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Indian stock market daily morning report (August 26, 2010, Thursday)

Contributed by Keynote Capitals

By Keynote Capitals

Views on markets today

- Indian markets ended a volatile session yesterday in negative note for second consecutive day knocked down by world markets, as rising worries over slow pace of global recovery continued to haunt investor sentiments. Volatility surged as traders rolled over positions in F&O segment from August series ahead of the expiry. Selling pressure was seen across the board with midcaps and small caps worst hit. All sectoral indices, except IT, closed negative with real estate consumer durables and auto stocks were the biggest losers. Prakash Steelage witnessed huge buying interest on its debut and closed 70.9% higher over its issue price of Rs110 per share.

- Market breadth was weak at ~0.4x as investors sold large cap stocks. Both FIIs and domestic institutions were seller and sold equities worth Rs3.64bn and Rs2.66bn respectively.

- The Asian market is trading mix this morning. The Nikkei clawed away from 16-month lows, buoyed by shortcovering after falling more than 500 points over the last week, with buying of futures by long-term domestic investors also providing support. However, the Hang Seng is trading marginal low.

- Indian markets are expected to open positive following the overnight gains on Wall Street. However, volatility may be seen in the market due to F&O expiry today.

Key events today

- Closing of IPO of Gujarat Pipavav Port (subscribed 7.2x as of August 25, 5PM)

- Announcement of food and fuel price inflation data

Economic and Corporate Developments

- The civil liability for Nuclear Liability Bill, 2010, was passed by Lok Sabha by a 252:25 majority after the Left pressed for a division.

- RBI has said that banks could change the terms under which they have lent to airlines

Buzzing Stocks

- Cipla will invest Rs10bn in the immediate and near future in factories, expansion of existing facilities and infrastructure.

- HDIL has objected to Golden Tobacco’s renewed plans to sell four acres of its land in the Andheri area of Mumbai, expected to be worth around Rs1bn.

- Reliance Industries is seen as a likely partner for Chesapeake Energy Corp's Eagle Ford shale acreage.

- The promoters of Religare Enterprises made an open offer to acquire about 28mn shares of financial services company at Rs457 a share.

- Piramal Health Care is likely to consider buyback of shares along with special dividend after it gets the proceeds deal with Abbots Labs.

- Adani Enterprises announced a US$1.65bn deal with the Indonesian government and its mining company PT Bukit Asam for setting up rail and port infrastructure in the island nation for sourcing coal to India.

- Reliance Infrastructure is gearing up to bid for new international airports in Navi Mumbai, Pune, Noida and Goa.

- M&M plans to bring Ssangyong vehicles to India after completing acquisition of the South Korean automaker.

US markets

The US market closed positive breaking a four-day losing streak as key technical support triggered bargain hunting that offset weak economic data. The markets sagged as much as 1 percent after data showed new single-family home sales slumped to a record slow pace in July and orders for manufactured durable goods rose far less than anticipated. But positive momentum grew through the session after the benchmark bounced back, indicating some investors may see a dip below it as a buying opportunity.

Healthcare stocks, among the least sensitive to economic swings, outperformed the overall market, while homebuilders gained despite the weak data after Toll Brothers Inc beat expectations and reported its first quarterly profit in three years.

On the downside, energy shares dragged on the market as coal mining stocks dropped on concerns that power plants would switch to natural gas from coal as the price of gas fell.