Market may extend last two days gains on positive global cues; inflation eyed

The key benchmark indices may extend last two days gains on positive Asia after US surged on encouraging economic data. Investors will keenly watch India's wholesale price index (WPI) data in the year to 5 September 2009 to be announced by the government today. The annual rate of inflation fell 0.12% in the year to 29 August 2009.

Reliance Industries may see action on reports a unit of India's largest private sector oil refiner by market capitalisation was selling up to $880 million worth of shares in the company at a discount of about 2.7 % to its Wednesday close. The seller, Petroleum Trust, was offering up to 10 million shares at Rs 2,125 rupees, with an option to sell an additional 10 million shares that would take total proceeds to about $880 million

The sentiment will remain upbeat as preliminary data showing a strong growth in advance tax payment by India Inc raised expectations of decent-to-strong Q2 September 2009 results. Higher advance tax payment by some of the top firms in the second installment of 15 September 2009 means their profits may rise in Q2 September 2009 over Q2 September 2008. As per reports, State Bank of India, India's biggest commercial bank by branch network, has paid Rs 1838 crore in advance tax in the second installment as against Rs 1500 crore paid in last year. HDFC Bank paid Rs 425 crore advance tax against Rs 315 crore last year. But, ICICI Bank paid lower tax of Rs 501 crore against Rs 575 crore last year.

Larsen & Toubro paid Rs 210 crore as against Rs 150 crore last year. Reliance Industries paid Rs 1157 crore in advance tax against Rs 683 crore paid in last year. But, Tata Steel paid a sharply lower advance tax of Rs 400 crore Rs 1000 crore paid in last year.

Software major TCS has reportedly paid Rs 220 crore as against Rs 81 crore. Tractor major Mahindra & Mahindra paid Rs 112 crore as against Rs 17.5- crore. Tata Motors paid advance tax of Rs 130 crore in the second installment, much higher than Rs 60 crore last year. Tata Power Company paid Rs 75 crore as against Rs 14 crore in last year.

Meanwhile, the initial public offer (IPO) of the private sector ship builder, Pipavav Shipyard, was fully subscribed within an hour of opening of the issue on Wednesday, 16 September 2009. IPO was subscribed 2.67 times on the first day of subscription on Wednesday. The company also said it has allotted 1.52 crore shares to anchor investors at the top-end of the Rs 55-Rs 60 price band.

Asian stocks hit their highest level in 13 months on Thursday after U.S. economic data raised hopes that the global economic recovery was strengthening. The key benchmark indices in China, Hong Kong, South Korea, Singapore and Taiwan rose by between 0.39% to 1.47%.

Japan's Nikkei rose 1.35% after Bank of Japan held key rate steady at 0.1% as expected.

Confidence in the world economy held at a record high in September after reports suggested the recession is over. The Bloomberg Professional Global Confidence Index rose to 58.54 this month from 58.12 in August. The index exceeded 50 for a second month, which means there were more optimists than pessimists.

The US markets rallied, with the benchmark indices up more than a percent, after industrial production rose for the second straight month and weakness in the dollar boosted commodity and industrial stocks. At the day's close, the Dow gained 108.30 points, or 1.1%, to 9,791.71. The S&P 500 index added 16.13 points, or 1.5%, to 1,068.76, while the Nasdaq Composite Index rose 30.51 points, or 1.5%, to 2,133.15. The S&P is up about 60% from its march 9 low.

Encouraging economic data also helped the US markets stay upbeat. Industrial production rose 0.8% in August, better than expected, and the prior month was revised to a 1% gain double the 0.5% originally reported.

August consumer price index showed a 0.4% increase, which was a tad higher than the expected 0.3% increase core consumer prices for August increased 0.1% in line with forecast.

Back home, the key benchmark indices surged to their highest level in nearly 16-months on Wednesday, 16 September 2009 tracking firm global stocks. The market gained for the second straight day after taking a breather on Monday, 14 September 2009, following gains in the preceding six trading sessions. The BSE 30-share Sensex rose 222.59 points or 1.35% to 16,677.04, its highest closing since 22 May 2008.

As per the provisional figures on NSE, foreign funds bought shares worth Rs 1105.64 crore and domestic funds bought shares worth Rs 143.45 on Wednesday.