Market may extend gains on higher Asian stock; RIL, ICICI Bank in focus after Q4 results

The market may extend gains for the fifth straight day on higher Asian stocks. Forecast of a normal monsoon this year may further aid investor sentiment. Trading in S&P CNX Nifty index futures on the Singapore stock exchange indicate that the Nifty could gain 34 points at the opening bell.

However, volatility may remain high as traders roll over positions in the derivatives segment from the April 2010 series to the May 2010 series ahead of the expiry of the near-month April 2010 contracts on Thursday, 29 April 2010. Index heavyweight Reliance Industries (RIL) after market hours on Friday, 23 April 2010, posted lower than expected Q4 results. ICICI Bank and HDFC Bank reported good Q4 results on Saturday, 24 April 2010.

Asian stocks moved higher on Monday, after broad gains in US stocks on Friday. The key benchmark indices in Hong Kong, Indonesia, Japan, South Korea, Singapore and Taiwan rose by between 0.47% to 2.08%. But, China's Shanghai Composite fell 0.2%.

US stocks rose to a 19-month high on Friday 23 April 2010 as Merck eased concerns about the impact of healthcare reform, saying its costs will be relatively low. The Dow Jones industrial average gained 69.99 points, or 0.63%, to 11,204.28. The Standard & Poor's 500 Index rose 8.61 points, or 0.71%, to 1,217.28. The Nasdaq Composite Index added 11.08 points, or 0.44%, to 2,530.15.

Back home, the Indian Meteorological department (IMD) expects normal rainfall in the June-September monsoon season this year. Rainfall is likely to be 98% of the long-term average, it said. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation. The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The quantum of rainfall in the crucial sowing month of July and distribution of rainfall during the monsoon season holds key.

The Q4 March 2010 results announced so far have been good. The combined net profit of a total of 209 companies rose 26.4% to Rs 20075 crore on 45.6% rise in sales to Rs 178270 crore in the quarter ended March 2010 over the quarter ended March 2009. Carmaker Maruti Suzuki India and leading copper producer Sterlite Industries will announce their Q4 result today, 26 April 2010.

Index heavyweight Reliance Industries (RIL) after trading hours on Friday, 23 April 2010 said net profit rose 29.9% to Rs 4710 crore in Q4 March 2010 over Q4 March 2009. The results were below market expectations.

India's largest private sector bank by net profit ICICI Bank on Saturday, 24 April 2010 reported its net profit rose 35.2% to Rs 1005.57 crore in Q4 March 2010 over Q4 March 2009.

India's second largest private sector bank by net profit HDFC Bank on Saturday, 24 April 2010 reported its net profit rose 32.61% to Rs 836.62 crore in Q4 March 2010 over Q4 March 2009.

The latest data showed the annual food and fuel inflation ticked higher, raising worries central bank may raise interest rates before the next scheduled policy review in July 2010. The food price index rose 17.65% in the year to 10 April 2010. The fuel price index rose 12.45% and the primary articles index rose 14.14% in the year to 10 April 2010, the latest government data showed.

The Reserve Bank of India expects India's economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias, assuming a normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand.

In its half-yearly World Economic Outlook, the International Monetary Fund (IMF) has pegged India's GDP growth at 8.75% in calendar 2010 and 8.5% in calendar 2011. According to the IMF, domestic demand in India will strengthen as the labour market improves, and investment is expected to be boosted by strong corporate profitability, rising business confidence and favourable financing conditions.

Indian stocks rose for a fourth day in a row on Friday, 23 April 2010, after the Reserve Bank of India (RBI) raised interest rates on Tuesday, 20 April 2010, by less than some economists had expected and forecast inflation will slow. From a recent low of 17,400.68 on Monday, 19 April 2010, the BSE Sensex jumped 293.52 points or 1.68% to 17694.20 to settle at 17694.20 on Friday, 23 April 2010. Optimism about the fourth quarter corporate earnings and hopes of a normal monsoon this year aided the rally

The RBI said it will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted. A 25 basis points hike in the cash reserve ratio (CRR) with effective from 24 April 2010 will suck out excess liquidity of Rs 12500 crore from the banking system.

As per provisional figures on NSE, foreign funds bought shares worth Rs 339.30 crore and domestic funds bought shares worth Rs 29.0 crore on Friday.