Market may remain volatile; Hindalco Industries eyed

The market may remain volatile over the next three days as traders roll over positions in the derivative segment from November 2009 series to December 2009 series ahead of the expiry of the near-month November 2009 contracts on Thursday, 26 November 2009. As regards global cues, Asian markets were trading mixed today after a strong rally in US stocks on Monday, 23 November 2009

A weak dollar may support the market. A weak dollar has boosted world stocks recently as traders borrow against the low-yielding greenback to reinvest elsewhere in what's known as the carry trade. The dollar has tumbled this year on speculation the US Federal Reserve will keep interest rates low for a prolonged period of time to aid recovery in the US economy.

Closer home, the Parliament was in uproar on Monday over a leaked government report blaming Bharatiya Janata Party (BJP) leaders for their role in the destruction of an ancient mosque that sparked widespread riots. Congress government has so far faced a concerted opposition in a parliament session that began last week and was supposed to debate issues such as rising food prices and policy moves on deregulating commodity prices.

The adjournments have further delayed government plans to debate reforms like increasing foreign investment in the insurance and pension sectors.

Prime Minister Manmohan Singh said on Monday completing a 2005 US-India nuclear cooperation deal would boost investment opportunities in India, a hopeful sign for US companies eyeing India's potential $150 billion market in power plants.

Singh, speaking to US business leaders on the eve of talks with US President Barack Obama, said India's ambitious infrastructure build-up would propel growth amid a global slowdown. Singh said he and Obama would sign a set of agreements on energy security, clean energy and climate change to deepen cooperation in an economic relationship that has grown rapidly since India began opening its economy 15 years ago

Meanwhile, the Reserve Bank of India (RBI) could reportedly allow systemically strong Indian banks to increase their exposure to capital market above the current ceiling, allowing them to lend more to stock market-related activities and finance the overseas acquisition plans of Indian companies.

Reliance Industries will be in action on reports the Securities and Exchange Board of India (Sebi) has asked Reliance Industries (RIL) why the company should not be barred from accessing the stock markets under rules governing fraudulent and unfair trade practices. The amendment (dated 8 October 2009) to the original show cause notice issued in April 2009 by the regulator's investigation department further asks why directions should not be issued to bar the company from buying, selling and dealing in any security, directly or indirectly. The notice was issued in the matter relating to alleged insider trading in the shares of the now-defunct Reliance Petroleum, which had since merged with RIL.

Hindalco Industries, may see action as the company on Monday initiated the process of raising up to Rs 2900 crore by selling shares to institutional investors in order to part-finance three greenfield projects. The floor price of the share sale has been fixed at Rs 130.90 per share.

Asian stocks were trading mixed on Tuesday. The key benchmark indices in China, Singapore, Indonesia and Taiwan rose by between 0.16% to 0.42%. The key benchmark indices in South Korea, Hong Kong and Japan fell by between 0.12% to 0.72%.

US stocks rose on Monday as stronger-than-expected home sales data fueled optimism about the economic recovery while a weaker dollar boosted commodity-linked stocks. The Dow gained 132.79 points, or 1.3%, to 10,450.95 - its highest level since October 2008. The S&P 500 index added 14.86 points, or 1.4%, to 1,106.24, while the Nasdaq Composite Index rose 29.97 points, or 1.4%, to 2,176.01.

A report showed existing home sales shot up 10.1% in October 2009 to the highest level in 2 and half years. This was well above the 2.3% rise economists had expected and came after a 9.2% jump in September 2009.

Back home, volatility ruled the roost on Monday as the key benchmark indices pared gains after striking one-month highs in mid-afternoon trade. The BSE 30-share Sensex rose 158.33 points or 0.93% to 17180.18, its highest since 20 October 2009 on that day.

As per provisional figures on NSE, foreign funds sold shares worth Rs 168.41 crore and domestic funds bought shares worth Rs 132.34 crore on Monday.