Market may extend gains

The market may extend Thursday (3 May)’s gains tracking firm global markets. Stocks from cement, IT and steel sector may edge higher after finance minister Finance Minister P Chidambaram on Thursday announced changes in the Financial Bill 2007-08 following a discussion in the parliament on the bill.

Chidambaram said the government will charge an ad valorem duty of 12% on cement priced above Rs 190 per 50 kg bag as against the budget proposal of Rs 600 per tonne. After this 12% duty, the effective reduction in tax burden on cement sold above Rs 190 per bag would be up to Rs 7, Chidambaram said during the debate on Finance Bill 2007-08 in Lok Sabha.

The import duty on jems & jewellery has been completely abolished and duty on cut diamonds abolished. The export duty on low-grade iron ore export was slashed to Rs 50 per tonne from Rs 300 per tonne.

The Finance Minister also recast the tax on Employee Stock Options (Esops). Fringe Benefit Tax will now be applicable on date of vesting. Guidelines will be issued in due course on how to arrive at the value of Esops. The Lok Sabha on Thursday passed the Union Budget 2007-08 by a voice vote.

The key data due today is the weekly inflation data. The wholesale price inflation rate is forecast at 5.87 percent for the 12 months to April 21, lower than an annual 6.09 percent a week before. The data will be released around noon. The annual rate hit 6.69 percent on Jan. 27, its highest in more than two years, but has moderated after RBI tightened policy and the government cut duties on a range of items to rein in prices.

RBI kept its short-term lending rate steady at its monetary policy review last week, as expected, but left the door open for further rate increases if needed to combat price pressures and inflationary expectations.

FIIs turned sellers at the fag end of April 2007 after their heavy inflow in the second half of that month. FIIs were net sellers to the tune of Rs 304.60 crore on Monday 30 April 2007. They were net sellers to the tune of Rs 194.80 crore on Friday 27 April.

As per provisional data, FIIs were net buyers to the tune of Rs 69.70 crore on Thursday (3 May). Domestic institutional investors were net buyers to the tune of Rs 186.40 crore on Thursday.

Asian shares forged ahead in quiet trade on Friday, with Australia setting another record high, while the dollar clung to gains, nervously waiting on US payroll data due later for clues on Federal Reserve policy. Market sentiment was lifted by the bellwether Dow Jones industrial's push to yet another record close, helped by a surprisingly strong U.S. service sector survey and a drop in labour costs. Japanese and Chinese financial markets remained shut for their respective Golden Week holidays.

US stocks edged higher on Thursday after a series of indicators showed signs of strength in the economy and a moderate rise in wage inflation. The Dow industrials closed at a record for the third straight day, led by a 3.7 percent gain in Verizon Communications Inc. on news that it is taking video and Internet customers from rival Cablevision Systems. The Dow rose 29.50 points, or 0.22 percent, at 13,241.38. The Standard & Poor's 500 Index was up 6.47 points, or 0.43 percent, at 1,502.39. The Nasdaq Composite Index was up 7.62 points, or 0.30 percent, at 2,565.46.

The key data later in the day today is April US job data. Median forecasts are for a payrolls increase of 100,000 in April, with the jobless rate ticking up to 4.5 percent from 4.4 percent in March