Views on markets today
- Following the cues from global markets, the Indian markets were mostly weak yesterday, except for a brief midsession rally. Small cap stocks rallied while large cap stocks witnessed profit taking. Investors bought PSU stocks on expectations that the new Government may clarify its stand on divestment. Bank, capital goods, auto and IT stocks moved lowered on selling.
- Market breadth was strong at over 3x. Institutions were net sellers in the markets yesterday. FIIs were net sellers of Rs3Cr while domestic institutions sold equities worth Rs371Cr. Trading volumes declined moderately from Rs283bn to Rs243bn (NSE) and from Rs84bn to Rs80bn (BSE). Deliverable volumes for the top 10 traded stocks also witnessed some weakness. Real estate stocks viz., DLF and HDIL saw weak deliverable volumes.
- Asian markets have opened lower today on the weak overnight close of the US markets. Stronger yen impacted exporter stocks. The Hang Seng however saw some recovery after a weak opening.
- We may see a weak opening for the Indian markets, following the US and Asian markets and ahead of the weekend. However, given that the market has seen a correction over the last two days, some recovery cannot be ruled out.
Economic and Corporate Developments
- The Indian Rupee (INR) today reached a five-month high at 47.0/47.02 per USD, compared with yesterday's close of 47.37/38. It has gained 5% during this week.
- NYMEX Crude Oil (CL) is currently trading at $61.66 per barrel.
- WPI based inflation index rose by 0.61% in the week ended May 9 from 0.48% in the previous week.
- India's direct tax receipts were up 8.33% to Rs3.38tnn in FY09, but fell Rs60bn short of the target of Rs3.45tn.
Buzzing Stocks
- Patel Engineering expects its order book position to cross Rs90bn by mid-year, from Rs79bn currently.
- Varun Shipping will reduce capex from $400mn last year to $80-$100mn in the current year, to be utilized for acquisition of offshore vessels.
- Kewal Kiran Clothing has raised Rs80.60Cr by issuing 31,000,37 Equity shares of Rs10 each @ Rs260 per share. The proceeds from the issue would be utilized for setting up new manufacturing facilities, expansion of distribution network, building corporate office and to meet general corporate purposes.
US markets
The US markets finished the session down 1.5% on the Fed's lowered outlook and disappointing economic data about grim job news hit the wires. One of the big things that weighed on the market was the S&Ps downgrade of the UK economy to "negative" from "stable." This raised concerns about both UK and US credit rating.
General Motors up 0.46% was one of the handful components to log a gain. GM was supported by news it has reached a labor contract deal with the United Auto Workers Union and the Treasury, along with more reports indicating that GM's finance arm, GMAC, will receive $7bn from the Treasury.
Most economic data worse than expected
Initial jobless claims dropped by 12,000 to a seasonally adjusted 631,000 last week, slightly higher than expected. Continuing claims climbed to a new record of 6.66. Investors shrugged off a 1% increase in leading economic indicators for April even though the data was better than expected and marked the first increase since last June.
