RTTNews - Monday, the Indian market is likely to open lower amid weak global cues. Stocks on Wall Street finished Friday's session lower on worries about the budget deficit and the major markets in the Asia-Pacific region have turned weak after an early surge on Monday with participants turning cautious after news poured in about the conduct of a nuclear test by North Korea.
That said, political developments at the Centre have been governing market movement over the past few days. Underlying sentiment remains upbeat and growing demand for equities clearly indicates that there is a lot of money waiting on the sidelines.
While there could be further profit taking in frontline stocks, second-line stocks in the smallcap and the midcap segments are likely to extend their gains. Stocks in the banking, oil/gas and infrastructure sectors, which are likely to benefit from policy pronouncements, may also attract some buying. Volatility is expected to be high as the May derivative contracts move towards expiry.
According to reports, a clutch of power companies, starting with the hydropower generator NHPC are planning to tap the capital market by June-July. The govt. is expected to initiate pro market policies such as disinvestments and reduction of fuel and fertilizer subsidies.
The Prime Minister and the new Finance Minister Pranab Mukherjee have already spelt out their priorities, and more measures to bring the economy back into the growth trajectory are likely to be announced in the next few weeks. In the near term, the Presidential address on June 4 will reveal the government's action plan for the economy.
The new UPA government hopes to get Parliamentary nod for its full-fledged budget for 2009-10 by July 31. If not, the government may propose another short vote-on-account budget.
Last week, the Indian market saw an unprecedented rally after the Congress-led UPA returned to power with a thumping majority without the support of the Left parties. For the first time in the Indian stock market history, market-wide upper circuits were applied twice last Monday, forcing a halt in trading, as the key indices jumped by about 17% for the session.
The post-election result euphoria receded since Tuesday, but small-cap and mid-cap stocks attracted frenzied buying all through the week. Record turnover was witnessed in both the cash as well as the derivative segment on Tuesday when market participants were able to execute trades. While the BSE Sensex jumped 1,714 points or 14.08% for the week, the BSE small-cap index surged up 28.82% and the mid-cap index climbed 24.92%.
Stocks to Watch
Shanthi Gears may move on reports that it will bring down its number of production facilities to two from six to reduce the consumption of raw materials and help improve productivity.
Diversified business conglomerate ITC could see some activity after it reported a 10% rise in its net profit for the March quarter. Crompton Greaves could move on reports that it is looking at acquiring an industrial automation company overseas.
HDIL may be in focus after it reported a 91% fall in its fourth-quarter net profit. Hindustan Zinc may be in focus after it reduced the price of zinc and lead to match global rates.
Strides Arcolab may move on reports that it is looking at a four-fold increase in its U.S. revenues this year. Spanco could move after it raised the price of a preferential allotment of equity shares by Rs.5 to Rs.40 per share.
Construction and infrastructure stocks could be in focus amid reports that the government is planning to invest about Rs.60, 000 crore in the next couple of years in constructing and upgrading about 40,000 km of roads as part of another economic stimulus package expected to be announced soon.
Ranbaxy Laboratories could be in the spotlight following the resignation of its chairman and chief executive officer Malvinder Singh with immediate effect.
Oil exploring companies such as Reliance Industries, Cairn and ONGC may come under selling pressure following reports that the government is planning to cap the profits of crude oil producers as part of a transparent and sustainable subsidy-sharing system for the sector.
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