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Indian stock market morning report by Keynote Capitals (May 19, 2009, Tuesday, 7.00 a.m. GMT)

Views on markets today

- Political stability helped the Indian markets hit upper circuits yesterday. Trading was halted twice on reaching 3 circuits. Though the last circuit was hit at 11.55am, the markets officially closed only an hour before normal close. The markets negated weak Asian markets. Real estate, capital goods, bank and oil and gas stocks were on a rampage. The upside was broad based and covered all sectors.

- Market breadth though high at 75x is not relevant, given the low trading activity, as only 846 shares were traded in; 11 shares closed negative.

- Institutional turnover was weak, mainly due to the overall low volumes. FIIs were net buyers of Rs46Cr, while domestic institutions were net sellers of Rs8Cr. Trading volumes were as low as Rs170Cr on NSE and Rs127Cr on BSE. The deliverable volumes hit almost 100% levels.

- Asian markets are up today on the strong overnight close of the US markets. Renewed optimism on housing and banks helped the up move. Exporter stocks gained on yen weakness. However, markets are cautious before Japan's GDP data which is to be announced on Wednesday.

- We expect Indian markets to continue yesterday's rally. The markets traded only for 60 seconds yesterday, which didn't allow investors to participate in the rally. We expect investors to take fresh positions in today's markets. Positive cues from global markets is another trigger.

Economic and Corporate Developments

- The rupee (INR) rose to 47.50/58 per USD, the strongest since Dec. 22, and above yesterday's close of 47.88/90.

- NYMEX Crude Oil (CL) is currently trading at $59 per barrel.

- After resolving the issue of revenue-sharing for the 1st week of release of a Bollywood films across multiplexes, talks between multiplex owners and Bollywood producers are now stuck on who gets the right to distribute new Hindi films and across how many locations.

Buzzing Stocks

 
- MRF declared a lockout at its Arkonam plant in Tamil Nadu following labour unrest in the factory. About 3,000 employees of MRF in Arkonam and Puducherry were on a 'sit-in' strike within the premises of the respective facilities since May 9

- The fortnight-long strike at M&M's plant at Satpur was called off following an amicable settlement reached between the management and internal unions.

- ONGC after cancelling a 5 year rig supply contract with Great Offshore during the last week due to latter’s inability of supplying the rig in time, plans to issue a new tender.

Results to be announced today
Chennai Petro, Grasim Ind., Thermax, Mercator Lines

US markets

The bulls regained control, US markets surged higher 2.9% helped by banks and financial services stocks. Following India's lead, US stocks advanced throughout the day on positive housing data and good news from the banking sector. Bank of America shares gained after Goldman Sachs added the company to its conviction buy list. Citigroup shares were higher, while Wells Fargo improved after Warren Buffett's Berkshire Hathaway increased its stake in the bank. Strength in bank stocks led the financial sector to a 7.2% gain. Goldman Sachs, JPMorgan Chase and Morgan Stanley applied to repay the combined $45bn they received in October from the government’s Troubled Asset Relief Program.

The market had briefly pared gains following a reading that showed home builder sentiment up for the 2nd month in a row and at the highest level since September. The index moved 2 points higher in May to 16, a number that met expectations but raised some concern that activity was not improving.

Home improvement retailers will likely have their gains tested today as April housing starts and building permits data hits news wires.