13 January 2011

India Morning Note - Keynote Capitals (January-13-'11)

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Views on markets today
·      Indian markets snapped 6-day losing streak and closed on positive note yesterday ahead of quarterly results of Infosys, shrugging off slower than expected growth in industrial output on firm global markets. Disappointed industrial output data dragged the markets down but the markets recovered in the second half of trade, helped by positive global cues. Finance Minister’ statement that the government is looking to take corrective measures to improve industrial output and he expects the industrial output numbers to improve in the next four months also help to boost the investor sentiments. Except capital goods, all sectoral indices closed positives with consumer durables, real estate, metal and banks stocks were major gainers.
·      Market breadth was strong at ~1.74x as investors bought large cap stocks. FIIs sold equities worth `3.71bn while domestic institutions bought equities of `3.59bn.
·      Asian markets are higher today following the US markets overnight. Both the Nikkei and the Hang Seng are up as risk appetite improved after Portugal's successful debt auction Wednesday, with stocks with exposure to Europe, such as heavyweight HSBC Holdings PLC and fashion retailer Esprit Holdings Ltd., among the leaders.
·      We expect investors to remain cautious. Deteriorating pricing scenario and slowing production growth may act as spoil sport. Below expected results of Infosys that announced today may also pull down the markets. We expect the investors to remain cautious in the medium term and eyes will be set on the inflation data and Infosys results today.
Key events today
·      Announcement of food and fuel price inflation data
Economic and Corporate Developments
·      The industrial output growth plunged to an 18-month low of 2.7% in November as against 11.3% in October.

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