Market may recover

Gains in Asian stocks will help Indian stocks recoup some of the last week's steep losses. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicate that the Nifty could gain 40 points at the opening bell. Volatility may remain high as traders roll over positions in the derivatives segment from the near-month November 2010 series to December 2010 ahead of the expiry of the November 2010 futures & options (F&O) contracts on Thursday, 25 November 2010.



In the near-term, year-end profit taking may cap the upside. Many stocks have clocked decent to strong gains this year. Funds based in US and Europe follow calendar year as their accounting year. The market has come off soon after hitting a record closing high early this month

Meanwhile, the Supreme Court on Monday, 22 November 2010, will hear petition filed by Centre for Public Interest Litigation, asking the top court to monitor 2G probe. Supreme Court will hear Prime Minister Manmohan Singh's affidavit on 2G tomorrow, 23 November 2010. The PM told the Supreme Court on Saturday, 20 November 2010, he had done nothing wrong and had followed correct procedures. In a rare move, the Supreme Court last week reprimanded Singh for failing to probe ex-telecoms minister Andimuthu Raja over allegations he had sold licences too cheaply. The court demanded Singh himself explain what had happened, tarnishing his squeaky-clean image.

Speaking at the HT Leadership Summit in New Delhi on Saturday, 20 November 2010, Singh said, "There should be no doubt in anybody's mind that if any wrong thing has been done by anybody, he or she will be brought to book. But for all these to happen, in a democracy we have to allow Parliament to function... We are ready to discuss all issues. We are not afraid of discussions," he said on the stalemate over the spectrum issue.

Asian stocks rose on Monday, 22 November 2010, on news over the weekend that Ireland has formally applied for aid from the European Union and the International Monetary fund. The key benchmark indices in Japan, Indonesia, Malaysia, South Korea and Taiwan were up by between 0.06% to 1.01%. Hong Kong stocks fell in early trade, with real-estate stocks down sharply in the wake of measures Friday, 19 November 2010, to cool prices in the sector. The Hang Seng index was down 0.62%.

In China, the Shanghai Composite index was down 0.28%. China on Friday, 19 November 2010, lifted its reserve requirement ratio for banks by 0.5%. Flows into equity and bond funds "hit a wall in mid-November," said fund-tracker EPFR on Friday, 19 November 2010, weighed by investor worries about indebtedness in the euro zone and weaker demand from China amid rising inflation. EPFR said globally tracked equity funds were hit with redemptions totaling $5.6 billion just a week after collectively posting their biggest inflow in more than 22 months. Only three major equity fund groups - Asia ex-Japan, Global and EMEA Equity Funds - posted inflows during the week ending 17 November 2010. But all emerging market equity funds combined posted inflows for the week, and extended year-to-date flows to $81.9 billion, "within a whisker of last year's $83.3 billion inflow record," wrote EPFR.

While global liquidity remains ample, a section of the market is worried that a strong equity issuance pipeline over the next six months will soak liquidity from the secondary equity market -- Indian companies are estimated to raise about Rs 80000 crore from equity and debt issue over the next three to six months. Steel Authority of India and Indian Oil Corporation (IOC) are some of the state-run firms that are planning large share sales in coming months. The Indian Government is selling 10% of its 78.92% stake in IOC, while the company will issue new equity of 10% of existing paid up capital. The size of the follow-on public offer of IOC is pegged at a massive about Rs 19000 crore.

Other upcoming state offers include Manganese Ore India's IPO to raise up to $270 million, Hindustan Copper's $1.6 billion share sale, and Shipping Corp of India's $320 milion share sale.

According to one report, fund raising by way of initial public offerings (IPOs), follow-on public offerings (FPOs) and qualified institutional placements (QIPs) have totalled a record Rs 87733 crore in the year till date, beating the previous high of Rs 65344 crore in calendar year 2007.