News & Analysis » India

Indian stock market morning report by Keynote Capitals (September 25, 2008, Thursday, 7.00 a.m. GMT)

Economic and Corporate Developments

- The Finance Ministry has scrapped bid limits on road PPPs. This will widen the scope of Indian construction companies to bid individually, in their own capacity without the involvement of any foreign player with a larger net worth and experience. Such a move is likely to benefit leading Indian construction companies such as L&T, Punj Lloyd, GMR and Nagarjuna Constructions and also mid-sized companies like Sadbhav Engineering, Patel Engineering, PBA Infrastructure, Roman Tarmat, etc.

- L&T has bagged orders worth Rs5000Cr in the Building & Factory segment.

- Jet Airways expects to break even in FY10.

- Opto Circuits India’s 100% subsidiary, Eurocor GmbH, has received registration for its drug eluting balloon, Dior in India.

- Gujarat Ambuja Exports (GAEL), a leading exporter of soymeal, is putting on hold the proposed expansion of its crushing and processing capacities, due to turbulent markets. The company expects prices of the key raw material to be stable at around Rs18,000-20,000 per tonne between Oct-March 2009. GAEL hopes to increase soymeal exports from 0.45-0.50 mn tonnes in FY08, to around 0.7-0.8 million tonnes in y. e. September 2009.

- The name of Infomedia India has been changed to Infomedia 18 Ltd., effective September 16, 2008.

Stocks to watch today

- Suzlon Energy (to consider a rights issue to raise up to Rs1800Cr($390mn)

- Shriram EPC (awarded two orders worth Rs315Cr by SAIL for its Rourkela Steel Plant)

US markets overnight

The US markets closed flat, in spite of the news that Warren buffet would infuse $5bn into Goldman Sachs, as also the government’s focus on stabilizing financial markets. AIG fell 15% after failing to secure private sector financing and will borrow $85bn from the Fed. Morgan Stanley is likely to request regulatory approval to retain oil, commodities and raw materials business. Tech stocks were saved on hopes for more buybacks and dividends continued. The primary culprit undermining economic growth has been a weak housing market. August existing home sales fell 2.2%.

View on markets today

Asian markets were dragged down by commodity and mining resource related stocks this morning, while banks and financial stocks fell on indecision over US Government bailout plan for the financial sector. We expect Indian markets to remain cautious and range-bound today ahead of today's inflation data announcement.

Technical view

Investors have to cope with high volatility in the Indian markets these days. One day bears dominate the market, followed by bulls the next day. The short term trend of the Sensex is within the 12000-15000 levels, while the medium and long term trend is yet to be established, in the absence of particular direction. Technically as well, the Sensex is in a state of indifference. While MACD is weak, the short term indicator viz., Williams %R is moving upward. We expect the same to be reflected in today’s Sensex movement, which is likely to remain cautious.