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Indian stock market daily morning report (February 01, 2012, Wednesday)

Contributed by Keynote Capitals

Views on markets today

- Indian markets rose sharply yesterday to recover almost all the losses made previous day, as investors cheer for the efforts of European leaders in resolving the debt issue and stronger than expected results of ICICI Bank. Few other developments also triggered the rally which include opening of the buyback offer of Reliance Industries, government decision over fund infusion in State Bank of India and RBI'S assurance over monetary policy easing by continuing open market operations. European Union leaders endorsed a treaty aimed at strengthening accountability and keeping a closer eye on member nations' efforts to rein in overspending and resolve the region's debt crisis. Twenty-five member states, including 17 eurozone countries, are expected to sign the fiscal compact when the leaders next gather in March. The markets rose 11.3% in January, best January rise forthe markets since a 19.4% rise in 1994. Foreign funds have been net buyers of about $2bn of Indian shares in January, after net outflows of about $500mn last year. All sectoral indices closed on positive note with bank, real estate, auto and metal stocks were major gainers. SBI gained ~3.5% cheering the federal government move to infuse $1.6bn through a share purchase to shore up the lender's capital base. ICICI Bank rose to their highest close in three months, after the lender widely beat market expectations with a 20% rise in its fiscal third-quarter profit. Market breadth was strong at ~1.74x as investors bought large cap stocks. On provisional basis, FIIs bought equities worth Rs.6.24bn while domestic institutions sold equities of Rs.2.41bn.

- Asian stocks moderately up today, as data showing a pick-up in Chinese manufacturing work to offset some disappointing earnings and weak global economic numbers.

- We expect a flat opening for the Indian markets today, as Asian stocks point out the directionless trades. Further, poor fiscal deficit numbers (fiscal deficit at 96% of budgeted till December 2011) may resists markets to move higher.

Economic and Corporate Developments

- The Centre’s fiscal deficit has already touched 92% of the Budget estimate. The deficit, the gap between the government's expenditure and revenue, more than doubled to Rs.3.81 lakh crore in the first nine months of 2011-12 from Rs.1.71 lakh crore in the corresponding period of the previous financial year.

Buzzing Stocks

- Taj GVK Hotels and Resorts is looking at opening hotels in Tier-II and Tier-III cities in Andhra Pradesh. The company is also looking at opening three-four Ginger hotels in Hyderabad.

- Essar Oil Limited has received a demand notice from the tax authorities of the Gujarat government, for repayment of sales tax deferment benefits utilised by the company, to the tune of Rs.6,300Cr with payable interest.

- Infosys signed an MoU with the Madhya Pradesh government for investing Rs.600Cr in its proposed unit in Indore, which will generate over 13,000 jobs.

- KEC International, which is engaged in power, railways and water projects, expects an order book of Rs.9,500Cr by the end of March, Chief Executive Ramesh Chandak told Reuters.

- State Bank of India (SBI) is looking to expand its presence in the Gulf region, a senior bank official said.

US markets

U.S. stocks on Tuesday closed best January in more than a decade, with the indexes mostly slipping after U.S. economic data failed to live up to its billing. The Dow Jones Industrial Average fell 20.81 points, or 0.2%, to 12,632.91 on Tuesday. The S&P 500 declined 0.6 point, or 0.1%, to 1,312.41. The Nasdaq Composite rose nearly 2 points, or 0.1%, to 2,813.84.