India Morning Note - Keynote Capitals (February-10-'11)

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Views on markets today

·      Indian markets fell for the second straight day and closed to 7-month low yesterday amid the volatile session as the CBI widened its probe in 2G spectrum scam with the arrest of Mr. Shahid Balwa, managing director of DB Realty and vice chairman of Etisalat DB. ADAG companies' shares were completely butchered as there were reports that audit firm accused Reliance Communications books. Reliance Communications, Reliance Power, Reliance Infrastructure, Reliance Capital and Reliance Mediaworks plunged between 10-19%. All sectoral indices closed negative with power, metal, real estate and consumer durables stocks were major loser. Metal stocks fell as London copper declined almost 1% after China has raised interest rates.

·      Market breadth was weak at ~0.22x as investors sold large cap stocks. FIIs sold equities worth `6.09bn while domestic institutions bought equities of `1.15bn.

·      Asian markets are lower today as the technology stocks dragged Japanese shares and energy, banks and real-estate stocks pulled down the Hong Kong shares.

·      We expect a weak opening for the Indian markets tracking global cues. The markets may remain cautious ahead of the inflation announcement today and IIP data in next few days. Increasing worries regarding 2G scam may also keep investors away from the markets.

Key events today

·      Listing of IPO of Omkar Speciality Chemicals Ltd. (NSE: OMKARCHEM, BSE code: 533317), issue price: Rs98 per share.

·      Announcement of food and fuel price inflation data

Economic and Corporate Developments

·      TRAI recommends Telecom companies to pay `16000Cr for extra spectrum held beyond 6.2MGz.

·      The government allows exports of 3 varieties of non-basmati rice.