Market may snap last five days' gains on weak Asian stocks

The market may snap last five days' gains tracking losses in Asian stocks. 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. Trading in S&P CNX Nifty index futures on the Singapore stock exchange indicate that the Nifty could fall 12 points at the opening bell.

Politics is in focus as the Congress-led United Progressive Alliance government faces Opposition sponsored cut motion in parliament today against a hike in petrol and diesel prices in the Union Budget 2010-2011. Prime Minister Manmohan Singh on Monday said he is confident that his government will defeat the cut-motions on the Budget proposals. As per media reports, the BSP is expected to either vote in favour of the government or abstain from voting. BSP has 21 MPs in the Lok Sabha. If the cut motion is adopted, the government will have to step down.

Asian stock markets declined Tuesday after a directionless day on the Wall Street on Monday as investors awaited earnings from some of the region's biggest companies. The key benchmark indices in China, Hong Kong, Japan, Indonesia, South Korea, Singapore and Taiwan fell by between 0.3% to 1.94%.

South Korea's economic growth accelerated more than estimated in the three months through March 2010. Gross domestic product increased 1.8% in the first quarter from the previous three months, when it rose 0.2%.

US stocks edged lower on Monday as bank shares fell on fears that financial reform making its way through Congress will curb profits, while Caterpillar's strong results buoyed the Dow. The Dow Jones Industrial Average edged up 0.75 point, or 0.01%, to close at 11,205.03. The Standard & Poor's 500 Index dropped 5.23 points, or 0.43% to 1,212.05. The Nasdaq Composite Index lost 7.20 points, or 0.28% to 2,522.95.

Meanwhile, confidence in Greek assets sank to a new low on Monday, as German Chancellor Angela Morkel kept up the pressure on Greece, insisting on tougher austerity measures. Questions persist about when and how the aid package to Greece of up to 45 billion euros ($60 billion) might be delivered.

Back home, the Q4 March 2010 corporate earnings announced so far have been good. The combined net profit of a total of 277 companies rose 31.8% to Rs 21685 crore on 44.6% rise in sales to Rs 196485 crore in the quarter ended March 2010 over the quarter ended March 2009.

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, the IMD said on 23 April 2010. 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 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 fifth day in a row on Monday, 26 April 2010, after the Reserve Bank of India (RBI) raised interest rates on 20 April 2010 by less than some economists had expected and forecast inflation will slow. From a recent low of 17400.68 on 19 April 2010, the BSE Sensex jumped 345.60 points or 1.98% to 17745.28 on Monday, 26 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 234.23 crore and domestic funds sold shares worth Rs 73.69 crore on Monday.