India Morning Note - Keynote Capitals (March-9-'11)

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Views on markets today

·      Indian markets bounced back sharply and closed on positive note yesterday on buying by funds in fundamentally strong stocks amid easing political worries and falling crude oil prices from a 29-month high. Political worries eased after the DMK put on hold the resignation of its six ministers from the Congress-led UPA government at the Centre. All sectoral indices closed positive with IT, metals, banks and real estate stocks were major gainers. Hero Honda fell 3.8% after Hero Investments said it had agreed to buy Honda Motors's 26% stake in the company at `739.97 per share, a discount of more than 50% to its Monday's close. Tech Mahindra and Mahindra Satyam rallied 9.3% and 3.8% respectively, after the Mahindra group said it is partnering with US telecom equipment maker Cisco Systems to provide a range of services, including cloud computing.

·      Market breadth was strong at ~1.68x as investors bought large cap stocks. FIIs bought equities worth `2.37bn while domestic institutions sold equities of `1.41bn.

·      Asian markets rallied today following the US markets overnight. Japanese stocks rose in early Wednesday trading, after a fall in the yen's value against the dollar helped exporter stocks gain. Hong Kong shares get a lift from Chinese lenders, after a report the central bank has reversed a previous increase in some reserve requirements.

·      We expect a positive start for the Indian markets today as cues from the Asian markets are strong. Markets may also take cues from Oil, which edged back from 29-month highs amid reports that more countries will step in to boost production and that Gadhafi may consider stepping down.

Economic and Corporate Developments

·      The government proposed to formulate a national consumer policy to ensure that goods, services and technology are made available to consumers at affordable prices.

·      Old GSM operators criticized the TRAI recommendations on pricing of extra spectrum in a meeting with Communications and IT Minister Kapil Sibal.