Market seen opening range-bound on mixed global cues

The market is likely to open sideways in absence of concrete direction from global markets. Most Asian stocks were trading lower on Wednesday while US markets had ended slightly higher on Tuesday. The S&P CNX Nifty futures for March 2010 expiry were up 7 points in Singapore.

State-run miner NMDC's follow-on offering (FPO) will open today, 10 March 2010 and will close on Friday, 12 March 2010. The price band has been fixed between Rs 300 and 350. The offer represents 8.38% of the outstanding equity share capital of the company with a reservation of 17.43 lakh shares for eligible employees.

Texmo Pipes and Products will debut on the stock exchanges today.

Most Asian stocks were trading lower on Wednesday, as Australian consumer confidence rose, while shipping lines declined after a measure of cargo transport rates fell for the first time in almost two weeks. The key benchmark indices in Singapore, Hong Kong, South Korea, Japan, Taiwan and China and were down by between 0.08% to 0.32%. However indices in Indonesia and Singapore rose 0.34% and 0.41%.

Japan's machinery orders slipped in January 2010 after the biggest jump since 2000, indicating a subdued appetite among the nation's companies to ramp up capital spending even as manufacturing passed its worst.

Orders, a signal of business investment in three to six months, dropped 3.7% from December, when they climbed 20.1%, the Cabinet Office said today.

A separate report showed Japan remains plagued by deflation. Producer prices fell 1.5% in February 2010 from a year earlier, the 14th consecutive drop, the central bank said.

US equities ended slightly higher on Tuesday as falling commodity prices pressured materials stocks, offsetting gains in the telecom and industrial sectors. The Dow Jones Industrial Average gained 11.86 points, or 0.11%, to 10,564.38. The Standard & Poor's 500 Index edged up 1.95 points, or 0.17%, to 1,140.45 and the Nasdaq Composite index rose 8.47 points, or 0.36%, to 2,340.68.

Back home, as per provisional figures on NSE, foreign funds bought shares worth Rs 2173.09 crore and domestic funds sold shares worth Rs 171.66 crore on Tuesday, 9 March 2010.

Profit taking in second half of the day's trading session pulled key benchmark indices lower on Tuesday, 9 March 2010. The BSE 30-share Sensex fell 50.06 points or 0.29% to 17,052.54 and the S&P CNX Nifty fell 22.50 points or 0.44% to 5101.50.

Meanwhile, the Russian Prime Minister Vladimir Putin heads to India Thursday for a visit aimed at tightening the close arms and energy partnerships that Moscow and New Delhi have enjoyed since the Soviet era.

The highlight of the two-day visit is expected to be the signing of several military agreements, including a deal on a Soviet-era aircraft carrier whose troubled history has raised fears over the future strength of relations. Russia supplies 70% of India's military hardware but New Delhi has in recent years also looked towards other military suppliers including Israel and the United States.

Also India and China on Tuesday decided to formally back the Copenhagen Accord worked out at the climate summit in December last year. While neither India nor China have said that they would ‘associate' with the accord, both countries have agreed to have their names listed in the preamble. The move would come as boost to the accord. With this the four BASIC countries — Brazil, South Africa, Indian and China — which were key players in formulating the accord have agreed to be listed in the chapeau.

On the political front, the Rajya Sabha on Tuesday tabled the historic Women's Reservation Bill that reserves 33% of legislative seats in the Lok Sabha and state assemblies for women to vote. In a dramatic sequence of events after the house reconvened at 15:00 IST, Chairman Hamid Ansari despite protests from the suspended RJD and SP MPs carried out a voice vote seeking consent for the adoption of the motion for voting on the bill. After the motion was adopted, the Chairman put the bill to vote.

However, as it is a Constitution Amendment (108th) Bill, it can be only cleared after four rounds of voting in its favour. A Constitution amendment needs a two-thirds majority in voting requiring the support of 155 MPs in Rajya Sabha for its passage. The bill has clear backing of at least 165 MPs in the House with an effective strength of 233.

Earlier, the errant SP, RJD and LJP MPs were marshalled out of the House as Chairman Hamid Ansari called for a vote on the Bill. Before that Ansari suspended seven MPs belonging to SP, RJD and LJP for the remaining part of the Budget session for their unruly behaviour in the House over the Bill.

Earlier on Tuesday morning, Janata Dal-United's Sharad Yadav, Rashtriya Janata Dal (RJD) chief Lalu Prasad and Samajwadi Party (SP) leader Mulayam Singh Yadav, who are opposing the Women's Reservation Bill, met Prime Minister Manmohan Singh and informed the PM of their differences towards the bill. The Women's Reservation Bill, which was blocked in the Rajya Sabha on Monday, seeks to reserve a third of the seats in parliament and state legislatures for women.

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.

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 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.

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.

Food prices will be keenly watched in coming weeks for the second and third round impacts of the recent 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.

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

Reserve Bank of India (RBI) Governor D Subbarao on Monday, 8 March 2010, said inflation should moderate in the coming months. He said the central bank will ensure that interest rate levels do not have a negative impact on the competitiveness of the economy. Should India need to manage inflationary expectations, the central bank could turn to its traditional mix of policy tools including use of both liquidity and cash reserve requirements, he said.

Subbarao said the government's plans to reduce the fiscal deficit this year and in 2011 would help to manage inflationary expectations and facilitate demand for private credit. The government's borrowing program is likely to proceed smoothly over the next financial year, he said. 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, a move that has pushed bond prices lower as investors have anticipated a flood of fresh debt supply. Asked if he anticipated a sharp rise in levels of yields in 10-year government bonds, he said that yields had risen slightly this year but would be managed over the coming 12 months.

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.