India Morning Note - Keynote Capitals (June-20-'11)

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Views on markets today

·      Indian markets ended in the negative territory on Friday, extending losses for third consecutive session as concerns slow-down in economic growth due to further rate hike by the RBI and deteriorating debt crisis in Greece hurt sentiments. Sustained selling by foreign funds over the past few days also hit sentiment. The downward movement was mainly led by selling pressure in IT, oil & gas, pharma and auto stocks while consumer durables, banks and power stocks witnessed some buying activities which gave some support to the markets. Export-oriented software firms were the top losers on concerns that a global economic slowdown would hit their revenue. Telecom service providers rose on hopes that operators could be considering a tariff hike following Tata DoCoMo's decision to raise headline pre-paid tariffs in Tamil Nadu circle. Maruti Suzuki initially rallied 3.3% after a 13-day strike ended, but soon faltered and closed down 2.4% as the workers agitation at a plant in northern India had caused a production loss of more than $90mn.

·      Market breadth was weak at ~0.49x as investors sold large cap stocks. Both the FIIs and domestic institutions sold equities worth `3.91bn and `35.37Cr respectively.

·      Asian markets opened week upbeat, with the latest news from Europe sparking hope of a resolution to Greek fiscal problems there. However, the concerns regarding slowing US economy restricted the gains. Both the Nikkei and the Hang Seng are up today.

·      We expect a firm opening for the Indian markets today as the morning cues from the Asian markets are encouraging. However, investor’s confidence towards the long term investing will come with improved domestic economic data.

Key events today

·      Opening of the IPO of Birla Pacific Medspa Ltd. (price band `10-11 per share), closes June 23.

·      Opening of the IPO of Rushil Decor Ltd. (price band `63-72 per share), closes June 23.

Economic and Corporate Developments

·      Advance tax payments by Indian industry have risen 76.8% during the fiscal first quarter, picking up momentum from the preceding quarters.