Market may open higher on firm global stocks; telecom stocks eyed

The key benchmark indices may open higher on firm global stocks after positive economic data. Most Asian stock markets edged up on Friday, led by overnight gains on Wall Street as strong U.S. retail sales data boosted confidence in a recovery in the world's biggest economy. The key benchmark indices in China, Hong Kong, Indonesia and Singapore rose by between 0.01% to 0.47%. But, the key benchmark indices in South Korea, Taiwan and Japan fell by between 0.01% to 1.18%.

In economic news in Asia, Japanese Prime Minister Yukio Hatoyama and Bank of Japan Governor Masaaki Shirakawa will meet on Friday to discuss the need to step up efforts to beat deflation

South Korea's central bank left its key interest rate at a record low at 2% on Friday

In Europe on Thursday, the European Central Bank (ECB) left its main refinance rate unchanged at 1%. Bank of England too on Thursday kept the bank rate unchanged at 0.5%. Jean-Claude Trichet, President, European Central Bank, said the euro zone's recovery remains on track. He stated that growth is likely to be uneven due to special factors. But was quick to add that price stability is to be maintained in the medium-term.

Meanwhile, a strong rebound in Britain's industrial output and house price data on Thursday boosted hopes that the economic recovery remained on track during the first three months of 2010.

The European Central Bank extended a helping hand to Greece on Thursday by prolonging easier rules on debt eligible as security against cheap central bank cash.

US stocks snapped a two-day losing streak on Thursday after retailers delivered their best sales numbers in a decade, reinvigorating confidence in the recovery. Major retail chains reported a record 9.1% jump in March same-store sales -- beating the forecast for a 6.3% gain. Stocks had a weak start after a disappointing report on initial jobless claims, which rose against an expectation of a marginal drop. The Dow Jones industrial average gained 29.55 points, or 0.27% to 10,927.07. The Standard & Poor's 500 Index rose 3.99 points, or 0.34% to 1,186.44. The Nasdaq Composite Index added 5.65 points, or 0.23% to 2,436.81.

Closer home, food prices accelerated for the second straight week in late-March, strengthening expectations of a hike in key policy rates when the Reserve Bank of India (RBI) reviews its policy on 20 April 2010.

The food price index rose 17.70% in the 12 months to 27 March 2010, higher than an annual rise of 16.35% in the previous week, data showed on Thursday. The fuel price index rose an annual 12.71%, a tad below the previous week's reading of 12.75%, while the primary articles index was up 14.50% year-on-year.

The Reserve Bank of India (RBI) unexpectedly raised rates in March by 25 basis points as headline inflation continued to remain above its perceived comfort zone of 5% for the fourth straight month.

The chief statistician Pronab Sen on Wednesday said the RBI would have to further tighten monetary policy if prices continue to rise. He has said inflation could cross 10% in March, higher than Febuary's reading of 9.89% and then ease. The government will officially announce the inflation data for the month of March on 14 April 2010.

The world's second fastest growing economy, is expected to grow 8.5% in the current fiscal year that began 1 April 2010, and accelerate to 9% in the next.

While the Greek debt crisis is still sending shivers through the global economy, India's central bank looks set to raise interest rates for the second time in as many months on 20 April 2010, and the speedy recovery of Asia's third-largest economy has raised concerns of a possible surge in capital inflows.

Expectations of good fourth quarter result by India Inc and heavy foreign fund inflows boosted the bourses in the past few weeks with the key benchmark indices surging to their highest level in more than 25 months on Wednesday, 7 April 2010.

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.

But abnormally hot weather and lower than expected rains are reportedly raising the spectre of India facing another water shortage in the coming kharif season, reports suggest. Rains have been 66% lower than normal in March. Temperature has been 4 to 7 degrees above normal, making it the hottest March in almost a decade report said.

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

In stock specific news, telecom stocks may be in thick of action as auctions for 3G and broadband wireless airwaves gets underway today, 9 April 2010. Bidding for broadband spectrum will begin two days after the completion of 3G spectrum auction. The auction reportedly will be a long-drawn affair, stretching for as long as 45 days.

The key benchmark indices slumped on Thursday, 8 April 2010 as weak global stocks and worries about the economic health of Greece triggered profit taking after recent sharp surge in share prices. A spike in food price inflation also rekindled fears of a hike in key policy rates when the Reserve Bank of India reviews its monetary policy on 20 April 2010. The BSE 30-share Sensex fell 255.62 points or 1.42% to 17,714.40 on that day.

As per provisional figures on NSE, foreign funds bought shares worth Rs 62.20 crore and domestic funds sold shares worth Rs 93.62 crore on Thursday.