Reports » India

Indian stock market daily morning report (January 30, 2012, Monday)

Contributed by Keynote Capitals

By Keynote Capitals

Views on markets today

- Indian markets rose for a sixth straight session on Friday to a 11-week high tracking a rally in Asian stocks on previous day triggered by Federal Reserve's pledge at the end of a two-day policy meeting on Wednesday to keep US interest rates at ultra-low levels until late 2014. The Federal Reserve surprised financial markets by saying it expected to leave U.S. benchmark borrowing costs at effectively zero until at least late 2014. Foreign investors also continued to buy local stocks on indication of a policy shift towards reviving growth, with an increase in global risk appetite also aiding sentiment. Foreign funds have pumped in more than $1.5 billion into beaten-down Indian shares this month, in sharp contrast to net outflows of about $500 million in 2011. The upward movement was mainly led by gain in oil & gas, consumer durable, metal and capital goods stocks while real estate, FMCG, bank and power stocks  witnessed some selling pressure. Banks, which have rallied recently, however, bucked the trend after earnings from most state-run lenders failed to lift investor sentiments with higher provisions and weaker asset quality. State-run SAIL rose almost 7% after the country's largest domestic steelmaker said it will spend about Rs.145bn on capital expenditure in the next fiscal year, adding 5 million tonnes of capacity. Tata Steel gained 3.1% after the company said that it would cut 200 jobs at four European plants as part of a restructuring of its European steel tubes business in the face of tough economic conditions and weakening demand.

- Market breadth was strong at ~1.61x as investors bought large cap stocks. On provisional basis, FIIs bought equities worth Rs.12.4bn while domestic institutions sold equities of Rs.7.08bn.

- Asian stocks traded modestly weaker in early trades, as investors are keeping eye on Europe ahead of a key leaders’ summit slated for later in the day.

- Indian markets may open weak, following the Asian counterparts and a possible profit taking from the investors.

Economic and Corporate Developments

- India-China bilateral trade hit a record $73.9 billion last year, but the ballooning trade deficit in Beijing's favour rose to over $27 billion, raising concern among Indian authorities.

- The Reserve Bank of India (RBI) is learnt to have turned down the government proposal to restructure textiles sector loans worth Rs.1 lakh crore, mostly from the PSU lenders, stating it would not be "the best international practice".

Buzzing Stocks

- Diamond Power Infrastructure (DPIL) plans to invest Rs.770Cr over three years to fuel expansion.

- Bharat Earth Movers (BEML) is eyeing South-East Asia, Africa and South America markets for supplying earth moving equipment for the mining sector.

- The Ministry of Environment and Forests (MoEF) has rejected clearance to one of the iron-ore mines of state-owned NMDC in Bailadila district, Chhattisgarh, a senior official of the company said.

- Neyveli Lignite Corporation (NLC) is planning to add 750 mega watts (MW) of power into various grids by the end of the year. Besides, the company is also planning to set up a 1,000 Mw power plant by dismantling its 45-year old unit at Tuticorin in Tamil Nadu. The project will attract an investment of around Rs.5,000Cr.

- Beta Wind Farm Pvt Ltd, a subsidiary of Orient Green Power Company Ltd (OGPCL), a Shriram Group company plans to set up a 300 mega watt (Mw) wind project in the southern states and Gujarat. For this, it is planning to pledge 23 per cent of the equity shares held in BETA towards IL&FS Financial Services Ltd (IFIN) and other lenders. It is being done for sanctioning of bridge loan of Rs.90Cr.

- After acquiring Australian firm Legacy Iron Ore last year for Rs.92Cr, NMDC is eyeing to acquire two more properties— Ridley iron ore deposit of Atlas Mining and Wonarah phosphate reserve of Minemakers Ltd— in the island continent.

US markets

U.S. stocks on Friday finished mostly lower, but a late surge in financial shares helped the S&P 500 to gain for a fourth week after the White House said it would expand a foreclosure-prevention program and hope grew for a Greek debt- deal.

The Dow Jones Industrial Average lost 74.17 points, or 0.6%, to end at 12,660.46. The S&P 500 Index shifted briefly higher and ended the day down 2.1 points, or 0.2%, at 1,316.33.