Market seen opening firm on positive global cues

The market is likely to open firm, extending three-day gains, on the back of positive global cues. Trading in S&P CNX Nifty index futures on the Singapore stock exchange indicated that the Nifty could rise 21.50 points at the opening bell. Monthly inflation data for May 2010 due to be released by the government today, 14 June 2010 will be closely watched.



In stock specific action, Reliance Industries after trading hours on 11 June 2010 said it has acquired a majority stake in Infotel Broadband Services, which had on the same day won nationwide licenses to offer broadband services

Hindustan Unilever announced after market hours on 11 June 2010 that its board of directors has approved a proposal for buy-back of shares at a price not exceeding Rs 280 per share. The company has set aside Rs 630 crore for buyback.

Public sector bank's may hog limelight on reports the Centre on Saturday approved capital infusion of Rs.6,211 crore in five public sector banks to help them in attaining a minimum 8% Tier-I capital by 31 March 2011, and ensure an additional Rs.77,637 crore in lending capacity to various sectors of the economy. The five banks lined up for infusion of fresh capital are IDBI Bank, Central Bank of India, Bank of Maharashtra, UCO Bank and Union Bank of India

Asian markets rose for a third consecutive day as higher confidence among U.S. consumers boosted speculation that demand for products and resources will increase in the world's biggest economy. The key benchmark indices in Japan, South Korea, Indonesia, Hong Kong, Taiwan and Singapore rose by between 0.48% to 1.56%.

Markets in Australia, China and the Philippines are closed today for holidays.

US markets rose on Friday, 11 June 2010 after a report found consumers are gaining confidence in the economy. The Dow Jones industrial average rose 38.54, or 0.4%, to 10,211.07. The Standard & Poor's 500 index rose 4.76, or 0.4%, to 1,091.60 and the Nasdaq composite index rose 24.89, or 1.1%, to 2,243.60.

The government reported that retail sales fell 1.2% in May 2010, the first drop in eight months.

Back home, investors will eye the first installment of the corporate advance tax payment which will give some clue about Q1 June 2010 corporate results. The first installment of corporate advance tax falls due on 15 June every year.

Also the focus would be on an Empowered Group of Ministers (EGoM) may meet on 17 June 2010 to consider freeing petrol prices from government control and possibly giving limited autonomy to oil firms to price diesel closer to market rates.

Industrial output rose much faster than expected at 17.6% in April 2010 from a year earlier on strong consumer demand and government spending. March's annual growth rate was revised upwards to 13.9% from 13.5%. Manufacturing output rose 19.4% in April 2010. The industrial output rose 10.4% in the 2009/10 fiscal year (April-March), faster than the 2.6% clocked in the previous fiscal year.

On the macro front, the food price index rose 16.74% in the year to 29 May 2010, higher than the previous week's annual reading of 16.55% as fruits and potato prices rose, data released by the government on 10 June 2010 showed. The fuel price index climbed 14.23% compared with an annual rise of 14.14% in the previous week.

Investors will also keep a close eye on the progress of the monsoon rains. As per the India Meteorological Department (IMD)'s statement on 10 June 2010, rainfall in the seven days to 9 June 2010 recovered to normal after an initial hiccup when cyclone Phet hindered the advance of the June-September monsoon, which irrigates 60% of farms in India. The IMD in its update said Southwest monsoon has advanced into some parts of Konkan & Goa, south Madhya Maharashtra and north interior Karnataka, remaining parts of coastal and south interior Karnataka, some more parts of Rayalaseema and coastal Andhra Pradesh.

The June-September monsoon rains hit Kerala on 31 May 2010, a day ahead of schedule. The south-west monsoon usually covers the entire country by mid-July. The weather office late April 2010 said rainfall is likely to be 98% of the long-term average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.

Last month, Australia's weather bureau said the El Nino weather pattern was over. El Nino is caused by an abnormal warming of the eastern Pacific Ocean and can play havoc with weather patterns across the Asia-Pacific region.

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 also holds key.

Data this month showed business activity remained strong for India's vast services sector in May 2010, with a key gauge growing for a 13th consecutive month even as some momentum was lost over the previous month. The HSBC-Markit Business Activity Index stood at 58.2 in May 2010 from a 21-month high of 62.1 in April 2010. A reading above 50 indicates expansion. Services make up about 55% of India's $1.2 trillion economy.

HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 Indian firms, surged to a 27-month high of 59 in May 2010 from 57.2 in April 2010, bolstered by steady growth in output, new orders and employment. The rate of growth had slowed in March 2010 and April 2010.

India's economy grew at 8.6% in the March 2010 quarter driven by robust manufacturing sector on the back of government and consumer spending, data released by the government on Monday, 31 May 2010, showed. The growth was significantly higher than the revised 6.5% expansion in Q3 December 2009 and a 5.8% growth in Q4 March 2009. The manufacturing sector grew 16.3%, farm output rose 0.7%, mining sector expanded 14% and services increased by 8.4% in January-March 2010 quarter from a year earlier.

For the full year to March 2010, the economy expanded 7.4%, above a government forecast of 7.2%. Economic growth had slowed down to 6.7% in year ended March 2009.

The key benchmark indices extended gains for the third straight day on Friday, 11 June 2010, tracking firm world stocks with the BSE Sensex regaining the psychological 17,000 mark. The BSE 30-share Sensex rose 142.87 points or 0.84% to 17,064.95 and the S&P CNX Nifty rose 40.75 points or 0.8% to 5119.35.

Foreign funds bought stocks worth a net Rs 820.88 crore and domestic funds offloaded shares worth a net Rs 213.76 crore on 11 June 2010, as per the provisional data released by the stock exchanges.