India Morning Note - Keynote Capitals (February-3-'11)

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Views on markets today

·      Indian markets snapped five days losing streak and closed with modest gains yesterday tracking a surge in global markets on strong data indicating sustained global economic recovery and easing concerns about Egypt. However, the markets lost most of the early gains late trade after reports that the CBI has arrested former telecom minister A Raja over an alleged telecom scam. Selling pressure in power, capital goods, consumer durables and banking stocks erode the early gains however buying in real estate, oil & gas, IT and metal stocks helped the markets to managed positive closing. Bharti Airtel rallied as much as 3.6% on the company’s improved earnings outlook. Improved prospects in Africa and the launch of 3G services in India have brightened the outlook for Bharti Airtel.

·      Market breadth was strong at ~1.03x as investors bought large cap stocks. FIIs sold equities worth `81.73bn while domestic institutions bought equities of `6.8bn.

·      Most of the Asian markets except Japan are mostly closed today. Japanese Nikkei slipped today after a flat opening. Trading was subdued due to the closure of most regional markets, while investors were also cautious after turmoil in Egypt took center stage again amid violent clashes between pro- and antigovernment demonstrators on Wednesday. Crowds, not satisfied with President Hosni Mubarak's pledge to step down from power after his term expires this fall, called for his nearly 30-year reign to end immediately.

·      We expect the Indian markets to open flat with negative biased as the investors may wait for strong cues from the global markets. Inflation data which will be announced today in the late-morning session may create some volatility in the markets.

Key events today

·      Announcement of food and fuel price inflation data

Economic and Corporate Developments

·      The government is likely to extend interest subvention for some export-oriented sectors for another year to sustain the current growth in exports.

·      Textiles industry is likely to triple to $220bn by 2020.