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Indian stock market morning report by Keynote Capitals (October 14, 2008, Tuesday, 7.00 a.m. GMT)

Economic and Corporate Developments

- The rupee continues to gain. It rose from Monday's close of 48.25/27 to 47.80 per dollar this morning, on rallies in overseas stock markets.

- Foreign direct investment (FDI) in India rose 124% to $14.6bn in the April-August period and is likely to exceed $35bn in FY09.

- India’s exports are likely to grow by 30% this month, in line with the growth in the year till date.

- Sanity may soon return to the beleaguered domestic aviation sector. Jet Airways and Kingfisher Airlines, with a collective market share of over 58% have announced a strategic alliance to reduce costs and enhance efficiencies. It will involve code-sharing on all flights, an interline agreement, joint fuel management, common ground-handling services and cross-selling flights through the global ticketing system.

- TCS has signed a Rs1000Cr deal with Ministry of External Affairs for the “Passport Seva Project”. It will get Rs199 as fees per passport. Last year, the Government issued 50Lakh new passports and it targets to issue 1Cr passports per year by 2011.

- Reliance Communications, India's No. 2 mobile operator, added 1.76mn mobile subscribers in September, taking its total mobile user base to around 56mn.

- Tata Motors has denied being in talks to buy Ford's stake in Japan's Mazda Motor Co.

- Axis Bank reported a 77% rise in Q2 net profit to Rs402.91Cr. Total income went up by 57.3% to Rs3239.45Cr.

- Redington (India) and Investcorp Gulf Opportunity Fund Company 1.BSC (Investcorp), a PE investor, have concluded an agreement whereby Investcorp will invest $98mn for a 36% stake in Redington's Middle East and Africa (MEA) business. This values its MEA business at $272mn. The transaction is likely to get completed by November.

- Leading transformer manufacturer Emco and South Africa’s Edison Corp will jointly invest $20mn in a joint venture to manufacture transformers.

- Oil India has deferred launch of its IPO due to volatile markets.

- Andhra Pradesh Paper is in process of implementing a Rs291Cr expansion plan. Its installed capacity will increase from 180,000 tpa to 250,000 tpa.

Results to be announced today

NDTV, Jubilant Organosys, South Indian Bank, Birla Power Solutions, Sonata Software

US markets overnight

The US markets rebounded from their worst week ever with one of their best performance - the Dow Jones Industrials ending up 11.1% as investors cheered the government’s plan to buy stakes in banks and Fed led push to flood global financial system with dollars. US treasury will invest $125bn in nine of the biggest US banks including Citigroup and Goldman in government's latest attempt to restore confidence in the financial system. The Fed gave its approval to takeover of Wachovia Corp by Wells Fargo, which battled Citigroup for ownership of the wounded bank. Morgan Stanley agreed to change terms of its $9bn investment from Mitsubishi UFJ Financial Group, providing the Japanese bank with preferred stock paying 10% dividend instead of common stock. The financial sector rose 10.2%, with investment banking and brokerage sector up 26.8%. A clearer picture will emerge, about how credit markets will react to these measures, when banks and treasury markets re-open later today (they were closed on Monday in observance of Columbus Day). The US is expected to outline a comprehensive plan of its own as soon as today, and is likely to include inter-bank lending, bank debt guarantees and direct capital injections in financial institutions.

Views on markets today

Asian markets predictably opened strong this morning, following the rally in US stocks overnight. The Nikkei gained 13% this morning, boosted by from international government measures to pour cash into struggling banks and restore confidence in the global financial system. Following the government interventions across continents, the market slide seems to have been reversed for the moment. However, back home the picture is clearly not rosy, as evident from the weak growth in IIP. The September quarter results will be keenly watched by market players to decide on trading strategies. As for today, we expect the domestic markets to have strong opening, though some profit-taking is likely in the later part of the trading session.