20 May; Views on markets today:Keynote

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Views on markets today

·      Indian markets snapped a three-day losing streak to close as positive note yesterday tracking firm global markets and decline in food inflation for the week ended May 7 fuelled the uptrend. Sustained buying in index heavyweight like L&T, Reliance Ind. and Infosys also led the market to close positive. The upward movement was mainly led by gain in capital goods, oil & gas, IT and auto stocks while real estate, metal, power and pharma stocks witnessed some selling pressure. Beaten down auto stocks pulled back and the sector index closed 0.2% above. Larsen & Toubro led the gains adding 5.8% after the engineering and construction conglomerate beat market estimates with a 17% rise in quarterly profit and forecast revenue to grow a quarter in FY12. Reliance Ind. gained 1.5% after UBS upgraded the stock to buy from neutral, citing attractive valuations compared to Asian peers. Lakshmi Vilas Bank rose 5.5% after the bank reported a profit of `273.8mn in the quarter ended March from a loss in the year-ago quarter.

·      Market breadth was however weak at ~0.64x as investors continued selling large cap stocks. FIIs sold equities worth `37.41Cr while domestic institutions bought equities of `1.32bn.

·      Asian markets are mostly up today after yesterday's rally in the US markets. Japanese shares are up in the choppy trade as technology stocks benefitted on weaker yen. The Hang Seng is trading flat in volatile session.

·      We expect a positive opening for the Indian markets today as the cues from the global markets are positive. The markets showed some strength after fall in the inflation yesterday. However, we believe the rally seem unsustainable as the recent fuel price hike yet to show impact.

Economic and Corporate Developments

·      Continuing on its downward trajectory, food inflation slipped further to 7.47% for the week ended May 7 as against 7.70% in the previous week on the back of cheaper pulses, vegetables and wheat price.