News & Analysis » India

Indian stock market morning report by Keynote Capitals (November 14, 2008, Friday, 7.00 a.m. GMT)

Economic and Corporate Developments

- The rupee was at 49.22/23 per USD in early trades this morning, compared with Wednesday's close of 49.30/32, when it posted its biggest single-day fall (2.4%) in over 12 years.

- Inflation, as measured by the WPI, fell sharply to 8.98% for the week ended November 1, from 10.72% in the previous week. Inflation is back in single digit after 5 months, which may allow RBI to cut rates.

- Bond yields fell sharply this morning following the announcement of the drop in inflation to 8.98%, its lowest since late May, in expectation that it would lead to further rate cuts by the RBI. The benchmark 10-year government bond yield was at 7.48%, compared to Wednesday's close of 7.60%.

- Crude oil is trading at $58.31/barrel.

- Reliance Industries will not enjoy pricing freedom on KG gas. Approved price of $4.20 per mn British thermal unit is final selling price for the gas.

- Gujarat State Petroleum Corporation has bagged onshore block in Indonesia in collaboration with Essar.

- The slowdown in the automobile sector has started impacting auto ancillaries too. Rico Auto Industries has cut down its FY09 revenue forecast from 20-30% revenue growth, to 6-7%m due to the slowdown in the truck industry and off-load vehicles industry in the US.

- SKF India has entered into a deal with Suzlon Energy for supplying bearings for the latter’s wind turbines. However it has decided to postpone the Rs150Cr new manufacturing facility being constructed at Haridwar for automotive bearings.

- Wockhardt has launched Midazolam injection, used for treating acute insomnia and anxiety, in the US market, after getting US FDA approval. The market size for Midazolam is $56mn in the US.

- Dishman Pharma is going slow on its plans to set up two special economic zones (SEZs) due to the financial market turmoil.

US markets

The US markets ended up 6.7% on bargain hunting in energy shares and optimistic news from the retail sector. Auto and technology sector did not participate in the surging session with major names down on the day. In the tech sector, Intel cut its 4Q revenue forecast, citing softer demand and now expects revenue to range from $8.7bn to $9.3bn. Wal-Mart stated it expects earnings for 4Q to range from $1.03 to $1.07 per share, and from $3.42 to $3.46 per share for FY09. However, both ranges fell below Wall Street's expectations, causing investors to look past better-than-expected results for the latest quarter. Gains were broad-based as all 10 economic sectors posted gains. Even struggling financial sector finished with an impressive advance of 8.1%. The financial sector remains the worst performer this year, down more than 54% year-to-date. Weekly jobless claims continue to indicate a soft labor market and suggest non-farm payrolls will decline for an 11th consecutive month. Claims for the week ended Nov. 8 totaled 516,000, which is a 7-year high. Claims were up 32,000 from the prior week.

Views on markets today

- Asian stocks are up today after the major overnight rally in the US markets and a weak Yen. Export related stocks led the rally in the Asian markets, which however seems to be a short recovery after three weak trading sessions.

- Chinese industrial growth has slowed to 2001 lows.

- Back home, Indian markets were weak on Wednesday backed by decline in the banks and real estate stocks.

- NSE witnessed a jump of over 15% in the volumes while volumes on BSE were weak. NSE also saw a much better proportion of deliveralble volumes to total traded volumes of top 10 stocks vis-a-vis BSE.

- Indian markets are likely to witness a rally today backed by positive news from economic front, viz, the fall in inflation. The inflation rate came down sharply to 8.98% which can give relief to RBI and the government. We may see further rate cuts from RBI.

- Another good news is the falling crude prices. Crude hit the $55/barrel levels yesterday.

- Stocks in news: NTT DoCoMo has put an open offer for TTML at Rs20.7/share.

- As per media report, Ispat Industries defaulted on loan repayment.

- GMR Infrastructure drop plans to acquire South African firm and will sell back the 10% stake acquired for $30mn. Jet Airways denies stake sale rumors to Temasek for Rs 250Cr. SKF India ties up with Suzlon for 5 years pact of Euro303mn to provide shaft and bearings.