RTTNews - The Indian market may open sharply lower on Wednesday due to extensive profit taking, as it has rallied nearly 80% from its March lows. There are concerns that the current euphoria may be short-lived and the market could face significant downward pressure due to tough economic environment. Valuations are getting stretched and retail investors are clueless on whether to invest or not. Domestic financial institutions are also expected to tread cautiously.
That said, significant buying by foreign funds and short covering might offer some support. Foreign funds made net investments of Rs.19, 820 crore thus far since March 9, market regulator SEBI data showed.
On Tuesday, FIIs bought shares worth a whopping Rs.4, 792 crore on a net basis, while domestic institutional investors sold shares worth Rs.1, 964.19 crore, according to stock exchange provisional data. Brokers, on the behalf of their clients, and non-resident Indians also booked profits to an extent of Rs.708.95 crore and 4.45 crore, respectively.
After a strong outing in the previous session, traders cut down their long positions on Wall Street overnight, as data released by the U.S. Commerce Department showed a decline in housing starts in April to an annual rate of 458,000 units, compared to March's revised rate of 525,000 units, suggesting a strong reacceleration is still some way off.
Economists had forecast the figure to rise to a pace of 540,000 units from the rate of 510,000 units originally reported for March. New restrictions placed on the credit card industry sent financial stocks tumbling down sharply. The Dow Jones Industrial Average shed 0.34% and the S&P 500 index slipped 0.17%, but the Nasdaq Composite fared slightly better and ended up 0.13%.
The Indian ADRs closed in the red across the board. Among the major decliners, Satyam Computers plunged 8.47%, Infosys slumped 5.39%, MTNL tumbled 5.23%, HDFC Bank fell 4.11%, Sterlite Industries declined 3.37% and Wipro ended down 2.87%.
Crude oil futures for July delivery settled at a six-month high of $60.10 a barrel in New York trading on Tuesday, as a flurry of U.S. refinery problems stoked supply fears.
The rupee closed at Rs.47.82/84 against the dollar on Tuesday, off its day's high of Rs.47.27 but stronger than its previous close of Rs.47.88/90. Reports about central bank's intervention and profit taking in the stock market restricted big gains.
The Indian market ended a volatile session on Tuesday mixed amid considerable amount of profit taking after a historic 17% rise in the previous session. While the BSE Sensex closed at 14,302, up 18 points over the previous close, the S&P CNX Nifty closed in negative terrain at 4,318, down 5 points or 0.11%. The market witnessed selective buying. Realty, banking and capital goods stocks jumped further on frenzied buying, but the IT sector bore the brunt of the selling pressure. The market breadth was positive and the small-cap ad the mid-cap indexes outperformed the benchmarks, rising around 3% each.
Tata Motors could be in the spotlight after it raised Rs.1, 250 crore by selling 10% non-convertible debentures to the Life Insurance Corporation of India.
Maruti Suzuki may move on reports that it had invested Rs.4, 000 crore on its latest offering 'Ritz' and that it is planning at least three launches by 2011-12.
State-owned oil marketing companies HPCL, BPCL and IOC could be in focus on reports that they have received bonds worth Rs.10, 305 crore from the government.
Jindal Steel & Power could move after the NSE included the stock in the Nifty with effect from June 17, replacing Reliance Petro, pursuant to its merger with its promoter firm Reliance Industries.
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