Monday, 15 December 2008

Shree Renuka Sugars (Rs 62.05): Buy

We recommend a buy in Shree Renuka Sugars from a short-term perspective. It is apparent from the charts of Shree Renuka Sugars that after encountering resistance at around Rs 140 in early August, it experienced selling pressure and declined sharply to record a 52-week low of Rs 41 during late October. The stock, however, reversed direction triggered by positive divergence in the daily relative strength index (RSI). Since its 52-week low, the stock has been on a medium-term up trend. Recently Shree Renuka breached its 21-day moving average. Moreover, the stock’s 8 per cent gain on December 12 reinforced its bullish momentum. We note that there is an increase in volume over the past three trading sessions. The daily RSI is on the brink of entering the bullish zone from the neutral region and the weekly RSI is likely to enter the neutral region. We are bullish on the stock from a short-term horizon. We expect the stock to move up until it hits our price target of Rs 69 in the approaching trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 58.50.

Source: TheHinduBusinessLine

Day Trading Guide - December 15, 2008

Source: TheHinduBusinessLine

Thursday, 4 December 2008

Europeans make big rate cuts to fight recession

LONDON (Reuters) - The European Central Bank, Britain and Sweden all made big cuts in interest rates on Thursday to shore up economies across Europe in the face of ever-bleaker financial news.

The cuts were applauded by many analysts but market reaction indicated that even more sweeping moves may be needed to halt the decline.

Sweden lopped off a record 175 basis points to 2.0 percent and the ECB slashed 75 points to 2.50 percent, the eurozone's biggest ever cut.

The Bank of England chopped 100 basis points for an interest rate of 2.0 percent, the lowest level since 1951, as recession loomed over Britain.

France meanwhile unveiled a 26 billion euro ($32.9 billion) stimulus plan for its faltering economy as unemployment rose, the latest European country to open state coffers to fight the downturn.

With the United States, Europe and Japan now in recession and other countries sliding that way, data showed a mounting pattern of job losses and corporate woes across the globe.

The rate cuts are aimed at making credit cheaper and so boost spending, but banks will need to overcome their reluctance to lend for the measure to take hold and savers will suffer.

Sweden's central bank, the Riksbank said it expected rates to remain at the new 2.0 percent level over the coming year. There was an "unexpectedly rapid and clear deterioration in economic activity since October," it said.

The Bank of England, also taking rates to 2.0 percent, made clear the downturn had gathered pace and conditions in credit markets remained difficult.

"Across the UK, deteriorating house prices and rising unemployment are both taking their toll on business and consumer confidence," said Trevor Williams, chief economist, Lloyds TSB Corporate Markets.

Analysts had widely expected the move following business indicators suggesting Britain's economy could be heading for an even deeper recession than most people had predicted.

But it disappointed some investors who had begun to speculate on a bigger easing following Sweden's action and European shares and bund futures pared Thursday's earlier gains.

Most analysts had predicted a 50 basis point cut by the ECB, but with inflation plummeting and the economy of the 15-nation eurozone sinking deeper into recession, it opted for a bigger slice.

"They are now taking bolder decisions and this reflects a shift in perception in the ECB," said Bank of America economist Gilles Moec."

Nevertheless, European shares gave up gains to turn deeply negative, tracking U.S. index futures after a bearish update from chemicals group DuPont.

U.S. interest rates will fall below 1 percent if the Fed cuts again as expected later this month.

Earlier on Thursday, New Zealand sliced interest rates by a record 150 basis points to a five-year low of 5.0 percent and said it would probably have to trim again.

Indonesia also made a surprise cut in its key interest rate, by 25 basis points to 9.25 percent, the first since December 2007 as the government sought to protect the economy.

In trading that closed before the European rate cuts, Asian shares fell as investors braced for a sharp turn lower in the global economy and sought safety in U.S. government debt.


French President Nicolas Sarkozy announced a stimulus package to help France withstand the crisis just as the government announced that the unemployment rate rose in the third quarter to 7.7 percent.

The 26 billion euro ($32.9 billion) plan will target investment projects rather than directly aiding consumers, earmarking money for infrastructure and support for local authorities as well as moves to help the ailing auto industry.

It is expected to boost French growth by around 0.6 percent next year, but will also push the deficit to 3.9 percent of GDP against a previous target of 3.1 percent.

In Zurich, Swiss bank Credit Suisse said it was cutting another 5,300 jobs as it revealed a net loss of about 3 billion Swiss francs ($2.5 billion) in October and November.

That will add to the more than 100,000 jobs that have been lost in the financial industry as banks across the world cut costs to cope with the worst crisis since The Great Depression.


The crisis has devastated industries, including the U.S. auto industry, which is lobbying Washington for a bailout.

