India Morning Note - Keynote Capitals (November-10-'10)

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Views on markets today

·      Indian markets ended volatile session in the positive note yesterday due to late buying activities emerged in heavyweights tracking firm European markets and US index despite SBI posting its biggest single-day loss in nine months a day after the bank’s quarterly earnings missed forecasts. European markets edged up with several companies rising after upbeat statements and a supportive macroeconomic backdrop helping sentiment. All sectoral indices, except oil & gas and PSU, ended positive with FMCG, real estate IT stocks were major gainers. Power Grid jumped 5.5% as Citigroup upgraded the stock to buy from hold while Macquarie upgraded the stock to neutral from underperform.

·      Market breadth was strong at ~1.39x as investors bought large cap stocks. FIIs bought equities worth `4.74bn while domestic institutions sold equities of `5.28bn.

·      The Asian markets are trading mix this morning. The Nikkei hits 4-months high buoyed by financial shares after a report that most major Asian banks will be exempt from planned new global regulations, while exporters rose on a weaker yen. However, the Hang Seng is trading lower.

·      The Indian markets are expected to open on a negative note tracking weak global markets, as worries over the pace of Wall Street weakness. Auto stocks will be in focus due to good results of Tata Motors. Markets will remain volatile ahead of weekly inflation data which is to be released tomorrow and manufacturing data on 12^th Nov.

Economic and Corporate Developments

·      The Railways is planning to spend around Rs2bn for the development of infrastructure in and around Mangalore.

·      The government said it has sought US$3bn assistance from the World Bank for converting 3,770 km of single lane national highways into double lanes.

Buzzing Stocks

·       Thermax Ltd has made its first overseas acquisition with the buy-out of Danish boiler manufacturing company Danstoker A.S. and its German subsidiary Omnical Kessel for €29.5mn.

·       Power Grid Corporation of India has decided to wind up its consultancy JV, with IL&FS, due to lack of orders.

·       The Foreign Investment Promotion Board is understood to have given its nod to foreign investment proposals of GMR Airports (US$200mn), and Jet Airways (US$400mn), among others last week.

·       NMDC has shortlisted Danish engineering company FLSmidth to set up an iron ore crushing plant with a capacity of 1,800 tonnes per hour in Karnataka’s Bellary district.

·       Cairn India, the operator of the offshore Ravva field in east India, plans to spend Rs650mn to drill additional wells.

·       Kingfisher Airlines has received preliminary approval from lenders for a debt restructuring plan to cut interest costs.

·       Tata Global Beverages is planning to raise US$200mn from private equity investors by selling a stake in its UK arm.