India Morning Note - Keynote Capitals (February-21-'11)

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Views on markets today

·      Indian markets snapped a five-day winning streak and closed lower on Friday, dragged down by companies involved in a widening telecoms license corruption probe. The BSE Mid-Cap and Small-Cap indices underperformed the main markets. Market sentiments also turned bearish after rumours that the ongoing probe in 2G scam may bring some more high profile names under the CBI scanner. All the sectoral indices ended in the red with realty, auto and oil&gas stocks being worst hit. Reliance Anil Dhirubhai Ambani (ADA) group shares also tumbled. Reliance Comm. ended down 6.8 while sister firms Reliance Infrastructure and Reliance Power lost 5.6% and 7%, respectively.

·      Market breadth was weak at ~0.37x as investors sold large cap stocks. FIIs bought equities worth `2.07bn while domestic institutions sold equities of `1.89bn.

·      Asian shares tumbled today as Mideast unrest, China tightening fears sap investor sentiment. The stock markets declined sharply inspite of positive US markets. Both the Nikkei and the Hang Seng are trading lower today.

·      We expect a weak opening for the Indian markets following the cues from the Asian markets. We may see pressure today as the investors may take profits out after the rally till Thursday. The investors may stay cautious ahead of the Union Budget.

Key events today

·      Opening of the IPO of Sudar Garments Ltd. (price band `72-77 per share), closes February 24.

·      Opening of the IPO of Acropetal Technologies Ltd. (price band `88-90 per share), closes February 24.

Economic and Corporate Developments

·      Finance Minister Pranab Mukherjee is expected to dole out some subsidies to exporters in Budget 2011-12.

·      India’s foreign exchange reserves fellUS$752mn to US$298.6bn during the week ended February 11.

·      Union Budget likely to boost semiconductor fabrication.