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Indian stock market daily morning report (August 27, 2010, Friday)

Contributed by Keynote Capitals

By Keynote Capitals

Views on markets today

- Indian markets ended volatile session yesterday with modest gain on expiry of F&O August contract after global markets rebounded from seven-week lows and decline in food inflation. Meanwhile, positive start for European shares coupled with higher US index futures helped the markets to scale higher. The up-move was mainly led by gains in FMCG, power and capital goods stocks while oil & gas, real estate and consumer durable stocks  witnessed profit booking.

- Market breadth was however weak at ~0.84x as investors sold small and mid cap stocks. FIIs sold equities worth Rs2.76 while domestic institutions bought equities of Rs38.93Cr.

- The Asian markets are trading lower this morning. The Nikkei slipped back towards a 16-month low, with investors fearing more falls could lie ahead depending on US economic data due out later in the day. The Hang Seng is also trading negative.

- Indian markets are expected to open lower in tandem with weak US and Asian markets, as concerns about the health of the US economy weigh down investors.

Economic and Corporate Developments

- The Cabinet has approved Direct Taxes Code (DTC) Bill.

- The food price reduced marginally to 10.05% in the week ended August 14 as against 10.35% in the previous week.

Buzzing Stocks

- Tata Motors is looking at raising up to US$1bn to fund its various expansion programmes.

- GAIL is planning to put up a gas-based power plant each in Maharashtra, Gujarat, Madhya Pradesh and Uttar Pradesh.

- L&T plans to launch a bank to gain access to cheap funds and scale up its presence in infrastructure financing.

- NMDC, the country’s largest iron ore mining firm, is seeking foreign partners for its proposed steel plant in Karnataka.

- NTPC will now offer gas producers stakes in its power projects to ensure long term fuel supply.

- Oil India said it was eying overseas shale gas assets in a possible consortium with Indian Oil Corporation and GAIL India.

- M&M would set up an assembly line at its Chakan plant for making Ssangyong sport utility vehicles (SUVs).

- Sun Pharma which approached the high court last week to be heard before any settlement was allowed between Wockhardt and its creditors on FCCB dues, demands the original FCCB terms be honoured.

US markets

The US markets closed below 10,000, a day ahead of an expected downward revision in US second-quarter economic growth and a major speech by Federal Reserve Chairman Ben Bernanke. Major technology shares were among the biggest losers as Tech shares have been seen as a proxy for economic growth.

Stocks initially rose on data showing first-time claims for jobless benefits fell more than expected last week, but the number was still too high to signal a shift in the weak labor market. The four-week average of new claims, regarded as a better gauge of trends, rose to the highest since late November.

In his speech today, Mr. Bernanke is likely to discuss the uncertain prospects for the economy but isn't expected to give many clues about whether the US central bank will pump more cash into the economy to keep the recovery going.

- The US continuing claims for the week ended August 14, 2010 stood at 4,456,000 as compared to 4,518,000 seen in the previous week.

- The US initial claims for the week ended August 21, 2010 stood at 473,000 as compared to 504,000 seen in the previous week.