Market may extend recent gains on firm Asian stocks

The market may extend recent gains on firm Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 21 points at the opening bell. Foreign institutional investors (FIIs) bought shares worth Rs 1447.42 crore and domestic funds sold shares worth Rs 766.38 crore on Monday, 27 June 2011, as per provisional figures released by the stock exchanges.

The market may remain volatile in the near term as traders roll over positions in the derivatives segment from June 2011 series to July 2011 series. The near-month June 2011 derivatives contracts expire on Thursday, 30 June 2011.



Trading for the week began on an upbeat note as the key benchmark indices surged on Monday, 27 June 2011, extending their rally into the third straight day, as a slide in global crude oil prices outweighed concerns that an increase in domestic fuel prices will stoke inflation. The BSE Sensex rose 171.73 points or 0.94% to settle at 18,412.41, its highest closing since 7 June 2011.

Expectations for Q1 June 2011 results will start building as the first quarter draws towards a close. Housing finance major HDFC kicks off the results season on 8 July 2011. IT bellwether Infosys Technologies will unveil Q1 results on 12 July 2011.

A hike in transportation costs will add to cost pressure of India Inc. As per reports, freight rates have gone up by 8% to 9% with immediate effect on all routes across India following the latest hike in diesel prices.

The latest hike in diesel and LPG prices will also add to inflationary pressure in the economy. The food price index rose 9.13% and the fuel price index climbed 12.84% in the year to 11 June 2011, data released by the government on Thursday 23 June 2011 showed. In the previous week, annual food and fuel inflation stood at 8.96% and 12.84% respectively. The primary articles price index was up 12.62% compared with an annual rise of 12.86% a week earlier.

Crucial monsoon rains have advanced to the remaining regions of cane-growing Uttar Pradesh and some parts of pulses-growing Rajasthan ahead of schedule, the India Meteorological Department (IMD) on Monday, 27 June 2011. The monsoon has also reached remaining parts of wheat-growing Punjab and Haryana, the weather office said.

The IMD recently revised downwards the forecast for the vital monsoon rains this year to slightly below normal from the normal forecast given in April 2011. On the flip side, crop output may not be adversely affected significantly due to the onset of the monsoon rains on time this year and expectations that the rains will be well distributed.

Rainfall in July is considered crucial. Sowing of a number of crops starts in June and good July rains determine the soil moisture and ensure proper development of the crops planted in June.

The government on Monday reportedly allowed foreign individual investors to buy local mutual fund units in equity schemes, as Asia's third-largest economy seeks to attract overseas capital and widen its investor base for the mutual fund sector. The total ceiling on qualified foreign investors in India will be $10 billion, reports suggest.

Finance Minister Pranab Mukherjee and US Treasury Secretary Timothy Geithner are attending the second round of two-day Economic and Financial Partnership talks between India and the United States that began in Washington on Monday, 27 June 2011.

New Zealand on Monday said it expects to conclude the negotiations for a Free Trade Agreement (FTA) with India by March next year with the target of trebling bilateral commerce to $3 billion by 2015. New Zealand Prime Minister John Key, who is on a three-day visit to India, said both the sides have already completed about five rounds of negotiations.

Asian stocks rose on Tuesday, 28 June 2011, on speculation Greece may be allowed to roll over some of its bonds, easing concern the nation's sovereign debt crisis will spread across Europe, one of Asia's biggest export markets. The key benchmark indices in Hong Kong, Indonesia, Singapore, South Korea, Japan, and Singapore were up by between 0.34% to 1.08%. China's Shanghai Composite fell 0.31%.

US stocks rose after three-day losses on Monday, 27 June 2011, led by banks after news of more favorable capital requirements and optimism over Greece's austerity plan. In economic news, US consumer spending stagnated in May, according to a government report, while a reading on Midwest manufacturing rose slightly. The US Federal Reserve has decided to end its $600 billion bond-buying program at the end of this month, as per schedule.

Investors are hoping the Greek parliament this week will pass an unpopular austerity program needed for the country to get the next bailout payment. Also helping to ease worry, French President Nicolas Sarkozy said his government had an agreement with French banks on rolling over Greek debt into new 30-year bonds.

The Greek parliament will conduct a vote on Wednesday, 29 June 2011, and Thursday, 30 June 2011, on austerity measures and investors are watching the outcome as a key next stage in resolving euro-zone debt issues. Greece is required to slash spending in order to receive its next round of assistance funds.