News & Analysis » India

Indian stock market morning report by Keynote Capitals (November 21, 2008, Friday, 7.00 a.m. GMT)

Economic and Corporate Developments

- Inflation has declined further to 8.90% for the week ended November 8, 2008 from 8.98% for the previous week, mainly on account of drop in prices of fuel, triggered by fall in international crude oil prices. The lower inflation figure may give RBI the legroom to cut interest rates.

- The rupee opened near its record low this morning at 50.53 per USD but recovered slightly to 50.35/40, though weaker than yesterday's close of 50.18/22.

- The Government is considering easing oversease borrowing norms. It mulls a Rs750bn refinance window to provide concessional funds to Infra, housing and SMEs by leveraging the foreign reserves.

- Two industry associations have asked for a bailout package from the government of India. Assocham asked the aid of $20-25bn to the core sectors while Automotive Component Manufacturers Association (ACMA) is considering to ask government for similar package.

- The Indian Cabinet has rejected a proposal from the oil ministry to award a deepwater block off the west coast to Cairn India, as apparently the company had not offered the government an attractive share of potential production.

- As per the CEO of JSW Steel, domestic steel manufacturers are unlikely to further cut production in the near term, in spite of a slowdown in demand for steel products in India.

- Titagarh Wagons is unlikely to achieve its revenue target of Rs1000Cr in FY09, on account of the economic downturn, in spite of achieving 47% of its target for the first half of the year. However, its Rs100Cr capex plans in FY09, on modernisation and introduction of new technology in its existing plants in West Bengal, were on track.

- Undeterred by the economic slowdown, Future Group has plans to expand its FMCG, consumer durables, apparels and electronics lines of businesses and targets revenues of Rs10,000Cr by 2012. The Group intends to create Indian brands in FMCG, household consumer durables, electronics and apparel.

- Cummins India will hive off its power generation rental business along with equipment, inventories etc., for a minimum of Rs29Cr to Aggreko Energy. Aggreko Energy rents generator sets across the country. The sale will enable the company to focus its attention on growing its core business.

US markets

The US markets continued to slide yesterday. The S&P 500 recorded its 11year low, while the Dow Jones Industrials closed at a five and half year low. Uncertainties about the aid to troubled auto makers and Citigroup's fate dominated the negative sentiment in the trading session. Citigroup’s shares plunged by 26%. However, as per media reports, it is considering various options to save itself including an option of the outright sale of company. Crude oil prices which dipped below $50/barrel is yet another reason which cautioned the markets on the slowing economy.

Views on markets today

- The Indian markets remained bearish yesterday, with the Sensex closed down 3.7%. Weak global cues and lack of investor interest kept the markets depressed. This is the 8th straight intra-day loss by the Sensex. The markets witnessed another day of weak volumes (BSE Rs29bn, NSE Rs78bn). Provisional data released by these two stock exchanges shows that FIIs sold Rs7.6bn of shares while domestic institutions bought Rs4.3bn of shares.

- The Asian markets opened weak this morning, following the US market cues. Exporters and energy stocks have led the weakness due to the strengthening Yen and weakening crude oil prices.

- Sebi made it clear yesterday that short selling is not driving the markets.

- Buzzing stocks
-- Religare to sell AMC stake to Aegon. Newly acquired Lotus Mutual Fund to come Under Religare. Existing AMC JV between Religare and Aegon to be controlled by Aegon.
-- Fitch downgrades long term credit rating of Ansal Properties to negative from stable.
-- ACC Concrete lays off 25% staff, puts expansion on hold.
-- Government awards 44 oil & gas exploration blocks with maximum going to ONGC & its partners BHP Billiton-GVK Power.
-- Jet Airways, Jet-lite under MRTPC lens on cartelisation concerns.
-- GVK Power plans to raise Rs 240 cr for Punjab unit.
-- EGoM meeting today on gas pricing. The decision will be important for RIL-RNRL case.
-- Electrotherm to hive off/ demerge the engineer division and electric vehicle division

- Buy backs approved in the board meeting yesterday

- Eicher Motors @ Rs691.68 per share

- Selan Exploration @ Rs230 per share