India Morning Note - Keynote Capitals (November-15-'10)

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Views on markets today

·        Indian markets tumbled in late trade on Friday, extending its two-day losses as concerns over Ireland's debt crisis and sell-off in Chinese markets over  concerns that China may tighten credit to contain inflation which hit a 25-month high in October, sparked a worldwide sell-off. Domestic economic data of industrial output rising lower than forecast in the month of September also dampened sentiment. Industrial output in September 2010 rose lowest in 15-month at a much slower-than-expected 4.4% from 8.2% a year ago. All sectoral indices ended negative with real estate, consumer durable, metal and banks stocks were major loser.

·        Market breadth was weak at ~0.33x as investors sold large cap stocks. FIIs sold equities worth `7.82bn while domestic institutions bought equities of `2.45bn.

·        Asian markets are mixed today as the Japan's Nikkei average rose with moderate gains as a softer yen encouraged investors to buy on dips following the market's tumble in the previous session and the Hang Seng sharply declined after a positive opening.

·        We may see a cautious opening for the Indian markets as the cues from the global markets are not clear. However, the markets may remain negative biased on account of Greece, Ireland economic troubles and China's anticipated policy tightening.

Economic and Corporate Developments

·        As per Commerce and Industry Minister, robust growth of over 27% in exports during the first six months of FY11 has fuelled hopes that India may cross the trade target of $200bn for the entire fiscal.

Buzzing Stocks

·        To expand its operations in Southeast Asia, SBI is on a look out for acquisition of a bank in Indonesia in cash deal not exceeding $100mn (about `450Cr).

·        Novelis Inc., the Canadian subsidiary of Hindalco Industries, plans to increase its flat-rolled aluminium capacity in Brazil by 20% to 2.5 lakh tonnes by 2014 on the back of strong demand in the Asian region.

·        Elder Health Care has forayed into the baby-care segment by inking an in-licensing pact with Germany's Mann & Schroder for the latter's Sanosan baby-care products.

·        Adani Power said the power generation capacity of its Mundra power plant will increase to about 2,000 MW by December with the commissioning of two new units over the next two months.

·        Reliance Power, RNRL swap ratio fixed at 1:4.

·        IDFC plans to raise $425mn through external commercial borrowings (ECB) in Q4FY11.

·        The government has cleared Reliance Power's plans for mining coal from its captive mines earmarked for firing up the 4,000 mw Tilaiya ultra-mega power project in Jharkhand, the third such plant being constructed after Sasan and Krishnapatnam plants by the Anil Ambani Group company.

·        Flag Telecom, a part of its international network arm Reliance Communication, may raise at least $500mn by selling bonds to European investors according to news sources.