Opening Bell 5 October

Opening Bell 5 October

Mumbai: The SBI downgrade has come as a shocker to the domestic markets. The downgrade has not only upset the government but is also ringing alarm bells in other industries. Moderating demand and pressure on profitability is expected to intensify the pace of downgrades in the Indian corporate sector. Read more...

Cues from the global markets are mixed. Moody’s slashed Italy’s credit rating by three notches citing ‘material increase’ in funding risks. The agency also warned that that Italy could ‘transition to substantially lower rating levels’ because liquidity support is uncertain.

The downgrade has led to a weak opening in Asian stock markets. But unlike in previous downgrades there is no sell-off in equities this time. The reaction is a bit subdued. The Nikkei at 8,431 is down only 0.30%.

Even though the European debt issue is a big overhang, overnight, stock markets in the US rallied on speculation that the region’s officials are looking at ways to re-capitalise banks in the region. The S&P 500 at 1,123 rose 2.25% on buying in stocks of financial services companies.

Back home, bankers have warned the Reserve Bank that more rate hikes would further hurt the repayment capabilities of the borrowers. At the pre-policy meeting, bankers asked the central bank to keep interest rates steady. They also asked the RBI to let them restructure accounts for second time.

Expect some recovery in the State Bank of India stock. The government has reportedly decided to infuse the much required capital into the State Bank of India. According to reports, the government is likely to provide a 8,000 crore lifeline to the state owned bank.

ONGC is planning to increase its crude oil output by 15% in two years. The newly appointed Chairman and MD of ONGC, Sudhir Vasudeva, also said that his focus would be on exploration.

Keep an eye on the Ashok Leyland stock. The company reported a 17.24% drop in commercial vehicle sales at 8,576 units in September. The company had sold 10,362 units in the same month last year.

To ensure that its management bandwidth and resources are not stretched too thin, NTPC is planning a restructuring exercise. The company is looking to review its numerous joint ventures and subsidiaries.

Theatre chain operator PVR Cinemas is planning to invest around 580 crore to set up six entertainment centres and add 350 screens over the next three years. For screen expansion, the company has lined up an investment of 300 crore. Currently PVR Cinemas has 154 screens.

The department of telecommunications may oppose Tata Communications’ plan to set up subsidiaries in Malaysia and New Zealand. A draft letter written by DoT says that Tata Communications’ fund position is not healthy because of high interest costs. The government holds a 26% stake in the former state-owned company.

The founder and former managing director of Everonn Education, P Kishore, was granted conditional bail by the Madras high court. Everonn shares rose 2% to 379 on the BSE yesterday. Kishore was arrested for allegedly bribing a tax officer.

Finally, the new iPhone has failed to ‘wow’ investors and fans. CEO Tim Cook did his first major product, but failed to ignite the sort of excitement and buzz that Apple co-founder Steve Jobs once did. Read more...