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Indian stock market daily morning report (August 20, 2010, Friday)

Contributed by Keynote Capitals

By Keynote Capitals

Views on markets today

- Indian market ended on positive note at its two-and-a-half years high yesterday supported by firm global markets and sustained fund-based buying. Moderation of food price inflation and recovery in European markets also boost the market sentiments. Except real estate and PSU, all sectoral indices closed positive with banks, metal and FMCG stocks were the major gainers. The flows from overseas investors provided strong support to the market to touch its two-and-a-half years high. FIIs have been net investors to the tune of ~Rs55,000Cr in equity markets this year so far.

- Market breadth was strong at ~1.27x as investors bought large cap stocks. Both FIIs and domestic institutions were buyer and bought equities worth Rs8.21bn and Rs2.15bn respectively.

- Asian markets are trading lower this morning. The Nikkei is trading negative after weak US economic data spurred new worries of a deepening slowdown and sent the dollar slipping back towards a 15-year low against the yen. But expectations that Japan may soon ease monetary policy further kept the slide in stocks in check. The Hang Seng is also trading lower.

- The Indian markets are expected to open lower following the weak global cues after worries of a deepening economic slowdown. The investors are expected to remain sideways as the markets may witness a lacklustre session.

Economic and Corporate Developments

- Food inflation stood at 10.35% on a yoy basis during the week to August 7, lower than the 11.4% annual rise reported in the previous week.

- The Government may come out with more representative data on industrial production by this year-end by adding nearly 150 new items and deleting the obsolete ones from the index.

Buzzing Stocks

- Lanco Infratech has partnered with Indonesian coal mining company Bukit Asam to bid for a 600 megawatt power project.

- ONGC may have to pay US$13bn if it were to exercise its pre-emption or right of first refusal to buy Cairn India in the giant Rajasthan block.

- Huaneng Group may pay GMR Infrastructure US$1.4bn to buy 50% of InterGen.

- With a view to boost its commercial vehicle finance portfolio, Allahabad Bank has entered into a tie-up with Ashok Leyland.

- Dr Reddy's in talks with Japanese pharma cos for tie-ups.

- MIC Electronics has bagged orders worth ~Rs200mn, majority of them being from the Indian Railways.

- Central Bank arm to offer loan syndication, merchant banking services.

- Sadbhav Engineering's wholly-owned arm, Sadbhav Infrastructure Project (SIPL), has got Rs4bn equity funding from global investors.

- Greaves Cotton plans to build an automotive engine manufacturing plant in Aurangabad for ~Rs1bn.

- Royal Orchid Hotels will raise up to Rs1.5bn to fund its new projects.

US markets

The US markets closed negative to their lowest in nearly a month as the latest batch of data amplified concerns the economy is stuck in neutral. Sectors most sensitive to growth were hit hardest. A report showing factory activity in the Mid-Atlantic States contracted in August for the first time since July 2009, blind-sided investors, who had been expecting activity to increase. Earlier, the Labour Department said that first-time claims for jobless benefits rose to a nine-month high. The US initial claims for the week ended August 14, 2010 stood at 500,000 as compared to 488,000 seen in the previous week. The volume in the markets was low and pointed to a lack of participation by institutional fund managers, who were on the sidelines due to uncertainty about the economy.