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Indian stock market morning report by Keynote Capitals (November 12, 2008, Wednesday, 7.00 a.m. GMT)

Economic and Corporate Developments

- The rupee weakened to 48.58/48.68 per USD this morning, from yesterday's close of 48.1250/1400 on weak Asian stock markets.

- NYMEX crude oil is trading at $58.95 per barrel, an 18-month low.

- Fund raising by Indian companies via foreign currency syndicated loans has declined by a 46% to around $13bn in the first nine months of this calendar year. The average syndicated loan deal size in India has come down from around $375m in FY 2007, to around $300m in the first nine months of the calendar year. Also, the tenor of syndicated loans has become shorter, from 8-10 years earlier, to 3-5 years.

- The FIPB has clarified that foreign JVs in the construction and development business will not be allowed to sell undeveloped land they acquire for projects. The ambit of this clarification includes foreign joint ventures in housing, commercial premises, townships, resorts, educational institutions, and city and regional townships.

- The Sebi has confirmed that it will make early withdrawals from Fixed Maturity Plans (FMPs) tougher, a move that is expected to solve mutual funds’ liquidity problems.

- Reduction in excise duties and customs duties by 8.7% and 0.9% in October amply reflects the industrial slowdown and is a major cause for concern.

- Real estate bodies National Real Estate Development Council (Naredco) and Confederation of Real Estate Developers’ Associations of India (Credai) have petitioned the Government to ease FDI and external commercial borrowing norms and formulate a policy for rescheduling of term or construction loans to facilitate the roll-over of existing debt.

- Iron ore exports dipped by 39.4%, while between July and October, iron ore exports dropped by more than 22%y-o-y.

- NTT DoCoMo of Japan will buy a 26% stake Tata Teleservices for JPY260bn ($2.7bn).

- Zydus Cadila has acquired Italy-based Etna Biotech, the wholly-owned subsidiary of Dutch biopharma company Crucell.

US markets

The US markets ended down 2.0% as economic fears and concerns over corporate earnings overshadowed news of a government plan to help prevent foreclosures. Government outlined a new mortgage modification plan for loans held by Fannie Mae and Freddie Mac. The program targets the highest risk borrower who has missed three payments or more, owns and occupies the property as a primary residence and has not filed for bankruptcy. The borrower's loan payment will then be modified to be affordable. Citigroup announced a plan to prevent foreclosures, which includes modification of mortgage terms for a group of 500,000 homeowners. American Express won US Fed approval to become a commercial bank, gaining access to government funds as credit-card defaults climb with economies slowing around the world. US taxpayers, who feel they own a stake in Wall Street after funding a $700bn bailout for industry, want executives' bonuses to be eliminated. GM and Ford fell as traders continue to speculate if automakers will have enough cash to make it through the economic downturn.

Views on markets today

- Asian markets are trading weak today, due to the fall in energy stocks due to declining crude prices and weak sentiments in auto stocks.

- Indian markets reported 6.6% decline yesterday after the selloff by FIIs. FIIs were net sellers of equities worth Rs371Cr yesterday, as per provisional data from the BSE and NSE.

- While volumes remained weak, the top traded 10 stocks on BSE and NSE witnessed strong delivery based volumes. However, Suzlon on NSE and Jaiprakaksh Associates accounted for a large part of deliverable volumes.

- The economy is witnessing recessionary pressures, which is reflecting in the weak indirect taxes collection numbers in October, as elaborated earlier in this note.

- Stocks in news - Fitch has cut down Unitech's rating from A+ to A- and revised the outlook for Tata Steel from stable to negative.

- Jet Airways plans to sell 10% stake to Temasek for Rs250Cr.

- Dabur to buy Fem Care for Rs300Cr.

- IDBI in talks to buy 25% stake in GE Arm.

- StanChart buys Rs750cr property in BKC (almost 33% discount to 1 year price) reflects the slowdown in the real estate sector.

- We expect markets to remain volatile with a negative bias due to weak global markets. The major event is IIP numbers, to be announced later today.