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Indian stock market daily morning report (February 06, 2012, Monday)

Contributed by Keynote Capitals

Views on markets today

- Indian markets continued its winning streak after it rose sharply by end of the day to close on positive note on Friday as fresh FII buying led to a strong rebound in Indian and European markets helping a recovery in the banks and oil & gas stocks ahead of the US economic data, particularly non-farm payroll data. Indian markets remained dull till afternoon before opening of the European markets. However, a wave of fresh buying from the foreign institutional investors in the European shares as well as Indian shares helped the index to cross the crucial resistance levels to close near 17,600 levels. India's services sector, which include IT sector, grew at its fastest pace in six months during January as new business swelled, extending the previous couple of months' positive trend into the new calendar year. Except metal, all sectoral indices closed on positive note with real estate, pharma, power and FMCG stocks were major gainers. Bharti Airtel rose 0.5%, extending its gains of nearly 7% in the previous session, as analysts expect the top mobile operator to benefit from the Supreme Court ruling on Thursday to revoke 122 licences. Dr Reddy's Laboratories gained 2.4% after it beat expectations in its quarterly net profit, mainly helped by surge in sales of generics in the United States, its top market. UltraTech Cement, India's largest cement makers, rose nearly 1% after its shipments in January rose an annual 11.2 percent.

- Market breadth was strong at ~1.47x as investors bought large cap stocks. On provisional basis, FIIs bought equities worth Rs.10.74bn while domestic institutions sold equities of Rs.9.15bn.

- Asian shares climb at the start of the week, with commodity and exporters outperforming, after data indicated that the U.S. economy is improving.

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

Economic and Corporate Developments

- India's foodgrains production, for the second year in a row, is expected to be a record 250.42 million tonne in FY12 crop year, bolstered by a significant contribution from eastern belt, specially Bihar and Jharkhand.

Buzzing Stocks

- NMDC is currently in the process of acquiring two coking coal projects in Russia and Australia, besides an iron ore mine in Brazil involving an initial investment of over $500mn.

- The new wage pact signed by the state-run Coal India Ltd (CIL) last week has seen an 88% increase in minimum basic of its employees to Rs.15,712 per month, as against Rs.8,360 during the previous deal.

- NTPC is expected to follow the rehabilitation package offered by West Bengal Power Development Corporation for land acquisition for the proposed 1,600-MW Katwa thermal power project in the state.

- The board of Indian Bank has approved the merger of the bank’s wholly-owned asset management subsidiary, Indfund Management Limited (IFML), with itself, which will be completed in another three months. Post the merger, around Rs.63.03Cr will flow into the bank’s reserves as Tier-I capital.

- Himadri Chemicals and Industries, one of the largest Indian coal tar pitch (CTP) manufacturers has now lined up investment plans worth Rs.1,200Cr in the state in the next four years.

US markets

U.S. stocks rose Friday, propelling the Nasdaq index to an 11-year high, as Wall Street embraced the nation’s jobless rate dropping to a three-year low.

The Dow Jones Industrial Average rose 156.82 points, or 1.2%, to 12,862.23, its highest close since May 2008. The S&P 500 Index rose 19.36 points, or 1.5%, to 1,344.90, its best day since the first trading session of the year. The Nasdaq Composite closed up 45.98 points, or 1.6%, to 2,905.66.