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Indian stock market morning report by Keynote Capitals (November 5, 2008, Wednesday, 7.00 a.m. GMT) 5 November 2008 Source: www.keynoteindia.net
- US Presidential Elections: Democrat Senator Barack Obama has been elected the first black President of the United States. - The rupee opened up 1% at 47.20/21 per USD this morning, from yesterday’s close of 47.69/71. - The Commerce Minister has indicated further relaxing the FDI norms in the defence sector, to attract foreign capital to stimulate investment and plug the growing current account deficit. - Leading public sector bank SBI has joined the rate cut bandwagon. It is likely to cut interest rates by 50 bps. Other banks following suit include Indian Bank and State Bank of Bikaner. - SBI is targeting 28% loan growth and 25% deposit expansion in FY09. - Reliance Industries has closed 5 of its 7 polyester and petrochemical units at Patalganga near Mumbai soon after offering exit option to employees. The move, which comes in the backdrop of a global slowdown, aims to improve profit margin amid falling demand for polyester products worldwide. - A new company named MNH Shakti Ltd. has been formed by Hindalco Industries in July, 2008 jointly with Mahanadi Coalfields and Neyveli Lignite Corporation for the purpose of exploration of the coal block allotted by the Government in the state of Orissa. Hindalco's holding in the new entity is 15% while Mahanadi Coalfield holds 70% and Neyveli Lignite Corporation holds 15%. - India Infoline has received an in-principle approval from Sebi for sponsoring a mutual fund. - Shriram EPC will, subject to shareholders’ approval, enter trading in iron ore, coal, coke, oils including hydrocarbon products, refractories, iron and steel and other components and materials required by the metallurgial industries and power plants. - Pursuant to the demerger of the publishing business of Macmillan India (MIL) into Macmillan Publishers India Ltd (MPIL), the two companies have announced appointment of key personnel. Henceforth, MIL will function without the domestic publishing business and will focus on providing services to export customers. - LT Overseas is changing its name to LT Foods w.e.f. November 11, 2008. US markets overnight The US markets closed up 3.3% yesterday which was the Election Day, benefiting from some better-than-expected quarterly earnings results, improvement in the credit market and a report that the a broader range of financial firms may receive investments from the Treasury. Barack Obama was elected the 44th President of the US. He is the first African-American to hold the world's most important job. Obama crossed the requisite threshold of 270 electoral votes to defeat Republican rival John McCain. Toyota which gets the biggest portion of its sales from North America, added 8.1% amid speculation that new U.S. president will strengthen measures to overcome a recession in the world's largest economy. The rally in the markets was despite a severe drop in factory orders and other negative news. JP Morgan closed its proprietary trading desk citing extremely difficult trading conditions and a reapplication of capital resources. The Libor continues to decline across all terms and the TED Spread fell by 18bps to 2.24%. The Volatility Index which is considered the "fear index" declined 11%. Views on markets today In the run up to the announcement of the US Presidential Election results, all major Asian indices are trading in positive territory today. Asian energy and exporter shares are seeing a major rally today. The Indian markets have been moving in tandem with Asian indices. The Sensex has been trading above sentimentally important 10,000 levels for the last 2-3 days, which can increase the confidence in the investors. We may see a broad based rally in the markets today. Specifically talking about sectors, we may see momentum in banking stocks. Many banks have positively reacted to the FM's demand of interest rate cuts to spur the liquidity in the system. Moody's has reaffirmed the financial strength of ICICI Bank's UK subsidiary. Last month, the stock had been beaten down on the news about the risky provisioning by its UK subsidiary. The investors of ICICI Bank might get some relief. Another important news is that RIL is shutting down 5 of its polyester units and has given an exit option to 800 employees. We may see a huge volatility in aviation stocks today, particularly Kingfisher Airlines. As per the news, Kingfisher defaulted on lease rentals of 4 jets. The other important sector to remain in focus would be technology which is highly correlated to the developments in US. |
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