Mundra Port & Special Economic Zone may see action

The Adani Group reportedly gets nod to go ahead with construction work in multi-product Mundra Port & Special Economic Zone with the Supreme Court vacating its earlier interim stay on further construction activities in the project.

Tata Steel reportedly plans to list Tata Steel Global Resources, the holding company for its steel and raw material assets outside India, on the London Stock Exchange to raise funds to buy iron ore and coal mines, and pay back part of the debt it took to buy Corus Plc.

Oil and Natural Gas Corporation (ONGC) is likely to conclude an acquisition deal in two months, suggest reports. The acquisition could be a company or a discovered oil and natural gas asset.

Parsvnath Developers may reportedly buy 30% - 38% in the Nano City project in Haryana of Sabeer Bhatia, who developed Hotmail.

Shipping Corporation of India has reportedly been able to place orders for only half its planned order for ships estimated for the 11th five-year plan, as shipyards globally are overbooked and have a long waiting list.

Negotiations between K Raheja Universal group and Lupin for part of the latter's land in the Thane district has reportedly flopped because of the prevailing uncertainty in the real estate market.

WNS Holdings, controlled by Warburg Pincus, has reportedly bought the BPOs of UK-based insurance company Aviva in India and Sri Lanka for $230 million.

The Supreme Court has reportedly appointed a three-member arbitration panel to sort out the tussle between the Tatas and the AV Birla group over Idea Cellular.

The board of Abbott India at the meeting held on 9 July 2008 approved a buy back of 7.97 lakh shares through open offer at Rs 630 a share.

The board Era Financial Services India at the meeting held on 9 July 2008 has approved the merger of Era Landmarks (India), a real estate firm, with the company.

Bajaj Auto, Bajaj Holdings and Sintex Industries will declare their June ended Q1 results today.

Shares of private sector oil firms may see action

Private oil firms such as Reliance Industries, Essar Oil and Cairn India may reportedly have to forego some profits to share the huge subsidy burden in the sector.

South African mobile phone operator MTN Group and Reliance Communications (RCOM) may reportedly continue their tie-up talks beyond Tuesday's (8 July 2008) deadline. An extension would give Reliance Communications' chairman Anil Ambani some time to try to resolve a claim of right of first refusal on the telecom's shares by his estranged brother Mukesh Ambani, who runs Reliance Industries, added reports.

Reliance Industries reportedly plans to buy some downstream assets of Chevron Corporation in Africa. Essar goup is also in talks with Chevron for buying the assets, which include 1,500 fuel stations, refineries, terminals and depots, the reports added.

Regal Entertainment Group, Bain Capital, Texas Pacific Group and Goldman Sachs are reportedly in talks with the founders of Pyramid Saimira Theatre for about 14% stake. The deal, if struck, Pyramid could be worth Rs 250 - Rs 300 crore.

Infrastructure Development Finance Company (IDFC) is reportedly looking for partners for its foray into urban transport projects such as mono-rail and light rail transit system.

Essar Oil is still reportedly in the race to to buy 50% in Kenya Petroleum Refineries and the Kenyan government was still evaluating Essar's proposal on the refinery.

Tata Motors has reportedly raised its stake in Automobile Corporation of Goa (ACGL) by 3% to 40.6% in three months through open market purchases.

The union coal ministry is reportedly considering a proposal to allow Reliance Power to transport the excess coal from the three captive blocks of Sasan project to the group's proposed 4,000 megawatt plant at Chitrangi. Both Sasan and Chitrangi projects are located in Madhya Pradesh.

Indian drugmakers such as Ranbaxy Laboratories, Cipla, Cadila Healthcare, Piramal Healthcare and Wockhardt would soon reportedly withdraw about 60 drug combinations from the market.

Bharat Heavy Electricals (BHEL) is likely to get an order worth Rs 2500 crore from Andhra Pradesh Power Generation Corporation for boilers, suggest reports.

The board of Era Infra Engineering approved sub-division of equity Shares of the company from existing one equity share of Rs 10 each to five equity shares of Rs 2 each.

Market may see firm opening

Local shares are likely to extend Friday’s gains as political worries recede with Samajwadi Party (SP) backing the Congress to secure a parliamentary majority if the Left withdraw their support. SP General Secretary, Amar Singh officially announced their support saying that he will fully support the Congress on the nuclear deal. Over the next few hours, the prospect of several other parties crossing over to the UPA camp cannot be ruled out.

However sentiment may remain cautious as the Left had set today, 7 July 2008 as deadline for the Centre to let them know whether it intends to approach the International Atomic Energy Agency to seal the India-specific safeguards agreement.

Meanwhile, visiting US Congressman Gary Ackerman informed that India will have to complete all formalities by September 2008 if it wanted the Indo-US civilian nuclear energy cooperation agreement to go through since the presidential elections in the US will be held in November 2008. He added that the progress was slow at the moment.

US light crude for August delivery traded at $143.92 a barrel and London Brent crude rose 23 cents to $144.65 a barrel. Crude oil hit a record $145.85 hit on 3 July 2008.

Asian markets were trading mixed today, 7 July 2008. China's Shanghai Composite gained 2.25% or 59.95 points at 2,729.84, Taiwan Weighted was up 0.07% or 7.92 points at 7,233.33, Singapore's Straits Times rose 0.26% or 7.54 points at 2,900.08, Hang Seng advanced 0.47% or 99.69 points at 21,523.51. However, Nikkei was down 0.06% or 8.43 points at 13,229.46 and South Korea's Seoul Composite declined 0.64% or 10.13 points at 1,567.81

US stock markets were closed for the Independence Day holiday on Friday, 4 July 2008.

Back home, the 30-share BSE Sensex rose 359.89 points or 2.75% at 13,454 and the broader based S&P CNX Nifty rose 90.25 points or 2.30% at 4016.

The key benchmark indices slumped to 15-month low in choppy trade as a political rift over nuclear deal, soaring crude oil prices, high inflation and sustained selling by foreign institutional investors (FIIs) depressed market sentiment. A number of stocks and sectoral indices tumbled to 52-week low. The barometer index BSE Sensex lost 348.22 points or 2.52% to 13,454 and the S&P CNX Nifty lost 120.65 points or 2.91% to 4,016 in the week ended Friday, 4 July 2008.

From a record high of 21,206.77 hit on 10 January 2008, Sensex has lost 7752.77 points or 36.55%. It has shed 6832.99 points or 33.68% in calendar year 2008 thus far from its close of 20286.99 on 31 December 2007.

India's wholesale price index rose 11.63% in the 12 months to 21 June 2008, a 13-year high, and above previous week's annual rise of 11.42%, government data released on 4 July 2008 showed. Experts opine that the double-digit inflation is here to stay for some more time, but could trend down from September 2008.

As per provisional data, foreign funds bought shares worth a net Rs 372.35 crore while domestic mutual funds sold shares worth a net Rs 97.02 crore on Friday 4 July 2008.

Foreign institutional investors (FIIs) were net buyers of Rs 120.10 crore in the futures & options segment on Friday, 4 July 2008. They were net sellers of index futures to the tune of Rs 215.54 crore and bought index options worth Rs 99.23 crore. They were net buyers of stock futures to the tune of Rs 221.21 crore and purchased stock options worth Rs 15.20 crore.

As per reports, India's monsoon has been 21% above average so far this season. A normal monsoon may lift farm production, which accounts for a fifth of the economy, and cool the nation's fastest inflation rate in 13 years.

See Sensex @ 10k in coming months: Gujral

Technical Analyst Ashwani Gujral sees the Sensex and Nifty at 10,000 and 3,000 respectively in the coming months.

According to Gujral, there would be a good bear market rally, only if there is a correction in inflation numbers, crude falls, or the very factors that are depressing markets right now.

Excerpts from CNBC-TV18's exclusive interview with Ashwani Gujral:



Q: How would you read what has happened over the past five-days?



A: The market is now pausing before the next move. The decline has been pretty swift and we should now be moving within a range of 3,850 to about 4,100.



Slowly, this volatility will come down and the market will build strength towards the next move. In a bear market, prices generally go down. So, we should be looking at levels of broadly 10,000 on the Sensex and 3,000 on the Nifty in the months to come.



People should not look at any sort of sharp rally to mean that things have reversed. They will be formed if the prices become too low to sell and it will be a 5-7 month period when all these macro factors start turning around and then the final bottom will be formed. It will not be a day’s affair, where you go up 700 and the final bottom is there.


Q: For the near-term though, can you see a bear market rally coming? A few months back we were almost at a 20% Nifty bear market rally. Do you think its possible that a rally of such magnitude could pan out, even if the eventual lows come about later?



A: A good bear market rally would only come if there were some sort of correction in the inflation numbers or crude or very factors which are depressing the market right now. There will probably be a 100-150 point rallies in the Nifty, probably a ranging move could also qualify as an upward correction. But this would only be due to short covering.



But till you have a serious correction in the commodity prices, there will not be an upside. The first time the pullback rally happened, everybody was optimistic that at 4,400 the bottom had been created and we would probably go back to new highs. But this time, people are a lot more sceptical. Fresh money has been scared away and buyers really are not coming forward. So, this market would have to have some macro factors changing to have a sustainable 20% kind of rally.



Q: 3,850 has emerged some kind of support for the market through this week. Would you watch that level? Do you think these supports are meaningless and with every rally you are looking to open up a short?



A: Supports clearly are meaningless because the nature of a bear market means fresh lows will get formed. So, probably it will be another 100 points on the Nifty. Again, 4,100 acts as a resistance and we start moving lower because nothing really has changed on the very factors which were depressing this market.



So, 3,850 sooner or later will break and you will see fresh lows because all bear markets right from 1992 have given back 55-60% of the overall market value.



So all of these bottoms though they seem quite low from the highs, are really a progression of higher bottoms. This cyclical bear market will take 12-18 months to play out.



Q: What do you see on the charts of some of the stocks that are pulling back - capital goods and infrastructure kinds of plays?



A: These are all pullback rallies. The capital goods sector has lost its fizz. All these sectors that were overowned - capital goods and real estate are all inflation hit. For BHEL, Rs 1,340 seems to have emerged as some kind of a support. At higher levels, Rs 1,550 becomes a resistance.



Probably even the strongest stocks are breaking down supports. We had Rs 2,600 acting as a strong support on Larsen. That finally broke down. Now, you have Rs 2,120 acting as some sort of support. Probably, there may be a sideways kind of pullback for the next week or 10 days and we should resume our decline.



Q: What is happening with the metal stocks?



A: Metals and metal stocks are two different things. The market is looking for spaces that have not fallen. So, you will start looking at hits in areas that have been relatively stronger. Metals was one space that was holding out because of global commodity prices. So, there may be some more shorting. The space to go down in metals is probably more than a real estate or a capital goods type of stock.

Birla Cotsyn IPO undersubscribed

The initial public offering of Birla Cotsyn (India), a company of the Yash Birla Group, engaged in textile manufacturing, has not subscribed fully yet. It has subscribed just 0.46 times and received bids for 3,31,80,350 equity shares as against 7,16,86,667 shares on offer.

