19 November 2010

India Morning Note - Keynote Capitals (November-19-'10)

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Views on markets today
·        Indian markets ended volatile session on a flat note, with a positive bias yesterday on firm global stocks. Global markets rose on expectations that Ireland will soon accept a bailout package from the European Union and International Monetary Fund. Ease in weekly food and fuel inflation also boosts the sentiment. Reliance Communications and developer Unitech dropped sharply roiled by uncertainty stemming from a possible probe into 2G spectrum allocation, that a government audit says was awarded too cheaply. SKS tumbled 20% after the company warned a collections ordinance enacted last month in Andhra Pradesh state, the heart of India's microfinance sector, could hurt profits.

·        Market breadth was weak at ~0.55x as investors sold small and mid cap stocks. FIIs sold equities worth `4.52bn while domestic institutions bought equities of `1.18bn.
·        Asian markets are mixed today as the Nikkei is up today while the Hang Seng is down. Japan's Nikkei average climbed to a fresh five-month high above 10,000, propelled by hedge fund inflows from overseas and getting additional support from a fall in the yen. Hong Kong shares declined early Friday despite strong overnight gains on Wall Street, amid reports that China might raise interest rates as early as Friday to cool inflation.
·        We expect the Indian markets to open cautious amid the political uncertainties and global cues. However, declining inflation is a relief factor, which may provide some support to the markets.
Economic and Corporate Developments
·        The telecom regulator has asked the government to cancel 62 of the 122 licences issued by former telecom minister A Raja under controversial circumstances in 2008 to telecom operators.
·        Government said invitation of bids for a 4,000 MW ultra mega power project in Orissa would be deferred for the fourth time on environment issues.
Buzzing Stocks
·        National Aluminium Company (Nalco), JSW Steel and Jaiprakash Industries have evinced interest in setting up an alumina refinery and aluminium smelter in Kutch.
·        Water treatment player VA Tech Wabag Ltd said it has signed a contract with Indian Oil Corporation Ltd (IOCL) to set up an effluent treatment plant (ETP) at a cost of Rs2.5bn.
·        Private equity firm IL&FS Investment Managers (IIML) today acquired Saffron Asset Advisors Private Ltd (SAAPL) for an undisclosed amount.
·        Shipping Corp to launch share sale on Nov 30
·        State-owned Shipping Corporation of India said it would launch on November 30 a share sale that could raise up to $320 million.
·        Patni Computer Systems has secured a five year contract with UK IT services provider , 2e2.
·        Sun Pharma received approval from USFDA for its abbreviated new drug application to market a generic version of Schering Plough's Clarinex tablets.
·        Oil and Natural Gas Corporation (ONGC) will invest Rs 5 bn on research and development in the areas of non-conventional energy sources, a top official said.
·        Bharat Electronics Limited (BEL) expects to secure contract for the first phase of the coastal surveillance system for Rs 7-8 bn from the Coast Guard by next month, a top company official said.
·        S Kumars Nationwide Ltd (SKNL) will be taking its Reid & Taylor apparel range to the American market next year.
·        Bharti Airtel to launch 3G services by Dec end
·        Lakshmi Energy and Foods Limited (LEF) has plans to hive off its energy business by floating a wholly owned subsidiary company to unlock the value of its green power business.

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