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Indian stock market daily morning report (November 18, 2009, Wednesday)

Contributed by Keynote Capitals

By Nitin A. Khandkar (Keynote Capitals)

Views on markets today

- Indian markets were bearish for almost the entire day yesterday, following the weakness across the global markets and profit taking. However, a strong upmove towards the end of the trading session helped the Sensex with a moderate upside. Real estate and oil and gas stocks declined, while IT and consumer durables stocks witnessed upside. Trading volumes on both exchanges however remained lacklustre.

- Market breadth was tight at 1x. FIIs bought equities worth Rs4.6bn, while domestic institutions sold equities of Rs2.4bn.

- Asian markets are mixed today. While the Nikkei is down on account of dip in banks and real estate stocks, the Hang Seng is up due to rally fueled by China stocks and upbeat US markets. A fall in the yen, however helped the Nikkei restrict losses.

- We expect a flat opening for the Indian markets today due to lack of clear trend in the Asian markets. However, investors are likely to remain cautious; the markets may be volatile due to lack of domestic / global triggers.

Economic and Corporate Developments

- Natural rubber (NR) imports declined 50% to 8,574 tonnes in October y-o-y. Currently, the international prices are higher by Rs7-8 per Kg compared with local prices. Therefore, imports have become unviable.

Buzzing Stocks

- Mahindra Satyam has received legal notices from 37 companies claiming a refund of Rs12.3bn ($265mn), allegedly given as a temporary advance. The notices claim the money back to allegedly repay their creditors, some of whom include Maytas Properties and Maytas Infra. On November 14, 2009, Mahindra Satyam has replied to the legal notices stating that the claims are legally untenable.

- Reliance Industries plans an aggressive exploration campaign over three years. E&P business would give the company a much higher growth trajectory in the coming years. The company’s AGM yesterday passed a resolution for a 1:1 bonus issue.

- Steel Authority of India (SAIL) is looking at acquiring licenses for coking coal mines abroad to protect itself from fluctuating raw material prices. The company is in talks with firms in Australia, New Zealand, Mozambique and Indonesia. It is looking at both operational and exploration licenses, in order to secure 30-40% of its coking coal needs.
- Sun Pharma has obtained tentative approval from US FDA for its generic version of Novartis' Gleevec, used to treat leukemia.

- Indian Oil Corp has been losing Rs92Cr per day on sale of petrol, diesel, domestic LPG and kerosene as Government has not allowed it to revise rates in line with firming international oil prices.

- BHEL set up transformer manufacturing unit at Bhopal. It plans to expand its manufacturing capacity to 15,000MW p.a.

- Jaihind Projects has bagged BPCL contract for provision of cross country pipeline laying and associated works for the Kochi Refinery to Cochin AFS Pipeline.

US markets

Stocks traded in an erratic and mostly negative manner during the morning session and finally US markets advanced 0.3%. Mixed retail news and word of big box discount club Costco cutting Coke products due to a dispute added to the generally lackluster, erratic session. CIT Group says its losses grew in Q3 to over $1bn compared to a loss of $317mn y-o-y. The commercial lender recently filed for bankruptcy after being unable to secure bond holder approval to reduce its mounting debt.

Economic News
Producer prices increased 0.3% in October, but that is a slower pace than the 0.5% increase that had been expected. Core producer prices fell 0.6% in October. A 0.1% increase had been expected.

Meanwhile, industrial production for October increased 0.1%, which is weaker than the 0.4% that had been expected. Capacity utilization came in at 70.7%, which is essentially in step with the consensus.

National Association of Home Builders says its sentiment index remains unchanged at a rating of 17 in November that was less than expected as home builders remained cautious ahead of the expiration of the first time home buyer tax credit, which Congress extended after the survey was completed.