EIA Inventory's Actual Crude Oil +1.7mbbl, Distillate 2.8 mbbl and Gasoline -4.4 mbbl. Data is Neutral for Crudeoil

US data: 300 000 barrel Distillates 2.1 Gasoline DOWN 1.2.

Spot Exchange

Reliance Money and National Multi-Commodity Exchange (NMCE) on Tuesday said they will set up a spot exchange for agricultural products.

NYT: Falling Commodities Imply A Global Recession

Many Chinese have been expecting a post-Olympics economic slowdown, but it has already started and the Games have not even begun. Chinese factories reported a plunge in new orders last month. Exports are barely growing. The real estate market is weakening, with apartment prices sinking in southeastern China, the region hardest hit by economic troubles.

The trends, which actually have little to do with the Olympics (the Games themselves, which open Friday, are small compared with the size of the economy), are being felt worldwide.
China’s slowing growth is one reason that gasoline prices have fallen in the United States, for example. Similarly, world prices for metals like copper, tin, zinc and aluminum have tumbled in the last several weeks, as voracious Chinese factories have closed, or cut back their consumption.

But while China’s difficulties may reduce inflationary pressures around the world, they threaten to slow further the already tenuous global economic growth. “China has slowed down a lot already, but it’s going to slow down more,” said Hong Liang, the senior China economist at Goldman Sachs.

Economists expect growth to slip from its recent pace of 11 percent or more annually to as low as 9 or 9.5 percent over the coming year.

Most nations would envy that rate. But 9 percent growth will make it much harder to supply jobs to the millions of Chinese moving to cities from rural areas in search of work. And any slower growth could prove a shock to workers who have been receiving double-digit pay increases each year, as companies struggle to find enough labor to keep factories open.
How Chinese authorities manage a slower economy, and its effect on China’s 1.3 billion people, will be a test for the regime. It seems to be responding quickly.

A Politburo meeting on July 25 replaced the previous national economic goals, preventing overheating of the economy and controlling inflation, with new targets. As enunciated by President Hu Jintao in recent appearances, the objectives now are to seek fast and sustained economic growth while still keeping inflation under control.

“We must maintain steady, relatively fast development and control excessive price rises as the priority tasks of macro adjustment,” he said on Friday at a rare news conference.
Having put a series of brakes on the economy over the last five years to keep inflation under control, Chinese policy makers are now removing some to prevent growth from slowing too much.

For example, after letting China’s currency rise sharply against the dollar in the first half of this year, China’s central bank has actually pushed it down against the dollar in each of the last four trading days, including a decline of 0.13 percent on Monday. This is helping to preserve the competitiveness of Chinese exporters in foreign markets, although at the risk of angering the United States and other trading partners.

In the last several days, Chinese authorities have also raised export tax refunds for garment manufacturers — an industry previously slighted by regulators, who remain more interested in promoting higher-tech industries.

Policy makers have also reportedly moved to ease lending limits on banks.

Weak demand from the United States over the last year, and now from Europe as well, is part of China’s emerging problem. On Sunday evening, the port here was less full of containers than usual, part of a broader slowing of export growth.

This weakening of exports has been particularly true of light manufactured goods from southeastern China, one of the country’s two main export areas, along with the Yangtze River delta region around Shanghai.

At Union Bags, a luggage maker in Dongguan, about 40 miles up the Pearl River from Hong Kong, sales to the United States have dropped 20 percent in the last year.
“We have had to cut back on our own orders to our local suppliers of zippers, nylon and polyester,” said Jim Jiang, the company’s sales manager.

Demand is beginning to weaken for big-ticket purchases. J. D. Power and Associates just cut its forecast for car sales in China this year to 5.95 million — still up from 5.42 million last year, but much less of an increase than the company’s previous forecast of 6.2 million.

More serious for the broader Chinese economy are signs that the real estate market is weakening after years of climbing prices that had prompted warnings of a possible bubble. Here again, the biggest trouble seems to be in southern China.

Min Hwa, a real estate broker in Shenzhen, a city of at least 12 million people near Hong Kong, said that residential real estate prices dropped by 10 percent over the last year in desirable neighborhoods near the city center and nosedived by up to 40 percent in outlying neighborhoods.

