India Morning Note - Keynote Capitals (June-13-'11)

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Views on markets today

·      Indian markets ended on weak note for third consecutive session on Friday as April IIP data and weak cues from global markets dampened sentiments. India's IIP growth for the month of April was at 6.3% versus 13.1% for the same month last year. The finance minister termed the April IIP figures as 'disturbing' and indicated that one should wait for longer term IIP growth to see the underlying trend in industrial growth. Political worries following reports the DMK may opt to withdraw ministers from the Cabinet after a high-level party meeting in Chennai also led the markets to close lower. All the sectoral indices ended in the negative terrain with capital goods, FMCG, real estate and metals stocks leading the decline. Banks stocks also led the losses on concerns slowing industrial growth could lead to a decline in demand for loans. Glenmark Pharma gained 0.9% after it said Glenmark generics received final approval from the U.S. health regulator to market Mupirocin ointment for topical treatment of skin infection.

·      Market breadth was weak at ~0.73x as investors sold large cap stocks. FIIs sold equities worth `1.70bn while domestic institutions bought equities of `5.02bn.

·      Asian markets declined sharply today following the weak cues from the US markets. Japanese shares got off to a weak start today, pressured by a persistently strong yen and disappointing economic data. Japan reported a poor core machinery orders data. The Hang Seng was down on account of weak property shares.

·      We expect a negative opening for the Indian markets as the investors are keeping themselves away from the risky assets such as equities on account of weak global economic scenario. Besides that domestic factors such as weakening manufacturing growth and consistently high levels of inflation may create pressure on the stocks.

Economic and Corporate Developments

·      IIP growth at 6.3% in April 2011 against 13.1% in April 2010; RBI urged tore-look tight money policy as industry output dips.