Views on markets today

- The Sensex declined yesterday on profit booking in IT, oil and gas, capital goods and power stocks. Metal stocks witnessed buying, supporting the markets.

- Market breadth deteriorated further from 0.7x to 0.5x yesterday led by overall across the board selling.

- Industry association Assocham projected India's GDP growth at 7.2% for FY10, higher than the consensus projections of 6-7%.

- Decline in inflation to 0.13% may further push RBI to reduce interest rates.

- In spite of volatile markets the figures of institutional investors show some relief. FIIs and domestic institutions were net buyers of Rs787Cr and Rs558Cr respectively.

- Asian markets are strong this morning. In view of low inflation, we expect investor sentiment to be positive today. However, we expect markets to be cautious on high crude oil prices, and ahead of the weekend.

Economic and Corporate Developments

- The Indian Rupee (INR) is marginally stronger this morning, at 47.48/51 per USD, compared to yesterday’s close of 47.60/61.

- NYMEX Crude Oil (CL) is currently trading at $72.39 per barrel.

- WPI based Inflation for the week ended May 30 dropped to 33-year low at 0.13%, from previous week's figure of 0.44%, lowest since the government started recording such data in 1977-78.

- Sesa Goa has acquired the mining assets of Dempo Group in Goa for Rs17.5bn ($368mn) to boost its output of iron ore. Sesa Goa hopes to raise iron ore output by over 50% to 22.75mn tonnes in FY10, helped in part by the acquisition of assets from Dempo Group. While Sesa Goa’s own output would grow by 25% from the FY09 level of 15mn tonnes, the Dempo Group’s mining assets acquisition would add around 4mn tonnes.

- The Automotive Tyre Manufacturers’ Association (ATMA) has sought a waiver in customs duty on the raw material, which is in short supply, to meet the domestic demand besides demanding a reduction in duty on natural rubber. The association has asked for a cut in the customs duty on natural rubber to 10% from the current levels of 20%. Alternatively, the duty on the import of tyres could be raised to 20% to protect the industry from cheaper Chinese imports. Imports from China and Korea that comprise nearly 80% of all imports, draw an 8.6% duty under the Asia Pacific Trade Agreement.

Buzzing Stocks

- Pantaloon Retail’s same-store sales in May grew the highest in the last seven months, as a revival in consumer demand propped up the company’s sales numbers.

- Houston-based ERHC Energy Inc has cancelled Aban Offshore deepwater oil rig contract after repeated delays.

- Shiv Vani Oil & Gas Exploration Services plans to raise Rs6bn through various domestic and international fund raising routes.

- Tata Tea is integrating its various global businesses operationally with an objective of transforming the company into a global beverages group.

Results to be announced today
Indian Hotels, Gail India, Orient Paper

US markets

The US markets overnight closed up 0.4% on positive pre-market economic reports, which showed jobless claims fell last week and retail sales ticked higher in May. Some encouraging economic data lifted the market sentiment yesterday - initial claims for unemployment benefits fell by 24,000 last week to 601,000, a much sharper drop than expected. Retail sales also shot up 0.5% in May, marking the first gain in 3 months. Total sales were in-line with expectations, while sales excluding autos were actually stronger than expected.

Strong results from the Treasury auction bolstered shares despite looming inflation and interest rate fears. Oil rallied lifting oil and gas companies higher on the day but the market pulled back hard near the close but remained in positive territory.