The Nifty and Sensex indicating a positive start today

The markets may open positive for a third straight day in line with global cues. The SGX Nifty is trading up by 40.5 points at 5050.5 indicating a strong gap up opening.

Overnight U.S. stocks indexes advanced by around 3 per cent, their best one-day performance in over six weeks, as France and Germany pledged to do everything necessary to support Europe’s banks, while investors also looked to the start of third-quarter earnings season. The Asian markets are also seen trading positive on a strong note with exporters and IT firms among the best performers.

Back home, FIIs bought shares worth Rs 211.71 crore yesterday as per provisional figures. This was the second day of FII inflow which has come on the back of a period where they had dumped shares worth a net Rs 2806.19 crore in the first three trading sessions of Oct 2011.

We believe India Inc is likely to post a muted earnings growth in Q2FY12, largely due to fall in rupee value, rising interest costs, high inflationary pressures and a global economic slump.

Now according to unconfirmed govt. sources the Aug IIP growth data which is due on Wednesday is seen close to 4.0 per cent vs. 3.3 per cent in Jul. The streets estimate growth at 4.8 per cent, reason being Aug IIP is seen up on growth in capital goods segment. Capital goods segment contracted 15.2 per cent in Jul. Govt source also added that 81 per cent items in IIP grew over 3 per cent in Aug. Consumer durables growth may see sharp dip in Aug IIP.

Moreover, CRISIL has cut India’s FY12 GDP growth estimate to 7.6 per cent vs. 7.7 – 8 per cent earlier. Inflation target has also been raised to 9.1 per cent vs. 8 - 8.5 per cent earlier.

In conclusion, we expect the markets to remain positive for the day and shall update our readers periodically on the market movements.

Corporate News

SBI is likely to raise Rs 5,000 crore through a rights issue of shares by December, a move expected to shore up the bank’s Tier-I capital to above eight per cent for the current financial year. The government is likely to subscribe its share fully in cash. It is expected to pump in around Rs 3,000 crore. The move comes within a week after rating agency Moody's Investors Service cut SBI's stand-alone rating, citing concern over capital and rapid deterioration in asset quality. The bank had earlier requested for a rights issue of Rs 20,000 crore, for which the government has to infuse Rs 12,000 crore to maintain its shareholding.

The labour unrest across Suzuki Motor Corporation’s subsidiaries in India have taken a turn for the worst, with Maruti Suzuki India Limited (MSIL) on Monday saying the company had to cut production at its facility in Gurgaon. The Gurgaon unit produced 1,800 vehicles because of the disruption in supply of components from vendor Suzuki Powertrain India Limited (SPIL) instead of the 2,800 vehicles it rolls out every day.

State-owned BHEL has bagged over Rs 4,000 crore contracts for setting up a 1200 MW thermal power plant in Andhra Pradesh from Singareni Collieries Company. BHEL will set up 2x600 MW unit for SCCL's upcoming super thermal power project at Adilabad. BHEL had also bagged a Rs 3,800 crore order from Dainik Bhaskar Power Ltd last week, for setting up a 1,320-MW thermal power plant in Madhya Prade

Sintex Industries announced it September quarter results yesterday. Despite posting a robust 25 per cent growth in its top-line on YoY basis, its bottom-line fell by 61 per cent due to exceptional loss suffered on FCCB’s. The respective top-line and bottom-line came in at Rs 1153.6 crore (Rs 920.6 crore) and Rs 38.8 crore (Rs 100.1 crore). However the adjusted PAT (indicating PAT from operations excluding exceptional items) came in at Rs 98.41 indicating a 24 per cent rise against last year’s adjusted PAT of Rs 79.83. This exceptional loss in FCCB’s on account of depreciating rupee due to rising global recessionary concerns indicates that other companies with high exposure to foreign loans may also report such numbers.

2G scam hit-Unitech is set to drag its JV partner Telenor to Company Law Board (CLB). The company has cited the oppressive and malaise actions of Telenor and its executives, especially regarding the decision of the Uninor board to raise Rs 9000 crore through a rights issue as the main reason for such legal action. This will affect their relation and the business of Uninor, where Telenor has a majority stake of 67.25 per cent while Unitech owns the rest.

UB Holdings Ltd (UBHL), the Vijay Mallya-owned holding company, which holds the three main group companies — United Breweries, United Spirits and Kingfisher Airlines — is set to raise its borrowing powers by another Rs 1,000 crore and take the limit up to Rs 3,500 crore which is already hovering at 1.5 times. As par of the debt raising plan the company has pledged nearly 86 per cent of its shares in Group Company Mangalore Chemicals and Fertilizers (MCFL). In a filing to the BSE, MCFL has said that its promoter UB Holdings has pledged 9 million shares. At current market price, these shares are worth nearly Rs 29 crore.

Provogue India promoter, Nikhil Chatturvedi, has pledged 24 lakh shares of the company in a filing to the BSE. With this transaction, Chatturvedi has pledged his entire stake of 9.27 per cent in the firm.

Economy News

As per the draft New Telecom Policy unveiled by the government today, telecom users across the country will be able to avail free roaming facilities and keep their phone numbers even if they switch service providers. The policy aims at a 'one-nation-one-license' regime and intends to abolish the distinction between local and STD calls. In what would seem as a respite amidst the 2G scam, telecom operators would also not require separate licences for operations in various parts of the country and a single license would suffice.

The Indian automobile industry today significantly lowered the passenger car sales growth forecast for FY12 to 2-4 per cent due to lower output at Maruti Suzuki because of labour issues, and higher lending rates. The SIAM had earlier revised the sales forecast for FY 2012 downwards for the passenger cars at 10-12 per cent in July against 16-18 per cent announced at the beginning of the fiscal.

The government has cleared 11 proposals, entailing total FDI of Rs 182.78 crore, including that from 9X Media to increase foreign equity participation to up to 100%. The Foreign Investment Promotion Board (FIPB), however, deferred decisions on nine proposals, including those of Vodafone Essar and Mauritius-based Ventureast Life Fund III LLC, and rejected six applications.

India will continue to allow FDI without any limits (100 per cent) under the automatic route for greenfield investments in the pharma sector. This will facilitate the addition of manufacturing capacities, technology acquisition and development, a press note from the commerce & industry ministry said.

Corporate Actions