Wednesday, the Indian market may open flat amid mixed global cues after remarks by US Treasury Secretary Timothy Geithner that most banks have sufficient reserves to protect against possible losses, eased worries about the financial sector. While stock-specific buying and short covering may help the market sustain its positive momentum, the extent of buying by foreign funds and news flow from overseas markets may influence market movement.
Political uncertainty over the outcome of month-long parliamentary elections may also restrict big gains. After buying consistently for the past few weeks, foreign funds sold shares worth Rs.191.01 crore on a net basis on Tuesday.
The other Asian markets opened on a firm note Wednesday but are off their highs now as the mood turned a bit cautious after Japan recorded its first annual trade deficit in nearly three decades. Currently, China's Shanghai Composite index is rising 0.94% and South Korea's KOSPI is gaining 0.66%, but Japan's Nikkei 225 index is losing 0.17% and Hong Kong's Hang Seng index is down 0.14%.
Stocks on Wall Street showed a strong upward move over the course of the trading day on Tuesday, partly offsetting the steep losses posted in the previous session. While stocks saw initial weakness on disappointing earnings news, a positive reaction to comments from Treasury Secretary Geithner drove the markets higher.
Geithner assured the Congressional Oversight Panel that there is enough money left in the government's $700 billion financial rescue program to stabilize the financial system. Geithner said there is at least $134.4 billion in funds left. Indicators on interbank lending, corporate issuance and credit spreads generally suggest improvements in confidence in the stability of the system and some thawing in credit markets, Geithner said. The Dow Jones Industrial Average advanced 1.63%, the Nasdaq Composite rose 2.22% and the S&P 500 index moved up 2.13%.
The Indian ADRs also closed mostly higher. Satyam Computers rallied 6.56%, HDFC Bank advanced 5.17%, ICICI Bank rose 2.21%, Wipro gained 1.87%, MTNL added 1.04% and Infosys edged up 0.37%, but Sterlite Industries moved down 1.17%.
Crude oil for May delivery rose 63 cents to settle at $46.51 a barrel on expiration day in New York trading on Tuesday, tracking gains on Wall Street. The rise of the euro against the dollar and comments from Iran's OPEC governor that the producer group may decide to further cut its output in its next meeting if the market remains oversupplied, also added some support. In Asian trading, crude oil futures for June delivery were last trading at $48.82 a barrel, up 0.56%.
The rupee dropped to its lowest level in two weeks on Tuesday as weakness in the stock market triggered fears that foreign inflows would take a pause after recent gains. The central bank forecast that growth would slow further this fiscal year also weighed on the currency. The partially convertible rupee ended at Rs.50.43/44 against the dollar, down 0.2% over the previous close.
The Indian market finished Tuesday's session lower mirroring weak global cues. The BSE Sensex closed at 10,898, down 81 points or 0.74% over the previous close and the S&P CNX Nifty moved down 12 points or 0.34% to 3,365. While the broad-based BSE- 500 index moved down 0.63% in line with the benchmarks, the mid-cap index slipped a modest 0.16% and the small-cap index bucked the declining trend with a 0.42% rise. Sector-wise, banking, auto and capital good stocks bore the brunt of the selling, while realty, defensive FMCG and stocks in the healthcare sector closed firm.
Stocks to Watch
Banking stocks may rally after Citigroup, JPMorgan & Bank of America climbed nearly 9% on Wall Street overnight.
Wipro could be in the spotlight after the IT giant reported a net profit of Rs.1, 010 crore for the fourth quarter ended March compared to Rs.898 crore in the corresponding period last year.
Two-wheeler major Hero Honda Motors may move after its net profit rose 32.42 per cent to Rs.1, 281.76 crore for the year ended March from the year before.
Reliance Power may see some activity after the company said on Tuesday that it has tied up Rs 14,500 crore for the Sasan Ultra Mega Power project in Madhya Pradesh and about $500 million (about 2,518 crore) would come from overseas
Apollo Hospitals may rise on reports that it is eying a stake in unlisted Wockhardt Hospitals.
State-run gas distributor Gail India could be in focus amid reports that it plans to build city gas distribution projects in Nigeria, after being shortlisted as one of the foreign companies to invest in the country's gas sector
Iron ore exporter Sesa Goa could be in focus on reports that it is exploring options of bidding for the controlling stake in an iron ore mine company that has been put on the block by Brazil's mining exploration company GME4.
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