The issue had opened for subscription with an IPO on June 30, 2008 to raise Rs 144.18 crore. A price band was between Rs 15-18 per equity share of face value of Rs 10 each. The issue closed for subscription today, Friday July 4, 2008.

The proceeds from the issue will be utilized to set up a integrated textile unit and a garment manufacturing plant at their facilities located at Khamgaon, Ghatanji & Makkapur in Maharashtra. The invested will also fund the company’s foray into retail outlets which it plans to set up pan India.

In order to ensure success in their expansion plans, the initial promoter of Birla Cotsyn (India) Limited Yash Birla group had entered in a 50:50 Joint venture with the P.B.Bhardwaj Group, This JV will enable both the partners to combine their resources and expertise and carry on the business of manufacturing, marketing and distribution of the products, which will enable their presence felt, in India as well as in international markets.

The company is in the process of setting up a 36,000 cotton spindle yarn manufacturing unit at Malkapur. Commercial production in Phase I has commenced.

In Phase II, the company has set up an Open End rotor based Cotton yarn manufacturing facility having capacity of 1,728 rotors, which has since become operational. In this Phase the Company is also setting up a weaving unit of Cotton Grey Fabric with 114 Looms.

Moving forward with a fully integrated manufacturing process, Birla Cotsyn plans to manufacture finished fabric by setting up a Dyeing and Processing facility with an installed capacity of 50,000 meters per day in Phase III.

Project Highlights

* Expansion of Integrated Textile Project at Khamgaon and Malkapur.
* Manufacture of finished cloth by setting up of a Dyeing & Processing unit .
* Setting up of a Ready made Garment Manufacturing facility for men & women clothes.
* Establish Retail Outlets across the country .
* MEGA Project status granted by Government of Maharashtra.

This issue has been graded by CARE and has been assigned the "IPO Grade 3".

Allbank Finance Limited is the book running lead manager to the issue.

Nexgen Capitals Limited, Saffron Capital Advisors Private Limited and Chartered Capital and Investment Limited are the co-book running lead managers to the issue.

Adroit Corporate Services Pvt. Limited is the registrar to the issue.

Market to take cues from global equities; Infosys results eyed

Domestic bourses are likely to track movement in global equities for direction. Volatility is also likely to continue in coming week. In the near term focus may shift to earnings season as IT bellwether Infosys Technologies kickstarts June 2008 quarter earnings season on Friday, 11 July 2008.

However tough macro economic environment comprising high inflation, record high global crude oil prices and rising interest rates will continue to weigh on the sentiment in near term.

Sustained selling of Indian stocks by foreign institutional investors (FIIs) has also dented market sentiment. FII outflow outflow in calendar year 2008 totaled Rs 26571 crore (till 3 July 2008).

India's wholesale price index rose 11.63% in the 12 months to 21 June 2008, a 13-yeat high, and above previous week's annual rise of 11.42%, government data released on 4 July 2008 showed. Experts opine that the double-digit inflation is here to stay for some more time, but could trend down from September 2008. On 24 June 2008, the Reserve Bank of India (RBI) raised the cash reserve ratio (the proportion of bank deposits parked with the RBI) and the repo rate (the rate at which RBI lends to banks) by 50 basis points each, as part of monetary tightening to check inflation.

On the positive side, India's monsoon has been 21% above average so far this season. A normal monsoon may lift farm production, which accounts for a fifth of the economy, and cool the nation's fastest inflation rate in 13 years.

The market will also keep a close watch on developments on the political front. The Indian government is seeking support from the Samajwadi Party (SP), a key regional party in Uttar Pradesh to retain power at a time when Left parties are on the verge of withdrawing support. SP party leaders on Friday, 4 July 2008, met Prime Minister Manmohan Singh and hinted that they would approve the deal.

SP has 39 seats in parliament, compared with 59 for the communist parties. The Congress-led ruling coalition needs the support of 44 lawmakers to reach a majority. It would try and win the other five seats from smaller parties. SP is likely to announce its decision on supporting the Congress-led United Progressive Alliance (UPA) government in a couple of days

Communist parties on Friday, 4 July 2008, said the government must tell them by Monday, 7 July 2008, if it plans to press ahead with the next step in a controversial civilian nuclear deal with the United States. Left parties have threatened to end their backing for the government if it seeks approval for the deal from the International Atomic Energy Agency (IAEA), the next international move needed to operationalise the pact.

The key benchmark indices slumped to 15-month low in choppy trade to register seventh straight weekly loss in the week ended Friday, 4 July 2008. The barometer index BSE Sensex lost 348.22 points or 2.52% to 13,454 in the week ended Friday, 4 July 2008. The S&P CNX Nifty lost 120.65 points or 2.91% to 4,016 in the week.

From a record high of 21,206.77 hit on 10 January 2008, Sensex has lost 7752.77 points or 36.55%. It has shed 6832.99 points or 33.68% in calendar year 2008 thus far from its close of 20286.99 on 31 December 2007.

Market registers seventh straight weekly loss

The key benchmark indices slumped to 15-month low in choppy trade as a political rift over nuclear deal, soaring crude oil prices, high inflation and sustained selling by by foreign institutional investors (FIIs) depressed market sentiment. A number of stocks and sectoral indices tumbled to 52-week low.

The barometer index BSE Sensex lost 348.22 points or 2.52% to 13,454 in the week ended Friday, 4 July 2008. The S&P CNX Nifty lost 120.65 points or 2.91% to 4,016 in the week.

From a record high of 21,206.77 hit on 10 January 2008, Sensex has lost 7752.77 points or 36.55%. It has shed 6832.99 points or 33.68% in calendar year 2008 thus far from its close of 20286.99 on 31 December 2007.

The BSE Mid-Cap index declined 280.51 points or 5.04% to 5,278.24 in the week. The BSE Small-Cap index slumped 488.40 points or 7.03% to 6,449.67 in the week. The BSE Mid-Cap and BSE Small-Cap indices slumped to 52-week lows of 4970.47 and 6938.07 respectively during the week.

FII outflow outflow in calendar year 2008 totaled Rs 26571 crore (till 3 July 2008).

Mutual funds bought shares worth a net Rs 347.49 in the first three days this month. They had pumped Rs 3179.20 crore in Indian equity market in June 2008.

Trading for the week started on bearish note as high inflation, rising interest rates, record high oil prices and political concerns haunted the markets. The 30-share BSE Sensex plunged 340.62 points or 2.47% at 13,461.60 and the broader based S&P CNX Nifty was down 96.1 points or 2.32% at 4,040.55 on Monday 30 June 2008.

Sell-off on the bourses continued on Tuesday, 1 July 2008, pulling key benchmark indices below psychological levels - the barometer index BSE Sensex fell below 13,000 mark and the S&P CNX Nifty fell below 4,000. The 30-share BSE Sensex plunged 499.92 points or 3.71% at 12,961.68 and the broader based S&P CNX Nifty was down 158.8 points or 3.56% at 3,896.75, on that day.

The market staged a solid rebound on Wednesday, 2 July 2008 with the 30-share BSE Sensex clocking its biggest intra-day gain since 25 March 2008. The 30-share BSE Sensex surged 702.94 points or 5.42% at 13,664.62 and the broader based S&P CNX Nifty rose 196.6 points or 5.05% at 4,093.35 on that day. Both the niche indices had struck 15-month low in intra-day trade on that day. The Sensex hit a low of 12,822.75 and Nifty had hit a low of 3,848.25.

A surge in oil price to a record high above $144 a barrel and overnight fall in US stocks weighed on the investor sentiment on Thursday, 3 July 2008. The 30-share BSE Sensex slumped 570.51 points or 4.18% at 13,094.11 and the broader based S&P CNX Nifty was down 167.6 points or 4.09% at 3,925.75, on that day.

The market rallied on Friday, 4 July 2008, shrugging off higher inflation on hopes a political turmoil arising from Indo-US nuclear deal may be averted. The 30-share BSE Sensex rose 359.89 points or 2.75% at 13,454 and the broader based S&P CNX Nifty was up 90.25 points or 2.30% at 4016, on that day.

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries (RIL) fell 3.80% to Rs 2,099 in the week.

India’s second largest telecom services provider by sales Reliance Communications (RCom) fell 7.46% to Rs 438.20. The stock hit a 52-week low of Rs 381.05 during the week. As per reports, Mukesh Ambani-controlled Reliance Industries (RIL) on Thursday, 3 June 2008 shot off another letter to Reliance Communications (RCOM) invoking a right of first refusal (RoFR). A copy of the letter was also sent to South African telco MTN with which RCOM is negotiating a deal, the exact contours of which are not yet clear.

India’s largest commercial vehicle maker by sales Tata Motors plunged 10.74% to Rs 400.85. The stock hit a 52-week low of Rs 383 during the week. The company said high input costs, rising interest rates and slowing demand would dent sales of commercial and passenger vehicles in the year to March 2009.

Banking and financial stocks were in action during the week. India's largest dedicated housing finance company HDFC said on Monday, 30 June 2008, its prime lending rate would go up by 50 basis points from Tuesday, 1 July 2008. The stock rose 0.13% to Rs 2055.45 in the week. It struck a 52-week low of Rs 1750.15 during the week.

India's largest private bank in terms of net profit ICICI Bank said rates on consumer loans would rise by 75 basis points. The stock lost 8.03% to Rs 600.65 in the week. The stock hit a 52-week low of Rs 551.30 during the week. Both HDFC and ICICI Bank also raised deposit rates between 50-100 basis points.

India’s largest commercial bank State Bank of India fell 2.88% to Rs 1127.50. The stock hit a 52-week low of Rs 1007 during the week. On 26 June 2008, the bank raised its benchmark prime lending rate by 50 basis points to 12.75% after the central bank aggressively tightened policy in the face of surging inflation.

India's largest oil exploration company in terms of market capitalisation ONGC gained 5.56% to Rs 876.30. The company has reportedly discovered a new oil field in the Farsi oil bloc of the Persian Gulf. ONGC will undertake the development of the newly discovered field upon determining that its development is economically feasible.

Capital goods stocks advanced on fresh buying. India’s largest engineering and construction firm by sales Larsen & Toubro rose 4.97% to Rs 2379.85. The stock hit a 52-week low of Rs 2100 during the week. The company received an order wroth Rs 1,557 crore from Andhra Pradesh Power Development Company for the supply of steam turbine generators.

India's biggest power equipment maker in terms of revenue, Bharat Heavy Electricals advanced 8.68% to Rs 1500.30 after securing an order exceeding Rs 2080 crore for a 400-megawatt thermal power project in Syria.

IT stocks were mixed. Satyam Computer Services (up 5.08% to Rs 462.15), and Infosys (up 2.80% to Rs 1755.40), gained. However Wipro (down 3.05% to Rs 429.10), and Tata Consultancy Services (down 2.48% to Rs 843.75) edged lower.

Sejal Architectural Glass, a glass processing house in India, settled at Rs 81.50 on 1 July 2008, a discount of 29.13% over the issue price of Rs 115 per share.

On 3 July 2008, Avon Weighing Systems, maker of platform scales and weighbridges, settled at Rs 11.90, a 19% premium over its issue price of Rs 10.

