Market seen extending Wednesday's rally

The market is headed for an upbeat start, extending Wednesday's 2.4% rally, on positive global cues. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicate that the Nifty could gain 17 points at the opening bell.

Reliance Industries (RIL) may see action on reports the company has started marketing a proposed issue of bonds denominated in US dollars



SEA TV Networks, Ashok Buildcon and Bedmutha Industries will debut on the secondary equity markets today, 14 October 2010.

Asian markets edged higher on Thursday, 14 October 2010, as strengthening economic and corporate earnings data boosted confidence in a global recovery. The key benchmark indices in Japan, Indonesia, China, South Korea, Hong Kong, Taiwan and Singapore rose by between 0.23% to 1.82%.

US markets advanced on Wednesday, 13 October 2010 as investors cheered the latest round of US blue-chip earnings. The Dow Jones Industrial Average rose 75.68 points or 0.69% to 11,096.08. The S&P 500 gained up 8.33 points or 0.71% to 1,178.10 and the Nasdaq Composite advanced 23.31 points or 0.96% to 2,441.23.

Back home, industrial production rose at a much slower-than-expected 5.6% in August 2010 from a year earlier, sharply lower than the previous month's revised 15.2% growth, data showed on Tuesday, 12 October 2010. Manufacturing output rose an annual 5.9% in August 2010, lower than a 10.6% rise in August 2009. Industrial production growth for July 2010 was revised upwards to 15.2% from 13.8% earlier.

The government will unveil data on wholesale price index for September 2010 on Friday, 15 October 2010, which will provide clues on the central bank's policy stance at its next policy review scheduled on 2 November 2010. The wholesale price index, the most widely watched gauge of prices in India, rose 8.5% in August 2010.

Foreign funds continue to aggressively mop up Indian stocks. Net equity inflow in 2010 now stands at a record $22.01 billion, above last year's $17.45 billion, as per data from the Securities & Exchange Board of India (Sebi). The Sebi data includes FII inflow through primary and secondary market route.

A sizable chuck of FII inflow this year is from India-focused exchange traded funds as well as long-only funds.

But, a section of the market is concerned that a strong equity issuance pipeline over the next six months will soak liquidity from the secondary equity markets. Indian companies are estimated to raise about Rs 36,000 crore from share sales over the next three to six months. This includes a large initial public offer (IPO) from Coal India this month. The government plans to raise about Rs 15,000 crore from divestment of 10% stake in Coal India. The Coal India IPO is billed as the country's largest issue ever. The IPO of Coal India opens for bidding on 18 October 2010 and closes on 21 October 2010.

The government on Tuesday, 12 October 2010, set Rs 225-245 per share price band for the Coal India IPO. Retail investors and employees will get shares at 5% discount on the final issue price to be discovered through the book-building route. The Indian government is selling roughly 63.16 crore Coal India shares, or 10% of the company.

The Reserve Bank of India governor D Subbarao said over the weekend in Washington that the central bank would intervene in the foreign exchange market if inflows are "lumpy" and "volatile". The rupee had dropped to a one-week low on Tuesday, 12 October 2010, after hitting a 25-month high of 44.125 on Thursday, 7 October 2010.

The next major trigger for the stock market is Q2 September 2010 results. Brokerage earnings estimates will now roll over to FY 2012 (year ending March 2012).

Tier-1 IT firms viz. Infosys, TCS, Wipro, and HCL Tech are seen reporting strong earnings growth in Q2 September 2010 as high volumes will boost operating margins. However, the IT sector faces headwind of a firm rupee in Q3 December 2010. The rupee hit a 2-year high against the dollar on Thursday, 7 October 2010. Higher volumes and price hike will aid earnings growth of most auto firms in Q2 September 2010 though analysts will closely eye operating profit margins and outlook on margins in the face of rising metal prices

Banks are seen reporting decent-to-strong earnings growth on the back of pick-up in credit offtake. Manufacturers of base metals are also seen reporting strong Q2 results on the back of higher metal prices. Increase in product prices will offset higher input costs for consumer staples firms in Q2 September 2010. But, cement firms will report dismal results due to a sharp fall in cement prices during the monsoon season.

The key benchmark indices surged to hit 33-month closing highs on Wednesday, 13 October 2010, as world stocks rose on growing expectations that the US Federal Reserve will take further measures to boost the slowing economic recovery. The BSE 30-share Sensex jumped 484.54 points or 2.4% to 20,687.88, its highest closing since 14 January 2008 and the S&P CNX Nifty was up 143 points or 2.35% to 6,233.90, its highest closing since 9 January 2008