Thursday, the Indian market may open higher, supported by consistent FII inflows and firm Asian cues. On Wednesday, foreign funds bought stocks worth Rs.685 crore on a net basis, while domestic institutions bought shares worth Rs.290 crore, according to provisional data on the Bombay Stock Exchange. FIIs have invested Rs.3, 000 crore on a net basis thus far in April.
However, analysts warn investors that the market is fairly valued and any further move could stretch the valuations. Intra-day profit taking may lead to some volatility. Traders would look forward to inflation data scheduled to be released later in the day amid expectations of further cut in key policy rates.
Currently, markets across the Asia-Pacific region are trading mostly higher on hopes that the recession in the U.S. is abating. Hong Kong's Hang Seng index is up 0.34%, Japan's Nikkei 225 index is rising 2.90% and South Korea's KOSPI is advancing 1.88%, but China's Shanghai Composite index is moving down 1.19%.
After showing a lack of direction throughout much of the session, stocks on Wall Street moved sharply higher going into the close of trading on Wednesday. The choppy trading seen for most of the day came as traders digested a slew of economic reports as well as earnings news from some big-name companies. The late-day rally by the major averages was also partly due to significant strength that emerged in the banking sector, which moved back to the upside after falling sharply on Tuesday.
On the economic front, the Federal Reserve's Beige Book report showed a continued economic contraction in many parts of the country, although it signaled that the contraction is slowing down. While the Dow Jones Industrial Average gained 1.38% and the S&P 500 index added 1.25%, the Nasdaq Composite moved up a marginal 0.07%.
Meanwhile, the Indian ADRs closed mixed. ICICI Bank jumped 6.08%, Reddy's Laboratories rallied 5.95%, MTNL advanced 4.47% and Sterlite Industries gained 0.72%, but technology stocks Infosys slumped 6.78%, Wipro tumbled 4.5% and Satyam Computers fell 2%.
In Asian trading, crude oil is currently up 1.06% at $49.77 a barrel in electronic trading. Light sweet crude for May delivery fell marginally to $49.25 a barrel on the New York Mercantile Exchange on Wednesday after an Energy Information Administration data revealed commercial crude oil inventories increased for a 25th time in 29 weeks by 5.6 million barrels to 366.7 million barrels in the week ended April 10, 2009.
The Indian rupee ended Wednesday's session stronger at Rs.49.69/70 against the dollar, up 19 paise on expectations of increased capital inflows from foreign funds after the stock market closed at a six-month high.
On Wednesday, ignoring bearish sentiment in global markets, the Indian market cut its early losses and closed sharply higher near the day's high on hopes of increasing capital inflows from foreign funds on reports about the return of risk appetite in the emerging markets. The NSE Nifty index surged past the 200- DMA (daily moving average) signaling the beginning of a bull market and total traded turnover from the cash segment and the futures and option segment on the NSE stood at Rs.1, 00,893.68 crore, the highest turnover for non-expiry day since January 2008.
The BSE Sensex closed at 11,285, up 318 points or 2.90% over the previous close and the S&P CNX Nifty rose 102 points or 3.0% to 3,484. Stocks in the mid-cap and small-cap segments were bought aggressively. While the broad-based BSE 500 index gained 3.44%, the mid-cap index added nearly 4% and the small-cap index jumped 5.32%.
Stocks to Watch
Ranbaxy Laboratories could be in focus on reports that it is running an estimated 2,500 crore mark-to-market losses on foreign currency derivatives transactions entered into with various banks.
Reliance Infrastructure may move after the company said that its promoters have bought back 25 lakh additional shares worth Rs.127.38 crore from existing shareholders at an average price of Rs.509.54 per share.
Banking stocks could be in the spotlight after financials surged on Wall Street overnight in a late rally after data from American Express signaled the ability of some consumers to pay their bills is stabilizing.
Hero Honda may see some activity following reports that Hero Group, which owns 26% in Hero Honda, is pulling out of a joint venture with Daimler to make commercial vehicles in India due to uncertain economic situation in the segment.
State Bank of India could move on reports that it is planning to raise Rs.60, 000-70,000 crore over the next five years through a rights issue to strengthen its capital base and expand loan disbursals.
Oil-marketing companies like HPCL, BPCL and IOC and stocks in the aviation sector, namely Kingfisher, JetAirways and SpiceJet could be in focus after state-run oil companies raised prices of aviation turbine fuel or ATF, for the third time in a month, by nearly 7% on account of firm international prices.
Cement stocks may move after the Builders Association of India on Wednesday lashed out at the industry alleging attempts of cartelization by the dominant players and artificial hiking of rates. The association has reportedly called for a total ban on exports of cement to overcome the shortages in the local market.
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