Market may extend recent strong gains

The market may extend recent strong gains, tracking higher Asian stocks. Data showing heavy buying by foreign funds on Thursday, 30 June 2011, is likely to boost sentiment. Trading of S&P CNX Nifty on the Singapore stock exchange indicates a gain of 40 points at the opening bell. Auto and cement stocks will be focus as companies from these two sectors start unveiling monthly sales volume data for the month just gone by.

Foreign institutional investors (FIIs) bought shares worth a massive Rs 1591.34 crore on Thursday, 30 June 2011, as per the provisional data released by the stock exchanges. FII inflow totaled Rs 2662.74 crore in June 2011, as per the data from the stock exchanges.



Data on the health of the manufacturing sector for June 2011 is likely to be released today, 1 July 2011. The HSBC Markit Purchasing Managers' Index, based on a survey of around 500 companies, had declined to 57.5 in May 2011 from 58 in April 2011, weighed down by a slower expansion rate for new orders and a labour shortage.

The BSE Sensex jumped a staggering 1,295.24 points or 7.3% in just 6 trading sessions to settle at 18,845.87 on Thursday, 30 June 2011, from a recent low of 17,550.63 on 22 June 2011. The Sensex and the Nifty attained their highest closing level in more than 8-weeks. Resumption of buying by foreign funds aided the strong rally. The substantial inflow from FIIs recently followed a sustained outflow earlier.

The Cabinet Committee on Economic Affairs (CCEA) on Thursday, 30 June 2011, conditionally approved Cairn Energy PLC's proposal to sell a big stake in its Indian unit Cairn India to miner Vedanta Resources PLC. CCEA approved the deal subject to the condition that Cairn has to equally and retroactively share royalty payments with ONGC on crude-oil production from an important block, reports suggest.

The market soon enters the crucial period of corporate earnings. Investors will closely watch the post-Q1 June 2011 result management commentary to gauge the future earnings outlook at a time when firms are witnessing costs pressures amid rising interest rates and staff costs. 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% on all routes across India following the latest hike in diesel prices.

Housing finance major HDFC unveils Q1 June 2011 results on Friday, 8 July 2011. IT bellwether Infosys Technologies will unveil Q1 results on 12 July 2011.

Asian stocks rose on Friday on optimism Greece will avoid default after Greece's austerity program cleared the final hurdle in parliament on Thursday, 30 June 2011. The key benchmark indices in Japan, Indonesia, South Korea, Singapore and Taiwan were up by between 0.48% to 1.18%.

But, China's Shanghai Composite index lost 0.02% after an official measure of mainland Chinese manufacturing activity came in below expectations. Stock markets in Hong Kong and Thailand were closed for a holiday.