Prime Minister Vladimir Putin of Russia -- which along with China, Indian and Brazil was a dynamic emerging market in the heady days before the downturn -- blamed the United States for "infecting" leading world economies with the crisis.

He predicted Russia would survive with "minimal losses" and pledged to maintain rises in social spending and avoid a sudden devaluation.

In China, Zhou Xiaochuan, head of the People's Bank of China, expressed confidence his country could sustain economic growth and financial stability but said "timely, effective and pre-emptive measures" were needed.

China cut interest rates last week to spur the economy and Australia and Thailand followed this week to avoid recession.

Japanese companies slashed spending, showing the economy was in a deeper recession than the government estimated.

DuPont warns of quarterly loss, to cut 2,500 jobs

NEW YORK (Reuters) - Chemical maker DuPont (DD.N: Quote, Profile, Research, Stock Buzz) said on Thursday it expects to post a fourth-quarter loss and will cut 2,500 jobs as a steep drop in construction, car sales and consumer spending hurt its business.

The slump in the U.S. automotive markets has hurt DuPont badly, as it is one of the largest suppliers of paints to automakers. The Wilmington, Delaware-based company has also been stymied by the collapse in the U.S. housing market, as it supplies chemicals like Corian and Tyvek used in home building.

The freeze in the global credit markets, a recession in many developed economies and a sharp slowdown in many emerging regions have further crimped growth for DuPont and its peers, which have relied heavily on emerging economies for growth in recent quarters.

The company, whose shares fell 8.3 percent in premarket trade, said it was targeting cost cuts for 2009 of $600 million, up from its previous goal of $200 million.

That improvement is on top of $130 million in cost reductions expected from its restructuring plan that will result in a charge of $500 million in the fourth quarter.

DuPont expects a fourth-quarter loss of 20 to 30 cents per share excluding one-time items, a sharp turnabout from the earnings of 20 to 25 cents it previously expected.

Analysts has expected the company to post earnings of 23 cents per share in the fourth quarter, according to Reuters Estimates.


The chemical maker said the 2,500 job cuts, which represent about 4.2 percent of its workforce, will occur in businesses that service the automobile and construction markets in Western Europe and the United States.

DuPont is also cutting the jobs of 4,000 contractors by year-end 2008 with additional contractor reductions in 2009.

In addition, the company is implementing work schedule reductions at select locations, adjusting production to market conditions and redeploying more than 400 employees to projects aimed at lowering operating costs.

For 2009, the company said its earnings would be between $2.25 and $2.75 per share.

The planned job cuts would come mostly in businesses that support the motor vehicle and construction markets in Western Europe and the United States.

Layoffs mount as crisis drags on

SINGAPORE (Reuters) - Credit Suisse and Nomura Holdings announced big job cuts on Thursday, further evidence the global financial crisis is unrelenting for an industry battered by heavy losses and weak markets.

The 5,300 layoffs by the Swiss bank and a further 1,000 in London by Japan's biggest broker are the latest in the global financial sector which has now seen over 150,000 jobs culled since September when Lehman Brothers filed for bankruptcy.

Of these, more than 50,000 were at Citigroup, which has made more writedowns than any other bank in the world during the crisis.

While the axe had been falling for months in the industry, Lehman's fall sparked carnage in financial markets and reshaped the industry landscape, resulting in job losses from New York to Singapore to Mumbai.

"I don't think people really know what's next. It depends on sentiment, which will in turn drive credit markets, which in turn will weigh on banks or not," said a London-based equities trader.

From the United States to Asian export giant Japan to European powerhouse Germany, the world's top economies are now in recession as the global crisis deepens. They are not the only ones with Singapore, New Zealand and Hong Kong also joining in.

The losses at banks are increasing. Credit Suisse said on Thursday it made a net loss of about 3 billion Swiss francs ($2.5 billion) in October and November.

It has already cut 1,800 jobs this year and said this week it would cut 650 investment banking jobs in Britain.

"Investment banking had a significant pretax loss, reflecting the challenging conditions in the financial markets in the quarter and the costs associated with risk reduction," the bank said in a statement.

Credit Suisse's shares jumped 8 percent in European trade in a broader market up 1.6 percent.


In Asia, Nomura, Japan's biggest brokerage, said the decision to cut as much as 22 percent of its London staff followed an internal review after the purchase of the Asian, European and Middle Eastern assets of Lehman Brothers.

Nomura had said the purchase of parts of Lehman Brothers would help the Japanese brokerage achieve its profit target despite poor financial market conditions.

"This is a natural move," said Azuma Ohno, a brokerage analyst at Credit Suisse Securities in Japan. "Once Nomura bought Lehman, it cannot continue Japanese-style life-time employment. It needs to be flexible in costs to be profitable."

