Market may snap last three days of fall on firm Asia

The market may gain tracking firm Asian stocks after US stocks surged on Monday. Higher advance tax payment by India Inc may further boost sentiment.

Advance tax payments by Indian firms rose an annual 24 % in October-December, signaling higher corporate profits and raising prospects that the country may exceed the target for direct taxes, a finance ministry official said on Monday. The corporates paid about Rs 55,900 crore in advance tax in the December quarter compared to about Rs 50500 crore during July-September quarter, and about Rs 41,600 crore during the year-ago quarter.

Top 100 firms' advance tax payments were up more than 30 % in the December quarter. The net direct tax receipts, which include corporate tax and income tax paid by individual tax payers grew by about 8.5 % during October-December compared to a year ago.

India's food-price inflation cannot be tackled through monetary and other policy steps, while inflationary expectations will not stay long, Finance Secretary Ashok Chawla said on Monday. Earlier on Monday, the Prime Minister's economic advisor C Rangarajan said India's central bank may have to raise the cash reserve ratio (CRR) to drain money from the banking system if prices do not decline in December.

India is battling soaring food prices after a poor monsoon and then flooding in parts of the country hit crops."Unlike previous inflation, this is very sector specific ... It is a very peculiar inflation which needs to be attacked at the level of the sector," said Kaushik Basu, chief economic advisor to the finance ministry.

India's central bank governor Duvvuri Subbarao had earlier said that monetary policy is not the right tool to fix supply problems such as food shortages, but added that if not contained soaring food prices would stoke inflationary pressures in the broader economy.

Food prices surged an annual 20 % in early December and rising food prices contributed to a faster-than-expected 4.78 % increase in the wholesale price index in November 2009. Last week, Mukherjee had said containing inflation is high on the government's agenda and it is monitoring the price situation.

Asian stocks rose on Tuesday on course for its first gain in four days, as the weaker yen boosted the earnings outlook for Japanese makers of electronics and cars and after metal prices advanced. The key benchmark indices in Hong Kong, Indonesia, Japan, South Korea, Singapore and Taiwan rose by between 0.36% t o 1.43%. But China's Shanghai Composite fell 0.51%.

Wall Street gained on Monday with the Nasdaq closing at a new 15-month high. Positive earnings, upgrades for Alcoa and Intel and the senate health-care bill advancing triggered gains despite the dollar index gradually gaining traction. The Dow Jones Industrial Average was up 85.25 points, or 0.83% at 10,414.14. The Standard & Poor's 500 Index gained 11.58 points, or 1.05%, to 1,114.05. The Nasdaq Composite Index rose 25.97 points, or 1.17, to end at 2,237.66, its highest close since September, 2008.

The key benchmark indices drifted lower in a volatile session of trade on Monday despite positive European markets and higher US index futures. The BSE Sensex fell 118.63 points or 0.71% to 16601.20 its lowest closing since 10 November 2009 on that day.

As per provisional figures on NSE, foreign funds sold shares worth Rs 291.94 crore and domestic funds bought shares worth Rs 353.83 crore on Monday.