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Indian stock market morning report by Keynote Capitals (October 13, 2008, Monday, 7.00 a.m. GMT) 13 October 2008 Source: www.keynoteindia.net
- The rupee gained this morning, from Friday's close of 48.38/43 per USD, to 48.31/33. The gain is attributable to gains in Asian markets and a view that the RBI had capacity to support the currency through intervention after a hefty cut in banks' CRR by 150 bps. - Oil prices jumped more than $3 this morning. US crude for November delivery rose $2.68 to $80.38 a barrel. - According to the RBI, India may escape the worst consequences of the global financial crisis due to its strong internal drivers for growth. However, money, debt and credit markets may be impacted indirectly. - India’s Industrial Performance Index (IIP) declined to a decade’s low of 1.3% in August 2008, from 10.9% in August 2007, driven by dramatic fall in manufacturing. - Indian banks through their overseas branches and subsidiaries have a combined exposure of around $1bn to five troubled institutions viz., Wachovia, Washington Mutual, AIG, Fortis and Lehman Brothers. - ICICI Bank has got a clean chit from S&P and Moody’s. The rating agencies have announced that ICICI bank’s overseas arms have no significant sub-prime risks. The CEO of ICICI Bank has assured that investors’ deposits with the bank are safe, and that it has a cushion to take domestic and overseas shocks. - The promoter of Pyramid Saimira Theatre, PS Saminathan proposes to acquire 70.45 lakh shares, aggregating to 24.9% of the shareholding of the company from two private investors at a price of Rs200 per share. The mode of proposed acquisition is by way of inter-se transfer. The shareholding of PS Saminathan after the proposed acquisition would aggregate to 46.9% of the shareholding of the company. - Hindustan Zinc has reduced prizes of zinc and lead by Rs2200 / tonne and Rs1700 / tonne respectively. - JSW Steel, Jindal Stainless and Bhushan Steels have put expansion plans on hold, due to the global credit crisis. - Satyam Computers will not alter its plan of recruiting 14,000-15,000 personnel this year, despite the financial crisis. US markets overnight While the US vowed to buy stakes in financial institutions, including Goldman Sachs and Morgan Stanley, to restore market stability, this move did not pacify the investors. US markets recouped most of the early losses and ended 1.5% in the red. The global financial crisis is turning into a bigger drain on US federal budget than experts estimated two weeks ago, ballooning the deficit toward $2 trillion. Bailouts are likely to be more expensive than expected. States are turning to Washington for fiscal help. The Fed said it will begin buying commercial paper; the short- term loans companies used to conduct day-to-day business, further increasing costs. Brinker Intl. which operates and franchises Chili's Bar & Grill restaurants warned that it is lowering its earnings expectations for its fiscal 1Q. It expects lower earnings due to rising commodity costs and promotions. Views on markets today Major Asian indices have opened positive this morning, after the 10-12% decline last week. Indian markets too witnessed a similar downturn, with the Sensex falling by 11% in the last week and 19% since October 1, 2008. This week we may see volatility continue, with the major result announcements. Capital goods major L&T and banking major HDFC Bank will announce results this week. However, situation of the economy is grim, which is reflected in the weak IIP numbers. August IIP growth fell to 1.3% indicating it may be difficult to achieve double digit growth in the near future. However, the RBI took steps to increase liquidity in the market by cutting CRR by 100bps. In October alone, the RBI has cut CRR by 150bps. Today we may see momentum in bank stocks, particularly ICICI Bank and Axis Bank. Axis Bank will declare its results today which we believe would be a good indicator of the health of the overall private banking space in India. While ICICI Bank stock will be under focus as its officials have been reiterating that everything is fine with the bank’s operations. Markets as a whole are likely remain positive on global cues. |
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