Market may halt two-day slide on positive global cues

Market is likely to open higher, ending a two-day declining trend, on positive global cues. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicate a rise of 26.50 points at the opening bell. Most Asian indices were trading in the green today, 6 January 2011 while the US market closed with modest gains on Wednesday, 5 January 2011. On the macro front, the government will unveil data on some wholesale price indices for the year through 25 December 2010 viz. the food price index, the primary articles index and the fuel price index at about 12:00 IST.



Most Asian stocks edged higher today, 6 January 2011, as a stronger dollar boosted earnings prospects for exporters and reports in the US signaled a broadening of the economic recovery. The key benchmark indices in Singapore, China, Japan, South Korea and Taiwan rose by between 0.03% to 1.17%. The key benchmark indices in Hong Kong and Indonesia fell 0.04% to 0.80% respectively.

US stocks gained on Wednesday, 5 January 2011, on encouraging data from the labor market and service sector pointed to a firming economic recovery. The Dow Jones Industrial Average added 31.71 points, or 0.27%, at 11722.89, reclaiming the highs reached at the top of dot-com bubble on 14 January 2000. The Standard & Poor's 500-stock index ended higher by 6.36 points, or 0.5%, at 1276.56, while the Nasdaq Composite advanced 20.95 points, or 0.78%, to 2702.20.

In economic data, the Institute for Supply Management reported its strongest service-sector figures since August 2005. The index climbed in December 2010 to 57.1, up from 55 in November 2010.A reading above 50 indicates expansion.

The ADP Employer Services report showed that companies increased payrolls in December by the most since records began in 2001. Employment increased by 297,000, almost three times analysts' expectations.

Back home, corporate earnings for Q3 December 2010, which will start trickling in from the second week of January 2011, will set the direction for the market in the near term. Analysts see corporate profit margins to be under pressure in the coming months due to higher commodity prices, rising cost of debt, surging wages and increased competitive intensity across sectors. IT bellwether Infosys kickstarts the earnings reporting season on 13 January 2011.

Growth in India's service sector eased in December 2010 from a four-month high the previous month, reflecting a slightly slower expansion in new business, a survey showed on Wednesday. The HSBC Markit Business Activity Index, based on a survey of around 400 firms, fell to 57.7 in December 2010 from 60.1 in November 2010 -- its strongest reading since July 2010. Both input and output prices rose in December 2010, with the growth in input costs accelerating to its highest levels since July 2010.

Exports in November 2010 rose an annual 26.5% to $18.9 billion, while imports for the month grew 11.2% on the year to $27.8 billion, government data released on Monday showed. India's trade deficit in November narrowed to $8.9 billion compared with $9.7 billion in October.

India's manufacturing activity continued to expand in December 2010, although the momentum from the prior month eased because of capacity constraints and a slowdown in new orders, a survey by HSBC showed Monday. The monthly purchasing managers' index eased to 56.7 from November's reading of 58.4, though it stayed well ahead of the threshold of 50, which separates expansion from contraction. "The PMI numbers show that the economy remains in high gear, but that this is becoming increasingly difficult to reconcile with a comfortable level of inflation," HSBC economists wrote in a statement. India's central bank, they wrote, may raise interest rates sooner rather than later to curb price increases.

The output of six key infrastructure sectors grew 2.3% in November 2010 from a year ago, the slowest pace in the last 21 months, raising the prospects of a drop in industrial growth for the month. The six core industries -- crude oil, petroleum refining, coal, electricity, cement and finished steel, have a combined weight of 26.7% in the index of industrial production and are considered an advance indicator of industrial activity. These sectors had grown an upwardly revised 8.6% in October 2010.

As per provisional data, foreign institutional investors (FIIs) sold shares worth a net Rs 240.30 crore on Wednesday, 5 January 2011, while domestic institutional investors sold shares worth Rs 101.75 crore.

FIIs had bought equities worth Rs 2049.60 crore in December 2010. FII inflow in the calendar year 2010 totaled Rs 133266 crore. In dollar terms the net equity inflow in 2010 totaled $29.36 billion, compared to an inflow of $17.45 billion in 2009. The annual inflow in 2010 was at record level.

The key benchmark indices edged lower on Wednesday, 5 January 2011, extending previous day's losses, as European stocks and US index futures fell. The BSE 30-share Sensex was down 197.62 points or 0.96% to 20,301.10 and the S&P CNX Nifty was down 66.55 points or 1.08% to 6,079.80.