India Morning Note - Keynote Capitals (March-24-'11)

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Views on markets today

·      Indian markets continued winning streak for the second consecutive day and closed positive yesterday led by sustained buying in blue-chips companies like ICICI, Infosys and RIL as investors continued to buy stocks at lower levels in the absence of any major negatives from the Middle East and Japan. Firm global markets also led the markets to close positive. All sectoral indices closed positive with real estate, banks, pharma and metals stocks were major gainers. However, DB Realty, whose former managing director was arrested as part of a broad telecoms corruption investigation, tumbled as much as 10.6% while Tata Communications soared 11.9% after BNP Paribas and HSBC upgraded the stock and raised their price targets on expectations that the sale of the company's surplus land could be expedited.

·      Market breadth was strong at ~1.38x as investors bought large cap stocks. Both FIIs and domestic institutions bought equities worth `3.12bn and `11.11bn, respectively.

·      Asian markets are mixed today in spite of positive close for the US markets overnight. Japanese shares declined after early gains to trade lower in the morning as tech and auto stocks among those leading the decline due to concerns about parts shortages and other issues threatening production following the catastrophic March 11 earthquake. Hong Kong shares rose in the opening trades as metal and energy producers climbed after commodity prices jumped overnight.

·      We expect a positive opening for the Indian markets continuing the yesterday's rally. Rise in commodity prices may create momentum in metals stocks up today. However, the weekly inflation data may fuel some volatility in the markets.

Key events today

·      Listing of IPO of Lovable Lingerie Ltd. (NSE: LOVABLE, BSE code: 533343), issue price: Rs205 per share.

·      Announcement of food and fuel price inflation data

Economic and Corporate Developments

·      The finance ministry has opposed the RBI’s suggestion to restrict foreign direct investment in new banks to 49%, saying the change in norms will hurt investor sentiment.