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Indian stock market morning report by Keynote Capitals (June 10, 2009, Wednesday, 7.00 a.m. GMT)

Views on markets today

- In spite of a dismal start, Indian markets recovered on strong FII buying and a pull back in real estate stocks. In addition, IT, metals, and consumer durables witnessed heavy buying.

- Market breadth was tight though large cap stocks saw a fair bit of buying. FIIs continued remain buyers and bought equities worth Rs955Cr. Domestic institutions sold equities of Rs143Cr.

- Asian markets are up today on bullish crude oil prices, which helped resources stocks post a rally. Shipping stocks were upbeat on improving investor sentiment.

- While we expect the rally in the Indian markets to continue, volatility has become the order of the day, with investors keen on taking profits off the table at every opportunity. We expect the markets to be volatile, albeit with a positive bias. While FIIs are on a buying spree, domestic institutions are yet to participate in the rally.

Economic and Corporate Developments

- The Indian Rupee (INR) strengthened this morning to 47.30/32 per USD, vis-?-vis yesterday’s close of 47.48/49.

- NYMEX Crude Oil (CL) is currently trading at $70.71 per barrel.

- Wipro expects only moderate revenue growth in FY10 y-o-y. The company continues to experience pricing pressure, but expects business momentum to pick up in the second half of FY10.

- SAIL and RINL have negotiated current fiscal's long-term coking coal prices with global suppliers at $115-125 per tonne.

Buzzing Stocks

- Tata Motors sold 11mn shares of Tata Steel to promoter company Tata Sons for Rs456.78Cr. As a result, Tata Sons holding in Tata Steel has gone up to 30.77% while Tata Motors' stake has reduced to 1.43% from 2.93%.

- HDFC has received approval to raise up to Rs40bn through QIP of secured redeemable non-convertible debentures and warrants.

- HCC promoters will not convert 7.5mn warrants (issued @ Rs202.50 per share in December ’07, CMP Rs117 per share).

- Future Group plans to raise Rs40bn in the next 2 years to fund its expansion plans. It will open 18 Central stores and 45 Big Bazaars in the next one year.

- KSK Energy Ventures has decided to increase the size of Wardha Chhattisgarh project from 1,800MW initially proposed to 3,600MW.

- Shri Lakshmi Cotsyn plans capex of Rs12bn for expansion of terry towels, fusible interlining, bed linen and denim capacities, and diversification into spinning mill, blackout fabric etc. and will allot 2.5mn share warrants on preferential basis to strategic investors, subject to approval of members in General Meeting and of other appropriate authorities.

- Austral Coke & Projects has split existing equity shares of face value of Rs10 each into ten equity shares of face value of Re.1.

Results to be announced today
Tata Tea, Monsanto India

US markets

The US markets overnight again ended on a flat note (down 1.43 points) after a choppy session. Fears of an imminent rate hike and confusion regarding TARP payback findings counteracted great earnings news from Texas Instruments. Further unclear sentiment emerged from a House Panel appointed to approve derivative regulations and signals from the Treasury pit of a pending rate hike further weighed on stocks.

Semiconductor stocks traded with sharp gains for the entire session, helping the Semiconductor Index climb 4.5%. Their upward move came after Texas Instruments raised its 2Q forecast. Most financials traded in green after 10 banks were allowed to repay capital they received through the troubled asset relief program. The companies are expected to give back some $68bn.

On the economic front, wholesale inventories fell by 1.4% in April. More than the 1.2% decline expected. It marked the 8th straight month that inventories were slashed.

Key event today
International Trade data and Treasury Budget