Market seen subdued in opening trade

The market is bracing for negative start on a rally in oil prices. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 27.50 points at the opening bell. Billionaire investor Warren Buffett who is in his first visit to India said on Tuesday that he hopes to spend some money in India.



As per provisional figures, foreign funds bought shares worth Rs 236.29 crore and domestic funds bought shares worth Rs 96.04 crore on Tuesday, 22 March 2011.

US crude futures were up 18 cents a barrel or 0.17% to $105.15 a barrel amid unrest in Yemen and after continuing strikes in Libya raised fears supplies would be disrupted. Oil prices have surged in recent months amid ongoing tensions in the oil-rich Middle East and North Africa region. High global crude oil price is a cause of concern for India which imports 70% of its oil requirements. Surging oil prices have stoked concerns about higher inflation and interest rates.

The finance minister Pranab Mukherjee on Tuesday announced withdrawal of 5% service tax on air-conditioned hospitals with more than 25 beds and on diagnostic services. Mukherjee also announced that 10% excise duty would be levied on 45% of the price instead of the earlier proposed levy of 10% excise duty on 60% of the price of the branded apparel.

The Lok Sabha on Tuesday, 22 March 2011, passed the Finance Bill 2011. A boycott by the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) on Tuesday helped the United Progressive Alliance (UPA) government pass the Finance Bill quickly in the Lok Sabha.

Japanese shares dropped on Wednesday, surrendering a portion of Tuesday's large gains, with the aftermath of the March 11 earthquake still weighing on some shares. The Nikkei 225 average was down 1.60%. Other Asian markets were mixed.

US stocks registered slight losses on Teusday amid concerns about violence in Libya after a US fighter plane crashed there. The Dow Jones industrial average closed at 12,018.63, down 17.90 points or 0.2%. The broader S&P 500 closed at 1293.77, down 4.61 points or 0.4%.

Back home, the government on Tuesday, 22 March 2011, sought parliamentary approval to amend a banking law for allowing investors in private banks to have voting rights proportional to their shareholdings, a long-awaited move to help grow the sector. Currently, the voting right of a single individual or entity in private banks is limited to 10%, irrespective of their shareholding. The bill, introduced by Finance Minister Pranab Mukherjee, also sought to raise the cap on investor voting rights in state-run banks to 10% from 1%, and lift the cap on state-run banks' authorised capital.

The government on Tuesday, 22 March 2011, also introduced in parliament the Constitution Amendment Bill to facilitate implementation of Goods and Services Tax (GST). The Bill is likely to be referred to the Parliamentary Standing Committee for scrutiny. The GST seeks to replace multiple indirect taxes, such as the central excise duty and services tax, and state taxes including value added tax, entry tax and purchase tax, with a neat single levy.

The Reserve Bank of India (RBI) raised key interest rates at a mid-quarter policy review on Thursday, 17 March 2011 and the central bank said it will continue with its anti-inflationary stance. The central bank also warned that continuing uncertainty about energy and commodity prices may vitiate the investment climate, posing a threat to the current economic growth trajectory.

The near term major trigger for the market is Q4 March 2011 results. Advance tax payments made by top 100 firms based in the country's financial capital --Mumbai reportedly rose by 25% in the Q4 March 2011 over Q4 March 2010, hinting robust earnings. Companies pay advance tax every quarter based on their projected income for the year.