Flat-to-positive opening likely on mixed global cues

The market is likely to see a flat-to-positive opening amid mixed global markets. Asian markets were trading lower today after US markets ended on a mixed note on Monday, 8 March 2010. The S&P CNX Nifty futures for March 2010 expiry were up 11.50 points in Singapore.

Meanwhile, Prime Minister Manmohan Singh will meet Samajwadi Party (SP) leader Mulayam Singh Yadav, Rashtriya Janata Dal (RJD) chief Lalu Prasad and Janata Dal-United leader Sharad Yadav on Tuesday morning over the Women's Reservation Bill, which was blocked in the Rajya Sabha on Monday. The bill seeks to reserve a third of the seats in parliament and state legislatures for women. The members of RJD and SP were leading the opposition against the bill and were successful in blocking it in the Rajya Sabha on Monday.

Shares of Tata Motors will be in spotlight on reports German carmaker Daimler is selling its 5.34% stake in the company through block deal on Tuesday to raise up to Rs 2,000 crore. Daimler was offering 2.56 crore shares in Tata Motors between Rs 737.40 and Rs 761.30 each, a discount of 4 to 7% below the stock's closing price on Monday of Rs 796.75.

NMDC may hog limelight after the Empowered Group of Ministers (EGoM) on Monday pegged the price band for the follow-on public offer (FPO) of National Mineral Development Corporation (NMDC) at Rs 300-350 a share. The government will offload 8.38% stake in NMDC through the FPO which remains open for bidding between 10 and 12 March 2010.

Asian stocks declined Tuesday as commodity companies edged lower. The key benchmark indices in Hong Kong, South Korea, Singapore, Taiwan, Indonesia, China and Japan were down by between 0.07% to 0.55%.

US markets ended slightly lower on Monday, 8 March 2010. American International Group Inc inked a deal to sell its unit American Life Insurance Company, better known as Alico, to MetLife Inc for about $15.5 billion. The Dow Jones Industrial Average shed 11.79 points, or 0.11%, to 10,554.41. The Standard & Poor's 500 Index dipped 0.14 point, or 0.01%, to 1,138.56. But, the Nasdaq Composite Index gained 5.39 points, or 0.23%, to 2,331.74.

Back home, selling pressure in second half of the day's trade curtailed strong initial gains on the domestic bourses on Monday, 8 March 2010 triggered by strong global cues. The BSE 30-share Sensex rose 108.11 points or 0.64% to 17,102.60 and the S&P CNX Nifty rose 35.30 points or 0.69% to 5124.

As per provisional figures on NSE, foreign funds bought shares worth Rs 1132.01 crore and domestic funds sold shares worth Rs 568.63 crore on Monday, 8 March 2010.

Rajan Bharti Mittal, the newly elected president of industry body FICCI said on Monday there's no room for hardening of interest rates and the Reserve Bank of India should maintain status quo on the rates to allow the industry to make fresh investments. He added that fresh investment announcement have begun across sectors and further increase in interest rates will only hamper economic growth.

The government has estimated Rs 40000 crore from disinvestment for FY 2010-11. In the Union Budget on 26 February 2010 the government said it would raise Rs 25,958 crore through disinvestment in the fiscal to March 2010.

The government will announce the industrial output data for the month of January 2010 on Friday, 12 March 2010. Industrial output grew 16.8% in December 2009.

Meanwhile, the fourth and the last installment of advance tax by India Inc due on 15 March 2010 will give a broad indication of fourth quarter earnings.

Going ahead, the key triggers for the stock market are structural reforms such as decontrol of petrol and diesel prices, targeting of food subsidies, and financial sector reforms such as increase in foreign direct investment in insurance sector.

The government said on Friday it will seek parliamentary approval to spend an extra Rs 31780 crore for the fiscal year to end-March 2010, which it plans to fund through savings.

