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Indian stock market morning report by Keynote Capitals (May 29, 2009, Friday, 7.00 a.m. GMT)

Views on markets today
- Indian markets were strong yesterday on FII buying. Metals, PSUs, banks and capital goods stocks witnessed buying.
- Market breadth was positive at 1.7x led by mid and small cap stocks. FIIs bought equities worth Rs1860Cr, while domestic institutions were net sellers of Rs451Cr.
- Trading volumes in the NSE were strong while they declined moderately on the BSE. High trading volumes were supported by good deliverable volumes, especially in counters such as Bharti Airtel, Reliance Industries and SBI.
- Asian markets opened positive today after a positive overnight close of the US markets. After a positive opening the Nikkei corrected sharply on profit taking, while the Hang Seng is strong though volatile. Shipping stocks witnessed a rally after the gains in the key freight index.
- Indian markets may remain upbeat today amid volatility driven by global markets. The markets appear to be cheering the improving economic conditions (inflation rose only 0.1% vis-?-vis previous week's 0.61%) and the Government's sustainability. Declining inflation may help the RBI take a decision on interest rate cuts.
- Rising international prices of crude oil may stoke inflation yet again, and therefore remain a concern.

Economic and Corporate Developments
- The Indian Rupee (INR) is strong this morning, at 47.48/50 per USD, compared to Thursday's close of 47.60/62.
- NYMEX Crude Oil (CL) is currently trading at $64.83 per barrel.
- Japan’s industrial output grew the most in 56 years in April on a rebound in exports. Production rose 5.2% from March, the second monthly gain.
- Japan’s industrial output grew the most in 56 years in April on a rebound in exports. Production rose 5.2% from March, the second monthly gain.

Buzzing Stocks
- Siemens plans to invest Rs2.75bn expansion of its steam turbine making unit in Gujarat. The unit currently makes steam turbines of up to 45 MW. After the expansion, this would increase to 100 MW.
- BOC India, an industrial gas maker plans to invest Rs10bn over the next 3 years to expand its reach in the local market.
- GMR Infra team bags AP highway project.
- Bajaj Electricals' unit, Starlite Lighting will raise its Compact Fluorescent Lamp (CFL) manufacturing capacity from 10mn units p.a. to 40mn involving capex of Rs400mn.

Results to be announced today
BPCL, Tata Motors, Indian Oil, IVRCL Infra, Colgate, Voltas

US markets

The US markets surged by 1.3% on improved treasury market despite dismal news from General Motors and the housing front. General Motors has settled on June 1st as a final date for bankruptcy and home foreclosures climbed to a record high dampening stocks strong upward momentum. Results of the Treasury bond auction eased concerns about government debt.

General Motors made gains early on after it announced that its bondholders accepted an amended debt-for-equity offering. However, it finished with a loss as investors continue to question whether it will be able to avoid bankruptcy. Time Warner finally decided to dump its money losing AOL unit after failing to find bidders for the internet dinosaur. Crude shot up to near a 6-month high of $65 as OPEC left production quotas unchanged and report showed that crude inventories were pared down by 5.413mn barrels last week.

Economic news

New-home sales ticked up 0.3% to a seasonally adjusted rate of 352,000 in April, less than expected. March sales were revised sharply lower.

Initial jobless claims dropped by 13,000 to 623,000 from a slightly revised 636,000, suggesting that the pace of layoffs is slowing. Continuing claims rose to another record around 6.8mn.

Durable goods orders rose 1.9% in April but enthusiasm was tempered by a sharply lower revision for March.