Market may extend three-day gains on higher Asian stocks

The market is likely to open on a firm note mirroring positive Asian equities. The S&P CNX Nifty futures for April 2010 expiry were up 14 points in Singapore. However profit booking might emerge during the later half of the day's trading sessions after three sessions of gains for the BSE Sensex.

Stock-specific action may rule the roost in the near term based on expectations of Q4 March 2010 results. IT bellwether Infosys kickstarts the reporting season on 13 April 2010.

Steel stocks may be in demand on reports top steel makers saw up to 15% increase in sales in March 2010 from a year ago owing to robust demand from automobile and infrastructure sectors. The metal prices are likely to move up further due to rise in raw material prices, particularly iron ore, reports indicated.

Asian stocks rose as investors bet the Federal Reserve will keep the benchmark US interest rate at a record low. The key benchmark indices in Hong Kong, Japan, Indonesia, South Korea, Taiwan, and Singapore rose by between 0.05% to 1.15%. However China's Shanghai Composite index slipped 0.19%.

Meanwhile, Australia's central bank underlined its determination to reduce monetary stimulus on Tuesday when it lifted its benchmark interest rate from 4 to 4.25%, its fifth such rise since October 2009. In an upbeat assessment of the country's outlook, the Reserve Bank of Australia indicated growth this year would be around a trend of 3.25 to 3.5% and inflation during the same period would be close to its 2 to 3% target range.

In US market action, the S&P 500 and the Nasdaq Composite rose modestly on Tuesday as the banking sector got a lift from positive analysts' comments, while minutes from the Federal Reserve's last meeting eased concern over rising interest rates. The Dow Jones Industrial Average shed 3.56 points, or 0.03%, to 10,969.99. The Standard & Poor's 500 Index gained 2 points, or 0.17%, to 1,189.44 and the Nasdaq Composite index rose 7.28 points, or 0.30%, to 2,436.81

US Treasury Secretary Timothy Geithner said on Tuesday that the United States and India must work together on rebalancing global growth and revamping a battered financial system. Geithner lauded India's handling of its economy through the financial crisis, saying it was emerging stronger and faster than most large economies, adding that prospects for both the United States and Indian economies were encouraging in the face of global recovery. Geithner is in Delhi to launch economic and financial partnership talks between the United States and India in an effort to elevate the countries' bilateral relationship.

Emerging market equity funds ended March 2010 with their seventh consecutive week of inflows, bringing net inflows to nearly $7.6 billion in the first quarter. All four of the major fund groups took in modest amounts of fresh money, ranging from a net $6 million for Latin America Equity Funds to $222 million for EMEA Equity Funds. China equity funds, however, recorded inflows for only the third week so far this year as some investors continue to be put off by rich valuations, growing exchange rate and trade frictions with the United States and uncertainty about just how far authorities will go to prevent a property bubble.

The world economy could grow 4.1% this year, 0.2 points more than previously forecast, the International Monetary Fund (IMF) said in the latest draft of its World Economic Outlook. The US economy is now expected to grow 3% this year, instead of the 2.7% forecast in the IMF's January report. The IMF is due to publish its next World Economic Outlook on 21 April 2010.

According to the draft, euro zone growth this year is now forecast to be 0.8%, down 0.1 points from January's estimate. In 2011, the figure is seen at 1.5%, also down 0.1 points from a previous estimate, the report said.

Closer home, market regulator Securities & Exchange Board of India (Sebi) has made it mandatory for companies to list shares within 12 days after the closure of a public issue. On Tuesday, the regulator said that this would be applicable to public issues opening on or after 1 May 2010. With this, the number of days between the closing of a public issue and its listing has been reduced by 10 days, from the existing 22 days.

On the macro front, Reserve Bank of India (RBI) executive director Deepak Mohanty said on Tuesday that the recent surge in inflation has raised concern on whether the supply-driven increase could spill over to the generalised inflation process. Mohanty added that prolonged high inflation even if originating from supply side would give rise to increase inflation expectations and cause general prices to rise. Poorly anchored in inflation expectations makes long-term financial planning more complex with potential adverse effects on investment and growth, Mohanty said

Meanwhile, commercial banks will maintain a status quo on interest rates till such time the Reserve Bank of India (RBI) reviews its monetary policy 20 April 2010, an umbrella organisation of the banks said Monday. In a bid to tame the price rise by sucking excess money out of the system, the RBI hiked two major policy rates by 25 basis points each on 19 March2010 in a move that the industry said could impact growth. The repo rate was revised to 5% and the reverse repo rate to 3.5%, marking an end to the easy money policy regime.

The stock market regulator Securities and Exchange Board of India (Sebi) on Monday notified amendments to the equity listing agreement, which were decided at its November 2009 board meeting. According to these amendments, all listed companies are required to disclose their audited annual results on a standalone as well as on a consolidated basis within 60 days from the end of the financial year. Earlier it was 90 days. This in effect, means all listed companies will have to submit the recently-concluded financial year's results by 31 May 2010 itself.

Listed companies have been further asked to publish the turnover, profit before tax and profit after tax on a stand-alone basis. These measures have been taken to streamline the submission of financial results by listed entities and uniformity in reporting, while reducing the timeline for submission of the same with the stock exchanges.

