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Indian stock market daily morning report (June 22, 2012, Friday)

Contributed by Keynote Capitals

Views on markets today

- Indian markets edged higher for the third straight trading session and attained seven-week closing highs yesterday despite losses in other global indexes, as oil stocks rallied on slumping crude prices, while overall sentiment was also bolstered after J.P.Morgan upgraded domestic equities to "overweight." The fall in Brent to an 18-month low and of U.S. crude futures to an eight-month low is a big relief for a net importer like India, especially given its bloated fiscal and current account deficits and slowing economic growth.

- J.P.Morgan also upgraded its call on Indian equities from "neutral", citing a number of factors including historic valuations, expectations for monetary stimulus, lower oil prices, and a weak rupee. Data showed resumption of buying of Indian stocks by foreign institutional investors also boosted domestic investor's sentiments.

- Global markets weakened after the Federal Reserve extended its bond-buying programme by less than some investors had hoped, while China posted weak factory data and the euro zone's private sector showed declines.

- Bank shares rose after Financial Services Secretary D.K. Mittal said India is very well poised to tackle a global economic crisis and played down concerns over the health of state-run banks. FMCG stocks extended their recent gains triggered by reports that sowing of summer crops including rice, oilseeds and cotton has started with the monsoon covering half of India early this week.

- Market breadth was strong at ~1.54x as investors bought large cap stocks. On provisional basis, FIIs bought equity of '2.57bn while domestic institutions sold equity of '0.69bn in cash segment.

- Asia markets dropped sharply, after weak US markets, ^ as signs of a deepening global economic slowdown as of 8.25AM IST wiped away investor appetite for risk.

- We expect a weak opening for the Indian markets today, following the cues from the Asian markets. However, falling crude oil prices would provide support to the markets.

Economic and Corporate Developments

- Market regulator SEBI said mutual funds can come out with pension schemes and it is in touch with finance ministry to sort out the taxation issues.

Buzzing Stocks

- The Competition Commission of India (CCI) has fined 11 Indian cement companies a total of '63bn in a price collusion investigation, the government said in a statement on Thursday. UltraTech Cement , part of the diversified Aditya Birla Group, Holcim -controlled ACC and Ambuja Cement , India Cements and the Indian unit of France's Lafarge SA are among the companies penalised.

- A year after the first labour strife at Maruti Suzuki India Limited (MSIL)'s Manesar facility, the car maker is set to face prosecution proceedings by the Haryana government's labour department for not adhering to the agreement signed with workers at the unit.

- Tata Motors decided to keep the post of Managing Director vacant after incumbent Prakash M Telang retired after being at the helm for three years. Instead, India's largest vehicle manufacturer appointed two Executive Directors -- Ravi Pisharody, the current president of the commercial vehicle business unit (CVBU) and Satish Borwankar, Senior Vice-President (Manufacturing Operations -Commercial Vehicles Business Unit).

- Mastek's US subsidiary MajescoMastek said it had signed a multi-year licence, implementation and maintenance engagement for its STG Billing solution with a Fortune-100 insurance and financial services company. The initial value of the contract is $30mn (around ?170Cr). As a part of this contract, Mastek will modernise the company's enterprise billing and payments platform across all the lines of insurance and financial products.

US markets

US stocks tumbled, as prices for key commodities fell sharply, after signals of a global slowdown in manufacturing added to disappointing housing and labour market data.