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Indian stock market morning report by Keynote Capitals (October 1, 2008, Wednesday, 6.00 a.m. GMT) 1 October 2008 Source: www.keynoteindia.net
- The rupee continues to weaken vis-?-vis the USD. The rupee dropped to a new five-year low of 47.22/23 per dollar this morning on worries that FIIs would continue to sell Indian equities. - LIBOR rates touched an all-time high of 6.88% yesterday which may make debt servicing more difficult for Indian companies, as it will lead to higher interest payments on their existing foreign currency loans. - India's direct tax receipts during the April-September period rose by 29.3% y-o-y, to Rs150000Cr. While corporate tax collections were up 34.5%, income tax receipts rose 22.7%. This is an encouraging number, since it may allay to an extent, the fears of an economic slowdown. - SAIL has signed an MoU with Larsen & Toubro, under which the two firms will jointly set up, develop, manage and own captive or independent power plants to meet SAIL's requirements. - BHEL has bagged a Rs 990Cr order for setting up a 500 MW thermal power plant in Rajasthan. - Bharat Electronics has planned capital expenditure of Rs570Cr to modernise its manufacturing plants. It expects to spend Rs260Cr during FY09 and Rs360Cr during FY10. - Maruti Suzuki India has reported a marginal 5% growth y-o-y in September, though sales of its passenger car segment were up by only 2%. Sales of its mainstay 800 model sharply declined by 33%. It faces the impact of the weakening rupee, as it will import auto parts worth Rs Rs2000Cr in FY09. - Engineering and wind turbine manufacturer Shriram EPC plans to dilute 30-40% equity stake in its Singaporean 50:50 JV Orient Green Power Pte Ltd. - Compact Disc India is likely to receive an investment of $10mn from content developer iMedia Ventures Ltd., for a 15% equity stake, for funding its expansion projects. Stocks to watch today - Pyramid Saimira Theatre plans to modernize 250 screens in South India, with an investment of Rs200Cr in the next 18 months. We believe the stock is trading at attractive valuations and retain our Buy rating, though we have cut our earnings estimates for the same. - Aftek has plans to raise up to $25mn (Rs118Cr) and will consider restructuring, including spinning off potential real estate business. US markets overnight The US markets ended up 4.7% on increased optimism that government will reach an agreement on a financial relief plan before the end of the week. It is believed that the Bush administration is stepping up pressure on the Congress to approve the $700bn bank rescue package. On the economic front, consumer confidence in September rose 1.3 to 59.8, better than expected reading of 53.0, which also helped lift market sentiment. Financials led the way with gain of 13.1% followed by a rise of 5.8% in energy stocks. Credit markets did in fact tighten further. Libor surged most on record at an all-time high of 6.88%. Views on markets today On positive cues from the US markets, the Asian markets too have opened positive today. Banking and financial stocks have led the rally. Japanese business sentiment survey turned negative for the first time in five years, indicating the Japanese economy may be in a recession. The Nikkei is in positive territory today even in a highly volatile session, partly due to the ban on short sales. Markets in China, Hong Kong, Indonesia, Malaysia, Singapore, the Philippines and Pakistan are closed today for public holidays. Back home, Indian markets saw a lot of statements from regulators, the RBI and the Finance Minister yesterday. Sebi assured markets that it would not ban short selling. The RBI assured the markets that ICICI Bank had sufficient liquidity and that the RBI had arranged to provide adequate cash to ICICI Bank to meet its customers’ demands. The finance minister also reiterated what the Sebi and RBI said. A High-Level Committee on Capital Markets (HLCC), comprising financial sector regulators and finance ministry officials, will meet in Mumbai today to review the situation in the domestic markets in the wake of the global financial turmoil. However, on the economic front the situation is not all well. India's current account deficit widened to $10.72bn during Q1FY09, a jump of 70.2%. Higher trade deficit is due to high oil import bills. Surplus of capital account shrunk to $12.96bn from $17.50bn during the quarter. What is worrying is that FIIs withdrew $5.18bn in Q1FY09. We expect a mixed reaction from the markets to all the news flows today. While we expect a positive opening, we believe volatility would remain. Technical view After 6 consecutive sessions of losses, the Sensex finally saw a rally yesterday. Oversold short term indicators viz., Stochastics and Williams %R helped the Sensex recover from the intra-day low of 12153. However, yesterday's rally does not indicate any short or medium term bull phase. Short term traders (mainly those with 4-5 day views) are advised to watch the resistance level of 13170. In case Sensex does close above this level, they can conbisder taking long positions. |
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