On 4 July 2008, Archidply Industries, engaged in the business of wooden interior products, settled at Rs 50.45, a discount of 31.82% over the initial public offer price of Rs 74.

India's wholesale price index rose 11.63% in the 12 months to 21 June 2008, above the previous week's annual rise of 11.42%, government data released on 4 July 2008 showed.

As per reports, India's monsoon has been 21% above average so far this season. A normal monsoon may lift farm production, which accounts for a fifth of the economy, and cool the nation's fastest inflation rate in 13 years.

Communist parties on 4 July 2008 said the government must tell them by Monday, 7 July 2008, if it plans to press ahead with the next step in a controversial civilian nuclear deal with the United States. Left parties have threatened to end their backing for the government if it seeks approval for the deal from the International Atomic Energy Agency (IAEA), the next international move needed to operationalise the pact.

Left parties also decided to launch a national campaign from 14 July 2008 to explain its opposition to the nuclear deal and over runaway inflation.

The government is seeking support from the Samajwadi Party (SP), a key regional party in Uttar Pradesh to retain power at a time when Left parties are on the verge of withdrawing support. SP party leaders today met Prime Minister Manmohan Singh and hinted that they would approve the deal

SP has 39 seats in parliament, compared with 59 for the communist parties. The Congress-led ruling coalition needs the support of 44 lawmakers to reach a majority. It would try and win the other five seats from smaller parties

Meanwhile, visiting US Congressman Gary Ackerman informed that India will have to complete all formalities by September 2008 if it wanted the Indo-US civilian nuclear energy cooperation agreement to go through since the presidential elections in the US will be held in November 2008. He added that the progress was slow at the moment.

Reliance Communications may see action

Reliance Communications may reportedly partner with a sovereign wealth fund in Middle East and may directly buy a large equity stake in South Africa's MTN, thereby emerging as the single-largest shareholder.

The government is reportedly considering liberalising the 10% mandatory cap on price hike for drugs outside the price control. Drugs outside the price control currently constitutes about 75% of the Rs 33000 crore drug retail market.

Videocon Group is reportedly interested in buying out greetings card maker Archies and has already picked up 4% stake from the open market in the last one month.

Anil Dhirubhai Ambani Group is reportedly picking up 26% stake with management control in a financial service firm in Saudi Arabia, which has been renamed as Riyada Reliance Money.

The government of the southern state of Karnataka is reportedly likely to scrap the proposed Rs 30000 crore petroleum, chemicals and petrochemicals project on the state's coastline citing possible law and order problems arising from land acquisitions.

At least a dozen firms have reportedly shown interest to pick up stake in the petrochemicals project of Oil and Natural Gas Corporation in the western state of Gujarat. The company is also considering an equity tie-up with Petronet LNG, the reports added.

The Bajaj family reportedly plans to sell its entire 69.49% stake in material handling equipment maker Hercules Hoists for about $100 million. Some European and a US firm are interested in buying the stake.

Dabur India is reportedly increasing prices by 5% across product categories to accommodate the sharp rise in the price of flexible packaging material made of polymers.

The Employees' Provident Fund Organisation (EPFO) is reportedly planning to abolish State Bank of India's 56-year old monopoly over its banking business due to growing differences between the two institutions.

National Aluminium Company reportedly plans to acquire 51% stake in Tajik Aluminium Company, which is owned by the Tajikistan government. The combined output of the two firms will be 800,000 metric tonnes.

Hinduja Foundries is reportedly close to acquiring two foundry companies in Europe and the acquisitions will be in the range of 300-500 million euros.

Oil and Natural Gas Corporation (ONGC) reportedly expects the cost of replacing its exploration and production infrastructure in the north-eastern state of Assam to double to around Rs 4000 crore due to rising steel prices.

The government reportedly plans to decontrol the sugar industry from the new crushing season beginning 1 October 2008. It is likely to dismantle the 10% levy on mills and the monthly release mechanism regulating the balance 90% free sale quota, the reports added.

Aditya Birla Nuvo will turn ex-dividend for a dividend of Rs 5.75 per share,

Bank of India will turn ex-dividend for a dividend of Rs 4 per share,

Biocon will turn ex-dividend for a dividend of Rs 5 per share,

Karnataka Bank will turn ex-dividend for a dividend of Rs 5 per share,

Kirloskar Brothers will turn ex-dividend for a dividend of Rs 4 per share,

Mahindra & Mahindra will turn ex-dividend for a dividend of Rs 11.50 per share, and

Zandu Pharma will turn ex-dividend for a dividend of Rs 25 per share.

Record high oil, weak US stocks may weigh on domestic bourses

The market may edge lower after Wednesday (2 July 2008)’s strong rebound, with oil prices striking a fresh record high and amid subdued trend in global stocks. Hopes that a political crisis over Indo-US nuclear deal may be avoided triggered a strong rebound on the bourses yesterday, 2 July 2008, with the Sensex surging 703 points, its biggest single day rise in more than three months.

As per media reports, Congress-led United Progressive Alliance (UPA) government may be able to retain power as Samajwadi Party (SP) is likely to provide support to the government at a time when Left parties are on the verge of withdrawing support to the government over Indo-US nuclear deal. SP has 39 seats in parliament, compared with 59 seats for the communist parties. The ruling coalition needs the support of 44 lawmakers to reach a majority and it hopes to also win support from a few smaller parties.

Oil, India's biggest import, rose to a fresh record high above $144 per barrel on Wednesday, 2 July 2008. Oil has risen more than 40% in calendar 2008 so far and it is the key reason for the turmoil of Indian equities. A section of the market reckons that only a sharp fall in oil prices can bring out a meaningful recovery in battered Indian stocks. From a record high of 21,206.77 hit on 10 January 2008, Sensex has lost 7,542.15 points or 35.56%. It is down 6,622.37 points or 32.64% in calendar year 2008 so far.

Asian markets were mostly in red today. Key benchmark indices in Hong Kong, Singapore, South Korea and Taiwan were down by between 0.46% to 1.35%. Key benchmark indices in China and Japan were up by between 0.18% to 1.29%.

The Dow Jones Industrial Average sank into a bear market on Wednesday, 2 June 2008, after a report showed US private employers cut the most jobs in nearly six years and oil shot to another record, increasing concerns about the health of the economy and corporate profits. Dow tumbled 166.75 points, or 1.46%, to 11,215.51. The Standard & Poor's 500 Index lost 23.39 points, or 1.82%, to close at 1,261.52, while the Nasdaq Composite Index slid 53.51 points, or 2.32%, to end at 2,251.46.

Foreign funds sold shares worth a net Rs 668.43 crore on Wednesday, 2 July 2008, provisional data released by stock exchanges showed.

There are concerns that the rise in input costs and tough macro economic environment comprising high inflation, record high global crude oil prices and rising interest rates, will result in slowdown in earnings growth of India Inc. More clarity on the impact of weak macroeconomic environment on earnings of India Inc. will emerge when company managements give outlook for the current fiscal years at the time of announcement of Q1 June 2008 results this month.

The advance tax payment by the Indian corporate sector this year so far has been strong. Government’s direct tax collection from the corporate sector rose 39.81% to Rs 30655 crore until 21 June 2008 compared to the corresponding period last year.

A good news on the inflation front is that ‘near normal’ rains this year will bolster farm production which in turn may help rein in inflation. The Indian Meteorological Department (IND), in its long-range forecast update for the 2008 southwest monsoon, has maintained that rainfall for the country as a whole is likely to be near normal. The department classifies rainfall as near normal when it's between 96% and 104% of the 50-year average.

Crude at a new all time high

The weekly inventory report by the Energy Department pushed crude prices to a new all time high mark today, Wednesday, 02 July, 2008. Crude futures also rose today as the dollar fell. EIA reported today that crude supplies fell last week.

Crude-oil futures for light sweet crude for August delivery today closed at $143.57/barrel (higher by $2.6/barrel or 1.8%) on the New York Mercantile Exchange. Prices rose to a high of $144.33 in electronic trading post trading hours. Crude prices gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. It ended June 2008 higher by 9.9%. Last week, crude prices closed higher by 3.6%. Prices are 107% higher than a year ago. For the year, crude is up by 45.5% till date.

EIA reported today that crude supplies declined by 2 million barrels to 299.8 million for the week ended 27 June. But the same report also showed that refinery utilization climbed to 89.2% compared with 88.6% of capacity a week earlier. According to the EIA data, crude inventories have now fallen during six of the past seven weeks. They are reportedly at near the lower boundary of the average range for this time of year.

EIA also reported that motor gasoline supplies rose 2.1 million barrels to 210.9 million barrels. It reported a climb of 1.3 million barrels in distillate stocks to total 120.7 million barrels for the latest week.

At the currency markets on Wednesday, the dollar slipped after a survey based on a sampling of ADP payrolls data showed private-sector firms in the U.S. shed a projected 79,000 jobs in June, in what would be the biggest monthly loss since November 2002. The dollar index which measures the greenback against a basket of six major currencies, was last at 72.052 compared with 72.374.

Brent crude oil for August settlement today rose $3.59 (2.6%) to $144.26 on the London-based ICE Futures Europe exchange. The London benchmark rose 54% in FY 2007, the most since 1999 when prices more than doubled.

Natural gas declined as speculators sold positions after a price gain of 78% this year, which outpaced the rise in crude oil. Natural gas for August delivery fell 16.1 cents (1.2%) to $13.344 per million British thermal units.

Against this backdrop, gasoline futures for August delivery rose 3.6 cents (1%) to settle at a record $3.5494 a gallon. Heating oil futures for August delivery gained 12.8 cents (3.3%) to $4.0715 a gallon in New York. The contract reached a record $4.0925.

Yesterday, the IEA (International Energy Agency) said in a report that spare OPEC capacity will shrink by 2013, keeping the market tight. In its Medium-Term Oil Market Report today, IEA reported that OPEC spare capacity will rise from 2.5 million barrels a day in 2008 to more than 4 million a day in 2010 before fading to negligible levels of around 1 million barrels a day by 2013.

International Energy Agency also said that supplies might not keep up with demand through 2013. The IEA, the Paris-based adviser to 27 oil-consuming nations, cut more than 3 million barrels a day from its 2012 global demand forecast. The IEA lowered demand forecasts for the years 2009 to 2012, citing weaker economic growth and the sharp rise in oil prices as factors curbing oil consumers' appetites.

In its latest medium-term report on the oil markets, the IEA forecast global demand will rise to 86.87 million barrels a day in 2008, down 1.4 million from the 88.27 million barrels projected in last year's report.

At the MCX, crude oil for July delivery closed at Rs 6,147/barrel, lower by Rs 1 (0.01%) against previous day’s close. Natural gas for July delivery closed at Rs 576.6/mmbtu, lower by Rs 10.7/mmbtu (1.8%).

Asian markets trading weak

Asian markets were trading weak. China's Shanghai Composite lost 3.02% or 80.09 points at 2,571.64.

Japan's Nikkei plunged 0.07% or 9.19 points at 13,277.18.

