India Morning Note - Keynote Capitals (December-1-'10)

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Views on markets today

·        Indian markets ended on a higher note for second consecutive days as sentiments turned bullish India’s Gross Domestic Product for second quarter grew at 8.9 per cent against 8.8% during the previous quarter. The growth was supported by 4.4 per cent growth in Agri output against 2.8 per cent. Earlier, markets had opened in the red in line with other Asian peers. Concerns that China may raise interest rates and fears of economic crisis in Europe after Ireland bail-out dampened sentiments. However, the GDP data provided much needed support and triggered the upmove. Except oil & gas, all sectoral indices closed positive with real estate, consumer durable, power and FMCG stocks were major gainers.

·        Market breadth was storng at ~2.14x as investors bought large cap stocks. FIIs bought equities worth `8.89bn while domestic institutions sold equities of `4.35bn.

·        Asian markets are weak though showed some recovery at the bottom. The recovery came after some gains in the Chinese stocks today.

·        We expect flat opening for the Indian markets as the investors will maintain caution ahead of the developments in the Chinese economy. However, strong GDP growth of 8.9% revived the hopes that the Indian economy will back to 9% levels. We expect the markets may face another round of interest rates hike to pull down the inflation.

Key events today

·        Closing of IPO of MOIL Ltd. (subscribed 29.1x as of November 30, 5PM)

Economic and Corporate Developments

·        Indian economy grew 8.9% in the second quarter of the current fiscal.

·        India's core sector output grew 7.0% yoy in October.

·        India's agriculture and allied sector grew by 3.8% yoy during H1 FY11 on the back of better Kharif crop output.