Profit booking may emerge after four-day rally; global cues mixed

The market is likely to see a flat-to-positive start if global cues are of any indication. US markets ended firm on Friday, 25 March 2011 while most Asian markets were trading subdued today, 28 March 2011. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 6.50 points at the opening bell. Profit booking may emerge as stocks extended gains for the fourth day in a row on Friday, 25 March 2011, with the barometer BSE Sensex gaining close to 1000 points, on recent bullish comments on India from billionaire legendary investor Warren Buffett and on hopes for economic reforms with the government tabling some key reforms bills in parliament last week.



As per provisional figures, foreign funds bought shares worth Rs 1446.18 crore and domestic funds sold shares worth Rs 313.77 crore on Friday, 25 March 2011.

Expiry of the near-month March 2011 derivatives contracts on Thursday, 31 March 2011 may keep stocks choppy this week. The March 2011 financial year-end reshuffling of positions by funds may also add to the volatility.

Asian stocks dropped on Monday, 28 March 2011, as radiation hampered efforts to cool crippled nuclear reactors in Japan, and as commodity prices slipped. Political tensions in West Asia and the Middle East and renewed debt crisis in the Euro zone also kept investor sentiments low. The key benchmark indices in Singapore, Japan, South Korea, Taiwan and Hong Kong fell by between 0.13% to 0.46%. The key benchmark indices in Indonesia and China rose 0.06% and 0.75%.

US stocks rose on Friday, 25 March 2011, after upbeat results from technology giant Oracle Corp. and data showing the economy grew more than previously estimated at the end of 2010. The Dow Jones Industrial Average finished up 50.03 points, or 0.41%, at 12220.59. The Standard & Poor's 500-stock index closed 4.14 points higher, or 0.32%, at 1313.80, and the Nasdaq Composite added 6.64 points, or 0.24%, to 2743.06.

US real gross domestic product grew at a 3.1% annualized rate in the fourth quarter, revised up from the 2.8% pace reported one month ago, according to the Commerce Department.

US crude futures were up 5 cents a barrel or 0.05% to $105.45 a barrel. Oil prices have surged in recent months amid ongoing turmoil in oil rich Middle East and North Africa regions. 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.

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.

Billionaire investor and international investment icon Warren Buffett who is in his maiden visit to India said on Tuesday, 22 March 2011, that he hopes to spend some money in India. His firm Berkshire Hathaway is looking to park funds in large investment destinations and India fits the bill perfectly, he said. India, according to him, is not an emerging market but a very big country with a large number of significant businesses. He said that Berkshire Hathaway would look at possible acquisitions in India as and when there were opportunities.

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.

The government introduced a long-awaited pension bill in parliament on Thursday, 24 March 2011, that would pave the way for private players in the sector and help cut government spending. The Pension Regulatory and Development Authority (PFRDA) bill, which would allow part investment of the corpus in the stock market, will take time for parliamentary approval as the current session of parliament ends this week.

The government on Tuesday, 22 March 2011, 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 International Monetary Fund (IMF) is reportedly working on activating its crisis lending pool, a move aimed at showing it has enough liquidity to help bail out countries in need and stabilize the global economy. Countries that contribute to the pool, with new members including China and India, are seeking an agreement on how much of the credit line's $583 billion should be made available and for how long.