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

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Views on markets today

·     Indian markets edged lower yesterday, snapping last two days' gains, as global markets fall on further heightened tension in the Middle East and North Africa, especially in Libya, which pushed oil prices higher yesterday. Negative news from overseas including surprisingly weak trade data from China and Moody's downgrade of Spain also hit investor sentiment. While the food inflation has come down below double digit but investors are awaiting January Index of Industrial Production data for further direction. Except real estate, all sectoral indices closed negative with metal, banks, IT and consumer durables were major losers. Banking stocks fell as high crude oil prices stoked inflation and monetary tightening concerns while metal stocks declined on worries high global crude oil prices may derail global economic recovery.

·     Market breadth was weak at ~0.82x as investors sold large cap stocks. FIIs sold equities worth `97.19Cr while domestic institutions bought equities of `1.09bn.

·     Asian markets were lowered on Friday as signs of growing political instability in the Middle East and North Africa fueled fears of a spike in oil prices that would undermine global economic growth. Reports that Saudi Arabian police fired rubber bullets to disperse about 200 Shiite protesters in the eastern town of Qatif heightened risk aversion, after sentiment had already taken a hit by a downgrade of Spain's government debt and a surprise trade deficit in China. Both the Nikkei and the Hang Seng are sharply down today.

·     We expect Indian markets to trade in weak territory on account of rising political instability in the Middle East countries and weak global markets. Besides that expectation of weak IIP data may resist market to go up.

Key events today

·     Listing of IPO of Sudar Garments Ltd. (NSE: SUDAR, BSE code: 533332), issue price: `77 per share.

·     Listing of IPO of Fineotex Chemical Ltd. (BSE code: 533333), issue price: `72 per share.

·     Closing of IPO of Acropetal Technologies Ltd. (subscribed 1.28x as of March 10, 5PM)

Economic and Corporate Developments

·     Food inflation dips to 9.5% for the week ended February 26.