India Morning Note - Keynote Capitals (December-3-'10)

Visit http://indiaer.blogspot.com/ for complete details �� ��

Views on markets today

·        Indian markets closed positive for fourth consecutive day on yesterday as firm global markets and positive news of food inflation easing keep sentiments firm in the markets. Except auto and capital goods, all setoral indices closed positive with real estate, metal, IT and oil & gas stocks were major gainers. Banks stocks rallied after the Indian cabinet decided to pump an additional `60bn into state-run banks to improve their capital adequacy and to lift the government's stake in them. ONGC gained 1.9% after government’s approval of bonus and stock split.

·        Market breadth was strong at ~1.82x as investors bought large cap stocks. FIIs bought equities worth `3.86bn while domestic institutions sold equities of `2.25bn.

·        Asian markets are up today after a stream of positive US retail and housing data raised hopes for a swift recovery in the world's biggest economy. Asian shares were also supported as the European Central Bank allayed concerns about a growing euro zone crisis with hefty purchases of Portuguese and Irish debt. The ECB said, however, it does not at present plan to increase the size of its liquidity programme.

·        We expect a positive opening for the Indian markets following the cues from the Asian markets. Some relief from the global front as well as the positive developments on the domestic front will help fuel some rally in the markets. Food inflation declined to 18 month low at 8.6% is another positive development post robust GDP growth.

Key events today

·        Closing of IPO of Shipping Corporation of India Ltd. (subscribed 2.32x as of December 2, 5PM)

Economic and Corporate Developments

·        Food inflation eased to 8.6% in the week ended Nov. 20 as against 10.15% in the previous week, while fuel inflation stood at 9.99% in the week ended Nov. 20 compared to 10.57% in the previous week.

·        The government has approved a 10% hike in price of natural gas that state-owned firms like ONGC sell to consumers in non-priority sectors such as steel and petrochemicals.