Market commentary
equity
GLOBAL MARKET OVERVIEW
SEP 17 - SEP 21, 2007
z Oil prices rose after the Energy Department report
showed a larger-than-expected inventory decline
and production in Gulf of Mexico was shut
because of a storm threat.
Groupe Danone to a Singapore court for allegedly
usurping the intellectual property rights of its Tiger
biscuit brand. Groupe Danone and Mumbai-based
Wadia Group are equal partners in UK-based,
Associated Biscuits International Holding (ABIH),
which holds 50.96% stake in Britannia Industries.
z PTC India (formerly Power Trading Corporation of
India), the country's largest power trading firm,
has taken 26% stake in the country's first power
exchange Indian Energy Exchange (IEX), which
recently got regulatory approval. Tata Power (TPC),
Reliance Energy (REL), Rural Electrification
Corporation (REC), a consortium of Adani
Enterprises (AEL) and IDFC are other stakeholders
in IEX.
z Reliance Logistics (RLL) is planning to set up
logistics parks within all the upcoming special
economic zones (SEZs). The Reliance logistics
parks will cater to the entire range of logistic
requirements of the SEZs.
DOMESTIC MARKET
OUTLOOK
z The Dow Jones Industrial Average Index (DJIA) rose
after Federal Reserve Chairman Ben Bernanke
reduced the fed fund rate by 50 basis points from
5.25% to 4.75%. This was the first rate cut since
June 2003. The Fed also cut its discount rate from
5.25% to 4.75%. The Federal Open Market
Committee (FOMC) said that it is going to continue
to assess the developments in the financial
markets and will act as needed to foster price
stability and sustainable economic growth. A few
good earnings reports and positive economic
news were the other encouraging news for the
markets during the week.
CRUDE OIL
z The market surged during the week amid a global
rally triggered by the US Federal Reserve cut to
4.75% from 5.25%. The Sensex rose 653.63 points
on September 19, 2007. This was a record single
day point rise for the Sensex. Bank and financial
shares rallied on the assumption that the Fed
move could put pressure on RBI to loosen its
Bull
jumps over the moon
- DNA Money, September 20, 2007
monetary policy. Both Sensex and Nifty closed the
week at an all time high.
z ITC Ltd acquired 100% equity stake in Australian
agri-biotech company Technico Pty Ltd as a part of
its strategy to strengthen its foods business. The
deal was launched through its subsidiary Russell
Credit. Technico is an agri-biotech company with
operations in Canada, China, India and Middle East
through its subsidiaries.
z Britannia Industries has dragged French Dairy major
z Volatility is expected to stay on over the next few
days ahead of the expiry of the September 2007
derivatives contracts.
WEEKLY SNAPSHOT
14/09/07
21/09/07
15,603.8
16,564.2
960.4
6.2
Nifty
4,518.0
4,837.5
319.5
7.1
CNX Midcap
6,897.0
7,199.9
302.9
4.4
40.5
39.9
-0.6
-1.5
1,198.9
5,143.5
NA
NA
13,442.5
13,820.2
377.7
2.8
Nasdaq
2,602.2
2,671.2
69.0
2.7
Crude Oil
$80
$81
$1
1.3
Sensex
Re/dollar
FII flows (Rs cr)*
DJIA
change
% change
*cumulative
Source: www.sebi.gov.in, www.bseindia.com
Market commentary
debt
GLOBAL MARKET OVERVIEW
z US treasuries remained mixed on inflation worries
tied to rising commodity prices and the Federal
Reserve's aggressive interest rate cut.
z Federal Reserve's Open Market Committee (FOMC)
in its meeting on September 18, 2007 lowered the
fed fund interest rate by 50 basis points from
5.25% to 4.75%. Fed also cut its discount rate from
5.25% to 4.75%. Bernanke and group reiterated
that turmoil in financial markets was a threat to
economic growth.
z Oil prices rose after the production in the Gulf of
Mexico was shut because of a storm threat.
DOMESTIC MARKET
SEP 17 - SEP 21, 2007
and a weak US dollar. Prices eased later as some
investors pocketed profits.
z India Infrastructure Finance Corporation Limited
(IIFCL) and Sumitomo Mitsui Banking Corporation
(SMBC) announced the start of a strategic
partnership to co-operate on various aspects of
infrastructure financing in India.
OUTLOOK
z Liquidity continues to remain an important factor
for the debt market. The central bank will auction
5.87% Government Stock, 2010 for Rs 5,000 crore
and 5.48% Government Stock, 2009 for Rs 5,000
crore under the MSS on September 26, 2007.
z G-Sec yields eased in the early part of the week
after the US Federal Reserve cut interest rate by 50
basis points. But it edged later on tighter cash
conditions caused by tax outflows. Cash
conditions in the banking system started showing
signs of tightening, with corporates making their
advance tax payments. Call rates traded in the
range of 6.00%-7.80%.
YIELD MOVEMENTS
rupee
scales against dollar
Red-hot
Sep 17, 2007
Sep 21, 2007
7.88
7.9
-The Economic Times, September 21, 2007.
7.3
7.86
7.6
YIELD %
z Rupee edged higher as a sharp cut in interest rates
by the US Federal Reserve increased appetite for
emerging market assets and a surging stock
market attracted capital inflows.
z The 182-day and 91-day Treasury bill auction on
September 19, 2007, saw a cut-off of 7.25% and
6.98 % respectively.
z Inflation declined to 3.32% for the week from
3.52% in the previous week due to decrease in
energy and mineral products. The wholesale
price-based annual inflation rate stood at 5.22% in
the corresponding week last year.
z Gold prices hit a new all time high world over as
investors continued to park money in the
traditional safe haven to counter high oil prices
7.3
7.0
7.21
6.7
10 yrs
G-Sec
Source: www.debtonnet.com
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