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Indian stock market daily morning report (August 25, 2010, Wednesday)

Contributed by Keynote Capitals

By Keynote Capitals

Views on markets today

- Indian markets ended on negative note yesterday as sentiments turned bearish in global markets on concerns of economic recovery. Negative European markets after a weak preliminary reading for the euro-zone's purchasing managers’ index, also weighed on investor sentiments. Intraday volatility was high as traders rolled over positions in F&O segment from the August series, ahead of the F&O expiry on Thursday. The downward movement was mainly led by loss in real estate, metals, power and IT stocks while consumer durable and FMCG stocks witnessed some buying activities.

- Market breadth was weak at ~0.68x as investors sold large cap stocks. FIIs bought equities worth Rs1.91bn while domestic institutions sold equities of Rs6.89bn.

- The Asian markets are trading lower this morning. The Nikkei fell to its lowest in 16 months after the yen hit a 15-year high versus the US dollar as dismal US housing data added to fears the global economic recovery would fizzle out. The Hang Seng is also trading negative.

- The Indian markets are expected to open lower in line with the global markets on fears of a slower global recovery. Some volatility may be seen ahead of August F&O expiry tomorrow.

Key events today

- Listing of IPO of Prakash Steelage (NSE: PRAKASHSTL, BSE code:533239), issue price: Rs110 per share.

Economic and Corporate Developments

- The Commerce Ministry has imposed value addition norms on export of petroleum and petrochemical products.

- The government extended sops worth Rs10bn to exporters, particularly for the labour-intensive textile, handicrafts and leather sectors, to help them see through the fragile economic recovery globally.

Buzzing Stocks

- Vedanta Resources failed to get environmental clearance for its US$1.7bn bauxite mining project in the Niyamgiri hills of Orissa.

- Maruti Suzuki is looking at manufacturing cars for other vehicle makers, both foreign and domestic, on the lines of its arrangement with Nissan. The company is working towards achieving full-body capability in manufacturing vehicles, which means MSIL will design and develop its models on its own.

- Reliance Power is considering investing as much as US$5bn in Indonesia.

- M&M plans to source automotive components worth US$4-5bn over several years from global markets for Ssangyong and itself.

- GTL Infrastructure and tower arm subsidiary of Reliance Communications will convert around Rs60bn of loans from promoters into equity shares and issue fresh equity shares worth US$1bn.

- Public sector oil refiners are baffled by reports of GAIL (India) being part of the ONGC-led consortium that is believed to be making a counterbid for a stake in Cairn India.

- Bharti Airtel’s Zain Kenya plans to invest more than US$308nm in next 18 months.

- Reliance Communications has selected Chinese equipment vendors Huawei and ZTE, to upgrade its mobile network for third generation (3G) services.

US markets

The US markets fell to their lowest level in seven weeks as an unexpectedly large drop in home sales ratcheted up concerns that the economic recovery is even weaker than had been feared. The US markets racked up their fourth day of losses in a row after an industry group reported that sales of US existing homes in July fell to their slowest pace in 15 years. Economically sensitive companies and banks were the biggest drags on the markets.

A report that, at least seven of the 17 top Federal Reserve officials at the US central bank's August policy meeting had reservations about the decision to buy more Treasuries also rattled investors.

Medical device maker Medtronic Inc plunged 10.8% after it reported a decline in quarterly sales and cut its outlook. The drop weighed on shares of rival companies, and the health-care sector.

Dell Inc tumbled 3% amid reports it will increase its offer for 3Par Inc while Pfizer Inc dropped 1.7% after its cancer treatment Sutent failed to improve overall survival in patients with a form of lung cancer.