News & Analysis » India

Indian stock market morning report by Keynote Capitals (September 26, 2008, Friday, 6.00 a.m. GMT)

Economic and Corporate Developments

- The WPI based inflation remains unchanged at 12.14%.

- ONGC is targeting oil and gas assets in Latin America, the CIS and West Africa.

- TTK Prestige has received shareholder approval for delisting its shares, through the reverse book building process.

- Info Edge (India) is acquiring a 49% equity stake in Etechaces Marketing and Consulting, a company which is in the business of distributing financial products online, for Rs20Cr.

Buzzing stocks yesterday

- Vishal Information Technologies (to consider acquisitions in the UK and Europe)

- Autoline Industries (Cyprus unit has acquired a 49% stake in Italy-based automobile design firm SZ Design Srl and Zagato S.r.l for an undisclosed sum)

- Man Industries (received orders worth Rs1100Cr)

- Zicom Electronics Security Systems (won an order worth Rs7.5Cr)

Key Takeaways - Analyst meet - Nitco Ltd.

- To increase higher-margin retail business by increasing exclusive “Le Studio” showrooms to 20 by FY09 and “Le Studio Express” (franchise based showrooms) to 100 by FY09.

- Expansion plans include increasing installed capacity of premium category ceramic tiles (addition of 10,000 mts per day). Capex of Rs100Cr is already incurred and was funded via debt and internal accruals.

- To foray into sanitary ware as well as bathroom fittings, via outsourcing.

- The real estate venture through 100% subsidiary Nitco Realities Pvt. Ltd. shall unlock value of real estate. It has 9 properties with total saleable area of 2.48mn sq ft.

- Going forward, it intends to separate the 2 businesses, tiles and real estate. It may even go for separate listing of the real estate business.

Stocks to watch today

- The value unlocking plan of Tata Motors may be a trigger for the stock. The firm proposes to raise around Rs3000Cr by divesting up to 25% stake in each of its 6 profitable subsidiaries, and selling stakes in listed firms.

- British Airways has signed a 3-year, multi-million pound deal with NIIT Technologies.

- Kernex Microsystems has received a $16.5mn order from Egyptian National Railways (ENR).

US markets overnight

The US markets ended up 1.8% on investor confidence that troubled-asset purchase plan will soon win congressional approval. This belief helped ignore an underwhelming outlook from downbeat economic data and rising crude (up 2.6% settling at 109.52 / barrel). General Electric lowered its 3Q earnings and suspended its stock buyback program.

Outlook on US retail

The financial markets turmoil is rattling America’s shoppers just as retail industry prepares for holiday season that was already expected to show slowest growth in almost two decades. US retailers have already been slashing inventories and cutting expenses. Hence, Wall Street shake up may even jeopardize Christmas spend.

View on markets today

The Asian markets opened weak this morning due to uncertainty over the US Government's $700bn rescue plan for the financial sector. Back home, the markets will await the announcements of inflation and business confidence index (BCI). Inflation has remained steady at 12.14%, though it is still very high compared to RBI's target of 5.5%. The BCI data released by National Council of Applied Economic Research (NCAER), shows signs of slowing economy. BCI has dipped sharply from 148.7 in June 2008 to 125.8 in July 2008. This is the lowest level in last five years. We expect these adverse news flows to impact the domestic markets negatively ahead of the weekend, and also ahead of the US nuclear deal going before the US Congress.

Technical view

In a volatile trading session, the Sensex closed down 145 points yesterday. A strong resistance at 14,000 level is seen shaping up. Short term technical indicators have turned weak indicating bearishness for some more days. With no significant triggers today, we expect volatile and weak movements in the Sensex.