Market may extend gains on firm Asian stocks; food inflation data eyed

The market may extend last two days gains on firm Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 40 points at the opening bell. On the macro front, the government will unveil data on some wholesale price indices for the year through 9 April 2011 viz. the food price index, the primary articles index and the fuel price index at about 12:00 IST.



Global markets including Indian stock exchanges remain closed on Friday, 22 April 2011 on account of Good Friday.

Among corporate news, Reliance Industries, TCS, Hindustan Zinc and Jindal Steel & Power slated to announce Q4 results today.

Amid concerns expressed by the Reserve Bank, country's largest lender State Bank of India (SBI) on Wednesday announced withdrawal of special home loan schemes, or teaser rates, with effect from 1 May 2011.SBI Easy Home Loan and SBI Advantage Home Loan (teaser rate products) will be replaced by floating interest rate schemes on par with other commercial banks. Under the teaser home loan scheme, SBI was offering lower rate of interest of 8-8.5% for the first three years. It invited severe criticism from RBI, which had said the scheme could impact the asset quality of SBI's home loan portfolio. The withdrawal of teaser rates comes within a month of the new chairman Pratip Chaudhuri taking charge at SBI.

Anil Ambani-controlled Reliance Infrastructure after market hours on Wednesday, 20 April 2011 said it bought-back 1 lakh equity shares today under its buyback programme. The company, which commenced its up to Rs 1000-crore share buyback offer on 11 April 2011, has so far bought back 6 lakh shares under the buyback programme.

Meanwhile foreign institutional investors (FIIs) bought shares worth Rs 193 crore and domestic institutional investors (DIIs) sold shares worth Rs 23.27 crore on Wednesday, 20 April 2011 provisional data released by the stock exchanges showed. FIIs had bought shares worth a net Rs 1836 crore from the secondary equity markets on Tuesday, 19 April 2011, the latest data showed.

The near term major trigger for the market is Q4 March 2011 results of India Inc. Investors will scrutinize post-result management commentary to gauge outlook on earnings at a time when rising salaries, raw materials prices and interest rates are pressurizing profit margins of India Inc. High global commodity prices will add to pressure on profit margins of Indian firms.

The combined net profit of a total of 84 companies rose 24.6% to Rs 6410 crore on 28% rise in sales to Rs 51659 crore in Q4 March 2011 over Q4 March 2010.

India Meteorological Department (IMD) has predicted the southwest monsoon 2011 to be 98% (normal) of the long period average (LPA) with a model error of plus/minus 5%. IMD has indicated that there is very low probability for the season rainfall to be deficient (below 90% of LPA) or excess (above 110% of LPA). The IMD released its initial forecast for the June to September monsoon after market hours on Tuesday 19 April 2011. The forecast is made in two stages in April and in June. The forecast for the season as a whole (June-September) is issued in the first stage.

Normal monsoon this year could help ease food inflation and boost rural income. The quantity and geographical spread of rainfall during the monsoon season is crucial for India's agriculture sector as the country lacks irrigation facilities on more than half of its farm land. The South Asia Climate Outlook Forum last week predicted that South Asia is likely to receive normal monsoon rains in 2011. It said the La Nina weather phenomenon, which aids monsoon in the region, would continue until June.

With inflation remaining above its comfort level, the Reserve Bank of India (RBI) is seen raising key short term policy rates by 25 basis points at its annual 2011-2012 monetary policy review on 3 May 2011.

A sharp surge in global crude oil prices over the past few months has raised macroeconomic worries. India imports majority of its crude oil requirements and high oil prices had raised concerns about widening current account deficit. High oil prices had also raised concerns about higher oil subsidy bill for the government and its negative impact on the government's fiscal position. US crude futures were up 79 cents or 0.71% at 112.24 a barrel.

India's exports surged 37.5% to $246 billion in the year ended March 2011 (FY 2011) their fastest annual growth since independence-despite a strong rupee and weak demand in developed markets, data released on Tuesday showed. The government is reportedly targeting a 25% rise in exports in the current fiscal. Imports rose 21.5% to $350.5 billion in FY 2011. Exports in March added to $29.1 billion, highest for a single month so far.

The key benchmark indices attained their highest closing levels in a week on Wednesday, 20 April 2011, tracking strong global cues. Prediction of normal monsoon for the June-September period this year also boosted sentiments as it could boost rural sales of automobiles, fast moving consumer goods and consumer durables. Data showing substantial buying by foreign funds on Tuesday, 19 April 2011, also underpinned sentiment. The BSE 30-share Sensex surged 349.15 points or 1.83% to 19,470.98 on Wednesday, its highest closing level since 13 April 2011.

A rally among U.S. technology shares spurred by results that beat analyst expectations boosted stock markets in Asia on Thursday. The key benchmark indices in Hong Kong, Indonesia, China, Japan, Singapore, South Korea and Taiwan rose by between 0.14% to 1.64%.

Big earnings surprises gave a positive turn to investor sentiment on Wednesday, propelling U.S. stocks to their best day in a month and lifting the Dow Jones Industrials Average to their highest in almost three years. Sales of previously owned U.S. homes rose more than expected in March, a trade group said on Wednesday, suggesting the housing market's downward trend may be close to hitting a bottom.