Meanwhile, the finance ministry has suggested easing of the rules for calculating foreign investment in a company. The proposed rules, which take out sundry entries of indirect investment, will make life easier for companies which have high foreign institutional investment and face the risk of breaching sector-specific caps. The ministry has said that portfolio investment by foreign institutional investors (FIIs), purchase of shares and convertible debentures by non-resident Indians (NRIs), and those by persons of Indian origin (PIO) should be excluded when calculating foreign investment in a company.

Under the much-debated Press Notes 2, 3 and 4 announced last year, all kinds of foreign investments are included when calculating foreign investment: Foreign direct investment (FDI), FII holdings, NRI holdings, American Depository Receipts, Global Depository Receipts, foreign currency convertible bonds, convertible preference shares and convertible currency debentures, among others. These rules apply to downstream investments by companies with foreign holding.

The government has taken the first concrete step towards the introduction of the Goods and Services Tax (GST). Since the introduction of the tax would require amendment to the Constitution, the government has sought the Supreme Court's opinion on the amendments proposed. This will ensure these amendments are not challenged in the court later. This has been done through a Presidential reference to the Supreme Court.

Finance Minister Pranab Mukherjee recently said the economy would soon return to the 9% growth trajectory, helped by various measures announced in the Union Budget 2010-11. He said the economy would post 8.25-8.75% growth in the current fiscal after recording 7.2% growth in 2009-10, which is impressive by global standards.

Prime Minister Manmohan Singh recently said that the economy would get back to 9% growth by the end of the Eleventh Five Year Plan period, and do even better after that. After clocking 9% plus growth for three straight years till 2007-08, the country's GDP grew by a relatively modest rate of 6.7% in 2008-09 on account of the international financial crisis.

India's manufacturing growth slowed down in March 2010, dropping from a 20-month-record in February 2010, as mounting cost pressures took a toll on expansion in output, a survey released on Thursday showed. The HSBC Markit Purchasing Managers' Index , based on a survey of 500 companies, fell to 57.8 in March 2010 from 58.5 in February 2010, which was the strongest since June 2008. A reading above 50 means activity is expanding. The new orders index fell to 62.7 in March from 64 in February

Industrial output in February is expected to have grown 16% year-on-year, Industry Secretary said on Wednesday. The output in January grew an annual 16.7%.

Foreign direct investment rose 15.4% to $1.72 billion in February 2010 over February 2009, government said Wednesday.

Exports in February grew 34.8% on year to $16.09 billion, Trade Minister Anand Sharma said last week. Exports are expected to grow 15-20% in the year that starts on 1 April 2010, Sharma said. Imports, too, maintained momentum growing by 66% to $25 billion underscoring the strong revival in the domestic economy.

Top banking executives on Monday told the Reserve Bank of India (RBI) that credit growth will be over 20% in the year ending March 2011 (FY 2011) and that they don't expect interest rates to go up soon. They don't feel there is any upward pressure on interest rates. Some bank chiefs met RBI Governor D. Subbarao ahead of the annual monetary policy scheduled for 20 April 2010 to discuss on issues including outlook on credit, deposit growth, lending rates, economic growth and inflation.

The BSE Sensex vaulted 7,819.27 points or 80.5% in the year ended March 2010 (FY 2010) helped by heavy purchases by foreign institutional investors. As per data from the stock exchanges, foreign institutional investors (FIIs) bought stocks worth a net Rs 14,792.31 crore in March 2010. Indian companied raised over Rs 47,800 crore through public offers during the fiscal 2009-2010, following buoyant secondary market.

Global credit rating agency Standard & Poor's, last month, revised the outlook on India to stable from negative due to improved government finances.

The forecast for the southwest monsoon for 2010 is the next major trigger for the market. Good rains this year after last year's drought will boost farm output and rural incomes. But another monsoon failure will add to inflationary pressure which in turn may hamper the current strong economic rebound. The June-September monsoon season 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.

Tokyo-based Research Institute for Global Change has predicted normal monsoon rains in India for the current year. Agriculture secretary P K Basu said in a media interview on Monday, 5 April 2010, that early signs indicate normal monsoon rains this year. The Indian Meteorological Department (IMD) issues a monsoon forecast, usually in the second half of April after considering weather observations in different parts of the world and extrapolating statistical data.

A weakening El Nino is a positive sign for the monsoon, Ajit Tyagi, director general at the India Meteorological Department, said on 18 March 2010. The cyclical heating of the Pacific Ocean known as El Nino will continue to fade, US forecasters said last month. The weather event, which occurs every four to seven years, brings more rain to South America and less precipitation to Asia.

The key benchmark indices were little changed on Tuesday, 6 April 2010, after moving between positive and negative zone in intraday trade. The BSE 30-share Sensex rose 5.89 points or 0.03% to 17,941.37, its highest closing since 19 February 2008. The S&P CNX Nifty fell 2.40 points or 0.04% at 5,366.

Foreign funds bought shares worth Rs 261.70 crore and domestic funds bought shares worth Rs 81.07 crore on Tuesday, 6 April 2010, as per provisional data.