Market may extend gain

The market is expected to extend their gains today, a day after a historic Monday when stocks surged more than 17% on hopes a new stable government will be able to push reforms, Strong global cues may further aid the rally.

A clear mandate for the Congress-led United Progressive Alliance (UPA) in Lok Sabha election send stocks surging with trading on the bourses halted for the day at about 11:55 IST on Monday 18 May 2009. For the first time in the history of the stock markets trading was halted because the market-wide circuit were applied due to a solid surge. Earlier, there have been instances when trading was halted when market-wide circuit filters were applied due to a market crash.

The 30-share Sensex jumped 2110.79 points or 17.34% at 14,284.21 and the 50-unit S&P CNX Nifty gained 651.50 points or 17.74% to 4,323.15 on that day.

Trading was halted in just 16 seconds after the market re-opened at 11:55 IST. Earlier in the day, trading was halted within seconds of opening as the market soared following a clear mandate for the UPA in the Lok Sabha election. A clear mandate for the Congress-led United Progressive Alliance (UPA) boosted hopes a strong coalition would be able to push through economic reforms that would boost foreign investment. The 30-share Sensex surged 14.70% or 1,789.88 points to 13,963.30 and the 50-unit S&P CNX Nifty gained 531.65 points or 14.48% to 4203.30, when trading was halted within seconds of opening.

The market soared on 18 May 2009, following a thumping victory of the Congress-led United Progressive Alliance (UPA) government in the Lok Sabha elections. A clear mandate for the UPA boosted hopes a strong coalition would be able to push through economic reforms that would boost foreign investment.

Prime Minister Manmohan Singh's coalition defied predictions of a tight election and was only about 11 seats short of an majority from the 543 seats at stake, according to election commission data. Congress' alliance took 261 seats, sweeping aside its nearest rival, the bloc led by the Hindu-nationalist Bharatiya Janata Party (BJP), which won only 159 combined. Congress, which alone won 205 seats, needs a handful of partners to reach the 272 seats needed to take power, and is expected to seek the support of more smaller parties or independents.

Meanwhile, Manmohan Singh met President Pratibha Patil on Monday and submitted the resignations of his Council of Ministers. Manmohan Singh formally stepped down as the Prime Minister. President Pratibha Patil on Monday dissolved the 14th Lok Sabha with immediate effect and asked the Prime Minister and his Council of Ministers to continue in office till the new government is formed. The President is expected to invite Prime Minister to form the next government today.

Armed with a decisive mandate, Manmohan Singh will meet the President to show the UPA alliance has the numbers, and formally stake claim to form a new government at the Centre.

Financial sector reforms are likely to get a push in the coming days, which were relegated to the back seat due to persistent opposition from the Left parties, with the Congress-led UPA set to form the next government. Left-less victory of the UPA over BJP-led National Democratic Alliance (NDA) would not only signify the formation of a stable government, but also revive hopes of a slew of pro-market policy changes.

Foreign funds bought aggressively in Indian stocks in the recent past. As per the provisional data released by the stock exchanges after trading hours, foreign funds on 18 May 2009 bought shares worth a net Rs 44.64 crore while domestic institutional investors sold shares worth a net Rs 8.41 crore. FII inflow in May 2009 totaled Rs 10,270.60 crore in May 2009 (till 15 May 2009) while their inflow in calendar year 2009 totaled Rs 10,627.20 crore.

Asian stocks rose today as higher confidence among U.S. homebuilders, a surge in oil prices and a drop in bank borrowing costs stoked optimism the global economy is recovering. Key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan rose by between 0.91% to 3.34%.

The US markets closed on Monday, 18 May 2009 at session highs helped by banks and financial services stocks. A rise in US traded stocks from India helped kick the rally off, leading to a nearly 3 % gain as trading wound down. The Dow gained 235.44 points, or 2.9%, to 8,504.08. The S&P 500 index gained 26.83 points, or 3%, to 909.71. The Nasdaq composite index added 52.22 points, or 3.1%, to 1,732.36.A reading showed home builder sentiment rose for the second month in a row and at the highest level since September 2008.