Australia's top investment bank, Macquarie Group Ltd, is cutting 10 to 15 percent of its jobs in Asia, two sources said last week.

Banks are axing jobs across Asia and even in countries such as India, where investment bankers were snapped up feverishly in the last few years in anticipation of strong initial public offerings and M&A markets.

"The layoffs will come in phases and will stretch into 2009," said Singapore-based Will Tan of Webbe International, an executive search firm specializing in the financial sector.

The job cuts from Nomura and Credit Suisse came a few hours after a report of layoffs at Bank of America Corp.

Bank of America CEO Kenneth Lewis said the bank is in the "final stage of our analysis" for planned job cuts following its purchase of Merrill Lynch & Co, the Charlotte Observer said on its website on Wednesday.

Lewis declined to comment on a CNBC report that as many as 30,000 jobs could be eliminated, the newspaper said. CNBC said earlier this week 10,000 cuts are expected.

JPMorgan Chase & Co has also announced it would eliminate 9,200 jobs at the former Washington Mutual Inc savings and loan, which it recently acquired.


Layoffs have also gathered pace at fund management firms.

State Street Corp, one of the world's biggest institutional money managers, said on Wednesday it plans to lay off as many as 1,800 people, or 6 percent of its staff, in the first three months of 2009.

Private equity firm Carlyle Group is cutting about 100 jobs -- around 10 percent of its staff -- a source familiar with the situation said. The reductions are the first major cuts made by a large U.S. private equity firm since the global economic crisis hit.

Middle market investment bank Jefferies Group Inc will slash nearly 15 percent of its employees worldwide and close offices in Dubai, Singapore and Tokyo as it contends with heavy losses for 2008.

Infosys to freeze new hiring as growth slows

NEW DELHI (Reuters) - Infosys Technologies Ltd will freeze recruitment after meeting this fiscal year's target of hiring 25,000 staff, a telling sign the global downturn is hitting India's $52 billion outsourcing sector.

India's second largest software services firm however has no plans to cut jobs and is sticking with its third quarter outlook, CEO Kris Gopalakrishnan told reporters.

He said the outsourcing sector's growth rate would halve next year as some customers delay orders.

"Last year the IT industry grew more than 30 percent, this year it is looking at somewhere in the region of 15 percent," Gopalakrishnan said.

India's export-driven IT sector, used to a scorching pace of growth, has been hit by the financial crisis and recession in the United States, which contributes more than half their revenue.

In the last few years, the outsourcing industry has created tens of thousands of jobs, mainly attracting young workers, as global companies look to trim labour costs.

Infosys hired 16,000-17,000 employees in the first half of the fiscal year that began in April and would honour commitments to 6,000 under training, Gopalakrishnan said.

Infosys, which counts Goldman Sachs and Philips Electronics among its clients, cut its full-year dollar revenue outlook in October due to the worsening global downturn.

Gopalakrishnan said on Thursday the company would freeze fresh recruitment, apart from meeting specific skill needs.

"We will have to look at controlling our cost, controlling our expenses making sure that we run an optimised business. We will have to look at what are things we need to do in order to prepare ourselves for the recovery."

"Growth is coming more and more from emerging markets so hese are the things we need to prepare ourselves. We should not lose momentum in this slowdown," he said.

But Infosys still expects its strong client base and a weakening rupee to help it meet a forecast for December quarter earnings of $0.57 a share. The rupee has fallen nearly six percent so far this quarter against the dollar.

"Infosys is seeing further degradation of the demand environment, with headwinds from leadership changes at customers, a shrinking large deal pipeline .... Pricing pressure has emerged," CLSA Asia-Pacific said in a report this week.

By 0845 GMT, Infosys shares were up 2 percent in a Mumbai market, but outperforming a 4 percent gain in the broader Mumbai market. Infosys shares have fallen 33 percent so far this year.

BSE Sensex up 5.5 pct on rate cut, stimulus hopes

MUMBAI (Reuters) - The BSE Sensex rose 5.5 percent on Thursday to its highest close in more than two weeks as expectations for an interest rate cut received a boost from slower-than-expected rise in inflation.

Banks, automobiles and construction companies were among the gainers after a government official said the authorities were working on a stimulus package and rate cuts to revive support sagging growth.

Top lender State Bank of India rose 6.6 percent to 1,169.30 rupees and the No. 2 ICICI Bank climbed 8.8 percent to 364.20 rupees as annual inflation dropped to a seven-month at 8.4 percent on Nov. 22, below the previous week's annual rise of 8.84

percent, and well below market estimates of 8.91 percent.

