Market may gain for the fifth straight day on stronger global manufacturing dataMarket may gain for the fifth straight day

The key benchmark indices may gain for the fifth straight day tracking firm Asian stocks buoyed by the stronger global manufacturing data. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicate a gain of 24 points at the opening bell.



Asian markets rose for the second straight trading day of the New Year on Tuesday, 4 January 2011 buoyed as global shares resumed their rally on stronger global manufacturing data. The key benchmark indices in China, Hong Kong, Indonesia, Japan, South Korea, Singapore and Taiwan rose by between 0.12% to 1.42%.

U.S. stocks greeted the new year with a rally on Monday as encouraging signs about the outlook for manufacturing around the world prompted investors to inject new money into the market.

U.S. manufacturing grew at its fastest pace in seven months in December, extending a recent run of encouraging economic data and suggesting that expansion of the world's biggest economy will accelerate in 2011.The Institute for Supply Management's national factory activity index rose to 57 from 56.6 in November, marking the 17th consecutive month of growth in the manufacturing industry, with a rise in new orders providing momentum for further growth.

Back home, exports in November 2010 rose an annual 26.5% to $18.9 billion, while imports for the month grew 11.2% on the year to $27.8 billion, government data released on Monday showed. India's trade deficit in November narrowed to $8.9 billion compared with $9.7 billion in October.

India's manufacturing activity continued to expand in December 2010, although the momentum from the prior month eased because of capacity constraints and a slowdown in new orders, a survey by HSBC showed Monday. The monthly purchasing managers' index eased to 56.7 from November's reading of 58.4, though it stayed well ahead of the threshold of 50, which separates expansion from contraction. "The PMI numbers show that the economy remains in high gear, but that this is becoming increasingly difficult to reconcile with a comfortable level of inflation," HSBC economists wrote in a statement. India's central bank, they wrote, may raise interest rates sooner rather than later to curb price increases

The output of six key infrastructure sectors grew 2.3% in November 2010 from a year ago, the slowest pace in the last 21 months, raising the prospects of a drop in industrial growth for the month. The six core industries -- crude oil, petroleum refining, coal, electricity, cement and finished steel, have a combined weight of 26.7% in the index of industrial production and are considered an advance indicator of industrial activity. These sectors had grown an upwardly revised 8.6% in October 2010.

Inflation in the food articles group climbed to 14.44% in the week ended 18 December 2010 from 12.13% in the previous week, the latest government data showed. This was the fourth instance of an increase in food inflation after easing for seven consecutive weeks. Inflation in the Primary Articles group jumped to 17.24% in the week under review from 15.35% in the week ended 11 December 2010, the latest data showed. Inflation in the Fuel & Power group inched higher to 11.63% in the week ended 18 December from 10.74% in the week ended 11 December.

The Reserve Bank of India, last week, warned that a sudden reversal of overseas portfolio investments that have been flooding in this year could create problems for the economy. "A potentially worrying feature of capital flows to India has been the dominance of portfolio flows which are prone to sudden stops and reversals," the RBI said in a report on assessment of the health of financial sector.

The second financial stability report by the central bank also warned that "at present, stressed liquidity conditions warrant caution and a watchful management in the coming months". With both financial and real sectors still under stress in advanced economies, the report said, "India will have to guard against vulnerabilities arising from risks to global growth and financial stability."

The report said that the other soft spots in the financial sector include widening current account deficit, deteriorating external sector ratios and tight liquidity position, in addition to inflationary pressures. The report also said that recent concerns regarding microfinance institutions (MFIs) warrant closer examination.

As per provisional figures on NSE, foreign funds bought shares worth Rs 340.97 crore while domestic funds sold shares worth Rs 124.01 crore on Monday.