Market seen extending Wednesday's rally on upbeat global cues; inflation data eyed

The market is likely to extend Wednesday (1 September 2010)'s 1.31% gains on upbeat global cues following encouraging economic data in the US. Asian markets were trading firm. Trading of the S&P CNX Nifty futures on the Singapore stock exchange indicated that the Nifty could gain 35 points at the opening bell.



On macro front, the government will unveil data on some wholesale price indices for the year through 21 August 2010 viz. the food price index, the primary articles index and the fuel price index at about 12:00 IST today.

Cement stocks may see action following release of monthly sales figures. UltraTech Cement's sales rose 2.4% to 2.96 metric tonne (mt) in August 2010 over August 2009. The cement sales figures include that of the demerged Grasim cement business.

ACC's cement sales slipped to 1.57 mt in August 2010 from 1.65 mt in August 2009. Jaiprakash Associates cement sales rose 51% at 1.08 mt in August 2010 over August 2009. Ambuja Cement's cement sales were flat at 1.42 mt in August 2010 over August 2009.

Bike major Hero Honda Motors reported 2.16% rise in total vehicle sales to 4.24 lakh units in August 2010 over 4.15 lakh units in August 2009.

Asian stock markets advanced on Thursday, after Wall Street soared on encouraging manufacturing data. The key benchmark indices in Hong Kong, China, South Korea, Indonesia, Taiwan, Singapore and Japan were up by between 0.38% to 1.3%.

US markets logged steep gains on Wednesday, 1 September 2010 as investor mood brightened after better-than-expected factory data from the United States and China. The Institute for Supply Management showed U.S. factory activity grew faster than forecast. The ISM report added fuel to a global equities rally on Wednesday driven by strong overnight data out of China and Australia. The Dow Jones Industrial Average rose 254.75 points or 2.54% to 10,269.47, its biggest one-day gain since 7 July 2010 and its fifth-largest one-day gain this year. The Standard & Poor's 500 Index added 30.96 points, or 2.95% to 1,080.29. The Nasdaq Composite Index gained 62.81 points, or 2.97% to 2,176.84.

Ahead of the key payrolls data on Friday, investors shrugged off a report from ADP Employer Services showing private U.S. companies unexpectedly cut 10,000 jobs in August as well as government data indicating U.S. construction spending fell to its lowest rate in 10 years.

World trade continued to rebound strongly in the first half of this year, rising by over a quarter from year-ago levels, with emerging economies showing particularly powerful export growth, World Trade Organization figures showed on Wednesday. Global exports of merchandise goods, measured by value in current dollars not adjusted for price changes, were 25.8% higher in the second quarter than a year earlier, after a 25.7% rise in the first quarter, WTO statistics showed.

Back home, exports rose for the ninth straight month in July 2010, growing an annual 13.2% to $16.24 billion, the government released last week data showed. Imports for the month rose 34.3% to $29.17 billion, widening the country's trade deficit to $12.93 billion. Exports during the April-July period rose 30.1% to $68.63 billion.

The trade deficit edged back into double digits in April 2010 after averaging $9.1 billion in Q4 March 2010 and has remained elevated since then. Latest data shows the gap stood at $12.93 billion in July 2010, highest since September 2008 and widening further from $10.55 billion in June 2010.

The HSBC Markit Purchasing Managers' Index, based on surveys of 500 Indian companies, fell to 57.25 in August 2010 from 57.6 in July 2010, but strength in new orders helped the index remain well above the 50 mark that divides growth from contraction. The manufacturing PMI had edged up to 57.6 in July 2010 from 57.3 in June 2010, when it slipped from a multi-year high.

The new orders index was 61.99 in August 2010, down from 62.82 in July 2010. The survey showed that output prices rose at their slowest rate in 10 months in August 2010, while the input price index rose for the second consecutive month.

The gross domestic product (GDP) grew 8.8% in Q1 June 2010, data released by the government on Tuesday, 31 August 2010, showed. The manufacturing sector grew 12.4%, mining sector expanded 8.9%, construction sector grew 7.5%, and farm sector expanded at 2.8%. Output in the combined sectors -- trade, hotels, transport and communication, jumped 12.2%.

The economy could grow better than 8.5% in the fiscal year that ends in March 2011, Planning Commission deputy chairman Montek Singh Ahluwalia said on Tuesday, 31 August 2010. Government spending is expected to pick up after the June-September monsoon rains, Ahluwalia said.

The key indices rallied on Wednesday, 1 September 2010 on strong global cues. Strong auto sales, data showing expansion in manufacturing sector in August 2010 and data showing resumption of buying by foreign funds, underpinned sentiments. The BSE 30-share Sensex rose 234.75 points or 1.31% to 18,205.87 on Wednesday.

As per provisional figures on NSE, foreign funds bought shares worth Rs 359.81 crore and domestic funds bought shares worth Rs 168.56 crore on Wednesday.