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Views on markets today
· Indian markets suffered a severe setback and closed negative on Friday led by a sell-off across sectors and fund pull-out by foreign institutional investors. Inflation worries due to spike up in commodity prices in international markets, domestic political issues and a likely hike in key rates by the RBI in its forthcoming policy meet triggered the sell-off in the markets. All the sectoral indices closed negative with metal, auto, consumer durable and IT stocks were major loser. Metal stocks lost their sheen tracking lower global prices with Hindalco lost ~7% and Tata Steel shed ~3.4%.
· Market breadth was weak at ~0.27x as investors sold large cap stocks. Both FIIs and domestic institutions sold equities worth `10.4bn and `11.15bn, respectively.
· Asian shares are lower today after a positive opening. The Hang Seng declined from its early gains as many larger exporters stocks declined ahead of the trade data. Japanese stock market was closed today.
· We expect a weak opening for the Indian markets following the negative cues from the Asian markets and deteriorating inflation scenario. We expect investors to remain cautious until the inflation situation improves in India.
Key events today
· Opening of the IPO of Midvalley Entertainment Ltd. (price band `64-70 per share), closes January 12.
Economic and Corporate Developments
· India’s exports reached US$22.5bn up36.4% in December from last year, highest in last 33 months.
· India’s imports topped US$25.1bnnarrowing the trade deficit to US$2.6bn in December.
· Communications minister says there was zero loss to the government as a result of giving 2Glicences to new players in 2008, contradicting a report from the CAG, which had pegged the loss at Rs1.8tn
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