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Indian stock market morning report by Keynote Capitals (October 27, 2008, Monday, 7.00 a.m. GMT)

Economic and Corporate Developments

- After closing at 49.950/965 per USD on Friday, the rupee again weakened to 50.05/06 this morning.

- OPEC may consider another cut in production due to a glut in the market, says Iran's OPEC governor.

- The recent drop in crude oil prices has brought down the freight rates of goods exported from India to the US and Europe by 30 - 40%. Leading shipping lines operating between India and Europe and the US said freight rates dropped to $700 from $1,000 and $1,600 from $1,900, respectively, for every 20-foot equivalent unit (TEU) in the past two months.

- Unitech will offload a 26-45% stake in telecom biz within a month.

- Era Infrastructure has bagged a Rs199Cr contract for a power project promoted by the BHEL at Bawana in New Delhi.

- KEC International is eyeing orders worth over Rs800Cr in the next quarter, and expects a major chunk to come from the overseas market.

Results to be announced today

State Bank of India, ICICI Bank, TATA Power, Tata Tea, Mahindra and Mahindra Financial, GMR Infra, Tata Teleservices, NMDC, Videocon Industries, Godrej Industries, National Fertilizers, Nagarjuna Cons

US markets last Friday

The US markets ended down 3.6% last Friday, as existing home sales numbers came in better than expected. Global recession concerns continue as Libor continues to come down across all terms, 30-year bond yields hit their lowest level (3.87%) since regular issuance began in 1977, with companies downsizing workforce and giving a weak earnings outlook. CLSA Asia-Pacific Markets, the regional brokerage unit, asked 500 senior bankers and executives to accept pay cuts of as much as 25% next year to avoid getting pink slips. General Motors, the largest US automaker, asked the Treasury Department for financial aid to help complete a merger with Cerberus Capital Management.

Views on markets today

Asian markets extended Friday's slide today as well. The Hang Seng posted a fresh low of 11,960 this morning, while the Nikkei remains volatile. Other Asian indices including Kospi are taking a breather after last week’s sharp decline.

In India, markets will be in Diwali mood this week. The festival remains an important event for Indian corporates. It is a major driver for the retail industry and has historically boosted sales of apparel, white goods, vehicles, etc. However, recent developments give a very poor indication for the medium term for Indian markets. Global recessionary fears, redemption of funds across the world, and huge liquidity-crunch in almost all countries have been pushing the Indian markets to record new lows. On Friday, the Sensex slumped by over 10% to close below the 9000 level.

Major real estate player Unitech's scrip saw a decline of 51% on Friday, after rumors that the company's financial health had been deteriorating and it had defaulted on payments to Greater Noida Authority. However, the company has cleared its stand and asked for a probe into the matter with Sebi. We may see a recovery in the Unitech stock today. Last week, few major companies had declared the above expected financial results which includes NTPC, Tata Steel, Union Bank, Corporation Bank and Sun Pharma. While the capital goods major ABB had recorded poor results (profits 30% below expectations). However, the outlook of all these companies as they are quite vulnerable to interest rate cycle is bleak. Today, the focus would be on banking majors SBI and ICICI Bank and Tata Power who will declare results and outlook about the industry. We may see a volatile day today.