Hong Kong's Hang Seng fell 1.10% or 238.89 points at 21,465.56.

Taiwan's Taiwan Weighted tumbled 1.96% or 143.81 points at 7,210.05.

Singapore's Straits Times was down 0.87% or 25.17 points at 2,881.06.

South Korea's Seoul Composite declined 0.93% or 15.07 points at 1,608.53.

Sensex vaults 703 points on hopes government may retain power

The market staged a solid rebound today with the 30-share BSE Sensex clocking its biggest intra-day gain since 25 March 2008. Sensex gained 702 points, recouping nearly half of 1,460.14 points it had lost in previous three trading sessions. Volatility was high today. The Sensex and the S&P CNX Nfity had slumped to its lowest level in nearly 15 months in mid-morning trade after strong opening.

The recovery on the bourses came partly on hopes the Congress-led United Progressive Alliance (UPA) government may be able to retain power on reports Samajwadi Party (SP) is likely to provide support to the government at a time when Left parties are on the verge of withdrawing support to the government over Indo-US nuclear deal. SP has 39 seats in parliament, compared with 59 seats for the communist parties. The ruling coalition needs the support of 44 lawmakers to reach a majority and it hopes to also win support from a few smaller parties.

Consumer durable, banking, IT and capital goods stocks rose while FMCG stocks fell. FMCG index was the lone loser from sectoral indices on BSE. Realty stocks which were battered earlier in the day, bounced back sharply. DLF surged more than 15% on buyback plans. Reliance Infrastructure and HDFC rose more than 10%. The market breadth turned strong later in the day in contrast to a weak breadth earlier in the day.

Gains in European markets, which opened after Indian market, also aided today's rebound on the domestic bourses. Key benchmark indices in France, Germany and UK were up between 0.69% to 1.56%. European stocks rose after Deutsche Bank said it expects to make a profit in the second quarter of the year and therefore did not need to turn to shareholders for extra cash. Asian markets which opened before Indian market were in red.

Surging global crude oil prices, high inflation, higher interest rates and political uncertainity have rattled India bourses over the past few days. The barometer index BSE Sensex had plunged 1,460.14 points, a fall of more than 10% in the past three trading sessions to 12,961.68 on 1 July 2008 from 14,421.82 on 26 June 2008.

Oil, India's biggest import, rose more than $1 a barrel on Wednesday, 2 June 2008, within sight of Monday (30 June 2008)'s record high above $143. Oil has risen more than 40% in calendar 2008 so far and it is the key reason for the turmoil of Indian equities.

The 30-share BSE Sensex today surged 702.94 points or 5.42% at 13,664.62. At the day’s high of 13,711.01 hit in late trade, the Sensex rose 749.33 points, the biggest intra-day gain since 25 March 2008. Sensex hit a low of 12,822.75 in mid-morning trade, its lowest level in nearly 15 months. Sensex lost 138.93 points at the day's low.

The broader based S&P CNX Nifty was up 196.6 points or 5.05% at 4,093.35. Nifty had hit a low of 3,848.25 earlier in the day, its lowest level in nearly 15 months.

From a record high of 21,206.77 hit on 10 January 2008, Sensex has lost 7,542.15 points or 35.56%. It is down 6,622.37 points or 32.64% in calendar year 2008 so far.

The market breadth turned strong from earlier weak breadth on BSE with 1,586 shares advancing as compared to 1,094 that declined. 57 remained unchanged.

From the Sensex pack 28 stocks were trading in green.

The BSE Mid-Cap index rose 3.3% to 5,311.30 and BSE Small-Cap index climbed 1.91% to 6,506.80. Both these indices underperformed Sensex.

BSE Realty index (up 12.22% at 4,731.19), BSE Bankex (up 6.02% at 5,919.63), BSE Metal index (up 5.96% to 13,239.02), The BSE Capital Goods index (up 5.89% at 10,318.14), BSE IT index (up 5.77% to 4,177.75), BSE Power (up 5.72% to 2,280.21), BSE Consumer Durables index (up 5.52% to 3,512.52), outperformed Sensex.

BSE FMCG index (down 1.1 % to 1,999.15), BSE Health Care index (up 2.29% at 4,167.31), BSE Auto (up 2.6% at 3,498.05), BSE PSU index (up 3.78% to 5,668.68), The BSE Oil & Gas index (up 5.28% to 9,195.29), BSE TecK index (up 5.4% to 3,109.76), underperformed Sensex.

Realty stocks surged in late trade on bargain hunting at lower levels. BSE Realty index surged 12.22% to 4,731.19. From a recent high of 6,099.19 hit on 17 June 2008, BSE Realty index had slumped 30.87% to 4,215.93 on 1 July 2008. India’s largest real estate firm by market capitalisation DLF rose 15.08% to Rs 423.95 after the company said its board will meet on 10 July 2008 to consider proposal for buyback of equity shares of the company.

Unitech (up 7.21% to Rs 171.10), and Indiabulls Real Estate (up 14.27% to Rs 286.20) edged higher.

Consumer durables stocks rose. Videocon Industries (up 11.24% to Rs 282.15), Rajesh Exports (up 9.07% to Rs 54.70), Titan Industries (up 4.26% to Rs 1,043.20) edged higher.

Capital goods stocks rose. Bharat Heavy Electricals (up 5.24% to Rs 1,426.25), Larsen & Toubro (up 7.33% to Rs 2,297.15), Suzlon Energy (up 1.76% to Rs 199.45), Praj Industries (up 13.75% to Rs 170) edged higher.

Banking stocks rose after recent steep fall. HDFC Bank (up 5.66% to Rs 1,020.55), State Bank of India (up 5.33% to Rs 1,079.25) and ICICI Bank (up 5.68% to Rs 623) edged higher. Recently most of the banks had raised their lending rates after the Reserve Bank of India tightened monetary policy last week to tame inflation.

FMCG Stocks declined. BSE FMCG index was the lone loser from sectoral indices on BSE. ITC (down 2.1% to Rs 179.60), and United Spirits (down 3.49% to Rs 1,153.30) edged lower. However Hindustan Unilever rose 1.24% to Rs 200.15.

IT stocks rose as rupee hovered near 15-month low against the dollar. Satyam Computer Services (up 7.18% to Rs 463.30), Infosys (up 6.45% to Rs 1,820.60), Wipro (up 5.73% to Rs 439.90), Tata Consultancy Services (up 3.68% to Rs 877.95) edged higher. A weak rupee augurs well for IT pivotals as they derive majority of their revenue from exports to the US.

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries (RIL) rose 4.84% to Rs 2,143.10.

Reliance Infrastructure (up 12.6% to Rs 790.50), HDFC (up 11.10% to Rs 2,039.20), Jaiprakash Associates (up 7.03% to Rs 144.70), Mahindra & Mahindra (up 6.57% to Rs 469), edged higher from Sensex pack.

India’s largest state run oil exploration firm by sales ONGC rose 8.12% to Rs 854.45. ONGC Videsh (OVL), the wholly-owned subsidiary of ONGC, is reportedly one of the 41 global oil firms to be shortlisted by the Iraqi government to develop its oil fields. OVL is also re-negotiating earlier exploration commitments given under the Saddam Hussein regime and later cancelled by the US.

India’s largest drugmaker by sales Ranbaxy Laboratories rose 2.9% to Rs 521.40. Two manufacturing facilities of Ranbaxy Laboratories are reportedly learnt to have come under the scanner of the US Food and Drug Administration (US FDA), the drug regulatory body in the US. According to reports, US FDA carried out inspections at Ranbaxy’s manufacturing plant at Dewas (Madhya Pradesh) and Batamandi (Himachal Pradesh) earlier this year. US FDA is learnt to have raised concerns over cross contamination at the Dewas plant.

India’s largest commercial vehicle maker by sales Tata Motors rose 1.21% to Rs 413.40 after the company said high input costs, rising interest rates and slowing demand would dent sales of commercial and passenger vehicles in the year to March 2009.

Reliance Natural Resources clocked the highest volume of 3.32 crore shares on BSE. IFCI (2.58 crore shares), Reliance Petroleum (2.08 crore shares), Ispat Industries (1.82 crore shares) and Chambal Fertilisers and Chemicals (1.58 crore shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of 470.28 crore on BSE. Reliance Capital (Rs 456.94 crore), Reliance Petroleum (Rs 350.06 crore), Reliance Infrastructure (Rs 229.89 crore) and Reliance Natural Resources (Rs 198.38 crore) were the other turnover toppers in that order.

Asian stocks were trading lower today. Key benchmark indices in Hong Kong, Japan, Taiwan and South Korea, Singapore were down by between 0.37% to 2.57%. China’s Shanghai Composite was flat.

US stocks rose on Tuesday, 1 July 2008, after embattled automaker GM surprised Wall Street with stronger-than-expected June sales and financial shares reversed earlier losses as investors scoured for bargains, overshadowing concerns about record oil prices. The Dow Jones Industrial Average gained 32.25 points or 0.28% to 11,382.26. The tech-laden Nasdaq Composite index rose 11.99 points or 0.52% to 2,304.97.

Record high oil prices, surging inflation, higher interest rates, a likely increase in fiscal deficit and political uncertainty have all caused a gloom on the macro economic front in India at this juncture. The stock market’s concerns are that the rise in input costs and tough macro economic environment comprising high inflation, record high global crude oil prices and rising interest rates, will result in slowdown in earnings growth of the corporate sector.

The advance tax payment by the Indian corporate sector this year so far has been strong. Government’s direct tax collection from the corporate sector rose 39.81% to Rs 30655 crore until 21 June 2008 compared to the corresponding period last year. More clarity on the impact of poor macroeconomic environment on earnings of India Inc. will emerge when company managements give outlook for the current fiscal years at the time of announcement of Q1 June 2008 results this month.

Sustained selling of Indian stocks by foreign institutional investors (FIIs) has also dented market sentiment. FII outflow in June 2008 totaled Rs 10095.80 crore. FII outflow in calendar year 2008 totaled Rs 25692.40 crore, till 30 June 2008.

Political uncertainty continues to haunt Indian bourses. Doubts have been raised as to whether the Congress led United Progressive Alliance government will be able to push through a much-debated Indo-US nuclear deal and still retain its power, in the face of heavy opposition from its key communist allies. The Left parties on Sunday, 29 June 2008, renewed their threat to withdraw support from the ruling coalition if Prime Minister Manmohan Singh forged ahead with the nuclear deal. Singh on Monday, 30 June 2008, promised to bring the nuclear pact with the US before parliament before going ahead with the deal that is fiercely opposed by his communist allies, a report said.

The Prime Minister played down the communists' threats to withdraw support to his government saying all that he wanted was that the government should be allowed to complete the negotiation process with the International Atomic Energy Agency-IAEA and Nuclear Suppliers' Group-NSG. Singh expressed confidence that the government would be able to address concerns of all including the Left parties on the civil nuclear cooperation agreement with the US.

The economic reforms process in India has virtually come to a halt in the last two years or so. A good news in the current gloom on the macroeconomic front is that the Indian Meteorological Department (IND), in its long-range forecast update for the 2008 southwest monsoon, has maintained that rainfall for the country as a whole is likely to be ‘near normal’. The department classifies rainfall as near normal when it's between 96% and 104% of the 50-year average. Good rains will bolster farm production which in turn may help rein in inflation.

