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Indian stock market morning report by Keynote Capitals (November 3, 2008, Monday, 7.00 a.m. GMT) 3 November 2008 Source: www.keynoteindia.net
- The rupee rose in opening deals this morning to 49 per USD vis-a-vis Friday's close of 49.44/46, after the RBI cut rates and took liquidity boosting measures last Saturday. - Latest Crude oil price: $66.36 / barrel. - With the cut in CRR, SLR by 100bps, repo rate cut by 50bps and special window for banks to raise resources, which can be used to on-lend to NBFCs, an estimated Rs.1,75,000Cr will be pumped in to the financial system. - The RBI has allowed NBFCs not accepting public deposits, to raise short-term foreign currency borrowings. The maximum borrowings should not exceed the higher of either 50% of the firm's net worth or $10mn. The maturity of such borrowings should not exceed three years and the cost should not exceed six-month Libor plus 200 basis points. - SEBI has increased the tenure for lending and borrowing of stocks from 7 days to 30. The move comes at a time of heavy short selling in the Indian markets, led by entities which borrow stocks from FIIs. Stocks worth over $1 billion have been shorted in the Indian markets through this route so far. - The Government has decided to increase FDI limit in the insurance sector from 26% to 49%. Currently, total FDI in the insurance sector is pegged at around Rs2500Cr. The industry expects another Rs7000Cr FDI to flow in once the cap is hiked. - According to the CEO of Hindalco Industries, there is likely to be a sharp decline in base metal prices, because of slower demand and the global credit crunch. - Essar Steel has slashed retail prices of steel by Rs 4,000-5,000 per tonne, soon after JSW Steel and SAIL reduced prices by Rs 4,000-6,000 per tonne, mainly due to slackening of demand. - The CEO of Dabur India has stated that the company will not raise product prices for at least next six months. This reflects the pressure on FMCG companies on account of the reducing disposable incomes, and a direct fallout of the slowdown in consumerism. US markets last Friday The US markets ended up 1.6% despite gloomy news of $70bn being pulled out from mutual funds and poor consumer spending figures. News of JP Morgan suspending home foreclosures for at least 90 days and rumors of large funds ending fiscal year end liquidations counteracted the bearish data which triggered a rally. US auto sales fell for the 12th straight month in October, extending the longest slide in 17 years, as tighter credit, falling consumer confidence and weakening economy crushed demand for General Motors, Ford Motor and Chrysler vehicles. US employers eliminated jobs in October for the 10th consecutive month, while manufacturing contracted at the fastest pace since the 2001 recession. Payrolls shrank by 200,000 workers. The unemployment rate may jump to its highest level in more than five years. Views on markets today The rally in the Asian markets has continued today as well. The across the world cut the interest rates and other liquidity improvement measures from central banks have started showing positive results. The Hang Seng is up by almost 5% today, while the Japanese markets are closed. However, a few events in the US are likely to have an impact on the global markets this week. These include the US presidential elections, reports on manufacturing, service sector and employment. Back home, Indian markets are likely to mirror the global bullish sentiment today. The RBI's decision to cut CRR by 100 bps, to 5.5% will drive the markets. Specific to sectors, steel may see some action after the downward revision of the steel prices by Sail and JSW Steel. CRR cut may put shift the focus to banking stocks, while realty stocks may see positive momentum. However, ICICI Bank has already clarified that it is not considering a reduction in the interest rates immediately, while SBI declared that it would consider rate cut later this week. Specific to stocks, IDBI may see action as the company is considering selling its home finance division. |
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