(June-23-'11) India Morning Note - Keynote Capitals

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Views on markets today

·      Indian markets ended sluggish session on a flat note yesterday as investors chose to stay away on concerns of macro-economic issues like below normal rainfall, high inflation and interest rates. Foreign fund outflows as rising borrowing costs and stubborn inflation chipped away investor confidence, leading to a bleak near-term outlook. Weak European shares, ahead of a US Federal Reserve policy meeting, also weighed market sentiments. Investors are waiting for some trigger, in the form of global event or government policies to get some direction on either side. The downward movement was mainly led by selling pressure in consumer durables, real estate, FMCG and metal stocks while oil & gas, capital goods and banks stocks witnessed some buying activities which gave some support to the markets. Sun Pharmaceutical rose 1.4% after its unit received approval from the US FDA to market a generic version of sumatriptan succinate injection that is used in the treatment of migraine. Four Soft rose 6.5% after the company signed a deal with Mexico-based Logistics Dynamic Corp to implement freight management solution. Timbor Home makes its debut in strong note and closed at `91.20, a premium of 44.76% over issue price of `63 a share with huge volume.

·      Market breadth was however weak at ~0.57x as investors sold large cap stocks. FIIs sold equities worth `2.87bn while domestic institutions bought equities of `1.57bn.

·      Concerns over the US economy dampened the investor’s sentiments over progress for Europe’s debt problems, pressuring Asian markets today. Both the Nikkei and the Hang Seng are down.

·      Asian markets indicate a weak opening for the Indian markets. Today's announcement of weekly inflation data may further push volatility in the markets.

Key events today

·      Closing of IPO of Birla Pacific Medspa Ltd. (subscribed 0.70x as of June 22, 5PM) and Rushil Decor Ltd. (subscribed 0.86x as of June 22, 5PM).

Economic and Corporate Developments

·      India’s engineering exports registered growth of 119.4% to $7.9bn in May (yoy), driven mainly by an increase in demand from US and Europe markets.