India Morning Note - Keynote Capitals (March-22-'11)

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Views on markets today

·      Indian market ended a lackluster session on flat note amid a tight range yesterday on concerns of spike in inflation and further interest rate hike as crude oil prices surged higher following attack on Libya by the US and allies. However, global markets gained on signs of stabilization at the Fukushima Daichi nuclear power in quake-hit Japan. Oil prices rose by more than 1% as a United Nations mandated wave of air strikes on Libya and proliferating unrest in the Middle East fanned concerns about oil supply from the region. Real estate, IT, consumer durables and capital goods stocks led the decline while pharma, banking and FMCG IT stocks provided some support to the markets. Jindal Steel and Power gained ~2% as RBS initiated coverage on the stock with a "buy" rating and a price target of `820.

·      Market breadth was weak at ~0.69x as investors sold large cap stocks. FIIs sold equities worth `97.02Cr while domestic institutions bought equities of `47.98Cr.

·      Asian markets are strong today as the rally in the US markets overnight helped boost sentiments. Japanese shares ended Tuesday morning trading sharply higher due to a weaker yen and improved sentiment over prospects for Japan's recovery, even as the nuclear crisis remained unresolved. The Hang Seng reported a moderately positive start today.

·      We expect a positive opening for the Indian markets taking cues from the Asian markets. However, rising crude prices remain a major worry for the sustainance of the higher levels for the markets.

Key events today

·      Opening of the IPO of Shilpi Cable Technologies Ltd. (price band `65-69 per share), closes March 25.

Economic and Corporate Developments

·      India is likely to allow 0.2mn tons of sugar exports under unrestricted sales, less than 0.5mn tons permitted earlier.

·      Indian Media & Entertainment (M&E) industry is expected to grow at a CAGR of 14% to touch Rs1,275bn (US$28bn) by 2015, as per FICCI-KPMG report.

·      The final guidelines on the new banking licences would be released only after the necessary amendments to the Banking Regulation Act and Banking Laws Act are cleared by Parliament.