Market seen extending three-day gains; telecom stocks may see action

The market is likely to extend three-day gains on follow-up buying as equities play a catch up with the global cues as they open after an extended weekend. The S&P CNX Nifty futures for December 2009 expiry were trading 13 points higher in Singapore.

Trading resumes today after a four-day break. The market remained closed on Monday, 28 December 2009 on account of Moharram and 25 December 2009 for Christmas holiday.

Trading volumes are likely to take a hit in the last week of the calendar year 2009 as most foreign fund managers will be on year-end vacation. The market is closed on Friday, 1 January 2010 for New Year holiday.

Volatility may zoom as traders roll positions in the derivative segment from December 2009 series to January 2010 series ahead of the expiry of the near-month December 2009 contracts on Thursday, 31 December 2009.

Telecom stocks may hog limelight on reports the much-awaited auction of spectrum for third generation (3G) mobile services would be delayed by over a month and is likely to start by the end of February 2010.

Meanwhile India and Japan signed two important agreements on Monday for implementing the ambitious Rs 3.6 lakh crore Delhi-Mumbai Industrial Corridor (DMIC) project which seeks to create integrated investment regions and industrial areas across six states.

The agreements include collaborating in the development of eco cities that are environmentally and ecologically sustainable along the corridor and setting up of a project development fund to undertake activities like master planning & feasibility studies, preparing project reports and obtaining approvals and bid process management for projects.

India's infrastructure sector grew an annual 5.3% in November 2009, Trade Minister Anand Sharma said on Thursday. Infrastructure sector output grew 3.5% in October 2009 from a year earlier. The sector accounts for 26.7% of the country's industrial output.

Food price index rose 18.65% in the 12 months to 12 December 2009, data released by the government on 24 December 2009, showed. The primary article index jumped 14.66% and the fuel price index rose 3.95%. The worst monsoon in nearly four decades and flooding in some parts of the country have pushed up food prices.

Finance Minister Pranab Mukherjee said on Wednesday that containing inflation and cutting fiscal deficit are the major challenges for the government in the short-to-medium term. Mukherjee added that the government is open to altering the proposed draft direct tax code further informing that sustaining high economic growth remains a priority for the government. The Indian economy can grow at 7.75% in the fiscal year ending March 2010, the Finance Minister said. He also told an industry conference in New Delhi that agriculture output must grow 4% for the economy to expand 9-10% annually.

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.

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 lower today, 29 December 2009 on profit booking after a recent rise. Key benchmark indices in Hong Kong, Japan, South Korea, China, and Taiwan were down by between 0.06% to 0.74%. However Singapore's Straits Times index rose 0.08%.

US markets rose on Monday, 28 December 2009, after sales figures showed shoppers spent more freely this holiday season, a sign that consumers are feeling better about the economy.

The Dow Jones Industrial Average added 26.98 points, or 0.3%, to 10,547.08. The Standard & Poor's 500 Index rose 1.30 points, or 0.1%, to 1,127.78, and the Nasdaq Composite Index added 5.39 points, or 0.2%, to 2,291.08.

Back home, key benchmark indices extended gains for the third straight day on Thursday, 24 December 2009, on buying in index pivotals. The BSE 30-share Sensex was up 129.50 points or 0.75% to 17,360.61, its highest closing since 16 May 2008. The S&P CNX Nifty was up 33.80 points or 0.66 % to 5,178.40, its highest closing since 5 May 2008.

As per provisional data on NSE, foreign funds bought shares worth Rs 706.83 crore and domestic funds sold shares worth Rs 111.11 crore on Thursday, 24 December 2009.