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Indian stock market daily morning report (September 04, 2012, Tuesday)

Contributed by Keynote Capitals

Views on markets today

- Indian markets declined to lowest closing levels in a month as investors were concerned by the latest data showing growth in manufacturing sector easing to a nine-month low in August 2012 while investors discounted deferment of proposed anti-tax avoidance rules, choosing to concentrate on macroeconomic woes like the fiscal and trade deficits. IndiaRs.s fiscal deficit during the April-July period rose to Rs.2.64 ($47.5bn) or 51.5% of the full fiscal year 2012/13. Export data also showed that annual exports fell 14.8% to $22.4bn in July, leaving a trade deficit of $15.5bn, the trade ministry said in a statement. The market was more worried on much-awaited reform measures as the political gridlock continued to weigh at a time of rising risk of a sovereign credit ratings downgrade. Morgan Stanley also cut IndiaRs.s economic growth forecast to 5.1% for the 2012/13 fiscal year, citing weak external demand, low private investment and poor government finances. However, European stock markets rose on Monday after weak Chinese manufacturing data spurred hopes of additional monetary easing measures in the country.

- Banking shares continued Friday's slide, after a stronger-than-expected GDP dashed hopes for rate cuts. August auto sales witnessed a broad-based slowdown, with none of the reported companies throwing a positive surprise.

- Market breadth was flat at ~1.02x as investors bought large cap stocks. On provisional basis, both Fils and domestic institutions sold equities worth Rs.0.55bn and Rs.1.61bn, respectively in cash segment.

- Asian stocks dropped after investors awaited important events this week, including a European Central Bank meeting on Thursday, while a weak U.S. non-farm payroll report on Friday could signal another round of asset purchases by the Federal Reserve.

- We expect a weak opening for the Indian markets following the cues from the Asian markets and rising global political instability after Iran's warnings to Israel took toll on the crude oil prices.

Economic and Corporate Developments

- MoodyRs.s Investors Service has changed to negative from stable its outlook on the Aaa long-term issuer rating of the European Union (EU).

Buzzing Stocks

- Tech Mahindra set to buyout Indian BPO arm of hutch for $100mn.

- Piramal Healthcare looking to acquire contract research and manufacturing business of Ind-Swift facilities for Rs.1000Cr.

- United Spirits close to 49% stake sale in Whyte & Mackay.

- Sun group enters race to acquire Deccan Chargers (part of Deccan Chronicle (DCHL)).

- Blue Dart promoters express to cut stake in Indian arm (means company not looking for delisting, stock was down 3% yesterday); current promoter holding 81%.

- Power Grid approved Rs. 1935Cr investment in South region grid.

- Jain Irrigation board meets today to consider raising of around $200mn.

- Ashok LeylandRs.s total sales for the month of August 2012 was up 30% at 9,432 units YoY.