India Morning Note - Keynote Capitals (March-1-'11)

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Views on markets today

·      Indian markets ended in the positive territory yesterday after favourable announcements in the Budget like lower fiscal deficit target for the year ending March 2012, a lower-than-expected net borrowing program, a thrust on infrastructure and agricultural sectors, reduction in surcharge on corporate tax, permission for foreign investors to invest in mutual fund schemes and plan to move towards direct transfer of cash subsidy to people living below poverty line. However, the markets gave most of intraday gains as absence of key reforms such as opening up the retail and financial sectors caused some profit booking. Except pharma, all sectoral indices closed positive with FMCG, real estate, capital goods and oil & gas were major gainers.

·      Market breadth was strong at ~1.33x as investors bought large cap stocks. FIIs sold equities worth `39.86Cr while domestic institutions bought equities of `3.17bn.

·      Asian markets are mixed today in spite of strong close from the US markets overnight. The Hang Seng is down after slow growth reported by Chinese industries.

·      We expect a positive opening for the Indian markets today as most of the Asian markets are trading higher and the budget declared yesterday was not disappointing.

Economic and Corporate Developments

·      The Indian economy grew by 8.2% in the third quarter of the current fiscal, up from 7.3% in the corresponding period a year ago

·      Cement makers are likely to hike price of the commodity by around `5 per 50-kg bag to pass on the proposed effective hike in excise duty.

·      The Union budget claimed fiscal deficit at 5.1% of GDP against targeted of 5.5%. while corporate tax surcharge reduced by 2.5% to 5%.

·      The government to levy Minimum Alternate Tax (MAT) of 18.5% on the book profits of Special Economic Zone (SEZ) developers and units.