Market likely to extend Wednesday's rally

The market is likely to extend Wednesday's (23 December 2009) solid surge on firm Asian stocks. The S&P CNX Nifty futures for December 2009 expiry were trading 2.5 points lower in Singapore. The government will today unveil data on some wholesale price indices for the year through 12 December 2009 viz. the food price index, the primary articles index and the fuel price index

However, trading volumes are likely to take a hit today, 24 December 2009, as the market remains closed for four days in a row from Friday, 25 December 2009 to Monday, 28 December 2009. The market remains closed on Friday on account of Christmas. It remains closed on Monday, 28 December 2009 on account of Moharram.

The government will wait until the February 2010 budget to consider withdrawing some of the fiscal stimulus measures, Finance Minister said on Wednesday. Mukherjee said inflation and fiscal consolidation are major challenges in short to medium term. Growth outlook for the second half of FY 2010 looks better, he added. The finance minister said farm output must grow 4% for the economy to expand 9-10% annually. He said industrial production has started picking up. The finance minister said the economy can grow 7.75% in the fiscal year that ends in March 2010 (FY 2010).

The finance minister said sustaining higher growth remains a priority for the government. The government is open to making changes in the draft direct tax code, Mukherjee said. The draft code has proposed various reform measures, including cutting in corporate tax rate to 25% and streamlining tax laws.

Meanwhile, the latest data showed that corporate advance tax payments for the October-December 2009 quarter shot up sharply, suggesting a higher profit growth in corporate sector in the third quarter (October-December) of the current fiscal. Corporate advance tax payments for the quarter were up 44% to Rs 48,300 crore against a 3.7% decline in April-June quarter and a 14.7% increase in July-September quarter. The company-wise break-up of advance tax collection suggests a broad-based recovery with automobiles, cement, metals and consumer goods, doing well.

Asian stocks were trading slightly higher today, 24 December 2009 on rise in commodity prices. Key benchmark indices in Hong Kong, South Korea, China, and Taiwan, were up by between 0.95% to 1.87%.

Wall street ended higher on Wednesday after a dull start with weaker dollar helping stocks stage a late comeback. The Dow Jones Industrial Average rose 1.51 points, or 0.01%, to 10,466.44. The Standard & Poor's 500 index rose 2.57 points, or 0.2%, to 1,120.59, while the Nasdaq Composite Index added 16.97 points, or 0.8%, to 2,269.64.

In key economic data, new home sales tumbled 11.3% in November 2009, raising the specter that previous positive signs in the industry were the result of government stimulus and not sustainable.

Back home, key benchmark indices spurted on Wednesday after Finance Minister Pranab Mukherjee said that the economy can grow 7.75% in the fiscal year that ends in March 2010 (FY 2010). Higher advance tax payment by India Inc and firm global stocks, also underpinned sentiment. The BSE Sensex jumped 539.11 points or 3.23% to 17231.11, its highest closing since 17 October 2009. The S&P CNX Nifty rose 158.75 points or 3.18% to 5,144.60, its highest closing since 8 December 2009.

As per provisional data on NSE, foreign funds bought shares worth Rs 769.53 crore and domestic funds bought shares worth Rs 13.02 crore on Wednesday, 24 December 2009.