There is no risk that the government will borrow more than planned to fund supplementary spending, Revenue Secretary Sunil Mitra said on Friday. Of the additional spending, Rs 12000 crore would be spent on oil subsidy, Rs 8000 crore on fertiliser subsidy and Rs 2459 crore on food subsidy, among others.

Prime Minister Manmohan Singh said on Friday the economy would grow by at least 8% in the year through March 2011. Asia's third largest economy would expand 7.2-7.5% in 2009-10, he told parliament. Singh said prospects for the winter-sown crop are 'very encouraging'. He also said the government must pay good prices to farmers to ensure higher farm production. The prime minister said the government will take all practical measures to bring down food prices.

He said the government will continue commitment to pubic and private investment in agriculture. The prime minster said there is need to find ways and means to stabilise the sugar economy.

A good harvest is likely to bring down food inflation, which accelerated to nearly 18% in late February. The government, facing mounting criticism for rising food prices, is struggling to meet conflicting aims of controlling food inflation and trying to please farmers by paying them attractive prices.

Meanwhile, the recent hike hike in petrol and diesel prices will further increase headline inflation. Higher inflation will put further pressure on interest rates which in turn may impact corporate and consumer confidence. However, Prime Minister Manmohan Singh had recently tried to allay fears of fuel price hike stoking inflation. He said the direct effect on the Wholesale Price Index (WPI) will be no more than 0.4%.

Food prices will be keenly watched in coming weeks for the second and third round impacts of the fuel price rise. Market men see a 25 basis points hike in the repo and reverse repo rates each by the RBI at the April 2010 policy review.

Meanwhile, Congress president Sonia Gandhi has reportedly signaled her support for a move to raise taxes on fuel in last year's Budget. The Congress president has reportedly praised finance minister Pranab Mukherjee for a well-balanced budget and said growth is the engine of the Budget

Prime Minister Manmohan Singh had earlier ruled out rolling back a price hike in fuel prices despite pressure from his main allies, saying populist policies would hurt the economy in the long-term. Petrol prices rose about 6% and diesel prices by 7.75% after the government increased factory-gate taxes and import duties on the fuels as part of last week's 2010-11 union budget 2010-11, which stressed fiscal prudence to cut a wide deficit

The government has set its gross market borrowing target for 2010/11 at a record Rs 4.57 lakh crore, up by 1.3% percent from the previous year, sending bond yields into a tizzy and sparking fresh worries on liquidity.

Finance minister Pranab Mukherjee's budgetary proposals last week offered a progressive cut in fiscal deficit over the next three fiscal years, changed personal tax rates lifting disposable incomes in the hand of individuals and reduced surcharge on corporate tax for domestic companies to 7.5% from 10%.

The Finance Minister in his budget speech on Friday, 26 February 2010 said the government aims to introduce the Goods and Services Tax (GST) and implement the direct tax code from 1 April 2011.

The fiscal deficit is pegged at 5.5% of GDP for 2010-2011, lower than an estimated 6.8% for the current fiscal year. The finance minister said the government also aimed to reduce the deficit further to 4.8% of GDP in the year starting 1 April 2011, and to 4.1% in the year from 1 April 2012. He said there is a need to review stimulus and move towards fiscal consolidation and review public spending.

A thrust on the infrastructure sector augurs well from a long-term growth perspective. The Finance Minister has provided Rs 1.73 lakh crore for infrastructure development in 2010-2011, which accounts for over 46% of the total plan expenditure for the year.

The stock market has applauded the Union Budget 2010-2011 due to its thrust on infrastructure development, government's pledge to reduce fiscal deficit over the next three years, a smaller-than-expected 2% hike in excise duties, and reduction in taxes for individuals which will boost disposable income. The Finance Minister has assumed a modest GDP of about 8% and inflation of about 4.5% for 2010-2011.

Finance Minister Pranab Mukherjee on Wednesday, 3 March 2010 said India's economic recovery is still being driven by public spending and is not yet broad-based, further clouding the debate on the timing of rate hikes by the central bank.