Weakness may persist

The market may extend a sharp fall witnessed over the past few days. Concerns about slowdown in corporate earnings, political uncertainty and sustained FII inflow will continue to keep market sentiments edgy. The barometer index BSE Sensex tumbled to its lowest level in 13 months on Friday, 27 June 2008.

Companies in sectors ranging from capital goods to automobiles are feeling the heat on their margins from rising input costs and slackening growth over the past two quarters. Nevertheless, advance tax payment by the Indian corporate sector this year so far has been decent to strong. Government’s direct tax collection from the corporate sector rose 39.81% to Rs 30655 crore until 21 June 2008 compared to the corresponding period last year.

Oil prices rose to a record near $143 a barrel on Friday, 27 June 2008, as a drop in global equities markets lured more investors into commodities. Crude oil rose one dollar in electronic trading to $141.21 a barrel on Monday, 30 June 2008.

Political uncertainty continues to haunt the bourses. The media continues to speculate whether the ruling Congress led United Progressive Alliance government will be able to push through a much-debated Indo-US nuclear deal and still retain its power, in the face of heavy opposition from its key communist allies. The Left parties on Sunday, 29 June 2008, renewed their threat to withdraw support from the ruling coalition if Prime Minister Manmohan Singh forged ahead with the nuclear deal.

A sustained selling of Indian stocks by foreign institutional investors (FIIs) has also dented market sentiment. As per provisional data, foreign funds sold shares worth a net Rs 703.11 crore on Friday, 27 June 2008. FII outflow in June 2008 totaled Rs 9349 crore (till 26 June 2008). FII outflow in calendar year 2008 totaled Rs 24,719.10 crore (till 26 June 2008).

Buffett vs. Bernanke: The inflation showdown

NEW YORK (Fortune) -- Even Warren Buffett is wrong some of the time. Federal Reserve chairman Ben Bernanke is hoping this is one of them.

Buffett, the billionaire investor behind Berkshire Hathaway (BRKA, Fortune 500), fingered "exploding" inflation Wednesday as the biggest risk to the economy. "I think inflation is really picking up," Buffett said on CNBC. "It's huge right now, whether it's steel or oil," he continued. "We see it everywhere."

Indeed, the prices of gasoline and milk have shot past $4 a gallon, and Dow Chemical (DOW, Fortune 500) has announced twice in the past month that it's raising prices to offset soaring commodity costs.

Yet Bernanke's Fed signaled Wednesday that, after nine months of interest rate cuts and expansive lending to the financial sector, it isn't eager to reverse course and push rates higher to try to tamp down rising prices.

Why? Because the Fed remains skeptical that high commodity prices will ripple through the economy, leading to broad price hikes and big wage increases.

"The committee expects inflation to moderate later this year and next year," the Federal Open Market Committee said in holding the fed funds rate steady at 2%, though it did note that "uncertainty" remains high and suggested inflation concerns could rise.
Depends on what you mean by 'inflation'

In part, the Fed's decision turns on a distinction economists make between inflation and "relative-price changes." The former is a general loss of purchasing power that's caused, or at least exacerbated by, overly lax monetary policy (such as keeping interest rates too low for too long). The latter are price hikes driven primarily by fundamental shifts in supply and demand.

If demand for commodities is spiking because of strong worldwide growth, the thinking goes, prices should rise accordingly, until consumers react by reducing consumption - a process that isn't apt to be influenced by interest rate changes.

The Fed is betting that rising prices won't feed through to higher general inflation expectations unless workers start demanding raises and companies start raising prices.

But wages haven't been rising sharply, and declining unionization means workers have less bargaining power than they did during the inflationary 1970s, economists say. And while some processors of commodities, like Dow, are charging more, their customers in turn have generally been unable to pass along those costs to consumers.

So even as some members of the Fed's policymaking body, such as Dallas Fed President Richard Fisher, warn of the need to take quick action against inflation - Fisher dissented for the third straight meeting in Wednesday's vote, this time advocating a rate increase - committee members' inflation forecast for 2010 has risen only slightly since October, despite surging oil prices.

"Oil prices have ratcheted up over the past nine years and the dollar has depreciated for more than six years. Nevertheless, as long as a central bank is not creating an excessive amount of money, these relative price pressures ought to be transitory," Sandra Pianalto, president of the Federal Reserve Bank of Cleveland and a voting member this year of the Federal Open Market Committee, explained in a speech last month.

"As consumers spend more money for higher-priced petroleum and agricultural goods," she continued, "they eventually have less money to spend on other goods and services. Other relative prices must then fall."
Wait and see

To be sure, there are other factors at work in the Fed's move to the sidelines. Bernanke & Co. wants to measure the stimulative effect of the rate cuts it's already made. The rate cuts of the past nine months - the Fed has slashed its overnight bank lending rate by 3.25 percentage points since September - will take time to impact the economy. If possible, the Fed wants to wait before making another move on rates.

And while fears of a marketwide meltdown seem to have eased, a weak housing market, rising unemployment and increasing loan losses at banks mean the risk of a sharp economic pullback remains substantial.

"In an environment of dislocated funding markets, a rate cut would not produce a recovery but a rate hike could trigger a recession," writes Tullett Prebon economist Lena Komileva.

Indeed, while inflation is the buzzword right now, the surge in fuel costs is hurting growth in some key industries. Airlines such as United Airlines, a unit of UAL (UAUA, Fortune 500), and Continental (CAL, Fortune 500) have set plans to eliminate thousands of jobs in response to soaring fuel costs.

Automakers Ford (F, Fortune 500) and General Motors (GM, Fortune 500) have slashed their production schedules as well, as consumers stopped buying the fuel-guzzling sport utility vehicles that were once a huge source of profits for Detroit. The loss of high-paying pilot and autoworker jobs will only add to existing weak wage and job trends.

None of this makes the recent price shocks easier to bear, of course. But for policymakers, if not for media darlings such as Buffett, the distinction is an important one. "While sometimes devastating," Pianalto said in her speech last month in Paris, "these global relative-price pressures are not the same thing as inflation."

Market may remain weak

The outlook for the market remains grim for the near term as steaming inflation, record high global crude oil prices and high interest rates threaten the pace of growth in the world's second fastest expanding major economy, driving investors to the sideline or to exit.

The wholesale price index rose 11.42% in 12 months to 14 June 2008, above the previous week's annual rise of 11.05%, government data released on Friday, 27 June 2008, showed. Inflation for the year through 19 April 2008 was revised upwards to 8.23% from 7.57%.

To tame inflationary pressures, the Reserve Bank of India (RBI) on 24 June 2008, raised its key lending rate viz. the repo rate by 50 basis points to 8.5% with immediate effect, its highest since March 2002 and the second hike this month. The RBI had earlier on 11 June 2008, raised the repo rate, by 25 basis points to 8%.

The RBI also increased the cash reserve ratio, the ratio of deposits banks must keep with it, to 8.75% from 8.25% in two 25-basis-point stages on 5 July 2008 and 19 July 2008.

Foreign investors, who usually set the trend for the market, have been withdrawing relentlessly this year. FIIs dumped shares worth Rs 9349.60 crore in the month of June 2008 (till 26 June 2008). FII outflow in calendar year 2008 totaled Rs 24,719.10 crore (till 26 June 2008).

Political factors will also weigh on the market due to the ongoing confrontation between the government and Left parties over the Indo-US nuclear deal. The UPA-Left coordination committee on Indo-US nuclear deal on 25 June 2008 decided to meet again later. Foreign Minister Pranab Mukherjee said the committee completed its discussions on all aspects of the nuclear deal. The next meeting of the committee will finalise its findings.

The Left parties have already made it clear that they will withdraw their support to the government if it moves ahead with the nuclear deal. Left parties are opposing the deal saying it undermines India's independent foreign policy and nuclear weapons program.

With inflation expected to remain in double-digits in the coming months, it would be suicidal for the ruling coalition to precipitate a political crisis and go for early elections, which are due by May next year.

Crude hit a record of $141.71 on Friday, 27 June 2008 after Opec President, Chakib Khelil predicted that the oil prices could rise to $150-170 a barrel in the next 3-4 months. Rising crude oil remains a major worry as India imports close to 70% of its crude requirements.

Sensex sheds 769 points

The key benchmark indices slumped as a political rift over nuclear deal, soaring crude oil prices and high inflation weighed heavily on the market sentiment. The BSE Sensex fell to the lowest level in 13-months while the S&P CNX Nifty touched a 10-month low.

Sensex declined 769.07 points or 5.28% to 13,802.22 in the week ended Friday, 27 June 2008. The S&P CNX Nifty lost 210.90 points or 4.85% to 4136.65 in the week.

The BSE Mid-Cap index declined 473.68 points or 7.85% to 5,558.75. The BSE Small-Cap index slumped 459.59 points or 6.21% to 6,938.07.

The market suffered major losses on 23 June 2008 to settle at 10-month low on sustained selling pressure throughout the day. The 30-share BSE Sensex lost 277.97 points or 1.91% at 14,293.32. The broader based S&P CNX Nifty was down 81.15 points or 1.87% to 4266.40.

Equities extended losses for the fifth straight day on 24 June 2008 with the barometer index BSE Sensex falling below the psychologically important 14,000 mark for the first time in 10 months since late August 2007. The 30-share BSE Sensex was down 186.74 points or 1.31% at 14,106.58. The broader based S&P CNX Nifty slumped 75.30 points or 1.76% at 4,191.10.

On 25 June 2008, equities staged a solid rebound after touching fresh calendar 2008 lows in early trade. The initial jolt was caused by the Reserve Bank of India's move to hike the key lending rate. However, short covering ahead of the expiry of June 2008 derivatives contracts tomorrow, 26 June 2008, provided a foundation for the recovery. The 30-share BSE Sensex gained 113.49 points or 0.80% at 14,220.07. The broader based S&P CNX Nifty surged 61.55 points or 1.47% at 4,252.65.

On 26 June 2008, short covering ahead of expiry of June 2008 derivatives contracts helped market move higher for the second straight session. However, the market underwent choppy swings throughout the day. The 30-share BSE Sensex gained 201.75 points or 1.42% at 14,421.82. The broader based S&P CNX Nifty was up 63.20 points or 1.49% at 4,315.85.

A setback to stocks in Asia and US, sharp spurt in crude oil prices and political uncertainty due to Indo-US nuclear deal rattled bourses on 27 June 2008. The 30-share BSE Sensex slumped 619.60 points or 4.30% to 13,802.22. Intense selling pulled it lower to day’s low of 13,760.78, which is its lowest level in more than 13 months. The broader based S&P CNX Nifty tanked 179.20 points or 4.15% at 4,136.65.

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries (RIL) rose 4.07% to Rs 2181.90 in the week. RIL will start pumping 25 million standard cubic metres a day (mmscmd) of natural gas by September from its D-6 field in the Krishna Godavari basin, the oil ministry said on 25 June 2008. It said in a statement that the output would be raised to 40 mmscmd by March 2009.

