Expect lacklustre trade for the rest of the week; the rally may be about to end in the short-term. But medium term outlook remains bright
The BSE Sensex edged higher than the previous day’s close after trading in a narrow range. The index closed 5.69 points higher (0.03%) at 17,941 and the Nifty closed 2.4 points lower (0.04%) at 5,366 points. We expect the market to remain listless for the next few days and even decline before a fresh rally begins.
In afternoon trading, the Sensex touched a 25-month high after which it pared its gains. It is now close to the psychologically important 18,000 level. Asian stocks were trading mixed today as markets consolidated after recent strong gains. Key benchmark indices in China, South Korea, Singapore and Taiwan were up 0.02% to 0.8%. The key benchmark indices in Japan and Indonesia were down by between 0.5% and 0.5% respectively. Markets in Hong Kong and Thailand were shut for holidays.
US markets ended higher on Monday, (5th April), on strong non-farm payrolls report and other positive economic data. The Dow Jones Industrial Average and S&P 500 closed at their highest levels since September 2008, while the Nasdaq closed at its highest level since August 2008. The Dow climbed 46.48 points to 10,973. The Nasdaq gained 27 points to 2,429 while the S&P 500 moved 9 points higher to 1,187.
Closer home, the finance ministry has suggested the simplification of the rules for calculating foreign investment in India. The proposed rule which takes out the sundry entries of indirect investment will be beneficial for companies with high foreign investments. The government initiative towards the GST (Goods & Services Tax) regime has started, with the Centre seeking opinion from the Supreme Court on the proposed amendments to the Constitution for the implementation of the tax. The largest bank of the nation, State Bank of India (SBI), said that it may raise lending and deposit rates within a few months.
The Bank will wait for the Reserve Bank of India’s (RBI’s) policy action before raising rates. Grain stocks as on 1st April stood at 42.8 million tonnes (MT) which are well above the target, the government said today. While wheat stocks were at 16.1MT against a target of 4MT, rice stocks were at 26.7MT, more than double the targeted 12.2MT. US treasury secretary Timothy Geithner said that India and the US should work together on “rebalancing” the world economy. In the bilateral economic partnership talks, he said that cooperation by both the parties will help to make the economy more stable.
Foreign institutional investors were net buyers of Rs766 crore on Monday. Domestic institutional investors were net buyers of Rs403 crore. The rupee was strong on continued capital inflows.
Sales of Tata Steel (up 1.3%) rose 18% in FY10 from the year-ago period. Castrol India (up 4.1%) issued 1:1 bonus shares. BHEL (up 2.8%) plans to reenter the wind turbine manufacturing business with foreign cooperation. NTPC (up 0.4%) plans to add up to 4,000MW-5,000MW of power in FY11. The company plans capital expenditure of
Rs28,000 crore-Rs29,000 crore—70% of which will be met through debt.
DLF (up 2%) has appointed an advisor to find buyers for Aman Resorts, a luxury hotel chain it had acquired in November 2007, for $400 million. Tata Motors (down 0.9%) reported a 38% jump in sales in March 2010 from a year earlier. Reliance Infrastructure (up 1.9%) has commissioned a 600MW unit at the Rajiv Gandhi Khedar thermal power plant at Hisar in Haryana. Bank stocks edged lower on fears of a possible interest rate tightening by the RBI to control inflation. IT company Persistent Systems was listed on the bourses today. The company had priced its initial public offer at the upper end of the Rs290-Rs310 per share price band. CESC (down 0.8%) has raised Rs50 crore by selling short-term debt to a mutual fund. It sold commercial paper yielding 4.05%, maturing on 22 June 2010.