consumer Confidence in U.S. Unexpectedly Fell in October on Job Concerns Confidence among U.S. consumers unexpectedly fell in October for a second month as Americans fretted about a lack of jobs.

Home Prices in 20 U.S. Cities Rise for Third Straight Month, Survey Shows Home prices in 20 U.S. cities rose in August for a third consecutive month, bolstering the case that an economic recovery is at hand.

Stocks in U.S. Fluctuate as Confidence Decline Offsets Home-Price Report U.S. stocks fluctuated after an unexpected slump in consumer confidence wiped out most of an early rally spurred by an increase in home prices.

Daimler Sees Profitable Fourth Quarter After Closing Plants, Cutting Hours Daimler AG, the maker of Mercedes- Benz cars and trucks, predicted operating earnings for the last three months of 2009 after spending cuts and growth in sales of the E-Class sedan led to its first quarterly profit in a year.

United Technologies Said to Lead Bidding for GE Surveillance-Systems Unit United Technologies Corp. has emerged as the frontrunner in the bidding for General Electric Co.’s fire alarm and surveillance systems unit, said a person familiar with the matter.

Dubai May Pay Premium of 375 Basis Points in Five-Year Islamic Bond Sale Dubai’s medium-term debt may be priced to yield 375 basis points above benchmarks as the sheikhdom seeks to attract investors in its first international bond sale in more than a year, according to a banker involved in the deal.

Roubini Sees `Huge' Asset Bubbles Growing in `Mother of All Carry Trades' Investors worldwide are borrowing dollars to buy assets including equities and commodities, fueling “huge” bubbles that may spark another financial crisis, said New York University professor Nouriel Roubini.

source: Bloomberg