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Indian stock market daily morning report (September 05, 2012, Wednesday)

Contributed by Keynote Capitals

Views on markets today

- Indian markets recouped early losses to end higher yesterday, snapping a two-day fall, led by a recovery in blue-chip shares while bank shares such gained on hopes of government capital infusion. Market sentiment also got a boost after a panel appointed by the government to review the proposed General Anti Avoidance Rules (GAAR) recommended in a report submitted to the government on 1 September 2012 that the government should abolish the tax on gains arising from transfer of listed securities, applicable to both residents as well as non-residents.

- Banking shares led the gains after RBI Governor D. Subbarao said the government needs to infuse 900 billion rupees into state-run banks to maintain majority shareholding under Basel III regulations. Goldman Sachs also upgraded Indian banks to "neutral" from "cautious" citing favorable risk/reward in public sector bank stock prices, as the gap between state-owned and private banks widens to a 10-year high. Oil marketers rose on reports that government may raise diesel prices by Rs.4-5 per litre, after the monsoon parliament session ends on Sept. 7 as oil firmsRs. revenue loss has soared to almost half the retail price. Tech Mahindra Ltd rose 1.31%, after it has bought Hutchison Whampoa LtdRs.s back-office call center business in the country for $87.1mn.

- Market breadth was positive at ~1.28x as investors bought large cap stocks. On provisional basis, FIIs bought equity of Rs.3.04bn while domestic institutions sold equity of Rs.1.06bn in cash segment.

- Asian markets declined sharply, after softening commodity prices and fall in US markets overnight.

- We expect Indian markets to open gap down, following the rising concerns in the global economies and fall in the Asian markets today.

Economic and Corporate Developments

- SBI Chairman Pratip Chaudhuri expects 100 basis points cash reserve ratio (CRR) cut by the RBI in its September 17 policy meet.

- The oil ministry is preparing a Cabinet note on fuel price hike. An increase in petrol, diesel, domestic cooking gas (LPG) and kerosene prices looks "imminent" after the Finance Ministry said it has no money to provide for fuel subsidy.

Buzzing Stocks

- STAR India ready to sell 26% Balaji Telefilms stake to promoters.

- IL& FS moves court over the proposed merger of Satyam Computer with Tech Mahindra.

- US based FreightCar calls off JV with Titagarh Wagons.

- Shriram City Union Finance to raise Rs.500Cr via secured NCDs.

- Kavveri Telecom board meets to consider proposal for merger of Kavveri Telecom Infrastructure with self.

- Kelkar panel says to raise LPG prices by Rs.50 and diesel prices by Rs.4.

- CAG says ONGC paid heavily for rig repairs, which it had hired from RIL in 2009.