A senior government official told Reuters the Reserve Bank of India (RBI) was likely to lower interest rates soon and the government was planning excise duty cuts for the automobile sector and also a package for the infrastructure sector.

"Clearly, focus is now on growth and we can expect rate cuts from the RBI and fiscal support from the government," said Anubhuti Sahay, economist at Standard Chartered bank in Mumbai.

Leading construction firm Larsen & Toubro rose 8.3 percent, while Jaiprakash Associates climbed 13.8 percent and Reliance Infrastructure gained 7.5 percent

on hopes a stimulus package would help spending.

The 30-share BSE index rose 5.51 percent, or 482.32 points, to 9,229.75, its best close since Nov. 17, with all of its components in the positive territory.

"What we saw today was a relief rally. Global cues are still a concern," said Deven Choksey, CEO and managing director of K R Choksey Shares. "Nothing is going to improve so soon so fast."

The benchmark index has lost 54.5 percent so far this year, with foreign investors pulling out a net 13.8 billion.

Energy group Reliance Industries contributed the most to the rise in the index, adding 8.4 percent to 1,159.30 rupees, while Tata Steel was the leading gainer

climbing 13.8 percent to 187.50 rupees.

Tata Motors raced 13.3 percent to 150.90 rupees on hopes lower interest rates and a cut in excise tax would help revive sluggish sales.

In the broader market, gainers outweighed losers in a ratio of more than 2:1 on relatively higher volume of 299 million shares.

The 50-share NSE index rose 4.95 percent to 2,788.


* Nava Bharat Ventures Ltd jumped 20.3 percent to 119.50 rupees after the diversified company said its board would consider buyback of shares on Dec. 12.

* GVK Power & Infrastructure Ltd rose 7.4 percent to 18.80 rupees after its subsidiary, in consortium with BHP Billiton Petroleum International Pty Ltd, was awarded deep water blocks off India's west coast.

* Hindustan Oil Exploration climbed 6.1 percent to 62.45 rupees after the firm said it was awarded two exploration oil blocks by the Indian government.


* Unitech on 31.9 million shares.

* Suzlon Energy on 24.7 million shares.

* GVK Power on 18.2 million shares.

GM, Chrysler considering bankruptcy to get bailout - report

Reuters - General Motors Corp and Chrysler LLC are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multi billion dollar government bailout, Bloomberg reported, citing a person familiar with internal discussions.

In response to automakers' bailout plea, staff for three members of Congress have asked restructuring experts if a pre-arranged bankruptcy -- negotiated with workers, creditors and lenders -- could be used to reorganize the sector without liquidation, Bloomberg said.

General Motors and Chrysler could not be immediately reached for comment by Reuters.

Industry executives and analysts say the immediate carnage from a bankruptcy of General Motors Corp, Ford Motor Co or Chrysler would spread throughout an industry that is bleeding cash in a global slowdown.

All three automakers have urged Congress to authorise $34 billion in loans and credit lines, saying they will restructure, and cut models, jobs and executive pay to remain viable.

The White House did not dismiss the industry's $34 billion figure on Wednesday but said it was too early to say what it might support on an emergency basis.

Senate Majority leader Harry Reid wants to try to find a way to avert threatened bankruptcies in the U.S. auto industry with Detroit Three chief executives readying for a make-or-break hearing on Thursday on the bailout request.

Negotiations currently are splintered among small groups, making it unlikely that a proposed solution such as bankruptcy would emerge until next week at the earliest, the person briefed on internal talks told Bloomberg.

GM's failure alone would mean more than $200 billion in interest-bearing debt at the carmaker and its GMAC financing arm could be worthless for countless retirees and taxpayers, further upsetting consumption patterns.

AT&T cutting 12,000 jobs, lowers capital spending

NEW YORK (Reuters) - Top U.S. phone company AT&T Inc. said on Thursday it would eliminate 12,000 jobs, about 4 percent of its workforce, as it joins a raft of corporations trying to slash costs in the face of the economic downturn.

AT&T will cut the jobs over the remainder of 2008 and 2009, and take a charge of about $600 million in this year's fourth quarter for severance.

The carrier plans to cut its 2009 capital spending from this year's levels, though actual spending plans have not yet been finalized. AT&T said it would provide details on its capital spending in late January.

Shares of AT&T were down 2.5 percent in pre-market trade following news of the job cuts, which the company attributed to "economic pressures, a changing business mix and a more streamlined organizational structure."

Shares of AT&T have dropped by about 30 percent so far this year, as the company has looked for ways to make up for the rapid decline in traditional wireline customers. To help, it has increasingly turned to wireless and high-speed

DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. The author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and that you confirm the facts on your own before making important investment commitments.