“We have seen a lot fewer prospective buyers in recent months,” he said.

Northern China tends to produce a higher proportion of industrial goods and fewer consumer goods than southern China, and seems to be faring better. Exports are still rising, for example, from the port of Tianjin, near Beijing.

But there, a few provinces like Shandong and Shanxi are suffering from power shortages. The shortages are forcing factories to limit their operating hours because not enough coal is being mined to fuel some of the many new power plants that opened in the last two years.

Andy Rothman, a China economist at CLSA, a Hong Kong brokerage, said that nearly half of China’s provinces had scattered power shortages this summer. But the slowing of the economy will prevent the problem from becoming widespread before cooler weather brings an end to air-conditioning season, he said.

The timing of the slowdown at the beginning of the Olympics appears to be largely coincidental.

Beijing accounts for slightly more than 1 percent of China’s people and less than 5 percent of its economic output. So even heavy spending in the Beijing area on Olympic sites is unlikely to have had much of an effect in lifting growth in the last months or in depressing growth now that the construction has ended.

But fears of a post-Olympic slowdown have become part of popular culture in China, and a subject of great interest among stock market investors. Chinese stocks have fallen by more than half after soaring to records in October.

The earthquake in May in Sichuan Province does not appear to have hurt the economy, and may even help economic output as towns in the area start rebuilding with heavy government spending.

More broadly, China’s enormous investments in new roads, ports, rail lines and other transportation networks are starting to show productivity gains that could help the country weather a global economic downturn better than most.

And foreign investment is still pouring into the country, increasingly directed at higher-technology industries, although other Asian countries are also drawing more investment.
Chris Woodward, the managing director for China at Ryder, the big logistics company particularly active in shipping auto parts, said American companies were still expanding in China and were becoming more focused on the market here even as Chinese exports slow.

“People have made huge investments in the infrastructure, and it’s not just the physical infrastructure,” he said. “It’s all the training and people development.”
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

Nothing in this article is, or should be construed as, investment advice.

Sinking Commodities, Unchanged Interest Rates Give Wall Street A Big 330 points push up

An already soaring Wall Street extended its advance Tuesday after the Federal Reserve left interest rates unchanged and assuaged some of the market's fears about the economy. The Dow Jones industrial average shot up more than 330 points, and all the major indexes had gains approaching 3 percent.

The market was enjoying a big rally before the Fed meeting as investors responded to a report that services sector activity fell less than expected last month and to another drop in oil prices that took crude as low as $118 a barrel.

The Fed gave stocks another huge push higher in the last hours of trading. In a statement accompanying its widely expected rate decision, the central bank reported that "economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports." That assessment was welcome news to a market that has feared the economy was falling into recession because of weak consumer spending.

The Fed did have some darker news, stating that "inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities." But it also said it expected inflation to moderate later in the year.

"The wording is a little strong over inflation, but there's really no real change in policy," said Brian Gendreau, investment strategist for ING Investment Management. "I think they are trying to buy time to allow the economy to recover, and so that the financials can slowly repair."

Ryan Larson, senior equity trader at Voyageur Asset Management, said he believes the central bank will keep rates on hold until the early part of 2009. He said of Fed officials, "they seem more concerned about growth for the rest of this year, and I'd say right now they appear to be dovish for the short term."

The oil market also helped soothe some of Wall Street's worries -- crude fell as low as $118 a barrel before settling at $119.17, down $2.24 on the New York Mercantile Exchange. Oil has now fallen $28 from its July 11 high of $147.27 on widening expectations that the slumping U.S. economy will keep curbing consumer demand for gasoline and other petroleum products.

Stocks had plunged in June and early July as oil reached new heights; the fear on Wall Street was that higher prices for fuel would curtail consumer spending, which accounts for more than two-thirds of the economy. With oil falling, and the Fed citing economic growth in its statement Tuesday, investors were allowing themselves to again feel a little more optimistic after a year of financial crises and soaring commodities costs that have pummeled stocks.

