Tuesday, the Indian market is likely to open flat despite favorable cues from the overseas markets. While net buying by foreign funds may help extend the rally, domestic institutions are likely to pare their long positions due to uncertainty on the political front.
On Monday, foreign funds bought shares worth Rs.14.17 billion on a net basis, while domestic financial institutions, including banks, insurance companies and mutual funds, sold shares worth Rs.926 million, data released by the National Stock Exchange showed.
Similarly, in April, overseas investors bought a net Rs.6508 crore worth of stocks, the most since October 2007, but domestic institutions have been net sellers to the extent of Rs.782 crore, according to data released by the market regulator Securities & Exchange Board of India.
Currently, markets across the Asia-Pacific region are trading mostly firm with stocks from banking, energy and materials sectors recording handsome gains. Australia's All Ordinaries index is up 0.46% and China's Shanghai Composite index is rising 0.19%, but Hong Kong's Hang Seng index is down nearly 0.4%. The Japanese and Korean markets are closed today on account of Children's Day.
In the U.S. the major averages ended at their multi-month closing highs overnight, as better than expected economic data generated some optimism about the outlook for the economy, particularly a recovery in the beleaguered housing market. A report from the National Association of Realtors showed that pending home sales index rose 3.2 percent in March following a revised 2.0 percent increase in February. Economists had expected the index to come in unchanged following the 2.1 percent increase originally reported for the previous month.
Separately, the Commerce Department released a report showing an unexpected increase in construction spending, which rose 0.3 percent in March following a 1.0 percent decrease in February. Economists had expected spending to fall by about 1.6 percent. The Dow Jones Industrial Average rose 2.6%, the Nasdaq Composite index gained 2.6% and the S&P 500 index rallied 3.4%.
Crude oil rose to its highest close of the year on Monday, as investors bet the recession was fading after a rally in global equities markets and better-than-expected macroeconomic news in the United States, Europe and Asia offered hopes of a recovery in world energy demand. After closing at $54.47 a barrel, up $1.27 in New York trading overnight, crude oil is now trading at $54.10, down 0.68% in Asian trading.
Meanwhile, after climbing to a two-week high of Rs.49.55, the rupee pared some of its gains and closed at Rs.49.91/92 against the dollar on Monday, up 0.3 percent from its previous close. While a rally in the stock market helped the currency's strong advance in early trading, the dollar's rise against major currencies and import payments restricted big gains.
Stocks to Watch
Suzlon Energy could be in focus on reports that it was evaluating options to change the terms of its $500-million foreign currency convertible bonds maturing in October 2012.
Tata Motors may see some activity after the company revealed that it has received over 2.03 lakh bookings for its small car Nano, garnering nearly Rs.2, 500 crore.
Mahindra & Mahindra could move after it has reported a 35 per cent jump in tractor sales for April to 11,640 units from 8,645 units in the same month a year ago.
Info Edge India may rise after the company disclosed that foreign fund house Citigroup Global Mkt (Mauritius) has hiked its stake in the company to 5.21% through open market transactions.
Maruti Suzuki may be in focus on reports that it expects to see a recovery in its profitability in the June quarter due to lower commodity prices.
State-owned Oil and Natural Gas Corporation (ONGC) could move following reports that it is looking for partners to bid for three oil fields in Iraq.
Indian Overseas Bank may see some activity after it has registered a net profit of Rs. 1,325.79 crore for the year ended March from Rs. 1,202.34 crore in the previous year.
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