India Morning Note - Keynote Capitals (March-15-'11)

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Views on markets today

·      Indian markets rebounded on yesterday after falling in the two previous sessions on sustained buying activity in index heavy-weight stocks following easing crude oil prices and concerns of unrest in Saudi Arabia eased after the police managed to prevent pro-democracy protests. Oil prices slipped below $99 per barrel on lowered demand due to earthquake and tsunami in Japan. All sectoral indices closed positive with oil & gas, metals, IT and banks stocks were major gainers. State-run oil marketing companies, rallied on the back of lower world crude prices while bank stocks rose as crude oil prices retreated, easing inflation and monetary tightening concerns. Reliance Capital jumped 9.7% after Japan's Nippon Life Insurance Co is buying a 26% stake in the firm's unit Reliance Life Insurance for $680mn. Vishal Retail gained 20% after it has completed the sale of its wholesale and retail businesses to private-equity firm TPG and Shriram Group, respectively.

·      Market breadth was strong at ~1.15x as investors bought large cap stocks. Both FIIs and domestic institutions bought equities worth `4.14bn and `7.65Cr, respectively.

·      Asian stocks sharply lowered today as the threat of a major radiation disaster rose in Japan. The Nikkei dropped more than 6% for 2nd consecutive day extending post-quake losses. The Hang Seng is also sharply lower today.

·      We expect Indian markets to open weak today reacting to negative Asian markets. We expect a gap down opening for the Indian markets. We advise investors to take a cautious view.