The Dow rose 331.62, or 2.94 percent, to 11,615.77. It was up about 225 points shortly before the Fed's 2:15 p.m. EDT announcement. Broader indexes also rose sharply. The Standard & Poor's 500 index added 35.87, or 2.87 percent, to 1,284.88, and the Nasdaq composite index rose 64.27, or 2.81 percent, to 2,349.83.

It was the Dow and S&P 500's biggest one-day gain since April 1, when the indexes kicked off the second quarter with a huge rally. This was also the Nasdaq's biggest point and percentage rise since mid-July.

Treasury bond prices fell after the Fed released its decision. The yield on the benchmark 10-year Treasury note, which moves opposite its prices, rose to 4.02 percent from 3.97 percent late Monday.

The dollar traded mostly higher against other major currencies, while gold prices fell.
Early in the session, shares rose sharply after the Institute for Supply Management, the trade group of corporate purchasing executives, said its services sector index rose to 49.5 from 48.2 in June. Analysts surveyed by Thomson Financial/IFR predicted it would rise to 49.0.

Any reading below 50 signals contraction. The report is based on a survey of the institute's members and covers such indicators as new orders, employment, inventories, prices and exports and imports.

The notion that the sector might be in better shape than many investors feared gave Wall Street reason for optimism.

Earnings reports continued to stream in. Cisco Systems Inc. reported late Tuesday a 4.4 percent increase in net income for its latest quarter, beating analyst expectations by a penny per share. The world's largest maker of computer networking gear said sales spiked almost 10 percent. Shares closed up 66 cents, or 3 percent, at $22.65, then tacked on another 3 percent in after-hours trading.

Procter & Gamble Co., maker of Tide detergent and Gillette razors, said its fiscal fourth-quarter profit jumped 33 percent, boosted by price increases, overseas sales and tax benefits. Shares rose $2.09, or 3.2 percent, to $67.91.

Archer Daniels Midland Co. reported a 61 percent plunge in fourth-quarter profit, but said revenues soared amid higher prices for commodities like wheat and corn. The stock fell $1.53, or 6 percent, at $25.87.

D.R. Horton Inc., the nation's largest homebuilder, posted a narrower fiscal third-quarter loss as charges to write down the value of property declined. Shares fell 5 cents to $11.17.

Advancing issues led decliners by a 3 to 1 basis on the New York Stock Exchange, where consolidated volume came to 5.35 billion shares, up from 4.65 billion shares on Monday.
The Russell 2000 index of smaller companies rose 16.90, or 2.40 percent, at 721.04.

Overseas, Japan's Nikkei stock average fell 0.15 percent. Britain's FTSE 100 rose 2.52 percent, Germany's DAX index rose 2.66 percent, and France's CAC-40 rose 2.47 percent.
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

Nothing in this article is, or should be construed as, investment advice.

BOE - ECB

if BOE and ECB keeps interest rates steady then crude will crash to 110 levels ..

Polaris Software Lab

Polaris Software Lab sold its stake in one of AIG Group companies AIG SS in which it was a joint venture partner holding 20 per cent stake for Rs 23.26 crore. The deal would also give a boost to Polaris’ bottomline this year. Polaris had entered into the JV with AIG for holding the 20 per cent stake in AIG SS for Rs 3.26 crore in 2002. This sale leaves a profit on sale of investment of Rs 20 crore for Polaris on a standalone basis and Rs 13.21 crore on consolidated basis.

News 6-Aug-08

6-Aug-08
Headlines for the day

Corporate News Headline

BHEL won contract worth Rs. 25 bn for supplying 800 MW supercritical boilers. (ET)
NTPC would enter into renewable power generation through a joint venture with foreign power and financial firms. (ET)
Nagarjuna Construction bagged new contracts aggregating Rs. 4.43 bn. (BS)

Economic and Political Headline

The finance ministry said that any further relaxation in the external commercial borrowings norms is very unlike in the near future. (ET)
As many as 19 more FIIs like Merrill Lynch Mortgage Lending, Citigroup Global Markets Mauritius, and Kotak India Focus Fund have been allowed by the SEBI to invest in Indian debt market with overall cap of over USD 1900 mn. (ET)
The US Federal Reserve, grappling with a yearlong crisis in credit markets, held interest rates unchanged at 2% while indicating continued worries about weaker economic growth ahead. (WSJ)