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Indian stock market morning report by Keynote Capitals (June 26, 2009, Friday, 7.00 a.m. GMT)

Views on markets today

- Amid high volatility, the Sensex dropped 0.5% yesterday, on the weak opening of the European markets. Auto, oil and gas and PSU stocks saw major declines, while real estate and bank stocks rallied.

- Market breadth was tight but positive at 1.2x led by the decline in large cap stocks. FIIs sold equities worth Rs15bn, while domestic institutions were net buyers of equities of Rs11bn yesterday. NSE trading volumes went up sharply yesterday from Rs179bn to Rs236bn while BSE volumes remained flat. Deliverable volumes on both exchanges increased. Reliance Industries and ICICI Banks witnessed strength in deliverable volumes, while for Reliance Capital Educomp and Reliance Natural Resources the deliverable volumes remained weak.

- Asian markets rose today supported by increase in commodity prices amid hopes of a recovery in the US economy. Oil stocks led the rally. However, investor caution about future negative news flow capped the gains.

- We expect Indian markets to open cautious but though with a positive bias. Volatility will continue, as FIIs are seen paring positions over the last few days; volumes will be lacklusture today being the last day of the week. However, a below-normal monsoon and spiralling crude oil prices may keep investor sentiments depressed.

Economic and Corporate Developments

- The rupee (INR) strengthened this morning to 48.5250/5350 per USD, compared with yesterday's close of 48.595/605.

- NYMEX Crude Oil (CL) is currently trading at $70.68 per barrel.

- India's monsoon rains for the week ended June 24 were 68 percent below normal

- India's WPI-based inflation reported a negative growth of 1.14% for the week ended to June 13, compared with the previous week's negative growth of 1.61%.

Buzzing stocks

- Tata Steel may see momentum on poor Q4 results; it also said recession was deeper than it expected and may cut over 2000 jobs in Corus.

- Tata Communications has won $1.5bn contract with British Telecom. The contract is to be executed over a 5 year period. Oil stocks may see investor interest as the government is working on the flexible pricing reported by media.

- Suzlon Energy bond holders approve amendments to existing bonds

- UB Group investment plan hits FIPB roadblock, revenue department objects to foreign loans through Mallya’s mother’s firm

- US advocacy group raises objections to Walmart importing drugs from Ranbaxy

- GAIL okays Rs75bn investment on laying gas pipelines in southern India

- IVRCL Infrastructure denies reports of divesting stake in 3 BOT road projects to PE investors

- Idea Cellular to meet creditors today for tower operations demerger

Results to be announced today
BEML, Deccan Chronicle, Glenmark Pharma, Spicejet

US markets

The US markets opened lower after weekly jobless claims came in higher than expected. But strong demand for another treasury auction boosted confidence and US markets rebounded, ending in green 2.1%. A successful Treasury Auction of $27bn of 7 year notes further bolstered the optimism. Good set of corporate earnings too helped the markets to bounce back. Stocks soared today led by retailers and commodity shares as Ben Bernanke launched a strong defense of misconduct allegations from several lawmakers. Financials lagged for most of the session and even traded with a modest loss early on, but spiked into the close to finish with a 1.7% gain.

Economic news

- Initial jobless claims for the week ending June 13 jumped by 15,000 to 627,000 last week, higher than the expected 6,00,000.

- Continuing claims crept up to 6.74mn, though that is still off of its record high, it exceeded forecasts.

- 1Q GDP showed a 5.5% annualized decline, which is a slight improvement from the 5.7% annualized decline that was previously reported.

Economic data to be released today
- Consumer Sentiment
- Personal Income and Outlays