Market may snap gains

The market may snap last two days' gains on weak Asian stocks. The government will unveil data on some wholesale price indices for the year through 10 April 2010 viz. the food price index, the primary articles index and the fuel price index at about 12:00 IST today, 22 April 2010. Trading in S&P CNX Nifty index futures on the Singapore stock exchange indicated that the Nifty could fall 30.50 points at the opening bell.

Asian stocks fell for the first time in three days on Thursday, led by mining companies and Japanese exporters, after commodity prices declined and the yen strengthened. The key benchmark indices in China, Hong Kong, Indonesia, Japan, South Korea, Singapore and Taiwan fell by between 0.38% to 1.88%.

Japan's exports jumped 43.5% in March from a year earlier as demand for the nation's cars and gadgets increased helped by recovering global economy.

US stocks finished little changed on Wednesday as disappointing outlooks from healthcare companies offset strong earnings from Morgan Stanley. The Dow Jones industrial average edged up 7.86 points, or 0.07%, at 11,124.92. The Standard & Poor's 500 Index dipped 1.23 points, or 0.10%, to 1,205.94. The Nasdaq Composite Index inched up 4.30 points, or 0.17%, to 2,504.61.

In economic data, on the housing front, mortgage applications bounced back from three-month lows last week as buyers rushed to take advantage of the federal-tax credit before it expires and refinancing picked up.

The global economy is recovering from recession more quickly than expected but rescue efforts have worsened public finances, and if not reined in, will lead to a debt explosion, the IMF said on Wednesday. Its World Economic Outlook forecasts for global growth nudged up to 4.2% in 2010. Emerging market economies like China and India are leading the upturn, it said, with 2010 growth expected to be nearly three times as fast as that in advanced economies. The IMF forecast growth in emerging and developing economies would rise to 6.3% this year and 6.5% next year.

Back home, the focus is on the fourth quarter corporate results and outlook provided by management for the current year. The combined net profit of a total of 108 companies rose 30.9% to Rs 8714 crore on 23.9% rise in sales to Rs 58391 crore in the quarter ended March 2010 over the quarter ended March 2009. ACC, Ambuja Cements, Sterlite Technologies, Zensar Technologies, Tata Sponge Iron, Strides Arcolab, Rallis India, Indiabulls Power among others will announce their January-March 2010 quarter result today.

Stocks rose in the past two trading sessions 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. 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.

The RBI said there is need to move in a calibrated manner in the direction of normalising its policy instruments given that the economic recovery is firmly in place. The central bank said it has to do a fine balancing act and ensure that while absorbing excess liquidity, the government borrowing programme is not hampered. Notwithstanding lower budgeted government borrowings for FY 2011, fresh issuance of securities will be 36.3% higher than in the previous year, the central bank said.

The RBI said the economy is recovering rapidly from a slowdown but inflationary pressures, which were triggered by supply side factors, are now developing into a wider inflationary process. The central bank said there in uncertainty about the shape and pace of ongoing global economic recovery.

The central bank 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. The quick rebound of the Indian economy in the year ended March 2010 (FY 2010) despite the failure of monsoon rainfall suggests that the Indian economy has become resilient, the RBI said. Growth in FY 2011 is expected to be more broad-based than in FY 2010. Prime Minister Manmohan Singh has pegged India's GDP growth at 8.25% for FY 2011.

The monsoon holds key. 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, had said on 18 March 2010.

The key indices settled marginally higher on Wednesday, 21 April 2010, extending previous day's gains 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. The BSE 30-share Sensex rose 11.98 points or 0.07% to 17,472.56.

As per provisional figures on NSE, foreign funds bought shares worth Rs 82.96 crore and domestic funds bought shares worth Rs 25.25 crore on Wednesday.

According to the data from the stock exchanges, FII inflow totaled Rs 1424.95 crore this month (till 21 April 2010), much lower than a robust inflow of Rs 14792.31 crore in March 2010