India’s second largest private sector bank in terms of net profit HDFC Bank declined 7.31% to Rs 1018.65. The bank announced a hike in its benchmark prime lending rate by 25 basis points to 15.25%. The bank made this announcement after trading hours on Friday, 20 June 2007.

Wipro, the country’s third largest software services exporter fell 6.65% to Rs 442.60. Wipro has reportedly raised close to Rs 1,400 crore (35 billion Yen) through external commercial borrowings (ECBs). The company has been pursuing an aggressive acquisition strategy over the last few years and it concluded two major acquisitions in the year ended March 2008 including Unza and Infocrossing for a cumulative value of close to $900 million. As of 31 March 2008, Wipro had cash and bank balance Rs 3,927 crore.

Reliance Communications (RCom), the country’s second largest telecom services provider in terms of market capitalisation lost 3.61% to Rs 473.55. RCom’s proposed merger deal with South Africa based global operator, MTN is reportedly expected to close by first week of July 2008.

India’s leading pharma company in terms of sales Ranbaxy Laboratories fell 3.61% to Rs 523.05 after receiving tentative approval from US Food and Drug Administration for manufacturing and marketing valganciclovir hydrochloride tablets in 450 miligram strength.

India’s largest bank in terms of net profit State Bank of India fell 7.15% to Rs 1158.30 after the state-run bank raised its benchmark prime lending rate by 50 basis points to 12.75% with effect from 27 June 2008. The bank made this announcement during trading hours on 26 June 2007.

India’s largest private sector steel manufacturer in terms of sales Tata Steel fell 6.54% to Rs 726.75. The company reported 195.64% jump in consolidated net profit to Rs 12349.98 crore on 415.04% spurt in total income to Rs 132110.09 crore in the year ended March 2008 over the year ended March 2007. The results are non comparable due to merger Corus Group with Tata Steel.

India’s largest private sector bank by assets ICICI Bank plunged 11.10% at Rs 653.10. It hit a 52-week low of Rs 643 on 27 June 2008.

India’s largest engineering and construction firm by revenue Larsen & Toubro fell 11.57% at Rs 2267.15.

India’s second largest software exporter by sales Infosys Technologies fell 6.57% at Rs 1707.60.

India’s largest state-run oil exploration company Oil & Natural Gas Corporation (ONGC) fell 4.23% to Rs 830.15. Net profit of ONGC fell 2% to Rs 2627.10 on a 26% increase in sales to Rs 15626.07 crore in Q4 March 2008 over Q4 march 2007. The company announced the results during trading hours on 25 June 2007.

The wholesale price index rose 11.42% in 12 months to 14 June 2008, above the previous week's annual rise of 11.05%, government data released on Friday, 27 June 2008, showed. Inflation for the year through 19 April 2008 was revised upwards to 8.23% from 7.57%.

RBI, after market hours on 24 June 2008, raised its key lending rate viz. the repo rate by 50 basis points to 8.5% with immediate effect, its highest since March 2002 and the second hike this month. The RBI had earlier on 11 June 2008, raised the repo rate, by 25 basis points to 8%.

The RBI also increased the cash reserve ratio, the ratio of deposits banks must keep with it, to 8.75% from 8.25% in two 25-basis-point stages on 5 July 2008 and 19 July 2008.

Political uncertainty weighed heavily on the market due to confrontation between the government and Left parties over the Indo-US nuclear deal. The UPA-Left coordination committee on Indo-US nuclear deal on 25 June 2008 cided to meet again later. Foreign Minister Pranab Mukherjee said the committee completed its discussions on all aspects of the nuclear deal. The next meeting of the committee will finalise its findings.

The Left parties have already made it clear that they will withdraw their support to the government if it moves ahead with the nuclear deal. Left parties are opposing the deal saying it undermines India's independent foreign policy and nuclear weapons program.

The finance ministry on 25 June 2008, said the direct tax receipts were up 43.45% to Rs 49411 crore until 21 June 2008, on the back of a higher advance tax payments by corporates. Collection from corporate tax were Rs 30655 crore, up 39.81% from a year-ago, while income tax receipts were up 49.8% to Rs 18756 crore, it said in a statement.

Sun Pharma may see action

Sun Pharmaceutical Industries, the country’s most valuable drugmaker, has decided to launch a hostile bid for Israel’s Taro Pharmaceutical Industries. The move comes close on the heels of Taro’s rejection of a merger agreement with Sun last month. Taro had termed the offer ‘inadequate’.

Sun said on Thursday, 26 June 2008, it will offer to purchase all outstanding shares of Taro in the next few days at $7.75 a share, the rate that both the companies had agreed upon a year ago. Sun, which already holds a 36% stake in Taro, said the offer is in line with the 2007 merger agreement between the two companies.

Tata Steel, the world's sixth-largest steelmaker, on Thursday 26 June 2008, reported 195.64% jump in consolidated net profit to Rs 12349.98 crore on 415.04% growth in total income to Rs 132110.09 crore in the year ended March 2008 (FY 2008) over the year ended March 2007. The results are non comparable due to merger Corus Group with Tata Steel in FY 2008.

At the time of announcing the results, Tata Steel managing director B. Muthuraman said it had raised prices for one-year steel sale contracts. 25% of Tata Steel's total sales were through annual contracts, he said.

B.K. Birla promoter of diversified firm Kesoram Industries said on Thursday, 26 June 2008, the company will not be split and both his grandson and head of Aditya Birla group, Kumar Mangalam Birla, and daughter Manjushree Khaitan will run the company in his absence. B.K. Birla said he will be happy working till the age of 90. He is currently 88 years old.

Earlier, B.K. Birla had plans to split the group firms between his two daughters and grandson. Other B.K. Birla group firms include Mangalam Cement, Jay Shree Tea & Industries and Century Enka.

Union Bank of India has raised its benchmark prime lending rate by 50 basis points to 13.25%. The new rates will be effective from July 2008.

The finance ministry on Thursday offered exemption of service tax on the supply of vehicles to goods transport agencies.

Satyam Computer Services announced on Thursday it has formed an alliance with Sciformix Corporation, a Westborough, Mass.-based, life science knowledge process outsourcing (KPO) company, to deliver end-to-end data management services in "Pharmacovigilance."

Financial services firm Religare Enterprises on Thursday reported a 269.8% surge in net profit to Rs 91.97 crore on 180% growth in total income to Rs 896.51 crore in the year ended March 2008 over the year ended March 2007.

The company also said on Thursday its board has approved raising upto Rs 1075 crore through equity or debt. It will also raise an additional Rs 500 crore through issue of redeemable preference shares to non-promoter entities, it said in a statement.

Shipbuilder ABG Shipyard has won an order worth Rs 585 crore from Sealion Shipping on behalf of Toisa, the company said on Friday, 27 June 2008. The total order book of ABG stands at about $2.44 billion, it said in a notice to the stock exchange.

Market may open weak on negative global cues

The market is likely to open on a weak note tracking negative global cues. The sharp spurt in crude oil prices above the $140 per barrel mark may dampen the sentiment further.

However trading might be cautious ahead of the government’s release of inflation data for the year through 14 June 2008. The wholesale price index rose 11.05% in the 12 months to 7 June 2008. The rate was above market expectation of about 10% rise. The reading was the highest in 13 years since 6 May 1995, when it was 11.11%.

To add to the negative sentiment, Standard and Poor’s (S&P) and its Indian subsidiary Crisil have lowered their India growth forecast for the current year to 7.8% from 8.1-8.6% earlier. The agencies said that the Indian economy would be hit by the surge in inflation fuelled by energy and commodity prices. The Reserve Bank of India (RBI) has already hiked interest rates twice in June 2008 to curb inflationary pressures and may well do so again.

As per reports, the marketwide rollover of positions from June 2008 contracts to July 2008 contracts in the derivatives segment stood at 82% while that of Nifty was 70%. June 2008 derivaties contracts expired yesterday, 26 June 2008.

Asian markets were trading weak today, 27 June 2008. Shanghai Composite plunged 3.67% or 106.41 points at 2,795.44, Japan's Nikkei fell 2.22% or 307.20 points at 13,515.12, Hang Seng tumbled 2.64% or 592.71 points at 21,862.96, Taiwan's Taiwan Weighted declined 3.99% or 311.64 points at 7,500.16, Singapore's Straits Times lost 1.41% or 42.02 points at 2,938.93. and South Korea's Seoul Composite was down 2.10% or 36.01 points at 1,681.65

US markets plunged after a downgrade on brokerage stocks, disappointing earnings from two tech giants and oil's rally above $140 a barrel. The Dow Jones closed at its lowest level since September 2006. The Dow Jones industrial average plunged 358.41 points, more than 3%, to close at 11,453.42. The Standard & Poor's 500 fell 38.82 points, about 3 percent, to 1,283.15, and the Nasdaq composite lost 79.89 points, or 3.3%, to 2,321.37.

Back home, short covering ahead of expiry of June 2008 derivatives contracts helped market move higher for the second straight session yesterday, 26 June 2008. The 30-share BSE Sensex gained 201.75 points or 1.42% at 14,421.82 and the broader based S&P CNX Nifty was up 63.20 points or 1.49% at 4,315.85, on that day.

Nifty July 2008 futures were at 4252.95, a huge discount of 62.90 points as compared to spot closing.

The BSE Sensex is down 5,865.17 points or 28.91% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2008. It is 6,784.95 points or 31.99% away from its all-time high of 21,206.77 struck on 10 January 2008.

As per provisional data, foreign funds today, 26 June 2008, sold shares worth a net Rs 667.19 crore. Domestic funds bought shares worth a net Rs 395.64 crore.

Foreign institutional investors (FIIs) were net buyers of Rs 918.59 crore in the futures & options segment yesterday, 26 June 2008. They were net buyers of index futures to the tune of Rs 1023.89 crore and sold index options worth Rs 368.21 crore. They were net buyers of stock futures to the tune of Rs 33.80 crore and bought stock options worth Rs 33.80 crore.

U.S. light crude for August delivery was down 32 cents at $139.32 a barrel today, 27 June 2008 in Globex electronic trading. U.S. oil hit a record of $140.39 on Thursday after Libya said it was studying possible options to cut output in response to potential U.S. actions against OPEC countries.

HDFC Bank may see action on hike in lending rate

After trading hours on Friday, 20 June 2008, HDFC Bank, announced a hike in its benchmark prime lending rate (BPLR) by 25 basis points to 15.25%. The bank has also upped its deposit rates by 25 basis points across different tenures. The hikes come into effect from 18 June 2008.

As per reports, several banks are reviewing their interest rate structures and are expected to take a call soon on whether to raise their rates or not.

After trading hours on Friday, 20 June 2008, Dredging Corporation of India reported 22.13% fall in net profit to Rs 50.15 crore on 5.56% fall in sales to Rs 190.72 crore in Q4 March 2008 over Q4 March 2007. The net profit declined 17.97% to Rs 154.82 crore on 23.12% growth in sales to Rs 705.32 crore in the year ended March 2008 over the year ended March 2007.

