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Indian stock market morning report by Keynote Capitals (November 17, 2008, Monday, 7.00 a.m. GMT) 17 November 2008 Source: www.keynoteindia.net
- The rupee has begun the week on a weak note this morning, opening at 49.15 per USD, slightly lower than Friday's close of 49.01/03. - KV Kamath, CEO, ICICI Bank, has said that lenders are expected to make available more credit in the coming days on the back of the likely reduction in interest rates. - IT sector update: - Nandan Nilekani of Infosys Technologies has said that the growth of the tech sector would see a slowdown. However, the IT industry will deal with challenges and will continue to grow and recruit. - Three of India’s top five IT service providers, viz., Infosys Technologies, Wipro and HCL Technologies, have posted a y-o-y as well as sequential rise in the proportion of fixed price contracts for the September quarter. Fixed price contracts allow for higher efficiencies and can lead to margin management. - Mastek is in the process of closing down its BPO practice. - Our research team has released a note “Steel - still not a steal?”. The note attempts to assess the extent of correction in steel prices. Steel, an essential commodity, has been severely impacted by the global economic slowdown. Demand erosion has resulted in steel prices falling by about 46% off the peak in June 2008. In order to maintain prices, steel manufacturers have announced production cuts and have deferred expansion plans. China, which produces over 1/3rd of world crude steel, will continue to determine global steel prices. Steel prices are likely to be decline further. - Inflationary pressures and lower import duties have boosted import of tyres from China, whose share in total imports is expected to rise to 82% this year from just 29% 7 years ago. Due to the onslaught, Indian tyre makers including MRF, JK Tyres, Apollo and Ceat have lost shares in domestic market to cheap Chinese tyres. - Apollo Tyres plans Rs. 3,000 crore investments in the next five years to set up Greenfield plans in India and abroad as well as to expand its existing facilities, with target turnover of $4 billion. - Tata Chemicals is planning massive expansion near its Chemical Complex in Gujarat for an investment of Rs 700-1000 crore. US markets last Friday Decrease in retail sales, weaker demand for mobile phones and continued concerns about the depth of the recession led US markets to end down 3.8%. Weak economic conditions have retailers worrying over the holiday shopping season. The gloomy outlook mirrors a 2.8% decline in October retail sales. Excluding autos, retail sales declined 2.2%. Both were worse than expected. Sears Holdings, Home Depot and Office Depot declined more than 7.6%. The downbeat retail sales data set a weak foundation for the Personal Consumption Expenditures (PCE) component of 4Q GDP. Moreover, the data validates the belief that 4Q GDP will be well below the original estimate of a 0.3% decline reported for 3Q. Leading handset company Nokia stated it expects 4Q industry volume to decline. The firm sees softer consumer spending amid weak economic conditions, while trade partners are challenged by credit conditions. Qualcomm, the biggest maker of mobile phone chips dipped 5.4% and Motorola dipped 11% after Nokia predicted global shipments will shrink next year. Views on markets today - Japan is in a recession. Q3CY08 GDP shrank by 0.4%, first time since 2001. The Nikkei has recovered after a weak opening. Other Asian indices are positive today. - Indian markets were volatile for last two trading sessions. On Friday, the Sensex closed down 1.6%. However, both the NSE and BSE saw good delivery based volumes. However, overall volumes remain low. - The Finance Minister has said that the global crisis would impact India for 6-9 months. He expects a slowdown in all the sectors. About G-20 meet, he said that there was a broad agreement on common accounting standards among countries. - Stocks in news today: - Kingfisher Airlines plans to sell 25% stake, in talks with British Airways, Singapore Airline and Virgin. - Tata Chemicals buying 600 acres land in Gujarat for Rs700-1000crore for soda ash expansion. - Great Offshore promoters at risk of losing control as lenders putting pressure to meet the shortfall (Promoters had pledged shares at Rs 850 and is currently trading at Rs300/share). - GVK, GMR seek to raise airport fees by 10% as traffic falls. - Star TV acquires minority stake in Jupiter Entertainment (major competitor of Sun TV in South India). - We may see volatility today with negative biased trading. |
