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Indian stock market morning report by Keynote Capitals (June 11, 2009, Thursday, 7.00 a.m. GMT)

Views on markets today

- Indian markets were bullish yesterday led by power, consumer durables and capital goods stocks. However, real estate stocks witnessed profit taking from the investors after Tuesday's rally.

- In spite of the rally market breadth was fairly negative at 0.8x showing the rally was not broad based. Only large cap stocks performed while mid and small cap stocks saw selling. FIIs and domestic institutions bought equities worth Rs738Cr and Rs590Cr yesterday.

- Both trading volumes and the deliverable volumes on top 10 traded stocks improved on the NSE while on the BSE the deliverable volumes declined. NTPC, Bharti Airtel, L&T and ICICI Bank witnessed good deliverable volumes.

- After a positive opening, the investors booked profits which led the markets downward. The investor sentiments dampened on the fears that the US may see rising interest rate scenario.

- Indian markets are in up trend for last few days. However, yesterday's rally was not broad based. The rally was limited to large cap stocks only. Lack of participation from the domestic institutions is a concern. We expect a profit taking on the higher levels today.

- Inflation data for the week ended May 30, which is to be released today may cause for some volatility. Inflation is expected to increase by 0.13% vis-?-vis an increase of 0.44% in the previous week.

Economic and Corporate Developments

- The Indian Rupee (INR) is declined from Wednesday’s close of 47.24/25 to 47.39/40.

- NYMEX Crude Oil (CL) is currently trading at $72.12 per barrel.

- RIL has increased LPG supplies to Indian Oil, Bharat Petroleum and Hindustan Petroleum from its twin refineries at Jamnagar, RIL’s production has to be sold to state-run firms as export of LPG is allowed.

- Gitanjali Lifestyle Ltd, wholly owned subsidiary of Gitanjali Gems Ltd has decided to set up a JV in India in association with Damas LLC, Dubai for retail trading of jewelleries and related accessories.

Key Events today
WPI based inflation for the week ended May 30.

Buzzing Stocks

- Mahindra & Mahindra (M&M) is likely to buy out its local partner in Mahindra South Africa (Mahindra SA), which is currently a 92% subsidiary according to the media sources.

- Infotech has signed a multi-year contract with Incontrol Tech Sdn Bhd (iTEC), a Malaysia-based automation services provider to the power industry. The contract envisages implementation of an enterprise GIS information system for Tenaga Nasional Berhad (TNB), which is the largest electric utility in Malaysia.

- Mercator Lines is acquiring three gearless post-Panamax bulk carriers totalling 2.77 lakh dead-weight tonnage (DWT) on a charter basis to expand its capacity with an investment of Rs500Cr.

- Network 18 will raise Rs119.63Cr by issuing shares on the preferential basis to SAIF III Mauritius Company for funding its various businesses.

- Maharashtra Government has ordered a high-level inquiry into Suzlon Energy’s land deals in past 2 to 3 years at Dhule and Nandurbar, where it is setting up the world’s largest wind energy park.

Results to be announced today
Hind Oil Exploration, Finolex Cables, Engineers India

US markets

The US markets closed negative 0.3% but well off their intraday lows. Stocks opened higher after Home Depot raised its outlook, but those gains quickly faded as a jump in oil prices and sharp rise in lending rates spurred worries. Stocks were knocked off of a morning uptrend as 10 year Treasury Note Auction resulted in depressing results spawning rate fears. Concern over an inflationary spiral further held stocks back during the session, despite positive fed words of a moderating recession.

Investors continue to look for signs that economic growth is actually taking root and, in turn, were uninspired by comments from Fed's Beige Book that signs of economic decline are slowing, while several districts indicated that their expectations have improved.

News that overall trade deficit widened to $29.2bn in April from $28.5bn in March also had little impact on trading. The latest number was in step with the consensus estimate, but reflected the ongoing economic difficulties around the globe. Moreover, the April figure was a bit above the 1Q average, so it will factor negatively into 2Q GDP forecasts.

Key event today
Retail Sales
Jobless Claims
Business Inventories