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

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Views on markets today

·      Indian markets shot up 623 points post Budget, the biggest single day gain in 21 months and closed positive on Tuesday on positive global cues after stabilization in crude oil prices after the Libya concerns. Higher auto sales and strong growth in manufacturing in February 2011 also helped the markets score strong gains a day after the Union Budget, which, laid stress on infrastructure and agriculture sectors to spur growth and tame food inflation. All sectoral indices closed positive with interest rate sensitive auto, banks, real estate and capital goods led the rally. Hotel Leelaventure rose 9% after the company plans to raise about `9.5bn by developing residential projects while TVS Motor gained 11% as its total sales in February rose 24% over last year to 177,412 units.

·      Market breadth was strong at ~2.81x as investors bought large cap stocks. Both FIIs and domestic institutions bought equities worth `4.18bn and `95.64Cr, respectively.

·      Asian markets rose today following their US counterparts. Japanese markets are higher with some export-focused firms rising after a private U.S. report overnight showing rising employment there.

·      We expect a positive opening for the Indian markets as the Asian markets are positive. However, uncertain cues from the Middle East countries and increasing crude oil prices may restrict the rally.

Key events today

·      Announcement of food and fuel price inflation data

Economic and Corporate Developments

·      As per Montek Singh Ahluwalia, the Budget's target to slash the fiscal deficit to 4.6% of GDP is achievable even if oil averages US$100 a barrel for the year.

·      Core infrastructure industry sector grows at 7.1% in January.

·      Taking into account the change in excise duty in 2011-12 Budget, cement players have increased prices by ` 4-6 per 50kg bag in the western region.