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Indian stock market morning report by Keynote Capitals (May 27, 2009, Wednesday, 7.00 a.m. GMT)

Views on markets today
- Indian markets were bearish yesterday due to weak Asian markets and institutional selling. Real estate, banks, capital goods and consumer durables stocks saw profit taking while IT stocks outperformed the markets.
- Market breadth was negative at 0.9x. FIIs and domestic institutions sold equities worth Rs197Cr and Rs138Cr respectively.
- Trading volumes on the NSE improved marginally from Rs188bn to Rs194bn while those on the BSE declined from Rs73bn to Rs69bn. However, deliverable volumes on the top 10 traded stocks remained strong. High deliverable volumes witnessed in the telecom stocks viz., Bharti Airtel and Reliance Communications while weak deliverable volumes witnessed in Reliance Capital.
- Asian markets are up today on strong improvement in consumer confidence in the US.
- Indian markets may open positive following cues from the global markets. Markets may however remain volatile with increasing uncertainties on the cabinet expansion.

Economic and Corporate Developments
- The Indian Rupee (INR) strengthened to 47.60/61 per USD, marginally above yesterday’s close of 47.88/90.
- NYMEX Crude Oil (CL) is currently trading at $62.45 per barrel.
- The Government is likely to double set price of natural gas. The Central exchequer likely to earn revenues worth Rs44bn.
- The Government to fast track Rs 200bn road projects.

Buzzing Stocks
- Reliance Power may earn Rs 40bn from carbon credit sale over the next 10 years.
- PTC India has raised about Rs5bn by issuing 6.66Cr equity shares through qualified institutional placement (QIP) to qualified institutional buyers.
- Morgan Stanley has acquired 7.68% stake in Indiabulls Real Estate for about Rs570Cr through the QIP route.

US markets

The US markets overnight surged higher 2.4% after 4 straight days of losses on exploding higher Consumer Confidence figures despite a record drop in home prices and bad news from the auto sector. Home prices dropped over 19% in the 1Q, a new record decline. Auto maker, GM moved closer to bankruptcy as bondholders failed to accept a debt for equity swap. Retailers responded to the increase in the consumer confidence by advancing 4.0%, though higher consumer confidence has yet to translate into higher consumer spending.

GM approached June 1 deadline to file for bankruptcy protection. GM recovered from a loss in excess of 10% after it reported that United Auto Workers union said the government will provide massive additional financial assistance to GM. Sources said that government will take 70% stake in GM for around $50bn and United Auto Workers union will get 17.5% stake in GM.

Economic events

US consumer-confidence index jumped to 54.9 in May from 40.8 in April, as against expectation of 42. It was highest since September 2008. Consumer spending accounts for roughly two-thirds of the US economy. Better-than-expected consumer confidence data gave participants some evidence that economic conditions may be improving, which brought about broad-based gains for the major indices.

Key event today is existing home sales data.