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Indian stock market morning report by Keynote Capitals (November 6, 2008, Thursday, 7.00 a.m. GMT) 6 November 2008 Source: www.keynoteindia.net
- The rupee, which posted its biggest single-day gain in over a decade yesterday, fell by 1% this morning to 47.90/91 per USD, compared to yesterday's close of 47.46/50. - According to unconfirmed sources, Bulgaria's debt-laden steel company Kremikovtzi, which is apparently owned by Pramod Mittal of Ispat Industries, is on the brink of a complete shutdown after Vorskla Steel of Ukraine discontinued raw material supplies. - Arcelor Mittal is cutting its global steel output by 30%. - Over the last week, two of the three largest iron ore producers Vale and Rio Tinto have confirmed either cutting output or reviewing capital expenditure on expansion projects. Vale is taking steps to cut both manganese ore and alloy output. Vale is reducing manganese ore production by 600,000 tonnes in Brazil. The price of HMS No.1 in the US has fallen below $100/l.ton, for the first time since 2002, after week-on-week falls of 39%. - The domestic cement industry, which is witnessing margin erosion, may not pass on the benefits of the recent fall in raw material prices to consumers. The 204mn tonne industry is under pressure due to excess capacities coming on stream across the country. - Corporation Bank is reducing its PLR from 14% to 13.25% w.e.f. November 10. Indian Private sector banks are expected to cut lending and deposit rates in the next 15 days and will support credit lines to finance companies and mutual funds. - India's fertiliser subsidy bill for FY09 will be lesser by Rs100-120bn than the previous estimate, due to falling naphtha prices. - Investor attention seems to be returning to real estate stocks following the interest rate cuts announced by banks. - Sun Pharmaceutical Industries has obtained approval from the US FDA to sell the generic version of Sinemet in tablet form, used to treat Parkinson's disease. Annual sales of the three tablet strengths of the drug which Sun Pharma will sell, was about $70mn in the US. - Management changes at Asian Electronics: Suresh H Shah, CMD, has resigned as CMD and as director on the board, in view of his failing health. Arun B Shah has taken over the active day to day management of the company. S R Batliboi & Co. has resigned as auditors. S Padmanabhan, Sanjay Asher and Sushil Jiwarajka have resigned as directors. Haresh Desai and Suhas Tuljapurkar have been inducted as independent directors. US markets overnight Barack Obama became the 44th US President in a practical landslide victory. However, the US markets ended down 5.1% on fears regarding his economic leadership skills and true ability to navigate the economy out of the worst financial condition. Reports on jobs and service industries fuelled concern that US economy will worsen even as president-elect Barack Obama tries to stimulate growth. According to national employment report, non-farm private employment declined by 157,000 in October, which is the largest decline since 2002. The result was worse than the expected drop of 100,000. The services sector contracted the most since 1997. Specifically, the October ISM Services Index registered 44.4 in October, 2.6 worse than expected and 5.8 lower than the 50.2 reading in September. A reading below 50 is intended to imply contraction in the services sector. Financials took a major hit closing down 8.8% on account of wider-than-expected quarterly losses from bond insurers Ambac MBIA along with disappointing earnings and outlook from REIT General Growth Properties as well as on fears that Obama would massively increase regulations in this sector. Further negative news of Google pulling a major ad agreement with Yahoo, forcing Yahoo back to Microsoft added to the already difficult negative environment. Views on markets today Asian markets this morning erased all gains of yesterday, amid global economic worries. Chinese Shanghai index has dropped to a two year low, while the Nikkei and the Hang Seng slumped by almost 6%. Commodity stocks are the major losers, while the strengthening Yen has led to increased selling pressure in exporter stocks. Yesterday’s decline of over 5% in the Sensex has already indicated the strong come-back of the bears. Surprisingly, in spite of yesterday’s decline, FIIs remained net buyers of Rs606Cr in the Nifty futures. As per the provisional data of FII and DII investments declared by both stock exchanges, FIIs were net buyers and domestic institutions were net sellers. We may see the continuation of the yesterday’s weak sentiments today as well, backed by global weakness. Inflation data will be announced today, which will add to volatility in the markets. Specific to stocks, IT major, Cognizant has put a cautious view in its guidance for Q4 which can put momentum in IT stocks. The Oman Government would pick up a 24% stake in Ansal Township. Reliance Industries has reported that the polyester units shut down was for a routine maintenance. It has announced VRS in its Patalganga site, which 400 employees have opted for. As per news reports, Escorts would shut down its Tractor division in US, due to industry slowdown. Jindal Drilling and Ratnamani Metals & Tubes may attract some volume as they will go ex-split today. |
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