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Indian stock market daily morning report (January 27, 2012, Friday)

Contributed by Keynote Capitals

By Keynote Capitals

Views on markets today

- Indian markets edged higher for the second straight day on Wednesday to their highest close in more than two months, powered by gains in IT bellwether Infosys and automaker Tata Motors, as investors resorted to selective buying amid settlement of monthly derivatives contracts. Data showing resumption of buying by foreign funds also boosted investor sentiment. Indian markets have gained ~10% so far in January, with foreign funds buying shares worth more than $1 billion. A note by CLSA said that European investors appear to be more constructive and are looking at raising their exposure to Indian equities, while Asian investors continue to remain sceptical about the market rally. CLSA believes that earnings downgrade cycle has started weakening but would wait for more confirmation of the trend from the rest of the third-quarter earnings season. Except capital goods, all sectoral indices closed on positive note with metal, auto, consumer durables and IT stocks were major gainers. IT stocks gained after strong first quarter results by US tech major Apple Inc. while FMCG stocks rose after good Q3 results announced by some FMCG companies recently. Indraprastha Gas gained 3.3% after the company posted a better-thanexpected 3% rise in December-quarter net profit while Deepak Fertilisers closed 5.3% up after the company reported a 23% jump in its December-quarter net profit. However, Biocon, the country's leading listed biotechnology company, closed 3.4% lower after its quarterly net profit dropped a worse-than-expected 15.8%.

- Market breadth was strong at ~1.74x as investors bought large cap stocks. On provisional basis, FIIs bought equity of Rs.11.47bn while domestic institutions sold equity of Rs.7.12bn.

- After a weak start, most Asian markets move solidly into positive territory, with banks rising in Hong Kong  and miners climbing in Australia.

- We expect a positive start for the Indian markets today following the cues from the Asian markets.

Economic and Corporate Developments

- The Ministry of Power is believed to have sent its proposal for addition of 76,000 Mw of power capacity in the 12th Five-Year Plan to the Planning Commission, even as the sector battles acute fuel shortages and environmental issues.

Buzzing Stocks

- Jindal Steel and Power (JSPL) plans to spend $600 million in the current year on the development of steel units, a sponge iron plant and an iron ore pellet plant as part of an integrated facility in Bolivia.

- Sesa Goa aims to produce about 20 million tonne of iron ore next financial year as the firm is hopeful of the mining ban in Karnataka being lifted soon, a senior company official has said.

- NTPC today said it got Ministry of Environment and Forests (MoEF) clearance for its 2,400-Mw (3x800MW), Stage-I Kudgi Super Thermal Power Project being set up in Bijapur district of adjoining Karnataka.

- Dr Reddy’s Laboratories has run into trouble with the US health authorities again, this time for not highlighting important risk information on a promotional website for injectable generic fondaprinux sodium, a drug that it launched in the US market recently. This is second instance of the company running into trouble with the US health authorities.

- The Delhi Electricity Regulatory Commission (DERC) has found certain 'discrepancies' in the audit report of Reliance Infrastructure-backed discoms BRPL and BYPL between April and December 2011. The power regulator observed the financial condition of the companies appeared not as bad as it has been made out to be.

US markets

U.S. markets lost Thursday’s gains after new-home sales unexpectedly declined last month, marking the slowest year for builders since the government began tracking the data.

The Dow Jones Industrial Average ended off 22.33 points, or 0.2%, at 12,734.63. The S&P 500 fell 7.62 points, or 0.6%, to 1,318.43. The Nasdaq Composite lost 13.03 points, or 0.5%, to close at 2,805.28.