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Indian stock market daily morning report (January 31, 2012, Tuesday)

Contributed by Keynote Capitals

Views on markets today

- Indian markets snapped six days winning streak and slumped more than 2% yesterday as the global sell-off on account of caution ahead of European Union Summit tempted investors to book profits. European markets were also down as worries about debt swap talks between Greece and its private creditors continued to weigh on investor sentiment before European Union summit about the region's debt crisis. Indian markets opened lower tracking weak Asian stocks after the US economy posted disappointing GDP numbers. All sectoral indices closed on negative note with capital goods, power, real estate and metal stocks were major losers. IT stocks turned negative after the rupee dropped sharply against dollar, as foreign investors sold equities on rising worries over Greek debt issue. Global sell-off pulled down the metal and mining stocks, led mostly by Sterlite Industries and Hindalco, lost 6% and 4.8%, respectively. Heavy equipment maker BHEL plunged over 10% as order inflows in the third quarter tuned negative after many years. The company witnessed order cancellations of `5,800Cr during the third quarter ending December 2011 which resulted in a negative order inflow of `3,500Cr for the third quarter. Havells India gained 3.44% after reporting higher-than-expected profit for its fiscal third quarter while Jyoti Structures fell 7.6% after the company posted slower-than-expected sales growth in third quarter. Hatsun Agro Product rose 7.6% after the company said its board will meet on February 13 to consider a bonus share issue and a special interim dividend.

- Market breadth was weak at ~0.55x as investors sold large cap stocks. On provisional basis, both FIIs and domestic institutions sold equities worth `2.02bn and `5.34bn, respectively.

- Asian stocks are positive today, after the US markets posted a late night recovery.

- We expect a positive opening for the Indian markets today, following the cues from the Asian markets.

Economic and Corporate Developments

- The eight core industries grew by 3.1% in December mainly due to slackening output of crude oil, steel and natural gas.

Buzzing Stocks

- Starbucks Coffee Company entered into an agreement with Tata Coffee Ltd to source and roast coffee arabica beans in India, it has formed a joint venture (JV) with Tata Global Beverages (TGB), the parent of Tata Coffee, to roll out its cafes nationwide.

- Suzlon announced fresh orders of 80 megawatts (Mw) in India, and a total of 189 Mw of orders in Brazil and US, over a period of one month, excluding orders announced separately. The cumulative orders are valued at approximately `2,000Cr.

- Bharat Heavy Electricals Limited (BHEL) is planning to commission its piping plant in Thirumayam in April this year, even as it is modernising its seamless steel tubes plant at Thiruchirappalli (Trichy) with an outlay of `160Cr.

- Coal India Ltd’s plan to strike a long-term coal offtake deal is now on the backburner. It is now compelled to drop the plans as most of the consumers were unwilling to accept the offers.

- The government has approved capital infusion of `7,900Cr in SBI.

US markets

U.S. stocks closed with moderate losses as telecommunications and technology stocks advanced, offsetting concern that came with Portugal’s soaring borrowing costs.

The Dow Jones Industrial Average closed down 6.74 points, or less than 0.1%, to 12,653.72. The S&P 500 Index declined 3.32 points, or 0.3%, to 1,313.01. The Nasdaq 100 turned higher to close up 3.55 points, or 0.1%, to 2,465.32.