Securities and Exchange Board of India (Sebi) on Friday, 20 June 2008, exempted Abbott India’s parent Abbott Laboratories, US, from making an open offer for the shares of the drug firm. The parent plans to buy back 5.83% of Abbott India's shares from the open market at a price not exceeding Rs 650 each. On Friday, the Abbott India shares rose 3.68% % to Rs 554.75 on BSE.

The proposed buyback would raise the shareholding of Abbott Laboratories in Abbott India to 68.94% from the current 65.14%. "The promoters are already in control of the target company. The increase in the shareholding ... is incidental to the buy-back proposal of the target company and is not a pro-active acquisition," Sebi said in its order.

After trading hours on Friday, 20 June 2008, hospitality firm EIH reported 9.68% growth in net profit to Rs 65.38 crore on 13.14% rise in sales Rs 339.88 crore in Q4 March 2008 over Q4 March 2007. The net profit rose 8.43% to Rs 217.23 crore on 15.01% growth in sales to Rs 1079.87 crore in the year ended March 2008 over the year ended March 2007.

Pyramid Saimira Theatre said on Monday, 23 June 2008, its board will meet on 30 June 2008 to consider raising funds.

Indian stocks headed for weak start

Indian stocks may be geared for weak start today, 23 June 2008, as whole host of factors including weak global markets, shadows of a interest rate hike post double-digit inflation, and political uncertainty may create havoc on the bourses.

Also there might be possibility of early elections after Uttar Pradesh chief minister Mayawati’s Bahujan Samaj Party (BSP) withdrew its support to the Congress-led UPA government during the weekend.

Volatility is expected to remain high as derivatives contracts for June series are set to expire on Thursday, 26 June 2008. As per reports, the marketwide rollover of positions from June 2008 series to July 2008 series stood at 16% while that of Nifty was 20%, as on Friday, 20 June 2008.

Asian markets were trading weak today, 23 June 2008. China's Shanghai Composite slipped 1.98% or 56.01 points at 2,775.73, Nikkei plunged 1.16% or 162.27 points at 13,779.81, Hang Seng tumbled 1.28% or 290.53 points at 22,455.07, Taiwan's Taiwan Weighted lost 0.44% or 34.87 points at 7,867.57, Singapore's Straits Times fell 0.78% or 23.47 points at 2,978.34. and South Korea's Seoul Composite declined 1.17% or 20.25 points at 1,710.75

US stocks tumbled on Friday, 20 June 2008, with the Dow cracking below the crucial 12,000 mark to hit 3-month lows. Moody's cut its ratings for bond insurers M-B-I-A and Ambac. Merrill Lynch reducing its earnings estimates for a host of banks on concerns of credit risk, capital raising and possible dividend cuts also impacted sentiment. The Dow Jones industrial average slumped 220 points to 11,843 while the Nasdaq Composite index declined 56 points to 2406.

Back home, investors chucked stocks on Friday, 20 June 2008, to survive the snowballing threat of a possible monetary tightening by Reserve Bank of India to rein in soaring inflation. The 30-share BSE Sensex slumped 516.70 points or 3.42% at 14,571.29, and the broader based S&P CNX Nifty was down 157.70 points or 3.48% at 4347.55, on that day.

The Sensex is down 6635.48 points or 31.28% from a record high of 21206.77 it hit on 10 January 2008. It is down 5715.70 points or 28.17% in calendar year 2008 so far.

The BSE Sensex declined 618.33 points or 4.07% to 14,571.29 in the week ended Friday, 20 June 2008. S&P CNX Nifty lost 169.55 points or 3.75% to 4,347.55 in the week.

As per provisional data, foreign funds sold shares worth a net Rs 999.31 crore on 20 June 2008. Domestic funds bought shares worth a net Rs 563.86 crore on that day.

Foreign institutional investors (FIIs) were net sellers of Rs 1254.40 crore in the futures & options segment on Friday 20 June 2008. They were net sellers of index futures to the tune of Rs 1429.10 crore and bought index options worth Rs 17.74 crore. They were net buyers of stock futures to the tune of Rs 160.87 crore and sold stock options worth Rs 1.91 crore.

The wholesale price index rose 11.05% in the 12 months to 7 June 2008, government data released on Friday, 20 June 2008, showed. The rate was above market expectation of about 10% rise. The reading was the highest in 13 years since 6 May 1995, when it was 11.11%.

Crude oil prices rose in Asian trading today, 23 June 2008, after Saudi Arabia said at a weekend summit that it had raised output, and said speculators were partly to blame for higher prices. New York's main oil futures contract, light sweet crude for August delivery, was 29 cents higher at $135.65 per barrel.

Sensex sheds 618 points

The soaring crude oil prices, high inflation and sustained selling by foreign institutional investors (FIIs) pulled the market down to its lowest level in calendar year 2008. Political concerns over the nuclear deal with US also weighed on the market sentiment. Sensex declined in 3 out of 5 trading sessions in the week ended Friday, 20 June 2008.

The BSE Sensex declined 618.33 points or 4.07% to 14,571.29 in the week ended Friday, 20 June 2008. S&P CNX Nifty lost 169.55 points or 3.75% to 4,347.55 in the week.

The BSE Mid-Cap index declined 195.74 points or 3.14% to 6,032.43. The BSE Small-Cap index slumped 184.06 points or 2.43% to 7,397.66.

Interest rate sensitive sectors bore major brunt of selling. BSE Bankex (down 3.56% to 6,804.78), BSE Auto index (down 2.1% to 4,042.86) and BSE Realty index (down 5.05% to 5,383.81) edged lower in the week.

Foreign institutional investors (FIIs) pressed heavy sales in the backdrop of a weakening rupee against the dollar. In June 2008, FIIs dumped shares worth Rs 7,477.80 crore (till 19 June 2008). FII outflow in calendar year 2008 totaled Rs 22,847.20 crore (till 19 June 2008). On the other hand, mutual funds were net buyers of shares to the tune of Rs 1,820.20 crore in the month of June 2008, till 19 June 2008.

The 30-share BSE Sensex rose 206.20 points or 1.36% at 15,395.82 on Monday, 16 June 2008. The market ended on a firm note on the back of firm global markets. However, a rebound in global crude oil prices pared strong intra-day gains on that day. Banking and information technology stocks rallied. However, automobile stocks declined after the Union government raised excise duty on large cars, multi-utility vehicles and sports utility vehicles with an engine cubic capacity exceeding 1500.

The 30-share BSE Sensex gained 301.08 points or 1.96% at 15,696.90 on Tuesday, 17 June 2008. Bulls had an upper hand over bears for a second day in a row with market sentiment boosted by reports of higher advance tax payment by top Indian firms in the first installment of 15 June 2008, reports of good monsoon in the initial phase and easing of oil prices from record high.

The 30-share BSE Sensex lost 274.59 points or 1.75% at 15,422.31 on Wednesday, 18 June 2008. Bears struck back with a vengeance on the bourses after a sharp rally in the past two days. Bears used the ploy of weak European markets and deferral of a crucial UPA-Left coordination committee meeting on Indo-US nuclear deal scheduled to bring share prices down. The decline followed a range bound movement on the bourses for a better part of the day till early afternoon trade.

The 30-share BSE Sensex lost 334.32 points or 2.17% at 15,087.99 on Thursday, 19 June 2008. The market succumbed to selling pressure for the second consecutive day. Political concerns and weak Asian markets weighed on the investor sentiments. Banking, realty and capital goods stocks were hurt the most. All the sectoral indices on BSE ended in red.

The 30 share BSE Sensex declined 516.70 points or 3.42% to 14,571.29 on Friday, 20 June 2008. The two key indices, Sensex and Nifty hit their lowest level of calendar year 2008 on that day. The market tumbled after the latest data showed India’s inflation soared to a 13-year high early this month. High inflation sparked fears of tighter monetary policy by the Reserve Bank of India.

India's largest aluminium producer by sales Hindalco Industries declined 8.21% to Rs 161 in the week . Its board on 20 June 2008 approved raising up to Rs 5000 crore by way of a rights issue to redeem a bridge loan it had taken for acquisition of Novelis Inc. The ratio for the rights issue will be 1:3, i.e. one right of Rs 1 each for every three equity shares of Rs 1 each held by the shareholder as on the record date.

India’s biggest engineering and construction firm in terms of revenue Larsen & Toubro rose 0.8% to Rs 2637.80 The company on 20 June 2008 said its heavy engineering division had crossed Rs 1000 crore of order booking for supply of high tech equipment and systems in the first two months of the current financial year.

India’s second largest telecom services provider by sales Reliance Communications plunged 9.58% to Rs 491.30 in the week. In another family feud between Ambani brothers, Mukesh ambani controlled Reliance Industries claimed a right of first refusal to buy a controlling stake in Reliance Communications. Meanwhile, Reliance Communications (RCom) said, in a mala fide effort to disrupt the talks, Reliance Industries (RIL) has sent a communication to MTN, making a false claim of an alleged right of first refusal to buy a controlling stake in RCom.

Reliance Communications (RCom) also threatened to claim damages from Reliance Industries, in case the latter choses to take legal action against RCom. It added that RIL's claim is legally and factually untenable, baseless, and misconceived. Earlier on 26 May 2008, Reliance Communications (RCom) had informed the bourses that it has entered into exclusive negotiations with MTN Group for 45 days soon after the South African giant aborted its talks with the Sunil Mittal-controlled Bharti group. As part of a tie-up, Anil Ambani would likely swap his controlling stake in Reliance Communications to become the largest shareholder in MTN.

World’s sixth largest steel producer Tata Steel declined 7.58% to Rs 777.60. The company said it has formed a joint venture with Jasper Industries to set up a 135 megawatt power plant in Orissa. Tata Steel along with its wholly owned subsidiary Rawmet Ferrous Industries will hold 26% in the project and Japser Industries will hold the remaining 74%.

India’s largest commercial bank State Bank of India declined 6.52% to Rs 1,247.50. The country's largest lender, on Saturday, 14 June 2008, decided not to raise its prime-lending rate. The decision was taken at a meeting of the assets-liability committee (Alco) of the bank

India’s largest tractor maker by sales Mahindra & Mahindra gained 0.84% to Rs 575.20. The Union government raised excise duty on large cars, multi-utility vehicles and sports utility vehicles with an engine cubic capacity exceeding 1500. As per reports, the additional excise duty will be applicable on Mahindra & Mahindra’s Renault-Logan, Mahindra Scorpio and Bolero, Maruti Suzuki India’s Maruti SX4, and Tata Motor’s Tata Safari, Tata Sumo

India’s largest car maker by sales Maruti Suzuki India gained 0.82% to Rs 727.80 in the week.

ICICI Bank (down 3.94% to Rs 734.65), Infosys (down 1.93% to Rs 1,827.60), Satyam Computer Services (down 5.37% to Rs 455.05), Tata Consultancy Services (down 4.88% to Rs 863.40), HDFC Bank (down 2.17% to Rs 1,099), Reliance Industries (down 7.57% to Rs 2,096.60) edged lower in the week.

