India Morning Note - Keynote Capitals (June-8-'11)

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Views on markets today

·      Indian markets shrugged off a sluggish start and climbed for a second day to attain their highest closing levels in nearly one week on yesterday and closed positive as gains in European shares and US index futures underpinned sentiment. Gain in index heavyweights Reliance Industries (RIL) and Infosys Technologies also led the markets to recover and closed positive. A revival in buying by FIIs this month spurred demand for stocks that had fallen recently, but worries about the outlook remain with more rate increases in the offing to stem high inflation. Except capital goods and FMCG, all sectoral indices closed positive with real estate, oil & gas, IT and pharma stocks were major gainers. Auto stocks were mixed ahead of a meeting of a government panel to decide on raising prices of diesel and cooking gas. Metal stocks also gained as a gauge of six metals traded on the London Metal Exchange gained ~0.41% on Monday. Karnataka Bank surged nearly 6% on market talk that the private-sector lender planned to sell stake, however the bank's managing director and chief executive, Jayarama Bhat, denied the rumour. ARSS Infrastructure Projects ended 2.3% higher after it won `2.07bn road construction orders from Madhya Pradesh Road Development Corporation.

·      Market breadth was strong at ~1.22x as investors bought large cap stocks. Both the FIIs and domestic institutions bought equities worth `1.12bn and `31.29Cr respectively.

·      Asian markets are weak today due to selling pressure.

·      We expect a weak opening for the Indian markets following the cues from the Asian markets.

Economic and Corporate Developments

·      The much-awaited meeting of the Empowered Group of Ministers (EGoM) on fuel prices is which was to take place on June 9 has been cancelled.

·      The telecom regulator TRAI has requested the Supreme Court for three months extension for completing formulation of the new Interconnection Usage Charge (IUC) regime.

·      The government has cleared 16 foreign direct investment (FDI) proposals amounting to Rs923.55Cr.