India Morning Note - Keynote Capitals (March-23-'11)

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Views on markets today

·      Indian markets snapped a three-day fall and closed positive yesterday supported by a rebound in Japan, fall in crude oil prices and gains in other global markets. The government's move to table the banking sector amendment bill and the Constitution Amendment Bill to facilitate implementation of Goods and Services Tax (GST), a major indirect tax reform, also aided recovery. All sectoral indices closed positive with real estate, auto, pharma and consumer durables were major gainers. Sugar shares rose on reports that the government is likely to allow 2lakh tonnes of sugar exports, under unrestricted sales. Auto and realty shares gained after SBI's chairman reportedly ruled out any hike by the bank in short term interest rates. Ballarpur Industries rose more than 5% after its unit BILT Paper Plc said it plans to raise $330mn from a London listing.

·      Market breadth was strong at ~1.20x as investors bought large cap stocks. Both FIIs and domestic institutions bought equities worth `2.36bn and `96.04Cr, respectively.

·      Following the cues from the US markets overnight, the Asian markets are weak today. The Nikkei is sharply lower in the morning trade, surrendering a portion of Tuesday's large gains, with the aftermath of the March 11 earthquake still weighing on some shares. The Hang Seng was dragged by China Coal Energy Co. and China Life Insurance Co. on disappointing 2010 results.

·      We expect a weak opening for the Indian markets as the Asian cues are not encouraging. With Japan's government set to give its quake-damage estimate, we expect the investors to remain cautious. Besides that rising oil prices remain a major worry.

Economic and Corporate Developments

·      India's Finance Minister Mr. Pranab Mukherjee introduced the key Goods and Services Tax (GST) bill in parliament.

·      Finance Minister rolled back 5% service tax on hospitals & also halved the custom duty to 30% on completely knocked down automobile units.