India Morning Note - Keynote Capitals (April-4-'11)

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Views on markets today

·      Indian shares rose for a second week in a row, signalling the overall sentiment was turning bullish, but closed 0.1% lower on Friday as investors booked profits after an eight-day rally. Reliance Industries and financials led the decline, while auto stocks were positive. Auto index gained 0.7% on account of a rise in the monthly vehicle sales. The Sensex slipped 0.13% or 24.83 points to 19,420.39, with 14 components declining.

·      Midcap and small cap stocks reported a smart rally as the investors shifted their focus from the large cap stocks. This resulted into a strong market breadth of 3.2x. FIIs were net buyers and bought shares worth Rs4.15bn while domestic institutions sold equities of Rs4.13bn.

·      Asian markets are strong today following the cues from the US markets on Friday. Exporter stocks led the rally in the Japanese Nikkei while property developers lifted the Hang Seng up.

·      We expect positive opening for the Indian markets today as the Asian markets have shown strength. Bullish sentiments ahead of the quarterly earnings among the FIIs may help the markets to continue the rally. However, weak global scenario and the unreasonably high levels of inflation are the major concerns.

Economic and Corporate Developments

·      Credit rating agency Fitch today downgraded Indian economy's growth projection to 8.3% for 2011-12 on account of high inflationary pressures that has forced the Reserve Bank to hike key rates.

·      Coal Ministry plans to invite bids for 58 coal blocks with over 18,600 million tonnes of reserves in six months

·      India's exports grew by 50% inFebruary, crossing the US$200bn mark during the first eleven months of 2010-11

·      India's exports hiked jet fuel prices by1.4%, the 12th increase in rates in a row since October last year.