India Morning Note - Keynote Capitals (March-8-'11)

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Views on markets today

·      Indian markets gives up post budget gains and closed on negative note yesterday on the back of political instability and rising crude oil prices. Investors booked profit on the concern of ongoing spat on seat sharing between the Congress and its regional ally DMK. US crude rose to a 30-month high above $106 on Monday as civil war brewed in Libya, Rate sensitive sectors contributing the most to the losses as firm oil prices kept the focus on inflation concerns and more monetary tightening. All sectoral indices closed negative with major losers were auto, capital goods, real estate and banks. DB Realty tumbled as much as 3.75% after the board accepted the resignation of Managing Director Shahid Balwa, who has been embroiled in a widening corruption investigation that has battered the government. OnMobile climbed 4.8% on the report of bonus issue.

·      Market breadth was weak at ~0.46x as investors sold large cap stocks. FIIs sold equities worth `92.24Cr while domestic institutions bought equities of `45.57Cr.

·      Asian markets are higher today after a small decline in crude prices. Japanese shares were higher led by Hitachi Ltd, which sold a disk-drive unit to California-based Western Digital for about $4.3bn. The Hong Kong shares posted modest gains, with property developers and coal miners in the lead as sentiment improves on a small decline in crude.

·      We expect a positive opening for the Indian markets as the Asian markets are positive. However, the uncertain global and domestic cues may resist markets at higher levels.

Key events today

·      Opening of the IPO of Lovable Lingerie Ltd. (price band `195-205 per share), closes March 11.

Economic and Corporate Developments

·      The government is likely to roll back the budget proposal to levy a service tax on healthcare services after it evoked strong reaction from general public and industry.

·      According to CMIE, India's agriculture output is expected to increase by 3.8% in 2011-12 on assumption of favourable weather conditions.