India Morning Note - Keynote Capitals (March-29-'11)

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Views on markets today

·      Indian markets ended higher for fifth consecutive day to their highest close in two months on brisk buying in blue-chips companies led by banking stocks as drop in crude oil prices eased inflationary concerns. Foreign institutional investors had stepped up buying of Indian stocks late last week also boosted sentiment. US crude futures were down 0.53% to $104.84 a barrel after Libyan rebels regained control of the towns of Brega and Ras Lanuf where strategic oil facilities are located. The upward movement was mainly led by gain in auto, capital goods, auto, banks and FMCG stocks while pharma, real estate and metals stocks witnessed some selling pressure. Bharti Airtel jumped 2.6% after JPMorgan upgraded the leading mobile operator to ‘overweight’ from ‘neutral’ and raised its target price to `410 while Marico firmed 2.7% after privately held food producer Cargill has signed a pact with the company to acquire its refined sunflower oil brand Sweekar.

·      Market breadth was however weak at ~0.72x as investors sold small and mid cap stocks. FIIs bought equities worth `8.9bn while domestic institutions sold equities of `2.86bn.

·      Asian markets declined today due to profit taking and the renewed nuclear issues. The Nikkei declined more than 1% hurt by setbacks in efforts to bring Japan's stricken nuclear complex under control.  Hong Kong shares opened with losses Tuesday led by HSBC Holdings and some property developers.

·      We expect a weak opening for the Indian markets following the Asian cues. We may see some action in the telecom stocks as the public accounts committee (PAC) has issued summons to top leaders of the telecom companies. PAC has asked Niira Radia and Ratan Tata to appear before it on April 4. Anil Ambani of Reliance, Vinod Goenka of Swan Telecom, Sanjay Chandra of Unitech and Siva Sankaran of Singapore Tel have been asked to appear before it on April 5.

Economic and Corporate Developments

·      The Telecom Ministry will take a final decision on 2Gspectrum pricing and on those holding airwaves beyond contracted limit of 6.2Mhz, based on recommendations of TRAI, within next three months.