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Indian stock market morning report by Keynote Capitals (October 20, 2008, Monday, 7.00 a.m. GMT) 20 October 2008 Source: www.keynoteindia.net
- The rupee opened stronger this morning, at 48.72/73 per USD, up from 48.88/89 on Friday, due to gains in some Asian currencies. - Crude oil prices moved up to $73.4 per barrel. - India's foreign exchange reserves fell from $283.9bn as on October 3, to $274bn as on October 10. However they are up 6.7% from a year ago. Forex reserves include foreign currency assets, which declined from $274.91bn as of October 3, to $264.97bn. - The much-awaited auction of 3G spectrum will now be held in January as the department of telecom (DoT) does not have adequate airwaves in 9 of 22 circles. Delay in spectrum vacation by the defense forces, coupled with the holiday season in December, has pushed back the process that could bring about Rs400bn to the treasury. - Due to cooling oil prices, Essar Oil is reviving its network of 1250 retail outlets in the country. The outlets were frozen about three years ago as the prices of products were significantly higher than those offered by oil PSUs that are subsidized by the Government. - Technology purchases in the US would see a sharper decline during the next several quarters, with little or no growth in the late 2008 and early 2009 due to the recent meltdown, said Forrester Research. - NMDC has increased long term contracts for iron ore by 40%. This will not be in favour of Ispat Inds, Essar, JSW and Rashtriya Ispat Nigam as they are dependent on NMDC to a large extent. - Tata Elxsi reported a consolidated net profit of Rs15.61Cr on net sales of Rs109.68Cr in Q2. - Q2 net profit of Nucleus Software dropped almost 75%, from Rs16.18Cr to Rs4.07Cr, y-o-y. Losses by Hedge Funds The hedge fund industry has reportedly suffered losses of $80bn in September. As at October 16 there have been net outflows of $34.5bn in September, while an additional $44.5bn was lost through performance, as per Eurekahedge database. This has reduced the total size of the hedge fund industry from $1.9 trillion at the beginning of the year, to $1.8 trillion. While there was $45bn of redemptions in September, there were also new inflows of $10.5bn, as investors switched to more successful strategies. YTD the industry has reduced by $90bn, due mainly to performance. However, net investments into the global hedge fund industry are still positive at $21bn. Results to be announced today Shree cements, Idea Cellular, Patel Eng, Mindtree, Jet Airways, EMCO, TITAN, Voltamp, KPIT Cummins, Akruti City, Canara bank US markets last Friday The US markets ended down 1.4% on worsening consumer confidence and housing data overshadowing Warren Buffett's advice to buy shares. Buffett stated that he is adding US stocks to his personal portfolio, which typically holds government debt. Buffett indicated he will continue to do so as stocks remain attractive. US housing starts in September fell 6.3% to 817,000 units, which was below expectations and marked the lowest level since January 1991. This data reflected continued weakness in housing industry, which can weaken 4Q GDP and continue to spur write-downs at financial firms. Financials closed down 2.3%. Credit markets showed some signs of cooling off. President Bush says that credit crunch could take a little while to ease but he is optimistic about the economy recovering. LIBOR for three-month loans in dollars dropped for a fifth day, declining 8 bps to 4.42%. Google and IBM reported better-than-expected earnings. Lehman Brothers stock sale is to be probed by 3 US prosecutors. Views on markets today Asian markets are trading mixed today, mostly positive. Nikkei has opened strong, on reports that Nippon Steel and JFE Holdings were likely to raise profit forecasts, while the Hang Seng was lifted by bargain-buying in beaten-down financial and property shares. However Chinese markets are bearish as the GDP data indicates a slowdown in the economy. China's GDP growth eased to 9% from 10.1% in the third quarter. This is the slowest growth rate since the second quarter of 2003. Back home, Indian markets witnessed a sharp decline on Friday. The Sensex closed below 10,000 for the first time after June 2006. However, we believe the bottom has still not been formed. According to press reports, banks and other lenders are pressurizing real estate companies to expedite property sales amidst increasing fears over payment defaults. Results of Idea Cellular and Canara Bank will be declared today. After few disappointing results in the public sector banks space from Allahabad Bank and Indian Bank, Canara Bank results would be important to watch. We may see positive sentiments today with high volatility in the Indian markets. |
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