The infrastructure sector output rose 3.6% in April 2008 from a year earlier, much lower than an unrevised 9.6% growth in March 2008, government data showed on Wednesday, 18 June 2008. The infrastructure sector accounts for 26.68% of industrial output.

The direct tax collections recorded strong growth in the first two months of this fiscal. As per the Finance Ministry data, direct tax collections jumped 71.28% to Rs.22840 crore in April-May 2008 over April-May 2007. The growth in personal income tax was 73.05% at Rs.14690 crore in April-May 2008 over April-May 2007. Corporate tax collection rose 68% to Rs 8126 crore in April-May 2008 over April-May 2007.

The wholesale price index rose 11.05% in the 12 months to 7 June 2008, government data released on Friday, 20 June 2008, showed. The rate was above market expectation of about 10% rise. The reading was the highest in 13 years since 6 May 1995, when it was 11.11%.

The June-September south west monsoon has been 45% above average so far this season, the Indian Meteorological Department said on 19 June 2008. Rainfall in the four-month rainy season this year will be near-normal, or 99% of the average between 1941 and 1990, the weather office had said in April 2008. The department classifies rainfall as near normal when it's between 96% and 104% of the 50-year average. Good rains will bolster farm production which in turn may help rein in inflation.

A key UPA-Left coordination committee meeting on Indo-US nuclear deal, which was scheduled on 18 June 2008, was postponed due to absence of leaders. The meeting is now likely to be held on 25 June 2008.

Sensex, Nifty at 10-month low

It was the worst day for Indian equity markets since the beginning of this year. Investors chucked stocks to survive the snowballing threat of a possible monetary tightening by Reserve Bank of India to rein in soaring inflation.

The key benchmark indices plummeted over 3% to end at their lowest level in 10 months after the latest data showed a surge in inflation to 13-year high early this month. The market breadth was extremely weak due to widespread selling. All the sectoral indices on BSE ended in the red. Oil & gas and realty stocks declined sharply.

As per provisional data, foreign funds today, 20 June 2008, sold shares worth a net Rs 999.31 crore. Domestic funds bought shares worth a net Rs 563.86 crore.

The 30-share BSE Sensex slumped 516.70 points or 3.42% at 14,571.29, its lowest closing since late August 2007. The index shed 568.72 points at the day’s low of 14,519.27 hit at the fag end of the trading session today. The Sensex gained 114.02 points at the day’s high of 15,202.01, hit at the onset of trading session.

The broader based S&P CNX Nifty was down 157.70 points or 3.48% at 4347.55, its lowest closing level since August 2007. Nifty June 2008 futures were at 4343, a discount of 4.55 points compared with the spot closing. NSE's futures & options (F&O) segment turnover was Rs 58533.66 crore, which was higher than Rs 42696.18 crore on Thursday, 19 June 2008.

The Sensex is down 6635.48 points or 31.28% from a record high of 21206.77 it hit on 10 January 2008. It is down 5715.70 points or 28.17% in calendar year 2008 so far.

The market breadth was poor on BSE with 450 shares advancing as compared to 2247 that declined. 43 remained unchanged.

The BSE Mid-Cap index outperformed the Sensex, falling 3.17% to 6,032.43. The BSE Small-Cap index underperformed the Sensex, sliding 3.43% at 7,397.66.

India’s second largest cellular service provider by sales Reliance Communication (RCom) slipped 6.65% at Rs 491.30. South African mobile giant MTN remained silent on its talks with the company at its annual general meeting (AGM) in Johannesburg on Thursday, 19 June 2008. The AGM was expected to discuss RCom merger deal especially in the back drop of the Reliance Industries’ claims over first right of refusal for a controlling stake in RCom.

India's largest aluminium producer by sales Hindalco Industries slipped 6.37% at Rs 161 after its board approved raising up to Rs 5000 crore by way of a rights issue to redeem a bridge loan it had taken for acquisition of Novelis Inc.

The other major losers from the Sensex pack were, Jaiprakash Associates (down 6.03% at Rs 166.60), Reliance Infrastructure (down 4.92% at Rs 962.55), Bharti Airtel (down 4.76% at Rs 766.40) and Tata Steel (down 4.66% at Rs 777.60).

India's top state-run oil explorer by market capitalisation ONGC rose 1.56% at Rs 866.85. It was the only gainers from the Sensex pack.

The BSE Oil & gas index underperformed the Sensex, sliding 5.03% to 9,419.89. Reliance Natural Resources (down 7.27% at Rs 82.95), Essar Oil (down 6.62% at Rs 225.80), and Cairn India (down 5.69% at Rs 267.60), slumped.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries lost 6.61% at Rs 2096.60. RIL has a highest weightage of 15.80% in Sensex.

Stocks of the interest rate sensitive sectors such as automobiles, realty and banking dropped after the inflation data. Bank of India (down 7.36% at Rs 247.90), State Bank of India (down 4.11% at Rs 1,247.50), and HDFC Bank (down 1.93% at Rs 1,099), were the key losers from the banking space. The BSE Bankex outperformed the Sensex, falling 2.97% to 6,804.78.

India's largest private sector bank by assets ICICI Bank lost 2.48% at Rs 734.65. ICICI Bank has a third highest weightage of 8.11% in BSE Sensex.

The BSE Realty index underperformed the Sensex, falling 4.45% at 5,383.81. Housing Development & Infrastructure (down 9.17% at Rs 528.15), Sobha Developers (down 6.66% at Rs 360.95), Indiabulls Real Estate (down 5.91% at Rs 354.05), Unitech (down 2.12% at Rs 184.60) and DLF (down 4.57% at Rs 456.35), tumbled.

Realty developer Parsvnath Developers lost 6.28% to Rs 152.10 after the company reported 17% fall in net profit to Rs 108.87 crore in Q4 March 2008 over Q4 March 2007.

Automobile sector stocks lost steam fearing that a tight monetary policy may compel banks to raise lending rates which in turn would hurt demand for automobiles. TVs Motor Company (down 5.19% at Rs 32.85), Hero Honda Motors (down 4.01% at Rs 759), Tata Motors (down 2.82% at Rs 488.85), Maruti Suzuki (down 2.51% at Rs 727.80) and Mahindra & Mahindra (down 0.22% at Rs 575.20), declined.

India’s second largest software exporter by sales Infosys Technologies shed 1.74% at Rs 1827.60. Infosys has a second highest weightage of 8.76% in BSE Sensex.

Sundaram Clayton, which resumed trading today on BSE, fell 57.92% at Rs 282.55. It opened at Rs 324 and touched a high of Rs 397.80 in early trade.

Reliance Industries clocked the highest turnover of Rs 387.31 crore on BSE. Anu's Laboratories (Rs 263.72 crore), Niraj Cement Structurals (Rs 233.67 crore), Reliance Capital (Rs 233.25 crore) and Reliance Petroleum (Rs 201.16 crore), were the other turnover toppers on BSE in that order.

Reliance Natural Resources reported a highest volume of 1.32 crore shares on BSE. IFCI (1.27 crore shares), Niraj Cement Structurals (1.16 crore shares), Reliance Petroleum (1.15 crore shares) and Chambal Fertilizers & Chemicals (1.07 crore shares), were the other volume toppers on BSE in that order.

European markets were trading lower. Key indices in UK, Germany and France were down by 1.07% to 1.43%. Some of the indices were trading in positive terrain earlier.

Asian stocks were mixed today. The key benchmark indices in Hong Kong, China and Singapore were up by between 0.31% to 3.01%. Key benchmark indices in Japan, Taiwan and South Korea were down by between 0.23% to 1.81%.

US stocks rose Thursday, 19 June 2008, as a drop in oil prices fueled investor optimism about consumer spending, driving shares of transportation and retailers sharply higher. The Dow Jones Industrial Average gained 34.03 points or 0.28% to 12,063.09. The tech-laden Nasdaq Composite Index rose 32.35 points or 1.33% to 2,462.06.

US crude for July delivery settled down $4.75, or 3.48%, at $131.93 per barrel on the New York Mercantile Exchange on Thursday. It lost further to $131.71 today as China's surprise move to increase fuel prices sparked worries about a curb in demand from the world's second largest consumer.

The sharp fall in oil price came just days before an emergency meeting on Sunday, 22 June 2008, in Saudi Arabia between oil consumers and producers to discuss rising oil prices. Saudi Arabia, the world's top oil exporter, is hiking output to help bring down prices, which have jumped nearly 40% this year and caused protests around the globe

Inflation to set near-term mkt trend: Envision Cap

Nilesh Shah, MD and CEO, Envision Capital, said sentiment in the market remains bearish. "The Sensex may not break 14,000. Negative news will get factored in at 14,000, where some buying is possible."

According to Shah, the near-term trend will depend on inflation. "If it comes in double-digits, it will be bad. One needs to watch out for political developments on the nuclear deal. Uncertainty regarding politics will add more pressure on the market. Crude remains a concern, which will decide the market course."

Technicals don't look promising, he said. "There is small buying by domestic financial institutions. Foreign Institutional Investors, or FIIs, continue to be sellers. It is difficult to draw any comfort from it."

Excerpts from CNBC-TV18's exclusive interview with Nilesh Shah:



Q: Are we back within that grinding range, or is the market threatening to break down?



A: It will depend on a couple of events, which will unfold in the next few days. One is inflation, which is already close to about 9%. If it threatens to go above that and if it probably goes towards the 10% mark, we could definitely have one more leg down. What really emerged over the last one or two days is some kind of a political development related to the nuclear treaty. If there are more developments, which the market perceives that to be negative, it could probably pull the market down further.



In addition, crude oil is trying to break above the USD 136-138 per barrel mark. If crude makes a new high, it is another important event to watch out for. So, before the earnings season unfolds, it's basically inflation crude oil, and political developments which could decide the course of the markets.



Q: What is the worse-case scenario or the best case scenario that you can think of for the Nifty or the Sensex?



Shah: It is going to be difficult for this market to break 14,000. The bias is more on the downside and probably a majority of people are bearish. But at that level of around 14,000, give or take 200-300 points here or there, there should be some amount of value buying.



By and large, whatever negative developments we can think of, would probably get adequately factored in barring any political developments. Apart from that, things like inflation should get factored in that kind of levels.



A lot of pain and damage would still be seen if the market were to correct at 15,000 to 14,000 points. I don’t see a case for this market to sustain below 14,000 at this point of time.



Q: How do you map the technicals of the market right now with the shorts on the derivatives side and the relentless FII selling on one side and the cash lying with mutual funds on the other side? How are the technicals balanced?



A: The technicals do not look all that promising. The reality is that mutual funds are sitting on cash and they are coming in and buying.But that buying is not good enough.

Buying is probably in the region of Rs 200-500 crore on a daily basis but against that the FIIs are selling anywhere between Rs 500-1,500 crore on a daily basis. It is really difficult to pinpoint at what level the FIIs will stop selling or the levels the mutual funds will stop buying. For the FIIs, it is also some kind of global unwinding or deleveraging exercise which is really happening at their end.

There is really not much comfort coming in from a technical perspective. The selling is relentless and it is difficult to draw any kind of comfort on that front. It is still very early days for that.