India Morning Note - Keynote Capitals (March-28-'11)

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Views on markets today

·      Indian markets extended its gains for the fourth day on Friday to close at a 2-month high in line with strong global markets, as funds bought blue-chips led by software companies on overall positive indicators. Increased buying by foreign funds and short-coverings by operators ahead of expiry of derivatives contract on March 31 also kept the sentiment strong. All sectoral indices closed positive with IT, banks, real estate and capital goods were major gainers. Software companies jumped after strong quarterly results and forecasts from global technology majors Oracle Corp and Accenture, indicated a positive business environment for Indian IT companies. TCS gained 2.3% as it has received a contract to provide banking software technology solution to Shanghai Rural Commercial Bank. Aban Offshore rose 2.9% rupees after BNP Paribas raised the stock to ‘buy’ from ‘reduce’ and raised the price target to `689.

·      Market breadth was strong at ~1.44x as investors bought large cap stocks. FIIs bought equities worth `14.46bn while domestic institutions sold equities of `3.13bn.

·      Asian markets are down on account of profit taking from the investors and in spite of the bullish US markets on Friday. Both the Nikkei and the Hang Seng declined after a positive start.

·      We expect a flat but negative biased opening for the Indian markets on account of the weak global cues. We may see profit taking from the investors after a recent rally today.

Economic and Corporate Developments

·      Cement has become costlier by about Rs10 a bag in most markets across the country in the last 20 days.

·      Union ministry for surface transport plans to put 100 highway projects up for bidding in the next fiscal, which will connect 11,000km and require an investment of over `1tn.

·      Government will raise over 60% of its targeted market borrowings of `4.2tn for the coming fiscal between April and September.